142. The LFT is to be administered in accordance with NRS Chapter 163, NRS Chapter 164 and NRS §165.030 through 165.120 with no exception. See Agreement
of June 30, 1981, Stipulation of April 30, 1982 and this
Court's Order of August 13, 1982 approving the aforementioned Agreement
and Stipulation. Exhibits 5, 6 & 8, respectively.
143. NRS 165.040 specifies the requirements of these intermediate accounts:
1. (a) The period which the account covers;
(b) The names and addresses of the living
beneficiaries known to the trustee, with a statement as to those known to be
minors or incapacitated persons, a description of any possible unborn or
unascertained beneficiaries, and the name of the surety or sureties on the
trustee's bond with the amount of the bond;
(c) In a separate schedule, additions to trust
principal during the accounting period with the dates and sources of
acquisition, investments collected, sold or charged off during the accounting
period, investments made during the accounting period, with the date, source and
cost of each, deductions from principal during the accounting period, with the
date and purpose of each, and the trust principal, invested or uninvested, on
hand at the end of the accounting period, reflecting the approximate market
value thereof;
(d) In a separate schedule, the trust income
on hand at the beginning of the accounting period, and in what form held, trust
income received during the accounting period, when and from what source, trust
income paid out during the accounting period, when, to whom and for what
purpose, trust income on hand at the end of the accounting period and how
invested;
(e) That, without prior court authority,
neither any seller to, nor buyer from, the trustee of trust property during the
accounting period was at the time of the sale or purchase:
(1) In the case of a corporate trustee,
an affiliate or any officer, employee, or nominee of the trust or of an
affiliate; or
(2) In the case of a noncorporate
trustee, a relative, partner, employer, employee or business associate,
but none of the provisions of this paragraph apply
to purchases and sales made by brokers for the trustee or to stock exchanges;
(f) A statement of unpaid claims with the
reason for failure to pay them, including a statement as to whether any estate or inheritance taxes have become due with regard to the trust property, and if
due, whether paid;
(g) A brief summary of the account; and
(h) Such other facts as the court may by rule
or court order require.
144. Under NRS §165.040 section 2, as amended, a trustee is required to file
an intermediate account within 60 days after the end of each calendar year:
NRS §165.040 Intermediate accountings: General requirements;
exceptions.
2. Except as otherwise provided in subsection 3, within
60 days after the end of each calendar year thereafter during the life of
the trust, the testamentary trustee then in office shall file with the same
court an intermediate account under oath showing corresponding facts regarding
the current accounting period.
[Emphasis added]
145. Respondents LFT Trustees knew or reasonably should have known that the LFT
was to be administered in accordance with NRS Chapter 163, NRS Chapter 164 and that true, correct, complete and accurate annual accountings were required to be
produced, filed and served in accordance with NRS §165.030 through §165.120.
146. Respondent Grant Thornton knew or reasonably should have known that the LFT
was to be administered in accordance with NRS Chapter 163, NRS Chapter 164 and that true, correct, complete and accurate annual accountings were required to be
produced, filed and served in accordance with NRS §165.030 through §165.120.
147. Respondents CR&R and/or REESE contracted with
Respondents LFT Trustees to produce, file and serve LFT accountings "pursuant
to NRS §165.030 through §165.120." Exhibit 12.
148. Respondents CR&R and/or REESE knew or reasonably
should have known that the LFT was to be administered in accordance with NRS
Chapter 163, NRS Chapter 164 and that accountings were required to be produced,
filed and served in accordance with NRS §165.030 through §165.120. Exhibits 5, 6, 7, 8, 10, 11, 12 & 13.
149. For the period between January 17, 1983 and April 30, 1984, for the period between May 1, 1984 and April 30, 1985, for the period between May 1, 1985 and April 30, 1986, for the period between May 1, 1986 and April 30, 1986,
singularly and separately, Respondents LFT Trustees MURPHY, DAYTON, ROWLEY, Grant Thornton, accountant MURPHY, CR&R and/or REESE knew
or reasonably should have known that the LFT annual intermediate accounts and
statements, and as were drafted and filed in this Court, did not meet the legal
requirements under either or both NRS 165.040 and the Uniform
Principle and Income Act NRS §164.140 through §164.370, inclusive, and
were contrary to and in contempt of this Court's Order of August 13, 1982. Exhibit 8.
150. For the period between May 1, 1987 to
December 31, 1987, for the years 1988, 1989, 1990, 1991, 1992, 1993,
1994, 1995, 1996, 1997, 1998, 1999, 2000, 2001, 2002, and 2003, singularly and separately, Respondents LFT Trustees MURPHY, DAYTON, ROWLEY, Grant Thornton, accountant MURPHY, CR&R and/or REESE knew
or reasonably should have known that the LFT annual intermediate accounts and
statements, and as were drafted and filed in this Court, did not meet the legal
requirements under either or both NRS 165.040 and the Uniform
Principle and Income Act NRS §164.140 through §164.370, inclusive, and
were contrary and in contempt of this Court's Order of August 13, 1982. See Figure 2.
151. Respondents are believed by Petitioner to have billed and accepted
payments from the LFT for services and duties that were not rendered or
properly performed for each year from 1983 through 2003.
152. As a result of failing to produce, file and serve LFT annual accounts in
accordance with §165.040, Respondents CR&R and/or REESE are
in breach of contract with LFT Trustees to provide competent and ethical legal advice and services and to produce, timely file and serve LFT accountings
"pursuant to NRS §165.030 through §165.120." Exhibit 12.
153. From January 17, 1983 to October 22, 1991, LFT Trustees did not produce, timely file and serve annual accounts in accordance with NRS Chapter 163, NRS Chapter 164 and NRS §165.030 through §165.120, as ordered
by this Court on August 13, 1982.
154. On October 22, 1991, LFT Trustees, under the advice and counsel of CR&R and / or REESE caused a Report to Beneficiaries to be sent to only the LFT income and outright beneficiaries. Petitioner and other
remaindermen beneficiaries of the LFT were not served with said October 22,
1991 report or any other communications regarding the management and
accountings of the LFT. In said report, LFT Trustees deceptively stated that
they had not and did not make annual accountings of the LFT "for the past
thirteen years" and as a result were in breach of duties to beneficiaries and
in contempt of this Court's Order of August 13, 1982 (Exhibit 8):
You will note from this schedule that we anticipate
making a cash distribution to all beneficiaries of $500,000. We are doing this
in lieu of having to go back and recalculate all of the income and all of the
principal that has transpired in the Estate accountings, the Trust A accountings, and the Trust B accountings, for the past thirteen years. [Emphasis added]
October 22, 1991 Report to Beneficiaries, p.4, §1
Exhibit 20
155. Respondents LFT Trustees DAYTON, MURPHY & ROWLEY, Grant Thornton,
accountant MURPHY, REESE and/or CR&R knew or should have known that said
Respondents were prohibited from using their power to distribute income to
discharge their own legal obligations. NRS §163.145.
156. Said October 22, 1991 Report to Beneficiaries was filed with this Court by Respondents LFT Trustees, under the advice and counsel of
Respondents CR&R and / or REESE, and was attached as exhibit
"B" of Trustees' Petition for Instructions on November 6, 1991. Exhibits
20 and 23, respectively. Respondents CR&R and / or REESE,
while being continually paid by the LFT to perform competent and ethical services for the LFT Trustees, reasonably knew or should have known that CR&R and/or REESE had continually failed and refused to adequately and
properly advise and counsel the LFT Trustees of their many legal duties and
Trust obligations, all in breach of the specific performance required by the
legal service contract of September 1, 1983. Exhibit 23, page 4, §8, lines
23-25.
157. The Summary Statements and LFT annual accounts for the LFT as presented
to this Court by Respondents LFT Trustees, Grant Thornton and CR&R and/or REESE for each year from 1990 through 2003 are untruthful, incorrect,
incomplete, and inaccurate.
158. For each of the following years: 1987, 1988, 1989, 1990, 1991, 1992, 1993,
1994, 1995, 1996, 1997, 1998, 1999, 2000, 2001, 2002, and 2003, singularly and separately, the Annual Intermediary Account of the Trustees of Lear
Family Trust B does not comply with NRS §165.040 as hereinafter set forth.
159. Respondents LFT Trustees, Grant Thornton, CR&R and/or REESE's annual
intermediate accounting and summary statements for the LFT failed to list the
names and addresses of an entire class of beneficiaries, the remaindermen
beneficiaries as required by NRS §165.040(1)(b) - compare list with list
included in Petition for Letters Testamentary, Exhibit 4 and LFT, Exhibit 3, see also Certificate of Mailing, Exhibit 58, p. #445 (for exhibit
page # see top or bottom right hand side of exhibit page)
160. Respondents LFT Trustees, Grant Thornton, CR&R and/or REESE's
annual intermediate accounts for the LFT failed to state and show the dates at
which trust principal (i.e. land sales, BOMBARDIER transactions, Capistrano Partnership sale, Silver Lake Water Co. sale) was added to the LFT as required by NRS
165.040(1)(c).
161. Respondents LFT Trustees, Grant Thornton, CR&R and/or REESE's
annual intermediate accounts for the years 1990 through 2003 regarding the LFT
failed to truthfully state and completely and accurately show the readily
identifiable source (i.e. Assessor Parcel Number, stocks, bonds etc.) of real
property sold resulting in an addition to trust principal as required by NRS 165.040(1)(c).
162. Respondents LFT Trustees, Grant Thornton, CR&R and/or REESE's
annual intermediate accounts for the years 1990 through 2003 regarding the LFT
failed to truthfully state and completely and accurately show the investments
made during the accounting period as required by NRS 165.040(1)(c).
163. Respondents LFT Trustees, Grant Thornton, CR&R and/or REESE's
annual intermediate accounts for the years 1990 through 2003 regarding the LFT
failed to truthfully state and completely and accurately account for their
deductions of the trust principal under the LFT agreement and under as required
by NRS 165.040(1)(c) and the Uniform Principal and Income Act, NRS §164.140
through §164.370 inclusive.
164. Respondents LFT Trustees, Grant Thornton, CR&R and/or REESE's
annual intermediate accounts for the years 1990 through 2003 regarding the LFT
failed to truthfully state and completely and accurately show what part of the LFT's
principal on hand was invested or uninvested at the end of the accounting
period and reflect its approximate current market value. The land holdings of
the LFT appear at their original estate valuations, not their current market
values as required under NRS 165.040(1)(c).
165. Respondents LFT Trustees, Grant Thornton, CR&R and/or REESE's
annual intermediate accounts for the years 1990 through 2003 regarding the LFT
failed to truthfully state and completely and accurately show trust income held
at the beginning of the accounting period and in what form held as required
under NRS 165.040(d).
166. Respondents LFT Trustees, Grant Thornton, CR&R and/or REESE's
annual intermediate accounts for the years 1990 through 2003 regarding the LFT
failed to truthfully state and completely and accurately show when trust income
was received by the LFT during the accounting period as required by NRS
165.040(d).
167. Respondents LFT Trustees, Grant Thornton, CR&R and/or REESE's
annual intermediate accounts for the years 1990 through 2003 regarding the LFT
failed to truthfully state and completely and accurately explain how trust
income was calculated and to whom it was distributed as required by NRS
165.040(d) and the Uniform Principal and Income Act, NRS §164.140
through §164.370 inclusive.
168. Respondents LFT Trustees, Grant Thornton, CR&R and/or REESE's
annual intermediate accounts for the years 1990 through 2003 regarding the LFT
failed to truthfully state and completely and accurately show the trust income
on hand at the end of the accounting period and how it was invested as required
by NRS 165.040(d).
169. Paragraphs 157 through 166 are reiterated and incorporated herein with
regards to the LFT accounting years 1983 through 1986 where applicable. LFT
Trustees, DAYTON, MURPHY and ROWLEY, CR&R remain the same, however, the accounting firm from 1983 through 1986 was HOLLANDER,
FREEDMAN, HARRISON & FINE, CPAs and Peter Banks, CPA.
170. While the relevant schedules show that certain classes of beneficiaries
received certain distributions of funds, it is not possible for a beneficiary
or an auditor to discover or ensure that the distribution allocations to each beneficiary were properly made in accordance with the LFT and that the sum of funds received by all
of the beneficiaries equal the sums disbursed by the Trust.
171. Respondents LFT Trustees, Grant Thornton and accountant MURPHY's
"Accountants' Compilation Report" produced, filed and served under the advice and counsel of CR&R and/or REESE's for the years 1987, 1988, 1989, 1990, 1991, 1992, 1993,
1994, 1995, 1996, 1997, 1998, 1999, 2000, 2001, 2002, and 2003, singularly and separately, contain a litany of disclaimers,
including but not limited to:
a. "The accompanying statement and related schedules are not
intended to present financial position and results of operation in conformity
with generally accepted accounting principles."
b. "A compilation is limited to presenting the transactions in
charge and discharge statement form and is the representation of the
Co-Trustees."
c. "We have not audited the accompanying charge and discharge
statement and related schedule."
d. "We do not express an opinion or any other form of assurance
on them."
e. "We are not independent with respect to the William P. Lear
Family Trust."
Exhibits 17 (1990), 28 (1991), 29 (1992),
43 (1999), 45 (2000), 58 (2001, 2002), 64 (2003).
172. Respondents LFT Trustees and Grant Thornton's "Accountants' Compilation
Report" produced, filed and served under the advice and counsel of CR&R and/or REESE's for the years 1983, 1984, 1985, 1986, 1987, 1988, 1989, 1990, 1991, 1992, 1993,
1994, 1995, 1996, 1997, 1998, 1999, 2000, 2001, 2002, and 2003, singularly and separately, do not state or represent that the charge and
discharge statement and related schedules are prepared and presented in
accordance with the requirements of Nevada State law, NRS §165.030 through §165.120 inclusive, as ordered by this Court on August 13, 1982. Exhibit 8. See
also Exhibits 17 (1990), 28 (1991), 29 (1992), 43 (1999), 45 (2000), 58 (2001, 2002), 64 (2003).
173. The
empiric methodology used by Respondents LFT Trustees, Grant Thornton, and accountant MURPHY, CR&R and/or REESE to falsely prepare and
present the LFT's intermediate accounts does not comply with any recognized fiduciary
accounting standard as required in particular by the Laws of the State of
Nevada NRS Chapter 165 and does not fulfill the obligations of the LFT or the lawful
amendments to LFT as ordered by this Court.
174. Respondents have never produced, filed with this Court and served
Petitioner with a true, correct, complete and accurate accounting performed in
accordance with Nevada State law, the Order of this Court dated August 13, 1982
or the tenor of the Lear Family Trust agreement itself. Exhibits 8 & 3,
respectively.
175. By the foregoing systematic and continuing acts, omissions, breach of
duty and obligation, Respondents have conspired together and with each other to
deprive Petitioner of due process of law and equal protection of the law and as
a result Petitioner's rights and interest in the LFT have been alienated,
converted and reduced in violation of law and in breach of the specific
performance required by and under the LFT.
176. While stating under "penalty of perjury" in 13th Intermediate Accounting for the year 1999, that neither any
seller to, nor buyer from Respondents LFT Trustees during the accounting period
was at the time of the sale or purchase a relative, partner, employer, employee
or business associate of the LFT Trustees, Respondents LFT Trustees, Grant Thornton, CR&R, under the advice and counsel of CR&R and / or REESE willfully misrepresented and intentionally deceived this Court and the LFT
beneficiaries into believing that there was no conflict of interest in the transaction and sale of SILVER LAKE WATER COMPANY (SILVERLAKE) to SIERRA PACIFIC POWER COMPANY (SPPC). Exhibit 43, page 2, lines 24-27,
p.4, lines 24-27 and page 5, lines 1-2.
177. At the time of the transfer and sale of SLWC to SPPC, Respondents LFT Trustees DAYTON and MURPHY were serving on the Board of Directors of SPPC,
the buyer of SLWC. Notice will be taken that the sale of SLWC required the
signature of a majority of co-trustees or at least two out of the three LFT
co-trustees. NRS §163.110.
178. On July 28, 2003, in their Closing Brief, Respondents LFT Trustees, Grant Thornton,
CR&R and REESE admitted to having produced the LFT's accountings
pursuant to other legal requirements and in willful disregard or contempt of
this Court's Order of August 13, 1982 and in breach of contract between
Respondents LFT Trustees and Respondents CR&R and REESE:
"The Fourteenth account prepared by Grant Thornton meets the
requirements of NRS 165.135."
July 28, 2003, Closing Brief by Trustees, pg. 4, lines 10-11.
Exhibit 52
179. Respondents LFT Trustees, Grant Thornton, accountant MURPHY and CR&R and REESE's knew that the statement made in the July 28, 2003 Closing Brief was deceptive and an intentional misrepresentation of fact. Exhibit 52. Neither the
Fourteenth Account (2000) nor any other account produced and filed by
Respondents LFT Trustees, Grant Thornton, CR&R and REESE comply with NRS
§165.135. Exhibit 45. See also Petitioner's Reply to Opposition to Motionfor Reconsideration of Order (Audit) of December 24, 2004 §§35-36, §§39-40, §§43-44, §§47-48, §§51-52.
180. The intermediate accountings for the years 2001 and 2002 were produced and filed by Respondents LFT Trustees, Grant Thornton, accountant MURPHY, CR&R and/or REESE in this Court and served upon LFT beneficiaries on or
about February 28, 2004, and were three (3) and two (2) years, beyond what was
required by the LFT agreement as amended by Court Order of August 13, 1982 and
as required under NRS §165.040(2), NRS §165.200. Exhibit 58.
181. The intermediate accountings for the year 2003 was produced and filed by
Respondents LFT Trustees, Grant Thornton, CR&R and/or REESE in this Court
and served upon LFT beneficiaries on or about September 23, 2004, or
approximately seven (7) months beyond the statutory deadline. NRS §165.040(2), NRS §165.200. Exhibit 64.
182. Respondents LFT Trustees, Grant Thornton, and accountant MURPHY, under
the advice and counsel of CR&R and REESE, produced and filed
the Charge and Discharge statement and accountants' compilation report for the year 2001, 2002 and 2003 with this Court on or about February 28, 2004
(2001 and 2002) and September 23, 2004 (2003). Exhibits 58 & 64,
respectively. Said "Accountants' Compilation Report" state, in pertinent part:
"We have compiled the accompanying charge and discharge
statement - income
tax basis..."
Grant Thornton, Accountants' Compilation Report, Dec. 15, 2003
Grant Thornton, Accountants' Compilation Report, Dec. 30, 2003
[Emphasis Added]
Exhibit 58, pages # 447 & #461
"The statement and related schedules have been
prepared on the accounting basis used by the Trust for federal income tax,
...."
Grant Thornton, Accountants' Compilation Report, July 28, 2004
[Emphasis added]
Exhibit 64 page #524
183. Respondents LFT Trustees, Grant Thornton, and accountant MURPHY, knew
or should have known that a change in accounting basis by a reporting entity
may significantly affect the presentation of both financial position and
results of operations for an accounting period and the trends shown in
comparative financial statements and historical summaries and that such change or
changes should therefore be reported in a manner which will facilitate analysis
and understanding of the financial statements.
"General Disclosure - A Change in Accounting Principle
17. The nature of and justification for a
change in accounting principle and its effect on income should be disclosed in
the financial statements of the period in which the change is made. The
justification for the change should explain clearly why the newly adopted
accounting principle is preferable."
Accounting Principles Board, Opinion No. 20, §17, July 1971
184. Respondents LFT Trustees, Grant Thornton, and accountant MURPHY, while
acting under the advice and counsel of CR&R and REESE, knew
or should have known that making a change in the accounting basis from "cash
basis" to "income tax" basis without providing justification for said change
violated the pervasive accounting principle of consistency. Accounting
Principles Board, Opinion No. 20 "Accounting Changes."
185. Thus, starting in the year 2001, Respondents changed the accounting
basis from a "cash basis" for the prior years to an "income tax" basis. Such
a change in accounting basis requires adjustments to accountings for all prior
years to maintain continuity between years and maintain accuracy in reporting.
Respondents knew or should have known that this was a standard accounting requirement
to prevent the shuffling of assets between years and thereby perpetrate fraud
upon those for whom the accountings was made or intended.
186. Respondents LFT Trustees, Grant Thornton, accountant MURPHY, CR&R and/or REESE knew or reasonably should have known that Respondents are
generally required to furnish a true, correct, complete and accurate accounting
to any person having a contingent or vested, present or future, financial
interest in the trust administration. See Bogert on Trusts, supra chap.
16, Sec. 142, Duty to Render Court Accounting, pp. 537-539, NRS §165.045 & 165.020.
"...he [Trustee] should also set up book-keeping entries according
to an approved accounting system, so that the there may be at all times
available an orderly statement of the trust work .... Failure to perform these
duties may be ground for court removal of the trustee, for denying or reducing
his compensation, or for charging him with the costs of an accounting
proceeding. .... It is also stated by the courts that a breach of these duties
will cause the court to 'resolve all doubts against the trustee.'"
Bogert on Trusts, supra, p. 534.
187. Respondents LFT Trustees, Grant Thornton, accountant MURPHY, CR&R and/or REESE knew or reasonably should have known that Respondents also
have the burden of showing the correctness of the accounts. 90A C.J.S. Trusts §739.
188. Respondents LFT Trustees, Grant Thornton, accountant MURPHY, CR&R and/or REESE knew or reasonably should have known that if an objection
is made by a party to an item in the account, the burden is on the trustee to
justify it. Bogert, supra, Sec. 143, p. 541.
189. Respondents LFT Trustees, Grant Thornton, accountant MURPHY, CR&R and/or REESE knew or reasonably should have known that obscurities and
doubts in the account will be resolved against the trustee. Bogert, supra, Sec.
143, p. 541.
190. Respondents LFT Trustees, Grant Thornton, accountant MURPHY, CR&R and/or REESE knew or reasonably should have known that Respondents three
basic principles of internal controls govern sound business accounting: 1)
Segregation of duties, 2) Timeliness, and 3) Documentation.
191. Respondents LFT Trustee MURPHY, Grant Thornton, accountant MURPHY, CR&R and/or REESE, knew that they had a duty to furnish a
true, correct, complete and accurate annual accounting to any beneficiary
having any contingent or vested, present or future, financial interest in the
trust administration but only sent the LFT accountings and other communications
to the outright and income beneficiaries and failed, refused and neglected to
provide any information, accountings, reports and other legal notices to Petitioner and other LFT beneficiaries similarly situated for the period starting September 1, 1983
through March 2004.
192. Respondents LFT Trustee MURPHY, Grant Thornton, accountant MURPHY, CR&R and/or REESE, knew or should have known that they had
and have a legal obligation to timely serve true, correct, complete and
accurate annual accountings of the LFT to Petitioner and that they individually
and collectively have the burden of showing the truthfulness, correctness,
completeness and accuracy of the annual accountings. Respondents LFT Trustee MURPHY, Grant Thornton, accountant MURPHY, CR&R and/or REESE have
obstructed Petitioner's discovery of records and information regarding the LFT,
opposed Petitioner's efforts at confirming the truthfulness and validity of the
LFT's accounts that were produced by Respondents and threatened to disqualify and
alienate Petitioner and other beneficiaries from the LFT when they enquired
into the management of the LFT.
193. While knowing that they had a duty to properly and timely produce true,
correct, complete and accurate accountings for the LFT, respondents LFT Trustee MURPHY, Grant Thornton, accountant MURPHY, CR&R and REESE,
failed to perform their duties and obligations to the LFT and to LFT
beneficiaries, including but not limited to, the duties and obligations due and
owing to Petitioner.
194. Respondents LFT Trustees MURPHY, DAYTON, ROWLEY, Grant Thornton,
accountant MURPHY, CR&R and/or REESE knew or should
have known that the LFT has three Trustees, and as such, in order to effectuate
any transaction, accountings and distributions of the Trust, the Trustees must
consult with each other and determine by a majority of the Trustees how to
manage the LFT and its assets. NRS §163.110.
195. Respondents LFT Trustees MURPHY, DAYTON, ROWLEY, Grant Thornton,
accountant MURPHY, CR&R and/or REESE, knew or should
have known that one prudent means of establishing effective internal controls
is the segregation of duties with regards to the management and accountings of
the Trust.
196. LFT Trustees MURPHY, DAYTON, ROWLEY, Grant Thornton,
accountant MURPHY, CR&R and/or REESE failed, refused
and neglected to implement any policy or measures to segregate the duties of
the LFT which remained centralized in Grant Thornton and Grant Thornton's accountant MURPHY who also served as LFT Trustee and as a corporate officer of other corporations
to which LFT principal assets were sold.
197. Respondents LFT Trustees MURPHY, DAYTON, ROWLEY, Grant Thornton,
accountant MURPHY, CR&R and/or REESE, knew or reasonably
should have known that by allowing MURPHY to centralize powers, duties,
obligations, management control and accountings in MURPHY that
imprudence, mismanagement, fraud and other breaches of Trust were easier to
effect and to conceal.
198. Respondents LFT Trustees MURPHY, DAYTON, ROWLEY, Grant Thornton,
accountant MURPHY, CR&R and/or REESE, knew or should
have known that a means of establishing effective internal controls is the
timeliness of producing, filing and serving upon this Court and the LFT
beneficiaries, timely, complete, accurate, and understandable annual
accountings.
199. Respondents LFT Trustees MURPHY, DAYTON, ROWLEY, Grant Thornton,
accountant MURPHY, CR&R and/or REESE, failed, refused
and neglected to produce, file and serve the LFT's annual accounts in a timely
manner by filing the LFT's annual accountings up to three years beyond the
statutory required filing date set forth under NRS §165.040 and is required by
the LFT Trust Agreement as amended and determined by this Court. Exhibit 8.
200. While knowing that the LFT's accounts are subject to NRS §165.040 and are due to be produced and filed no later than 75 days after the end of the new
fiscal year, Respondents LFT Trustees MURPHY, DAYTON, ROWLEY, Grant Thornton,
accountant MURPHY, CR&R and/or REESE, filed their
First Intermediate Accounting of Trustees of Lear Family Trust "B" on October
14, 1987, jointly served the LFT's intermediate annual accountings for the
period of January 17, 1983 through April 30, 1987, to certain LFT beneficiaries
only, in an untimely manner, while wholly discriminating against Petitioner and
in clear violation of this Court's Order of August 23, 1982 and the laws of the
State of Nevada. NRS §165.040 and §165.045. See Figure 2 below.
FIGURE 2
Year |
Accounting Period |
Due Date |
Compilation Date |
Filing Date |
1978 |
unknown |
07/15/79 |
unknown |
unknown |
1979 |
unknown |
07/15/80 |
unknown |
unknown |
1980 |
unknown |
07/15/81 |
unknown |
unknown |
1981 |
unknown |
07/15/82 |
unknown |
unknown |
1982 |
unknown |
07/15/83 |
unknown |
unknown |
1983 |
Jan
17, 1983 - Apr. 30, 1984 |
07/15/84 |
02/14/87 |
10/14/87 |
1984 |
May
1, 1984 - Apr. 30, 1985 |
07/15/85 |
02/20/87 |
10/14/87 |
1985 |
May
1, 1985 - Apr. 30, 1986 |
07/15/86 |
03/03/87 |
10/14/87 |
1986 |
May
1, 1986 - Apr. 30, 1987 |
07/15/87 |
09/15/87 |
10/14/87 |
1987 |
May
1 - Dec. 31, 1987 |
03/15/88 |
06/29/88 |
03/20/89 |
1988 |
Jan
1 - Dec. 31, 1988 |
03/15/89 |
01/27/89 |
03/20/89 |
1989 |
Jan
1 - Dec. 31, 1989 |
03/15/90 |
01/19/90 |
03/10/90 |
1990 |
Jan
1 - Dec. 31, 1990 |
03/15/91 |
01/30/91 |
03/13/91 |
1991 |
Jan
1 - Dec. 31, 1991 |
03/15/92 |
03/31/92 |
05/01/92 |
1992 |
Jan
1 - Dec. 31, 1992 |
03/15/93 |
03/11/93 |
05/27/93 |
1993 |
Jan
1 - Dec. 31, 1993 |
03/15/94 |
04/11/94 |
07/01/94 |
1994 |
Jan
1 - Dec. 31, 1994 |
03/15/95 |
04/28/95 |
06/22/95 |
1995 |
Jan
1 - Dec. 31, 1995 |
03/15/96 |
05/20/96 |
06/11/96 |
1996 |
Jan
1 - Dec. 31, 1996 |
03/15/97 |
05/15/97 |
07/25/97 |
1997 |
Jan
1 - Dec. 31, 1997 |
03/15/98 |
06/18/98 |
07/09/98 |
1998 |
Jan
1 - Dec. 31, 1998 |
03/15/99 |
06/08/99 |
07/06/99 |
1999 |
Jan
1 - Dec. 31, 1999 |
03/02/00 |
06/06/00 |
07/31/00 |
2000 |
Jan
1 - Dec. 31, 2000 |
03/02/01 |
06/11/01 |
06/27/01 |
2001 |
Jan
1 - Dec. 31, 2001 |
03/02/02 |
12/15/03 |
03/02/04 |
2002 |
Jan
1 - Dec. 31, 2002 |
03/02/03 |
12/30/03 |
03/02/04 |
2003 |
Jan
1 - Dec. 31, 2003 |
03/02/04 |
07/28/04 |
09/23/04 |
2004 |
Jan
1 - Dec. 31, 2004 |
03/01/05 |
n/a |
50
days late & counting |
Legend: Bold = late
filing; Gray background=2 or more years filed at same time. |
201. While knowing that the LFT's intermediate annual accountings are subject
to NRS §165.030 et seq. and are therefore due to be produced and filed
no later than 75 days after the end of each fiscal year, Respondents LFT
Trustee MURPHY, Grant Thornton, accountant MURPHY, CR&R and/or REESE, filed the LFT's intermediate annual accountings for the
year 1983 on October 14, 1987, or approximately three years and three months
(1186 days) beyond the statutorily required deadline under NRS §165.040. See Figure 2.
202. While knowing that the LFT's intermediate annual accountings are subject
to NRS §165.030 et seq. and are therefore due to be produced and filed
no later than 75 days after the end of each fiscal year, Respondents LFT
Trustees DAYTON, MURPHY, ROWLEY, Grant Thornton, accountant MURPHY, CR&R and/or REESE, filed the LFT's intermediate annual
accountings for the year 1984 on October 14, 1987, or approximately two years
and three months (821 days) beyond the statutorily required deadline under NRS
§165.040. Figure 2.
203. While knowing that the LFT's intermediate annual accountings are subject
to NRS §165.030 et seq. and are therefore due to be
produced and filed no later than 75 days after the end of each fiscal year,
Respondents LFT Trustees DAYTON, MURPHY, ROWLEY, Grant Thornton,
accountant MURPHY, CR&R and/or REESE, filed the LFT's
intermediate annual accountings for the year 1985 on October 14, 1987, or approximately
one year and three months (456 days) beyond the statutorily required deadline
under NRS §165.040. See Figure 2.
204. While knowing that the LFT's intermediate annual accountings are subject
to NRS §165.030 et seq. and are therefore due to be produced and filed
no later than 75 days after the end of each fiscal year, Respondents LFT Trustees DAYTON, MURPHY, ROWLEY, Grant Thornton, accountant MURPHY, CR&R and/or REESE, filed the LFT's intermediate annual
accountings for the year 1986 on October 14, 1987, or approximately three months
(91 days ) beyond the statutorily required deadline under NRS §165.040. See Figure 2.
205. While knowing that the LFT's intermediate accountings are subject to NRS
§165.030 et seq. and are therefore due to be produced and filed no later
than 75 days after the end of the fiscal year, (fiscal year changed from May 1
- April 30 to calendar year) Respondents LFT Trustees DAYTON, MURPHY, ROWLEY, Grant Thornton, accountant MURPHY, CR&R and/or REESE,
filed the LFT's intermediate annual accountings for the year 1987 on March 20,
1989 or five days beyond the statutorily required deadline under NRS §165.040. See Figure 2.
206. While knowing that the LFT's intermediate annual accountings are subject
to NRS §165.030 et seq. and are therefore due to be produced and filed
no later than 75 days after the end of the calendar year, Respondents LFT
Trustees DAYTON, MURPHY, ROWLEY, Grant Thornton, accountant MURPHY, CR&R and/or REESE, filed the LFT's intermediate annual
accountings for the year 1991 on May 1, 1992 or approximately one and a half
months (47 days) beyond the statutorily required deadline under NRS §165.040. Exhibit 28.
207. While knowing that the LFT's intermediate annual accountings are subject
to NRS §165.030 et seq. and are therefore due to be produced and filed
no later than 75 days after the end of the calendar year, Respondents LFT
Trustees DAYTON, MURPHY, ROWLEY, Grant Thornton, accountant MURPHY, CR&R and/or REESE, filed the LFT's intermediate annual
accountings for the year 1992 on May 27, 1993 or approximately two and half
months (73 days) beyond the statutorily required deadline under NRS §165.040. See Figure 2.
208. While knowing that the LFT's intermediate annual accountings are subject
to NRS §165.030 et seq. and are therefore due to be produced and filed
no later than 75 days after the end of the calendar year, Respondents LFT
Trustees DAYTON, MURPHY, ROWLEY, Grant Thornton, accountant MURPHY, CR&R and/or REESE, filed the LFT's intermediate annual
accountings for the year 1993 on July 1, 1994 or approximately 4 months (108
days) beyond the statutorily required deadline under NRS §165.040. See Figure 2.
209. While knowing that the LFT's intermediate annual accountings are subject
to NRS §165.030 et seq. and are therefore due to be produced and filed
no later than 75 days after the end of the calendar year, Respondents LFT
Trustees DAYTON, MURPHY, ROWLEY, Grant Thornton, accountant MURPHY, CR&R and/or REESE, filed the LFT's intermediate annual accountings
for the year 1994 on June 22, 1995 or approximately three months and three
weeks (99 days) beyond the statutorily required deadline under NRS §165.040. See Figure 2.
210. While knowing that the LFT's intermediate annual accountings are subject
to NRS §165.030 et seq. and are therefore due to be produced and filed
no later than 75 days after the end of the calendar year, Respondents LFT
Trustees DAYTON, MURPHY, ROWLEY, Grant Thornton, accountant MURPHY, CR&R and/or REESE, filed the LFT's intermediate annual
accountings for the year 1995 on June 11, 1996 or approximately three months (88
days) beyond the statutorily required deadline under NRS §165.040. See Figure 2.
211. While knowing that the LFT's intermediate annual accountings are subject
to NRS §165.030 et seq. and are therefore due to be produced and filed
no later than 75 days after the end of the calendar year, Respondents LFT
Trustees DAYTON, MURPHY, ROWLEY, Grant Thornton, accountant MURPHY, CR&R and/or REESE, filed the LFT's intermediate annual
accountings for the year 1996 on July 25, 1997 or approximately four and half
months (132 days) beyond the statutorily required deadline under NRS §165.040. See Figure 2.
212. While knowing that the LFT's intermediate annual accountings are subject
to NRS §165.030 et seq. and are therefore due to be produced and filed
no later than 75 days after the end of the calendar year, Respondents LFT
Trustees DAYTON, MURPHY, ROWLEY, Grant Thornton, accountant MURPHY, CR&R and/or REESE, filed the LFT's intermediate annual
accountings for the year 1997 on July 9, 1998 or approximately four months (116
days) beyond the statutorily required deadline under NRS §165.040. See Figure 2.
213. While knowing that the LFT's intermediate annual accountings are subject
to NRS §165.030 et seq. and are therefore due to be produced and filed
no later than 75 days after the end of the calendar year, Respondents LFT
Trustees DAYTON, MURPHY, ROWLEY, Grant Thornton, accountant MURPHY, CR&R and/or REESE, filed the LFT's intermediate annual accountings
for the year 1998 on July 6, 1999 or approximately four months (113 days)
beyond the statutorily required deadline under NRS §165.040. See Figure 2.
214. While knowing that the LFT's intermediate annual accountings are subject
to NRS §165.030 et seq. and are therefore due to be produced and filed
no later than 60 days after the end of the calendar year, Respondents LFT
Trustees DAYTON, MURPHY, ROWLEY, Grant Thornton, accountant MURPHY, CR&R and/or REESE, filed the LFT's intermediate annual
accountings for the year 1999 on July 31, 2000 or approximately 5 months (152
days) beyond the statutorily required deadline under NRS §165.040. Exhibit 43 - See also Figure 2.
215. While knowing that the LFT's intermediate annual accountings are subject
to NRS §165.030 et seq. and are therefore due to be produced and filed
no later than 60 days after the end of the calendar year, Respondents LFT
Trustees DAYTON, MURPHY, ROWLEY, Grant Thornton, accountant MURPHY, CR&R and/or REESE, filed the LFT's intermediate annual
accountings for the year 2000 on June 27, 2001 or approximately 4 months (118
days) beyond the statutorily required deadline under NRS §165.040. Exhibit 45.
216. While knowing that the LFT's accounts are subject to NRS §165.040 and are due to be produced and filed no later than 60 days after the end of the
calendar year, Respondents LFT Trustees DAYTON, MURPHY, ROWLEY, Grant Thornton, accountant MURPHY, CR&R and/or REESE, filed
both their Fifteenth and Sixteenth Intermediate Accounting of Trustees of
Lear Family Trust "B" (for the years 2001 and 2002) on February 28, 2004 together
and produced and filed the LFT's Intermediate Annual Accounts for the years
2001 and 2002, in an untimely manner, in clear violation of this Court's Order
of August 23, 1982. NRS §165.040 and §165.045. Exhibit 58 - see also Figure 2.
217. While knowing that the LFT's intermediate annual accountings are subject
to NRS §165.030 et seq. and are therefore due to be produced and filed
no later than 60 days after the end of the calendar year, Respondents LFT
Trustees DAYTON, MURPHY, ROWLEY, Grant Thornton, accountant MURPHY, CR&R and/or REESE, filed the LFT's intermediate annual
accountings for the year 2001 on February 28, 2004 or approximately 2 years (729
days) beyond the statutorily required deadline under NRS §165.040. Exhibit 58 - see also Figure 2.
218. While knowing that the LFT's intermediate annual accountings are subject
to NRS §165.030 et seq. and are therefore due to be produced and filed
no later than 60 days after the end of the calendar year, Respondents LFT
Trustees DAYTON, MURPHY, ROWLEY, Grant Thornton, accountant MURPHY, CR&R and/or REESE, filed the LFT's intermediate annual
accountings for the year 2002 on February 28, 2004 or approximately 1 year (364
days) beyond the statutorily required deadline under NRS §165.040. Exhibit 58 - see also Figure 2.
219. While knowing that the LFT's intermediate annual accountings are subject
to NRS §165.030 et seq. and are therefore due to be produced and filed
no later than 60 days after the end of the calendar year, Respondents LFT
Trustees MURPHY, DTC, TUCKER, Grant Thornton, accountant MURPHY, CR&R and/or REESE, filed the LFT's intermediate annual accountings for the
year 2003 on September 23, 2004 or approximately seven months (206 days) beyond
the statutorily required deadline under NRS §165.040. Exhibit 64.
220. While knowing that the LFT's intermediate annual accountings are subject
to NRS §165.030 et seq. and are therefore due to be produced and filed
no later than 60 days after the end of the calendar year, Respondents LFT
Trustee DAYTON, MURPHY, ROWLEY, DTC, TUCKER, Grant Thornton,
accountant MURPHY, CR&R and/or REESE, have failed and
neglected to file the 2004 accountings to date and are currently approximately
seven weeks (over 54) days beyond the statutorily required deadline under NRS §165.040. See Figure 2.
221. Respondents LFT Trustees DAYTON, MURPHY, ROWLEY, Grant Thornton,
accountant MURPHY, CR&R and/or REESE, knew or
reasonably should have known that they have an affirmative duty to disclose and
produce Trust information to all of the LFT beneficiaries.
222. Respondents have continuously obstructed this Petitioner's access to LFT
books, records, accounts and information, have engaged in dilatory practices
and have significantly increased the cost for Petitioner to obtain said
documents while knowing that they had imprudently and abusively managed and
expended LFT Trust funds and improperly used Trust funds and wrongfully
concealed, disposed and distributed valuable Trust assets.
223. After engaging in extensive and costly litigation against LFT
beneficiary Shanda Lear-Baylor and imprudently expending large sums of LFT
assets in opposing an audit of the LFT, Trustees retained the services of Barnard,
Vogler & Co. (BV) to provide a very limited and incomplete
review of the LFT accountings and only for the years 1996 to 2000.
224. Respondents LFT Trustees DAYTON, MURPHY, ROWLEY, Grant Thornton,
accountant MURPHY, CR&R, REESE and BV, were all
paid from LFT funds and assets knew or should have known that there are six
fiduciary accounting principles that are summarized as follows:
Principle I. Accounts should be stated in a manner
that is understandable by persons who are not familiar with practices and
terminology peculiar to the administration of estates and trusts.
Principle II. A fiduciary account shall begin with a
concise summary of its purpose and content.
Principle III. A fiduciary account shall contain
sufficient information to put the interested parties on notice as to all
significant transactions affecting administration during the accounting period.
Principle IV. A fiduciary account shall include both
carrying values -- representing the value of assets at acquisition by the
fiduciary -- and current values at the beginning and end of the accounting
period.
Principle V. Gains and losses incurred during the
accounting period shall be shown separately in the same schedule.
Principle VI: the account shall show significant
transactions that do not affect the amount for which the fiduciary is accountable.
Uniform Fiduciary Accounting Principles
<click here, then scroll down to "Fiduciary Accounting Principles>
225. On or about June 28, 2004 BV stated in a report to LFT Trustees
that:
"There are six principles stated in the Fiduciary Accounting
Principles section of the Uniform Fiduciary Accounting Principles and Model
Account Formats. The objectives of these principles are to provide maximum
clarity, full disclosure, and complete description and explanation of all
events."
BARNARD, VOGLER & Co. report to LFT Trustees,
June 28, 2004, page 1, §5, Exhibit 64, p.#520
226. Respondents LFT Trustees, Grant Thornton, accountant MURPHY, CR&R, REESE, and BV did not apply and use all of the known recognized
principles and standards related to fiduciary accounting.
Principle I. Accounts should be stated in a manner
that is understandable by persons who are not familiar with practices and
terminology peculiar to the administration of estates and trusts.
Uniform Fiduciary Accounting Principles
227. In June 2004 Petitioners sought expert advice from Professor of Law, Robert Whitman, Esq., Counselor at Law, a recognized authority on Fiduciary
Accountings and co-author of "Fiduciary Accounting and Trust Administration
Guide", published by the American Law Institute and the American Bar
Association. Petitioners asked whether the LFT Trustees can satisfy their
fiduciary obligation to account to remaindermen by presenting the 2001 and 2002 Charge & Discharge Statements. In his reply letter of June 14, 2004
to Patrick Christopher Lear, Prof. Whitman writes:
"The 2001 and 2002 Lear Family accountings are totally
inadequate for the purpose of informing you concerning the stewardship of
the Trustees. Accordingly, until the Trustees properly account to you the
Trustees stand in breach of their fiduciary duties to you. The Trustees are
unable to gain any protections against you based on the accountings they have
presented you."
Prof. Robert Whitman, Esq. letter of June 14, 2004 to
Petitioner
[Emphasis added]
Exhibit 63, p. #486
228. Respondents LFT Trustees DAYTON, MURPHY, ROWLEY,
DTC, TUCKER, Grant Thornton, accountant MURPHY, CR&R and/or REESE, knew that the methodology used by the Trustees to account for the
LFT in the 2003 Charge and Discharge Statement violates Principle I of the
Uniform Fiduciary Accounting Principles and that said accounts are not
understandable by other persons who are not familiar with practices and
terminology peculiar to the administration of estates and trusts.
"The Co-Trustees have elected to omit substantially all of the
disclosures ordinarily included in the charge and discharge statement prepared
on the income tax basis of accounting. If the omitted disclosures were
included in the charge and discharge statement, they might influence the user's
conclusions about the Trust's assets, liabilities, net assets, revenue and
expenses. Accordingly, this charge and discharge statement is not designed
for those who are not informed about such matters."
17th Intermediary Annual Account, filed September 23, 2004
2003 "Accountants' Compilation Report" by Grant
Thornton,
dated July 28, 2004.
[Emphasis added]
Exhibit 64, p. #524
229. Respondents knew that the 2003 summary statements are substantially in
the same format and similarly vague and deficient as the summary statements for
years 1983 through 2002.
230. Respondents LFT Trustees DAYTON, MURPHY, ROWLEY, DTC, TUCKER, Grant Thornton, accountant MURPHY, CR&R and/or REESE,
knew that the vague methodology used would prevent Petitioner and other LFT
beneficiaries from understanding the LFT's activities, annual accountings and
management thus furthering the concealment of their mismanagement and
misaccountings of the LFT.
Principle II. A fiduciary account shall begin with a
concise summary of its purpose and content.
Uniform Fiduciary Accounting Principles
231. While knowing that a fiduciary account under the standard principles
must begin with a concise summary of its purpose and content, Respondents LFT
Trustees DAYTON, MURPHY, ROWLEY, Grant Thornton, accountant MURPHY, CR&R and/or REESE, failed, refused and neglected to include
the required concise summary of purpose and content with any of the accounts
presented to this Court, singularly and separately, for the years 1983, 1984,
1985, 1986, 1987, 1988, 1989, 1990, 1991, 1992, 1993, 1994, 1995, 1996, 1997,
1998, 1999, 2000, 2001, 2002, and 2003.
Principle III. A fiduciary account shall contain
sufficient information to put the interested parties on notice as to all
significant transactions affecting administration during the accounting period.
Uniform Fiduciary Accounting Principles
232. While knowing that a fiduciary account under the standard principles
must contain sufficient information to put the interested parties on notice as
to all significant transactions affecting administration during the accounting
period, in accordance with Principle III of the Uniform Fiduciary Accounting
Principles, Respondents LFT Trustees DAYTON, MURPHY, ROWLEY, Grant Thornton, accountant MURPHY, CR&R and/or REESE, since
1989 when Grant Thornton started producing the LFT compilations, and each and every
year thereafter, continuously reduced and failed to include the specificity
required for the Intermediate Annual Accountings and presented the incomplete
and inaccurate annual accountings to the Court and served them only upon
certain LFT beneficiaries while excluding Petitioner and other beneficiaries
similarly situated.
233. Respondents LFT Trustee MURPHY, Grant Thornton, accountant MURPHY, CR&R and/or REESE's Intermediate Annual accountings for the
years up to and including 2000 did not include a schedule of "Remainderman
Account Transactions" or any reasonable and understandable equivalent, which
should have showed the activity pertaining to the equitable share of the
remaindermen beneficiaries. The 2001, 2002 and 2003 Intermediate Annual
accountings, prepared on or about December 2003 have said schedule of
"Remaindermen Account Transactions" or any equivalent.
234. Respondents LFT Trustee MURPHY, Grant Thornton, accountant MURPHY, CR&R and/or REESE's Intermediate Annual accountings for the
years 2001 and 2002 include some detail of the distributions made to the LFT's outright and income beneficiaries for each land parcel sold by LFT Trustees during the same
years. The Intermediate Annual accounting for the year 2003 does not show any detail of distribution or allocation. Neither this Petitioner nor any other LFT
beneficiary is able to determine and verify whether the allocations and distributions by Respondents LFT Trustee MURPHY, Grant Thornton, accountant MURPHY, CR&R and/or REESE to the LFT outright, income and remaindermen beneficiaries
was made in accordance with the terms and conditions of the LFT without inside and further information. Said Respondents including DTC & TUCKER drafted, compiled and filed the 2003 Intermediate Annual Accounting with the
Court on September 23, 2004 while knowing that said accounting did not meet and
was not done in accordance with the Uniform Principal and Income Act.
235. While knowing that a fiduciary account under the standard principles
must contain sufficient information to put the interested parties on notice as
to all significant transactions affecting the administration during the
accounting period in accordance with Principle III of the Uniform Fiduciary
Accounting Principles, Respondents LFT Trustee MURPHY, Grant Thornton,
accountant MURPHY, CR&R and/or REESE, in the Annual
Intermediary Accounts, singularly and separately, for the years 1983, 1984,
1985, 1986, 1987, 1988, 1989, 1990, 1991, 1992, 1993, 1994, 1995, 1996, 1997,
1998, 1999, 2000, 2001, 2002, and 2003, failed, neglected and refused to
present a comprehensive report of the separate and conflicting interests of the
outright, income and remaindermen beneficiaries thereby preventing LFT
beneficiaries from protecting their interests in the LFT from misallocation and
misdistribution, and against mismanagement, nonfeasance, misfeasance and
malfeasance of LFT Trustees.
Principle IV. A fiduciary account shall include both
carrying values -- representing the value of assets at acquisition by the
fiduciary -- and current values at the beginning and end of the accounting
period.
Uniform Fiduciary Accounting Principles
236. While knowing that a fiduciary account under the standard principles
must include both carrying values and current values at the beginning and end
of the accounting period, in accordance with Principle IV of the Uniform
Fiduciary Accounting Principles, Respondents LFT Trustee MURPHY, Grant Thornton,
accountant MURPHY, CR&R and/or REESE, failed, refused
and neglected to include current values for LFT's assets in any of the accounts
presented to this Court, singularly and separately, for the years 1983, 1984,
1985, 1986, 1987, 1988, 1989, 1990, 1991, 1992, 1993,
1994, 1995, 1996, 1997, 1998, 1999, 2000, 2001, 2002, and 2003.
Principle V. Gains and losses incurred during the
accounting period shall be shown separately in the same schedule.
Uniform Fiduciary Accounting Principles
237. While knowing that a fiduciary account under the standard principles
must show gains and losses incurred during the accounting period separately on
the same schedule, in accordance with Principle V of the Uniform Fiduciary
Accounting Principles, Respondents LFT Trustee MURPHY, Grant Thornton,
accountant MURPHY, CR&R and/or REESE, failed, refused
and neglected to account for gains and losses during the accounting period
separately on the same schedule and engaged in vague and deceptive accounting
practices to conceal excessive write-offs by naming and identifying at least one asset by two different names on separate schedules, placing the asset on one schedule at a
particular value and depreciating
said asset by an amount exceeding its entire stated value
on a different and separate schedule. By this artifice, misrepresentation and
deceptive accounting practice, Respondents LFT Trustee MURPHY, Grant Thornton,
accountant MURPHY, CR&R and/or REESE were able to hide
substantial sums not accounted for and violated one of the most elementary
accounting principle, that no write-off against a particular asset can exceed
the stated value of that asset.
238. Petitioner has reasonable knowledge of this deceptive management and
accounting practice and incorporates herein section 6.10.3 - Write-Offs
exceed value of asset in its entirety.
Principle VI: the account shall show significant
transactions that do not affect the amount for which the fiduciary is accountable.
Uniform Fiduciary Accounting Principles
239. While knowing that a fiduciary account under the standard principles
must show significant transactions that do not affect the amount for which the
fiduciary is accountable, in accordance with Principle VI of the Uniform
Fiduciary Accounting Principles, Respondents LFT Trustee MURPHY, Grant Thornton,
accountant MURPHY, CR&R and/or REESE, failed, refused
and neglected to account for significant transactions that do not affect the
amount for which the fiduciary is accountable.
240. Transactions such as the purchase of an investment, receipt of a stock
split or change of a corporate name do not alter the total funds for which a
fiduciary is accountable, but must be shown in order to permit analysis and an
understanding of the administration of the Trust funds. These can be best
shown in information schedules. One schedule should list all investments made
during the accounting period. It should include those subsequently sold as
well as those still on hand. Frequently the same money will be used for a
series of investments. Therefore, the schedule should not be totaled in order
to avoid giving an exaggerated idea of the size of the fund. Uniform Fiduciary
Accounting Principles, Principle VI, Commentary; see also §165.040(c).
241. While knowing that a fiduciary account under the standard principles
must show significant transactions that do not affect the amount for which the
fiduciary is accountable in accordance with Principle VI of the Uniform
Fiduciary Accounting Principles, Respondents LFT Trustee MURPHY, Grant Thornton,
accountant MURPHY, CR&R and/or REESE, failed and
neglected to list numerous transactions that do not affect the amount for which
the fiduciary is accountable including but not limited to investments, stock
splits, land zoning or rezoning, easements granted or provided, and
environmental reclassification of land parcels during the accounting period in
their intermediate annual accountings presented to this Court, singularly and
separately, for the years 1983, 1984, 1985, 1986, 1987, 1988, 1989, 1990, 1991, 1992, 1993,
1994, 1995, 1996, 1997, 1998, 1999, 2000, 2001, 2002, and 2003. §165.040(c).
242. Respondents Trustees, Grant Thornton, accountant MURPHY and CR&R and/or REESE knew or should have known that compilations, as opposed to
reviews or complete and accurate audits are performed by accountants for
clients who are incapable of presenting the accounts of the entity in good form.
243. The Charge and Discharge Statements presented by Respondent Trustees, Grant Thornton,
accountant MURPHY and CR&R and/or REESE are known as
and fit only at best within the lowest standard of accounting categories referred
to as compilations. The production of the 1992 Charge and Discharge Statement
and each and every Charge and Discharge Statement produced by Respondents Grant Thornton and accountant MURPHY under the advice and counsel of CR&R and/or REESE, thereafter, contain the following or similar statement:
"We have compiled the accompanying charge and discharge
statement and related schedules for the William P. Lear Family Trust for the
period January 1, 1992 to December 31, 1992, in accordance with Statement on
Standards for Accounting and Review Services [SSARS] issued by the American
Institute of Certified Public Accountants."
1992 Charge & Discharge Statement
[Emphasis added]
Exhibit 29, page #184
244. Respondent Trustees, Grant Thornton, accountant MURPHY and CR&R and/or REESE knew or should have known that Statement on Standards
for Accounting and Review Services [SSARS] No. 1 establishes
the standards by which compilation and review engagements are performed under
existing standards and that a CPA must at least compile financial statements
that he or she submits to a client or others, and report on them accordingly. The
requirements for a SSARS compilation include:
- Establishing an understanding with the entity regarding
the services to be performed and the report the accountant expects
to render.
- Possessing or obtaining knowledge about the accounting
principles and practices of the industry in which the entity
operates that will enable the accountant to compile financial
statements that are appropriate in form for an entity operating in
that industry.
- Possessing or obtaining a general understanding of the
nature of the entity's business transactions, the form of its
accounting records, the stated qualifications of its accounting
personnel, the accounting basis on which the financial statements
are to be presented, and the form and content of the financial
statements.
- Reading the compiled financial statements and considering
whether they appear to be appropriate in form and free of obvious
material errors.
- Reporting on the financial statements.
|
SSARS No. 1
245. Respondents Grant Thornton and accountant MURPHY and LFT Trustee MURPHY knew or should have known how to present accounts in good form to this Court
and to LFT beneficiaries.
246. Respondent LFT Trustee MURPHY failed, refused and neglected to
produce accounts in good form within the scope of his duties, contracted with
himself and Grant Thornton to perform such compilations, performed the compilations with
complete indifference and disregard for the principle standards and thereafter misrepresented to this Court and to the LFT's beneficiaries that the compilations conform
with the standards.
247. Respondents Grant Thornton and accountant MURPHY knew or should have
known that the Charge and Discharge Statements produced and filed with this
Court and served upon certain LFT beneficiaries did not comply with the Statement
on Standards for Accounting and Review Services No. 1 in
contradiction with Grant Thornton's statement and misrepresentation in the letter of
transmittal of the Charge and Discharge Statement for each year, separately,
since March 11, 1993.
248. Respondents Grant Thornton and accountant MURPHY knew or should have
known of the requirements of SSARS Nº 1 applicable to LFT charge and
discharge statements but failed, neglected and refused to apply the standards of SSARS Nº 1 and did not apply the accounting methodologies as they
relate to Trusts - see SSARS No. 1 (b), Principles of Fiduciary Accounting,
and NRS §165.030 through 165.120, inclusive.
249. While possessing knowledge
about the accounting principles as they relate to Trusts, while possessing a
keen understanding of the nature of the LFT's business transactions, while
possessing a keen understanding of the accounting basis on which the financial
statements are to be presented, and while preparing the tax returns for the
LFT, Respondents Grant Thornton and accountant MURPHY failed, neglected and refused to properly read the
compilations for material errors and willfully overlooked material errors in
the compilations - see SSARS Nº 1 (d), Principles of Fiduciary
Accounting, NRS §165.030 through
165.120, inclusive. Petitioner incorporates herein section 6.10.3 - Write-Offs exceed value of asset in its entirety.
