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 2               5901 GREEN VALLEY CIRCLE

 3                 CULVER CITY, CALIFORNIA





 8                 REPORTER'S TRANSCRIPT

 9                   SEPTEMBER 22, 2009



12                      APPEAL OF

13                    ANDRA R. SACHS

14                      NO. 446027


16                    ADDITIONAL TAX








25   Reported by:   Juli Price Jackson

26                      CSR No. 5214



 1                         P R E S E N T

 2   For the Board                   Betty T. Yee
     of Equalization:                Chair
                                Judy Chu
 4                              Vice-Chair

 5                              Bill Leonard
                                Michelle Steel
 7                              Member

 8                              Marcy Jo Mandel
                                Appearing for John
 9                              Chiang, State Controller
                                (per Government Code
10                              Section 7.9)

11                              Diane G. Olson
                                Chief, Board
12                              Proceedings Division

     For Board of               Amy Kelly
14   Equalization Staff:        Staff Counsel



     For Franchise Tax          Christopher Haskins
18   Tax Counsel:               Tax Counsel

19                              Ronald Hofsdal
                                Tax Counsel
     For Appellant:             Walter Weiss
21                              Attorney

22                              Andra R. Sachs
                                Bradford Sachs, Witness
                                Lesley Summers, Witness
       Nina Lifschultz


28   ---oOo---

 1                                5901 GREEN VALLEY CIRCLE

 2                                 CULVER CITY, CALIFORNIA

 3                                 SEPTEMBER 22, 2009

 4                              ---oOo---

 5            MS. YEE:     Next case?

 6            MS. OLSON:    Our next item is B4, Andra R.

 7   Sachs.

 8            Please come forward.

 9            MS. YEE:     Ms. Kelly?

10            MS. KELLY:    The issue in this appeal is whether

11   Appellant was a California resident at the time she

12   received the proceeds from her sale of $9 million worth

13   of Flashcom stock on the apparent February 11th, 2000

14   sale date.

15            MS. YEE:   Thank you.

16            Good afternoon.

17            MR. WEISS:    Good afternoon.

18            MS. YEE:   Thank you for your patience.

19            If   you can pull the microphone right up in

20   front of you so we can hear you?

21            Introduce yourselves for the record and you

22   have ten minutes.

23            MR. WEISS:    Good afternoon.   Walter Weiss

24   appearing for the Petitioner, Andra Sachs.    On my left

25   is Ms. Sachs.
26            And also in the courtroom are two witnesses, if

27   we have time, Mr. Brad Sachs and Ms. Lesley Summers, who

28   are -- who have submitted affidavits.   And if the Board

 1   would like to question them, they are here and

 2   available.

 3              MS. YEE:   Very well.   Please proceed.

 4              TXPYR@@:   Okay.   This case involves -- the

 5   issue here is whether Ms. Andra Sachs was a resident or

 6   domicile of California in the year 2000.

 7              I think the sale date of the shares was, I

 8   believe, either March or April, not February.        But, in

 9   any event, to give you a little bit of background,

10   Ms. Sachs had a very rough 1999.     In May of 1999 she

11   lost a minor child, a tragic accident.     In August of

12   1999 she was ousted from Flashcom, the company which she

13   was a founder, along with her ex-spouse.      She was

14   forcibly ousted.      And in November of 1999, I think the

15   coup de grace was she had a marital separation from her

16   husband.   And at that time she made up mind that she had

17   had enough of California.     She had enough problems here

18   and she decided to leave California on a permanent

19   basis.

20              So, she relocated to Nevada.   And she resided

21   throughout the year 2000 with her mother-in-law.        And

22   on -- strange as it may seem, she had a friendly

23   relationship with her mother-in-law, her husband's

24   mother, despite the forcible breakup.     She had joint

25   custody of her two children, who stayed in California.
26   Her estranged spouse also stayed in California.   And

27   Ms. Sachs went on to a new life in Nevada.   She spent

28   not all of her time in Nevada, she spent time also in

 1   Florida and in Hawaii.

 2              In Nevada she received a Nevada driver's

 3   license.   She made an offer to buy a house up in

 4   Northern Nevada up in the Reno area that was in escrow,

 5   it fell out of escrow.    That was around early '99 --

 6   early 2000.   She ultimately acquired -- she also made an

 7   offer to buy a house in Las Vegas, which was built in

 8   2000.   She ultimately acquired title to it in 2001.

 9              She acquired a house in Hawaii and spent

10   several months in Hawaii in 2000, as well, because she

11   looked at Hawaii as a possible place to relocate.

12              And she also spent some time in Florida.   She

13   actually acquired title to the Hawaii property in 2000.

14              So, she spent approximately 75 percent of the

15   time outside of California.   And -- but the key thing

16   here, her domicile, she did not have the intent to come

17   back to California.   She only came back here to,

18   obviously attend to certain business activities she had

19   or she still had owned some real property here and she

20   also came back here to see her children.   She came back

21   approximately twice a month, but she did not have the

22   intent to relocate here and -- from there.

23              I want to -- I guess there was some confusion

24   on my part.   I want to bring tot he Board's attention

25   some additional authority from my position.    I thought I
26   could submit this as an exhibit and I offer it if the

27   Board will accept it even.   But there is a few cases

28   that are similar that I want to at least cite to the

 1   Board, bring to the Board's attention where a person

 2   such as Mrs. Sachs, even though they have business

 3   connections in California and there are still

 4   connections here, they were held to be nonresidents of

 5   California for income tax purposes.

 6               I cite a case, the Appeal of Stephen D. Bragg,

 7   in 2003.    That's Bragg, B-R-A-G-G, and Stephen is

 8   S-T-E-P-H-E-N.      And my cite is CCH, California Tax

 9   Reports, Section 15-110.266.     And Bragg involved a

10   situation where a taxpayer had left California and, as

11   in Mrs. Sachs' case, she conducted her business

12   activities outside of California.    She was an investor.

13   She was ousted from Flashcom and she made her money

14   dealing with investments.     She had several Nevada

15   entities already that were formed prior to her locating

16   in Nevada.    She had Max Singer Limited Partnership that

17   owned real estate.    She had Marlene Moss Trust, Inc.

18   She had a company, Minority Electronics.    And she had a

19   company called High Tech Online, Inc., all Nevada

20   entities.

21              And she basically worked -- she was a -- what

22   you call you a techie.     She worked with her -- you know,

23   her company was one of the founders of the broadband

24   concept.    So, she basically -- I'm sorry, not broadband,

25   but D. S. L. and she basically used her computer and
26   performed her activities out there and really had no

27   business activities in California other than attending

28   to things that were already there.   And that --

 1   obviously, when you break up from your spouse, it's very

 2   hard to divide everything up and divide up assets in one

 3   fell swoop.   It takes time.

 4            So, in addition to the Bragg case, which I

 5   cited, Petitioner also cites as authority a case, Fred

 6   C. Klemp, F-R-E-D C. K-L-E-M-P, a 1975 case, CCH

 7   California Tax Reports, Paragraph 1 --

 8   Section 15-110.557 where basically the California court

 9   overruled the Board, the California Superior Court

10   overruled the Board and held taxpayer had a closer

11   connection with Illinois, despite owning a home in

12   California.

13            And in Mrs. Sachs' case, she did own a home in

14   California, but she did not reside there.   Her

15   ex-spouse, Mr. Sachs resided there.   But title was in

16   both of their names.   And I'm not -- you know, it's --

17   you know I have to make this clear to you -- to the

18   Board as well.

19            And a final case I cite, which is even more

20   similar, Raymond H., R-A-Y-M-0-N-D H., and Margaret,

21   M-A-R-G-A-R-T (sic) R., Berner, B-E-R-N-E-R, a 2000 case

22   and the cite is CCH Tax Reports, Section 15.11575,

23   where the Board relied on affidavits by friends, family

24   and business associates to believe the taxpayer resided

25   or was domiciled outside of California.   Here, as part
26   of the record, there are four affidavits.   There is

27   Ms. Sachs' affidavit, she's here; Mr. Sachs, her

28   ex-husband; Miss Nina Lifschultz and Lesley Summers,

 1   that verify that Miss Sachs lived outside of California.

 2   She resided in -- near northern Las Vegas and near

 3   Summerlin with her -- you know, her mother-in-law.

 4   Unfortunately -- you know, I'd love to have her

 5   mother-in-law here to testify, but she's deceased.       So,

 6   my best witness I can't bring here.      But, anyway -- so,

 7   that -- that verifies that, these people will verify her

 8   location.    And those are from there.

 9              In addition -- let's see, what else?    Miss --

10   there's a -- the Franchise Tax Board has assessed a

11   penalty of over $50,000.    And I am not really -- in the

12   briefing the petition wasn't spelled out, but I want to

13   make it clear on the penalty issue, if the Board rules

14   against taxpayer for any reason, and I want to make the

15   penalty issue clear, that Ms. Sachs did not do this on

16   her own.    She relied on the advice of her CPA, Ken

17   Lorin, who had been her CPA for over 20 years.     That's

18   L-O-R-I-N, Ken Lorin.    And it was actually, she --

19   Mr. Lorin gave her the idea to leave California.     I

20   guess she explained the situation and she moved.     She

21   discussed this with him.    That wasn't the reason why she

22   left, but, you know, it definitely was an issue.     She

23   relied on Mr. Lorin's advice, fully disclosed all the

24   issues to Mr. Lorin and he filed the, you know, non --

25   this nonresident return for her.   So, you know, it was
26   her regular CPA.   He was a competent CPA.   He's been in

27   business a long time.   It wasn't some newcomer she went

28   to just to get a return done.

 1             So, essentially, those are my issues.

 2   Ms. Sachs wants to, you know, speak.    You're welcome to

 3   add things I missed.

 4             MS. SACHS:   Mr. Weiss did a very good job in

 5   kind of telling the story.    And I just want to reiterate

 6   that 1999 was absolutely the most horrific, worst year

 7   of my life and I was very glad to get out of California

 8   after that year.   And I kind of had to regroup and kind

 9   of, you know, get myself together again.   And it was

10   good that I left because, you know, I had a chance to

11   kind of build billed my strength.   I don't know how many

12   of you have been through bad divorces and, you know,

13   trauma in your life, but it -- I needed to get out of

14   California.

15             And I spent at lot of time relaxing in Hawaii

16   and most of the time in Nevada.   And Nevada really did

17   kind of get my mind off of all of the problems and I,

18   you know, I still go to -- I am still living most of the

19   time in Nevada.    I'm in kind of a relaxing golf course

20   setting over there and, you know, I was not here in 2000

21   other than to come back every couple weeks to visit my

22   kids.   And I brought them out there in the summers.

23   Whenever they had vacations I took them out with me to

24   Nevada.   And we he spent a lot of time there together.

25   So, I absolutely was a Nevada resident for that year and
26   a few years after.

27             And I still spend a good amount of time in

28   Nevada.   That's all I wanted to say.

 1            Thank you.

 2            MS. YEE:   Thank you very much, Ms. Sachs.

 3            Mr. Weiss?

 4            MR. WEISS:   One last thing I want to add and

 5   get this out.

 6            There is -- in the part of the Franchise Tax

 7   Board's, their briefing, their position, they cite

 8   actually court documents that Ms. Sachs signed in late

 9   2001.   Let me point out, No. 1, they're late 2001.     To

10   explain the situation, I don't believe Ms. Sachs still

11   did not come back to California.   She had the intent --

12   her domicile was to not come back here.   I think she

13   eventually came back, 2002-2003, but the -- I want to

14   point out that these are -- she had to sign extensive

15   documents.   There were deadlines by her attorney.    Her

16   ex-husband was involved and they used the words Orange

17   County and that's not accurate.

18            I also want to point out that these -- these

19   pleading were not verified, they're not under penalty of

20   perjury and I think they were done due to a deadline.

21   And the Franchise Tax Board relies on that and I want to

22   explain that, point that out.

23            And you're free to question Ms. Sachs as well

24   on that, on those pleadings.    So, I'm going to get these

25   things right in front of you.
26            MS. YEE:   Very well, thank you very much.

27   You'll have five minutes on rebuttal.

28            Franchise Tax Board?

 1             MR. HASKINS:   Thank you.   Good afternoon, Madam

 2   Chair, Members of the Board.

 3             I'd like to just --

 4             MS. YEE:   Would you introduce yourself for the

 5   record?

 6             MR. HASKINS:   Christopher Haskins for the

 7   Franchise Tax Board and this is Ron Hofsdal to my

 8   right.

 9             Without repeating the entire brief, I wanted to

10   point out a few pertinent dates I think are important.

11             In 1998, Ms. Sachs and Mr. Sachs created --

12   formed Flashcom, the company at issue.    She was an

13   officer of the company, on the Board of Directors. Later

14   in that year, in May, Ms. Sachs and Mr. Sachs bought

15   22,000,500 shares from Flashcom.

16             In 1999 Ms. Sachs either renewed or obtained a

17   new California driver's license that was valid through

18   2003.    And in 1999 she was living at 23 Ridgeline Drive,

19   Newport Beach.   As far as our records indicate, that was

20   the address that was used.    And, as she stated, in 1999,

21   in August, she was fired by her husband from Flashcom.

22             On February 8, 2000, the year at issue, the

23   Appellant agreed with Flashcom to a stock buy back in

24   the amount of $9,000,000.    That agreement set

25   February 11th date unless the parties agreed otherwise
26   and there is no indication that the parties agreed

27   otherwise.

28            On February 28th, her husband, Mr. Sachs, filed

 1   for divorce.    That date it is also notable because on

 2   the Appellant's 2000 part year nonresident return, filed

 3   in 2001, she stated under penalty of perjury that she

 4   became a resident of Nevada on February 28, which is 17

 5   days later than the day that the sale of the stock

 6   closed which is at issue in this case.

 7               On May 12th of 2000 Flashcom filed an SEC S1

 8   filing stating, quote,

 9               "We repurchased 1,612,903 shares of common

10            stock held by Ms. Sachs for a purchase price

11            of $9 million."

12            That is in the past tense, that had already

13   occurred.

14            May 24th, the Sachs' divorce becomes final and

15   Ms. Sachs is given custody --I'm sorry, is awarded

16   23 Ridgeline Drive as her residence and a Sunset Beach

17   property in California.    She is, as she noted, awarded

18   custody of the children.     The children, however, stay in

19   California and attend California schools.     So, Mr. Sachs

20   also remains in California.

21            Later that -- during 2000 Ms. Sachs, either

22   through the Max Singer partnership or through her own

23   ownership owned 12 properties in California, commercial

24   and residential.    She also owned four businesses that

25   were doing business in California.    There's no
26   indication that these businesses that were mentioned

27   were doing any business in Nevada.

28            In 2000, according to the records that we've

 1   been able on locate, deed records, assessor records,

 2   Appellant owned no residential property in Nevada.

 3             Now on July 25th of 2000, she did open a P. O.

 4   box in Zephyr Cove, Nevada, but she used an address to

 5   which she has admitted she never resided.

 6             In 2001, February 20th, Appellant purchased

 7   441 Emerald Heights, Las Vegas as a residence.    That's

 8   the address that was listed on her late filed 2000

 9   return.   And I don't mean "late filed," she did file for

10   a legitimate extension.    So, it wasn't late, it was just

11   filed later in the year.

12             June 14, 2001, the Appellant filed two lawsuits

13   in California courts stating that she was, quote,

14             "At all times relevant herein," a resident of

15   California.

16             The relevant times covered by the lawsuits were

17   February 2000 through June 2001.

18             In 2001 Appellant obtained a Nevada driver's

19   license, again using Zephyr Cove address, which had a

20   physical address attached to it, to which she admitted

21   she never lived.

22             The affidavits that were submitted originally,

23   none of them are specific about addresses where

24   Ms. Craig (sic) lived, none of them were specific as to

25   the time frame.    They all are general statements.
26            And I'd like to contrast with the State -- with

27   the affidavits that were admitted or submitted in the

28   Berner case.   If recall, in the Berner case there were

 1   more than 30 affidavits submitted.    Those affidavits

 2   stated, "I played golf with Mr. Berner.     I played bridge

 3   with Mrs. Berner.    We went out to dinners together."

 4             And, in fact, one of the affidavits was from

 5   the local postmaster, who became so familiar with them,

 6   he knew them by name and said, "I became friends with

 7   them."   Those affidavits did support that the Berners

 8   had changed their residence to Nevada.      Those affidavits

 9   bear no resemblance to the affidavits in this case.

10             In this case we asked the Appellant for

11   evidence to show that she had changed her domicile or

12   residency.   We received next to none.     We did ask for

13   credit card information.    We were told there weren't any

14   credit cards.    We asked for checking account information

15   and we obtained a checking account for Max Singer

16   Partnership.    Now that was a business.    And, so, we

17   didn't -- we examined the checks, but they didn't

18   indicate that they were for personal items necessarily.

19   The Max Singer Partnership and the Appellant, as its

20   major partner, it is a real estate company and, so, the

21   suspendings were on real estate things like fixing

22   houses and stuff.

23             But, again, all of the properties that we're

24   talking about here were California properties.

25             In the end, I think that we have offered enough
26   evidence, more than enough evidence to sustain our

27   determination.

28            I would ask the Board to sustain our

 1   determination.

 2            Thank you.

 3            MS. YEE:     Thank you very much.

 4            You have five minutes on rebuttal.

 5            MR. WEISS:    All right.   You want to go ahead

 6   and talk about the -- Ms. Sachs will talk about the

 7   dates because I think there's some dispute on the dates

 8   and I will finish up.

 9            Go ahead.

10            MS. SACHS:    I would say there is quite a few

11   inconsistencies in his story.

12            No. 1, the Zephyr Cove address, I did -- I

13   wasn't sure whether I was going to move to Las Vegas or

14   Lake Tahoe.   So, I visited Zephyr Cove.     And I did buy

15   a house in Zephyr Cove in 2000, early 2000.      And it --

16   we opened escrow and it fell out of escrow because I had

17   a -- I was going through the divorce and everything and

18   I could not qualify for the loan.    So, the house fell

19   out of escrow in Zephyr Cove.

20            And then I started looking at Las Vegas.     And

21   then I went to Las Vegas and I spent some time with my

22   mother-in-law, quite a few months, just kind of healing.

23   And I was looking to buy property there.      And I did find

24   a house, but it was being built.     So, it took a quite

25   while before the escrow was closed.    I believe it was at
26   least six months before I could go in and sign all of

27   the papers and close the sale on it.   And then I moved

28   into that house.   And that was the one on Emerald

 1   Heights in Summerlin.

 2            So, as far as the dates, yes, I did get a house

 3   in Newport Beach in the divorce and my ex got another

 4   house in Orange County.    And we had joint custody of the

 5   kids.   And I saw them on the weekends, when they had

 6   holidays and he also stayed at that house for quite a

 7   bit, 23 Ridgeline Drive.

 8            The divorce -- it was a bitter divorce, but we

 9   put the kids ahead of everything and, you know, tried

10   for make it work and we kind of used -- I didn't want to

11   take them out of school in Newport because I didn't

12   think it was right to move them out of Orange County and

13   my ex would not let me at the time.    But I took them to

14   Nevada with me as much as I could.    And we spent a lot

15   of time, you know, in Nevada with grandma and just

16   trying to recuperate.

17            So, as far as the dates, you know, on the -- it

18   was kind of a big blur, I'll try to do the dates as best

19   I can, but I know that -- you know, I didn't get -- I

20   can't remember the exact month I got the payment, but I

21   know it was sometime in 2000, I believe, late 2000 when

22   they finally bought the stock back after just kind of a

23   big battle.

24            And there was a lot of legal papers going back

25   and forth.    It was not an easy transaction.   There was a
26   lot of emotions involved and hostility.   And when --

27   they would throw papers in front of me, "Sign this.

28   Sign that."   You know, they never asked me where I

 1   lived.   They would just put down addresses, the last

 2   known address.   So, when they'd say, "Sign here."     So,

 3   if I signed any of them living at 23 Ridgeline, that --

 4   they were totally incorrect.

 5              You know, I signed so many papers, it was just

 6   pile after pile after lawyer after lawyer after lawyer.

 7   And I was -- you know, if he has any papers saying that

 8   it wasn't my handwriting that put in there, you know, in

 9   Newport Beach.   It wasn't mine.

10              MR. WEISS:   A couple of things I want to add.

11              While it's true that the properties in some of

12   these entities were California properties, these were

13   properties acquired while she was a California resident.

14   So, it's not expected -- if you are working on -- it's

15   not where the property is located, it's where you're

16   performing services.    She's actually performing services

17   in Nevada on these things.     And these properties were

18   previously acquired before she left California.

19              The only property she actually acquired after

20   she left California in 2000, she actually took title to,

21   was a property in Hawaii, which -- that she was going to

22   consider living there.     But it didn't work out.

23              I think she was going through a traumatic

24   time -- loss of a child, marital breakup, business

25   breakup.   And what makes it worse is the business
26   breakup was not -- her partner was her spouse.

27            So, there was a lot of litigation going on.

28   She was actually later sued to try to get the money back

 1   by, I beliee, Smith Barney and that's where all this

 2   ensuing litigation arose in 2001.

 3             I don't -- you know, with all due respect to

 4   the Franchise Tax Board, I'm not sure where he's saying

 5   the time period of the litigation is in the paperwork.

 6   I have not seen that in any of his papers.    But, you

 7   know, maybe he could bring that to my attention.

 8             But -- and, so, I think the dates are critical.

 9   I think that the negotiations took place February,

10   March.   I believe the SEC reporting says May.   And, in

11   fact, when she received the money was after May.      It did

12   not -- it took only threatened litigation for her to get

13   the money.

14             So, you know, I think -- you don't -- when you

15   get a divorce or you have a business breakup, you can't

16   divest yourself of everything in California immediately.

17   It takes time and, you know, you try to make the best.

18             And her intent was not to come back here, she

19   wanted to go forward.   And everything she acquired was

20   out of California thereafter.

21             MS. OLSON:   Time has expired.

22             MS. YEE:   Okay, thank you.

23             Questions?   Ms. Steel?

24             MS. STEEL:   I think these dates are very

25   critical here.   I just have few questions.
26            When did you get your driver's license or

27   voter's registration in Nevada?   Do   you know around

28   when?

 1            MS. SACHS:    I believe it was 2000.

 2            MS. STEEL:    Right.   But is it after May or, I

 3   mean, after February or before, February 11th?

 4            MS. SACHS:    You know, I'd have to probably

 5   research that one.

 6            I just remember that I decided I needed to get

 7   out of California in '99.    That's when I decided it,

 8   when Brad moved out of the house in November, that's

 9   when I decided I wanted to get out of California.

10            MS. YEE:    Okay.

11            MS. SACHS:    And I knew that.   And I don't know

12   if I changed my license right away because my California

13   one was still valid.   So, I might have -- you know, I

14   don't know if I ran to the DMV when I got there.      I

15   don't think I did right away, you know, maybe like in

16   the next few months.

17            MS. STEEL:    Do you have any proof of, you know,

18   you lived in -- outside of California at that point?

19            MS. SACHS:    Well, I know that -- well, I

20   didn't -- I didn't work.     He's saying I had all these

21   businesses.

22            No, when I left here in late '99, I didn't

23   have -- these businesses were not active.       These were

24   just like entities that were created to put properties

25   into, you know, cause that's what I was -- you know,
26   before that I was kind of in investing in real estate.

27            So, there was no active -- I not working.   I

28   wasn't even set to work.   After '99, I -- there is -- I

 1   couldn't -- you know, it was very difficult to even

 2   function.

 3             MS. STEEL:    You had a joint custody with your

 4   children?

 5             MS. SACHS:    Yes.

 6             MS. STEEL:    Did you take them back to Nevada

 7   some --

 8             MS. SACHS:    Yes, many times.

 9             MS. STEEL:    -- after -- I am talking about the

10   school.   They still staying here or --

11             MS. SACHS:    They wanted to stay in California.

12   They're very close with their daddy.       They didn't want

13   to change schools.     So, we went back and forth.   And we

14   just did for a while.

15             MS. STEEL:    Okay.   For your tax return that you

16   wrote as a nonresident for -- you signed it on, I

17   believe it's May 24th or May 28.

18             Why did you do that if you moved beforehand?

19             MS. SACHS:    What year was that?

20             MS. STEEL:    2000, year 2000.

21             MS. SACHS:    Nonresident of Nevada?

22             MS. STEEL:    Nonresident of California?

23             MS. SACHS:    Of California, yeah.

24             MR. WEISS:    You didn't say a year, I'm sorry,

25   May?
26           MS. STEEL:   2000.

27           MR. WEISS:   She signed the return in 2001,

28   wouldn't she have signed it?

 1              MS. STEEL:     I believe -- yeah, 2001 -- 2000

 2   return that you signed as a nonresident for May.

 3              MS. SACHS:     I was a nonresident of California.

 4              MS. STEEL:     But you specified a date; is that

 5   right?

 6              MS. MANDEL:    You mean the -- was it

 7   February 28?

 8              MS. STEEL:     The February 28.

 9              MR. HASKINS:      February 28, 2000 is the date

10   claimed.

11              MS. STEEL:    Okay, why did you sign it if you

12   moved beforehand, before 2000?

13              Why you signed it on February 28th?

14              MS. SACHS:    I don't remember signing that with

15   that.

16              MS. STEEL:    Your tax return.

17              MR. WEISS:    What year tax return are you

18   referring to?    Because the 2000 is not due until

19   April 15th, 2001.

20              So, I'm a little confused, sorry.     I mean,

21   you're talking about the '99 return, '98?

22              MS. STEEL:    Even what I think FTB's going to

23   show you the paperworks there.

24              MR. HASKINS:    If I may, Ms. Steel --

25              MS. YEE:   Yes.
26             MR. HASKINS:   -- you're talking about the

27   2000 --

28             MS. STEEL:   2000 tax return, right.

 1             MR. HASKINS:     -- part year, nonresident return?

 2             MS. STEEL:     Right.

 3             MR. HASKINS:    We received it August 15th, 2001.

 4   And there is a signature here and Mr. Lorin dated it as

 5   of August 2nd, 2001.

 6             And this is the return that you have as your

 7   Exhibit U.

 8             MR. LEONARD:    That's the one that declares

 9   February?

10               MS. STEEL:   That's declare --

11             MR. HASKINS:    Yes, sir -- yes, ma'am.

12             Right here on page 1 of the Schedule CA 540,

13   line 3,

14             "I became a nonresident, entered new state and

15             date of move, Nevada, 2-28-2000."

16             MR. WEISS:     And it's our position the sale was

17   after that date.    That's what -- we differ from the --

18               MS. STEEL:   The contract was signed on

19   February 11th.

20             MR. WEISS:     But the closing wasn't -- I don't

21   know when you received the money, but -- when did you

22   receive the money?

23             MS. SACHS:     Not 'til long after that.

24             MS. MANDEL:    But that was -- what you -- we

25   have like a new document from FTB?
26            MR. HASKINS:    Oh, I will get to that if you --

27            MS. MANDEL:    Well, I think that's kind of what

28   they're talking about right now.

 1            Because you have the date of -- the dates of

 2   February 8, February 11, February 28th being after.

 3            When Mr. Weiss was talking, he said that

 4   Flashcom didn't pay until much later in the year, only

 5   on threat of litigation.    And I don't recall exactly

 6   what the documents in the record establish and this

 7   Schedule D they're showing as 12-31 as the date.

 8            MR. HASKINS:    Correct.

 9            MS. MANDEL:    So, that's kind of where Ms. Steel

10   and your conversation is right now, which is when did it

11   really -- when -- what's the -- what's the operative

12   date for -- because the way everything was written up

13   before it was that the February date, mid-February dates

14   are the operative dates.

15            And since she's saying she didn't -- on the

16   return that she didn't become a Nevada resident until

17   February 28th, you know, end of story with all of the

18   document backup.

19            But now what I am hearing him say is that the

20   transaction didn't happen until later in the year, we

21   didn't get the money and, so, and the Schedule D    you

22   put in, can you get into that?

23            Because that seems to be what people are

24   talking about now.

25            MR. HASKINS:    If that is, I can, certainly.
26            The Schedule D is wrong and it has to be

27   because 12-31-2000 is Sunday.   The day after is New

28   Year's day and no transactions occur on that date.

 1            So, I think that that is -- and, if you notice,

 2   that is also the date for the Chase H & Q.     I don't know

 3   why they listed that date, but that can't be the right

 4   date because even Ms. Sachs has said that she received

 5   the money before December 31st, 2000.

 6            MS. MANDEL:   Okay.     Then maybe can you address

 7   what you know about -- and Mr. Weiss can address what he

 8   knows and what documents there are to support that it

 9   didn't happen in February?

10            And I don't know who goes first on that chair.

11            MR. WEISS:    Well, I would say that --

12            MS. YEE:   Mr. Weiss?

13            MR. WEISS:    I agree -- I agree that it wasn't

14   likely that it closed on 12 -- I didn't prepare the

15   returns, so -- if I did, I could be here and I could

16   talk about it, but I didn't prepare it, Mr. Lorin must

17   have prepared the return.    And that date is probably not

18   correct, it probably did not close the last day of the

19   year.

20            Ms. Sachs is the best one who has personal

21   knowledge.   I don't have personal knowledge.     I know --

22   I didn't even represent here in that transaction.

23            When did you -- when did the transaction close

24   and when did you leave the money is really the question.

25            You know best, what time in 2000?
26           MS. SACHS:   Much later than that.   I think it

27   was more towards like the --

28           MR. LEONARD:   Do we have bank records or

 1   anything that can help us with the date?

 2            And that date appears to be critical as to --

 3   as to where to -- as to how to prove residency.    If

 4   there is any way to -- first pin that date down, then I

 5   was hoping -- but it's not worth it now, I was hoping to

 6   ask her witnesses, "Did you go out to dinner in

 7   Las Vegas on that date or the day after or something,"

 8   to help nail it down to that period, but -- but we've

 9   got to get the income received date pinned down.

10            MR. WEISS:    I would make an offer -- well, it's

11   sort of an offer of proof, I think that in fairness, I

12   mean, listen, if I'm sitting in your shoes I'd want to

13   know that date too.

14            I think that there should be maybe some

15   submission of a document or something with a closing

16   date or something that would clarify this issue that

17   should be -- at least submitted, maybe, maybe 30 days or

18   some time period, you know, could it be submitted that

19   would clarify --

20            MR. LEONARD:   Do you and your client know that

21   it exists?

22            MR. WEISS:    Is there a such document?

23            There must be.   If it's an SEC document there

24   must -- a filing, there must be something in there.

25   It's an SEC company.
26   MR. HASKINS:   If I may?

27   MS. YEE:   Yes.

28   MR. HASKINS:   The SEC document lists -- it

 1   says -- it's off -- what it is is the SEC document,

 2   which you have, includes the sale agreement which lists

 3   February 11th.    That SEC document was filed May 12th.

 4            And on the front of the SEC filing they say,

 5   "Here's something that we did recently.     We bought

 6   1,600,000 shares."

 7            "We bought," not we're going to buy, we bought

 8   and paid.    And that closing date was February 11.

 9   There's simply no other evidence of any other date.

10            We've never been provided with a deposit slip

11   that says, "Here's 12 million, $9 million going into a

12   bank account with Ms. Sachs' name on it."

13            I don't believe that exists, but as Mr. Weiss

14   said, I'd like to see it if it does.

15            MS. STEEL:    Well, what's the legal effect if

16   they signed the contract date or get the money date?

17               MR. HASKINS:   Well, the --

18            MS. STEEL:    Closing?

19            MR. HASKINS:      -- the contract was signed on

20   the --

21            MS. STEEL:    February 11th?

22               MR. HASKINS:   -- and it was to close on the

23   11th of February.

24            MS. STEEL:    She didn't receive money until

25   May.
26   MR. HASKINS:   Well, that's her testimony.

27   MS. STEEL:   That's what they are saying.

28   So, if they received money on May, is that --

 1   if you have a proof of they received money on May then

 2   that's the date that we count?

 3            MR. HASKINS:    That's the date that she --

 4            MS. STEEL:     Then she says she moved out on

 5   February 28th to Nevada.      So, she was not in California.

 6            MS. SACHS:     No, no, no, I moved out late '99,

 7   right after Brad left in November.

 8            MS. STEEL:     Okay, what I am saying is just for

 9   May and February dates, so, it doesn't -- you know,

10   that's not my question is.

11            My question is effective date is May, when --

12   when they have a proof that they received the money on

13   May then May is the right date or the February 11th

14   contract signed date is the right date by the law?

15            MR. HASKINS:    She would have realized the money

16   on February 8th when she signed the contract.     She had

17   the right to receive it on that date.

18            And, so, we certainly could say that that was

19   the date that it became income for California purposes.

20            MS. STEEL:   Okay.    But if --

21            MR. HASKINS:    Just to be clear, that's not our

22   argument that she, in fact, was anywhere else but

23   California for the entire year.

24            Therefore, from our point of view it doesn't

25   matter when she got paid -- not that we have any
26   proof -- but it doesn't matter because all of 2000 she

27   was a resident of this state.

28            So, I understand your question, what if -- if

 1   she actually received in her hands the money on May 5th,

 2   let's say, just pick --

 3            MS. STEEL:     Right.

 4            MR. HASKINS:     -- Cinco de Mayo, is that the day

 5   that she actually got it?    Well, that's one argument.

 6            The other argument is when she signed the

 7   contract then that's the date that she realized the

 8   income and that's the date that we should look at.

 9            MS. STEEL:     So, by the law what's the date that

10   we count if they proved that they got the money on May

11   and she signed the tax return that she moved out of

12   California on February 28th, then she was not California

13   resident at that time.

14            MR. HASKINS:     If that's true.

15            MS. STEEL:    So, my question -- so, that's true.

16   So, when she received the money --

17            MR. HASKINS:    No, if that   statement is true.

18            MS. STEEL:     -- okay.   I am asking you, what's

19   the law here?

20            Received the date -- I mean, received the money

21   date is the effective date or sign the contract is the

22   effective date?

23            MS. MANDEL:    'Cause so far all you've said is

24   you can make an argument this way, you can make an

25   argument that way, which is a nice lawyer statement, but
26   Ms. Steel wants to know what -- what -- if push comes to

27   shove, what is the answer that would you give?

28            MR. HOFSDAL:   I would say it depends on the way

 1   the funds were deposited.   If they were deposited into

 2   an escrow account, we're going to handle it one way, if

 3   it was handed to her in a check and she failed to cash

 4   it for whatever reason, it would be handled a different

 5   way as well.

 6            So, we don't know because although we've asked

 7   for some type of proof of how those funds were handled,

 8   they were never provided to us.

 9            The only thing that we do have is what was

10   provided by the company to the SEC, which I would

11   suggest is pretty strong evidence as to when the

12   transaction had, in fact, occurred, absent anything

13   else.

14            MS. STEEL:   But that has to be -- they reported

15   to SEC that SEC by -- on May they said, "Yes, we bought

16   it."

17            So, you are not really clear with the letter

18   that they really bought it -- it's very clear that they

19   bought it before May, but they are not clear that it was

20   done on February 8th or 11th.

21            So, what I want to make clear is that money

22   received -- if taxpayer can provide us a proof of that

23   money transaction that they received the money on May,

24   then at that time that this is right -- she has been

25   telling us that she's gone from California since 1999,
26   but on the tax return that we see, not that many people

27   lies about it when they fill out the tax return forms --

28   and on February 28th.

 1            So, if she received the money on May instead of

 2   February 11th, when she signed the contract and received

 3   the money at the same time, so, if she received the

 4   money on May, then she was not California resident at

 5   that time.

 6            MR. HOFSDAL:    Oh, I don't agree with that.

 7            MS. STEEL:     I want to count those dates, that's

 8   why I am asking you that by California law what's the

 9   effective date?

10            Is the money receiving date or sign the

11   contract date, that's why I am asking you.

12            MS. MANDEL:    For purposes of answering

13   Ms. Steel, I think you have to accept that her -- sounds

14   like her current view, Ms. Steel's current view is that

15   she's going by the date, February 28th on the return,

16   that her view is as of right now that's the date this

17   lady moved to Nevada.

18            MS. STEEL:     She moved?

19            MS. MANDEL:    We understand that FTB's position

20   is we don't think she ever moved and changed residence

21   to Nevada all of 2000.

22            But to answer Ms. Steel, assume February 28th

23   is the move date.   Then what's the law?   Is it the date

24   she -- the money hits her bank account or is it the date

25   that some agreement --
26   MS. STEEL:    She signed the contract, yeah?

27   MS. MANDEL:   -- was signed?

28   That's what she's asking you.

 1              MR. HASKINS:    As Mr. Hofsdal pointed out, it

 2   depends.

 3              MS. YEE:     Well --

 4              MR. HASKINS:     -- it depends on how it was

 5   handled because he said if it was stuck in an escrow

 6   account then it's -- then it's available to her on that

 7   dated.

 8              MS. YEE:     But does that suggest that it's not

 9   the date of the contract and really kind of how the

10   proceeds are actually --

11              MR. HASKINS:    No, I don't think -- I'll say

12   this also, the S1 filing -- in the contract it

13   specifically states if the parties agree to a different

14   date in writing, that's -- there is nothing offered with

15   the S1 that indicates it was      any other date than

16   February 11.

17              So, in the agreement itself February 8th was

18   the day it was signed, February 11th is the closing date

19   or a date mutually agreed by the parties.      That would

20   have to be included in the S1 and it wasn't.

21              So --

22              MS. STEEL:    You are giving two answers right

23   there.   Either date is fine.

24              Can you prove that your money's been deposited

25   after February 28?
26           MR. WEISS:   Two things, let me respond.

27           You know, he's correct when he says it depends

28   on this stuff.   I mean, normally a transaction takes

 1   place when a date of -- it closes, that's the sale date

 2   normally, date of closing.

 3            But sometimes the money might be tied up and

 4   you don't have receipt of it.

 5            So, I think a fair answer would be the date of

 6   closing and you have the actual right to receive the

 7   money would be really the date of sale for reporting.

 8            But Mr. Sachs is here and he was an officer, I

 9   think he was actually the CEO of the company.    He, I

10   believe, has personal knowledge on this issue.

11            MS. YEE:   Mr. Sachs, would you come forward?

12            MR. WEISS:   Let him testify.

13            He could come forward and he could maybe help

14   us.

15            MR. SACHS:   Hi, Brad Sachs, CEO and Chairman of

16   the company at the time.

17            So, I'm the guy that raises the money for the

18   company, it was about $85 million at the time.   And that

19   was to buy back Mrs. Sachs' shares of the company

20   because she was forced out by the Board of Directors.

21            And I was on the road all over the New Year's

22   trying to -- part of what happened to Mrs. Sachs with --

23   with our separation was a pressure that she was out and

24   hadn't received the settlement she was entitled to or

25   they had struck upon late in '99.
26            I was out raising the money for the company and

27   that round of financing did not close until late April.

28   And we funded in early May.

 1              So, with the SEC filing, the plan was to go

 2   public.    And we had to get the -- Mrs. Sachs' funding

 3   out of the way before we could file the SEC document.

 4              So, we were pushing as hard as they could to

 5   finish the round of financing, but that didn't happen

 6   until like late April, very early May.

 7              So, if the document says that we just finished

 8   with Mrs. Sachs, that's because just finished -- it

 9   was -- it was -- the Board decided that we wanted to

10   have the funding close, the stock payback, and -- before

11   we filed the SEC paperwork because it would be cleaner

12   that way for the public when they filed the shares.

13              So, does that answer your question about the

14   dates?    It was talked about with Mrs. Sachs at the end

15   of '99 as far as the buyback of shares, but not actually

16   executed until early May of 2000.

17              MS. YEE:   Okay.    And what can you provide in

18   terms of any substantiation of this?      Of --

19               MS. MANDEL:    Documents?

20              MS. YEE:     -- what you just described?   Any

21   documentation to support your --

22              MR. SACHS:     You know, I don't know what I would

23   have.     I -- you know, I might have a plaque somewhere

24   with a date on it, you know, for milestone markers when

25   you, you know, raise money.      So, I don't know.
26            MR. WEISS:   Bank statements, if they could be

27   produced would be good because I --   you know, I don't

28   know anybody who's walking around holding a $9 million

 1   check and not putting it in the bank.

 2            MR. SACHS:      Yeah, it was all lump sum.

 3            MR. WEISS:      You don't walk around with that.

 4            MR. SACHS:      It was in an escrow account or it

 5   was just a straight buyout of the shares, pay with a

 6   check one time.

 7            MS. YEE:    Well, bank statements, that's a

 8   pretty --

 9            MS. SACHS:      I might be able to find something.

10   I didn't know I had to bring anything.

11            But if I would have known it, I would have come

12   prepared and looked for it.     I could probably find

13   something, but I think he's correct on the dates.

14            I mean, I believe it was May.

15            MS. YEE:    Okay.    It's a pretty significant

16   transaction.    I would think that certainly bank

17   statements would help, but anything else that kind of

18   leads up to, you know, actually the proceeds being --

19               MS. SACHS:   Well, all I know is like right

20   after I got the money and the company filed bankruptcy,

21   I spent the next ten years fighting the lawyers and the

22   trustees for Flashcom.

23            After a solid, I think it was eight years of

24   legal battles, I wound up paying a lot of that money

25   back and all of the legal fees.
26            And I know this isn't taken into consideration,

27   but that's what happened afterwards.   So, it was like

28   ten years of a big blur or a massive legal battle trying

 1   to get that stock repurchase money back.

 2            MS. YEE:   To the Franchise Tax Board, while

 3   we're kind of on this issue of documents that can be

 4   produced, what else would be helpful?

 5            MR. HOFSDAL:     I would suggest that at some

 6   point she would have to sign those shares over to

 7   Flashcom and there has to be some type of filing or some

 8   type of document with a signature and a date certain.

 9   You know, we're not dealing with an arm's length

10   transaction between husband and wife when we're dealing

11   with a stock sell back.

12            I mean, I would suggest that that might even be

13   the strongest documentation to show when this

14   transaction happened, even more so than when payment was

15   actually received because it's a different escrow and

16   different components to that.

17            But I agree with you, I find it rather hard to

18   believe that $90 million (sic) in financing was found

19   and 90 million (sic) --

20            MR. HASKINS:   9 million.

21            MR. HOFSDAL:   No, no, but didn't -- he

22   initially got $90 million in financing, in funding and

23   then you would pay $9 million to his spouse and there

24   would be zero documentation to substantiate when this

25   date occurred.
26            You know, the assumption that we have is it

27   would be -- that it would be consistent with the

28   documentation we do have, the contract, and we do have.

 1   Otherwise, when you are dealing with the amount of tax

 2   that we're dealing with, it's a pretty routine, easy

 3   document to uncover.      And the fact that it hasn't been

 4   strongly suggests that February 11th was the date.

 5               MR. WEISS:   With all due respect, nobody ever

 6   asked me for a copy of that document.     And I don't know

 7   if there is -- I don't see any evidence in anything they

 8   filed where it's asked.

 9               And if somebody would have asked me for that

10   document, I clearly would have produced it.        So, I --

11   it's news to me, you know, that they asked for a

12   document.    Nowhere in any documentation do I see that.

13            MS. YEE:    Mr. Leonard?

14            MR. LEONARD:      The reason for that, I think, is

15   the real bigger question that revolves around this,

16   Franchise Tax Board believes that Mrs. Sachs never left

17   California.

18            MR. HASKINS:      Correct.

19            MR. LEONARD:     Never left California.

20            MR. HASKINS:     Not in 2000.

21            MR. LEONARD:     So, once we get that date, then

22   the real question comes into play, can you show where --

23   where you were and what state you resided in on the date

24   that you got that money?

25            And to the extent your testimony is that that's
26   kind of the period that the transition was taking place,

27   that would be something I would be interested in.

28            Franchise Tax Board's already convinced that it

 1   didn't occur any date that year, so, it doesn't matter

 2   to them.

 3              So, that's why you -- it didn't matter which

 4   date the deal was signed or the check came in or the

 5   check was deposited or the money was spent because

 6   they -- they seemed to argue that you were a California

 7   resident the whole time.

 8              MR. HASKINS:    Mr. Leonard, please, let me be

 9   clear.

10              Franchise Tax Board did ask for bank

11   statements.    We did ask for records.     We didn't get any.

12              MR. LEONARD:    Okay.

13              MS. MANDEL:    Let me be clear, we did ask.

14              MR. LEONARD:    Okay.   But the real question is

15   residency?

16              MS. YEE:    That's correct.

17              MR. WEISS:    Domicile is really -- the intent to

18   leave, domicile.      She had the intent to leave.

19              MR. HOFSDAL:     Well, it's not the intent to

20   leave, it's the actual leaving that triggers it.

21              And as Ms. Sachs has testified, she didn't know

22   whether she was going to move to Hawaii, she bought a

23   house there, that might be a good location.

24              Well, maybe northern November, but that fell

25   out of escrow.
26            Well, let me live with my mother-in-law for a

27   while.

28            And while she may have had the intent to leave

 1   California at some point in the future, domicile is not

 2   established in a new location or domicile is not

 3   abandoned until it's established in a new location.

 4            And we have this fuzzy, it could be Hawaii, it

 5   could be Douglas County, it could be Las Vegas.

 6            MS. SACHS:     No, no.    I would like to interrupt

 7   on that because my intent was to either move to Lake

 8   Tahoe or Las Vegas, Nevada and then also spend some time

 9   in Kauai.   That was my intent.

10            I did not want to live -- I couldn't live in

11   Kauai because of the joint custody.       I had to be in

12   proximity to my children so I could come back and visit

13   them.

14            So, that's the reason I settled on Nevada, so I

15   could drive back and forth and see my kids and pick them

16   up and take them to Nevada.       It was really a child issue

17   more than anything.

18            MR. LEONARD:    As for me, the proof of the

19   intent is so nebulous I'm looking for the reality.

20            MS. YEE:   Yeah.

21            MR. LEONARD:    Some tangible locations and I

22   think Franchise Tax Board, in an interesting list in one

23   of the previous cases where the affidavits were, "I went

24   to dinner with the taxpayer in Las Vegas on that night,"

25   and named a date.
26           Things like that would be very helpful to me.

27   And dinner -- not that we all traveled together for a

28   weekend in Vegas, but --

 1               MS. SACHS:    Well, I brought my sister as a

 2   witness.

 3               MR. LEONARD:    -- that I was over at their

 4   house or we did church together or things like that.

 5               MS. SACHS:    My sister lived in Nevada the whole

 6   time I was there and we spent a lot of time together

 7   doing different things.

 8               MR. LEONARD:   She's available?

 9               MS. SACHS:    She's here as a witness.

10              MR. WEISS:    She's here.

11              MS. SACHS:    She's right behind me.

12              MR. WEISS:    And she's signed an affidavit

13   and --

14              MR. LEONARD.    Do you want to do it now or do

15   you want to do a 30-30-30 to document these things?

16              MS. SACHS:    She lived there with her three

17   children and I'd bring my kids and they'd all play

18   together.    We'd go to different places.

19              So, it was just -- it was a great -- you know,

20   it was great to have family there and that's another

21   main reason I chose to move to Las Vegas, because my

22   sister was there.

23              MS. YEE:   Okay.    Well, why don't we hear from

24   your sister because what I think what we're going to

25   likely be doing is allowing more time to see whether we
26   can get some of those documentation presented, both as

27   relates to the specific transaction and to get the dates

28   straight, but also to respond to the underlying issue,

 1   as Mr. Leonard has reminded us, about residency.

 2             And at this point in time there is really -- I

 3   mean, from our perspective for the tax year in question,

 4   2000, there is really no kind of record or anything

 5   substantiating purchase, renting, using, any kind of

 6   property in Nevada.

 7             So, we're kind of left in this dilemma of

 8   really not knowing what was taking place during the tax

 9   year.

10             Please, if you could introduce yourself for the

11   record, and take some time to make your statement?

12             MS. SUMMERS: I am Lesley Summers.   I did live

13   in Nevada.   And I did visit Andra several times and she

14   did come and visit me.

15             And I was living there.   I had been living

16   there for several years.    And she was going through a

17   terrible, terrible divorce.    So many things happened to

18   her I don't know how she held up mentally.    And she did

19   want a break.

20             And, you know, I said, "Well, come out here

21   and, you know, it's a nicer place, you know, the air is

22   clean."

23             And she came to live -- try to live out there

24   and, well, actually did live out there, but she was

25   trying to buy a house.     And she did buy a house
26   eventually.

27            MR. LEONARD:   Question?

28            MS. YEE:   Yes, Mr. Leonard?

 1            MR. LEONARD:   Do you remember the date that she

 2   moved into her mother-in-law's house?

 3            MS. SUMMERS:   The -- not exactly, but I know it

 4   was --

 5            MR. LEONARD:   Month and the year maybe?

 6            MS. SUMMERS:   No, I can't, it was -- my memory

 7   is not that great.   It was a while ago.

 8            MR. LEONARD:   Do you --

 9            MS. SUMMERS:   When she actually moved in there?

10            MR. LEONARD:   Yeah.

11            MS. SUMMERS:   I think it was in like '99.   Was

12   it?   I don't recall.

13            MR. LEONARD:   Are there any other things that

14   you and she did that there might be a record that we

15   could go back to that might still exist?

16            I have no idea what.

17            MS. SUMMERS:   The only thing that I can

18   remember is one time I got very sick she did take me to

19   the doctor.   And I didn't have medical insurance at the

20   time and she paid the bill and bought me medicine.

21   That's all I can say.

22            MR. LEONARD:   What year was that?

23            MS. SUMMERS:   In 2000.

24            MR. LEONARD:   2000, early or late in the year?

25   Do you remember that?
26           MS. SUMMERS:   No, it was probably -- I don't

27   even remember.

28           MR. LEONARD:   Okay, thank you.

 1            MS. YEE:     Other questions, Members?

 2            Well, let me suggest this, you heard kind of

 3   the gaps that we're trying to grapple with.       And I think

 4   there is probably agreement to allow you more time to

 5   try to provide the documentation to help us fill in

 6   those gaps.

 7            What I would like is to just -- requests for

 8   records have been made previously.       Let's kind of get

 9   clear about what specifically would be helpful.

10            You've heard some suggestions from us up here

11   that I'd be willing to move for additional time on this,

12   but I suspect that you're going to need probably more

13   than 30 days to get your hands on some records.

14            MS. MANDEL:    I have another question that just

15   occurred to me.

16            MS. YEE:     Ms. Mandel?

17            MS. MANDEL:    Can you remind me how old the

18   children were who were here, the two children at the

19   time?

20            MR. LEONARD:      '99.

21            MS. MANDEL:    Yeah, the 2000 time frame when --

22            MS. SACHS:    Nine and seven.

23            MS. MANDEL:    And they stayed -- you're saying

24   they stayed here with your ex-husband?

25            MS. SACHS:    Yes.
26            MS. MANDEL:   I guess it's still a while ago,

27   I'm just -- the one record that I was thinking of is if

28   there would be school records that might have the

 1   information on both parents.     Because presumably if they

 2   were in his charge when they were here and in school, if

 3   some reason they couldn't reach him, perhaps they would

 4   still list her --

 5            MR. LEONARD:    With a contact information?

 6            MS. MANDEL:    -- with contact information.   I

 7   don't know, that just occurred to me.

 8            MS. SACHS:    I had my cell phone with me

 9   everywhere.   So, I mean, that's -- they -- I am sure

10   they have information and I am sure they'd have my

11   telephone number there and --

12            MS. MANDEL:    But you're saying it might be a

13   California cell phone?

14            MS. SACHS:    Well, I never -- I never changed

15   the cell phone number.    I have had the same cell phone

16   number for probably like the last ten years.

17            MS. MANDEL:    Well, it was --

18            MS. SACHS:    You know, I never changed it.

19            MS. MANDEL:    It was a thought.

20            MS. YEE:   Mr. Weiss?

21            MR. WEISS:     On the credit cards, we -- I do

22   have some credit card statements, the problem is most of

23   them are 2001.

24            I mean, there is Nevada activity and Florida

25   activity in 2001.     I mean, I would submit that.
26            2000, I think one of the problems was to try to

27   get all of the credit cards.

28            MS. SACHS:   Yeah, you know, I tried getting a

 1   lot of the stuff, but, you know, kind of moving around a

 2   lot.   I had a problem kind of locating all of the

 3   records.    And I did find quite a few credit card

 4   statements, I believe, that I submitted and showed that

 5   I was in Nevada and, you know, purchases I had made and

 6   restaurants I was at and gas and, you know.

 7              I found whatever I could.       It was kind of a

 8   mishmash.    Going through that time period there was just

 9   a lot of moving around of records and most of my records

10   also -- I had a lot of my personal records at Flashcom

11   when the company went down.

12              I got locked out of my own company.       That's

13   basically what happened.          I didn't have any access.

14   They dropped my desk off in the parking lot with all my

15   records and just threw them in the parking lot.

16              I didn't even get any records.       Most of the

17   records were at my office.         And it was -- you know, it

18   wasn't a real happy parting when I left, you know, it

19   was like they locked the door and all my stuff in there.

20               And I never got anything but the desk back.

21              MR. LEONARD:    What date was that?

22              MS. SACHS:    That was in '99.

23              MR. LEONARD.    Do you know what date?

24              MS. YEE:     August?

25              MS. SACHS:    That was August, yeah.
26           MR. LEONARD:   August?

27           MS. SACHS:   Shortly after, it was August or

28   September.

 1            MS. YEE:     Well, I think it still would be --

 2   and I would venture to guess there must be something out

 3   there with respect to the stock transaction.    So, let's

 4   start there.

 5            And then you've heard kind of where we're

 6   struggling with respect to the -- your activities in the

 7   year 2000 relative to being outside of California.

 8            So, let's see what we can come up with on that.

 9            MS. SACHS:    I know that they asked me about

10   social clubs.    And I really wasn't in a social mood.     I

11   didn't belong to any clubs anywhere.

12            I didn't have a gym membership.    I didn't

13   really have any affiliations.    I was just, you know,

14   really kind of   in mourning and not really doing

15   anything social.

16            And you know, Walter kept saying, "Well, what

17   about social?    You know, didn't you go to the gym?"

18            I said, "No, I did not.    I couldn't."   You

19   know, at that time I was not in a good frame of mind.

20   And what could I produce for you, you know?

21            I -- whatever I found that Flashcom didn't

22   steal from me, you know, I gave him.    And that's all I

23   could find.

24            MR. WEISS:    She's also a non voter, so -- I

25   mean, she didn't vote in either state, which -- and I
26   was -- you know, I've been trying to get as much as I

27   could.

28            And, you know, per testimony -- and she told me

 1   the same thing -- she was in seclusion, mourning, you

 2   know, having a lot of problems.

 3              You know, we -- can I request 60 days to get as

 4   much tangible evidence as I can and to get bank records

 5   to, you know, try to help you in making a decision if

 6   that's okay with the FTB?

 7              MR. HASKINS:    I have no objection.

 8              MS. YEE:     Okay, yeah.    We'll allow 60 days for

 9   you to do that.

10              MR. WEISS:     Thank you.

11              MS. YEE:   And while you're here and before you

12   leave, I would encourage you to confer with our

13   representatives from the Franchise Tax Board just to be

14   sure that we are looking for documentation that will be

15   helpful.

16              MR. WEISS:    Okay, thank you.

17              MS. YEE:   Is there a motion on this?

18              I'm sorry, Mr. Haskins, did you have another --

19              MR. HASKINS:    Well, how exactly will we

20   structure this?

21              Do you want additional submissions of documents

22   and then briefing related to that?

23              MS. YEE:   Yes, and then --

24              MS. KELLY:    It will be either a 60-30-30 or a

25   however many days you want to afford to the FTB as well.
26              But it would be opening with Appellant

27   providing additional documentation and briefing related

28   to that.

 1             And then with Franchise Tax Board replying.

 2             MR. HASKINS:    60-30-30 sounds good.

 3             MS. YEE:     Okay.

 4             MR. WEISS:     That's fine, thank you.

 5             MS. YEE:     Okay, motion to that effect?

 6             MR. LEONARD:    So moved.

 7             MS. YEE:     Motion by Mr. Leonard.   Is there a

 8   second?

 9             MS. STEEL:    Second.

10             MS. YEE:   Second by Ms. Steel.

11             Without objection, that motion carries.

12             Thank you all very much and good luck to you in

13   finding the --

14             MR. WEISS:    Thank you.

15             MS. YEE:     -- any additional documentation.

16             Thank you.

17                                  ---o0o---













 3   State of California    )

 4                          )    ss

 5   County of Sacramento   )


 7             I, JULI PRICE JACKSON, Hearing Reporter for the

 8   California State Board of Equalization certify that on

 9   SEPTEMBER 22, 2009 I recorded verbatim, in shorthand, to

10   the best of my ability, the proceedings in the

11   above-entitled hearing; that I transcribed the shorthand

12   writing into typewriting; and that the preceding pages 1

13   through 47 constitute a complete and accurate

14   transcription of the shorthand writing.


16   Dated:   October 26, 2009



19                          ____________________________

20                          JULI PRICE JACKSON

21                           Hearing Reporter








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