Jerry S. Payne - Page 10

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          The Withdrawal Authorizations                                               
               During the audit years, petitioner signed withdrawal                   
          authorizations (for the most part, printed forms entitled “Tip              
          Authorization Voucher” or “Guest Check”) (the WAs) that                     
          authorized the expenditure of amounts charged to 2618's general             
          ledger account entitled “Business Promotion/Travel”.  The WAs               
          totaled $70,159 for 1989, and $26,345 through November 1990, when           
          the operation of the club was taken over by JKP.                            
               Petitioner signed the WAs by writing either “PAYNE” or, in             
          some cases, “Jerry”, or “Jerry Payne”, or “JSP”.  The WAs also              
          set forth a specific date and dollar amount, and they contained             
          the notation “ProMo”, all in the same handwriting.  One of the              
          1990 WAs was prepared and signed by Virginia Sanders and                    
          contained the words “Jerry S. Payne Promotional Expense” and                
          “paid out”.  On the forms entitled “Tip Authorization Voucher”,             
          petitioner’s initials appeared on a signature line directly above           
          the words “I hereby authorize the above tip.”9  Petitioner’s                
          initials also appeared at the bottom of the “Guest Check” forms.            
          A number of the WAs contained the words “paid out”, and on one              

               9  Petitioner testified that the tip authorization vouchers            
          were originally designed to enable customers to pay the dancers             
          by means of a credit card rather than in cash.  The club’s                  
          customers utilized the vouchers to specify the credit card tip              
          amount to be allocated to a particular dancer.  Petitioner                  
          adapted the vouchers to his own use as authorizations for payment           
          of the amounts specified thereon.  Only the voucher amounts                 
          authorized by petitioner were charged to 2618's general ledger              
          account entitled “Business Promotion/Travel”.                               

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