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 FEBRUARY 1, 2012 10 11 SALES AND USE TAX APPEAL HEARING 12 APPEAL OF 13 WILLIAM BLAINE RIGGLE 14 NO. 417558, 417559(FH) 15 AGAINST PROPOSED ASSESSMENT OF 16 SALES AND USE TAX 17 18 19 20 21 22 23 24 25 26 27 Reported by: Kathleen Skidgel 28 CSR No. 9039 1 1 P R E S E N T 2 For the Board Jerome E. Horton of Equalization: Chairman 3 4 Michelle Steel Vice-Chairwoman 5 6 Betty T. Yee Member 7 8 George Runner Member 9 10 Marcy Jo Mandel Appearing for John 11 Chiang, State Controller (per Government Code 12 Section 7.9) 13 Diane Olson 14 Chief Board Proceedings Division 15 16 For Board of David Levine Equalization Staff: Tax Counsel IV 17 18 For the Department: Scott Claremon Tax Counsel 19 Robert Tucker 20 Tax Counsel IV 21 Kevin Hanks Chief, Headquarters 22 Operations Division 23 For Petitioner: Mitchell B. Dubick Attorney 24 William B. Riggle 25 Taxpayer 26 27 ---oOo--- 28 2 1 5901 GREEN VALLEY CIRCLE 2 CULVER CITY, CALIFORNIA 3 FEBRUARY 1, 2012 4 ---oOo--- 5 MR. HORTON: Good morning. 6 MS. YEE: Good morning. 7 MR. HORTON: Let us reconvene the meeting of 8 the Board of Equalization. 9 Ms. Olson, our first item. 10 MS. OLSON: Our first item today will be C21, 11 William Blaine Riggle. 12 Please come forward. 13 MR. HORTON: Thank you. 14 Mr. Levine, would you please introduce the 15 issues in this case. 16 MR. LEVINE: Good morning, Chairman Horton, 17 Members. 18 MR. HORTON: Good morning, sir. 19 MR. LEVINE: David Levine for the Appeals 20 Division. 21 The issue in this petition of William Riggle is 22 whether Petitioner's personally liable for the unpaid 23 liabilities of 21st Century Oil Corporation and 21st 24 Century Oil-Front Company, pursuant to Revenue and 25 Taxation Code Section 6829. 26 MR. HORTON: Thank you very much. 27 The Petitioner will have 10 minutes to make 28 their presentation. 3 1 Please commence with your introduction for the 2 record. 3 MR. DUBICK: Thank you, Mr. Chairman and Board 4 Members. 5 My name is Mitchell Dubick, and I am counsel 6 for Mr. William Blaine Riggle who sits to my left. 7 If Bill Zures were still alive today, we would 8 not be here. We would not be here judging the fate of 9 Bill Riggle, a man who is nothing more than a loyal 10 employee who followed the express orders of his boss. 11 The sole issue confronting us is whether 12 Mr. Riggle made the decision not to pay over sales tax, 13 or as we contend, only acted at Mr. Zures's direct 14 instruction. 15 Mr. Riggle worked for 21st Century Oil for 16 several years. He owned no stock in the company, had no 17 financial interest, and had no benefit to not pay over 18 the state taxes. 19 If you review, as I'm sure you will, the record 20 in this case, I believe you will see that every piece of 21 relevant evidence supports Mr. Riggle's position. 22 First, there is his own testimony. We 23 understand that some may be skeptical because it is, uh, 24 self-serving, that is, he believes he should not have 25 been liable for this tax, um, and should not have been 26 assessed. But we also have at least three other pieces 27 of convincing evidence. One is a declaration from Kevin 28 Sullivan, a past President of 21st Century Oil. He has 4 1 no reason to help Mr. Riggle, yet he says that Zures 2 made all the financial decisions and that Mr. Riggle was 3 without authority. 4 Similarly, Kenneth Weiss -- not Mr. Riggle's 5 Certified Public Accountant, but the long-time 6 confidante and CPA for Mr. Zures -- he has no reason to 7 tarnish his friend's reputation. And he also states 8 that Mr. Zures, and only Mr. Zures, decided which 9 creditors would be paid. 10 And finally, we have contemporaneous haunting 11 testimony from Mr. Zures himself, whose last words on 12 earth, in his suicide note that he left state, and I 13 quote: 14 "I take full responsibility for all the 15 decisions, and I'm the one that authorized you 16 to do the activities that got us to this 17 place." 18 In contrast, despite all its investigative 19 efforts, Board staff has not been -- has been unable -- 20 um, has not -- excuse me, has been unable to produce a 21 single witness and has not produced a shred of testimony 22 or evidence that big -- that Bill Riggle ever made a 23 decision with respect to the payment of sales taxes. 24 Yes, he was on the bank accounts. And yes, he 25 prepared and signed tax returns. He even went to the 26 Board, at Mr. Zures's direction, to try to get 27 installment agreements. But that proves only that 28 Mr. Riggle knew of the problem, not that he had any 5 1 decision-making role or caused it to happen. 2 Why the Board failed to file a claim in 3 Mr. Zures's estate or to gather any relevant testimony 4 from witnesses, is something only the Board can answer. 5 Even at the time, it does not appear that they 6 did an investigation, and they never asked Mr. Riggle 7 about the company. Instead, staff now contends that 8 Mr. Riggle's failure to volunteer the fact that he was 9 not the decision-maker when he went to ask for an 10 installment agreement at Mr. Zures's direction, somehow 11 makes Mr. Riggle liable. 12 Surely, if the Board wants to hold liable 13 anyone who shows up to enter into an installment 14 agreement on behalf of an employer, the least they could 15 do is ask the person -- is ask that person, who's making 16 the decisions. Having failed to do so, the Board should 17 not now be allowed to ruin Mr. Riggle's life simply 18 because he's the last one standing. 19 I urge you to give this matter your most 20 careful consideration and not to hold Bill Riggle liable 21 for actions he did not direct, he did not control. 22 To ensure that the record of this hearing is 23 clear and that you can satisfy yourselves regarding 24 Mr. Riggle's lack of control, I would now like to have 25 him sworn as a witness. I will ask him a few questions 26 and hope you will question him about anything I may have 27 omitted or which you think is important. 28 MR. HORTON: Ms. Olson. 6 1 MS. OLSON: Please raise your right hand. 2 Please state your name for the record. 3 MR. RIGGLE: William Blaine Riggle. 4 MS. OLSON: Do you swear or affirm to tell the 5 truth in these proceedings? 6 MR. RIGGLE: I do. 7 MS. OLSON: Thank you. 8 MR. DUBICK: Mr. Riggle, how long did you work 9 at 21st Century? 10 MR. RIGGLE: From 1999 until 2006. 11 MR. DUBICK: Did you ever have any financial 12 interest in the company? 13 MR. RIGGLE: No. 14 MR. DUBICK: Did you tell Mr. Zures, during the 15 time that these taxes were accruing, that sales taxes 16 needed to be paid? 17 MR. RIGGLE: Yes, uh, numerous times. 18 MR. DUBICK: And what was his response? 19 MR. RIGGLE: "I will take care of that." 20 MS. MANDEL: Could you come closer to the mike? 21 MR. RIGGLE: "I will take care of that." 22 MR. DUBICK: Did you get that? 23 MS. MANDEL: Yes. 24 MR. DUBICK: Okay. 25 Mr. Riggle, could you have made a decision to 26 write checks to satisfy the liability to the State 27 Board? 28 MR. RIGGLE: Mister -- Bill Zures, he -- he 7 1 controlled the -- the things that occurred at the 2 company, the -- the things that were paid, the things 3 that were, uh -- 4 I would provide him with lists of what the 5 accounts payables were, and he would decide as to what 6 was being paid and what wasn't to be paid. 7 MR. DUBICK: And so you were aware of the fact 8 that sales taxes were accruing, and you brought this to 9 his attention? 10 MR. RIGGLE: Yes, uh, numerous times. 11 MR. DUBICK: Did he tell you what his plan was, 12 if any, to satisfy the liability? 13 MR. RIGGLE: That he was raising the money or 14 he was getting the monies into, uh -- that would pay for 15 the taxes and, uh -- and advance the company. 16 MR. DUBICK: Did there come a time when you 17 spoke to the -- to representatives of the State Board of 18 Equalization? 19 MR. RIGGLE: Yes, I have. 20 MR. DUBICK: And could you tell us, um, how did 21 that occur, uh, whom did you speak to before you went 22 and what happened? 23 MR. RIGGLE: When -- when I was notified to 24 come over to visit with them, and that was their offices 25 in San Marcos, uh, I would, uh -- I met with Bill first 26 and, uh, said that I would assume that they're looking 27 for a payment plan. And he told me within a range of 28 money how much I could afford or I could -- how much I 8 1 could offer up to pay each month, to pay for back 2 taxes. 3 MR. DUBICK: And did you always follow those 4 instructions? 5 MR. RIGGLE: Yes. 6 MR. DUBICK: Did you ever represent to any 7 personnel at the State Board or anyone else that you 8 were the person making the decision to pay or not pay 9 the sales taxes? 10 MR. RIGGLE: No. 11 MR. DUBICK: And did you tell them -- or was 12 there ever a time when they wanted more than you had 13 been authorized to spend? 14 MR. RIGGLE: I -- I believe so, yes. 15 MR. DUBICK: And what did you tell them then? 16 MR. RIGGLE: That I would have to get back to 17 them. 18 MR. DUBICK: And finally, Mr. Riggle, uh, what 19 is your current employment and financial situation? 20 MR. RIGGLE: Uh, I'm a -- I'm 68 years old. I, 21 uh -- I'm, uh, working some consulting work for, uh, 22 some -- the banks on some properties that they've 23 foreclosed on, uh, until they can sell those properties. 24 Uh, I'm drawing Social Security. I have a -- I 25 have a house, uh, with, uh, some equity in it. It's in 26 foreclosure, so I'm trying to, uh, re -- work with the 27 bank to, uh -- I forget the -- I forget the term they 28 use for it. Uh, rework a, uh, mortgage amount. 9 1 MR. DUBICK: Modification? 2 MR. RIGGLE: Modification. Yeah, loan 3 modification. 4 Uh, I'm just going through a -- a process. I 5 have a granddaughter that, uh -- uh, that I'm raising. 6 Uh, we're just going through the process of, uh, 7 adopting her. Uh, that will be completed, uh, actually 8 next Wednesday. 9 MR. DUBICK: You mention that you have a house 10 with some equity, that's in foreclosure. Um, you 11 understand that there's such a thing as a homestead -- 12 MR. RIGGLE: Correct. 13 MR. DUBICK: -- in California? 14 MR. RIGGLE: Yes. 15 MR. DUBICK: Um, is the amount of equity more 16 than that homestead amount? 17 MR. RIGGLE: No. No. 18 MR. DUBICK: That's all the questions I have. 19 If we have any time remaining, Mr. Riggle would 20 be happy to answer any questions. 21 MR. HORTON: Thank you very much. We will 22 return to you on rebuttal. 23 MR. DUBICK: Thank you. 24 MR. HORTON: Department has 10 minutes to make 25 their presentation. 26 Please commence with your introduction. 27 MR. CLAREMON: Good morning, Chairman Horton, 28 Members of the Board. 10 1 I'm Scott Claremon from the Legal Department. 2 With me are Robert Tucker and Kevin Hanks representing 3 staff. 4 We concur with the recommendation of the 5 Appeals Division that Petitioner is liable under Section 6 6829 for the unpaid liabilities of Cent -- of 21st 7 Century Oil Corporation and 21st Century Oil-Front 8 Company. 9 There -- as stated by the Petitioner's 10 representative, there's no dispute as to the first three 11 requirements for personal liability to attach under 12 Section 6829. 13 The companies terminated. They collected sales 14 tax reimbursement, and Petitioner has admitted that he 15 is a responsible person for sales and use tax matters. 16 Uh, with regard to the fourth requirement, 17 Petitioner admits that that he knew the taxes were due 18 and that there were funds available to pay them that 19 were used for other expenses. 20 He claims, however, that he -- he did not have 21 the authority to direct payment to the Board because the 22 authority solely rested with William Zures, the former 23 and now deceased President of both companies. However, 24 Petitioner was the Chief Financial Officer for both 25 companies. He signed numerous tax returns and other 26 documents, and he was identified as the responsible 27 person in two separate questionnaires by former 28 employees, one of whom is Kevin Sullivan, who is one of 11 1 the declarants that, uh, Petitioner's representative 2 mentioned. 3 Um, he also signed checks to the Board and was 4 the signatory on the EFT authorization form. 5 Also, between 2002 and 2007 he communicated 6 with the Board staff on numerous occasions to discuss 7 sales and use tax matters, including making payments -- 8 uh, payment arrangements for the unpaid liabilities, and 9 even to direct payment to the Board to replace bounced 10 checks. 11 At no time during any of these communications 12 was there any indication that Petitioner lacked 13 independent authority to handle these matters and 14 specifically to direct payment. 15 In sum, all the requirements for liability 16 under Section 6829 have been met and the petition should 17 be denied. 18 Thank you. 19 MR. HORTON: On rebuttal, please. 20 MR. DUBICK: Um, I think there's a disconnect 21 between staff's position that because someone had a 22 title and someone had knowledge, that that same person 23 must therefore have had control. 24 They have produced, in the past and again this 25 morning, absolutely no evidence that Mr. Riggle 26 possessed the actual control that is required under 27 Section 6829. 28 All the things that they state only prove that 12 1 he knew about the problem, not that he had it within his 2 control to prevent it or fix it. 3 All the testimony, by declaration, from 4 Mr. Zures himself, and from Mr. Riggle, state that, yes, 5 Mr. Riggle knew about it, but that Mr. Zures ruled the 6 company with an iron hand, that Mr. Zures thought he'd 7 be able to get financing to borrow, and that Mr. Rig -- 8 excuse me, and that Mr. Zures directed Mr. Riggle on a 9 weekly basis, told him which bills to pay and which 10 bills not to pay. 11 The notion that Mr. Riggle is liable because 12 the Board failed to ask him, and I guess he failed to 13 volunteer the fact that he had no control, uh, when they 14 met to discuss installment agreements is the only item 15 from which one might possibly draw an inference. 16 But other than the fact that I carry a 17 power-of-attorney form with me, when I go to negotiate 18 an installment agreement with the Board for my clients, 19 I don't tell them I have no control. They don't ask me 20 if I have no control. 21 If Mr. Zures -- if Mr. Riggle had control, 22 where is the evidence of it? Yes, he had a title. Yes, 23 he had a business card. But they have provided no 24 evidence whatsoever that he, um -- that he actually made 25 the decisions. In fact, all of the evidence, all of the 26 evidence, is that Mr. Zures made the decision. Um, in 27 his last words, thanked Mr. Riggle when he -- when 28 Mr. Zures had no reason to lie, thanked Mr. Zures -- 13 1 thanked Mr. Riggle for being a loyal employee and stated 2 that he, Mr. Zures, was the one who made the decisions 3 that caused these taxes not to be paid. 4 Under these circumstances, I do not believe 5 that Mr. Riggle, uh, is liable under Section 6829. 6 But again, um, would welcome any questions from Board 7 Members if there's anything that we should have 8 asked. 9 MR. HORTON: Thank you very much. 10 Discussion, Members? 11 MS. YEE: Yes. 12 MR. HORTON: Member Yee. 13 MS. YEE: Thank you very much, Mr. Chairman. 14 Um, a question for the Department. Um -- I 15 mean, based on what we've heard from Mr. Riggle today, 16 um, you know, he contends that he, uh, took direction 17 from Mr. Zures. 18 Uh, what would be -- what would be sufficient, 19 um, support, um, to demonstrate that he had no 20 independent authority to act? 21 I mean, I -- and -- and part of what I'm 22 looking for is, um -- well, maybe let me start this. 23 Who signed the seller's permit? Was -- was Mr. Riggle's 24 name on any of the -- 25 MR. CLAREMON: I -- I believe Mr. Riggle was 26 identified on the seller's permit. 27 MS. YEE: Okay. Okay. 28 MR. TUCKER: It would be helpful if there were 14 1 any -- any written communications, e-mails, um, some 2 sort of correspondence, anything that indicated payments 3 or payment schedules. 4 MS. YEE: Okay. 5 MR. TUCKER: I mean, that would be something 6 that could serve as evidence. 7 MS. YEE: Okay. 8 Mr. Dubick, Mr. Riggle, were there any, you 9 know, kind of daily types of correspondence that 10 indicated kind of a routine practice of how you were 11 directed to pay certain items? 12 MR. RIGGLE: There would have been -- I'm 13 sorry. There would have been going through with the -- 14 with the weekly or couple every weeks cash flow. 15 But, uh, the company was closed in '06. And 16 I'm not sure where the files are for any of that stuff. 17 It could be with the attorney that handled the, uh -- 18 uh, the foreclosure bankruptcy. 19 MS. YEE: Okay. 20 MR. DUBICK: We -- we do know, and I'm just 21 reiterating what Mr. Riggle said earlier, that he and 22 Mr. Zures would meet. Mr. Zures -- uh, Mr. Riggle would 23 have a sheet that would show the payables. Mr. Riggle, 24 um, would -- and Mr. Zures would go through them, and 25 Mr. Zures would show him. 26 Um, if those were kept, uh, we were unable -- 27 the bankruptcy, by the time we got involved, had long 28 since happened and they -- I -- we don't know whether 15 1 they were kept by anybody or not. 2 MS. YEE: Mm-hmm. 3 MR. DUBICK: Um, but there is no other 4 information that -- that we are aware of. 5 Um, I would suggest that when counsel says it 6 would be nice if there were things in writing, um, they 7 somehow seem to ignore, um, Mr. Zures's, um, statement. 8 Um, we -- we played the tape at the first hearing. We 9 had it transcribed so you have it -- 10 MS. YEE: Right. 11 MR. DUBICK: -- in front of you. 12 MS. YEE: Right. 13 MR. DUBICK: I did not think, given that we had 14 it to -- that you'd want to hear it again. 15 MS. YEE: Right. No, and I -- 16 MR. DUBICK: It's rather emotional. 17 But I -- I'm just saying we have the guy who 18 made the decision saying "I made the decisions" at a 19 time when he has no reason to fib. 20 MS. YEE: Yeah. No, I understand. 21 Uh, with regard to that statement, um, again to 22 the Department, um, any, uh, sense of whether the 23 liability could have been assigned to Mr. Zures's 24 estate? Is there anything? 25 MR. TUCKER: Um, I'm not aware that we've 26 ever -- ever done so in the past. I mean, I'm sure -- I 27 suppose it could have been. 28 MS. YEE: And we may have a statute problem at 16 1 this point, right? 2 MR. TUCKER: Yes, at this point. 3 MS. YEE: Okay. 4 MS. MANDEL: Your -- your -- your question was 5 hypothetically could they have? 6 MS. YEE: Yes. Could they have? 7 MR. TUCKER: Yes, hypothetically we could 8 have. 9 MS. YEE: Okay. All right. 10 Thank you, Mr. Chairman. 11 MS. STEEL: Um, Mr. Chairman. 12 MR. HORTON: Uh, Member Steel. 13 MS. STEEL: Thank you. 14 Um, so you were paid employee there? 15 MR. RIGGLE: Yes. 16 MS. STEEL: So you never really got any profit 17 from the companies. I guess the last part of it, 18 there's no profits. But, you know, while you were 19 working with Mr. Zures, that you never really got any 20 benefit other than your paychecks. 21 MR. RIGGLE: Correct. 22 MS. STEEL: Okay. 23 Um, to the Department. This transcript here 24 that, you know before he -- I don't know how to say it, 25 killed himself -- that he said he's responsible for 26 everything. How -- how can we prove here that -- you 27 know, if this taxpayer received more money than his 28 paycheck and he had, you know -- he was just paid 17 1 employee here and the transcript itself saying that 2 that, uh, Mr. Zures was all responsible for, you know, 3 the companies. And he's taking all the responsibility 4 that, you know, whatever happened. 5 How much proof that we really need to, uh, 6 provide, as a taxpayer, provide to convince Department 7 that I was just one of the paid employee and I 8 followed -- I mean, you know, how -- how can we do 9 this? 10 MR. CLAREMON: I -- I think we just see the 11 statements in that transcript as somewhat ambiguous as 12 to what he's referring to. 13 He does say he takes responsibility for the 14 business in general. But I don't -- I don't think we 15 see any evidence that he's specifically talking about 16 he's taking responsibility for making payments. 17 MS. STEEL: Well, how many people, before they 18 die, they going to say, yeah, all these payment taxes 19 responsible -- I mean, I am the one responsible for 20 paying taxes. I mean, you know, he's saying that he is 21 responsible for everything here that what happened. 22 Second thing is, uh, my question that, how 23 about the estate, uh, for Mr. Zures? Did he anything 24 and we checked it? And, you know, he seems like he has 25 some insurance policies here for the kids and wife, and 26 we never really went after that; why is that? 27 MR. TUCKER: If there were -- if there were 28 insurance policies for the children, that would have 18 1 been for the -- they would have been paid to the 2 children, so that wouldn't necessarily have been 3 something that we could have collected against. 4 MS. STEEL: But how about other assets or you 5 know -- 6 MR. TUCKER: He wasn't billed as a responsible 7 person. 8 MS. STEEL: Why he was not billed? 9 MR. HANKS: I don't have that information in 10 front of me, Ms. Steel, so I -- I can't tell you exactly 11 why the Department decided not to -- to issue a -- a 12 determination against the estate of Mr. Zures. 13 MR. DUBICK: Ms. Steel? 14 MS. STEEL: Yes. 15 MR. DUBICK: Mr. Chairman, if -- if I may, 16 it's -- 17 MS. STEEL: Sure. 18 MR. HORTON: Sure. 19 MR. DUBICK: -- not an area that I practice in 20 a whole lot. 21 MS. STEEL: Yes. 22 MR. DUBICK: But I do know from some other 23 experiences, and I used to do work for the Internal 24 Revenue Service years ago, um, sometimes the taxing 25 authorities don't realize that they have to go into an 26 estate, proceeding within a certain amount of time. 27 So, I'm not suggesting that happened here. I'm 28 only suggesting that I know it's happened in other 19 1 matters, that they simply don't go in within the statute 2 of limitations for an estate. That is -- that is a 3 possibility. 4 Um, second, with all due respect to my 5 colleague, um, the fact that there were proceeds in 6 the -- uh, there are times, depending on how the 7 insurance policy is held, there may or may not have been 8 assets that would be payable or -- or available for 9 creditors, um, and -- and might have been included in 10 the taxable estate. 11 I don't know how they were held. I don't know, 12 uh, whether Mr. Zures had lots of other assets. Um, we 13 know that he did at one time, but -- but it's -- it's 14 not certainly impossible that he would have used much of 15 his own estate or much of his own money prior to the 16 time that he died. 17 And if -- if I could offer just one other 18 comment. Staff keeps saying that they had these 19 contacts, and this is not the first time at a hearing 20 when I've heard staff argue that the fact that someone 21 came to the Board and dealt with the Board shows somehow 22 that he must have been a responsible person rather than 23 an employee or an agent taking direction. 24 If they're going to use that as a means of 25 imposing liability, it would be nice, and perhaps 26 incumbent on them to ask the person who's coming in, um, 27 what is your role with the company? So that they find 28 out whether they're responsible or not, rather than 20 1 arguing that he should have known to have volunteered 2 that he's only a paid employee. 3 And -- and finally, if it will help, we would 4 be happy to produce W-2s or tax returns, um, if -- if 5 there's any question that Mr. Riggle got anything other 6 than, um, his salary. 7 MS. STEEL: Thank you. 8 MR. HORTON: Mr. Runner. 9 MR. RUNNER: Yeah, um, speak to me, um, 10 Department, in regards to the statements by Kevin 11 Sullivan and by Kenneth Weiss -- um, Weiss, that, um -- 12 that speak pretty specifically to the, uh, limited 13 authority to which, uh, Mr. Riggle's had and the 14 ultimate authority to which, um, the deceased had. 15 MR. CLAREMON: I think those are not 16 contemporaneous statements, um, well after the fact. 17 And in the case of Mr. Sullivan, he did 18 identify Mr. Riggle as a responsible person back in 2005 19 when he filled out the questionnaire, so the staff -- 20 MR. RUNNER: Now how did he -- when you say -- 21 how did he do that? Tell me how that happens? When he 22 says he responds -- he identified him as a responsible 23 party back in 2005, what -- how did he do that and what 24 was the issue about? 25 MR. CLAREMON: It's a questionnaire that simply 26 asks a number of questions, one of which is, "State who 27 is responsible for sales and use tax matters for the 28 company." And he identified Mr. -- 21 1 MR. RUNNER: Okay. But that's -- that's a 2 different question, isn't it? That's a different 3 question than somebody who's responsible for making the 4 decision payment. 5 I can have -- I can have an employee who's 6 responsible for -- for, uh, filling out the paperwork, 7 for doing all those things, but that doesn't necessarily 8 make them the responsible party. 9 MR. CLAREMON: Yeah. There -- 10 MR. RUNNER: Right? 11 MR. CLAREMON: There -- there is -- there is a 12 difference there and -- but then you look -- the staff 13 also looked at these are not contemporaneous statements 14 that were made. 15 MR. RUNNER: Okay. But let's go back to the 16 one thing you pointed out. I'm going to stay on this 17 one issue. Again, because you -- what you've said is 18 that Mr. Sullivan has a conflicting statement, um, 19 because he is -- at one time said that he had -- he was 20 a responsible party. And now you're saying that it's 21 changed from what his statement is here. 22 And my point, I guess, is, that his statement 23 that he made in 2005 doesn't -- may have been limited, 24 it seems to me, to the amount -- to the fact that he was 25 responsible for filing the paperwork, he was responsible 26 for filling out -- you know, dealing -- dealing with 27 the -- the administration of that issue, as opposed to 28 having the authority to make the decisions, right? I 22 1 mean -- 2 MR. HANKS: Senator Runner. 3 MR. RUNNER: Yes. 4 MR. HANKS: If I could add, the purpose of the 5 questionnaires are to elicit the type of information and 6 answer some of the questions that I think all of us 7 have. What is the extent of the -- the responsible, uh, 8 parties who are involved with -- with the operation of 9 the business? 10 So that's the purpose for sending out the 11 questionnaires. Actually, they're fairly detailed 12 questionnaires, asking who is on the premises, who 13 worked, um, in various capacities. What were their 14 capacities? Were they -- were they corporate 15 officers? 16 MR. RUNNER: Is the question -- hang on. Is 17 the question specific to whether or not the individual 18 had the authority to make the decisions in regards to 19 the payment of the -- the tax? 20 MR. HANKS: I think we're looking for the 21 questionnaire now -- 22 MR. RUNNER: Okay. 23 MR. HANKS: -- so we can -- we can share with 24 you what was shared. 25 MR. RUNNER: Because, I mean, I think to me 26 that's the issue. The issue is, to me -- because, 27 again, I don't know how Mr. Sullivan may have looked at 28 the question. But if the question was very specific, 23 1 did he have the authority to make the payments, you 2 know, on his own, then that's a very specific issue and 3 that does then conflict with his later statement. 4 MR. CLAREMON: The question asks: 5 "Provide the name, address and telephone 6 number of any officer or person who had 7 control, supervision, responsibility or duty to 8 act for the business in sales and use tax 9 matters when the business was terminated." 10 MR. RUNNER: Okay. So supervision isn't 11 necessarily -- so that's a broad amount of -- of role, 12 right? I mean, supervision is -- did you say 13 supervision was in that list? 14 MR. CLAREMON: Yes. Control, supervision, 15 responsibility or duty to act. 16 MR. RUNNER: Okay. 17 MR. HANKS: I think the -- the purpose of that 18 questionnaire, again though, is to try and identify 19 those -- those individuals that have any responsibility 20 in the business, but then narrow that focus, too, to try 21 to determine what individuals were ultimately 22 responsible for the -- the reporting, who had knowledge 23 of, uh, sales taxes that were owed, who had knowledge 24 of -- of the sales tax returns that -- that were 25 remitted to the Board, who had knowledge that there was 26 an accounts payable that was owing to Board of 27 Equalization. 28 MR. RUNNER: Right. 24 1 MR. HANKS: So I think that -- that's the 2 information we're looking for. 3 MR. RUNNER: Again knowledge of knowing all 4 that is certainly -- certainly, I don't think anybody's 5 denied that, right? I mean, the taxpayer hasn't denied 6 that he's had knowledge. 7 MR. DUBICK: We fully -- we fully acknowledge 8 that Mr. Riggle had knowledge. It's a question -- 9 MR. RUNNER: Of authority. 10 MR. DUBICK: -- of authority or willfulness. 11 That is, was he the decision-maker? 12 MR. RUNNER: Let me ask you -- let me ask the 13 taxpayer, if you would have -- if you would have gone 14 ahead and written a check out to pay for the liability, 15 what would have happened to you? 16 MR. RIGGLE: I probably would have been let go, 17 fired. One, I couldn't have written it because the -- 18 the amount of money they're talking about wasn't there. 19 But, uh, he would have -- Bill would have let me go for 20 that. 21 MR. RUNNER: Well, what if you wrote it for all 22 the amount of money that was in the checkbook at the 23 time, the checking account at the time? 24 MR. RIGGLE: He would have still let me go for 25 that. 26 MR. RUNNER: Yeah, go ahead. 27 MR. DUBICK: Two things. First, if I heard, 28 um, staff's, um, reading of the form, they asked the 25 1 questions about who had responsibility, control, and 2 I -- I -- I agree with you, sir, that the, um -- it's a 3 much more general question, um, than the one that we're 4 dealing with today. And, if I heard correctly, it asked 5 a question about who had control after the business was 6 terminated. 7 The relevant period here is not when the 8 business was terminated. We know there was no money 9 then. The question is, Who was making the decisions 10 during the time the taxes were accruing? And that 11 question doesn't even ask that. 12 Um, if I may, could I follow -- 13 MR. RUNNER: Real quickly. 14 MR. DUBICK: Could I follow up on your last 15 question about the, um -- 16 MR. RUNNER: Sure. 17 MR. DUBICK: Um, Mr. Riggle, you're -- 18 MR. RUNNER: Still under on oath. 19 MR. DUBICK: You're still under oath. 20 Um, you said that you -- you might have been 21 fired, um, had you written a check. Um, do I understand 22 that there were never enough funds in the account to 23 satisfy the estate -- excuse me, the State Board of 24 Equalization, is that -- is that correct? 25 MR. RIGGLE: That's correct. 26 MR. DUBICK: And second, um, in addition to 27 possibly being fired, was your relationship with 28 Mr. Zures such that you would have defied his 26 1 instructions? 2 MR. RIGGLE: I would not have. It -- it was 3 Bill's company. I mean, I would tell him what was due 4 and what was owed and, uh -- and -- and suggest what 5 needed to be taken care of or paid. But those are his 6 decisions. 7 MR. DUBICK: Thank you. 8 MR. RUNNER: So, while other -- you know, 9 obviously there were other things being paid -- paid at 10 that time, salaries, other -- other -- 11 MR. RIGGLE: Yes. 12 MR. RUNNER: -- other items that were being 13 paid. 14 Um, they were -- the choice to pay those other 15 things, those other items, lights, electricity, payroll, 16 um, would come from -- 17 MR. RIGGLE: Mr. Zures. 18 MR. RUNNER: -- uh, the owner? 19 MR. RIGGLE: Yes, it was. I would -- I would 20 put together the -- the cash need statements, or the 21 accounts payable for -- for a week or two-week period, 22 and he would go through and -- and review those and 23 state which -- which to pay, which not to pay. 24 If -- he wouldn't necessarily say pay SDG&E and 25 pay -- you know. But he would say the utilities, or if 26 this was payroll time, payroll. Or if this was, uh -- 27 Everything else, uh, the vendors, the oil 28 companies, were all on COD, so they were receiving their 27 1 monies, uh, right up front. 2 So it was really the -- the operating expenses 3 of it, uh, that was, uh -- that had to be laid out to 4 what was going to be paid in a period of time. 5 MR. RUNNER: Okay. Thank you. 6 MR. HORTON: Um, question of the Department. 7 There are four elements in the Revenue and Tax Code that 8 must be met. 9 Uh, based on your read of the questionnaire, it 10 appears that, um, it does not ask who had the authority 11 to pay the bills. Can you take another look at that and 12 see if the questionnaire deals with all four elements of 13 the Revenue and Tax Code? 14 MR. HANKS: We'll do that. 15 MR. HORTON: Question of the, uh, Petitioner 16 while they're looking. Um, did you ever make a 17 recommendation to, uh, Mr. Zures to pay the sales tax? 18 MR. RIGGLE: Yes, I did, sir. 19 MR. HORTON: And what was his response? 20 MR. RIGGLE: That I'll take care of that. He 21 was in the process of, uh, refinancing or raising monies 22 for the company. 23 MR. HORTON: You've indicated that you provided 24 a listing of, uh, accounts payable that should be paid. 25 Was sales tax included in that listing? 26 MR. RIGGLE: Yes, sir. 27 MR. HORTON: Do you have a copy of the log that 28 shows that, uh -- that you provided to him that show 28 1 that you recommended that he pay the sales tax? 2 MR. RIGGLE: I do not, sir. 3 MR. HORTON: After Mr. Zures passed, why did 4 you continue to engage in communications with the Board 5 of Equalization, payments and so forth? 6 MR. RIGGLE: Why did I? 7 MR. HORTON: Continue to, uh, engage with the 8 Board of Equalization or engage in the payment of the 9 bills and so forth? Were you authorized at that point? 10 MR. RIGGLE: Yes. His -- his wife, Maggie, 11 went through and hired an attorney and a receiver to 12 help run the company. And they continued me as -- I was 13 basically the only employee left in the offices there to 14 continue to work -- do the operations while they made 15 decisions of what was going to happen with the 16 company. 17 MR. HORTON: So did your authority change 18 subsequent to his death? 19 MR. RIGGLE: In a sense, no. I'm just working 20 for another person. Uh, Maggie went through and hired, 21 like I said, these two people that now were leading the 22 direction of how to, uh -- what to do with the company 23 and how to, uh, deal with the various, uh, debts that it 24 had. 25 MR. HORTON: They didn't consult you as the 26 sole employee? 27 MR. RIGGLE: I had a list of all the -- of the 28 debts that were there, yes, sir. 29 1 MR. HORTON: Okay. 2 Question of the Department. The testimony 3 provided by the former CEO and accountant, is there a 4 reason that wasn't taken into consideration? 5 MR. CLAREMON: It was -- it was taken into 6 consideration. But since it wasn't -- it was weighed 7 against the other evidence, and since they weren't 8 contemporaneous statements, the Department still found 9 that the evidence, uh, pointed to liability. 10 MR. HORTON: Has other taxpayers entered into a 11 payment plan? Are there any other potential responsible 12 parties? 13 MR. CLAREMON: For this period, no. 14 MS. MANDEL: Question. 15 MR. HORTON: Ms. Mandel. 16 MS. MANDEL: Um -- 17 MR. DUBICK: I'm sorry. If I may. Um, I may 18 be incorrect, but we were told that -- that there was 19 another gentleman, at least for part of this period. 20 That may be incorrect, but that was the information we 21 were told. 22 MR. CLAREMON: Um, there was another matter on 23 the calendar today. That was for the subsequent period 24 for 21st Century Oil-Front Company. 25 MR. DUBICK: All right. 26 MR. HORTON: So that's subsequent to the period 27 before us? 28 MR. CLAREMON: Yes. 30 1 MR. HORTON: Okay. 2 Member Mandel. 3 MS. MANDEL: This might be in the materials, 4 but I missed it. It's just a little follow-up to 5 Mr. Horton's questions. 6 Um, did the company go into bankruptcy before 7 or after Mr. Zures's death? It was before he -- 8 MR. RIGGLE: After. 9 MS. MANDEL: After. 10 MR. HORTON: The questionnaire, did you -- 11 MR. CLAREMON: It -- it does not specifically 12 ask for who had responsibility to pay. That could be 13 something that should be added to it. And as Mr. Hanks 14 pointed out, it's -- it's more to identify and narrow 15 down who the responsible parties are. 16 MR. HORTON: So it's the Department's position 17 that all four elements of the Revenue and Tax Code have 18 been met? 19 MR. CLAREMON: Correct. 20 MR. HANKS: Yes. 21 MR. TUCKER: Absolutely. 22 MR. HORTON: And is this document part of the 23 contemporaneous evidence that the Department's relying 24 on? 25 MR. CLAREMON: It is -- it is part of the 26 record that we're relying on. 27 MR. HANKS: Yes. 28 MR. HORTON: Despite the fact that one of the 31 1 elements is missing from the questionnaire? 2 We might modify that questionnaire, by the 3 way. 4 MR. CLAREMON: I think the questionnaire -- oh, 5 sorry. 6 The questionnaire asks to identify responsible 7 persons. I just don't think it breaks down the elements 8 of the liability. 9 MR. HANKS: There's additional work that -- 10 that takes place after the -- the questionnaires are 11 gathered. So the information contained in those 12 questionnaires are -- are typically verified with 13 additional information through our Secretary of State -- 14 MS. MANDEL: Because the -- 15 MR. HORTON: Can you -- 16 MS. MANDEL: Oh, go ahead. 17 MR. HORTON: -- delineate the evidence that 18 meets all four of the elements? 19 MR. CLAREMON: Yes. Um -- 20 MR. HORTON: I know you mentioned it in your 21 original, but it seems that this document doesn't meet 22 all -- you know, its own testimony. 23 Did we ever ask him whether or not he -- and 24 what was his response? 25 MR. CLAREMON: The -- it was -- it was 26 undisputed as to the first three elements. And there's 27 significant documentary evidence as well. Um, there 28 were questionnaires and affidavits that stated that 32 1 sales tax reimbursement had been collected. And, um, 2 Petitioner -- 3 MR. HORTON: Questionnaires of the -- of whom? 4 MR. CLAREMON: Customer affidavits who had paid 5 sales tax. 6 MR. HORTON: That's not in dispute. 7 I'm trying to -- I'm trying to identify that 8 all four elements have been met. Uh, that's one, and 9 that's not in dispute. 10 MR. CLAREMON: Yeah. And then the 11 responsible -- 12 MR. HORTON: And correlate that to the 13 evidence, is what I'm trying to accomplish here. 14 Because as we weigh the preponderance of the evidence, 15 you know, we've got to really understand in each 16 category. And if you happen to have evidence in one 17 category that sort of outweighs the documentary 18 evidence, then possibly in that particular category we 19 have not met our, uh, objective. 20 So take me through this process, if you will. 21 MR. CLAREMON: Uh, with regards to willfulness, 22 we note that he had communication with the Board staff 23 from the -- from our records. We also note that he, um, 24 was signing many of these tax returns. So there was 25 knowledge, um, of the taxes being owed. 26 With regard to -- we also note that there -- 27 there are records showing that, uh, wages were being 28 paid and fuel purchases were being made, so that there 33 1 was -- as each of these amounts are accruing, there's 2 money to pay them. 3 MR. HORTON: Okay. 4 MR. CLAREMON: And so then the final -- the 5 final part of that is whether, um, the Petitioner had 6 the authority to pay. And that's where we look to the 7 records showing that he was arranging for these 8 payments, and he was telling the Board that he was going 9 to make these payments, and that his name shows up on 10 all these -- these documents. 11 And at no time in our records is there any 12 indication that -- that he had to discuss it with 13 Mr. Zures or he didn't have the authority to make the 14 decision then, that he had to go back. 15 And maybe the question wasn't specifically 16 asked, but you would think in all these communications, 17 there might be a record of that. 18 MR. HORTON: Well, what I'm looking for is 19 something that says that the Petitioner had control and 20 authority to pay. 21 MR. HANKS: I -- I think the substantial 22 evidence, Mr. Horton that -- that the Department has, is 23 that we know in looking at various corporate documents 24 that the Petitioner is identified as the CEO of the 25 business, the CFO, a Vice President and Secretary. 26 He had signed several of the sales and use tax 27 returns. He signed checks and payment of the sales 28 taxes. Uh, and he met with us on future -- not future, 34 1 on several occasions, uh, to arrange for payments of -- 2 of amounts that -- that he knew were owing to Board of 3 Equalization. 4 MR. HORTON: Okay. 5 MR. HANKS: And so I think that's -- that's 6 really the totality of the evidence that we have that -- 7 that indicates willfulness. 8 MR. HORTON: And it's the Department's position 9 that -- I got the willfulness. It's the Department's 10 position that that refutes the testimony that there is 11 no -- he has no control? He is echoing, parroting what 12 he has been told to say. 13 MR. CLAREMON: Correct. 14 MR. HORTON: Further discussion, Members? 15 MR. RUNNER: Just real quick. Just real quick. 16 MR. HORTON: Mr. Runner. 17 MR. RUNNER: And I think what -- again, the 18 thing that makes this a little more, um, apparent, to me 19 at least, is that he had no benefit for not paying it. 20 He was -- he was an employee. You know, and I 21 know that somehow that doesn't go to the core of what 22 the test is. But often times these try to -- you know, 23 you end up dealing with people who are making financial 24 decisions for their own benefit because they're using 25 the money for this instead of -- for themselves or 26 whatever purposes. 27 He had no benefit on that side. And so the 28 issue for me then is, why -- again, it undermines, for 35 1 me, the whole idea that just because he had these 2 positions, and certainly there have been cases before 3 us, with people with all of those titles who we have not 4 found as -- as, uh, individuals who have responsibility. 5 The titles themselves don't grant the 6 responsibility, correct? 7 MR. HANKS: The titles in and of themselves do 8 not. 9 MR. RUNNER: Right. You have to have the 10 authority to actually be able to make the decision and 11 decide not to pay the BOE or to -- or to pay something 12 else instead. 13 MR. HANKS: That's correct. 14 MR. RUNNER: Okay. Thanks. 15 MR. HORTON: Do we have a duty statement by any 16 chance? Copy of a duty statement? 17 MR. TUCKER: Not that we're aware of. 18 MR. CLAREMON: Not that we're of, no. 19 MR. HORTON: Just curious. I know it's a 20 reach. 21 All right. 22 MR. DUBICK: Excuse me. I'm sorry. What's a 23 duty statement? 24 MR. HORTON: What is a duty statement? 25 MR. DUBICK: Oh, a job description for 26 Mr. Riggle. I'm sorry. Thank you. 27 MS. YEE: Mr. Chairman? 28 MR. HORTON: Member Yee. 36 1 MS. YEE: Mr. Levine has been, I think, wanting 2 to jump in here. Can we just see -- 3 MR. LEVINE: Oh, I'd be hap -- I'd like to -- 4 yeah, there are three basic things for willfulness, 5 which you've heard. Knowledge, we don't -- in the 6 normal case, by definition, a CFO -- the job 7 description's in the statute -- they do by default have 8 authority. 9 And here, all the evidence, besides the 10 statements, from the Department's point of view, was 11 consistent with that. And we know he had knowledge, 12 there's no dispute. And the money was flowing, so 13 there's money. It all falls on whether he had 14 authority. 15 Six or seven years ago, we'd be done because 16 he's CFO and we'd be done. But, uh, about five years 17 ago Appeals recommended, and the Board agreed, that we 18 should be viewing this a little more reasonably and 19 accepting that a person who, although the title and the 20 statute indicates that they have authority, they don't 21 have to put their job on the line and get fired to defy 22 the higher authority who says, "Do not pay it." That's 23 the test. 24 Here, all of the, um, information that the 25 Department had was consistent with the fact that he was 26 CFO and had authority, and it's up to Petitioner to 27 produce the evidence to override all that evidence. 28 And what it comes down to is, if you believe 37 1 what he's telling you, I'd recommend grant. If you 2 think that the record doesn't support it -- and your 3 view on life can change. Being older, um, I see that. 4 Um, if you think that perhaps his memory is not correct, 5 then you should deny. That would be my recommendation. 6 If you believe him, I think that shows he 7 didn't have authority. But if he could have -- he had 8 the check-writing authority. He could have written it. 9 Um, and then he would have had to go back and tell his 10 boss. And, uh, the Board's agreed that we don't require 11 someone to be fired. If they show that they could not 12 do it without being fired, then we've accepted they did 13 not have the authority. 14 MR. RUNNER: Can I just follow up with Mr. 15 Levine? 16 MR. HORTON: Mr. Runner. 17 MR. RUNNER: Just a -- just a quick kind of -- 18 try to kind of -- 19 MR. HORTON: My apologies. 20 MR. RUNNER: Oh, I'm sorry. Yeah, that's 21 right. 22 MR. HORTON: Mr. Runner. 23 MS. YEE: I don't -- 24 MR. HORTON: Mr. Runner. 25 MR. RUNNER: Um, just trying to figure out, 26 again, the role of -- of the, um -- of the Department 27 there. Um, so the Department can assert responsibility, 28 and it's the taxpayer's job -- 38 1 MR. LEVINE: Willfulness. 2 MR. RUNNER: -- to -- to show that their 3 assertion is wrong? I -- I -- see, I kind of though it 4 was our responsibility to prove authority. 5 MR. LEVINE: When -- when you have a CFO -- 6 MR. RUNNER: Right. 7 MR. LEVINE: -- and, uh, that position, pretty 8 much by definition, has the authority to pay the bills. 9 But we see in real life, everything else is internal to 10 the corporation. 11 MR. RUNNER: Let me -- let me just disagree 12 with you there. I had companies and I had CFOs, and 13 they didn't have the authority. 14 So, how do you -- how do you -- what brings you 15 to the conclusion that by the title, a CFO has the 16 authority? 17 MR. LEVINE: Well, I don't recall if he was a 18 controller also. 19 MR. RUNNER: But even a controller -- I have 20 controllers, too. 21 MR. LEVINE: It's in the statute, I believe -- 22 MR. RUNNER: In what statute? The statue of? 23 MR. LEVINE: The corporation's statute assigns 24 the basic authorities which can be changed internally. 25 MR. RUNNER: Right. It could be changed by 26 each corporation, right. 27 MR. LEVINE: But this is -- this is the 28 standard thing. There's a limit to what a third party, 39 1 the Department, can know about the internal workings -- 2 MR. RUNNER: Right. 3 MR. LEVINE: -- of the corporation. So -- 4 MR. RUNNER: So our responsibility is still to 5 prove, though. 6 MS. MANDEL: Mr. Levine. 7 MR. LEVINE: To prove based on the available 8 evidence. And then it comes down to, usually, in this 9 type of case, if you believe someone. 10 MR. RUNNER: If you believe. 11 Okay. Thank you. 12 MR. HORTON: Member Mandel. 13 MS. MANDEL: Thank you. 14 MR. LEVINE: I would point out that I think 15 that the money -- they don't have to be an owner. It 16 may bear on believability, but it's not technically part 17 of the test. 18 MR. RUNNER: Yeah. Yeah. 19 Thank you. 20 MR. HORTON: Member Runner -- I mean, Member 21 Mandel. 22 MS. MANDEL: We look so much alike. 23 MR. HORTON: I looked right at her and I said 24 "Member Runner." 25 MS. MANDEL: Um, is what you're saying, 26 Mr. Levine, is that -- that through the corporation's 27 code and the -- the fact of the title CFO, that the 28 Department makes a prima facie case, and then it's what 40 1 we get is people who may have those titles, may say, 2 but, in fact, I did not have the authority, and here's 3 why and here's what I can show you and tell you, and so 4 they're basically overcoming the prima facie case. 5 It's not -- it's not that it's absolutely 6 proven, because of course the taxpayer hasn't put on his 7 case. But the Department's put forward a prima facie 8 case. 9 MR. LEVINE: Exactly. And that's what we've 10 laid out. 11 MS. MANDEL: It's the magic words that I didn't 12 hear you saying -- 13 MR. LEVINE: Yes. 14 MS. MANDEL: -- but that I think you were 15 meaning. 16 MR. LEVINE: Yeah. Yeah. That's -- that's the 17 way we've laid it out when we've, um, done it fully and 18 properly. We talk about the prima facie case. 19 MS. MANDEL: Okay. Thank you. 20 MR. HORTON: Mr. Riggle, um, when did 21 Mr. Zures -- at what point during the period in 22 question, did Mr. Riggle request -- 23 MR. DUBICK: Mr. Zures. 24 MR. HORTON: Mr. Zures -- my apologies -- 25 request to be notified of all the accounts payable? 26 When did this participation, extensive participation of 27 Mr. Zures begin? 28 MR. RIGGLE: When, uh, Mr. Sullivan left the 41 1 company. And he left at the end of '03 -- or the end of 2 '02, I'm sorry. 3 So during -- at the beginning of '03, Zures 4 took, uh, direct control -- or direct involvement in the 5 operations of the company. 6 MR. HORTON: Okay. 7 MS. MANDEL: So end of '02 is what -- so -- 8 MR. HORTON: Could you repeat the date for 9 Member Mandel? 10 MR. RIGGLE: You asked when Mr. Zures took 11 direct involvement. And I'm saying Mr. Sullivan left 12 the company at the end of '02. 13 MS. MANDEL: Okay. 14 MR. RIGGLE: And Zures then was, uh, overall 15 operating as the CEO/President. 16 MR. HORTON: When -- when -- please allow him. 17 When did you begin to engage with Mr. Zures, uh, and 18 these discussions about the payment of the bills? 19 MR. RIGGLE: Directly at the beginning of '03, 20 the end of '02, that type of thing. 21 MR. HORTON: Okay. 22 MS. MANDEL: And how did it work before that? 23 MR. RIGGLE: I would prepare the -- the 24 payables and give that to Mr. Sullivan, who was 25 President, and he would interact directly with 26 Mr. Zures. And the decisions go back as to what was 27 being processed. 28 MS. MANDEL: So -- so the only difference, in 42 1 your testimony, between when Mr. Sullivan was there and 2 after Mr. Sullivan left was that in the earlier period 3 Mr. Sullivan was the intermediary. 4 MR. RIGGLE: Correct. 5 MS. MANDEL: So in the earlier period, could 6 you have written the check anyway? Or -- 7 MR. RIGGLE: There was no difference in -- in 8 my -- in my operating of it. I just would give it to 9 one person. I was still getting my answers back from 10 what to do with the processing. 11 MS. MANDEL: Okay. Thank you. 12 MR. HORTON: Do you have a personal 13 relationship with Mr. Zurich (verbatim)? 14 MR. RIGGLE: Mr. Zures? 15 MR. HORTON: Zures. 16 MR. RIGGLE: Uh, no, we didn't socialize. So, 17 uh -- I mean, I knew him. 18 MR. HORTON: Is there any reason that he would 19 indemnify you, in his final statements? 20 MR. RIGGLE: I don't -- I don't know. 21 MR. HORTON: Okay. 22 MS. STEEL: Didn't -- didn't you answer that 23 you say you were the only one left from the company, 24 that's why Mr. Zures asked you to take care of it? 25 MR. RIGGLE: Most likely. I mean, he -- he 26 asked me in his -- it wasn't -- in his tape that he 27 sent, there were other things he asked me to do is try 28 to take out -- look for the family and help some 43 1 employees find jobs and things like that. There was a 2 variety of things in -- in the tape that he sent. 3 MR. HORTON: Further discussion, Members? 4 Hearing none, is there a motion? 5 MS. YEE: Move to take the matter under 6 submission. 7 MR. HORTON: Moved by Member Yee to take the 8 matter under submission. 9 Second by Member Steel. 10 Without objection, such will be the order. 11 Thank you very much for, uh, appearing before 12 us today. The Board will take your matter under 13 consideration later on this evening and send you a 14 written report of our decision. 15 MR. RIGGLE: Thank you. 16 ---oOo--- 17 18 19 20 21 22 23 24 25 26 27 28 44 1 REPORTER'S CERTIFICATE 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, KATHLEEN SKIDGEL, Hearing Reporter for the 8 California State Board of Equalization certify that on 9 February 1, 2012 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 44 constitute a complete and accurate 14 transcription of the shorthand writing. 15 16 Dated: May 11, 2012 17 18 19 ____________________________ 20 KATHLEEN SKIDGEL, CSR #9039 21 Hearing Reporter 22 23 24 25 26 27 28 45