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Capitalbanc Corporation

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Crsp,2.4 CnpnarBeruc ConpoRATroN ln 1975, Carlos Cordova and several other investors founded Capital National Bank (CNB) in Bronx, New York.r Cordova was appointed the bank 's chief executive officer and chairman of the board. Over the next several years, the bank opened five branch offices in the New York City metropolitan area. CNB catered primarily to the banking needs of Hispanic-American and immigrant communities in New York City. In 1986, Cordova and the other owners of CNB formed CapitalBanc Corporation, a publicly owned bank holding company registered with the Securities and Exchange Comrnission (SEC).Throughout its entire existence,the principal operating entity controlled by CapitalBancwas CNB. Cordova assumed the titl.ps …show more content…

Cordova openedthe locked cabinetin the main vault in the presence the of staff auditors. The auditors then oroceededto count the $2.7million that had not been counted on December 29,1987. All of the cash was present.None of the other cash funds of the 177thStreetBranch or other CNB brancheswas counted by the Arthur Andersen auditors on January14, 1983. After counting the segregated cash,the staff auditors asked Cordova n 'hy he kept those funds in the locked cabinet. Cordova replied that a customer who casheda large certificateof deposit insistedon having the funds availableon demand at all times.According to Cordova,the customerintended to use the funds to buy foreign currencieswhen market conditions becamefavorable.The volatility of the foreign currencymarket dictated that the customerhave immediateaccessto the funds on a daily basis. Near the completion of the 1987 CapitalBancaudit, Lukenda reviewed the workpaper that documentedCordova 's explanationfor the $2.7million of segre- 2. Securities and Exchnnge Commission,Accounli g ond Audiling Enfolcemutt Relcas? 458, No. 28 June 1993. CASE2.4 CAP]TALBANC CORPOFATIOI{ 195 gated cash. Lukenda then discussedthat

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