17. In August 1986, Weiss and Treglia purchased all of Promo-Net's stock.
18. Weiss, through his control of Promovision, exercised, indirectly, significant control over Promo-Net. Promo-Net had no sources of income or credit independent of Promovision. Promo-Net never had its own billing system in place. When Promo-Net needed cash for operations, Rizzuto would prepare a list of payables and forward it to Promovision for review and approval by Treglia. Rizzuto and Katz understood that Weiss and Treglia's approval was needed for all expenditures. Although Rizzuto and Katz theoretically had check signing authority, in practice, pre-approval by Promovision of all checks, except net payroll checks was required. Rizzuto, for example, was not permitted to write himself checks for reimbursement for petty cash because Weiss instructed him to get pre-approval for such checks from Promovision.
19. Weiss directed Promo-Net to move into the former offices of Promovision in Jamaica, Queens. The lease was held in Promovision's name and Promovision paid the rent and utilities.
20. The managerial groups at Promo-Net and Promovision were small and informally run. The testimony of Katz and Rizzuto, which I credit, was that the officers and employees of Promo-Net understood that Weiss was in charge and that overall authority for the direction, operation and financial control of the company rested with Weiss and Treglia. Rizzuto and Katz further testified that Promo-Net's officers and employees further understood that to incur Weiss' displeasure was to risk discharge.
21. Weiss had access to Promo-Net's books and records which were maintained at Promovision's headquarters on Seaview Boulevard in Port Washington, New York where it performed accounting functions for Promo-Net. Bookkeeping and accounting functions for Promovision and its subsidiaries were done there under the supervision of Treglia. Abdin Aly worked under Treglia at Promovision. Among Aly's responsibilities was the preparation of tax returns for Promovision's subsidiaries including Promo-Net. These returns were signed by Aly and Treglia. Weiss rarely involved himself in decisions about which specific bills to pay, had no involvement in the daily operations of Promo-Net, and rarely if ever, visited its premises.
22. Katz, Weiss and Treglia were authorized to sign checks on Promo-Net's account beginning about December 19, 1985. Katz was authorized to sign checks up to $ 999; he could also sign checks with a co-signature for checks in excess of that amount. Weiss had, but never exercised, check co-signing authority at Promo-Net. Beginning on or about May 12, 1986, Rizzuto, like Katz, was authorized singly to sign checks up to $ 999 but needed a co-signature for checks in excess of that amount.
23. Katz and Rizzuto ran Promo-Net's operations on a daily basis and oversaw Promo-Net's employees. Rizzuto handled marketing and product development. Katz provided technical direction for the company, participated in discussions on technical matters and signed business letters on Promo-Net's behalf.
24. Katz was responsible for providing information as to the number of hours each employee had worked each week to Paychex, Inc., which prepared Promo-Net's employee paychecks. All of the checks were for amounts less than $ 999, and the funds were drawn from Promo-Nets bank account. Katz generally signed the paychecks. Katz also advised Promovision of the net payroll from a printout supplied by Paychex, Inc. Pay stubs accompanying the checks stated the amounts withheld for FICA and withholding taxes.
25. Grubman, Promo-Net's comptroller, wrote to Weiss on February 6, 1986 voicing serious concern over a number of unfulfilled promises apparently made by Weiss to induce Grubman to join Promo-Net. In addition, Grubman expressed his concern that Promo-Net was indebted to the IRS and New York State for approximately $ 18,000 in payroll taxes:
"Of no small consequence, I am also very concerned that as of this writing, Promo-Net is indebted to the IRS and New York State for approximately $ 18,000 in payroll taxes. I cannot take this lightly because Richard Katz and myself are both officers of Promo-Net and face personal liability.