Opinion ID: 1248085
Heading Depth: 1
Heading Rank: 11

Heading: untruth of certain statements

Text: Having found that Defendants offered and sold securities by means of the specified written statements of material facts, we come to the question of whether any of said statements were untrue. As to the Balance Sheet for the period ending May 31, 1974, the questions presented are: (1) Did it accurately set forth the financial condition of the corporation; (2) Did it accurately set forth the results of operation from January 1 through May 31, 1974; and (3) Was it prepared in conformity with generally accepted accounting principles consistently applied? The issues as to the accuracy of the Balance Sheet for May 31, 1974, as developed at trial, related primarily to certain particular accounts. For the sake of simplicity, the Court will first consider only the following: Account No. Assets Amount 202 Cash in Bank ...................... $ 46,165.00 210 Receivables-customer notes-not due .................... 13,573.00 220 Receivables-customer accounts-not due ................. 24,025.00 274 Pre-paid interest ................. 26,098.00 277 Lease and Rental Units ............ 227,223.00 280 Land .............................. 34,580.00 Account No. Liabilities Amount 220 Accounts receivable credit balances ......................... __________ 360 Capital Stock ...................... $90,000.00 Before proceeding to a consideration of proofs respecting the above accounts, it should be noted that the full audit performed by Plaintiffs' expert accounting witnesses was made for the period ending August 31, 1974. In order to evaluate various accounts on the Balance Sheet for May 31, 1974, it was necessary, in some instances, for the witnesses and the court to relate the August 31st audit findings back to the May 31st Balance Sheet. This rendered the proofs at trial and the findings of the court very difficult. [Here the trial judge, in a well-reasoned, detailed statement covering 20 pages, discusses each of the eight accounts enumerated above. In the interest of brevity, we refrain from printing the same. It is sufficient to say that he found that numerous statements in the balance sheet were untrue, rendering untrue the defendants' statements that the balance sheet of May 31, 1974 accurately set forth the financial condition of the corporation, and rendering untrue the statement that the balance sheet was prepared in conformity with generally accepted accounting principles. The findings of fact are abundantly supported by the record and we are not convinced that they should be disturbed.]