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Mug Shot Monday — Borrowers Who Don’t Report all Income is Just a Character Issue, Right?

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February 9, 2015

By Bob Coleman
Editor, Mug Shot Monday

Back in the day, when I was in grad school working on my MBA, my accounting professor said, “Just remember, overreporting expenses can be a gray area, but undereporting income is a crime.”

Not declaring all cash sales. Ar we simply dealing with character issues?

After all everyone does it, right?

So what’s the problem.

Well, your borrower can go to jail and lose the business, and you are left holding the bag.

That’s what happened to a NorCal family charter bus company, owned by two brothers.

Quality Insurance Travel ran buses to the Chukchansi Gold Resort & Casino for the Chukchansi Indian tribe.

The bookkeeping sister dutifully recorded income received by the casino in its books.

However, she did not report additional cash payments of $20 provided by passengers who were not preferred customer of the casino — close to $1 million over a five year period.

The brothers received about three and two years in prison for the fraud. Sis got two years.

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