1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 5901 GREEN VALLEY CIRCLE 3 CULVER CITY, CALIFORNIA 4 5 6 7 8 REPORTER'S TRANSCRIPT 9 SEPTEMBER 22, 2009 10 11 CORPORATE FRANCHISE AND PERSONAL INCOME TAX HEARING 12 APPEAL OF 13 ANDRA R. SACHS 14 NO. 446027 15 AGAINST PROPOSED ASSESSMENT OF 16 ADDITIONAL TAX 17 18 19 20 21 22 23 24 25 Reported by: Juli Price Jackson 26 CSR No. 5214 27 28 1 1 P R E S E N T 2 For the Board Betty T. Yee of Equalization: Chair 3 Judy Chu 4 Vice-Chair 5 Bill Leonard Member 6 Michelle Steel 7 Member 8 Marcy Jo Mandel Appearing for John 9 Chiang, State Controller (per Government Code 10 Section 7.9) 11 Diane G. Olson Chief, Board 12 Proceedings Division 13 For Board of Amy Kelly 14 Equalization Staff: Staff Counsel 15 16 17 For Franchise Tax Christopher Haskins 18 Tax Counsel: Tax Counsel 19 Ronald Hofsdal Tax Counsel 20 For Appellant: Walter Weiss 21 Attorney 22 Andra R. Sachs Taxpayer 23 Bradford Sachs, Witness 24 Lesley Summers, Witness 25 Nina Lifschultz 26 27 28 ---oOo--- 2 1 5901 GREEN VALLEY CIRCLE 2 CULVER CITY, CALIFORNIA 3 SEPTEMBER 22, 2009 4 ---oOo--- 5 MS. YEE: Next case? 6 MS. OLSON: Our next item is B4, Andra R. 7 Sachs. 8 Please come forward. 9 MS. YEE: Ms. Kelly? 10 MS. KELLY: The issue in this appeal is whether 11 Appellant was a California resident at the time she 12 received the proceeds from her sale of $9 million worth 13 of Flashcom stock on the apparent February 11th, 2000 14 sale date. 15 MS. YEE: Thank you. 16 Good afternoon. 17 MR. WEISS: Good afternoon. 18 MS. YEE: Thank you for your patience. 19 If you can pull the microphone right up in 20 front of you so we can hear you? 21 Introduce yourselves for the record and you 22 have ten minutes. 23 MR. WEISS: Good afternoon. Walter Weiss 24 appearing for the Petitioner, Andra Sachs. On my left 25 is Ms. Sachs. 26 And also in the courtroom are two witnesses, if 27 we have time, Mr. Brad Sachs and Ms. Lesley Summers, who 28 are -- who have submitted affidavits. And if the Board 3 1 would like to question them, they are here and 2 available. 3 MS. YEE: Very well. Please proceed. 4 TXPYR@@: Okay. This case involves -- the 5 issue here is whether Ms. Andra Sachs was a resident or 6 domicile of California in the year 2000. 7 I think the sale date of the shares was, I 8 believe, either March or April, not February. But, in 9 any event, to give you a little bit of background, 10 Ms. Sachs had a very rough 1999. In May of 1999 she 11 lost a minor child, a tragic accident. In August of 12 1999 she was ousted from Flashcom, the company which she 13 was a founder, along with her ex-spouse. She was 14 forcibly ousted. And in November of 1999, I think the 15 coup de grace was she had a marital separation from her 16 husband. And at that time she made up mind that she had 17 had enough of California. She had enough problems here 18 and she decided to leave California on a permanent 19 basis. 20 So, she relocated to Nevada. And she resided 21 throughout the year 2000 with her mother-in-law. And 22 on -- strange as it may seem, she had a friendly 23 relationship with her mother-in-law, her husband's 24 mother, despite the forcible breakup. She had joint 25 custody of her two children, who stayed in California. 26 Her estranged spouse also stayed in California. And 27 Ms. Sachs went on to a new life in Nevada. She spent 28 not all of her time in Nevada, she spent time also in 4 1 Florida and in Hawaii. 2 In Nevada she received a Nevada driver's 3 license. She made an offer to buy a house up in 4 Northern Nevada up in the Reno area that was in escrow, 5 it fell out of escrow. That was around early '99 -- 6 early 2000. She ultimately acquired -- she also made an 7 offer to buy a house in Las Vegas, which was built in 8 2000. She ultimately acquired title to it in 2001. 9 She acquired a house in Hawaii and spent 10 several months in Hawaii in 2000, as well, because she 11 looked at Hawaii as a possible place to relocate. 12 And she also spent some time in Florida. She 13 actually acquired title to the Hawaii property in 2000. 14 So, she spent approximately 75 percent of the 15 time outside of California. And -- but the key thing 16 here, her domicile, she did not have the intent to come 17 back to California. She only came back here to, 18 obviously attend to certain business activities she had 19 or she still had owned some real property here and she 20 also came back here to see her children. She came back 21 approximately twice a month, but she did not have the 22 intent to relocate here and -- from there. 23 I want to -- I guess there was some confusion 24 on my part. I want to bring tot he Board's attention 25 some additional authority from my position. I thought I 26 could submit this as an exhibit and I offer it if the 27 Board will accept it even. But there is a few cases 28 that are similar that I want to at least cite to the 5 1 Board, bring to the Board's attention where a person 2 such as Mrs. Sachs, even though they have business 3 connections in California and there are still 4 connections here, they were held to be nonresidents of 5 California for income tax purposes. 6 I cite a case, the Appeal of Stephen D. Bragg, 7 in 2003. That's Bragg, B-R-A-G-G, and Stephen is 8 S-T-E-P-H-E-N. And my cite is CCH, California Tax 9 Reports, Section 15-110.266. And Bragg involved a 10 situation where a taxpayer had left California and, as 11 in Mrs. Sachs' case, she conducted her business 12 activities outside of California. She was an investor. 13 She was ousted from Flashcom and she made her money 14 dealing with investments. She had several Nevada 15 entities already that were formed prior to her locating 16 in Nevada. She had Max Singer Limited Partnership that 17 owned real estate. She had Marlene Moss Trust, Inc. 18 She had a company, Minority Electronics. And she had a 19 company called High Tech Online, Inc., all Nevada 20 entities. 21 And she basically worked -- she was a -- what 22 you call you a techie. She worked with her -- you know, 23 her company was one of the founders of the broadband 24 concept. So, she basically -- I'm sorry, not broadband, 25 but D. S. L. and she basically used her computer and 26 performed her activities out there and really had no 27 business activities in California other than attending 28 to things that were already there. And that -- 6 1 obviously, when you break up from your spouse, it's very 2 hard to divide everything up and divide up assets in one 3 fell swoop. It takes time. 4 So, in addition to the Bragg case, which I 5 cited, Petitioner also cites as authority a case, Fred 6 C. Klemp, F-R-E-D C. K-L-E-M-P, a 1975 case, CCH 7 California Tax Reports, Paragraph 1 -- 8 Section 15-110.557 where basically the California court 9 overruled the Board, the California Superior Court 10 overruled the Board and held taxpayer had a closer 11 connection with Illinois, despite owning a home in 12 California. 13 And in Mrs. Sachs' case, she did own a home in 14 California, but she did not reside there. Her 15 ex-spouse, Mr. Sachs resided there. But title was in 16 both of their names. And I'm not -- you know, it's -- 17 you know I have to make this clear to you -- to the 18 Board as well. 19 And a final case I cite, which is even more 20 similar, Raymond H., R-A-Y-M-0-N-D H., and Margaret, 21 M-A-R-G-A-R-T (sic) R., Berner, B-E-R-N-E-R, a 2000 case 22 and the cite is CCH Tax Reports, Section 15.11575, 23 where the Board relied on affidavits by friends, family 24 and business associates to believe the taxpayer resided 25 or was domiciled outside of California. Here, as part 26 of the record, there are four affidavits. There is 27 Ms. Sachs' affidavit, she's here; Mr. Sachs, her 28 ex-husband; Miss Nina Lifschultz and Lesley Summers, 7 1 that verify that Miss Sachs lived outside of California. 2 She resided in -- near northern Las Vegas and near 3 Summerlin with her -- you know, her mother-in-law. 4 Unfortunately -- you know, I'd love to have her 5 mother-in-law here to testify, but she's deceased. So, 6 my best witness I can't bring here. But, anyway -- so, 7 that -- that verifies that, these people will verify her 8 location. And those are from there. 9 In addition -- let's see, what else? Miss -- 10 there's a -- the Franchise Tax Board has assessed a 11 penalty of over $50,000. And I am not really -- in the 12 briefing the petition wasn't spelled out, but I want to 13 make it clear on the penalty issue, if the Board rules 14 against taxpayer for any reason, and I want to make the 15 penalty issue clear, that Ms. Sachs did not do this on 16 her own. She relied on the advice of her CPA, Ken 17 Lorin, who had been her CPA for over 20 years. That's 18 L-O-R-I-N, Ken Lorin. And it was actually, she -- 19 Mr. Lorin gave her the idea to leave California. I 20 guess she explained the situation and she moved. She 21 discussed this with him. That wasn't the reason why she 22 left, but, you know, it definitely was an issue. She 23 relied on Mr. Lorin's advice, fully disclosed all the 24 issues to Mr. Lorin and he filed the, you know, non -- 25 this nonresident return for her. So, you know, it was 26 her regular CPA. He was a competent CPA. He's been in 27 business a long time. It wasn't some newcomer she went 28 to just to get a return done. 8 1 So, essentially, those are my issues. 2 Ms. Sachs wants to, you know, speak. You're welcome to 3 add things I missed. 4 MS. SACHS: Mr. Weiss did a very good job in 5 kind of telling the story. And I just want to reiterate 6 that 1999 was absolutely the most horrific, worst year 7 of my life and I was very glad to get out of California 8 after that year. And I kind of had to regroup and kind 9 of, you know, get myself together again. And it was 10 good that I left because, you know, I had a chance to 11 kind of build billed my strength. I don't know how many 12 of you have been through bad divorces and, you know, 13 trauma in your life, but it -- I needed to get out of 14 California. 15 And I spent at lot of time relaxing in Hawaii 16 and most of the time in Nevada. And Nevada really did 17 kind of get my mind off of all of the problems and I, 18 you know, I still go to -- I am still living most of the 19 time in Nevada. I'm in kind of a relaxing golf course 20 setting over there and, you know, I was not here in 2000 21 other than to come back every couple weeks to visit my 22 kids. And I brought them out there in the summers. 23 Whenever they had vacations I took them out with me to 24 Nevada. And we he spent a lot of time there together. 25 So, I absolutely was a Nevada resident for that year and 26 a few years after. 27 And I still spend a good amount of time in 28 Nevada. That's all I wanted to say. 9 1 Thank you. 2 MS. YEE: Thank you very much, Ms. Sachs. 3 Mr. Weiss? 4 MR. WEISS: One last thing I want to add and 5 get this out. 6 There is -- in the part of the Franchise Tax 7 Board's, their briefing, their position, they cite 8 actually court documents that Ms. Sachs signed in late 9 2001. Let me point out, No. 1, they're late 2001. To 10 explain the situation, I don't believe Ms. Sachs still 11 did not come back to California. She had the intent -- 12 her domicile was to not come back here. I think she 13 eventually came back, 2002-2003, but the -- I want to 14 point out that these are -- she had to sign extensive 15 documents. There were deadlines by her attorney. Her 16 ex-husband was involved and they used the words Orange 17 County and that's not accurate. 18 I also want to point out that these -- these 19 pleading were not verified, they're not under penalty of 20 perjury and I think they were done due to a deadline. 21 And the Franchise Tax Board relies on that and I want to 22 explain that, point that out. 23 And you're free to question Ms. Sachs as well 24 on that, on those pleadings. So, I'm going to get these 25 things right in front of you. 26 MS. YEE: Very well, thank you very much. 27 You'll have five minutes on rebuttal. 28 Franchise Tax Board? 10 1 MR. HASKINS: Thank you. Good afternoon, Madam 2 Chair, Members of the Board. 3 I'd like to just -- 4 MS. YEE: Would you introduce yourself for the 5 record? 6 MR. HASKINS: Christopher Haskins for the 7 Franchise Tax Board and this is Ron Hofsdal to my 8 right. 9 Without repeating the entire brief, I wanted to 10 point out a few pertinent dates I think are important. 11 In 1998, Ms. Sachs and Mr. Sachs created -- 12 formed Flashcom, the company at issue. She was an 13 officer of the company, on the Board of Directors. Later 14 in that year, in May, Ms. Sachs and Mr. Sachs bought 15 22,000,500 shares from Flashcom. 16 In 1999 Ms. Sachs either renewed or obtained a 17 new California driver's license that was valid through 18 2003. And in 1999 she was living at 23 Ridgeline Drive, 19 Newport Beach. As far as our records indicate, that was 20 the address that was used. And, as she stated, in 1999, 21 in August, she was fired by her husband from Flashcom. 22 On February 8, 2000, the year at issue, the 23 Appellant agreed with Flashcom to a stock buy back in 24 the amount of $9,000,000. That agreement set 25 February 11th date unless the parties agreed otherwise 26 and there is no indication that the parties agreed 27 otherwise. 28 On February 28th, her husband, Mr. Sachs, filed 11 1 for divorce. That date it is also notable because on 2 the Appellant's 2000 part year nonresident return, filed 3 in 2001, she stated under penalty of perjury that she 4 became a resident of Nevada on February 28, which is 17 5 days later than the day that the sale of the stock 6 closed which is at issue in this case. 7 On May 12th of 2000 Flashcom filed an SEC S1 8 filing stating, quote, 9 "We repurchased 1,612,903 shares of common 10 stock held by Ms. Sachs for a purchase price 11 of $9 million." 12 That is in the past tense, that had already 13 occurred. 14 May 24th, the Sachs' divorce becomes final and 15 Ms. Sachs is given custody --I'm sorry, is awarded 16 23 Ridgeline Drive as her residence and a Sunset Beach 17 property in California. She is, as she noted, awarded 18 custody of the children. The children, however, stay in 19 California and attend California schools. So, Mr. Sachs 20 also remains in California. 21 Later that -- during 2000 Ms. Sachs, either 22 through the Max Singer partnership or through her own 23 ownership owned 12 properties in California, commercial 24 and residential. She also owned four businesses that 25 were doing business in California. There's no 26 indication that these businesses that were mentioned 27 were doing any business in Nevada. 28 In 2000, according to the records that we've 12 1 been able on locate, deed records, assessor records, 2 Appellant owned no residential property in Nevada. 3 Now on July 25th of 2000, she did open a P. O. 4 box in Zephyr Cove, Nevada, but she used an address to 5 which she has admitted she never resided. 6 In 2001, February 20th, Appellant purchased 7 441 Emerald Heights, Las Vegas as a residence. That's 8 the address that was listed on her late filed 2000 9 return. And I don't mean "late filed," she did file for 10 a legitimate extension. So, it wasn't late, it was just 11 filed later in the year. 12 June 14, 2001, the Appellant filed two lawsuits 13 in California courts stating that she was, quote, 14 "At all times relevant herein," a resident of 15 California. 16 The relevant times covered by the lawsuits were 17 February 2000 through June 2001. 18 In 2001 Appellant obtained a Nevada driver's 19 license, again using Zephyr Cove address, which had a 20 physical address attached to it, to which she admitted 21 she never lived. 22 The affidavits that were submitted originally, 23 none of them are specific about addresses where 24 Ms. Craig (sic) lived, none of them were specific as to 25 the time frame. They all are general statements. 26 And I'd like to contrast with the State -- with 27 the affidavits that were admitted or submitted in the 28 Berner case. If recall, in the Berner case there were 13 1 more than 30 affidavits submitted. Those affidavits 2 stated, "I played golf with Mr. Berner. I played bridge 3 with Mrs. Berner. We went out to dinners together." 4 And, in fact, one of the affidavits was from 5 the local postmaster, who became so familiar with them, 6 he knew them by name and said, "I became friends with 7 them." Those affidavits did support that the Berners 8 had changed their residence to Nevada. Those affidavits 9 bear no resemblance to the affidavits in this case. 10 In this case we asked the Appellant for 11 evidence to show that she had changed her domicile or 12 residency. We received next to none. We did ask for 13 credit card information. We were told there weren't any 14 credit cards. We asked for checking account information 15 and we obtained a checking account for Max Singer 16 Partnership. Now that was a business. And, so, we 17 didn't -- we examined the checks, but they didn't 18 indicate that they were for personal items necessarily. 19 The Max Singer Partnership and the Appellant, as its 20 major partner, it is a real estate company and, so, the 21 suspendings were on real estate things like fixing 22 houses and stuff. 23 But, again, all of the properties that we're 24 talking about here were California properties. 25 In the end, I think that we have offered enough 26 evidence, more than enough evidence to sustain our 27 determination. 28 I would ask the Board to sustain our 14 1 determination. 2 Thank you. 3 MS. YEE: Thank you very much. 4 You have five minutes on rebuttal. 5 MR. WEISS: All right. You want to go ahead 6 and talk about the -- Ms. Sachs will talk about the 7 dates because I think there's some dispute on the dates 8 and I will finish up. 9 Go ahead. 10 MS. SACHS: I would say there is quite a few 11 inconsistencies in his story. 12 No. 1, the Zephyr Cove address, I did -- I 13 wasn't sure whether I was going to move to Las Vegas or 14 Lake Tahoe. So, I visited Zephyr Cove. And I did buy 15 a house in Zephyr Cove in 2000, early 2000. And it -- 16 we opened escrow and it fell out of escrow because I had 17 a -- I was going through the divorce and everything and 18 I could not qualify for the loan. So, the house fell 19 out of escrow in Zephyr Cove. 20 And then I started looking at Las Vegas. And 21 then I went to Las Vegas and I spent some time with my 22 mother-in-law, quite a few months, just kind of healing. 23 And I was looking to buy property there. And I did find 24 a house, but it was being built. So, it took a quite 25 while before the escrow was closed. I believe it was at 26 least six months before I could go in and sign all of 27 the papers and close the sale on it. And then I moved 28 into that house. And that was the one on Emerald 15 1 Heights in Summerlin. 2 So, as far as the dates, yes, I did get a house 3 in Newport Beach in the divorce and my ex got another 4 house in Orange County. And we had joint custody of the 5 kids. And I saw them on the weekends, when they had 6 holidays and he also stayed at that house for quite a 7 bit, 23 Ridgeline Drive. 8 The divorce -- it was a bitter divorce, but we 9 put the kids ahead of everything and, you know, tried 10 for make it work and we kind of used -- I didn't want to 11 take them out of school in Newport because I didn't 12 think it was right to move them out of Orange County and 13 my ex would not let me at the time. But I took them to 14 Nevada with me as much as I could. And we spent a lot 15 of time, you know, in Nevada with grandma and just 16 trying to recuperate. 17 So, as far as the dates, you know, on the -- it 18 was kind of a big blur, I'll try to do the dates as best 19 I can, but I know that -- you know, I didn't get -- I 20 can't remember the exact month I got the payment, but I 21 know it was sometime in 2000, I believe, late 2000 when 22 they finally bought the stock back after just kind of a 23 big battle. 24 And there was a lot of legal papers going back 25 and forth. It was not an easy transaction. There was a 26 lot of emotions involved and hostility. And when -- 27 they would throw papers in front of me, "Sign this. 28 Sign that." You know, they never asked me where I 16 1 lived. They would just put down addresses, the last 2 known address. So, when they'd say, "Sign here." So, 3 if I signed any of them living at 23 Ridgeline, that -- 4 they were totally incorrect. 5 You know, I signed so many papers, it was just 6 pile after pile after lawyer after lawyer after lawyer. 7 And I was -- you know, if he has any papers saying that 8 it wasn't my handwriting that put in there, you know, in 9 Newport Beach. It wasn't mine. 10 MR. WEISS: A couple of things I want to add. 11 While it's true that the properties in some of 12 these entities were California properties, these were 13 properties acquired while she was a California resident. 14 So, it's not expected -- if you are working on -- it's 15 not where the property is located, it's where you're 16 performing services. She's actually performing services 17 in Nevada on these things. And these properties were 18 previously acquired before she left California. 19 The only property she actually acquired after 20 she left California in 2000, she actually took title to, 21 was a property in Hawaii, which -- that she was going to 22 consider living there. But it didn't work out. 23 I think she was going through a traumatic 24 time -- loss of a child, marital breakup, business 25 breakup. And what makes it worse is the business 26 breakup was not -- her partner was her spouse. 27 So, there was a lot of litigation going on. 28 She was actually later sued to try to get the money back 17 1 by, I beliee, Smith Barney and that's where all this 2 ensuing litigation arose in 2001. 3 I don't -- you know, with all due respect to 4 the Franchise Tax Board, I'm not sure where he's saying 5 the time period of the litigation is in the paperwork. 6 I have not seen that in any of his papers. But, you 7 know, maybe he could bring that to my attention. 8 But -- and, so, I think the dates are critical. 9 I think that the negotiations took place February, 10 March. I believe the SEC reporting says May. And, in 11 fact, when she received the money was after May. It did 12 not -- it took only threatened litigation for her to get 13 the money. 14 So, you know, I think -- you don't -- when you 15 get a divorce or you have a business breakup, you can't 16 divest yourself of everything in California immediately. 17 It takes time and, you know, you try to make the best. 18 And her intent was not to come back here, she 19 wanted to go forward. And everything she acquired was 20 out of California thereafter. 21 MS. OLSON: Time has expired. 22 MS. YEE: Okay, thank you. 23 Questions? Ms. Steel? 24 MS. STEEL: I think these dates are very 25 critical here. I just have few questions. 26 When did you get your driver's license or 27 voter's registration in Nevada? Do you know around 28 when? 18 1 MS. SACHS: I believe it was 2000. 2 MS. STEEL: Right. But is it after May or, I 3 mean, after February or before, February 11th? 4 MS. SACHS: You know, I'd have to probably 5 research that one. 6 I just remember that I decided I needed to get 7 out of California in '99. That's when I decided it, 8 when Brad moved out of the house in November, that's 9 when I decided I wanted to get out of California. 10 MS. YEE: Okay. 11 MS. SACHS: And I knew that. And I don't know 12 if I changed my license right away because my California 13 one was still valid. So, I might have -- you know, I 14 don't know if I ran to the DMV when I got there. I 15 don't think I did right away, you know, maybe like in 16 the next few months. 17 MS. STEEL: Do you have any proof of, you know, 18 you lived in -- outside of California at that point? 19 MS. SACHS: Well, I know that -- well, I 20 didn't -- I didn't work. He's saying I had all these 21 businesses. 22 No, when I left here in late '99, I didn't 23 have -- these businesses were not active. These were 24 just like entities that were created to put properties 25 into, you know, cause that's what I was -- you know, 26 before that I was kind of in investing in real estate. 27 So, there was no active -- I not working. I 28 wasn't even set to work. After '99, I -- there is -- I 19 1 couldn't -- you know, it was very difficult to even 2 function. 3 MS. STEEL: You had a joint custody with your 4 children? 5 MS. SACHS: Yes. 6 MS. STEEL: Did you take them back to Nevada 7 some -- 8 MS. SACHS: Yes, many times. 9 MS. STEEL: -- after -- I am talking about the 10 school. They still staying here or -- 11 MS. SACHS: They wanted to stay in California. 12 They're very close with their daddy. They didn't want 13 to change schools. So, we went back and forth. And we 14 just did for a while. 15 MS. STEEL: Okay. For your tax return that you 16 wrote as a nonresident for -- you signed it on, I 17 believe it's May 24th or May 28. 18 Why did you do that if you moved beforehand? 19 MS. SACHS: What year was that? 20 MS. STEEL: 2000, year 2000. 21 MS. SACHS: Nonresident of Nevada? 22 MS. STEEL: Nonresident of California? 23 MS. SACHS: Of California, yeah. 24 MR. WEISS: You didn't say a year, I'm sorry, 25 May? 26 MS. STEEL: 2000. 27 MR. WEISS: She signed the return in 2001, 28 wouldn't she have signed it? 20 1 MS. STEEL: I believe -- yeah, 2001 -- 2000 2 return that you signed as a nonresident for May. 3 MS. SACHS: I was a nonresident of California. 4 MS. STEEL: But you specified a date; is that 5 right? 6 MS. MANDEL: You mean the -- was it 7 February 28? 8 MS. STEEL: The February 28. 9 MR. HASKINS: February 28, 2000 is the date 10 claimed. 11 MS. STEEL: Okay, why did you sign it if you 12 moved beforehand, before 2000? 13 Why you signed it on February 28th? 14 MS. SACHS: I don't remember signing that with 15 that. 16 MS. STEEL: Your tax return. 17 MR. WEISS: What year tax return are you 18 referring to? Because the 2000 is not due until 19 April 15th, 2001. 20 So, I'm a little confused, sorry. I mean, 21 you're talking about the '99 return, '98? 22 MS. STEEL: Even what I think FTB's going to 23 show you the paperworks there. 24 MR. HASKINS: If I may, Ms. Steel -- 25 MS. YEE: Yes. 26 MR. HASKINS: -- you're talking about the 27 2000 -- 28 MS. STEEL: 2000 tax return, right. 21 1 MR. HASKINS: -- part year, nonresident return? 2 MS. STEEL: Right. 3 MR. HASKINS: We received it August 15th, 2001. 4 And there is a signature here and Mr. Lorin dated it as 5 of August 2nd, 2001. 6 And this is the return that you have as your 7 Exhibit U. 8 MR. LEONARD: That's the one that declares 9 February? 10 MS. STEEL: That's declare -- 11 MR. HASKINS: Yes, sir -- yes, ma'am. 12 Right here on page 1 of the Schedule CA 540, 13 line 3, 14 "I became a nonresident, entered new state and 15 date of move, Nevada, 2-28-2000." 16 MR. WEISS: And it's our position the sale was 17 after that date. That's what -- we differ from the -- 18 MS. STEEL: The contract was signed on 19 February 11th. 20 MR. WEISS: But the closing wasn't -- I don't 21 know when you received the money, but -- when did you 22 receive the money? 23 MS. SACHS: Not 'til long after that. 24 MS. MANDEL: But that was -- what you -- we 25 have like a new document from FTB? 26 MR. HASKINS: Oh, I will get to that if you -- 27 MS. MANDEL: Well, I think that's kind of what 28 they're talking about right now. 22 1 Because you have the date of -- the dates of 2 February 8, February 11, February 28th being after. 3 When Mr. Weiss was talking, he said that 4 Flashcom didn't pay until much later in the year, only 5 on threat of litigation. And I don't recall exactly 6 what the documents in the record establish and this 7 Schedule D they're showing as 12-31 as the date. 8 MR. HASKINS: Correct. 9 MS. MANDEL: So, that's kind of where Ms. Steel 10 and your conversation is right now, which is when did it 11 really -- when -- what's the -- what's the operative 12 date for -- because the way everything was written up 13 before it was that the February date, mid-February dates 14 are the operative dates. 15 And since she's saying she didn't -- on the 16 return that she didn't become a Nevada resident until 17 February 28th, you know, end of story with all of the 18 document backup. 19 But now what I am hearing him say is that the 20 transaction didn't happen until later in the year, we 21 didn't get the money and, so, and the Schedule D you 22 put in, can you get into that? 23 Because that seems to be what people are 24 talking about now. 25 MR. HASKINS: If that is, I can, certainly. 26 The Schedule D is wrong and it has to be 27 because 12-31-2000 is Sunday. The day after is New 28 Year's day and no transactions occur on that date. 23 1 So, I think that that is -- and, if you notice, 2 that is also the date for the Chase H & Q. I don't know 3 why they listed that date, but that can't be the right 4 date because even Ms. Sachs has said that she received 5 the money before December 31st, 2000. 6 MS. MANDEL: Okay. Then maybe can you address 7 what you know about -- and Mr. Weiss can address what he 8 knows and what documents there are to support that it 9 didn't happen in February? 10 And I don't know who goes first on that chair. 11 MR. WEISS: Well, I would say that -- 12 MS. YEE: Mr. Weiss? 13 MR. WEISS: I agree -- I agree that it wasn't 14 likely that it closed on 12 -- I didn't prepare the 15 returns, so -- if I did, I could be here and I could 16 talk about it, but I didn't prepare it, Mr. Lorin must 17 have prepared the return. And that date is probably not 18 correct, it probably did not close the last day of the 19 year. 20 Ms. Sachs is the best one who has personal 21 knowledge. I don't have personal knowledge. I know -- 22 I didn't even represent here in that transaction. 23 When did you -- when did the transaction close 24 and when did you leave the money is really the question. 25 You know best, what time in 2000? 26 MS. SACHS: Much later than that. I think it 27 was more towards like the -- 28 MR. LEONARD: Do we have bank records or 24 1 anything that can help us with the date? 2 And that date appears to be critical as to -- 3 as to where to -- as to how to prove residency. If 4 there is any way to -- first pin that date down, then I 5 was hoping -- but it's not worth it now, I was hoping to 6 ask her witnesses, "Did you go out to dinner in 7 Las Vegas on that date or the day after or something," 8 to help nail it down to that period, but -- but we've 9 got to get the income received date pinned down. 10 MR. WEISS: I would make an offer -- well, it's 11 sort of an offer of proof, I think that in fairness, I 12 mean, listen, if I'm sitting in your shoes I'd want to 13 know that date too. 14 I think that there should be maybe some 15 submission of a document or something with a closing 16 date or something that would clarify this issue that 17 should be -- at least submitted, maybe, maybe 30 days or 18 some time period, you know, could it be submitted that 19 would clarify -- 20 MR. LEONARD: Do you and your client know that 21 it exists? 22 MR. WEISS: Is there a such document? 23 There must be. If it's an SEC document there 24 must -- a filing, there must be something in there. 25 It's an SEC company. 26 MR. HASKINS: If I may? 27 MS. YEE: Yes. 28 MR. HASKINS: The SEC document lists -- it 25 1 says -- it's off -- what it is is the SEC document, 2 which you have, includes the sale agreement which lists 3 February 11th. That SEC document was filed May 12th. 4 And on the front of the SEC filing they say, 5 "Here's something that we did recently. We bought 6 1,600,000 shares." 7 "We bought," not we're going to buy, we bought 8 and paid. And that closing date was February 11. 9 There's simply no other evidence of any other date. 10 We've never been provided with a deposit slip 11 that says, "Here's 12 million, $9 million going into a 12 bank account with Ms. Sachs' name on it." 13 I don't believe that exists, but as Mr. Weiss 14 said, I'd like to see it if it does. 15 MS. STEEL: Well, what's the legal effect if 16 they signed the contract date or get the money date? 17 MR. HASKINS: Well, the -- 18 MS. STEEL: Closing? 19 MR. HASKINS: -- the contract was signed on 20 the -- 21 MS. STEEL: February 11th? 22 MR. HASKINS: -- and it was to close on the 23 11th of February. 24 MS. STEEL: She didn't receive money until 25 May. 26 MR. HASKINS: Well, that's her testimony. 27 MS. STEEL: That's what they are saying. 28 So, if they received money on May, is that -- 26 1 if you have a proof of they received money on May then 2 that's the date that we count? 3 MR. HASKINS: That's the date that she -- 4 MS. STEEL: Then she says she moved out on 5 February 28th to Nevada. So, she was not in California. 6 MS. SACHS: No, no, no, I moved out late '99, 7 right after Brad left in November. 8 MS. STEEL: Okay, what I am saying is just for 9 May and February dates, so, it doesn't -- you know, 10 that's not my question is. 11 My question is effective date is May, when -- 12 when they have a proof that they received the money on 13 May then May is the right date or the February 11th 14 contract signed date is the right date by the law? 15 MR. HASKINS: She would have realized the money 16 on February 8th when she signed the contract. She had 17 the right to receive it on that date. 18 And, so, we certainly could say that that was 19 the date that it became income for California purposes. 20 MS. STEEL: Okay. But if -- 21 MR. HASKINS: Just to be clear, that's not our 22 argument that she, in fact, was anywhere else but 23 California for the entire year. 24 Therefore, from our point of view it doesn't 25 matter when she got paid -- not that we have any 26 proof -- but it doesn't matter because all of 2000 she 27 was a resident of this state. 28 So, I understand your question, what if -- if 27 1 she actually received in her hands the money on May 5th, 2 let's say, just pick -- 3 MS. STEEL: Right. 4 MR. HASKINS: -- Cinco de Mayo, is that the day 5 that she actually got it? Well, that's one argument. 6 The other argument is when she signed the 7 contract then that's the date that she realized the 8 income and that's the date that we should look at. 9 MS. STEEL: So, by the law what's the date that 10 we count if they proved that they got the money on May 11 and she signed the tax return that she moved out of 12 California on February 28th, then she was not California 13 resident at that time. 14 MR. HASKINS: If that's true. 15 MS. STEEL: So, my question -- so, that's true. 16 So, when she received the money -- 17 MR. HASKINS: No, if that statement is true. 18 MS. STEEL: -- okay. I am asking you, what's 19 the law here? 20 Received the date -- I mean, received the money 21 date is the effective date or sign the contract is the 22 effective date? 23 MS. MANDEL: 'Cause so far all you've said is 24 you can make an argument this way, you can make an 25 argument that way, which is a nice lawyer statement, but 26 Ms. Steel wants to know what -- what -- if push comes to 27 shove, what is the answer that would you give? 28 MR. HOFSDAL: I would say it depends on the way 28 1 the funds were deposited. If they were deposited into 2 an escrow account, we're going to handle it one way, if 3 it was handed to her in a check and she failed to cash 4 it for whatever reason, it would be handled a different 5 way as well. 6 So, we don't know because although we've asked 7 for some type of proof of how those funds were handled, 8 they were never provided to us. 9 The only thing that we do have is what was 10 provided by the company to the SEC, which I would 11 suggest is pretty strong evidence as to when the 12 transaction had, in fact, occurred, absent anything 13 else. 14 MS. STEEL: But that has to be -- they reported 15 to SEC that SEC by -- on May they said, "Yes, we bought 16 it." 17 So, you are not really clear with the letter 18 that they really bought it -- it's very clear that they 19 bought it before May, but they are not clear that it was 20 done on February 8th or 11th. 21 So, what I want to make clear is that money 22 received -- if taxpayer can provide us a proof of that 23 money transaction that they received the money on May, 24 then at that time that this is right -- she has been 25 telling us that she's gone from California since 1999, 26 but on the tax return that we see, not that many people 27 lies about it when they fill out the tax return forms -- 28 and on February 28th. 29 1 So, if she received the money on May instead of 2 February 11th, when she signed the contract and received 3 the money at the same time, so, if she received the 4 money on May, then she was not California resident at 5 that time. 6 MR. HOFSDAL: Oh, I don't agree with that. 7 MS. STEEL: I want to count those dates, that's 8 why I am asking you that by California law what's the 9 effective date? 10 Is the money receiving date or sign the 11 contract date, that's why I am asking you. 12 MS. MANDEL: For purposes of answering 13 Ms. Steel, I think you have to accept that her -- sounds 14 like her current view, Ms. Steel's current view is that 15 she's going by the date, February 28th on the return, 16 that her view is as of right now that's the date this 17 lady moved to Nevada. 18 MS. STEEL: She moved? 19 MS. MANDEL: We understand that FTB's position 20 is we don't think she ever moved and changed residence 21 to Nevada all of 2000. 22 But to answer Ms. Steel, assume February 28th 23 is the move date. Then what's the law? Is it the date 24 she -- the money hits her bank account or is it the date 25 that some agreement -- 26 MS. STEEL: She signed the contract, yeah? 27 MS. MANDEL: -- was signed? 28 That's what she's asking you. 30 1 MR. HASKINS: As Mr. Hofsdal pointed out, it 2 depends. 3 MS. YEE: Well -- 4 MR. HASKINS: -- it depends on how it was 5 handled because he said if it was stuck in an escrow 6 account then it's -- then it's available to her on that 7 dated. 8 MS. YEE: But does that suggest that it's not 9 the date of the contract and really kind of how the 10 proceeds are actually -- 11 MR. HASKINS: No, I don't think -- I'll say 12 this also, the S1 filing -- in the contract it 13 specifically states if the parties agree to a different 14 date in writing, that's -- there is nothing offered with 15 the S1 that indicates it was any other date than 16 February 11. 17 So, in the agreement itself February 8th was 18 the day it was signed, February 11th is the closing date 19 or a date mutually agreed by the parties. That would 20 have to be included in the S1 and it wasn't. 21 So -- 22 MS. STEEL: You are giving two answers right 23 there. Either date is fine. 24 Can you prove that your money's been deposited 25 after February 28? 26 MR. WEISS: Two things, let me respond. 27 You know, he's correct when he says it depends 28 on this stuff. I mean, normally a transaction takes 31 1 place when a date of -- it closes, that's the sale date 2 normally, date of closing. 3 But sometimes the money might be tied up and 4 you don't have receipt of it. 5 So, I think a fair answer would be the date of 6 closing and you have the actual right to receive the 7 money would be really the date of sale for reporting. 8 But Mr. Sachs is here and he was an officer, I 9 think he was actually the CEO of the company. He, I 10 believe, has personal knowledge on this issue. 11 MS. YEE: Mr. Sachs, would you come forward? 12 MR. WEISS: Let him testify. 13 He could come forward and he could maybe help 14 us. 15 MR. SACHS: Hi, Brad Sachs, CEO and Chairman of 16 the company at the time. 17 So, I'm the guy that raises the money for the 18 company, it was about $85 million at the time. And that 19 was to buy back Mrs. Sachs' shares of the company 20 because she was forced out by the Board of Directors. 21 And I was on the road all over the New Year's 22 trying to -- part of what happened to Mrs. Sachs with -- 23 with our separation was a pressure that she was out and 24 hadn't received the settlement she was entitled to or 25 they had struck upon late in '99. 26 I was out raising the money for the company and 27 that round of financing did not close until late April. 28 And we funded in early May. 32 1 So, with the SEC filing, the plan was to go 2 public. And we had to get the -- Mrs. Sachs' funding 3 out of the way before we could file the SEC document. 4 So, we were pushing as hard as they could to 5 finish the round of financing, but that didn't happen 6 until like late April, very early May. 7 So, if the document says that we just finished 8 with Mrs. Sachs, that's because just finished -- it 9 was -- it was -- the Board decided that we wanted to 10 have the funding close, the stock payback, and -- before 11 we filed the SEC paperwork because it would be cleaner 12 that way for the public when they filed the shares. 13 So, does that answer your question about the 14 dates? It was talked about with Mrs. Sachs at the end 15 of '99 as far as the buyback of shares, but not actually 16 executed until early May of 2000. 17 MS. YEE: Okay. And what can you provide in 18 terms of any substantiation of this? Of -- 19 MS. MANDEL: Documents? 20 MS. YEE: -- what you just described? Any 21 documentation to support your -- 22 MR. SACHS: You know, I don't know what I would 23 have. I -- you know, I might have a plaque somewhere 24 with a date on it, you know, for milestone markers when 25 you, you know, raise money. So, I don't know. 26 MR. WEISS: Bank statements, if they could be 27 produced would be good because I -- you know, I don't 28 know anybody who's walking around holding a $9 million 33 1 check and not putting it in the bank. 2 MR. SACHS: Yeah, it was all lump sum. 3 MR. WEISS: You don't walk around with that. 4 MR. SACHS: It was in an escrow account or it 5 was just a straight buyout of the shares, pay with a 6 check one time. 7 MS. YEE: Well, bank statements, that's a 8 pretty -- 9 MS. SACHS: I might be able to find something. 10 I didn't know I had to bring anything. 11 But if I would have known it, I would have come 12 prepared and looked for it. I could probably find 13 something, but I think he's correct on the dates. 14 I mean, I believe it was May. 15 MS. YEE: Okay. It's a pretty significant 16 transaction. I would think that certainly bank 17 statements would help, but anything else that kind of 18 leads up to, you know, actually the proceeds being -- 19 MS. SACHS: Well, all I know is like right 20 after I got the money and the company filed bankruptcy, 21 I spent the next ten years fighting the lawyers and the 22 trustees for Flashcom. 23 After a solid, I think it was eight years of 24 legal battles, I wound up paying a lot of that money 25 back and all of the legal fees. 26 And I know this isn't taken into consideration, 27 but that's what happened afterwards. So, it was like 28 ten years of a big blur or a massive legal battle trying 34 1 to get that stock repurchase money back. 2 MS. YEE: To the Franchise Tax Board, while 3 we're kind of on this issue of documents that can be 4 produced, what else would be helpful? 5 MR. HOFSDAL: I would suggest that at some 6 point she would have to sign those shares over to 7 Flashcom and there has to be some type of filing or some 8 type of document with a signature and a date certain. 9 You know, we're not dealing with an arm's length 10 transaction between husband and wife when we're dealing 11 with a stock sell back. 12 I mean, I would suggest that that might even be 13 the strongest documentation to show when this 14 transaction happened, even more so than when payment was 15 actually received because it's a different escrow and 16 different components to that. 17 But I agree with you, I find it rather hard to 18 believe that $90 million (sic) in financing was found 19 and 90 million (sic) -- 20 MR. HASKINS: 9 million. 21 MR. HOFSDAL: No, no, but didn't -- he 22 initially got $90 million in financing, in funding and 23 then you would pay $9 million to his spouse and there 24 would be zero documentation to substantiate when this 25 date occurred. 26 You know, the assumption that we have is it 27 would be -- that it would be consistent with the 28 documentation we do have, the contract, and we do have. 35 1 Otherwise, when you are dealing with the amount of tax 2 that we're dealing with, it's a pretty routine, easy 3 document to uncover. And the fact that it hasn't been 4 strongly suggests that February 11th was the date. 5 MR. WEISS: With all due respect, nobody ever 6 asked me for a copy of that document. And I don't know 7 if there is -- I don't see any evidence in anything they 8 filed where it's asked. 9 And if somebody would have asked me for that 10 document, I clearly would have produced it. So, I -- 11 it's news to me, you know, that they asked for a 12 document. Nowhere in any documentation do I see that. 13 MS. YEE: Mr. Leonard? 14 MR. LEONARD: The reason for that, I think, is 15 the real bigger question that revolves around this, 16 Franchise Tax Board believes that Mrs. Sachs never left 17 California. 18 MR. HASKINS: Correct. 19 MR. LEONARD: Never left California. 20 MR. HASKINS: Not in 2000. 21 MR. LEONARD: So, once we get that date, then 22 the real question comes into play, can you show where -- 23 where you were and what state you resided in on the date 24 that you got that money? 25 And to the extent your testimony is that that's 26 kind of the period that the transition was taking place, 27 that would be something I would be interested in. 28 Franchise Tax Board's already convinced that it 36 1 didn't occur any date that year, so, it doesn't matter 2 to them. 3 So, that's why you -- it didn't matter which 4 date the deal was signed or the check came in or the 5 check was deposited or the money was spent because 6 they -- they seemed to argue that you were a California 7 resident the whole time. 8 MR. HASKINS: Mr. Leonard, please, let me be 9 clear. 10 Franchise Tax Board did ask for bank 11 statements. We did ask for records. We didn't get any. 12 MR. LEONARD: Okay. 13 MS. MANDEL: Let me be clear, we did ask. 14 MR. LEONARD: Okay. But the real question is 15 residency? 16 MS. YEE: That's correct. 17 MR. WEISS: Domicile is really -- the intent to 18 leave, domicile. She had the intent to leave. 19 MR. HOFSDAL: Well, it's not the intent to 20 leave, it's the actual leaving that triggers it. 21 And as Ms. Sachs has testified, she didn't know 22 whether she was going to move to Hawaii, she bought a 23 house there, that might be a good location. 24 Well, maybe northern November, but that fell 25 out of escrow. 26 Well, let me live with my mother-in-law for a 27 while. 28 And while she may have had the intent to leave 37 1 California at some point in the future, domicile is not 2 established in a new location or domicile is not 3 abandoned until it's established in a new location. 4 And we have this fuzzy, it could be Hawaii, it 5 could be Douglas County, it could be Las Vegas. 6 MS. SACHS: No, no. I would like to interrupt 7 on that because my intent was to either move to Lake 8 Tahoe or Las Vegas, Nevada and then also spend some time 9 in Kauai. That was my intent. 10 I did not want to live -- I couldn't live in 11 Kauai because of the joint custody. I had to be in 12 proximity to my children so I could come back and visit 13 them. 14 So, that's the reason I settled on Nevada, so I 15 could drive back and forth and see my kids and pick them 16 up and take them to Nevada. It was really a child issue 17 more than anything. 18 MR. LEONARD: As for me, the proof of the 19 intent is so nebulous I'm looking for the reality. 20 MS. YEE: Yeah. 21 MR. LEONARD: Some tangible locations and I 22 think Franchise Tax Board, in an interesting list in one 23 of the previous cases where the affidavits were, "I went 24 to dinner with the taxpayer in Las Vegas on that night," 25 and named a date. 26 Things like that would be very helpful to me. 27 And dinner -- not that we all traveled together for a 28 weekend in Vegas, but -- 38 1 MS. SACHS: Well, I brought my sister as a 2 witness. 3 MR. LEONARD: -- that I was over at their 4 house or we did church together or things like that. 5 MS. SACHS: My sister lived in Nevada the whole 6 time I was there and we spent a lot of time together 7 doing different things. 8 MR. LEONARD: She's available? 9 MS. SACHS: She's here as a witness. 10 MR. WEISS: She's here. 11 MS. SACHS: She's right behind me. 12 MR. WEISS: And she's signed an affidavit 13 and -- 14 MR. LEONARD. Do you want to do it now or do 15 you want to do a 30-30-30 to document these things? 16 MS. SACHS: She lived there with her three 17 children and I'd bring my kids and they'd all play 18 together. We'd go to different places. 19 So, it was just -- it was a great -- you know, 20 it was great to have family there and that's another 21 main reason I chose to move to Las Vegas, because my 22 sister was there. 23 MS. YEE: Okay. Well, why don't we hear from 24 your sister because what I think what we're going to 25 likely be doing is allowing more time to see whether we 26 can get some of those documentation presented, both as 27 relates to the specific transaction and to get the dates 28 straight, but also to respond to the underlying issue, 39 1 as Mr. Leonard has reminded us, about residency. 2 And at this point in time there is really -- I 3 mean, from our perspective for the tax year in question, 4 2000, there is really no kind of record or anything 5 substantiating purchase, renting, using, any kind of 6 property in Nevada. 7 So, we're kind of left in this dilemma of 8 really not knowing what was taking place during the tax 9 year. 10 Please, if you could introduce yourself for the 11 record, and take some time to make your statement? 12 MS. SUMMERS: I am Lesley Summers. I did live 13 in Nevada. And I did visit Andra several times and she 14 did come and visit me. 15 And I was living there. I had been living 16 there for several years. And she was going through a 17 terrible, terrible divorce. So many things happened to 18 her I don't know how she held up mentally. And she did 19 want a break. 20 And, you know, I said, "Well, come out here 21 and, you know, it's a nicer place, you know, the air is 22 clean." 23 And she came to live -- try to live out there 24 and, well, actually did live out there, but she was 25 trying to buy a house. And she did buy a house 26 eventually. 27 MR. LEONARD: Question? 28 MS. YEE: Yes, Mr. Leonard? 40 1 MR. LEONARD: Do you remember the date that she 2 moved into her mother-in-law's house? 3 MS. SUMMERS: The -- not exactly, but I know it 4 was -- 5 MR. LEONARD: Month and the year maybe? 6 MS. SUMMERS: No, I can't, it was -- my memory 7 is not that great. It was a while ago. 8 MR. LEONARD: Do you -- 9 MS. SUMMERS: When she actually moved in there? 10 MR. LEONARD: Yeah. 11 MS. SUMMERS: I think it was in like '99. Was 12 it? I don't recall. 13 MR. LEONARD: Are there any other things that 14 you and she did that there might be a record that we 15 could go back to that might still exist? 16 I have no idea what. 17 MS. SUMMERS: The only thing that I can 18 remember is one time I got very sick she did take me to 19 the doctor. And I didn't have medical insurance at the 20 time and she paid the bill and bought me medicine. 21 That's all I can say. 22 MR. LEONARD: What year was that? 23 MS. SUMMERS: In 2000. 24 MR. LEONARD: 2000, early or late in the year? 25 Do you remember that? 26 MS. SUMMERS: No, it was probably -- I don't 27 even remember. 28 MR. LEONARD: Okay, thank you. 41 1 MS. YEE: Other questions, Members? 2 Well, let me suggest this, you heard kind of 3 the gaps that we're trying to grapple with. And I think 4 there is probably agreement to allow you more time to 5 try to provide the documentation to help us fill in 6 those gaps. 7 What I would like is to just -- requests for 8 records have been made previously. Let's kind of get 9 clear about what specifically would be helpful. 10 You've heard some suggestions from us up here 11 that I'd be willing to move for additional time on this, 12 but I suspect that you're going to need probably more 13 than 30 days to get your hands on some records. 14 MS. MANDEL: I have another question that just 15 occurred to me. 16 MS. YEE: Ms. Mandel? 17 MS. MANDEL: Can you remind me how old the 18 children were who were here, the two children at the 19 time? 20 MR. LEONARD: '99. 21 MS. MANDEL: Yeah, the 2000 time frame when -- 22 MS. SACHS: Nine and seven. 23 MS. MANDEL: And they stayed -- you're saying 24 they stayed here with your ex-husband? 25 MS. SACHS: Yes. 26 MS. MANDEL: I guess it's still a while ago, 27 I'm just -- the one record that I was thinking of is if 28 there would be school records that might have the 42 1 information on both parents. Because presumably if they 2 were in his charge when they were here and in school, if 3 some reason they couldn't reach him, perhaps they would 4 still list her -- 5 MR. LEONARD: With a contact information? 6 MS. MANDEL: -- with contact information. I 7 don't know, that just occurred to me. 8 MS. SACHS: I had my cell phone with me 9 everywhere. So, I mean, that's -- they -- I am sure 10 they have information and I am sure they'd have my 11 telephone number there and -- 12 MS. MANDEL: But you're saying it might be a 13 California cell phone? 14 MS. SACHS: Well, I never -- I never changed 15 the cell phone number. I have had the same cell phone 16 number for probably like the last ten years. 17 MS. MANDEL: Well, it was -- 18 MS. SACHS: You know, I never changed it. 19 MS. MANDEL: It was a thought. 20 MS. YEE: Mr. Weiss? 21 MR. WEISS: On the credit cards, we -- I do 22 have some credit card statements, the problem is most of 23 them are 2001. 24 I mean, there is Nevada activity and Florida 25 activity in 2001. I mean, I would submit that. 26 2000, I think one of the problems was to try to 27 get all of the credit cards. 28 MS. SACHS: Yeah, you know, I tried getting a 43 1 lot of the stuff, but, you know, kind of moving around a 2 lot. I had a problem kind of locating all of the 3 records. And I did find quite a few credit card 4 statements, I believe, that I submitted and showed that 5 I was in Nevada and, you know, purchases I had made and 6 restaurants I was at and gas and, you know. 7 I found whatever I could. It was kind of a 8 mishmash. Going through that time period there was just 9 a lot of moving around of records and most of my records 10 also -- I had a lot of my personal records at Flashcom 11 when the company went down. 12 I got locked out of my own company. That's 13 basically what happened. I didn't have any access. 14 They dropped my desk off in the parking lot with all my 15 records and just threw them in the parking lot. 16 I didn't even get any records. Most of the 17 records were at my office. And it was -- you know, it 18 wasn't a real happy parting when I left, you know, it 19 was like they locked the door and all my stuff in there. 20 And I never got anything but the desk back. 21 MR. LEONARD: What date was that? 22 MS. SACHS: That was in '99. 23 MR. LEONARD. Do you know what date? 24 MS. YEE: August? 25 MS. SACHS: That was August, yeah. 26 MR. LEONARD: August? 27 MS. SACHS: Shortly after, it was August or 28 September. 44 1 MS. YEE: Well, I think it still would be -- 2 and I would venture to guess there must be something out 3 there with respect to the stock transaction. So, let's 4 start there. 5 And then you've heard kind of where we're 6 struggling with respect to the -- your activities in the 7 year 2000 relative to being outside of California. 8 So, let's see what we can come up with on that. 9 MS. SACHS: I know that they asked me about 10 social clubs. And I really wasn't in a social mood. I 11 didn't belong to any clubs anywhere. 12 I didn't have a gym membership. I didn't 13 really have any affiliations. I was just, you know, 14 really kind of in mourning and not really doing 15 anything social. 16 And you know, Walter kept saying, "Well, what 17 about social? You know, didn't you go to the gym?" 18 I said, "No, I did not. I couldn't." You 19 know, at that time I was not in a good frame of mind. 20 And what could I produce for you, you know? 21 I -- whatever I found that Flashcom didn't 22 steal from me, you know, I gave him. And that's all I 23 could find. 24 MR. WEISS: She's also a non voter, so -- I 25 mean, she didn't vote in either state, which -- and I 26 was -- you know, I've been trying to get as much as I 27 could. 28 And, you know, per testimony -- and she told me 45 1 the same thing -- she was in seclusion, mourning, you 2 know, having a lot of problems. 3 You know, we -- can I request 60 days to get as 4 much tangible evidence as I can and to get bank records 5 to, you know, try to help you in making a decision if 6 that's okay with the FTB? 7 MR. HASKINS: I have no objection. 8 MS. YEE: Okay, yeah. We'll allow 60 days for 9 you to do that. 10 MR. WEISS: Thank you. 11 MS. YEE: And while you're here and before you 12 leave, I would encourage you to confer with our 13 representatives from the Franchise Tax Board just to be 14 sure that we are looking for documentation that will be 15 helpful. 16 MR. WEISS: Okay, thank you. 17 MS. YEE: Is there a motion on this? 18 I'm sorry, Mr. Haskins, did you have another -- 19 MR. HASKINS: Well, how exactly will we 20 structure this? 21 Do you want additional submissions of documents 22 and then briefing related to that? 23 MS. YEE: Yes, and then -- 24 MS. KELLY: It will be either a 60-30-30 or a 25 however many days you want to afford to the FTB as well. 26 But it would be opening with Appellant 27 providing additional documentation and briefing related 28 to that. 46 1 And then with Franchise Tax Board replying. 2 MR. HASKINS: 60-30-30 sounds good. 3 MS. YEE: Okay. 4 MR. WEISS: That's fine, thank you. 5 MS. YEE: Okay, motion to that effect? 6 MR. LEONARD: So moved. 7 MS. YEE: Motion by Mr. Leonard. Is there a 8 second? 9 MS. STEEL: Second. 10 MS. YEE: Second by Ms. Steel. 11 Without objection, that motion carries. 12 Thank you all very much and good luck to you in 13 finding the -- 14 MR. WEISS: Thank you. 15 MS. YEE: -- any additional documentation. 16 Thank you. 17 ---o0o--- 18 19 20 21 22 23 24 25 26 27 28 47 1 REPORTER'S CERTIFICATE. 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, JULI PRICE JACKSON, Hearing Reporter for the 8 California State Board of Equalization certify that on 9 SEPTEMBER 22, 2009 I recorded verbatim, in shorthand, to 10 the best of my ability, the proceedings in the 11 above-entitled hearing; that I transcribed the shorthand 12 writing into typewriting; and that the preceding pages 1 13 through 47 constitute a complete and accurate 14 transcription of the shorthand writing. 15 16 Dated: October 26, 2009 17 18 19 ____________________________ 20 JULI PRICE JACKSON 21 Hearing Reporter 22 23 24 25 26 27 28 48