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 APRIL 26, 2012 10 11 SPECIAL TAXES APPEAL HEARING 12 APPEAL OF 13 LOH SUN INTERNATIONAL, INC., 14 KENT LA, NANCY LA and JOHN LA 15 NO. 480989, 506428 16 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 Joann Richmond 14 Chief Board Proceedings Division 15 16 For Board of David Levine Equalization Staff: Tax Counsel IV 17 18 For the Department: Pamela Mash Tax Counsel 19 Jay Keffelew 20 Business Taxes Specialist II 21 Stephen Smith Tax Counsel IV 22 23 For Petitioner: John La 24 Taxpayer 25 Nancy La Taxpayer 26 27 The Interpreter: Ashley Dang 28 ---oOo--- 2 1 5901 GREEN VALLEY CIRCLE 2 CULVER CITY, CALIFORNIA 3 APRIL 26, 2012 4 ---oOo--- 5 MR. HORTON: Ms. Richmond. 6 MS. RICHMOND: Our last hearing for today is 7 Item D1, Loh Sun International, Inc., Kent La, Nancy La 8 and John La. 9 Please come forward. 10 And we do have an interpreter for this case. 11 MR. HORTON: Uh, thank you very much. 12 Mr. Levine, would you, uh, please, uh, 13 introduce the issues in this case. 14 MR. LEVINE: As Ms. Richmond said, we do have 15 an interpreter for this case. So, it's going -- it's 16 going to be full interpretation, so I'm going to pause 17 after each sentence. 18 MR. HORTON: Okay. Thank you. 19 MR. RUNNER: Mr. Chair, can we just take a -- 20 take a one-minute break before we start this? 21 MR. HORTON: Um -- okay. Let's take a 22 one-minute break. My apologies. 23 MR. JOHN LA: Sure. That's fine. That's fine. 24 (Recess taken.) 25 MR. HORTON: Members, uh, in interest of 26 maintaining a quorum, um, I would, um, ask for the 27 taxpayers' indulgence, as well as the, uh, Department 28 and Mr. Levine. And it should only take us a few 3 1 minutes, but we're going to take up the items that we 2 need to vote on, um, in accommodation of the Members as 3 well as the taxpayers. 4 Okay. 5 (Recess taken.) 6 MR. HORTON: Mr. Levine, please pick up where 7 you left off. 8 MR. LEVINE: Okay. 9 Ashley Dang is from this district office. She 10 will interpret. And I'm going to ask her to start 11 interpreting as I go. 12 This is a full interpretation, so I ask that 13 you stop every couple sentences, or three at most, so 14 she can translate. 15 THE INTERPRETER: I just begin? 16 MR. HORTON: Yes. Um, the -- 17 Ms. Dang. 18 THE INTERPRETER: Yes. 19 MR. HORTON: Uh, the taxpayer will have ten 20 minutes to make their presentation. 21 Into the mic, please. 22 Uh, and we would ask that you would commence 23 with your introductions. 24 MR. LEVINE: Let me -- I just wanted to -- I 25 need to introduce the issues, just briefly. I just 26 wanted to cover that. 27 MR. HORTON: Oh, that's sufficient 28 introduction. 4 1 MR. LEVINE: Okay. 2 MR. HORTON: No, I'm just kidding. 3 Go -- go right ahead. Just kidding. 4 Mr. Levine, please. 5 MR. LEVINE: The issues in this petition are 6 whether the individual Petitioners operated as a 7 partnership for the subject enterprise, whether 8 adjustments are warranted, and whether fraud has been 9 established by clear and convincing evidence. 10 MR. HORTON: I would ask that the 11 interpretation be -- uh, pull the mic just a little 12 closer. 13 THE INTERPRETER: Um, she say, "No. It's not a 14 partnership." 15 MR. HORTON: Okay. Um, accept it. 16 Uh, the taxpayer will have ten minutes to make 17 their introduction. We would ask that they commence 18 with their introduction. 19 I'm sorry. Ten minutes to make their 20 presentation. We would ask that they commence with 21 their introduction for the record. 22 MR. JOHN LA: Okay. Good afternoon, Chairman 23 and Ladies and Gentlemen of the Board. 24 Uh, my name is John La. I'm here, uh, to 25 represent myself as an individual and to state the case. 26 Okay? 27 Uh, Loh Sun corporation was started by my 28 father, Kent La, in 1988. The business was run by my 5 1 father and mother. My father gave me the title of vice 2 president because, in the Chinese tradition, a father 3 will want his son to succeed him. The title -- 4 MR. LEVINE: If your mother is going to have 5 full interrup -- interpretation, we need to interpret 6 everything, whatever she wants -- 7 MR. JOHN LA: Oh. 8 MR. LEVINE: -- including yours. 9 MR. JOHN LA: Yeah, but that's going to take 10 forever. I mean -- 11 MS. STEEL: But when you wrote the statement, 12 did you explain to her? 13 MR. JOHN LA: Yes, she -- 14 MS. STEEL: So she understands -- 15 MR. JOHN LA: Yeah, she -- 16 MS. STEEL: -- exactly what you are talking 17 about? 18 MR. JOHN LA: Exactly. Oh, yeah, yeah. 19 Definitely. 20 MS. STEEL: Okay. 21 MR. JOHN LA: So she -- she -- she already has 22 a record of this. 23 MS. STEEL: Okay, good. Good. Then you can -- 24 MR. JOHN LA: I'm fine if he insists on doing 25 the interpretation. 26 MR. LEVINE: No, we're trying to do whatever 27 she wants. 28 MR. JOHN LA: Oh, okay. 6 1 For the record, she has a copy of my statement 2 beforehand and also a complete translation from me to 3 her as to what's been, uh, written and what I'm going to 4 present to the Board. 5 MR. HORTON: Thank you. 6 MR. JOHN LA: Okay. 7 Okay. The title of vice president was bestowed 8 on me with no official responsibilities or duties. I 9 had no responsibility in the day-to-day operation of Loh 10 Sun. I was not knowledgeable about the business because 11 I did not prepare, sign, or submit returns, do 12 accounting functions, negotiate sales or prepare sale 13 invoices, order product, pay bills, or supervise 14 employees. My main point is that I did not do anything 15 for Loh Sun except hold the empty title of vice 16 president. 17 The State, in the criminal case, had gathered a 18 tremendous amount of evidence; and the majority of 19 evidence points to other people that were involved in 20 the fraud and not myself. The evidence showed that 21 Nancy La, Yopie Sioeng and Iktae Jang were the primary 22 conspirators in the case. See Exhibit 2 and 3 that I've 23 already submitted to the Board. 24 Yopie was responsible for purchasing the 25 cigarettes from abroad. Iktae Jang was responsible for 26 importing the cigarettes through his bonded warehouse 27 and transferring them to Nancy. And finally, Nancy's 28 role was to sell the cigarettes. 7 1 There was a symbiotic relationship between the 2 three. All three worked closely together and shared in 3 the profits of the operation. All three have pled 4 guilty in the criminal case, with Nancy La receiving 5 three years in prison. And Yopie and Iktae Jang each 6 paid 500,000 in restitution. 7 My case was finally dropped, and I was cleared 8 of all charges against me. Staff contends that my 9 charges were dropped as part of a plea deal. That is 10 not true at all. There is nothing in the case file or 11 official court transcript that even suggests that was 12 the case. 13 See page 19 of your brief summary that staff 14 presented. On footnote 23, staff states: "We cannot 15 locate any documents specifying the reasons why the 16 charges against John La were dropped." Yet staff still 17 wants to misconstrue the fact to imply my guilt. 18 With all the evidence in the case presented, it 19 was clear I had no role in the fraud, and subsequently 20 the D.A. dropped all charges in my case. 21 So if there's any partnership that staff wants 22 to hold accountable, it should be the one with the three 23 main conspirators who are responsible for the 24 importation and distribution of untaxed cigarettes. 25 Keep in mind that all three have pled no contest to the 26 charges and there's no doubt in terms of guilt. 27 As you have read through the summary that staff 28 has submitted to the Board, all the evidence clearly 8 1 points to Nancy, Yopie or Iktae Jang. However, staff, 2 in summary, will claim it was the partnership of Loh 3 Sun, Kent, John, and Nancy. There is no such 4 partnership. 5 The State's criminal case is very clear, and it 6 shows who the major players were in the case. With all 7 the facts presented, the overwhelming evidence points 8 elsewhere, and it shows that I am not a partner of this 9 operation. 10 The three were convicted by the justice system 11 and I was exonerated, yet staff wants to hold me 12 accountable as a partner in this operation. If I was a 13 partner and played a role in this operation, why was I 14 the only one that was cleared of all the charges against 15 me? Is it not logical to think that the three that pled 16 guilty in the criminal case should also be held liable 17 for the tax burden? 18 Staff's reluctance to look at the true 19 partnership defies logic when all the facts are 20 undisputed and all the parties involved have already 21 admitted their roles in the crime. 22 Staff allegations of me involved in the 23 partnership is based on money deposited in my account. 24 There's no link between deposits in my accounts to sale 25 invoices from Loh Sun. No such evidence existed in the 26 criminal case, and staff has not produced any evidence 27 to support their allegations. 28 My main profession is a day trader. I've been 9 1 trading since 1998. As a day trader, I got many margin 2 calls during that period of time when the market was 3 going down; so I have to transfer money in and out of my 4 accounts to my broker to meet those margin calls. 5 At times when I did not have enough money, 6 Nancy did deposit some money into my account as loans to 7 help me cover those margin calls. After the calls were 8 met and the money was transferred back to my account 9 from my broker, I would return the money to her. 10 Staff also claims that there were large amount 11 of sales were being deposited in my personal account; 12 there's no such proof of that. It would be extremely 13 easy to show any deposits that match any sale invoices 14 for the cigarettes sold. There aren't any deposits in 15 my accounts that matches with any payments on the sale 16 invoices noted by staff. 17 I also want to show how staff has 18 misrepresented some of the facts of the case. Gil -- in 19 Gil Haas memorandum, page 8, second paragraph, staff 20 Investigator Sacasa states that a set of books and 21 records were maintained by individuals Kent, Nancy, and 22 John La. 23 That is not accurate at all because all the 24 books and records were maintained by one person, and 25 that's Nancy La. All the writings and the journal 26 entries and sale invoices were written in Nancy's 27 handwriting. John Lim, the office manager, also 28 testified that Nancy handled the figures and numbers for 10 1 bookkeep -- bookkeeping. 2 All the evidence found in Nancy's or Yopie's 3 handwriting. In all the evidence seized, none of my 4 handwriting ever appeared on any journals or invoices or 5 any matter dealing with Loh Sun, such as a monthly 6 cigarette tax reports. 7 Staff contends that there are all these 8 deposits going to my account from sales invoices. 9 However, the staff worksheets in Exhibit 4 represent 10 about 99 percent of the sales activity, according to 11 staff auditors. 12 If you look at Column H, uh, it shows where the 13 proceeds were deposited in. The transactions for year 14 2001 to 2003, please note that none of those belonged to 15 me. 16 The codes in Column H represent: A, deposit 17 proceeds to La Bihn Tan account number; B, deposit 18 proceeds to Nancy La account number; C, paid 19 cash/check/cashier's check; D, Washington Mutual -- I 20 don't have a Washington Mutual account -- E, John Lim B 21 of A account number; F, on account; G, Cathay Bank 22 Ey How Joa; H, deposit Quin Sun account number. 23 All the deposits were accounted for in other 24 people's account. And why is it that I don't have my 25 own code J, deposit in John La's account? 26 There are no evidence that shows that funds 27 deposited in account were related to sales of 28 cigarettes, yet staff claims that it was mostly 11 1 deposited in my account. 2 The fact that there's no such transaction -- 3 because if there were, I would not have been exonerated 4 in the criminal case and I would not have been -- I -- 5 if not, I would have been easily convicted of all 6 charges. Such incriminating evidence would not be 7 ignored by State prosecutors. 8 Nancy has admitted all her wrong-doings and 9 accepted all the responsibilities for her mistakes. She 10 has paid a huge price for those mistakes. In addition 11 to serving three years in prison, Nancy lost her 12 American dream when in 2007 BOE closed down Loh Sun, her 13 business that she and my father built up since 1988. 14 She is tormented by her shame and guilt daily. After 15 serving three years in prison, she has been in very poor 16 health. Last year her liver failed; and less than nine 17 months ago, she required a liver transplant. 18 She has a different perspective in life now and 19 just wants to accept responsibility for what she has 20 done and move forward with this case. She is here today 21 to answer any questions you may have and to set the 22 record clear that there is no such partnership. 23 With all the evidence presented to you in the 24 summary briefs, please look at each evidence with an 25 open and unbiased view. Staff has inaccurately been 26 presenting some of the facts to spin it the way staff 27 wants you to view it. Staff has based its allegations 28 on false assumptions because there are no facts to 12 1 support staff's assertion of my involvement. 2 Staff has passed judgment on me, using guilt by 3 association. Yes, I am a corporate officer, and yes, I 4 am the son of Kent and Nancy La. But that does not make 5 me a partner in the operation in which I played no role 6 in. 7 Staff's theory of my involvement based on 8 deposits into my account is seriously flawed because it 9 lacks concrete evidence to support their assumptions. 10 There is no link between any deposits in my account with 11 sales invoices of Loh Sun. 12 Staff allegations of me being a partner is 13 without merit because it's based on -- upon an 14 assumption that is not true or accurate. If staff wants 15 to hold any partnership accountable, the criminal case 16 has provided a solid foundation to hold those liable for 17 the tax burden. All the participants in the fraud have 18 pled no contest, and there's no doubt as to who was 19 involved in the operation. However, staff chooses to 20 hold the one person that was cleared of all charges 21 accountable in the partnership and disregard the two 22 other guilty parties. Please explain how this is 23 possible and what is staff's motive to punish the 24 innocent and free the guilty ones of the tax burden? 25 The facts remain that Nancy, Yopie, and Iktae 26 Jang were the three people responsible for this 27 operation. They should be held accountable for the tax 28 burden and not the fabricated partnership of Loh Sun, 13 1 Kent, Nancy, and myself. 2 MR. HORTON: Thank you very much. 3 MR. JOHN LA: Thank you. 4 MR. HORTON: We'll now go to the Department. 5 The Department has ten minutes to make their 6 presentation. 7 MS. MASH: Thank you, Mr. Chairman, Members of 8 the Board. 9 I'm Pamela Mash with the Board's Legal 10 Department, along with Steve Smith and Jay Keffelew 11 representing staff. 12 Petitioner has operated as an unlicensed 13 distributor of cigarettes and are liable for the excise 14 tax on unreported distribution of cigarettes in 15 California. 16 THE INTERPRETER: Do I need to talk into 17 microphone? 18 MR. HORTON: Yes. 19 THE INTERPRETER: Okay. 20 You can continue. 21 MS. MASH: Continue? 22 Petitioners imported and sold cigarettes with 23 counterfeit tax stamps, using the basement of Loh Sun's 24 business location in Los Angeles to store the illegal 25 cigarettes. 26 The cigarettes, as well as counterfeit stamps, 27 invoices, a double set of books and records, and a large 28 amount of cash were found when Board investigators, CHP 14 1 officers, and ATF agents executed search warrants at the 2 business location and the Petitioners' residences. 3 Seized bank -- bank records show wire transfers 4 from Kent and John La's personal bank accounts for 5 purchases of counterfeit cigarettes. And payments 6 deposited into the personal bank accounts of Kent, Nancy 7 and John La were received as payment for the illegal 8 cigarettes. 9 THE INTERPRETER: Can you repeat, transfer from 10 to -- from and to? 11 MS. MASH: Uh, wire transfers from Kent La and 12 John La's bank accounts -- 13 THE INTERPRETER: Mm-hmm. 14 MS. MASH: -- for purchases of cigarettes to be 15 imported into California. 16 MR. HORTON: Please share with the, uh, 17 taxpayer that, um, we will return to her on -- and allow 18 her an opportunity to respond to the statements made by 19 the Department. 20 However, if she would like the previous 21 statement on the record -- 22 MR. JOHN LA: Yeah. 23 MR. HORTON: -- uh, such that it was made -- 24 MR. JOHN LA: Okay. 25 MR. HORTON: -- I will allow it. 26 MR. JOHN LA: Okay. 27 MR. HORTON: Can you share that with her? 28 MR. JOHN LA: Oh, okay. 15 1 Okay. Thank you. She says that's fine. 2 MR. HORTON: Do you want to share with us what 3 she said? 4 THE INTERPRETER: Um, she just said, "Yes." 5 MR. HORTON: Okay. 6 Please continue. 7 MS. MASH: Uh, since the execution of the 8 search warrants, multiple felony tax evasion charges 9 have been filed against Kent, Nancy, and John La. 10 As stated, Nancy La pled no contest to multiple 11 felonies. Um, Kent La has been a fugitive since 2003. 12 And as part of Nancy La's agreement to plead no contest 13 to all the charges that were pending against her, the 14 charges against John La were dropped; and that was based 15 on a motion to dismiss, and it was granted by the Court 16 per the minute order of the criminal hearing -- it was 17 granted pursuant to the case settlement which included 18 the plea of Nancy La. 19 Staff used the evidence from the criminal case 20 to conduct the civil audit which led to the Petitioners' 21 tax liabilities here. 22 The liability is based on records seized during 23 the various searches, including purchase invoices for 24 cases of counterfeit cigarettes and counterfeit stamped 25 cigarettes that Petitioners sold to their customers. 26 Other evidence includes, um, evidence of John 27 La's personal bank account statements, showing that in 28 October and November 2002 and July 2003 a total of 16 1 $460,000 were wire-transferred out of his bank 2 account. 3 THE INTERPRETER: July 2003? 4 MS. MASH: Yes. 5 In 2003, a total of $402,193 were deposited 6 into John La's bank account. 7 These wire transfers include a transfer of 8 $180,000 on December 16th, 2002 to one of the Hong Kong 9 tobacco companies for purchase of counterfeit 10 cigarettes. That's the Mr. Yopie that Petitioner was 11 referring to. 12 Not only are Petitioners liable for the excise 13 tax on the unreported distribution of cigarettes, but 14 the evidence overwhelmingly supports the imposition of 15 fraud penalties in this case. 16 For all these reasons, we concur with the 17 Appeal Division's recommendations. 18 Thanks. 19 MR. HORTON: Thank you. 20 On rebuttal, please. 21 MR. JOHN LA: Uh, yes. 22 I just want to address the -- the amounts of 23 deposits that staff was, uh, talking about. 24 Yes, there were deposits in my accounts, uh, 25 totaling 400,000 or whatever. But, like I said, you 26 know, uh, during that time I was doing a lot of day 27 trading and I was getting a lot of margin calls. So as 28 a result of those margin calls, I would have to deposit 17 1 money into my bank account and then wire it to my 2 brokerage firm to meet those margin calls. And then 3 after it's done, then it gets wired back into my account 4 or deposited back into my account. 5 So that's, uh -- so let's just say the first 6 one was done for 50,000. Next week I get another margin 7 call. I have to go through that same process where I 8 have to wire out the money to meet the margin calls. 9 After the margin calls are met, then the money would be 10 deposited back into my account. 11 So -- so, you know, just by looking at the 12 deposits -- I mean, it's the same 50,000 that's going in 13 and out. If I do it 10 times, it would be 500,000. If 14 I do it 20 times, it would be a -- a million dollars. 15 Staff -- staff didn't do any forensic 16 accounting on my -- on my bank deposits to show, oh, 17 this deposit was from this invoice for cigarettes sold 18 on this date. Instead, they -- they -- they just 19 inferred, oh, just because there were a large amount of 20 deposits going into my account that, oh, it's related to 21 cigarette sales because Nancy was -- was doing it? 22 Now I don't think -- I don't think that that's 23 a proper way of -- of trying to, uh, account for -- for, 24 uh -- for these numbers. 25 And then in regards to the wire transfer, 26 the -- the wire transfer for 180,000 was to City Bank. 27 It was to a Private Banking Group, uh, that was held at 28 City Bank for a client, for a broker at Merrill Lynch. 18 1 And if you look on the wire transfer, it does say "PBG," 2 referring to Private Banking Group. Okay. And that was 3 not for -- for a Hong Kong -- Hong Kong tobacco company. 4 I have no idea where -- where, uh, staff gets that idea 5 that it was a Hong Kong tobacco company. 6 What company was that? 7 MR. HORTON: I'm sorry, sir. You can't ask 8 them questions. 9 MR. JOHN LA: Oh, I'm sorry. 10 But that -- that's my point. You know, you 11 cannot just say, oh, he wired 180,000 out to some Hong 12 Kong tobacco company when -- when there is no such -- 13 such thing. 14 MR. HORTON: Does that conclude your rebuttal? 15 MR. JOHN LA: Uh, yes. Yes, sir. 16 MR. HORTON: Okay. 17 MR. JOHN LA: Oh, I have one more thing -- 18 MR. HORTON: Sure. 19 MR. JOHN LA: -- to add. 20 Um, when -- when the arrest warrants came 21 out -- I mean, before the arrest warrants even came out, 22 uh -- uh, CHP, along with BOE, did a search warrant on 23 our residence. So they pretty much extracted a huge 24 amount of everything: Computers, folders, papers, 25 anything. So everything they -- that we had in our 26 possession, CHP pretty much confiscated to -- to examine 27 for evidence, okay. 28 From all the evidence seized -- my personal 19 1 computers, everything that had everything at -- at the 2 company, at Loh Sun, okay -- there was nothing, other 3 than my bank accounts, that staff contends that I have 4 any role in this. If I had any role in the -- in the 5 corporation -- this corporation was -- has been open 6 since 1988, so it wasn't -- it wasn't like the 7 corporation was just open for -- for this 2001 to 2004 8 for this fraudulent activity. 9 This corporation has been in business for over 10 20 years. And so there's ample amount of paperwork, 11 evidence, um, cigarette -- uh, monthly cigarette tax 12 reports that the company has to file to BOE. 13 Everything. Audits that BOE has done. 14 So -- and -- and -- and none of those cases 15 were I present or did I have any role in it. And if you 16 look at the DNA of all the evidence, pretty much they 17 have nothing. 18 So their -- their main -- their main contention 19 is just based on assumption of deposits of money and 20 these wires that's going in and out of my account. But, 21 you know, as -- for my profession as a day trader, you 22 know, it's going to happen that I'm going to have 23 deposits going in and out of my account. 24 Thank you. Thank you, Chairman. 25 MR. HORTON: Thank you very much. 26 Uh, discussion? 27 Member Steel. 28 MS. STEEL: Um, when you say you have to meet 20 1 the margin calls, that you made the deposits, where 2 those money came from? 3 MR. JOHN LA: Either -- either from my savings. 4 Or if -- if I didn't have enough, then, yeah, I would 5 ask Nancy to help me to -- to meet those margin calls. 6 But, you know, with margin calls -- 7 MS. STEEL: Then you returned that money? 8 MR. JOHN LA: Yeah. 9 MS. STEEL: Okay. 10 MR. JOHN LA: With margin calls, you don't -- 11 you don't want to get one. You don't expect to get one. 12 MS. STEEL: Okay. 13 MR. JOHN LA: You know, it's one of those 14 things where it's unexpected, you know, when -- when 15 your -- 16 MS. STEEL: Okay. 17 MR. JOHN LA: -- when your, uh, portfolio or 18 your holdings -- 19 MS. STEEL: Okay. 20 MR. JOHN LA: -- have gone too much. And 21 either you put in more money so you can hold on to the 22 position -- 23 MS. STEEL: So you have all the proof that you 24 got deposited from your mom, and then you redepos -- 25 paid back -- 26 MR. JOHN LA: Yes. 27 MS. STEEL: -- that everything. 28 MR. JOHN LA: The thing is, it -- it wasn't -- 21 1 it wasn't like, oh, she was making every deposit. 2 MS. STEEL: Right, right. 3 MR. JOHN LA: I'm just saying in -- in -- in 4 cases if I fell short, I would say, hey, uh, you know, 5 can you -- 6 MS. STEEL: So most of the money came from your 7 savings? 8 MR. JOHN LA: Yes. 9 MS. STEEL: Okay. 10 MR. JOHN LA: Or for -- 11 MS. STEEL: Let me ask Department -- 12 MR. JOHN LA: Uh-huh. 13 MS. STEEL: -- that, um, did you check all the 14 deposits that it matches coming out from? How many 15 times that, you know, we have those, you know, from the 16 store? But at the same time this taxpayer said that he 17 returned it. 18 So I want to see that really that investigation 19 was thorough enough that, you know, money came in and 20 money went out. 21 MS. MASH: There was an investigation of the 22 money coming in and out. And there's actually no 23 evidence whatsoever of the day trading business. 24 Staff asked Petitioners for anything. 25 Anything. Checks, money, letters from clients, just to 26 prove where this money was coming in and out from. And 27 there was nothing offered to staff -- 28 MR. JOHN LA: So -- 22 1 MS. MASH: -- as of today. 2 MS. STEEL: Okay. 3 MR. JOHN LA: So what was -- what was the -- 4 MS. STEEL: Okay. Let me ask you -- 5 MR. JOHN LA: Oh, I'm sorry. 6 MS. STEEL: Uh, where is those documents, the 7 going in and out? 8 MR. JOHN LA: The thing is, um, these 9 documents -- 10 MS. STEEL: When -- when they took it, all the 11 informations? 12 MR. JOHN LA: Excuse me? 13 MS. STEEL: They -- they took your -- they 14 confiscated your -- 15 MR. JOHN LA: Yes. 16 MS. STEEL: -- computer and everything. 17 MR. JOHN LA: Yes, yes. 18 MS. STEEL: When it happen? 19 MR. JOHN LA: I believe that was sometime in 20 2000 -- 2004 or 2005. 21 MS. STEEL: It was before -- it was after the 22 investigation went out or it was before that, when, uh, 23 BOE was asking you some documents? 24 MR. JOHN LA: Oh, this -- this was way before. 25 I mean -- 26 MS. STEEL: So they took all the stuffs. 27 MR. JOHN LA: Yeah. They took all of it -- 28 MS. STEEL: Okay. 23 1 MR. JOHN LA: -- and -- and -- okay. 2 MS. STEEL: Okay. Um, what was the direct -- 3 okay. 4 MR. JOHN LA: Okay. I'd like to add one thing. 5 They said they did an investigation on the -- on those 6 deposits? Where are -- where are those results of that 7 investigation? 8 MS. STEEL: That's why I'm following up -- 9 MR. JOHN LA: Oh, okay. 10 MS. STEEL: -- right now. So, yeah. 11 Um, I just need that -- that amount. First of 12 all, that amount matches. And then this taxpayer said 13 he returned it. So, where is the direct evidence here 14 that he was involved with the business? That's my first 15 question. 16 And second question is, when court dropped him 17 from the criminal charges, why we still going after him? 18 MS. MASH: Well, I can -- can I answer -- 19 MS. STEEL: Yes. 20 MS. MASH: -- that in reverse a little bit? 21 MS. STEEL: Yeah. 22 MS. MASH: So the reason we can still go after 23 him without the court, this is a different -- this is a 24 completely different process, first of all. 25 Then, secondly, the reason that he was able 26 to -- was not convicted of any charges is because of a 27 settlement with his mother. The court did have evidence 28 against him, but, for whatever reason, the District 24 1 Attorney decided this was the -- the way to go. 2 We're not bound by that. 3 MS. STEEL: Okay. I want to hear a little more 4 direct answer here. You said there is certain evidence 5 there, but court somehow dropped him. I mean, there is 6 a reason to it. You know, judge is never going to just 7 drop him because, you know, even he's, um, criminally 8 charged, and all three, and two went to jail. Then, you 9 know, one is innocent by the court, no matter what. 10 But, you know what, I'm not really getting -- 11 there is something out there that we don't know. I want 12 to see a little direct -- I mean, I want to see 13 little -- I want to see the direct evidence that why we 14 are going after innocent taxpayer here that -- you know, 15 money goes in and out from the parents', uh, account, 16 and then he returned that. 17 And, I mean, I -- I'm just, um, shocked that 18 even he's here, that he has to be responsible. 19 And then you said court is totally different 20 process than what BOE goes through. That's not really 21 true because we follow the court ruling a lot of times, 22 because when we go through the cases we always talk 23 about -- all these attorneys, BOE attorneys, talk about 24 court cases. 25 So I -- I don't want to hear that, but I want 26 to hear the direct evidence here. 27 MS. MASH: Sure. Some of the direct evidence 28 is invoices that the partnership was providing to their 25 1 customers when they purchased counterfeit cigarettes. 2 And on those invoices it was written John La, Bank of 3 America, bank account number, deposit this money that 4 you're purchasing, that you're -- that you're -- that 5 we're -- 6 MS. STEEL: Okay. Let's not talk about that 7 Hong Kong stuff. 8 You said PBS? 9 MR. JOHN LA: PBG. 10 MS. STEEL: PBG, whatever. 11 MR. JOHN LA: Uh, Ms. Steel -- 12 MS. STEEL: So that PBG is not from Hong Kong. 13 So other than that, that you have more proof there? 14 MS. MASH: I was speaking of the invoices. 15 Yeah, that's a different thing from the -- 16 MS. STEEL: Okay. 17 MS. MASH: -- the Hong Kong. 18 So the invoices are just to customers in 19 California. When they sold something, they would 20 provide a purchase invoice and the customers would make 21 a payment. 22 So instead of making a payment to the 23 corporation or to the business, there are line items 24 written "John La," his bank account and "Bank of 25 America" and stated exact amounts of what that 26 customer's supposed to make a payment towards that 27 invoice to John La's personal bank account, not to the 28 business bank account. 26 1 MS. STEEL: So when they bought it from outside 2 of, uh, U.S., the money came in to his account directly; 3 is that what you are saying, on the invoice indicated? 4 MS. MASH: Right. These are invoices -- 5 MS. STEEL: But you don't have that statement 6 indicating that the money deposited directly to the 7 statement? 8 MS. MASH: Right, we do. So what we have is -- 9 MS. STEEL: So you have a bank statement that 10 shows the money directly deposited from Hong Kong? 11 MS. MASH: Not from Hong Kong. These are 12 purchases to California customers. So the corporation, 13 Loh Sun, as a business, it's selling product, right? 14 And so it is also selling counterfeit product on the 15 side. So it's different from the actual corporation 16 that's doing good business. 17 So the product that's sold to customers in 18 California to various retailers or distributors or 19 individuals, whoever -- whomever, there's an invoice -- 20 purchase invoice for that. And on there it says, 21 instead of making the payment by check or money order or 22 cash to the corporation, make it directly to this bank 23 account, with the number, John La's bank account number 24 to Bank of America. 25 And so the money was being sent directly there 26 as payment. This isn't -- this is separate from the 27 Hong Kong and -- and the other foreign transactions. 28 MS. STEEL: So you have a bank statement 27 1 that -- that money came in directly to his -- under his 2 name and his personal bank account; is that what you are 3 saying? 4 MS. MASH: Right. So these are -- on the 5 invoices? 6 MS. STEEL: Yeah, on the invoices, I heard 7 that. 8 MS. MASH: And they were matched. 9 MS. STEEL: But bank statement itself, that 10 money really went in. Physically, money went in, wired 11 into his accounts, that's what I'm asking. 12 MS. MASH: I -- I don't know that they were 13 wired in this case. 14 MS. STEEL: Or wired or paid deposited. 15 MR. KEFFELEW: There is no evidence that the 16 money went, but the generic invoices. 17 MS. STEEL: Okay. I don't really -- I heard 18 that part. Invoices that indicated that John La -- 19 MR. KEFFELEW: Yes. 20 MS. STEEL: And then, you know, put it in. 21 But I want to see that there's a direct 22 evidence on his personal checking account, or any bank 23 account, that money was directly deposited. Do you have 24 that evidence, that's what I'm -- 25 MR. KEFFELEW: We do not have that. But the 26 generic invoices that were issued specifically 27 instruct -- 28 MS. STEEL: Okay. Okay. I -- I -- I got that 28 1 part, but I just want to see that money was really 2 transferred to his account, that's what I'm asking. 3 MR. KEFFELEW: There's no evidence. 4 MS. STEEL: Okay. Just -- I'm giving you just 5 one minute. 6 MR. JOHN LA: Okay. Ms. Steel, yeah, to 7 clarify that matter, it would be very simple to look at 8 Exhibit 4 that I've provided. 9 Exhibit 4, what it is, is -- is the worksheet 10 of staff that they did for all the -- all the sales 11 activity, 99 percent of the sales activity, okay. 12 If you look at Column H, it has a code, okay. 13 As I've -- as I've said, each code represents a deposit 14 into a certain account. That is -- that is directly 15 from the generic invoices that staff is talking about. 16 So staff is saying one thing, saying that, oh, 17 it was deposited in my account, but when they do the 18 worksheets, everything is accounted for in other 19 people's account except my account. I don't even have a 20 code under my name. 21 If you look at Exhibit 4, there's three sets 22 for each year: 2001, 2002, 2003. 23 In Column -- Column H -- Column H, it says 24 "special note" and it has A, B, C, D, E, F, G, H. 25 The -- the key is on page 5 of -- okay. That's BOE's, 26 uh -- staff's code, okay. 27 It's on the very last page of 2001. I'm sorry, 28 the -- the copy's a little small. But it says: Special 29 1 Notes: A, deposit proceeds to La Binh Tan; B, deposit 2 proceeds to Nancy; C, paid cashier's check; D, 3 Washington Mutual; E, John Lim; F, on account; G, Cathay 4 Bank; H, deposit Quin Sun account number. 5 So each letter corresponds to a certain 6 account, okay. I don't -- I don't have a letter that 7 belongs to me. 8 So if you look at all -- all the -- all the 9 sales, each -- each sales -- each invoice, it -- there's 10 a special note on it. A, B, C, D, E, F, G, H. 11 MS. STEEL: Did you check this? Because, yeah, 12 there is no, um -- it's under your investigation and 13 under your code. There's nothing went in directly to 14 John La's, uh, account. 15 MR. KEFFELEW: Yeah, I -- I -- I realize that. 16 But, you know, the generic invoices basically 17 specific -- 18 MS. STEEL: Okay. No. Let's not go back 19 there, because I'm asking specific question here. 20 MR. KEFFELEW: Yes. 21 MS. STEEL: You know, money was really 22 transferred to his account or not. 23 MR. KEFFELEW: Well, according -- 24 MS. STEEL: You know what, let me explain to 25 you just one thing. For Asian -- I don't know -- for 26 other ethnic background people, too, but they use 27 actually their daughter -- 28 I was working with my mom and, you know what, 30 1 we were using together. I nev -- I got my allowance, 2 but I was never involved with her accounts. 3 So I am asking, the money really transferred, 4 this illegal money transferred to this taxpayer or not? 5 That's the only thing I'm asking. I don't care about 6 the invoices. I don't -- money was physically deposited 7 to this -- his bank or not. 8 But I'm looking at it that our investigation 9 here, that I don't see anything here. This is your code 10 and this is your investigation. So that's what I'm 11 asking. I'm not asking about the invoice. Money really 12 went into his account, that he is responsible for this 13 or not. That's what I'm asking here. 14 Thank you. I'm done. 15 MR. HORTON: Mr. Runner. 16 MR. RUNNER: Yeah, I'd like to follow up a 17 little more on this issue of his name on an invoice. 18 I'm a little confused by that. 19 Now, um, first of all, if you could go back 20 through from staff, what that means and how that -- how 21 that looks. And then I'd like to hear from the 22 taxpayer -- 23 MR. JOHN LA: Okay. 24 MR. RUNNER: -- in regards to how his name 25 would appear on an invoice. 26 MS. MASH: Sure. 27 MR. RUNNER: Okay. 28 MS. MASH: So, the company sells cigarettes to 31 1 me. 2 MR. RUNNER: Okay. 3 MS. MASH: Okay. And when I get my invoice, I 4 have to make a payment to somebody. 5 MR. RUNNER: Right. 6 MS. MASH: And on that invoice it says, 7 handwritten -- I'm not sure by whom -- John La's name -- 8 MR. RUNNER: Mm-hmm. 9 MS. MASH: -- his Bank of America bank account 10 number, and deposit a certain amount, 1500, 3,000, 11 however much it is on various invoices, deposit directly 12 into this account. 13 Some of them say deposit into Nancy La's 14 account. Some of them say Kent La's account. Some of 15 them divvy it up between three or four other people. 16 MR. RUNNER: Okay. 17 MS. MASH: And it's all handwritten on an 18 invoice. And so the purchaser was then making those 19 payments -- 20 MR. RUNNER: Deposits into those accounts. 21 MS. MASH: Deposits into the individual 22 accounts. 23 MR. RUNNER: And that was clearly stated on the 24 invoice itself. 25 MS. MASH: Yes, I have -- 26 MR. RUNNER: Yeah. Okay. 27 MS. MASH: -- copies of those invoices here. 28 MR. RUNNER: Okay. And -- and -- and do we -- 32 1 and those are indeed, we know, the invoices for the 2 illegal cigarettes? 3 MS. MASH: Exactly. 4 MR. RUNNER: Okay. Okay. 5 Mr. La. 6 MR. JOHN LA: Okay, sir. Uh, the thing is on 7 the generic invoices, you know, I don't know what's been 8 written on it, but I know that, you know -- 9 MR. RUNNER: Have you seen these invoices? 10 MR. JOHN LA: Yeah, I seen some of the 11 invoices. 12 MR. RUNNER: Okay. So help me understand, if 13 your name is on an invoice -- 14 MR. LA: Yes. 15 MR. RUNNER: -- that says deposit money into 16 this account -- 17 MR. JOHN LA: I haven't -- I haven't seen any 18 deposits that were from those invoices. 19 MR. RUNNER: Into your account? 20 MR. JOHN LA: Into my account. My -- that's -- 21 that's my point to staff, I've been saying -- 22 MR. RUNNER: Okay. Okay, let me ask you -- 23 MR. JOHN LA: Uh-huh. 24 MR. RUNNER: Okay, that's good. 25 In our -- in our looking at this -- because we 26 looked at his bank accounts. 27 MS. MASH: Correct. 28 MR. RUNNER: Did we follow those invoices to 33 1 see if indeed those -- those deposits were made into 2 that account? 3 MS. MASH: There were deposits made into that 4 account, but not necessarily for those specific amounts 5 because some of them could have been combined, some of 6 them could have been partial payments. So they weren't 7 all matched up, line by line, is my understanding. 8 MR. RUNNER: But how do you know that -- so, 9 okay. When you say there were deposits made, but you 10 don't know if they were deposits -- what those deposits 11 were for at that point. I guess the only thing we 12 actually know is that there were deposits made into his 13 account. 14 MS. MASH: Sure. 15 MR. RUNNER: We don't know where those deposits 16 came from. 17 MR. JOHN LA: Correct. 18 MR. RUNNER: So -- so right now, what we're 19 saying is we know that there's an invoice out there, it 20 has "Please deposit into this account." 21 MS. MASH: Correct. 22 MR. RUNNER: We know that those account numbers 23 are his accounts. 24 MS. MASH: Correct. 25 MR. RUNNER: We just don't know -- but -- but 26 the numbers do not necessarily correspond because they 27 could be a multiple deposits given at one particular 28 time. 34 1 MS. MASH: Correct. 2 MR. RUNNER: Because it's an invoice being 3 paid, who knows how many invoices might have been linked 4 together. 5 MS. MASH: Exactly. 6 MR. RUNNER: That sounds like a pretty 7 reasonable explanation. 8 MR. JOHN LA: And how -- and how many of these 9 invoices that had my name on it? 10 MR. RUNNER: Oh -- 11 MR. JOHN LA: Okay. 12 MR. RUNNER: Okay. Let me ask. 13 MR. JOHN LA: Uh-huh. 14 MR. RUNNER: At that point, are you denying 15 that you did not have deposits that came off of invoices 16 that had your name on it? 17 MR. JOHN LA: No -- yes, the invoices -- I 18 don't know what she's talking about, what invoice or 19 what deposits. 20 MR. RUNNER: Have you not seen these invoices 21 with your name on it? 22 MR. JOHN LA: I have -- I haven't -- 23 MR. HORTON: Excuse me. Um, my apologies for 24 interrupting. But it appears as if the, um -- the 25 taxpayer wants to inject something. Uh, in the normal 26 set of circumstances, she would be able to do that. 27 MR. RUNNER: Oh. 28 MR. HORTON: So I'm going to allow that, if -- 35 1 and then we will continue to your testimony. 2 MR. RUNNER: Okay. 3 MS. NANCY LA: Um, when I issued the invoice to 4 the customers, I just, uh, write out like who, whomever 5 the customer needs to pay to, like whatever account. 6 But sometimes, uh, the customer will pay by cash. 7 Sometimes they don't pay me at all. So, um -- um, and I 8 think that, uh, is not right. 9 MR. RUNNER: Well, let me ask a question to the 10 taxpayer. 11 Why would, on the invoice, some of the money on 12 that invoice be deposited into John's account? 13 MS. NANCY LA: Um, at that time John told me 14 that he needs money. So I think like whenever the 15 customer pay me the money, I will tell them to deposit, 16 uh, directly, right into his account. 17 MR. RUNNER: So, the explanation there is -- 18 and you may need to translate this portion -- the 19 explanation there is, that rather than she writing a 20 check directly to John, she would go ahead and instruct 21 the payment that would be due to be put into John's 22 account? 23 MS. NANCY LA: Yes. 24 MR. RUNNER: Okay. Let me ask a question in 25 regards to this, uh, I think it was $180,000 check? 26 MR. JOHN LA: Uh, wire. It was a wire. 27 MR. RUNNER: A wire -- wire transfer? 28 MR. JOHN LA: Yeah. 36 1 MR. RUNNER: Um, the $180,000 wire transfer, 2 from the testimony that I -- or the report that I heard 3 from the -- from the staff, was a wire -- it was a wire 4 directly to a provider of illegal cigarettes. 5 MS. MASH: Correct. 6 MR. RUNNER: Is that what I heard? 7 MS. MASH: Yes, it's a Blooming -- 8 MR. RUNNER: Tell me how we -- tell me how we 9 know that? 10 MS. MASH: So it's the Blooming Jasmine 11 company -- 12 MR. RUNNER: Mm-hmm. 13 MS. MASH: -- which is one of the Hong Kong 14 companies that's associated with Yopie, one of the 15 people who was also, um, part of the criminal 16 investigation and had his own criminal case. 17 MR. RUNNER: Mm-hmm. 18 MS. MASH: And the Petitioner referred to him. 19 And there are -- there are several wire 20 transfers to Yopie, and he's associated with that -- 21 with that business. 22 MR. RUNNER: Okay. 23 MS. MASH: And that's where the cigarettes came 24 from. 25 MR. RUNNER: Okay. So, to the taxpayer here, 26 why -- how would -- how would -- how is that 27 misconstrued -- 28 MR. JOHN LA: Yes. 37 1 MR. RUNNER: -- in your opinion? 2 MR. JOHN LA: No, because -- just because I 3 sent 180,000, uh, to, uh -- to that company, Blooming 4 Jasmine -- but that Blooming Jasmine, they -- they claim 5 it's some Hong Kong tobacco company that's involved in 6 illegal cigarettes. 7 MR. RUNNER: And who do you think they are? 8 MR. JOHN LA: It's -- it's a company that, uh, 9 was run by Yopie Sioeng. 10 MR. RUNNER: And it -- and they do what? 11 MR. JOHN LA: He has -- he has multiple, uh, 12 businesses. It's not just cigarettes. He also does 13 investments in -- in the Hong Kong stock market, in the 14 U.S. stock market. 15 So it's not, you know -- the thing is, 16 everything is -- is pretty much -- 17 MR. RUNNER: So you had $180,000 wire 18 transferred -- 19 MR. JOHN LA: Yes. 20 MR. RUNNER: -- to this particular company. 21 MR. JOHN LA: Yes. 22 MR. RUNNER: This partic -- this particular 23 company is a known provider to the United States -- 24 MR. JOHN LA: No, it's not a known provider. 25 MR. RUNNER: Hang on just a second. 26 MR. JOHN LA: Oh, I'm sorry. 27 MR. RUNNER: A known provider to the United 28 States of -- of illegal cigarettes, counterfeit 38 1 cigarettes? 2 MS. MASH: Um, I don't know if it's a known 3 provider. 4 MR. RUNNER: Oh. 5 MR. KEFFELEW: I believe Yopie Sioeng's dad is 6 involved in the manufacture of cigarettes. So he's 7 known -- he's a very well-known person in China. 8 MR. RUNNER: Okay. But then -- but we don't 9 know if this particular company does illegal cigarettes; 10 is that correct? 11 MS. MASH: I don't know about the particular 12 company. I know -- 13 MR. RUNNER: So why -- again -- okay. So 14 how -- how did -- how did -- okay. How did we get from 15 $180,000 to this -- to -- to this company that it was 16 for illegal cigarettes? 17 MR. JOHN LA: Staff just -- 18 MR. RUNNER: Just -- just -- 19 MR. JOHN LA: Oh, I'm sorry. 20 MR. RUNNER: How did we get there? 21 MR. JOHN LA: Assumption. 22 MR. RUNNER: Just -- 23 MR. JOHN LA: Oh, I'm sorry. 24 MS. MASH: Because it's Yopie Sioeng's 25 company. 26 MR. RUNNER: And -- okay. And because it's his 27 company, and his company does -- 28 MR. KEFFELEW: And he's pled guilty or 39 1 criminally prosecuted here in California and paid 2 $500,000 for, uh, illegally, uh -- 3 MR. RUNNER: Okay. 4 MS. MASH: And I should say, I don't know that 5 company's name specifically, but Yopie is known as 6 someone who facilitates cigarettes from other -- from 7 China, from a company there. 8 MR. RUNNER: Okay. So the company there isn't 9 necessarily -- then the check was written to a company 10 that we don't necessarily know does illegal cigarettes. 11 We just know that the owner of the company does -- has 12 had a history. 13 MS. MASH: Correct. 14 MR. RUNNER: Of -- of counter -- illegal 15 cigarettes. 16 MS. MASH: Correct. 17 MR. RUNNER: Okay. How big a company is this? 18 Is this like a -- do you have any context for me? I 19 mean, is this a billion-dollar company, and he gets 20 caught up in some other stuff? I mean, help me 21 understand. 22 MS. MASH: I can't -- 23 MR. RUNNER: Or is the only thing he does is 24 illegal cigarettes? 25 MS. MASH: Uh, about this company, I really -- 26 I don't know. 27 MR. RUNNER: Okay. 28 MS. MASH: I don't know about that. 40 1 MR. RUNNER: What can you tell me about this 2 company? 3 MR. JOHN LA: It's -- it's pretty much -- it's 4 not -- it's not a multi-million- or billion-dollar 5 company. It's -- it's a company, you know, um, that 6 just engages in -- in stock investments, property 7 investments, stuff like that. But, you know, I -- I -- 8 I can't say -- 9 MR. RUNNER: And why did you -- and the money 10 transferred to that account for that individual was -- 11 or that company was because? 12 MR. JOHN LA: Yes. Was because I -- I had made 13 an investment in -- in a stock in Hong Kong, so I wired 14 that money to pay for that transaction. 15 MR. RUNNER: Any paperwork to that? 16 MR. JOHN LA: They have the wire transfer. 17 MR. RUNNER: No, besides the wire transfer. 18 Any -- any -- any demonstration of the -- of the -- of, 19 uh, what it is that you got for that? Um, I assume when 20 you did the wire transfer -- 21 MR. JOHN LA: Yes. 22 MR. RUNNER: -- it must have referred to 23 something. 24 MR. JOHN LA: Yes. 25 MR. RUNNER: What did it say in the wire 26 transfer? 27 MR. JOHN LA: It just says, uh, to City Bank, 28 account number, to PBG, which is a Private Banking Group 41 1 at City Bank that was in charge of the -- of the 2 securities division. 3 MR. RUNNER: Payment for what? 4 MR. JOHN LA: No. Because the thing is, the 5 money just gets deposited into the broker account. On 6 the wire form, it doesn't ask you for details. 7 MR. RUNNER: Any follow-up? Do you get 8 anything, follow-up saying deposit was made for 9 such-and-such a purchase or for anything? 10 MR. JOHN LA: No. Because -- because the 11 account wasn't under my name. So I -- I don't have 12 access to that information, sir. 13 MR. RUNNER: Okay. The account wasn't in your 14 name? 15 MR. JOHN LA: No. It was -- it was not in my 16 name. It was under "Blooming Jasmine." 17 MR. RUNNER: Okay. 18 Okay. Thank you. 19 MR. HORTON: Further discussion? 20 Member Mandel. 21 MS. MANDEL: So did I follow that correctly 22 that you're saying that the money that was 23 wire-transferred to City Bank -- 24 MR. JOHN LA: Yes. 25 MS. MANDEL: -- was because you made a stock 26 investment in Hong Kong? 27 MR. JOHN LA: Yes. 28 MS. MANDEL: So I think the question is, what 42 1 records do you have demonstrating that you had a stock 2 investment in Hong Kong, and that this was a payment for 3 it? 4 I mean, when I make a stock investment, I get 5 some piece of paper back that says I now own so many 6 shares bought on that day for this amount of money. 7 MR. JOHN LA: I understand that. Um, 8 unfortunately, you know, I'm not a Hong Kong citizen. 9 I can't -- I can't just, uh, buy -- I don't have any 10 accounts in Hong Kong. I can't just buy the stock over 11 here because it's listed in the Hong Kong stock 12 exchange. So as a result, I had to go through this 13 inter -- uh, this intermediary to buy the stock. 14 MS. MANDEL: Right. So that's your broker is 15 what you're saying. 16 MR. JOHN LA: Uh -- 17 MS. MANDEL: Did you get no record from your 18 broker that you own -- 19 MR. JOHN LA: Because the account -- the 20 account was not under my name. It was under "Blooming 21 Jasmine," the company's name. The -- the company would 22 have gotten the -- the statement. 23 MS. MANDEL: Do you have any accounting from 24 Blooming Jasmine, showing that it's holding 3,000 -- 25 MR. JOHN LA: Unfortunately -- 26 MS. MANDEL: -- shares of something? 27 MR. JOHN LA: Yeah, unfortunately, I don't 28 at -- at this moment. I mean, it's been -- it's been so 43 1 many years and it was pretty much -- you know, I trusted 2 them. I'd never had a problem dealing with them. 3 That's why I did the transaction. I mean, it's quite a 4 big transaction for me to just do it, you know -- 5 MS. MANDEL: Quite a big transaction. Yes, 6 180,000 is quite a big transaction, but -- 7 MR. JOHN LA: Yes, without -- without any trust 8 in -- in them that I'm going to get my money back. 9 MS. MANDEL: So you -- you -- you didn't keep 10 any other kind of record showing what you sent them 11 180,000 for? 12 MR. JOHN LA: No, I -- I -- because -- because 13 of that wire transfer and that PB -- and that City Bank 14 account, because I know that PBG group is a Private 15 Banking Group. That's the arm of the securities 16 division at City Bank. That's where we were instructed 17 to deposit the funds, to wire the funds in for -- for 18 further credit to. 19 It was -- the wire was to Blooming Jasmine for 20 further credit to City Bank PBG, the Private Banking 21 Group. That's where it would go into the brokerage, uh, 22 house. 23 So I know exactly when she mentioned that wire 24 transfer, it -- it clicked. 25 MS. MANDEL: Okay. Thank you. 26 MR. HORTON: Further discussion, Members? 27 Hearing none, is there a motion? 28 MS. YEE: Move to take the matter under 44 1 submission. 2 MR. HORTON: Moved by Member Yee to take the 3 matter under submission. Second by Member Steel. 4 Without objection, such will be the order. 5 Uh, thank you for appearing before the Board 6 today. 7 MR. JOHN LA: Thank you for your time. 8 MR. HORTON: The Members will take your matter 9 under consideration later on this evening and send you a 10 written report of our decision. 11 Okay. Thank you. 12 MR. JOHN LA: Thank you, sir. 13 ---oOo--- 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 45 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 April 26, 2012 I recorded verbatim, in shorthand, to the 10 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 45 constitute a complete and accurate 14 transcription of the shorthand writing. 15 16 Dated: July 17, 2012 17 18 19 ____________________________ 20 KATHLEEN SKIDGEL, CSR #9039 21 Hearing Reporter 22 23 24 25 26 27 28 46