Michael Jackson was hired in January as the new Operations Manager for "Just Collect It, Inc", a Texas toy assembly plant also known as JCI. As the Operations Manager Michael's duties included contract negotiations, accounts receivables & payables, Human Resources & scheduling, shipping & receiving and purchasing. Michael recognized that the duties agreed upon were customarily performed by 3-5 people, and or 3-5 departments, but due to budget concerns JCI was convinced that the right Operations Manager would be effective in all of the assigned tasks. Michael was aware that the 5 previous Operations Managers were overwhelmed with the job duties and resigned within 6 months of being hired.

Michael was informed upon hiring that JCI did not have a Contracts, Account Receivable, HR, Shipping and or Purchasing department or positions because of budget restrictions and they had absolutely no intention of filing the positions. Michael was convinced that he had the solution to succeed at each duty.As operations manager Michael would receive an annual salary of $250,000.The collective salary for all 4 of the positions needed would be over $250,000 for the requisites experience needed for the job.The position would require education and actual work experience for several years to be proficient.

Once Michael took over the leadership role, while being fully aware of the corporation's decision not to hire any additional labor, he made the executive decision to hire 4 inexperienced recent high school graduates to handle some of the task that was assigned to him.Michael had success in the past hiring "fresh minds" as he calls it. He enjoyed training young employees in the methods he preferred them to use.Hence, he hired Carl to handle the contracting, Alice for general accounting and Accounts receivable, Harry for HR demands and scheduling and Paula for purchasing. Michael retained all the other duties and felt his time would be best spent keeping a close eye on the new hires and overseeing the assembly workers.

To offset budget concerns Michael used $72,000.00 of his $250,00000 and paid the new hires directly from his personal account.Their employment setup provided for pay only, they did not

receive any health, retirement, 401K or workman compensation.They did not have any federal or social security withholdings. They were scheduled to receive their full hourly rate without deduction every Friday. Each employee would receive $18,000.00 annually in pay. The experienced professional would have commanded $62,500.00 for the position.

On Alice's first day on the job she noticed that Company X was had 2 years of outstanding accounts receivables to JCI totaling $10,000.00. She knew Company X was a start-up company and wanted to give them a fresh start as Xavier the owner of the company just happened to be her favorite uncle. The second week on the job Alice created an Accounting statement which showed that Company X had paid his account JCI in full. Subsequent to Alice creating the accounting statement JCI applied for a $1,000,000.00 with Bank Generous. Bank Generous used the Accounting statement that Alice created to approve the loan to JCI.Their approval was based on numbers that were off by $10,000.00.The bank president informed the JCI executives that they just barely fit the requirements for the loan. They also mentioned that had their numbers be off by as much as $100, they would not have qualified for the loan.

1.When Alice wrote off the debt owed by her uncle, did she violate any laws? If so, what laws did she violate?

2.Will Company X be required to repay the debt if JCI attempt to overturn Alice's actions of excusing Company X $10,000.00 debt?