1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 450 N STREET 3 SACRAMENTO, CALIFORNIA 4 5 6 7 8 REPORTER'S TRANSCRIPT 9 DECEMBER 14, 2016 10 11 SALES AND USE TAX APPEAL HEARING 12 APPEAL OF 13 MARC ANTHONY SOLIS 14 NO. 800735 (KH) 15 AGAINST PROPOSED ASSESSMENT OF 16 SALES AND USE TAX 17 18 19 20 21 22 23 24 25 Reported by: Jillian Sumner 26 CSR No. 13619 27 Kathleen Skidgel 28 CSR No. 9039 1 1 P R E S E N T 2 For the Board of Equalization: Fiona Ma, CPA 3 Chairwoman 4 Diane L. Harkey Vice Chair 5 Jerome E. Horton 6 Member 7 Sen. George Runner (Ret.) Member 8 Yvette Stowers 9 Appearing for Betty T. Yee, State Controller 10 (per Government Code Section 7.9) 11 Joann Richmond 12 Chief Board Proceedings 13 Division 14 For Board of Equalization Staff: Jeff Angeja 15 Tax Counsel IV Legal Department 16 17 For the Department: Monica Silva Tax Counsel 18 Legal Department 19 Lawrence Mendel Tax Counsel III 20 Legal Department 21 Dario Romano Sales and Use Tax 22 Department 23 24 For Petitioner: Marc Anthony Solis Taxpayer 25 26 ---oOo--- 27 28 2 1 450 N STREET 2 SACRAMENTO, CALIFORNIA 3 DECEMBER 14, 2016 4 ---o0o--- 5 MS. RICHMOND: Our next item is Item C, 6 Sales and Use Tax Appeal Hearing, Item C1, 7 Marc Anthony Solis, please come forward. 8 MS. MA: Okay. To the Appeals, please 9 introduce the issues in this case and yourself. 10 MR. BACCHUS: Good afternoon, Madam Chair 11 Ma and Members. I am Chad Bacchus on behalf of the 12 Appeals Division. 13 The appeal before you presents two 14 unresolved issues, which are whether petitioner is 15 personally liable for the unpaid tax liabilities of 16 Solis Enterprises Inc. pursuant to Revenue and 17 Taxation Code Section 6829, and whether adjustments 18 are warranted for bad debts. 19 And we have a revised recommendation to 20 delete the prepayment negligence penalty of $481.85 21 because it was not properly imposed against the 22 corporation. 23 MS. MA: How much was that payment? 24 MR. BACCHUS: $481.85. 25 MS. MA: Okay. Okay. 26 To the taxpayer, you have ten minutes for 27 your hearing and then five minutes on appeal. 28 Please introduce yourself for the record, 3 1 and then you may begin. 2 MR. SOLIS: My name is Mark Solis. 3 MS. MA: Okay. Welcome. 4 MR. SOLIS: Thank you. 5 What you guys do here every day is amazing. 6 It's 4:00 o'clock in the afternoon, you guys have 7 dealt with so many things. It's just -- phew -- 8 over my head. 9 What I'm bringing to you is, uh, my story. 10 That's basically what I can give you. I mean, I've 11 talked to you -- the people underneath you, and they 12 said you're five people looking to get to the bottom 13 of anything and solve it. 14 So what we're about to open up and talk 15 about is -- is horrific for me. It's -- it's very 16 sad. It's gonna take me to a place I don't want to 17 go. But it -- it's there. It's a family business 18 that went awry. It's a family that got into 19 trouble. And I understand the magnitude and the 20 seriousness of the dollars and us taxpayers. I 21 understand that. 22 I also understand this was my parents' 23 business and not mine. And that's where I'm gonna 24 sit out. I know it's not about emotions. I know 25 you need facts. I know -- that's why I hope that I 26 can stay focused and bring to you today. That's my 27 goal. 28 MS. MA: Okay. 4 1 MR. SOLIS: But, please, I ask for your 2 understanding. Because it is -- it is hard on me. 3 So my current job is to manage. And I am 4 sorry that I did not get things to you in a timely 5 manner and that I brought them today. I am trying 6 to -- it's a full sales job. I'm a salesman. I'm 7 not a bookkeeper. I'm not any of those things. 8 That's what I've been all my life. 9 And that's -- that's what -- I just want to 10 let you know that I'm sorry. The State has always 11 been good at what they're doing. They've been at 12 the NOD. That was my first awakening to what, you 13 know, corporate is. And they've been professional 14 in every step of the way. 15 So I don't -- it's my fault. I did not 16 paint the right picture of myself. And they're only 17 working off what they have. And they have done 18 well, and they communicated well. So I'd like to -- 19 to let them know that I'm grateful of that. 20 But what I have is there is a few things in 21 there -- there's a few holes in there. And I want 22 -- I want to just give you a background of me really 23 quickly. 24 So I want to remind you guys that I'm 13 25 years old when this business started. I'm raised in 26 this business. My dad's from Nicaragua, first 27 generation. My mom's from Ireland, and she's the 28 perfect co-dependent. My dad is the dictator. This 5 1 is where we're going. This is the direction we're 2 going. And when I'm raised with him, I believed in 3 me. To me he was superman. I -- he was amazing. 4 We started that store -- we started from 5 scratch. And they told us it'll never succeed 6 there. And we took that little store from the first 7 day we opened to $65. And I could see the look on 8 their face going, "What did we go into?" And all 9 those years later, as we took it to $3.5 million, 10 through hard work and all those labors. But there's 11 a lot of things that crashed and burned through 12 there. And that's what I want to try to paint there 13 through it. 14 But I just wanted you -- to remind you that 15 I grew up in this store, and I trusted everything 16 they say. And I believed in words like "honor" and 17 "honor your mother and father," and "follow the 18 rules," and "be a good citizen." 19 I have a -- I have a deep faith in the 20 Lord, Jesus Christ, and that's where I bound almost 21 everything that I do in. 22 So what I'm speaking to you is, I literally 23 stick to those rules. Those are my mother and 24 father; that's their business; and I follow their 25 wishes and their directions. 26 So I want to talk about the 2007. I had 27 sent paperwork that showed that I had an operation 28 that was serious. It was in my neck. They cut 6 1 through right here. It was serious. 2 And it started -- the best way I can tell 3 you it started when -- in about 1996. I was loading 4 a roof. And I was walking across the platform, and 5 it slipped, gave way, and I fell into a sand pile. 6 It was only about a three-foot dive. But I tucked 7 my neck in there, and I really did some damage. 8 At that time, MRIs weren't around, things 9 weren't there. And I thought, "Well, you know, I've 10 got a lot of work to do. I can move my neck. 11 Everything's fine." By the end of that week, I 12 couldn't even touch my toes. 13 I go to the doctor, I tell him what 14 happened. He opens a workman's comp file. That 15 file turns into a murderous thing. This is my -- 16 this -- the reason I'm bringing this to you is this 17 is my mom's view of the State. 18 Someone from state workman's comp comes 19 down and in the room says, "You know, this is your 20 son. You know it didn't happen like you say. It's 21 a week later. You're just trying to use workman's 22 comp." 23 I'm in the room, and I'm listening to all 24 this. And I'm going, she must be -- he was pretty 25 much trying to get her to tell him, "Yeah, it was a 26 lie." 27 We didn't. We followed through. We took 28 it all the way -- had to fight it all the way. They 7 1 wouldn't help on anything. I got the worst kind of 2 service you can think of with my neck. And in the 3 meantime, I was in pain. 4 So we took that all the way to the court, 5 and we did win. But it was because it was Solis 6 versus Solis. And that is her perception of the 7 State. And she had a fear. 8 So we're talking about people that don't 9 know anything about computers. Which you guys 10 eventually went to computers. And you can see that 11 they wrote a letter that said she wished you didn't. 12 That's where I came in is because I knew a little 13 bit about computers, but not a lot. They feared 14 them, and they feared the State. After that day, 15 she was never the same. 16 And then my dad's from Nicaragua. State 17 wasn't a good thing to him in general. Just in 18 general. So both of them feared it. So they used 19 me as that tool to go through there. And that's -- 20 I just wanted to bring reason to that. 21 And after about ten years, it got to the 22 point where this little injury just grew and grew 23 and grew to where it festered. I have a cage over 24 three of my discs in here. And that's -- that's -- 25 that came out of pocket because that settled -- I 26 had to -- I had to do it with my own insurance. 27 And I had to figure it out. And I had -- that was 28 expensive. And I got it fixed. And that's what I 8 1 went in 2007. And I kept putting it off. 2 When I did that, I resigned. My wife -- my 3 wife witnessed that. And there's documentations to 4 that. And I resigned, but, you know, I resigned and 5 went to this thing. 6 But what hurt me the most was I had three 7 little children; this is my wife; this is my life. 8 And what they said was, "Well, we -- we fear that if 9 something were" -- because I had to sign something 10 that said I might not come out of this. 11 "We fear that you might not come out of 12 this, and we're worried that we don't know her. We 13 don't know her family. We don't know anything. I 14 want you to resign and take off of this." 15 I did. And what they -- what -- there's 16 more to that when it comes back, but that's where I 17 painted the wrong picture. I did resign. I did 18 left (sic). And when I left that time, I took a 19 whole year off. 20 And I think there's a -- there's 21 conversation where I come back in November and I'm 22 talking to someone. That's after. You know, I'm 23 trying to heal. I can't drive. My mom's driving. 24 I'm on too much meds. They -- then she -- my mom is 25 crying on the phone saying that State's calling; we 26 can't pay them. It's starting to take a dive. And 27 the recession is coming." And I'm saying, "Close 28 your credit accounts. Stop it." 9 1 You know, that business was so not ran the 2 way I would want to run a business. But I'm just 3 the son telling the dad what to do. The dad's gonna 4 do whatever he's doing. 5 They're healthy at this time still. Just 6 on that verge of when you're, you know, like -- when 7 someone is becoming sick, you don't realize it when 8 you're working next to them, and they've been that 9 level all the time and someone starts to fade. 10 There's still that time. And this is the perfect 11 storm where you have the recession hitting. 12 And that's the other thing. We -- we went 13 through a recession. Five other lumber yards in our 14 area that have over 100 years went down. Anybody 15 tied to lumbar and financing lumbar packages and 16 carrying accounts, their throat was cut and they 17 bled out over that time. 18 That's basically what happened to my 19 parents. And that's why I told them to shut the 20 charges down, and they refused to. 21 So this is what I was worried about. I get 22 a little excited, and I get going on another reason. 23 But the main thing is my feelings were hurt. And 24 when I left, I had already started in 2005 to '06, 25 playing in real estate. And I've been buying and 26 selling rentals and I was doing outstanding. 27 And, of course, you know that was before 28 the bubble. Things were moving. And it was really 10 1 -- it was incredible. And I masked a good -- a good 2 amount of money. And I turned that toward our dream 3 in Bangor in 2006 and started our own ranch, working 4 ranch. 5 My wife loves horses. We had a feed store. 6 I took care of it. It was 19 stalls. It was -- 7 that was how the plan was going to be. We were 8 gonna let my -- we were gonna divide. That's what 9 happened. There was a divide there. I didn't like 10 what happened there. I didn't like the direction we 11 were going. It was pretty much -- it always had to 12 be his way, and it was never going to be my way. 13 And his way was completely opposite from what I am. 14 And it was just finally, you know, this is 15 not my store. I didn't build this. I grew into it. 16 This wasn't mine. This was his. There's no saying 17 that I have in it. They -- the whole corporate 18 thing is something that they put together. And my 19 -- my baptism in the corporate is when they looked 20 at me and said, "Well, you shouldn't have signed 21 CEO." 22 You know, I have -- that word meant 23 absolutely nothing to me. I'm just doing what my 24 parents told me to do. So that's my negligence. 25 And I can't speak to that. That was my fault, and 26 that's -- going on from there, that's just the way 27 it is. 28 But that's not the role I had. I was never 11 1 the boss, never the CEO. It was always driven in me 2 in there that even from their -- from their 3 accountant, James Duckett, it was -- I can remember 4 being in the room, remembered -- "this doesn't mean 5 you're the boss. Your dad still runs the show 6 here." 7 So I never took it as anything serious. I 8 never -- it didn't really even amount to me. All I 9 did was the sales there. I never was the bookkeeper 10 until our bookkeeper passed away, and my mom had to 11 take the role. 12 Then it became an electronic issue, and 13 that's how I slowly got pulled into the store as I 14 was trying to divide and go. 15 So I started to bring things -- that brings 16 me to the things that I brought you. I brought you 17 a letter from my mom, who signed it, who explains 18 that -- there's one thing in there when it comes to 19 willfulness that I had to have the authority -- my 20 mom was a Nazi with a checkbook. She kept it in the 21 safe. She kept it in there. And that's my dad's 22 rule. And whatever my dad said, she did. And she 23 followed, and that was it. 24 So if I -- I didn't really care about those 25 things. I would come and help. But it was always 26 with the State, because it was electronic or 27 anything like that. They paid the regular payroll. 28 And they did the -- the bills from day to day. But 12 1 I had to do the State or any conversation with that. 2 And coming back in 2007, there was a 3 conversation where it says that, "Oh, I'll get that 4 to you." In 2007 at the end of November, I'm still 5 on Vicodin and I'm still being driven around. I 6 have no idea about that conversation or what that 7 meant. All I know is for the first time ever in 8 2007, I came back to a store in shambles. And this 9 is what was going on with the State Board. And I'm 10 telling them, "Close your charge accounts. It's 11 gonna kill you. Our credit line is getting killed. 12 Close yours." 13 They said, no, they need it. The 14 contractors need it. That's what brings them to us. 15 So that -- that kept going. Again, they 16 would not listen to what I had to say in order to 17 help them. 18 So going forward with their -- that's the 19 letter that she wrote that speaks directly to that. 20 And then also they say in the authority part that in 21 there there was a lady named Jane. Jane was a 22 bookkeeper that we brought in because I couldn't 23 keep coming in because my business was exploding and 24 growing. I couldn't keep coming in to do all this 25 stuff, so they hired a girl. 26 She didn't even last more than a month. 27 She was scared of the State, and she was scared of 28 -- the number one thing we needed was accounts 13 1 receivable in collecting, because people were not 2 paying us. They were avoiding us. They couldn't 3 pay us. It was crisis all over. 4 So in here -- that's my mom -- my mom's in 5 the room, and they call to tell her about their -- 6 even in the State Board, they couldn't even remember 7 the lady's last name. So -- but they can 8 remember that I didn't -- my mom is the one that 9 gave permission, but somehow or another they say 10 it's me. 11 MS. MA: The time. 12 MR. SOLIS: But it was my mom. And she's 13 -- she's attesting to that in here, and she's 14 signing towards that. 15 And then -- the bookkeeping issue is 16 something we'll get to in a little bit. But our 17 bookkeeping system took chart sales and they took 18 sales, and they lumped them together and reported 19 them. At the end of the year, they would -- if we 20 had bad debt, it would be dealt with then. But on 21 the -- on the reporting all the time, it went that 22 way. 23 So the -- the amount that -- it's not my 24 debt. But the amount that's being applied to my mom 25 needs to be addressed a little differently. And, 26 uh, that's one thing I wanted to say. 27 But, uh, after you go there, you go to 28 Meryl Sawyer. It just shows you that I'm not there. 14 1 It shows you there's a divide. It shows you that 2 I'm working somewhere else. It -- it -- it shows 3 you that I'm just not there. I'm there to deal with 4 something she fears. She fears electronics and she 5 fears the State. So I'm dealing with those things. 6 But -- that's what I do. 7 I'm -- I split from that store, but, 8 remember, I worked there a lot of years. And 9 that's my mother and father. And my mother and 10 father needed me. There was really -- it was the 11 right thing to do. If I had to do it over again, 12 I'd do the same thing. But I would -- I would do it 13 a little bit different in the way I painted myself 14 from the resignation on. So -- 15 MS. RICHMOND: Time's expired. 16 MR. SOLIS: -- that's Meryl Sawyer. Then 17 we go to my lovely wife Julie. 18 MS. MA: Is your ten minutes -- 19 MS. RICHMOND: Time's expired. 20 MR. SOLIS: I mean -- 21 MS. MA: We'll -- we'll come back I'm sure. 22 So let's have the State put on their case, 23 you can come back five minutes for rebuttal. 24 And I'm sure, taxpayer, we will have 25 questions. 26 MS. HARKEY: We'll have a lot of 27 questions -- 28 MS. MA: Yeah. 15 1 MS. HARKEY: -- you can answer. 2 MS. MA: Okay. 3 State -- 4 MS. SILVA: Good afternoon, Chairwoman Ma, 5 Board Members. My name is Monica Silva. With me 6 today, Lawrence Mendel and Dario Romano representing 7 the Department. 8 The Department is in agreement with the 9 revised recommendation of the Appeals Division. The 10 petitioner is personally liable for the unpaid tax 11 liabilities of Solis Enterprises Inc., doing 12 business as Lake Oroville, Ace Hardware, resulting 13 from self-assessed partial and non-remittance 14 returns. 15 Four conditions must be met for personal 16 liability to attach under Section 6829: 17 First, the corporation must be terminated; 18 Second, it must have collected sales tax 19 reimbursement; 20 Third, petitioner must have been 21 responsible for payment of sales and use tax; 22 And, fourth, petitioner's failure to pay 23 the tax liabilities must be willful. 24 There's no dispute as to the first two 25 conditions. The hardware store ceased operation on 26 December 31st, 2010. Petitioner does not contest 27 that the sales tax reimbursement was added to 28 taxable sales. 16 1 Petitioner's disputing that he was 2 responsible for payment of the sales and use tax, 3 and that his failure to pay the tax liabilities was 4 willful. 5 Personal liability can only be imposed on a 6 responsible person. Responsible person is divide -- 7 defined as any person having control or supervision 8 of, or who was charged with responsibility for the 9 filing of returns or the payment of tax. Or a 10 person who had the duty to act for the corporation 11 in complying with sales and use tax laws when the 12 taxes became due. 13 Contrary to petitioner's argument, the 14 evidence before this Board establishes the 15 petitioner was a responsible person for SEI from the 16 fourth quarter of 2007 through the fourth quarter of 17 2010. 18 Board records show that on October 9th, 19 2007, petitioner signed, as president, authorization 20 agreement for electronic funds transfer. 21 On November 27, 2007, petitioner spoke with 22 the Department about amounts past due and states 23 that he will get those paid. 24 On March 27, 2008 petitioner stated he was 25 a corporate officer of SEI and was borrowing money 26 to pay the liabilities in full. 27 Doris Solis, his mother, confirmed a few 28 months later on June 16th, the petitioner was a 17 1 corporate officer. 2 In April, July, August and October of 2008 3 petitioner discusses with staff payments made, 4 outstanding liabilities, and how liabilities might 5 be paid. 6 February 2nd, 2009 petitioner is listed as 7 CEO of SEI and registration information from EDD. 8 In February, March and April of 2009 9 petitioner again discusses with staff payments that 10 have not been made. 11 On June 2nd, 2009 petitioner signed as CEO 12 a power of attorney. 13 September 22nd 2009, petitioner gave verbal 14 approval for another individual to speak to the 15 Department employee about SEI's sales and use tax 16 account. 17 On January 22nd, 2010 petitioner is 18 identified as CEO of SEI in a state -- statement of 19 information from the Secretary of State. 20 Petitioner also signed various returns in 21 2009 and 2010. 22 Petitioner signed several checks to the 23 Board on SEI's bank account. 24 This is all evidence of consistent 25 representations made by petitioner throughout the 26 liability period that he was a person having 27 control, supervision, and a duty to act for SEI with 28 regards to the corporation complying with sales and 18 1 use tax laws. 2 While petitioner has submitted a letter 3 dated December 11th, 2006, stating that he resigned 4 his position as corporate officer effective 5 January, 1, 2007, petitioner represented himself 6 after October 2007, on multiple occasions, as a 7 person responsible for the sales and use tax matters 8 of SEI. 9 During the liability period itself, there's 10 no evidence that establishes petitioner acted only 11 at the direction of his parents. It does appear 12 that petitioner stepped aside into late in 2007, 13 presumably because of the medical issues he has 14 stated caused him to write the December 11th, 2006 15 letter. 16 But after that time, the evidence 17 establishes petitioner was responsible person 18 through the liability period. Any statements made 19 to the contrary are not sufficient in this case to 20 override the contemporaneous evidence that 21 demonstrates that petitioner was a responsible 22 person for payment of SEI's sales and use tax during 23 the liability period. 24 Now, to the fourth element required for 25 personal liability: willfulness. Personal liability 26 can be imposed on petitioner only if he failed to 27 pay or caused to be paid taxes from SEI due from 28 SEI. A failure to pay is willful if the petition -- 19 1 person had knowledge that the taxes were not being 2 paid, had the authority to pay or cause to be paid 3 that taxes when they became due, but failed to pay 4 them. 5 The language of Section 6829 provides that 6 willfully failing to pay means that the failure was 7 the result of an intentional, conscious, and 8 voluntary course of action. 9 Regulation 1702.5 adds that a person can be 10 willful even though there was no bad purpose. A 11 person is regarded as having willfully failed to pay 12 the taxes or caused them to be paid, where he or she 13 knew that the taxes were not being paid and had the 14 authority to pay the taxes or cause them to be paid, 15 but failed to do so. 16 The involvement in SEI's business affairs 17 with BOE employees regarding unpaid amounts and how 18 to potentially pay these amounts in signing returns 19 and checks during the liability period establishes 20 the petitioner knew the taxes were owed and were not 21 being paid. 22 Next, petitioner must have the authority to 23 pay taxes or cause them to be paid. Here, on many 24 occasions during the liability period at issue, 25 petitioner represented that he had the authority to 26 act for SEI when he discussed how payments might be 27 made, or what payments had not been made. He 28 authorized staff to speak with the bookkeeper about 20 1 SEI's account. He signed checks drawn on SEI's 2 business accounts. He self-proclaimed himself as a 3 corporate officer for SEI. 4 This all establishes that petitioner had 5 the authority to pay or cause to be paid SEI's sales 6 tax liability for the liability period. 7 While Petitioner has argued that his 8 parents had the authority, there's no record of 9 conversations with petitioner or other evidence 10 during the liability period that petitioner needed 11 approval from either of his parents before 12 committing action for SEI. 13 Last, while petitioner had knowledge of the 14 taxes due and the authority to pay the taxes, there 15 must have been funds available to pay SEI's 16 liability. There's no question that the sales tax 17 reimbursement was collected from customers, so that 18 represents available funds. Self-assessed sales tax 19 returns from the fourth quarter of '07 to the fourth 20 quarter of 2010 showed total gross sales of over 21 $4 million. 22 Also EDD records indicate SEI reported 23 employee wages for the periods at issue totaling 24 over 800,000. SEI paid Ace Hardware an amount of 25 almost $200,000 during the liability period. SEI 26 also paid its accountant and the Board levee funds 27 from SEI's corporate accounts. This all establishes 28 that SEI had funds available to pay the tax when 21 1 due, but elected to pay other liabilities during the 2 periods at issue. 3 The record before this Board, therefore, 4 establishes the full required statutory elements for 5 petitioner's personal liability under Section 6829. 6 SEI was terminated, sales tax reimbursement 7 was collected from customers, petitioner was 8 responsible for payment of sales and use tax, and 9 petitioner's failure to pay the taxes was willful 10 because he knew the taxes were owed. He had the 11 authority to pay the taxes owed, but he didn't. 12 The Department is therefore in agreement 13 with the Appeals Division revised recommendation. 14 But let me address the bad debt. 15 MR. MENDEL: I'll address bad debt. 16 MS. SILVA: Oh, okay. Do you want to go 17 ahead and do that? 18 MR. MENDEL: I have just -- as to the bad 19 debt, which is one of the issues here, the 20 submissions petitioner brought today raised some 21 issues significantly different regarding bad debts 22 than had been raised at the Appeals Conference. 23 And I spoke with petitioner briefly before 24 this hearing about whether or not he could come up 25 with additional documentation. There had been no 26 mention of sales on account that were not paid. 27 And so if petitioner is found to be 28 personally liable, we would recommend a 30/30/30 22 1 regarding the amount of the liability to allow the 2 Department to work with the petitioner to determine 3 if there are, in fact, some bad debt deductions that 4 shouldn't be taken. 5 MS. MA: Are you done? 6 MS. SILVA: Yes. 7 MS. MA: Okay. Thank you. 8 Five minutes on rebuttal, Mr. Solis. 9 MR. SOLIS: There's a lot going in there. 10 And she's right, I painted the wrong picture of 11 myself. And there's -- there's a thing in there, 12 you have to go back and remember, that I follow my 13 parents' direction. I always have, and that's just 14 who I am. 15 There's a -- in a small business in a small 16 town, there's a few things. Jim Duckett was a local 17 CPA and very involved in the community, and their 18 friend. That was their accountant. And one of the 19 things when I decided to split and not be involved 20 in this company, what they said was, "Well, sign 21 this letter of resignation. We'll keep it here. 22 But going forward, anything to do with Jim Duckett, 23 just tell him you're CPO -- CA -- CAO -- whatever -- 24 corporate -- CEO. Just tell him that." 25 And that's the only places I did it. 26 Everywhere else, I'm signed as manager. But 27 anywhere else, there's -- on the board, I did as 28 they wish, because they were worried that the divide 23 1 would cause a problem. They were very 2 self-orientated (sic). 3 They think -- you know, when the police 4 came in and started taking money out of the till, 5 there's not once that I signed, because I'm not 6 there. I'm never there. I was -- I was -- I was 7 trying to -- that's why I showed the magnitude 8 of -- I gave you the things that showed you the size 9 and scope of the business that we were building. 10 That's 22 stalls, horses. I showed taxes where 11 we're making an income every month. I was consumed 12 in what we were doing. And I had given up on 13 what -- trying to help them, and then them 14 sabotaging themselves. 15 So the -- the -- it's consistent with what 16 I've done. I've always followed what they wanted me 17 to do. I -- my regret is I painted the wrong 18 picture when it came to uses and the verbiage of 19 CEO. And that's what I'm held liable for. I -- 20 it's -- that's the only thing -- that's what 21 happened in our family cir -- system. 22 That's what happens in a small town. It's 23 a small-town mentality. It's my negligence of not 24 understanding the scope of what that meant to -- to 25 paint myself as something else for the benefit of my 26 parents, so they can have the self-esteem of knowing 27 that their son didn't split off in a business from 28 them into the rest of the -- I didn't see it as a 24 1 big deal, so I honored their wish. I had already 2 started my own businesses and moved off in another 3 direction. 4 I didn't give that person, Jane -- which 5 they don't even know her last name -- and she -- 6 somehow the Board can't remember that. Her -- they 7 should have been able to remember that. That was 8 the whole purpose of the conversation. But they can 9 remember that I'm the one that said -- gave 10 permission. Cause it wasn't me, it was my mom. And 11 there's a sign here with -- under penalty of perjury 12 that it was her doing it. 13 It shows the method from which she did the 14 checks. I did not have access to the checks. I 15 could sign the checks, but I couldn't get the 16 checks. That was their last form of control over 17 the whole business. 18 That's how it worked. So as to them and 19 how they painted it, yeah, it looks like that. And 20 if I'm -- was you guys up there, I'd be thinking, 21 "Hm. It looks like it is." But that's what -- 22 that's the truth of what happened. And that's how 23 it went down. I can't speak to it in any other way. 24 But that's my negligence in -- in keeping that 25 little thing for my mother and father and following 26 direction has put me in this -- in grave jeopardy. 27 That is not my business, never was my 28 business. I would never run a business the way they 25 1 run a business, or build it the way they built it. 2 They would build shacks all over the place to -- to 3 avoid permit fees. They would do the strangest 4 things. And I just -- 2000 -- I was gone. I was 5 gone. 6 But you've got to remember, I was there 7 since I was 13. I follow my parents. And I -- it 8 was -- I'm their -- to this day, I take care of my 9 mom. And I take care of my dad. Even though all 10 this has taken place, I still do. 11 MS. MA: Okay. 12 Mr. Runner. 13 MR. RUNNER: Yeah. Lets, um -- so after 14 July 2007, um -- 15 MR. SOLIS: I'm still recovering. 16 MR. RUNNER: How much -- how much time did 17 you spend at the business? 18 MR. SOLIS: I keep -- my wife drove me in 19 to talk to the State, because my mom was crying -- 20 MR. RUNNER: I'm sorry -- 21 MR. SOLIS: My -- my wife would drive me 22 in -- 23 MR. RUNNER: Into where? 24 MR. SOLIS: To the store. I lived in -- I 25 lived 15 miles away in a little town called Bangor 26 where I built the feed store. 27 MR. RUNNER: Okay. Okay. 28 MR. SOLIS: I'm in a town over. 26 1 MR. RUNNER: Okay. 2 MR. SOLIS: So she called in on that time, 3 on that particular time, because I wasn't in much at 4 all. There was only two times I think I was in, in 5 the whole year of that time for any scope. 6 Because -- 7 MR. RUNNER: You were only in that store 8 twice? 9 MR. SOLIS: Pretty much. All to address 10 the State. Because they can't deal with computers, 11 and they were scared of the State. 12 MR. RUNNER: So they called you into the 13 store to ask your assistance dealing with that? 14 MR. SOLIS: Yeah, and -- 15 MR. RUNNER: Okay. 16 MR. SOLIS: The other stuff I brought 17 collaborates that. From Meryl, the other person 18 there, and the other people that work there. 19 MR. RUNNER: And then the correspondence -- 20 back to the Department. 21 The correspondence that we have at -- at 22 that point, we -- we have correspondence after that 23 time where the appellant there is signing as CEO, 24 correct? 25 MS. SILVA: Yes, or president. Sometimes 26 he used president. Um, he does tell staff he's a 27 corporate officer of SEA (sic). 28 MR. RUNNER: Who signed -- who signed -- 27 1 who signed the, um, sales tax reports during that 2 term -- time? 3 MS. SILVA: The earlier part of the 4 liability period, Ms. -- Mrs. Solis signed them. 5 MR. RUNNER: The earlier part of the 6 liabilities, tell me what time -- what -- 7 MS. SILVA: Um, I think that would be, um, 8 '08. So I believe she signed fourth -- 9 MR. RUNNER: How about seven? 10 MS. SILVA: -- quarter. 11 Well, the only liability period left is the 12 fourth quarter -- 13 MR. RUNNER: Okay. 14 MS. SILVA: -- which he didn't do in '08. 15 MR. RUNNER: So who signed those? 16 MS. SILVA: I believe she did. 17 MR. RUNNER: So she signed those. She 18 signed them in '08. Who started signing them later? 19 MS. SILVA: Petitioner. 20 MR. RUNNER: Okay. And that would be 21 starting in '09 or something? 22 MS. SILVA: Yes. 23 MR. RUNNER: And at that point he was 24 signing them as -- 25 MS. SILVA: He had various titles; 26 president, sometimes he did put manager, president, 27 president. He signs other documents CEO. 28 MR. RUNNER: Okay. Why -- okay. 28 1 Let me go back to the appellant. 2 Tell -- tell me, what -- what -- what -- 3 why were you signing those documents? 4 MR. SOLIS: That's a very good question. 5 Because I'm a salesman -- 6 MR. RUNNER: Well, I can't answer it. So 7 you're gonna have to help me. 8 MR. SOLIS: I know. So here's my thing. 9 They -- they did not want to create a divide. 10 MS. HARKEY: They; who is "they"? 11 MR. SOLIS: My mom and dad. Sorry. 12 MS. HARKEY: Your mom and dad did not want 13 to create a divide. 14 MR. SOLIS: My mom and dad did not want to 15 create a divide in a small town that I no longer 16 wanted to work for them in any capacity. And 17 because I'm a large portion of a lot of their 18 business and what came in and all that, but I just 19 could not put up with what was going on anymore and 20 how they were treating -- 21 MR. RUNNER: So why does that -- what does 22 that have to do with you signing the returns? 23 MR. SOLIS: Because when I resig -- when I 24 resigned, I resigned. But they asked me not to make 25 it, like, public, or when you're talking to -- 26 you've gotta remember -- 27 MR. RUNNER: Well, listen -- 28 MR. SOLIS: -- James L. Duckett is our CPA 29 1 who prepared -- 2 MR. RUNNER: Right. 3 MR. SOLIS: -- all of these tax returns. 4 MR. RUNNER: But clearly -- 5 MR. SOLIS: And if I were to go to James 6 and say, you know, "I'm no longer there, and I'm not 7 doing anything," that was what they were worried 8 about. 9 MR. RUNNER: But I'm confused because your 10 mom was signing them earlier. 11 MR. SOLIS: Sometimes I couldn't get there. 12 Sometimes I couldn't -- what do you mean earlier? 13 In 2000 -- 14 MR. RUNNER: Well, in '07, '08 it sounds 15 like your mom was signing them. 16 MR. SOLIS: Right, cause that's -- I'm 17 still in my -- I mean, you -- you got to remember 18 this is -- 19 MR. RUNNER: Okay. Okay. 20 MR. SOLIS: -- huge. So I'm in there now, 21 and I'm -- that's all. I mean -- 22 MR. RUNNER: So any kind -- 23 MR. SOLIS: In conversation, any kind of 24 conversation on the phone or -- or calling them, had 25 to be me. 26 MR. RUNNER: Okay. 27 MR. SOLIS: She would never do it. 28 MR. RUNNER: Again, your mom was signing 30 1 those, and then you started signing them again. 2 MR. SOLIS: Yeah, because that -- at that 3 time, my dad started to become ill. And that was 4 where a lot of this went to heck, and they lost 5 their other bookkeeper that past away. And it 6 became to where they couldn't juggle it all. And 7 that's where it got really confusing. 8 And then I'm losing everything, and I'm 9 involved in a property dispute where my house is 10 built over a property line -- 11 MR. RUNNER: Okay. Hang -- so -- so how 12 much time were you spending at that business in 13 '08, '09? 14 MR. SOLIS: Hardly any at all. I mean, not 15 even on the week -- 16 MR. RUNNER: You need to tell me what that 17 means. You need to tell me what that means. 18 MR. SOLIS: I would come in and check on 19 Mondays, and that was it. Because the magnitude of 20 what I showed you when I brought you that -- that 21 was a huge ranch I'm working on. I'm working sun up 22 til sun down -- 23 MR. RUNNER: So checking in on Mondays -- 24 MR. SOLIS: -- (inaudible) kids. 25 MR. RUNNER: -- you did what? 26 MR. SOLIS: I checked in with anything to 27 do with State Board of Equalization. That was my 28 thing. And to -- to check over, like -- I made some 31 1 calls to some of the people who owed us money, 2 because they were accounts that I had -- 3 MR. RUNNER: Okay. When you tell me that 4 your thing was the State Board of Equalization -- 5 MR. SOLIS: And unintelligible. 6 MR. RUNNER: -- you know that doesn't sound 7 very good for you. 8 MR. SOLIS: No, it's not, but 9 unintelligible. 10 MR. RUNNER: Okay. So -- so -- so tell me 11 what that means when you say the State Board of 12 Equalization was your thing. 13 MR. SOLIS: My parents made -- they -- I 14 painted a picture. They didn't want anything to do 15 with the State. They couldn't understand 16 electronics. They sent a letter in -- that's -- 17 that asked for you guys to do it the old fashioned 18 way. And you guys, of course, could, and you've 19 gone to the lengths -- 20 MR. RUNNER: So you started return -- you 21 started signing returns, you started doing all 22 that -- 23 MR. SOLIS: Right. And I never -- I -- I 24 honored their wish because all of it was right in 25 front of me -- 26 MR. RUNNER: So I -- so here's what 27 happened -- so -- so -- okay. But the problem is 28 the taxes weren't paid. 32 1 MR. SOLIS: But they tried. I mean, 2 they -- 3 MR. RUNNER: So -- so -- 4 MR. SOLIS: They, at best -- 5 MR. RUNNER: When you said it was your 6 thing -- when you said it was your thing, help me 7 understand, then, if it was your thing, why didn't 8 you see that the taxes got paid? 9 MR. SOLIS: My thing was to implement their 10 wishes. They'd hand out a check and say, "Pay this 11 quarter." So that's what I'd do. 12 MR. RUNNER: Okay. Let's go there. Let's 13 go there for a minute. 14 MR. SOLIS: Yeah. 15 MR. RUNNER: You -- you -- they -- you -- 16 you had no access to the checks? 17 MR. SOLIS: No. Never. 18 MR. RUNNER: Who kept the checks? 19 MR. SOLIS: My mom and dad in that safe -- 20 in their safe. That was their last -- 21 MR. RUNNER: You had -- you had no access 22 to that safe? 23 MR. SOLIS: No, it was their safe. It was 24 their store. 25 MR. RUNNER: Well, again, I -- it could be 26 their store, but you may have the combination of the 27 safe. 28 MR. SOLIS: No, I don't. I don't have the 33 1 combination. 2 MR. RUNNER: That's why you need to tell me 3 that. 4 MR. SOLIS: Yes. I'm saying -- 5 MR. RUNNER: Okay. 6 MR. SOLIS: -- I don't have the combination 7 to that safe. 8 MR. RUNNER: Okay. So the -- the checks 9 were in a place that you had no access to? 10 MR. SOLIS: Yes. 11 MR. RUNNER: So when you would -- when -- 12 when -- when things need to be paid, like a 13 supplier, or the, uh -- the BOE or whoever else -- 14 MR. SOLIS: They did those. 15 MR. RUNNER: They did those? 16 MR. SOLIS: Yeah. They did the suppliers 17 and all those things. 18 MR. RUNNER: And so when you told them they 19 needed to write a check to the BOE -- 20 MR. SOLIS: I didn't tell them, they told 21 me. 22 MR. RUNNER: They told you what? 23 MR. SOLIS: We need to pay a quarter of 24 this. Here's the -- here's the plan. I -- you 25 know, they -- they -- it made sense. They were 26 trying to pay a little bit to everybody and survive. 27 They were trying to keep the doors open in hopes 28 that there was a loan coming, or there's funds 34 1 coming, there's, ya know, personal people were going 2 to invest in the store -- 3 MR. RUNNER: So you told them that they owe 4 this amount of money to the BOE -- 5 MR. SOLIS: No, they did. They did all 6 that. It was prepared by the CPA which is 7 James L. Duckett. I never knew any of that stuff. 8 I had no idea of that stuff. 9 MR. RUNNER: Well, you'd sign the filing. 10 MR. SOLIS: Yeah, because they handed it to 11 me. I didn't prepare the filing. James L. 12 Duckett -- 13 MR. RUNNER: You didn't prepare the filing? 14 MR. SOLIS: No. No. None of it. I was 15 the -- I'm the spokesperson -- 16 MR. RUNNER: Okay. 17 MR. SOLIS: -- to your Board. 18 MR. RUNNER: Okay. Well, except that's not 19 what your title was. So, um -- so you -- you -- 20 they handed you a prepared filing, you signed it. 21 MR. SOLIS: In front of James L. Duckett, 22 the guy I'm not supposed to tell I divided and left 23 with. 24 MR. RUNNER: Okay. And you did not have 25 the ability to put a check to -- on that -- 26 MR. SOLIS: No. I couldn't grab -- no. 27 They're in the safe. It's their check, it's their 28 store, it's their thing. I never thought anything 35 1 of it. I'm off doing my own thing. 2 MR. RUNNER: Did you think they were paying 3 those? 4 MR. SOLIS: Yes, absolutely. 5 MR. RUNNER: You thought you were signing 6 them and giving them to who? 7 MR. SOLIS: The -- I -- 8 MR. RUNNER: After you signed them -- 9 MR. SOLIS: It was an electronic file, 10 so -- 11 MR. RUNNER: Okay. Okay. 12 MR. SOLIS: Yeah. 13 MR. RUNNER: Okay. So -- 14 MR. SOLIS: And then apparently some of 15 them bounced, some of them, um -- some of them did 16 go through. But I -- I would only hear of that in 17 the conversations I've had. 18 MR. RUNNER: So you assumed once you signed 19 it, and it was filed electronically, that there was 20 funds attached to that to pay it? 21 MR. SOLIS: I believe so. Yeah, I would 22 imagine. I didn't follow it. My job was that 23 piece. That's the sad part. 24 MR. RUNNER: Um -- the -- you -- there's a 25 letter here from, um -- it's a worker, right? 26 MR. SOLIS: Meryl? 27 ---oOo--- 28 36 1 ---oOo--- 2 MR. RUNNER: Meryl, right. 3 Meryl is who? 4 MR. SOLIS: Meryl was a 30-year-old -- she 5 would have been here and, uh -- but she's -- she 6 had a leg inj- -- she lost her leg and she has 7 complications right now -- 8 MR. RUNNER: Mm-hmm. 9 MR. SOLIS: -- due to that. And it was 10 short-term notice and I couldn't get her down here. 11 But, uh -- so this is what she wrote in 12 that. 13 Meryl was probably there, gosh, over 27 14 years, I believe. She was there for a long time. 15 She just worked in that capacity as a sales store 16 manager. 17 MR. RUNNER: Mm-hm. Basically telling us 18 that she had -- that he had -- that you did not have 19 control, or you were working as manager, and the 20 dates that correspond to that issue. 21 Okay. 22 If we -- if -- let me go back to 23 Department. If he hadn't signed these as CEO or 24 president, how -- how -- how definitive is that to 25 BOE's position? 26 MS. SILVA: Well, he still represented on 27 multiple occasions throughout the liability period 28 that he was the person -- a person, at least, with 37 1 the ability and the duty to pay -- 2 MR. RUNNER: How did he represent -- 3 MS. SILVA: -- sales and use tax. 4 MR. RUNNER: How did he represent that he 5 was the person who had the duty and the ability to 6 settle the -- to send a check? How did he -- what 7 did he do, what did he say to say, "Yeah, I can 8 write you a check"? 9 Or tell -- what -- how did -- how did he -- 10 how did he demonstrate that he had the control and 11 the ability to write a check? 12 MS. SILVA: Well, there isn't anything in 13 here that says that he didn't have the -- 14 MR. RUNNER: That's not what we -- 15 MS. SILVA: -- the ability. 16 MR. RUNNER: That's not what you told me. 17 MS. SILVA: But, let me -- 18 MR. MENDEL: Well, I think -- I think maybe 19 you're asking about exactly what was said in some of 20 the ACMS notes. 21 MR. RUNNER: Well, all's I'm saying is it 22 was -- what I heard from the Department -- 23 Hang on. Just a minute. 24 What I heard from the Department is he 25 indicated that he had the ability -- 26 MR. MENDEL: Right. 27 MR. RUNNER: -- to sign -- or to -- to -- 28 to pay the liability. 38 1 MR. MENDEL: On -- 2 MR. RUNNER: So I'm asking what -- what do 3 we have to show that? 4 MR. MENDEL: On March 2nd, 2009 -- and I'm 5 just taking things -- 6 MR. RUNNER: Okay. 7 MR. MENDEL: -- almost at random. 8 MR. RUNNER: Okay. 9 MR. MENDEL: He called -- he, uh -- a phone 10 call: 11 "He had to wait to make sure money in 12 bank to do payment plan and $2500 payment. 13 "The last time he spoke, he was going 14 to send those the following day and a check 15 a week later. And it's not there, and I 16 haven't heard from him." 17 MR. RUNNER: Okay. 18 MR. MENDEL: "This is the last time I will 19 call if payment not here." 20 MR. RUNNER: Okay, let me ask -- let me ask 21 the taxpayer. It sounded like you were making a 22 deal and making -- and had control over the 23 checkbook. 24 MR. SOLIS: There's time in between there 25 where I'm actually telling 'em what -- this is what 26 they want to do, this is how they want to do it. 27 This is when it started getting into that 28 negotiation part. There's all these days -- 39 1 MR. RUNNER: Who -- hold on. Hold on. 2 Negotiating with who? 3 MR. SOLIS: Them (indicating). They're 4 wanting their money. 5 MR. RUNNER: Right. 6 MR. SOLIS: It's obvious. And then I'm 7 telling them, "Hey, we need -- you need to do 8 something here." And then that's why you see days 9 in between there because I'm going back to tell 10 them, "This is what they'd like to do; can we do 11 that?" 12 MR. RUNNER: But you never indicated, "I 13 need to check this out with -- with my --" 14 MR. SOLIS: That's why there's days in 15 there -- 16 MR. RUNNER: Well -- 17 MR. SOLIS: You're right. 18 MR. RUNNER: -- but did you feel like you 19 ever said to them -- 20 MR. SOLIS: You're right. 21 MR. RUNNER: -- I need to check with my 22 parents to see if this is -- if they're acceptable 23 to this? 24 MR. SOLIS: You're right, but there's 25 conversations prior to this where it says I'm 26 just the -- where we had a conversation where I'm 27 going to speak for my mom because she doesn't know 28 how to speak to this or doesn't want to speak to 40 1 this. There is a conversation that's not in here 2 that spoke to that. 3 MR. RUNNER: Where -- when you say it's -- 4 we don't have it here, where is it? 5 MR. SOLIS: I just remember talking to a 6 Renee Spelling -- 7 MR. RUNNER: Okay. 8 MR. SOLIS: -- saying that -- and my mom 9 was in the room -- just saying similar to what -- 10 MR. RUNNER: Okay. 11 MR. SOLIS: -- the bookkeeper was going to 12 do. 13 MR. RUNNER: Okay. Do we have any record 14 of a conversation that indicated that he had a 15 limited ability or that he needed to deal with 16 his -- that he was representing his mom in these -- 17 in these discussions? Do we have any indication of 18 that in any of the notes? 19 MS. SILVA: No. There are lots of 20 discussions with Renee Spelling in the ACMS notes, 21 but nothing to, um, that effect. 22 I mean there's one where he says he's a 23 corporate officer. His mother then confirms later, 24 a couple months later that, yes, in fact he's a 25 corporate officer. 26 So staff was making sure they were talking 27 to the right person, um, a person who could help to 28 pay the liabilities. 41 1 MR. SOLIS: That -- there's one -- 2 MR. RUNNER: Go ahead. Real quick, go 3 ahead. 4 MR. SOLIS: In that, that was a perfect 5 opportunity to say, "So you're saying that you're 6 responsible for these bills." Because, I don't 7 know. I'm just doing what my parents told me. 8 MR. RUNNER: Well, wouldn't that be kind of 9 natural for them to say -- 10 MR. SOLIS: No, I don't -- I don't know. 11 MR. RUNNER: I'd say you said -- are you -- 12 to re- -- 13 MR. SOLIS: Yes, you're right. 14 MR. RUNNER: If you're representing 15 yourself as that -- 16 MR. SOLIS: You're right, but at 13 years 17 old -- 18 MR. RUNNER: -- would it not be natural for 19 them to -- to doubt you at that point? And that's, 20 I guess, the challenge that we have when we look at 21 this. 22 Okay, thank you. 23 MS. MA: Ms. Harkey. 24 MS. HARKEY: Okay. I have some timelines 25 here, and I think these are really important. 26 In 1978, Doris and Iris Solis formed the 27 partnership. Doris was 44 -- or Iris was 44, Doris 28 was 51. 42 1 In 1995, the corporation was formed. Doris 2 68, Iris 61. 3 In 1999, Marc Solis is added as corporate 4 officer with the Secretary of State. He was 36. 5 In December of '06 he was ill and he 6 forced -- he had a resignation, which he explained. 7 And if you -- if -- I think he's nervous 8 here at the hearing. But as it was explained to my 9 staff is that he, uh -- he was -- he was going in 10 for major surgery. And as he explained, they didn't 11 know if he was going to be okay or not. 12 His parents had a small business. They 13 didn't want his wife to potentially seize the 14 business or to become involved. So they asked him 15 to resign, which created bad feelings in the family. 16 Um, but he's a son, he's the youngest of 17 the sons as I understand it, the only one around. 18 November 7th, he returns as a manager and 19 the business was in -- in shambles. And that's 20 November of '07. Iris at that point was 73, Doris 21 was 80. 22 In 2008, Iris leaves the business due to 23 illness; and that, we believe, to be Alzheimer's. 24 In 2009, Doris was diagnosed with dementia. 25 Marc had a very difficult situation. I 26 think what he's trying to say and what I understood 27 from all of this is that he was trying to just come 28 in and communicate and then get on with his life. 43 1 He was the only child left to deal with his parents' 2 issues. 3 He signed on in a variety of capacities, 4 which shows the other confusion. I mean, if you 5 could see, he's -- he's CEO in one part. He's -- 6 he's manager in another. He has no title. He's a 7 president. And then he's son and he's signing all 8 these things, all different sorts of documents in a 9 variety of forms. 10 He got involved -- the mom did sign all the 11 tax returns or all the -- the sales tax returns 12 through 2008. He then signed the electronic 13 returns. His mom didn't know how to use a computer, 14 so he was the one that was in charge of coming in to 15 do the e-filing for her. 16 On any returns that he signed physically, 17 the CPA also put his name on them. So it was kind 18 of a dual capacity. 19 Um, in June of 2009, he does sign with 20 power of attorney because his mother -- his dad is 21 ill and his mother is diagnosed with dementia, and 22 dementia is very slow. We know it's not always -- 23 sometimes they're on, sometimes they're off. 24 Doris did not want to give up control of 25 the company or her checkbook. That was her claim to 26 her talent, skill, what she did. This was her 27 company. 28 But unfortunately, things had gone down. I 44 1 don't believe that Marc had any ability as to 2 determine who got paid. Just merely, "Come in and 3 do this for me because I can't do this part." 4 In 2010, the corporation closed. And we do 5 have documentation that Marc had his own business, 6 his own company going on. I think he shows income 7 from both. 8 It's a very difficult case because if you 9 just looked at documentation, I think you'd say, 10 "Yeah, you got it all. He's here, he's admitted the 11 guilt." 12 But I think when -- if you can get through 13 some of the nervousness up here and -- as we did 14 when we talked to him on numerous occasions and got 15 it -- you know, got his story. 16 You know, the problems for the 17 store really -- well, there were other things in 18 these letters, as you can see, where they had bills 19 and stuff. But Dad went out and bought another car 20 and Dad -- you know, different things happened. And 21 I don't think that Marc was in control of those 22 funds. 23 The money problems were due to the poor 24 economy starting in 2007, because they'd been able 25 to keep it afloat and keep, you know, moving money 26 around for that time. 27 Uh, most of their big clients went bankrupt 28 or did not pay accounts, and I understand that's 45 1 about $360,000. 2 They got behind on mortgages for the 3 building and land, which resulted in foreclosure. 4 And this is on the parents now. 5 Um, during the period, BOE tried to collect 6 from the corporation. Marc said that his family had 7 all their money tied up in real estate and bills -- 8 and they probably did -- and they were having 9 trouble getting loans or selling the property. 10 So it was a 31-year-old business owned by 11 the parents. I do believe we should have some 12 consideration for his, uh -- if you look here, in 13 May of '09 he's partner; 2 of '09 president; August 14 of '09 owner; November of '09, manager; 4 of '09 no 15 title. Manager. Manager. President. Manager. 16 Son. 17 I mean, I don't think that he really 18 understood the impact of his titles on the 19 documents. I think he was just doing as he was told 20 and trying to get the money in that they told him 21 was available. 22 I don't believe he controlled the bank 23 accounts. And I just -- you know, I -- it was based 24 on whether he made a credible case up here. And I 25 think that he's having trouble making his case 26 clearly because it's -- it's a very difficult 27 situation. It's nerve-racking. He's on video, and 28 it's a little bit frightening. 46 1 But I just don't -- I don't think that he 2 ever intended to be the responsible person here for 3 the money. And had he known he was responsible, he 4 would have probably taken -- taken over the 5 checkbook and the bank accounts, if he had the 6 ability, or totally abdicated. 7 But I think with the Alzheimer's, then the 8 dementia and the economy crashing, I think he was 9 put in a pretty bad situation. 10 Um, so that's how I see this case. I see 11 that he did have another business. He was working. 12 He wasn't going in. The letters seemed to indicate 13 he was only in a little bit. I mean, one day a week 14 maybe, to come by and say "Hi" and see if there's 15 anything he had to -- had to help with. But I don't 16 think he had control of the funds. And I don't 17 think he negotiated who got paid when. 18 I think he just did what he was told to do 19 until really it couldn't happen anymore. And by 20 that time the corporation had to close, and he took 21 power of attorney and CEO in '09 and '010. And 22 maybe '09 and '010 he had some ability, some control 23 over that; I'm not sure what was going on then, if 24 his mother was ill. But I think, prior to '09 25 definitely; I don't see that he was the responsible 26 person. I think he was just trying to do what he 27 could do. 28 MS. MA: Did she summarize that right? 47 1 MR. SOLIS: Amazingly so. 2 MS. MA: Okay. 3 Mr. Horton. 4 MR. HORTON: Thank you, Madam Chair. 5 What was your source of income? 6 MR. SOLIS: I, um -- in two thousand -- 7 MR. HORTON: During the period -- 8 MR. SOLIS: -- five, I believe is all real 9 estate. 10 MR. HORTON: -- period in question. 11 MR. SOLIS: All my tax returns will show 12 that I bought pieces of property for -- one I bought 13 for 65,000 and four years later sold it for 865. It 14 happened to be a commercial corner that just blew 15 up. 16 MR. HORTON: So -- 17 MR. SOLIS: That was the main reason I 18 flipped that out into, um -- that's what started the 19 whole ranch thing. I 1031'd that out to Bangor 20 along with all my other property. So my income was 21 real estate. 22 MR. HORTON: From the business in question, 23 you never received any compensation? 24 MR. SOLIS: I prob- -- yeah, I did. Yeah. 25 They kept me on the payroll to keep the facade up 26 and I would -- you know, I'd do my thing once a 27 week. 28 MR. HORTON: Do you recall what your 48 1 compensation was? 2 MR. SOLIS: It -- it changed a lot. It -- 3 it -- it, um -- it was salary for a while and -- 4 Gosh, it's been so long ago I want to 5 say -- 6 MR. HORTON: Does the Department know? 7 MR. SOLIS: -- it was around a grand -- a 8 grand a week. 9 MS. SILVA: I didn't see any breakdown in 10 the EDD records that we got, just the total amounts. 11 MR. HORTON: Total? 12 MS. SILVA: So I wasn't able to see the 13 breakdown. 14 MR. HORTON: The total amount? 15 MR. SOLIS: It was like a grand a week, and 16 then it changed to 500 a week. 17 MS. SILVA: During the liability period, it 18 was -- I think I said 800,000. 19 MR. HORTON: 800,000. That was the 20 compensation? 21 MR. SOLIS: That I got 800,000? 22 MS. SILVA: No, no, no. Those were the 23 total -- 24 MR. SOLIS: Oh. 25 MS. SILVA: -- EDD records for the 26 liability period for the employee compensation -- 27 MR. HORTON: All the employees. 28 MS. SILVA: -- not -- not just for 49 1 petitioner. 2 MS. HARKEY: What was his payroll? 3 MR. HORTON: So -- 4 MS. SILVA: That -- that's what Mr. Horton 5 was asking, and we don't have that breakdown. 6 MR. HORTON: It's your testimony that it 7 varied; a thousand a week, 500 a week? 8 MR. SOLIS: Yeah. Because at the point 9 where it was starting to go down, everybody had 10 the -- I couldn't -- you know, I'm hardly there. I 11 was making money here, cut mine in half. 12 MR. HORTON: At what point in time was 13 that? 14 MR. SOLIS: 2009, I believe. 15 MR. HORTON: 2009? 16 MR. SOLIS: Yeah. 17 MR. HORTON: And, uh, you had indicated 18 earlier in your testimony that there was a plan of 19 some sort, you alluded to it as a financial plan 20 where your parents would tell you how to manage 21 the -- how they wanted to -- let me make sure I 22 characterize it properly -- how they wanted to 23 manage the finances. That they wanted to pay a 24 little bit here and a little bit there and a little 25 bit there. 26 Can you elaborate on that plan and what it 27 was for? 28 MR. SOLIS: Basically why it made sense to 50 1 me -- I mean, I'm trying to do the same thing over 2 at my business where I'm at. I'm trying to spend a 3 little bit -- you know, sales are dropping. The 4 recession's hitting. I'm trying to pay a little bit 5 to this. And as you can see, I put that up there. 6 My wife and I couldn't pay our sales tax, but we 7 ended up paying it back because we did -- that was 8 our business. It was up to us to pay that back. 9 It's paid now and it took us a long time to 10 get it there, and we paid a lot of fees and 11 interest. But we took care of it. 12 MR. HORTON: So when your parents -- 13 MR. SOLIS: But -- I'm sorry. 14 MR. HORTON: When your parents were 15 discussing with you what amounts to pay to manage 16 this challenging time -- 17 MR. SOLIS: It was never in round -- it was 18 little bit to this one, we're going to pay some of 19 these vendors, going to pay the lighting to keep the 20 light on, and a little bit here. And then the 21 totals were written out when I got there, when the 22 checks were there. 23 MR. HORTON: And why did they discuss that 24 with you? 25 MR. SOLIS: I don't know really. I guess 26 because I'm their son and it's been prior probably. 27 MR. HORTON: Just wanted you to know. 28 MR. SOLIS: You know, and probably maybe 51 1 for affirmation and seeing if they're going in the 2 right way. 3 MR. HORTON: You indicated earlier as part 4 of your testimony that you were a large portion of 5 their business. What -- what -- what is that, just 6 handling the Board of Equalization? 7 MR. SOLIS: Well, when I'm not nervous as 8 heck, I'm charming as hell. And I'm really good at 9 sales. 10 MR. HORTON: So -- so your -- your -- 11 MR. SOLIS: Sorry I said the -- 12 MR. HORTON: That's okay. That's okay. 13 MR. SOLIS: -- the h-e-l-l word -- 14 MR. HORTON: I think that's -- 15 MR. SOLIS: -- in a really nice place like 16 this. I'm sorry. 17 MR. HORTON: When you opened up your -- 18 your new business, that -- the source of that was 19 your real estate transactions. 20 MR. SOLIS: Well, it was part of that and 21 feed store. We had -- my wife -- that was the whole 22 goal, was to get to this huge ranch -- which you 23 have a picture up there -- which is 135 acres, and 24 the back half had already been broken up and started 25 with the plat map. And what I was going to do is 26 plot that out and actually, you know, pay off the 27 front and then have a feed store and our home paid 28 for. 52 1 But it all crashed and I lost every bit of 2 my investment. And that's why you see the 3 bankruptcy thing is there just to show you that I 4 stayed in the fight all the way, all the way to the 5 end. I was willing to lose everything I had. To 6 keep things going, I lost all my investments, 7 anything I have. So that's why that's there, just 8 to show you that I tried to do my best to stay in 9 the game. 10 MR. HORTON: So in regards to the payment 11 plan that your parents discussed with you, uh, to 12 pay this vendor and that vendor and so forth, who 13 wrote the checks to make those payments? 14 MR. SOLIS: Well, with the vendors, it 15 was -- she said she just paid a little to the 16 vendors, so she did the vendors. And then she left 17 me what's going to the state. So I really don't 18 know what she paid the vendors other than a little 19 to the vendors. 20 MR. HORTON: Did she authorize a payment to 21 the state of California? 22 MR. SOLIS: She told me, "Here's what 23 to" -- 24 MR. HORTON: To pay? 25 MR. SOLIS: -- "write the check for," yeah. 26 "Here's the amount." And then it was prepared by 27 the CPA, always. 28 MR. HORTON: Was that amount -- was that 53 1 amount consistent with the amount on the return that 2 you -- that you signed? 3 MR. SOLIS: I don't know those things. I'm 4 a salesman, not a bookkeeper, and I was just 5 following -- those things I can't address 6 properly. 7 MR. HORTON: Um -- 8 MR. SOLIS: What -- can you say that 9 question again to make sure I do clearly answer you? 10 Maybe I misunderstood that. 11 MR. HORTON: Your answer was understood. 12 MR. SOLIS: Oh. 13 MR. HORTON: It was a good answer. 14 MR. SOLIS: Okay. 15 MR. HORTON: In your favor. 16 MR. SOLIS: All right. 17 MR. HORTON: Unless you want to change 18 it. 19 MR. SOLIS: No. I like -- I like what you 20 said. 21 MR. HORTON: Um -- all right. Thank you 22 very much. 23 MS. STOWERS: I guess -- it's late. I just 24 kind of -- make sure I'm following all the facts. 25 And so what I'm getting here is that it was 26 your parents' business. Your father was ill. Um, 27 your mother was elderly, was not comfortable with 28 the computers, e-filing or dealing with the state of 54 1 California. 2 Your mother/your father's business, they 3 had a CPA that would prepare the tax returns. You 4 sometimes signed the tax return. But as far as the 5 amount of tax that was due, your mother would 6 dictate how much would be paid, would say, "We're 7 going to write a check for this amount." 8 MR. SOLIS: Right. 9 MS. STOWERS: And then either you would 10 sign the check based on your mother's direction? 11 MR. SOLIS: Right. 12 MS. STOWERS: Okay. 13 MR. SOLIS: See, we were on -- we had 14 Epicore which was the computer for the store. And 15 then we had QuickBooks because our accountant didn't 16 like pulling stuff off of Epicore. So at the end of 17 the month he would pull -- come in, pull it all 18 down, and get it all ready. And then these little 19 yellow tickets saying "sign here." And then my mom 20 would drop by, put a -- put a check to that, and 21 that's what I did. 22 MS. STOWERS: Okay. So to, um -- okay. 23 MR. SOLIS: Do you have another question? 24 MS. STOWERS: No, I don't really have a 25 question. I was just kind of summarizing what I'm 26 seeing as -- it seems to me that he was just trying 27 to help his parents deal with their financial 28 responsibility with the state of California. 55 1 MR. SOLIS: Absolutely. 2 MS. MA: Okay. I just have, um, one 3 question. 4 It showed in your IRS tax returns or the 5 corporate partnership tax returns that you were an 6 owner of the company. 7 MR. SOLIS: So I -- you know -- 8 MS. MA: What is -- 30 -- was it 30, 40 9 percent owner? I just saw something about that. 10 MR. SOLIS: I -- I guess that's true. I 11 didn't really -- that wasn't something I really paid 12 attention to or looked at or even can remember. I 13 wouldn't even know what percentage I had. 14 MS. MA: So who -- who filed your personal 15 tax returns? 16 MR. SOLIS: James L. Duckett. I think they 17 had in him do it and they -- they would take care of 18 it for them. It was the same guy. 19 MS. MA: Mm. 20 MR. SOLIS: That's what made it kind of 21 weird is that was their guy. 22 MS. MA: Okay. Mr. Runner. 23 MR. RUNNER: Yeah. But you signed 'em? 24 MR. SOLIS: Yeah. 25 MR. RUNNER: Um -- 26 MR. SOLIS: What do you mean I signed them? 27 MR. RUNNER: You signed your tax returns. 28 MR. SOLIS: Yes. 56 1 MR. RUNNER: Okay. Um, when -- when -- 2 what's the date when -- when there -- when -- when 3 the appellant would have known that the sales taxes 4 were not current and he was negotiating a payment 5 plan? What's the date on something like that? 6 MR. MENDEL: Um -- 7 MS. SILVA: When he's negotiating payment? 8 MR. RUNNER: Yeah. 9 MS. SILVA: From the very beginning, at the 10 end of, uh, November. 11 MR. RUNNER: Of? 12 MS. SILVA: 2007. 13 MR. RUNNER: Okay. So in November 2007. 14 MS. SILVA: He starts speaking with -- 15 MR. RUNNER: So -- 16 MS. SILVA: He did step away; we see 17 that. 18 MR. RUNNER: So, and that's -- you're 19 making a thousand dollars a week and you're showing 20 up one day a mon- -- or a thousand dollars a week 21 and you're showing up one day a week? 22 MR. SOLIS: At that time. But I had a lot 23 of sales prior to that, that I accumulated, and that 24 was the payroll tax that they gave me. 25 MS. HARKEY: Were you commission? 26 MR. SOLIS: And I think it was just because 27 I was the son. 28 MR. RUNNER: Were you on commission or 57 1 what? 2 MR. SOLIS: What does that mean? 3 MS. HARKEY: Were you commi- -- 4 MR. SOLIS: No. No, I don't believe so, 5 but I'm their son and I'm -- they -- they know I'm 6 starting my business, so they're just -- 7 MR. RUNNER: Here's what my hurdle is. My 8 hurdle is you are now aware that they're not paying, 9 that the taxes aren't being paid. 10 MR. SOLIS: No. At that time they -- 11 MR. RUNNER: Well, how -- how -- 12 MR. SOLIS: They were telling me -- that's 13 the only time those two didn't go through is that 14 now I'm realizing that's 2007, I'm coming back from 15 my surgery. 16 MR. RUNNER: Right. 17 MR. SOLIS: They're still paying me. I 18 mean, I'm not -- 19 MR. RUNNER: Okay, but -- but in 2007 -- 20 MR. SOLIS: I'm not making income 21 anywhere. 22 MR. RUNNER: In 2007 you're realizing that 23 the taxes are not current, that they're behind. 24 MR. SOLIS: Right. 25 MR. RUNNER: You're coming in a day a 26 week. 27 MR. SOLIS: Yeah. 28 MR. RUNNER: And you're getting a thousand 58 1 dollars. 2 MR. SOLIS: Because I'm still recuperating. 3 I'm not working anywhere, so that's probably the 4 goodness out of their heart. That's all. 5 MR. RUNNER: Your other businesses weren't 6 making any money. 7 MR. SOLIS: They were coming ground up. 8 And they're, you know -- they're labor-intense. I 9 was having to have someone sub for me. So I'm 10 thinking that's the part of the family part where 11 you got to remember that I was there since I was 13. 12 It's been a long going. It was something that was 13 there. I mean, I don't -- I can't speak to it any 14 other way. 15 MR. RUNNER: But you were okay taking 16 that -- you were okay taking that money in light of 17 the fact knowing that the taxes weren't paid. 18 And, again, I got to understand, when taxes 19 aren't being paid that means you're collecting tax 20 from customers, right? You're collecting tax from 21 customers -- 22 MR. SOLIS: Payroll tax -- 23 MR. RUNNER: -- and you're not -- you're 24 not submitting that to the state, right? 25 MR. SOLIS: I don't -- those things, like I 26 say, I'm getting that now, but not then. 27 MR. RUNNER: Okay, thank you. 28 MR. SOLIS: But there's one other thing 59 1 though. The checks that were written to me, half of 2 'em were bouncing and none of them went through. 3 And I didn't say anything to them. And I do have 4 cancelled checks. A lot of times they didn't go and 5 I didn't say anything. 6 MR. RUNNER: Okay. 7 MS. MA: Ms. Harkey. 8 MS. HARKEY: Okay. I think he -- even if 9 he was aware of the debts -- which I don't -- I'm 10 not so sure he was. I mean I think he knew when 11 things started going awry -- he still -- if he 12 didn't have the authority to pay, he still can't 13 really be held responsible. 14 And did he have the ability to pay them? I 15 don't know. I mean in 2007 he was coming back from 16 surgery. His parent give him some money, maybe to 17 stay alive. And then did some of those checks 18 bounce too, and was he back on taxes? 19 But even if they were behind on taxes, he 20 probably -- I don't think he saw it as his 21 responsibility to pay the taxes. 22 I -- I just -- that's just where I'm -- you 23 know. Did he have the authority? Did he have the 24 checkbook? Could he -- could he do this? 25 You've got a father with Alzheimer's and a 26 mother diagnosed with dementia. I mean, you know, 27 what do you do here? 28 So I -- I -- I think that -- I think he 60 1 makes a good case. I think for two -- for, you 2 know -- from all the periods until like 2009, June 3 of 2009 where he signs as power of attorney and CEO, 4 and his mother's dementia, what happened then? When 5 you signed with power of attorney and as CEO, did 6 you then take over the checkbook? 7 MR. SOLIS: In 2000 -- 8 MS. HARKEY: 2009, June of 2009 you signed 9 a power of attorney as CEO, as corporate officer. 10 MR. SOLIS: No. She still had the 11 checkbook. 12 MS. HARKEY: Okay. This is what I'm -- 13 this is what -- this was the conversation that we 14 had -- that my staff has reported to me that he 15 called and verified. They were trying to get to the 16 bottom of this, because we were not -- we were not 17 favorably inclined toward this taxpayer at all. But 18 the more we dug into it, the more we heard the story 19 about the illness and the more we heard about the, 20 um -- uh -- you know, about the mother with 21 dementia. 22 And I don't know if any of you have had 23 family members with this, but it kind of comes in 24 and out. They get rational, then they get very 25 hostile. Things happen. Uh, you know, she probably 26 wanted to take control. I can -- I can see all this 27 happening. 28 And then, you know, 2010 the corporation 61 1 closes. So it's a very short window, I think, where 2 it all -- if he had any ability to take control, it 3 was there, June of 2009 until 2010 when the 4 corporation closed. And, um, also, there were bad 5 debts. 6 So I'd like -- you know, I'm -- I'm going 7 to make a motion to relieve the taxpayer for 8 everything except two thousand -- June of 2009 9 through the closing of the corporation in 2010. 10 I would like the, uh -- I would also like 11 us to take into consideration the bad debts that 12 were written off. I think this is a very -- it's a 13 very sad case. But trying to say that he was the 14 responsible person for all these other years, I just 15 don't see it. 16 I would be willing to do the whole thing, 17 but I do think that -- 18 MR. SOLIS: There is one thing I remember, 19 why I had a power of attorney. 20 MS. HARKEY: Okay. Why was that? 21 MR. SOLIS: Now this is -- this is the part 22 where it gets kind of weird. 23 When my dad -- I have a little girl and two 24 boys, raising at this time. And they were losing 25 properties. They were losing the home they were in. 26 We needed to find them a place in the meantime. 27 Alzheimer's is a funny thing. And he did 28 something weird to my daughter, and it got really 62 1 ugly with my wife. And those two couldn't divide 2 and my mom is still not believing that. And there 3 was a divide, another divide there, and we had to 4 find them a home. 5 That's why we went to an, uh -- what do you 6 call those, assisted living style? And I had to 7 take that portion over, but not her checkbook, just 8 to talk to that. Because she was too traumatic to 9 deal with anything. And I just -- 10 You know, these are -- these are things 11 that I've suppressed and put away because they're -- 12 it really is horrific what happened to our family 13 and what happened at that time. And it would be 14 hard for, you know -- I mean that's a big dose of 15 ugly coming at you over a long period of time. But 16 that was something that -- that did happen. And 17 we've had to work through that. But that's what 18 that was. 19 MS. HARKEY: Okay. Um, I -- okay. I would 20 be willing to grant the entire thing in the 21 taxpayer's favor. But -- and I'll make a motion to 22 that effect. If not, I'll come back with motion 23 number 2. 24 Do I have a second? 25 No, I don't. Okay. Then -- 26 MS. MA: I think Ms. Stowers has some -- 27 MS. STOWERS: I just -- I have a little 28 follow-up question. 63 1 Sir, when did your mom become ill? 2 MR. SOLIS: She never really -- she had a 3 touch of dementia, but she never -- she was -- I 4 know you mentioned her as ill. She was trucking. 5 She was trucking on. She just -- 6 MS. HARKEY: 2009? 7 MR. SOLIS: Yeah, she got, you know, a 8 little memory, little bit, that stuff. But she was 9 still driving. 10 MS. STOWERS: Uh-huh. 11 MR. SOLIS: And she was still taking him 12 back and forth to work, and she was still operating. 13 She wasn't like ill-ill. 14 MS. STOWERS: There was never a diagnosis 15 for her? 16 MR. SOLIS: They said that she has a touch 17 of dementia. 18 MS. STOWERS: When was that made? 19 MR. SOLIS: I don't know. I can't -- it 20 was right around in that time. 21 MS. SILVA: It's stated in his petition 22 that his mother was diagnosed with dementia in 23 2009. 24 MR. SOLIS: Right. 25 MS. STOWERS: 2009. So -- 26 MR. SOLIS: But it wasn't the kind where 27 you just like -- you know, I don't even know what -- 28 I didn't know what dementia is or anything like 64 1 that. 2 MS. STOWERS: Okay. So it seems to me 3 that, um, up until that point that she -- mm. 4 MR. SOLIS: She was running it. She would 5 bring my dad to work with her, and she was there. 6 MS. STOWERS: Hm. 7 MR. SOLIS: They -- they were like an 8 institute there. 9 MS. HARKEY: That's why I say I was -- I 10 was going to make my motion June of 2009 'til the 11 close of the business he would be the responsible 12 person. But prior to that, I do believe it was 13 mother. 14 MS. STOWERS: I can second that. 15 MS. HARKEY: Okay. And do you want -- 16 would you, uh -- I'd like them to take -- the 17 Department to take into consideration the bad debts 18 that were written off. 19 MR. RUNNER: He wanted a 30/30/30 on 20 that. 21 MR. MENDEL: Yeah. We -- 22 MS. HARKEY: Okay. 23 MR. MENDEL: The bad debts -- the bad 24 debts -- 25 MS. SILVA: I just heard about that 26 today. 27 MR. MENDEL: -- only came up today. 28 MS. HARKEY: Okay. 65 1 MR. MENDEL: We don't have any actual 2 numbers. 3 MS. HARKEY: Okay. So then from, uh, June 4 of 2009 through the close of business, Marc would be 5 the responsible person. 6 So I had a second from Ms. Stowers. 7 Is there any objection to that? 8 MR. HORTON: Yes. 9 MS. MA: Mr. Horton. 10 MS. STOWERS: He's just objecting. 11 MR. HORTON: I mean I'm -- I'm sympathetic 12 to the, um -- to the testimony and the issues. So I 13 really don't want to, um -- 14 I mean we have a situation where salaries 15 were paid, everyone else was paid except for, uh, 16 the Board of Equalization; and these were paid with 17 tax revenues. 18 Relative to assess his liability, an 19 illness, worker's compensation, salary compensation, 20 participation in a financial plan, although be it 21 maybe nominal in the participation, but responsible 22 for carrying out the financial plan and negotiating 23 with the Board of Equalization. Um, that is by law, 24 you know, a, uh, responsible person. 25 Again, sympathetic but not convinced that 26 there was -- of the innocence of participating in 27 this process. Not only participating but actually 28 being a benefactor of the process which is 66 1 concerning. 2 MR. SOLIS: Being paid in 2010 or 2009? 3 MR. HORTON: I -- I'm presuming your 4 testimony that you were paid -- 5 MR. SOLIS: Minimum. 6 MR. HORTON: -- all the time that -- 7 minimum. 8 MR. SOLIS: Minimum. Yeah, it declined 9 over the time, and a lot of times those checks never 10 went through, and a lot of times people's checks to 11 them bounced, too. 12 MR. HORTON: I mean I -- I appreciate 13 your -- 14 MR. SOLIS: Okay. 15 MR. HORTON: -- testimony to that effect. 16 The intent was to pay you. Somebody got paid, 17 $800,000 in salaries. Vendors got paid and so 18 forth. All of which is part of this -- 19 MR. SOLIS: How did you get to $800,000 in 20 one year? What -- what year is that? 21 MR. HORTON: Well -- 22 MS. HARKEY: It wasn't one year. 23 MR. HORTON: It sounds as if though other 24 Members -- 25 MR. SOLIS: I don't know how anybody can -- 26 there's not $800,000 worth of payroll out there. 27 MR. HORTON: Well, let me -- I mean I 28 think -- I think you -- 67 1 Well -- 2 MS. HARKEY: Okay, Jerome? 3 MR. HORTON: I'll just -- I think you are a 4 exceptional salesperson. And, um -- and, uh -- but 5 the evidence that has been presented, your 6 testimony -- your testimony, you almost, you know, 7 admit participation in the process. The testimony 8 in the line of questioning Mr. Runner presented, uh, 9 the testimony about your participation in the 10 payment plan. 11 You being a large portion, your sole 12 responsibility being that of managing the Board of 13 Equalization. Your discussions with the Board of 14 Equalization during the period of time about the 15 payment, either why you can't pay or you're not 16 paying and so forth. 17 Even though, uh, you were directed -- well 18 let's -- based on your testimony, you were directed 19 by your parents to make those negotiations. They 20 weren't necessarily there in order to -- to make 21 that -- to have those discussions. And then having 22 the title, the ability to do this, and the knowledge 23 and awareness and the compensation, all of those 24 just kind of get a little compounding. 25 But, as I said earlier, I think my sympathy 26 actually goes towards your parents more than it does 27 you necessarily. 28 MS. MA: Okay. So, um, I know how it is 68 1 dealing with parents. I live with my parents. 2 Um, you know, I -- I think I would be okay 3 with the motion just because I'm reading all of 4 these notes in our ACMS system and they all seem 5 kind of vague or "I'll call you back" or "I don't 6 know, I'll check." 7 And then on July 21st, 2009 it just got a 8 little more specific. And it said: 9 "Renee Spelling spoke to Marc Solis. 10 His dad had a heart attack, and now both 11 mom and dad, Doris and Iris, are not at the 12 business. He has hired bookkeeper Jane to 13 help him get budget together, come up with 14 a plan while staying current. He said levy 15 caught about $3200. He said he plans to 16 file and pay second quarter '09 on time in 17 addition to levy funds. I told him I would 18 like to have him be in an IPA with payments 19 made via auto pay. He will call me in a 20 week." 21 And then it starts, um -- all the notes 22 start getting a little bit more specific where, you 23 know -- you know, Marc did phone. He said he had 24 this amount. He said he could pay this. 25 So it seemed like something changed after 26 you filed the power of attorney and you got control 27 over, you know, their assets. The parents -- your 28 parents weren't there any more, doing the day-to-day 69 1 business. 2 So, I mean, I have sympathy, you know, for 3 you. I think that's the best I could probably do 4 is, you know, when you sign the power of attorney, 5 just from our notes in the system, it just seemed 6 like you are there, more in control, making those 7 decisions, what would or wouldn't be paid. 8 So, um, that's where I'm at. 9 MS. HARKEY: Okay. 10 MS. MA: Okay. So I think we'll, um -- 11 there's a motion on the table, um, to grant for the 12 Department up until the power of attorney signed on 13 June 2009 -- 14 MS. HARKEY: You mean grant for the 15 taxpayer. 16 MS. MA: -- after that. Up until -- 17 well -- 18 MS. HARKEY: No. No. Grant for the 19 taxpayer. 20 MS. MA: Grant for the taxpayer after June 21 2009 when he signed the power of attorney. 22 MS. SILVA: It's the other way around. 23 MS. MA: Is that what you're saying? 24 The other way around. 25 MR. MENDEL: The other way. Grant for 26 Department after June 2009. 27 MS. HARKEY: After June -- 28 MS. MA: Right, okay. 70 1 MS. HARKEY: -- 2009, 'til they closed. 2 MR. SOLIS: July 1. 3 MS. HARKEY: And also, do we want to send 4 the, uh -- the -- 5 MR. RUNNER: Mm-hm. 6 MS. SILVA: 30/30/30. 7 MS. HARKEY: -- the bad debts to 30/30/30? 8 MR. HORTON: Um -- 9 MS. MA: I -- I don't -- I don't know 10 why. 11 MS. HARKEY: Or you don't want to do that? 12 MS. MA: I don't -- 13 MR. SOLIS: Well, there is -- there is one 14 thing that I can dig up and find out. Because in 15 2009 we went out -- they went out in 2010 with all 16 that crisis that was going on. 17 MS. HARKEY: Yeah -- 18 MR. SOLIS: No taxes got done, so it left a 19 whole bunch of money out there that we never 20 collected, nor the sales tax. It's just left on the 21 computer. The debt didn't pay. 22 MS. HARKEY: So -- 23 MR. SOLIS: There's a large portion there. 24 And when I looked in November, it was in the 229 25 area. 26 MS. MA: Well, I -- I don't -- 27 MR. SOLIS: If I can -- 28 MS. MA: I think you need to -- 71 1 MR. SOLIS: I'm going to dig that paperwork 2 up. 3 MS. MA: You need to figure that out and -- 4 MR. SOLIS: Oh yeah. That's what I -- 5 MR. RUNNER: That's what a 30/30/30 is. 6 MR. SOLIS: That's all I wanted to say 7 is -- 8 MS. MA: Okay. 9 MR. SOLIS: -- there's something -- 10 MS. MA: A 30/30/30. 11 MR. SOLIS: -- out there that would make 12 that number not accurate. 13 MS. HARKEY: Okay. 14 So, grant relief to the taxpayer for 15 anything before June of 2009. And June of 2009 to 16 June of 2010 -- or to 2010 when the corporation 17 closed, that would be dual in the Department's 18 favor, grant in the Department's favor. 19 And also request that the Department 20 convene with the taxpayer on the 30/30/30 for the 21 bad debts to see what there is. 22 MR. HORTON: Member Harkey, I would -- 23 Mr. Angeja, maybe as to -- 24 MS. HARKEY: What? 25 MS. MA: Mr. Angeja, do you have a 26 question? 27 MR. ANGEJA: No. The 30/30/30 would 28 work. 72 1 MR. RUNNER: Okay. 2 MS. MA: Okay. 3 MS. STOWERS: Okay. 4 MR. ANGEJA: If the Board chose to not 5 incorporate at this point, there's still the 6 petition for rehearing option. If the taxpayer 7 could come up with that and then submit it, we could 8 consider it, we could recommend adjustments at that 9 point. 10 MR. RUNNER: Yeah. 11 MR. ANGEJA: My sense is the Board would 12 rather keep that 30/30/30 open -- 13 MR. RUNNER: Mm-hm. 14 MR. ANGEJA: -- so we can have this 15 non-final and current and have the Department look 16 at this documentation. 17 MS. HARKEY: Okay. Did I -- did I make 18 that motion correctly then? 19 MS. STOWERS: Yeah. 20 MS. MA: Okay. Motion by Ms. Harkey, 21 seconded by Ms. Stowers. 22 The vote is 4 to 1, with Mr. Horton voting 23 no. 24 Okay. Everyone clear? 25 MS. HARKEY: Okay. 26 MS. MA: Okay. Thank you very much. 27 MR. SOLIS: Thank you. Thank you. 28 MS. HARKEY: Meet with them if you have any 73 1 questions. 2 MS. MA: Yeah. 3 ---oOo--- 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 74 1 REPORTER'S CERTIFICATE 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, Jillian Sumner, Hearing Reporter for 8 the California State Board of Equalization certify 9 that on November 30, 2016 I recorded verbatim, in 10 shorthand, to the best of my ability, the 11 proceedings in the above-entitled hearing; that I 12 transcribed the shorthand writing into typewriting; 13 and that the preceding pages 1 through 36 14 constitute a complete and accurate transcription of 15 the shorthand writing. 16 17 Dated: March 13, 2017 18 19 20 ____________________________ 21 JILLIAN SUMNER, CSR #13619 22 Hearing Reporter 23 24 25 26 27 28 75 1 REPORTER'S CERTIFICATE 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, Kathleen Skidgel, Hearing Reporter for 8 the California State Board of Equalization certify 9 that on December 14, 2016 I recorded verbatim, in 10 shorthand, to the best of my ability, the 11 proceedings in the above-entitled hearing; that I 12 transcribed the shorthand writing into typewriting; 13 and that the preceding pages 37 through 74 14 constitute a complete and accurate transcription of 15 the shorthand writing. 16 17 Dated: January 20, 2017 18 19 20 ____________________________ 21 KATHLEEN SKIDGEL, CSR #9039 22 Hearing Reporter 23 24 25 26 27 28 76