Mihelick v. United States of America

MOTION for summary judgment

M.D. Fla.June 30, 2017

IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF FLORIDA FORT MYERS DIVISION NORA L. MIHELICK, ) ) Plaintiff, ) ) v. ) ) UNITED STATES OF AMERICA, ) ) Defendant. ) _______________________________________ ) Case No. 2:16-cv-00741 UNITED STATES’ MOTION FOR SUMMARY JUDGMENT Defendant, the United States of America, moves for summary judgment under Fed. R. Civ. P. 56 on plaintiff Nora Mihelick’s claim that she is entitled to a tax refund of $111,802 for the 2009 tax year under the claim of right doctrine codified in section 1341 of the Internal Revenue Code (26 U.S.C.). The undisputed facts demonstrate otherwise, and the United States is entitled to judgment as a matter of law. For tax years 1999 through 2004, Ms. Mihelick filed joint income tax returns with her husband, Michael Bluso, that reported as taxable income compensation he received from a family business, Gotham Staple Company. After Ms. Mihelick filed for divorce in 2004, Mr. Bluso was sued by his sister who alleged that he was excessively compensated by Gotham and demanded the return of any ill-gotten gains. Mr. Bluso settled with his sister for $600,000 and (in 2009) Ms. Mihelick paid $300,000 to Mr. Bluso under a property settlement negotiated as part of their divorce. Ms. Mihelick now claims that she is entitled to deduct that amount under section 1341 of the Internal Revenue Code. To do so, Ms. Mihelick must show that her payment is otherwise deductible under the Internal Revenue Code, and that there is a substantive nexus between the right to the income at the time of the receipt and the circumstances necessitating its Case 2:16-cv-00741-SPC-MRM Document 47 Filed 06/30/17 Page 1 of 13 PageID 161 2 return. Further, she must establish that the return of the income was involuntary - a taxpayer is not entitled to use section 1341 for amounts that are voluntarily repaid. Ms. Mihelick has not satisfied any of these requirements and her request for a refund should be denied. STATEMENT OF MATERIAL FACTS 1. Nora Mihelick and Michael Bluso were married in Ohio in 1978. (Compl. ¶ 6). 2. During 1999-2004, Mr. Bluso worked at Gotham Staple Co. (“Gotham”). (Compl. ¶ 7). 3. Gotham was a closely held Ohio corporation owned by Mr. Bluso’s family. (Compl. ¶ 7; Michael Bluso Deposition 18:14-19:19). 4. From 1999-2004, Ms. Mihelick and Mr. Bluso included Mr. Bluso’s wages from Gotham as income on their joint tax returns, as follows: 1999 $765,400 2000 $855,400 2001 $1,065,400 2002 $1,145,400 2003 $1,065,400 2004 $1,100,600 (Compl. ¶ 9; Ex. 3, 4, 5, 6, 7, 8) 5. On September 3, 2004, Ms. Mihelick filed for divorce from Mr. Bluso. (Compl. ¶ 10). 6. While the divorce was pending, Pamela Barnes (Bluso’s sister) filed a lawsuit against Mr. Bluso, Gotham, and others, alleging, among other things, that Mr. Bluso as a majority shareholder of Gotham “fraudulently and maliciously breached his fiduciary duty” to Ms. Barnes, a minority shareholder, through “forgery of her signature and wrongfully wasting Case 2:16-cv-00741-SPC-MRM Document 47 Filed 06/30/17 Page 2 of 13 PageID 162 3 and depleting company assets” by excessively compensating himself. (“the Barnes litigation”) (Compl. ¶ 11; Ex. 9 ¶ 41). 7. Ms. Mihelick was not a party to the Barnes litigation. (Nora Mihelick Dep. 24:16-25, 28:1-15; Michael Bluso Dep. 36:13-14; Ex. 9). 8. Despite the fact that Ms. Mihelick was not a party to the Barnes litigation, Mr. Bluso insisted during their divorce proceedings that she agree to indemnify him for amounts he might be required to pay as a result of the Barnes litigation. (Nora Mihelick Dep. 11:6- 25; Michael Bluso Dep., 12:12-14:23). 9. Ms. Mihelick and Mr. Bluso’s divorce was final on August 31, 2005, and it incorporated a separation agreement (“separation agreement”) as part of the decree. (Compl. ¶ 12; Ex. 11). 10. Regarding the Barnes litigation, the parties agreed to Article 5 in their separation agreement, which states in relevant part: “ARTICLE 5. PAMELA BLUSO CLAIMS * * * The Husband and Wife agree that the Barnes Litigation may result in the establishment of liability against one or both. The Husband and Wife agree that said liability, if any, that arose all or in part from the acquisition of marital assets, and which assets have been equally divided herein between the parties, shall be deemed to be a marital liability. The Husband and Wife further agree that they will be jointly and severally liable for all damages, costs, attorney fees and other expenses incurred in this litigation by Michael D. Bluso, Jr.,…which is a marital liability. The Husband and Wife further agree that the amount of damages, costs, attorney fees and other expenses, if any, are not ascertainable at this time. The Husband and Wife further agree that they shall mutually agree to the allocation of the payment of any litigation costs. * * * The provisions set forth herein regarding the Barnes Litigation shall not be construed as an admission of any liability by either the Wife or Husband or waiver of defenses in connection with the Barnes Litigation, but are only intended Case 2:16-cv-00741-SPC-MRM Document 47 Filed 06/30/17 Page 3 of 13 PageID 163 4 to resolve the issue between Husband and Wife regarding this potential liability that arose during the marriage.” (Ex. 11) 11. Ms. Mihelick and Mr. Bluso agreed to the separation agreement, including Article 5, without court intervention. (Michael Bluso Dep. 58:10-59:18). 12. The Barnes litigation ended with a settlement agreement that was signed in 2007 (“Barnes settlement agreement”). (Ex. 12). 13. Pursuant to the Barnes settlement agreement, Mr. Bluso paid Ms. Barnes $600,000 for her excess compensation claims. (Ex. 12, ¶ 4; Michael Bluso Dep. 38:1-22). 14. Thereafter, in 2009, Ms. Mihelick paid Mr. Bluso $300,000 pursuant to Article 5 of their settlement agreement. (Nora Mihelick Dep. 48:16-23; Ex. 13). 15. On her 2009 tax return, Ms. Mihelick sought a tax refund under sections 1341 and 165(c)(2) of the Internal Revenue Code for her payment to Mr. Bluso. (Compl. ¶ 21; Interrogatory Response 3). 16. The IRS disallowed her claim for refund, and Ms. Mihelick filed this suit. (Compl. ¶ 23). MEMORANDUM OF LAW I. Overview of Section 1341 Ms. Mihelick seeks favorable tax treatment under section 1341 of the Internal Revenue Code for the $300,000 payment she made to Mr. Bluso in 2009. In order to qualify for favorable treatment under section 1341, a taxpayer must establish three elements: (1) that an item was included in the taxpayer’s gross income in a prior year because it appeared that the taxpayer had an unrestricted right to the item in the prior year; (2) that after the close of the prior year it is Case 2:16-cv-00741-SPC-MRM Document 47 Filed 06/30/17 Page 4 of 13 PageID 164 5 established that the taxpayer did not have an unrestricted right to such item and (3) that the taxpayer is entitled to a deduction (in excess of $3,000) under another section of the Internal Revenue Code for the loss resulting from the payment of the item to another in the current tax year. 26 U.S.C. § 1341(a); Batchelor-Robjohns v. United States, 788 F.3d 1280, 1293-1294 (11th Cir. 2015). The undisputed facts demonstrate that Ms. Mihelick cannot establish the final two elements. II. Mihelick Has Not Demonstrated Her Entitlement to Deduct Her Payment The claim of right doctrine requires a taxpayer to include income that she received “under a claim of right and without restriction as to its disposition” in the year she received it, even if it is later determined that she must repay that income. Batchelor-Robjohns, 788 F.3d at 1293. Although section 1341 is commonly referred to as a deduction, it does not create an independent basis for taking a deduction.1 See United States vs. Skelly Oil Co., 394 U.S. 678, 683 (1969). In order to receive the benefit of section 1341, a taxpayer must first be able to deduct the payment under another provision of the Internal Revenue Code. Id. It is a basic tenet of tax law that deductions are matters of legislative grace. INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992). To be entitled to any deduction, a taxpayer must demonstrate that she meets the terms established by Congress. New Colonial Ice v. Helvering, 292 U.S. 435, 440 (1934). Ms. Mihelick contends that she is deducting a repayment of wages and that such a payment is deductible under section 165(c)(2) which permits individual taxpayers to deduct “losses incurred in any transaction entered into for profit, though not connected with a trade or 1 In fact, section 1341 often operates as a credit. See 26 § U.S.C. 1341(a)(5); Batchelor- Robjohns, 788 F.3d at 1293 (explaining “[w]hen § 1341 applies, the taxpayer is entitled to either a ‘deduction’ or a tax ‘credit’ in the year of repayment...”). Case 2:16-cv-00741-SPC-MRM Document 47 Filed 06/30/17 Page 5 of 13 PageID 165 6 business.” Her response to an interrogatory asking for the statutory basis for the deduction she is claiming further explains that Ms. Mihelick’s accountants relied on IRS Publication 525, which states that taxpayers can “claim a deduction or credit only if the repayment qualifies as an expense or loss incurred in your trade or business or in a for-profit transaction.” IRS Pub. 525, at p. 36 (2009), available at: https://www.irs.gov/pub/irs-prior/p525--2009.pdf. 2 But Ms. Mihelick has failed to identify either a trade or business in which she engaged, or a transaction entered into for profit through which she incurred a loss. The “loss” in question is a $300,000 payment she made to her ex-husband that had nothing to do with a business venture or investment and is outside the scope of section 165(c)(2). Indeed, as the Federal Circuit recently observed, “‘losses’ that § 165(c)(2) generally seems to contemplate are losses in the value of assets purchased for investment that failed to bear fruit.” See Nacchio v. United States, 824 F.3d 1370, 1377 (Fed. Cir. 2016), cert. denied, No. 16-810, 2017 WL 2507357 (June 12, 2017). Here, Ms. Mihelick is not claiming a loss on an investment that “failed to bear fruit.” She is trying to deduct - what she characterizes as - a repayment of some of the excessive compensation Mr. Bluso received from Gotham and returned to his sister to settle the Barnes litigation. Even if Ms. Mihelick’s characterization is correct, section 165(c)(2) does not apply to that situation. Regardless, Ms. Mihelick’s characterization of her payment to Mr. Bluso as a repayment of his wages is mistaken. Ms. Mihelick paid Mr. Bluso pursuant to a private property settlement agreement. Ms. Mihelick was not a party to the Barnes litigation; she did not make the payment 2 The interrogatory response actually says “IRS Publication 25”, but the United States believes this was a typographical error as it was unable to locate a Publication 25. Publication 525 discusses deductions taken under the claim of right doctrine. See IRS Publication 525, p. 36, available online at: https://www.irs.gov/pub/irs-prior/p525--2009.pdf. Case 2:16-cv-00741-SPC-MRM Document 47 Filed 06/30/17 Page 6 of 13 PageID 166 7 because of any personal obligation resulting from that lawsuit. Nor was Ms. Mihelick obligated by Gotham, or any other third party, to repay any portion of Mr. Bluso’s compensation. She and Mr. Bluso negotiated their marital separation agreement and were free to organize Article 5 in the manner they saw fit. She must accept the tax consequences of her choice. See Commissioner v. Natl. Alfalfa Dehydrating & Milling Co., 417 U.S. 134, 149 (1974); (stating that “while a taxpayer is free to organize his affairs as he chooses, nevertheless, once having done so, he much accept the tax consequences of his choice, whether contemplated or not, * * * and may not enjoy the benefit of some other route he might have chosen to follow but did not.”)(citations omitted); see also Fin. Dynamics, Ltd. v. United States, 531 F. Supp. 187, 189 (M.D. Fla. 1980) (stating “[t]he government may bind a taxpayer to the form in which he has cast a transaction”). Additionally, Ms. Mihelick’s payment to Mr. Bluso is not deductible under any other provision of the Internal Revenue Code. Typically, transfers incident to divorce are shielded from the tax treatment generally assigned to property transfers. See 26 U.S.C. § 1041(a) (“no gains or loss shall be recognized on a transfer of property from an individual to * * * a former spouse, but only if the transfer is incident to the divorce.”) The policy behind section 1041(a) is “to treat a husband and wife as one economic unit until the property is conveyed to a third party.” Blatt vs. Commissioner, 102 T.C. 77, 88 (1994). Accordingly, even if Ms. Mihelick’s payment to Mr. Bluso would in other circumstances be a taxable event that generated a loss or deduction, in the special circumstances surrounding a divorce, and absent a specific exception, the application of section 1041(a) prevents such treatment. Case 2:16-cv-00741-SPC-MRM Document 47 Filed 06/30/17 Page 7 of 13 PageID 167 8 Ms. Mihelick has not shown that her payment to Mr. Bluso is deductible under any provision of the Internal Revenue Code. Accordingly, her claim for refund pursuant to section 1341 must be denied. III. Mihelick’s Payment Does Not Have Substantive Nexus With the Inclusion of the Wage Income Assuming arguendo that Ms. Mihelick’s payment to Mr. Bluso is otherwise deductible, Section 1341(a)(2) requires the taxpayer to establish that after the tax year has closed she no longer had an unrestricted right the item of income. In interpreting section 1341(a)(2), “[c]ourts have universally ruled that there must be a ‘substantive nexus between the right to the income at the time of receipt and the subsequent circumstances necessitating a refund.’” Cinergy Corporation v. United States., 55 Fed. Cl. 489, 507 (2003); see also Batchelor-Robjohns, 788 F.3d at 1293. In determining whether there is a substantive nexus, Courts have held that “the obligation to repay the money must arise from the ‘same circumstances, terms and conditions of the transaction whereby the amount was included in income.’” Griffiths v. United States, 54 Fed. Cl. 198, 202 (2002) citing Kraft v. United States, 991 F.2d 292, 295 (6th Cir. 1993); In re Steffen, 349 B.R. 734, at 738 (M.D. Fla. 2006) (citation omitted). Additionally, if “the taxpayer ‘voluntarily took some action after the receipt of apparently unrestricted income which required the taxpayer to thereafter return the remuneration,’ section 1341 does not apply.” In re Steffen, 349 B.R. 738 (citation omitted). Ms. Mihelick’s payment to Mr. Bluso did not have a substantive nexus with her inclusion of his salary on her joint tax returns both because the transactions did not arise from the same circumstances, terms and conditions, and also because she voluntarily entered into an agreement obligating her to pay Mr. Bluso. Case 2:16-cv-00741-SPC-MRM Document 47 Filed 06/30/17 Page 8 of 13 PageID 168 9 a. Mihelick’s Transactions Did Not Arise From the Same Circumstances, Terms and Conditions In order to avail herself of section 1341, Ms. Mihelick’s obligation to pay $300,000 to Mr. Bluso must arise out of the same circumstances, terms and conditions as her receipt of Mr. Bluso’s Gotham salary. It does not. Ms. Mihelick’s obligation to pay Mr. Bluso arose pursuant to their separation agreement, as part of the division of their marital estate. Ms. Mihelick’s obligation to report Mr. Bluso’s Gotham salary on her joint return arose from Mr. Bluso’s employment at Gotham, as taxable wages. These two transactions are not related in that they did not arise out of the same circumstances, terms and conditions - Ms. Mihelick’s payment to Mr. Bluso did not involve Gotham; Gotham’s payment of Mr. Bluso’s salary did not involve Mr. Bluso’s marriage or divorce from Ms. Mihelick. Ms. Mihelick’s situation is analogous to that of the taxpayer in Kraft v. United States, 991 F.2d 292 (1993). In Kraft, the taxpayer, Kraft, belonged to a closely held medical corporation. Kraft filed fraudulent claims with an insurance company, and the insurance company paid on the claims. The corporation reported the payments from the insurance company on its corporate returns. The corporation then paid Kraft’s salary. Later, as part of a plea agreement between Kraft and the insurance company, Kraft paid the insurance company for the fraudulent claims. In denying Kraft’s claim for section 1341 treatment for his payments pursuant to the plea agreement, the Court held that there was not a substantive nexus between Kraft’s inclusion of his corporate salary and Kraft’s payment to the insurance company. Id. at 299. The Court reasoned that Kraft paid the insurance company as part of a plea agreement which did not result from the same circumstances, terms and conditions, as his salary from the corporation. Id. The Court also found it important that it was the corporation, not Kraft, who Case 2:16-cv-00741-SPC-MRM Document 47 Filed 06/30/17 Page 9 of 13 PageID 169 10 reported the money from the insurance company. Id. Thus, Kraft was not repaying anything to the insurance company, as he had not received any money from the insurance company in the first place. Ms. Mihelick’s situation is analogous. As in Kraft, Ms. Mihelick paid Mr. Bluso pursuant to an unrelated settlement agreement, which did not have anything to do with the circumstances, terms, and conditions of the salary paid by Gotham. Additionally, as in Kraft, Ms. Mihelick’s payment is not a repayment. Mr. Bluso did not pay Ms. Mihelick the salary that was included on her joint return. Gotham paid the salary. Accordingly, Ms. Mihelick’s payment to Mr. Bluso is not a repayment at all and did not arise out of the same circumstances, terms and conditions as the original transaction.3 b. Ms. Mihelick Voluntarily Agreed to Article 5 of the Separation Agreement “A taxpayer’s lack of an unrestricted right to income must arise out of the circumstances, terms, and conditions of the original payment on such income and not out of circumstances, terms, and conditions imposed by a subsequent agreement between the payor and the payee.” Blanton v. Comissioner, 46 T.C. 527, 530 (1966), aff’d Blanton v. Commissioner aff'd, 379 F.2d 558 (5th Cir. 1967). Said another way, in order for there to be a substantive nexus between the receipt of the original item of income and its subsequent repayment, the repayment must be involuntary. See Batchelor-Robjohns, 788 F.3d at 1293-1294. 3 Indeed, even if Ms. Mihelick stands in the shoes of Mr. Bluso in terms of entitlement to section 1341 treatment, the same analysis still prevents her from prevailing. Mr. Bluso received his salary from Gotham, but made his subsequent payment to Ms. Barnes, in her individual capacity. While Gotham was named as a defendant in the Barnes litigation, Mr. Bluso never paid Gotham anything. Accordingly, as the two transactions do not arise from the same circumstances, terms and conditions, they lack the requisite substantive nexus. Case 2:16-cv-00741-SPC-MRM Document 47 Filed 06/30/17 Page 10 of 13 PageID 170 11 Ms. Mihelick voluntarily entered into the settlement agreement with Mr. Bluso. Her situation is analogous to that of the taxpayer in In re Steffen, 349 B.R. 734 (M.D. Fla. 2006). In Steffen, the Court held that the taxpayer, Steffen, was not entitled to favorable treatment under section 1341 for a payment made pursuant to a voluntarily-entered settlement agreement. Id. at 739-740. Steffen entered into an agreement with the SEC to repay money that her husband had been convicted of stealing. In denying her the ability to deduct this payment using section 1341, the Court held that the Steffen “was not ordered to do anything” and that she voluntarily entered into the settlement agreement. Id. In reaching its holding, the Steffen Court discussed and distinguished the case of Barrett v. Commissioner, 96 T.C. 713 (1991). Id. In Barrett, the taxpayer, Barrett, received the benefit of section 1341 despite that his payment was made pursuant to a settlement agreement. The Court determined that his payment was involuntary because he had entered into the settlement agreement after the SEC had instituted administrative proceedings against him and after two groups of brokers had filed civil suits against him. Barrett, 96 T.C. at 719. In comparing the situations of Barrett and Steffen, the Steffen Court found that Steffen “was under no such legal obligation. The civil suit * * * was not against Steffen; rather, it was against [her husband].” In re Steffen, 349 B.R. at 739. In the present case, the Barnes litigation was not against Ms. Mihelick; rather, it was against Mr. Bluso. Further, while Ms. Mihelick may have earnestly believed that Mr. Bluso would take her to court if she did not agree to a divorce settlement that included a provision regarding potential liability in the Barnes litigation, her belief does make it so. Unlike in Barrett v. Commissioner, there were no lawsuits or claims filed against her by Mr. Bluso, or by anyone else, regarding the money from Gotham. Ms. Mihelick voluntarily agreed to Article 5, and it was this subsequent action that obligated her to pay Mr. Case 2:16-cv-00741-SPC-MRM Document 47 Filed 06/30/17 Page 11 of 13 PageID 171 12 Bluso. Accordingly, her payment to Mr. Bluso did not have the requisite substantive nexus with the inclusion of the income on their joint returns. CONCLUSION The Court should hold that Ms. Mihelick is not entitled to a 2009 tax refund pursuant to section 1341 of the Internal Revenue Code. Dated: June 30, 2017 Respectfully submitted, DAVID HUBBERT Acting Assistant Attorney General /s/ Rebecca Elene Layne REBECCA ELENE LAYNE Trial Attorney, Tax Division U.S. Department of Justice P.O. Box 14198 Washington, D.C. 20044 (202) 514-5879 (v) (202) 514-9868 (f) Rebecca.Layne@usdoj.gov Case 2:16-cv-00741-SPC-MRM Document 47 Filed 06/30/17 Page 12 of 13 PageID 172 13 CERTIFICATE OF SERVICE I hereby certify that on this 30th day of June, 2017 I electronically filed the foregoing document with the Clerk of Court using the CM/ECF system and that it will be served accordingly on all counsel of record via transmission of Notices of Electronic Filing generated by the CM/ECF system. /s/ Rebecca Elene Layne REBECCA ELENE LAYNE Trial Attorney United States Department of Justice, Tax Division Case 2:16-cv-00741-SPC-MRM Document 47 Filed 06/30/17 Page 13 of 13 PageID 173 EXHIBIT INDEX Number Title 1 Complaint 2 Michael Bluso’s deposition 3 1999 W2 4 2000 W2 5 2001 W2 6 2002 W2 7 2003 W2 8 2004 W2 9 Barnes litigation complaint 10 Nora Mihelick’s deposition 11 Divorce separation agreement 12 Barnes settlement agreement 13 Check for $300,000 from Mihelick to Bluso 14 Interrogatory Response to Question 3 Case 2:16-cv-00741-SPC-MRM Document 47-1 Filed 06/30/17 Page 1 of 1 PageID 174 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF OHIO EASTERN DIVISION In re: ) Case No. ) NORA L. MIHELICK ) Judge 16285 Coco Hammock Way, Apt. 102 ) Fort Myers, FL 33908-3205, ) ) Plaintiff ) ) vs. ) COMPLAINT ) UNITED STATES OF AMERICA ) Internal Revenue Service ) 1111 Constitution Ave., NW, # 5480 ) Washington, D.C., ) ) Defendant ) JURISDICTION AND VENUE 1. This is a civil action for a refund, pursuant to 26 U.S.C. §§ 7422(a), 1341. 2. Jurisdiction of this proceeding is vested in this Court by provisions of 28 U.S.C. §§ 1331, 1346(a). 3. Venue is proper pursuant to 28 U.S.C. §§ 1391(b)(1), 1391(b)(2) and 1402(a), since the location of almost every witness is in this district and the primary basis for the claim for a refund is predicated upon Plaintiff's divorce (filed in Geauga County, Ohio) and a lawsuit filed against her ex- husband alleging excessive income was paid to him (filed in Cuyahoga County, Ohio). PARTIES 4. Nora L. Mihelick ("Plaintiff") is a citizen of the United States, resides in Florida at the address above, and was divorced from Michael D. Bluso, Jr. (Mr. Bluso") in Geauga County, Ohio. 5. United States of America is the proper defendant since this is an action for a federal tax refund from the Internal Revenue Service pursuant to 26 U.S.C. § 7422(f)(1). Case 2:16-cv-00741-SPC-MRM Document 1 Filed 02/25/16 Page 1 of 4 PageID 1Case 2:16-cv 00741-SPC-MR Document 47-2 il 6/30/ 7 f 9 I 75 FACTUAL BACKGROND 6. Plaintiff lived was married to Mr. Bluso from March 11, 1978 until August 31, 2005. During this time, they lived in Chagrin Falls, OH. 7. Both Plaintiff and Mr. Bluso worked for Gotham Staple Co. ("Gotham") located on Miles Road, Cleveland, OH during the period January 1, 1999 - December 31, 2004 (the "Tax Period"). 8. Gotham was a company owned by Mr. Bluso's family. 9. During the Tax Period, Plaintiff and Mr. Bluso always filed joint 1040 income tax returns. 10. On September 3, 2004, Plaintiff filed a divorce action against Mr. Bluso. Nora L. Bluso v. Michael D, Bluso, Case No. 04 D 000831 in Geauga County Common Pleas Court. 11. While the divorce was pending, Mr. Bluso and Gotham were sued, among other defendants, by Pamela Bluso. The allegations against him were primarily that he was excessively compensated during the Tax Period. Pamela Bluso v. Michael Bluso, Jr., et al., Case No. CV-05-554824 in Cuyahoga County Common Pleas Court ("Barnes Litigation"). 12. The divorce was granted on August 31, 2005, and incorporated a Separation Agreement as part of the judgment entry. 13. The Barnes Litigation was pending when the divorce was granted. 14. The divorce order specifically recognized in the Separation Agreement the Barnes Litigation could result in liability against Plaintiff and Mr. Bluso, effecting marital assets, since both Plaintiff's and Mr. Bluso's income resulted in the acquisition of marital assets. 15. Consequently, the divorce decree found both Plaintiff and Mr. Bluso would be jointly and severally liable for any liability found against Mr. Bluso. 16. Further, the divorce decree ordered it retained jurisdiction to allocate litigation costs and liability in the Barnes Litigation between Plaintiff and Mr. Bluso if they failed to reach an agreement. Case 2:16-cv-00741-SPC-MRM Document 1 Filed 02/25/16 Page 2 of 4 PageID 2Case 2:16-cv 00741-SPC-MR Document 47-2 il 6/30/ 7 f 9 I 176 17. The divorce court had the power to force Plaintiff to pay her share of the Barnes Litigation costs and liability by modifying or terminating her support payments from Mr. Bluso as appropriate. 18. The Barnes Litigation was subsequently settled. Mr. Bluso was obligated to repay $600,000.00 to Pamela Bluso for excessive compensation during the Tax Period. He was further obligated to make other payments related to costs, litigation and other things. 19. Beginning in mid to late 2008, Mr. Bluso made demands upon Plaintiff to pay him 50% of the $600,000.00 compensation reimbursement and a portion of the other expenses. He reminded her of her legal obligation to pay him back pursuant to the divorce court's order. 20. Plaintiff paid Mr. Bluso $300,000.00 for the income reimbursement. This $300,000.00 reduction in income for the Tax Period would have resulted in an income tax reduction for her of $111,802.00. 21. Plaintiff filed an amended 2009 1040 return to assert her claim of right pursuant to 26 U.S.C. § 1341 for a refund of $111,802.00, the tax attributable to the $300,000.00 amount of income to which she did not have an unrestricted right. 22. Plaintiff made a claim for the refund and pursued all appropriate appeals when the Internal Revenue Service denied her claim. 23. Plaintiff's claim was ultimately disallowed her claim under 26 U.S.C. § 1341 by letter dated February 27, 2014. 24. Plaintiff is entitled to bring this suit pursuant to 26 U.S.C. §§ 7422(a) and 6532(a)(1). CAUSE OF ACTION (26 U.S.C. §§ 1341 and 1346 - Claim for Refund) 25. Plaintiff incorporates each and every prior allegation. 26. Plaintiff included the $300,000.00 of wages in income in the Tax Period in her jointly filed tax returns because it appeared she had an unrestricted right to it. Case 2:16-cv-00741-SPC-MRM Document 1 Filed 02/25/16 Page 3 of 4 PageID 3Case 2:16-cv 00741-SPC-MR Document 47-2 il 6/30/ 7 f 9 I 177 27. A deduction is allowable because it was determined after the close of the taxable years for the Tax Period Plaintiff did not have an unrestricted right to this income pursuant to a court decree. 28. The amount of the deduction clearly exceeds $3,000.00. 29. Plaintiff is entitled to a refund in the amount of $111,802.00. WHEREFORE, Plaintiff requests a determination she is entitled to a refund in the amount of $111,802.00, plus interest and costs, reasonable litigation costs pursuant to 26 U.S.C. § 7430, an award of reasonable costs and attorney's fees pursuant to 28 U.S.C. § 2412, and any other appropriate relief. Respectfully submitted, JONATHAN P. BLAKELY, ESQ. /s/ Jonathan P. Blakely___________ Jonathan P. Blakely (# 0042550) P.O. Box 217 Middlefield, OH 44062 (440) 339-1201 (440) 632-9091 Fax jblakelylaw@windstream.net Attorney for Nora L. Mihelick Case 2:16-cv-00741-SPC-MRM Document 1 Filed 02/25/16 Page 4 of 4 PageID 4Case 2:16-cv 00741-SPC-MR Document 47-2 il 6/30/ 7 f 9 I 178 JS 44 (Rev. 11/15) CIVIL COVER SHEET The JS 44 civil cover sheet and the information contained herein neither replace nor supplement the filing and service of pleadings or other papers as required by law, except as provided by local rules of court. This form, approved by the Judicial Conference of the United States in September 1974, is required for the use of the Clerk of Court for the purpose of initiating the civil docket sheet. (SEE INSTRUCTIONS ON NEXT PAGE OF THIS FORM.) I. (a) PLAINTIFFS DEFENDANTS (b) County of Residence of First Listed Plaintiff County of Residence of First Listed Defendant (EXCEPT IN U.S. PLAINTIFF CASES) (IN U.S. PLAINTIFF CASES ONLY) NOTE: IN LAND CONDEMNATION CASES, USE THE LOCATION OF THE TRACT OF LAND INVOLVED. (c) Attorneys (Firm Name, Address, and Telephone Number) Attorneys (If Known) II. BASIS OF JURISDICTION (Place an “X” in One Box Only) III. CITIZENSHIP OF PRINCIPAL PARTIES (Place an “X” in One Box for Plaintiff (For Diversity Cases Only) and One Box for Defendant) ’ 1 U.S. Government ’ 3 Federal Question PTF DEF PTF DEF Plaintiff (U.S. Government Not a Party) Citizen of This State ’ 1 ’ 1 Incorporated or Principal Place ’ 4 ’ 4 of Business In This State ’ 2 U.S. Government ’ 4 Diversity Citizen of Another State ’ 2 ’ 2 Incorporated and Principal Place ’ 5 ’ 5 Defendant (Indicate Citizenship of Parties in Item III) of Business In Another State Citizen or Subject of a ’ 3 ’ 3 Foreign Nation ’ 6 ’ 6 Foreign Country IV. NATURE OF SUIT (Place an “X” in One Box Only) CONTRACT TORTS FORFEITURE/PENALTY BANKRUPTCY OTHER STATUTES ’ 110 Insurance PERSONAL INJURY PERSONAL INJURY ’ 625 Drug Related Seizure ’ 422 Appeal 28 USC 158 ’ 375 False Claims Act ’ 120 Marine ’ 310 Airplane ’ 365 Personal Injury - of Property 21 USC 881 ’ 423 Withdrawal ’ 376 Qui Tam (31 USC ’ 130 Miller Act ’ 315 Airplane Product Product Liability ’ 690 Other 28 USC 157 3729(a)) ’ 140 Negotiable Instrument Liability ’ 367 Health Care/ ’ 400 State Reapportionment ’ 150 Recovery of Overpayment ’ 320 Assault, Libel & Pharmaceutical PROPERTY RIGHTS ’ 410 Antitrust & Enforcement of Judgment Slander Personal Injury ’ 820 Copyrights ’ 430 Banks and Banking ’ 151 Medicare Act ’ 330 Federal Employers’ Product Liability ’ 830 Patent ’ 450 Commerce ’ 152 Recovery of Defaulted Liability ’ 368 Asbestos Personal ’ 840 Trademark ’ 460 Deportation Student Loans ’ 340 Marine Injury Product ’ 470 Racketeer Influenced and (Excludes Veterans) ’ 345 Marine Product Liability LABOR SOCIAL SECURITY Corrupt Organizations ’ 153 Recovery of Overpayment Liability PERSONAL PROPERTY ’ 710 Fair Labor Standards ’ 861 HIA (1395ff) ’ 480 Consumer Credit of Veteran’s Benefits ’ 350 Motor Vehicle ’ 370 Other Fraud Act ’ 862 Black Lung (923) ’ 490 Cable/Sat TV ’ 160 Stockholders’ Suits ’ 355 Motor Vehicle ’ 371 Truth in Lending ’ 720 Labor/Management ’ 863 DIWC/DIWW (405(g)) ’ 850 Securities/Commodities/ ’ 190 Other Contract Product Liability ’ 380 Other Personal Relations ’ 864 SSID Title XVI Exchange ’ 195 Contract Product Liability ’ 360 Other Personal Property Damage ’ 740 Railway Labor Act ’ 865 RSI (405(g)) ’ 890 Other Statutory Actions ’ 196 Franchise Injury ’ 385 Property Damage ’ 751 Family and Medical ’ 891 Agricultural Acts ’ 362 Personal Injury - Product Liability Leave Act ’ 893 Environmental Matters Medical Malpractice ’ 790 Other Labor Litigation ’ 895 Freedom of Information REAL PROPERTY CIVIL RIGHTS PRISONER PETITIONS ’ 791 Employee Retirement FEDERAL TAX SUITS Act ’ 210 Land Condemnation ’ 440 Other Civil Rights Habeas Corpus: Income Security Act ’ 870 Taxes (U.S. Plaintiff ’ 896 Arbitration ’ 220 Foreclosure ’ 441 Voting ’ 463 Alien Detainee or Defendant) ’ 899 Administrative Procedure ’ 230 Rent Lease & Ejectment ’ 442 Employment ’ 510 Motions to Vacate ’ 871 IRS-Third Party Act/Review or Appeal of ’ 240 Torts to Land ’ 443 Housing/ Sentence 26 USC 7609 Agency Decision ’ 245 Tort Product Liability Accommodations ’ 530 General ’ 950 Constitutionality of ’ 290 All Other Real Property ’ 445 Amer. w/Disabilities - ’ 535 Death Penalty IMMIGRATION State Statutes Employment Other: ’ 462 Naturalization Application ’ 446 Amer. w/Disabilities - ’ 540 Mandamus & Other ’ 465 Other Immigration Other ’ 550 Civil Rights Actions ’ 448 Education ’ 555 Prison Condition ’ 560 Civil Detainee - Conditions of Confinement V. ORIGIN (Place an “X” in One Box Only) ’ 1 Original Proceeding ’ 2 Removed from State Court ’ 3 Remanded from Appellate Court ’ 4 Reinstated or Reopened ’ 5 Transferred from Another District (specify) ’ 6 Multidistrict Litigation VI. CAUSE OF ACTION Cite the U.S. Civil Statute under which you are filing (Do not cite jurisdictional statutes unless diversity): Brief description of cause: VII. REQUESTED IN COMPLAINT: ’ CHECK IF THIS IS A CLASS ACTION UNDER RULE 23, F.R.Cv.P. DEMAND $ CHECK YES only if demanded in complaint: JURY DEMAND: ’ Yes ’ No VIII. RELATED CASE(S) IF ANY (See instructions): JUDGE DOCKET NUMBER DATE SIGNATURE OF ATTORNEY OF RECORD FOR OFFICE USE ONLY RECEIPT # AMOUNT APPLYING IFP JUDGE MAG. JUDGE Case 2:16-cv-00741-SPC-MRM Document 1-1 Filed 02/25/16 Page 1 of 3 PageID 5Case 2:16-cv-00741-SPC-MRM Document 47-2 Filed 06/30/17 Page 5 of 9 PageID 179 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF OHIO I. Civil Categories: (Please check one category only). 1. General Civil 2. Administrative Review/Social Security 3. Habeas Corpus Death Penalty *If under Title 28, §2255, name the SENTENCING JUDGE: CASE NUMBER: II. RELATED OR REFILED CASES. See LR 3.1 which provides in pertinent part: "If an action is filed or removed to this Court and assigned to a District Judge after which it is discontinued, dismissed or remanded to a State court, and subsequently refiled, it shall be assigned to the same Judge who received the initial case assignment without regardfor the place of holding court in which the case was refiled. Counsel or a party without counsel shall be responsible for bringing such cases to the attention of the Court by responding to the questions included on the Civil Cover Sheet." This action is RELATED to another PENDING civil case. This action is REFILED pursuant to LR 3.1. If applicable, please indicate on page 1 in section VIII, the name of the Judge and case number. III. In accordance with Local Civil Rule 3.8, actions involving counties in the Eastern Division shall be filed at any of the divisional offices therein. Actions involving counties in the Western Division shall be filed at the Toledo office. For the purpose of determining the proper division, and for statistical reasons, the following information is requested. ANSWER ONE PARAGRAPH ONLY. ANSWER PARAGRAPHS 1 THRU 3 IN ORDER. UPON FINDING WHICH PARAGRAPH APPLIES TO YOUR CASE, ANSWER IT AND STOP. (1) Resident defendant. If the defendant resides in a county within this district, please set forth the name of such county COUNTY: Corporation For the purpose of answering the above, a corporation is deemed to be a resident of that county in which it has its principal place of business in that district. (2) Non-Resident defendant. If no defendant is a resident of a county in this district, please set forth the county wherein the cause of action arose or the event complained of occurred. COUNTY: (3) Other Cases. If no defendant is a resident of this district, or if the defendant is a corporation not having a principle place of business within the district, and the cause of action arose or the event complained of occurred outside this district, please set forth the county of the plaintiff's residence. COUNTY: IV. The Counties in the Northern District of Ohio are divided into divisions as shown below. After the county is determined in Section III, please check the appropriate division. EASTERN DIVISION AKRON (Counties: Carroll, Holmes, Portage, Stark, Summit, Tuscarawas and Wayne) CLEVELAND (Counties: Ashland, Ashtabula, Crawford, Cuyahoga, Geauga, Lake, Lorain, Medina and Richland) YOUNGSTOWN (Counties: Columbiana, Mahoning and Trumbull) WESTERN DIVISION TOLEDO (Counties: Allen, Auglaize, Defiance, Erie, Fulton, Hancock, Hardin, Henry, Huron, Lucas, Marion, Mercer, Ottawa, Paulding, Putnam, Sandusky, Seneca VanWert, Williams, Wood and Wyandot) Case 2:16-cv-00741-SPC-MRM Document 1-1 Filed 02/25/16 Page 2 of 3 PageID 6Case 2:16-cv-00741-SPC-MRM Document 47-2 Filed 06/30/17 Page 6 of 9 PageID 180 JS 44 Reverse (Rev. 11/15) INSTRUCTIONS FOR ATTORNEYS COMPLETING CIVIL COVER SHEET FORM JS 44 Authority For Civil Cover Sheet The JS 44 civil cover sheet and the information contained herein neither replaces nor supplements the filings and service of pleading or other papers as required by law, except as provided by local rules of court. This form, approved by the Judicial Conference of the United States in September 1974, is required for the use of the Clerk of Court for the purpose of initiating the civil docket sheet. Consequently, a civil cover sheet is submitted to the Clerk of Court for each civil complaint filed. The attorney filing a case should complete the form as follows: I.(a) Plaintiffs-Defendants. Enter names (last, first, middle initial) of plaintiff and defendant. If the plaintiff or defendant is a government agency, use only the full name or standard abbreviations. If the plaintiff or defendant is an official within a government agency, identify first the agency and then the official, giving both name and title. (b) County of Residence. For each civil case filed, except U.S. plaintiff cases, enter the name of the county where the first listed plaintiff resides at the time of filing. In U.S. plaintiff cases, enter the name of the county in which the first listed defendant resides at the time of filing. (NOTE: In land condemnation cases, the county of residence of the "defendant" is the location of the tract of land involved.) (c) Attorneys. Enter the firm name, address, telephone number, and attorney of record. If there are several attorneys, list them on an attachment, noting in this section "(see attachment)". II. Jurisdiction. The basis of jurisdiction is set forth under Rule 8(a), F.R.Cv.P., which requires that jurisdictions be shown in pleadings. Place an "X" in one of the boxes. If there is more than one basis of jurisdiction, precedence is given in the order shown below. United States plaintiff. (1) Jurisdiction based on 28 U.S.C. 1345 and 1348. Suits by agencies and officers of the United States are included here. United States defendant. (2) When the plaintiff is suing the United States, its officers or agencies, place an "X" in this box. Federal question. (3) This refers to suits under 28 U.S.C. 1331, where jurisdiction arises under the Constitution of the United States, an amendment to the Constitution, an act of Congress or a treaty of the United States. In cases where the U.S. is a party, the U.S. plaintiff or defendant code takes precedence, and box 1 or 2 should be marked. Diversity of citizenship. (4) This refers to suits under 28 U.S.C. 1332, where parties are citizens of different states. When Box 4 is checked, the citizenship of the different parties must be checked. (See Section III below; NOTE: federal question actions take precedence over diversity cases.) III. Residence (citizenship) of Principal Parties. This section of the JS 44 is to be completed if diversity of citizenship was indicated above. Mark this section for each principal party. IV. Nature of Suit. Place an "X" in the appropriate box. If the nature of suit cannot be determined, be sure the cause of action, in Section VI below, is sufficient to enable the deputy clerk or the statistical clerk(s) in the Administrative Office to determine the nature of suit. If the cause fits more than one nature of suit, select the most definitive. V. Origin. Place an "X" in one of the six boxes. Original Proceedings. (1) Cases which originate in the United States district courts. Removed from State Court. (2) Proceedings initiated in state courts may be removed to the district courts under Title 28 U.S.C., Section 1441. When the petition for removal is granted, check this box. Remanded from Appellate Court. (3) Check this box for cases remanded to the district court for further action. Use the date of remand as the filing date. Reinstated or Reopened. (4) Check this box for cases reinstated or reopened in the district court. Use the reopening date as the filing date. Transferred from Another District. (5) For cases transferred under Title 28 U.S.C. Section 1404(a). Do not use this for within district transfers or multidistrict litigation transfers. Multidistrict Litigation. (6) Check this box when a multidistrict case is transferred into the district under authority of Title 28 U.S.C. Section 1407. When this box is checked, do not check (5) above. VI. Cause of Action. Report the civil statute directly related to the cause of action and give a brief description of the cause. Do not cite jurisdictional statutes unless diversity. Example: U.S. Civil Statute: 47 USC 553 Brief Description: Unauthorized reception of cable service VII. Requested in Complaint. Class Action. Place an "X" in this box if you are filing a class action under Rule 23, F.R.Cv.P. Demand. In this space enter the actual dollar amount being demanded or indicate other demand, such as a preliminary injunction. Jury Demand. Check the appropriate box to indicate whether or not a jury is being demanded. VIII. Related Cases. This section of the JS 44 is used to reference related pending cases, if any. If there are related pending cases, insert the docket numbers and the corresponding judge names for such cases. Date and Attorney Signature. Date and sign the civil cover sheet. Case 2:16-cv-00741-SPC-MRM Document 1-1 Filed 02/25/16 Page 3 of 3 PageID 7Case 2:16-cv-00741-SPC-MRM Document 47-2 Filed 06/30/17 Page 7 of 9 PageID 181 AO 440 (Rev. 12/09) Summons in a Civil Action UNITED STATES DISTRICT COURT for the __________ District of __________ ) ) ) ) ) ) ) Plaintiff v. Civil Action No. Defendant SUMMONS IN A CIVIL ACTION To: (Defendant’s name and address) A lawsuit has been filed against you. Within 21 days after service of this summons on you (not counting the day you received it) - or 60 days if you are the United States or a United States agency, or an officer or employee of the United States described in Fed. R. Civ. P. 12 (a)(2) or (3) - you must serve on the plaintiff an answer to the attached complaint or a motion under Rule 12 of the Federal Rules of Civil Procedure. The answer or motion must be served on the plaintiff or plaintiff’s attorney, whose name and address are: If you fail to respond, judgment by default will be entered against you for the relief demanded in the complaint. You also must file your answer or motion with the court. CLERK OF COURT Date: Signature of Clerk or Deputy Clerk Case 2:16-cv-00741-SPC-MRM Document 1-2 Filed 02/25/16 Page 1 of 2 PageID 8Case 2:16-cv-00741-SPC-MRM Document 47-2 Filed 06/30/17 Page 8 of 9 PageID 182 AO 440 (Rev. 12/09) Summons in a Civil Action (Page 2) Civil Action No. PROOF OF SERVICE (This section should not be filed with the court unless required by Fed. R. Civ. P. 4 (l)) This summons for (name of individual and title, if any) was received by me on (date) . ’ I personally served the summons on the individual at (place) on (date) ; or ’ I left the summons at the individual’s residence or usual place of abode with (name) , a person of suitable age and discretion who resides there, on (date) , and mailed a copy to the individual’s last known address; or ’ I served the summons on (name of individual) , who is designated by law to accept service of process on behalf of (name of organization) on (date) ; or ’ I returned the summons unexecuted because ; or ’ Other (specify): . My fees are $ for travel and $ for services, for a total of $ . I declare under penalty of perjury that this information is true. Date: Server’s signature Printed name and title Server’s address Additional information regarding attempted service, etc: Case 2:16-cv-00741-SPC-MRM Document 1-2 Filed 02/25/16 Page 2 of 2 PageID 9Case 2:16-cv-00741-SPC-MRM Document 47-2 Filed 06/30/17 Page 9 of 9 PageID 183 Merit Court Reporting, Inc. 1 IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF FLORIDA FORT MYERS DIVISION ______________________________ ) NORA L. MIHELICK, ) ) Plaintiff, ) ) v. ) Case No. 2:16-cv-00741 ) UNITED STATES OF AMERICA, ) ) Defendant. ) ______________________________) DEPOSITION OF MICHAEL BLUSO DATE TAKEN: April 20, 2017 TIME TAKEN: 9:00 a.m. - 11:00 a.m. PLACE TAKEN: Merit Court Reporting 6213 Presidential Court Suite 100 Fort Myers, Florida ON BEHALF OF: Counsel for Defendant REPORTER: Maryanne Wagner, RPR, FPR Court Reporter _________________________________________________________ MERIT COURT REPORTING, INC. 6213 Presidential Court, Suite 100, Fort Myers, FL 33919 (Main Office) 2022 Hendry Street, Suite 104, Fort Myers, FL 33901 (Downtown) 1415 Panther Lane, Naples, FL 34109 239.481.1300 FAX: 239.481.1451 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 2 A P P E A R A N C E S On behalf of the Plaintiff: JONATHAN P. BLAKELY, ESQ. (Via Phone) 15210 Lake Avenue Middlefield, Ohio 44062 On behalf of the Defendant: REBECCA E. LAYNE, ESQ. Trial Attorney, Tax Division U.S. Department of Justice P.O. Box 14198 Washington, D.C. 20044 _ _ _ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 3 I N D E X PAGE Direct Examination by Ms. Layne....................... 5 Cross-Examination by Mr. Blakely...................... 58 Redirect Examination by Ms. Layne..................... 61 Recross-Examination by Mr. Blakely................... 62 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 4 E X H I B I T S EXHIBIT NO. DESCRIPTION PAGE 1 Subpoena to Testify/Michael Bluso................ 6 2 Judgment Entry and Decree of Divorce............. 16 3 1999 1040 Tax Return............................. 27 4 2000 1040 Tax Return............................. 28 5 2001 1040 Tax Return............................. 29 6 2002 1040 Tax Return............................. 30 7 2003 1040 Tax Return............................. 30 8 2004 1040 Tax Return............................. 31 9 Complaint........................................ 35 10 Settlement Agreement and Release................. 37 11 2005 W-2......................................... 39 12 2006 W-2......................................... 39 13 August 28, 2008 Letter........................... 46 14 September 25, 2008 Letter........................ 48 Case 2:16-cv-00741-SPC-MRM Document 47-3 Filed 06/30/17 Page 1 of 22 PageID 184 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 5 Thereupon, MICHAEL BLUSO, the witness, being first duly sworn for and in his own behalf, was examined and testified upon his oath as follows: DIRECT EXAMINATION BY MS. LAYNE: Q All right. We are now on the record in Nora Mihelick versus United States. This is the deposition of Michael Bluso. This deposition is being taken in accordance with Federal Rules of Civil Procedure. Mr. Bluso, you've been sworn in, correct? A Yes. Q Do you understand your duty to testify truthfully and completely here today? A Yes. Q Will you please state your home address for the record? A Michael Bluso, Jr. 27 Bayview Boulevard, Fort Myers Beach, Florida 33931. Q Great. And we are going to start off, I am handing him the document, John, the first number is page 224. It should be near the bottom of the PDF. Take a look at this document, and my first 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 6 question when you have had a chance to review it, do you recognize it? A Yes. Q And can you tell me what this is? A It is a summons for today. Q Okay. So what do you understand that document to mean or -- A That you are going to ask me questions and I'm truthfully going to answer them for you. Q All right. Great. MS. LAYNE: I would like to mark this document as Exhibit 1. (Whereupon, Exhibit 1 was marked for identification.) BY MS. LAYNE: Q Did you receive this document from me? A Yes. Q Did you agree to accept service of it by e-mail? A Yes. Q I know you've been deposed before, but I just wanted to start by laying some ground rules so things can go a little bit more smoothly today. First thing is if you have a question or you don't understand a question that I asked, you can ask me to clarify it and I will be happy to do so. If you answer 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 7 a question, I will assume that you are answering based on your personal knowledge. And if you don't know an answer or can't remember something, that's a perfectly acceptable answer, just say so. As you can see with Maryanne here, we are being transcribed. So please verbalize any answers. Shaking your head, nodding your head can't be picked up, so I might queue you. I will try to help you remember. A Yes. Q I am thinking we may take a break every hour or so, including breaking for lunch if we go that long. But if you want to take break, need coffee, water, anything -- A That's fine. I'm ready to go. Q Okay. And Mr. Bluso, have had any alcohol this morning or last night? A No. Q Are you on any drugs or medication that might impair your ability to sit here today? A No. Q No medical illness or anything? A No. Q Did you do anything to prepare for your deposition today? A I just pulled out some paperwork that we talked about. And I had my assistant pull it out and send it to 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 8 me. So -- and that's it. It was very, you know, very small. Q What specifically what paperwork did you review? A My deposition. My sister's deposition. The complaint from my sister -- I don't have a date on it. And just a letter that I wrote to Petersen Ibold for the -- for my -- to get my funds back that we agreed upon for the divorce back in October. The letter's from October, 2008. Q Okay. A That is it. Q Thank you. And do you have copies of those? A No, I don't. But if you want to take them with you and send them back to me again, that's fine with me, whatever you want to do. Q Great. That would be great. I'll review these at a break and see which ones we don't already have. A I didn't put anything in that you don't have. Q Oh, okay. I don't believe I got a letter. A Everything I am bringing today is not -- I did not send you this. Q I see. A You asked me if anything I reviewed to bring with me. Case 2:16-cv-00741-SPC-MRM Document 47-3 Filed 06/30/17 Page 2 of 22 PageID 185 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 9 Q Yes. A And this is what it is. Q Okay. Yes. And we are -- if you reviewed something to prepare for a deposition, we are able to get those documents and review them -- A This is it. Q Awesome. Thank you. All right. And did you speak with anyone in preparation today -- for today? A I talked to Nora. Q You spoke with Nora? A She called me. Q What did you guys talk about? A That she said I would be getting a summons. Q Did you guys discuss anything else? A I kind of asked her what it was about. I'm not sure exactly what until -- but what I gather was it's the repayment of the excessive income from Gotham Staple Company. Q So did you and Nora talk about anything else related to the case, just generally? A Just that I was not aware in the beginning other than there was some other IRS issues we had with selling of some stock from Smith Barney that I was -- the IRS, since my name was on the top of the list, if you have your 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 10 name and her name was second, well, the first one on the top of the list with the Social Security number falls back on that person. And anyway, we split the account, but she didn't put it in her own account. When she sold it was sold under my name, and so the IRS came after me for the funds of the tax liability. That's the only -- that's what I thought she was talking about in the beginning. But that's what I was thinking. Q Okay. So that's a separate issue? A Whole separate issue. Q Okay. Great. And what year was that, do you remember? A 2009. I think I settled everything in -- with the IRS in 2012. It was a long drawn-out affair. Q Sounds about right for the IRS. Okay. So you mentioned that you kind of understand what you are doing here today. You mentioned you spoke with Nora. How do you know Nora? A She is my ex-wife. Q And when were you guys married? A '79, I believe. Q And you mentioned ex-wife, so you must been divorced? A Yes. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 11 Q When were you divorced? A 2005. Q And what was the reason for your divorce? A We both agreed to get divorced. Q And what was the divorce proceedings like, was it -- A Well, it was a divorce. It was just a, you know, trying to split up the assets, and which was done in a year, and that was it. Q And did you have counsel in the divorce? A Yes. Q Who's your counsel? A Elaine Tassi. Q Had you worked with Ms. Tassi before? A No. Q And did Nora have counsel? A Yes. Q Do you know -- A Dennis Ibold, I-B-O-L-D. Q All right. I am now going to show you a document -- John, it's documents page 157. MR. BLAKELY: 157. Thank you. BY MS. LAYNE: Q All right. I am going to hand you this document and ask you to look at it, and when you've had a chance to 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 12 review it, tell me if you know what it is, if you recognize it? A Yes. This is the decree for divorce. Q And okay. So you've seen this document before? A Yes. Q Okay. I want to direct your attention to the page at the bottom right corner it will be page -- one second -- it will be page 167. A Yes. Q Okay. Do you see where it says Article 5? A Yes. Q Can you tell me what Article 5 is regarding? A It's to share the cost of the Pamela Bluso Barnes claim. Q How did this article come to be in your guy's divorce agreement? A Well, the -- my sister Pam was -- had a complaint against myself, Gotham Staple Company, Lake Effect Investment Corp, there is a list of people. So, you know, to settle the divorce we had this open-ended to where this was not settled until 2007/2008. So we agreed to split the cost of the claim, the complaint. Q And were you the one that suggested that this should be in the divorce settlement agreement or Elaine? A You know, I don't know how it came about. Case 2:16-cv-00741-SPC-MRM Document 47-3 Filed 06/30/17 Page 3 of 22 PageID 186 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 13 Q Okay. A But it was open-ended. So I don't know who brought it up or who did whatever, but this was the final result. Q Do you remember if there was a lot of back and forth about -- A Well, yes. There was a lot of back and forth about it, but at one time what I wanted to do was take her out of it for a cash settlement, and they wanted to play it out to see where it went. So that left it open-ended. And I believe that was back before the divorce we tried to settle that, and just like a week before the divorce. Q I'm sorry, a week before the divorce is when you added in this article? A No. This was all workings. But before that we tried to make, you know, make a deal just to close everything up so there is no open-ended for the divorce. Q Oh, okay. So I may be a little bit confused. So the week before the divorce you -- A I don't know if it was a week before, but at some point, you know, I made an offer to her for $150,000 to pay me and then there is no other -- she's not liable. I would not put it in the divorce. So we could get it clean and not have something dragging on for years until we figure out what is going on. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 14 Q Okay. A And so we couldn't make up -- nobody could -- they wanted to play it out to see if it -- you know, they didn't believe that this claim was going to be what it's was going to be, even though we, you know, we gave them potential what it could be, what we thought it could be. And but they didn't agree to it. So we had to do this Article 5. MR. BLAKELY: Mr. Bluso, for the record, that was Nora and Dennis Ibold did not agree to it? THE WITNESS: Yes. What I remember and what I have in a letter that I -- now, this letter goes back to 2008, when I was trying to get my funds from the excessive compensation, and we -- I don't know if it was, you know, somewhere in writing, but that's between our attorneys anyway. But there was a calculation of $150,000 that she could have got out for 150 grand. MS. LAYNE: And let the record reflect that as he's talking, I know John you are not here, he's looking at one of the letters that he brought with him that's dated October 2nd, 2008. MR. BLAKELY: Thank you. THE WITNESS: The reason I didn't send this to you, I wasn't aware that I needed to bring anything 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 15 that I studied beforehand. I was not aware of that until your letter stated if you reviewed anything you need to bring it. So -- BY MS. LAYNE: Q No. Thank you. A That's -- only complying with the summons. Q Yes. Thank you. Okay. So if I'm understanding correctly, prior to the divorce regarding Article 5 you offered Nora $150,000 to say you can pay me this or this could be taken out of your half of the estate to completely settle any claim I may have against you? A Yes. Q Okay. Regarding the Pamela Bluso investigation? A Yes. Q And Nora -- what was Nora's response to that? A I don't know what the response was, other than they wouldn't accept it. They didn't believe the case had any merit. So -- Q And as a result of not believing the case had any merit, they wanted to include Article 5; is that correct? A Well, we both signed it, so we both agreed to it. Q All right. I would like to direct your attention using the same document that I handed you. And I'm sorry, we haven't marked it for 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 16 identification yet. Can we mark it as Exhibit 2, I believe? (Whereupon, Exhibit 2 was marked for identification.) BY MS. LAYNE: Q Can I direct your attention to bottom of page 165, and if you'll please look at the second paragraph from the bottom and read it and let me know -- A Husband paid the wife? Q Yes. A Okay. Q Can you tell me what that provision is about? A I don't know what that word contemporaneous really means, one of your guy's words. Q Contemporaneous means at the same time. A Okay. Well, I think it states I paid her half the equal division of marital assets, and she acknowledges the receipt. Q And do you recall about how much that payment was? A You mean, like a check? There was a check written for over a million dollars. And there was assets that was split, which all includes above, you know, the properties were split and that's it. Q Okay. Were Nora to have accepted your $150,000 Case 2:16-cv-00741-SPC-MRM Document 47-3 Filed 06/30/17 Page 4 of 22 PageID 187 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 17 offer to settle, would that have come out of this check that you would have written to her? A I don't know. Q Thank you. And outside of the discussions of Article 5 of your divorce agreement, did you and Nora discuss the Pamela Bluso Barnes litigation? A That I don't recall. I'm sure we did, but I don't recall any, you know, anything that stands out to me. Q Okay. Okay. I'm going to switch gears now a little bit. Mr. Bluso, where do you work? A Gotham Staple Company. Q How long have you worked there? A Since 1971. Q And has that -- have you worked anywhere else since 1971? A No. Q Always full-time employed at Gotham? A Yes. Q And what was your role when you started? A Just warehouse, repair work, delivery boy, janitor. Q And how did your roles progress throughout the 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 18 company over time, just -- A In the sales management, chief operating officer, CEO. Q And about when did you transition into sales and management, if you can remember? A Very early '74, '75. I got out of high school in '73, so a couple years after that. Q Backing up a little bit, what does -- what is the business of Gotham? A We sell industrial and construction fasteners, nails and staples. Q And has that always been the business of -- A Yes. Q And how did you come to work at Gotham? A My father owned the business. Q He owned the business? A He did at the time back in the '60s. Q And when you say he owned it, does -- do you mean he owned all the shares or -- A There was no shares until they were issued in '74, I believe. Q So how do you understand that he owned it? A Well, he purchased it from a guy by the name of Hugel Gotham, my mother and him. Q And why did they create shares in 1974? 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 19 A I don't really know. Q And when he created the shares in 1974, were you given any -- A 25 percent. Q Do you know what the other -- how the other 75 percent were divvied? A My brother, Mark, received one share. I believe my mother had 24, and my father had 25. But that's best of my knowledge. Q Okay. And you said you had 25 percent, and you said mother 24, father 25, are you saying 25 shares or -- A There was 100 shares. There was 24 issued to me. Q So you had 24 shares? A 25, I am sorry. My mother had 24. Q Okay. And how did your ownership of the company progress, do you still own 25 shares? A Actually, I own about 70 percent of the stock now. And my sister Michelle owns about 30 percent. We are the only two shareholders remaining. Q And are there still only 100 shares? A No. There is 400 nonvoting and 100 voting. Q Do you know when the structure of the company changed to -- from just 100 shares to voting, nonvoting? A There was -- we issued nonvoting shares, and I don't remember the year. And we based it off of the 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 20 ownership of the company. And at that time, I believe it was myself having 25 -- I don't think I gave it the right numbers. But my father and mother owned the majority of it, and I owned 25 voting shares. So I think the number I gave you before didn't equal 100. But needless to say, they owned 75 percent of the company, and I owned 25 percent of the company. And then we split that off into nonvoting shares. And at that time, it was an idea of mine and my parents that we would distribute some nonvoting shares to my brothers and sisters, because, you know, we are a family and we are going to work together in the big pipe dream. Q So the decision to create the nonvoting shares was to share the company with your siblings? A Yes, yes. Q Did your siblings work at the company? A Not at the time, no. Q And I am sorry, just for the record, who are your siblings? A My brother, Mark. His one share was redeemed by my mother, because he left the company years back. And it was my brother, Jeff. My sister, Michelle. And my sister, Pamela, that got the nonvoting shares. And myself and my mother and some of my father's, because they gifted some of theirs to them. Case 2:16-cv-00741-SPC-MRM Document 47-3 Filed 06/30/17 Page 5 of 22 PageID 188 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 21 Q And do you recall how the nonvoting shares were given out? A No. Q Do you remember if -- not specific numbers, ball park half to each? A No, I don't know. Q You don't know if someone had a majority of them? A No, I don't. Q Okay. And you said you don't know exactly when the nonvoting shares were created? A Right. Q Do you recall prior to 1980, prior to 1990? A I don't know. Q Prior to 2000? A Oh, prior to 2000, oh, yes. Q Okay. Would you say prior to 1995? A Could be. But over the years my parents were gifting more shares, voting shares and nonvoting shares to my three brothers or my brother and two sisters and also myself, and that was done in a series of times. Q Did most of the stock gifting happen around the 1999's or -- A Yes, probably so. Yes, I think so, because my parents were getting older and they just wanted to take the benefit of being able to give the shares, you know, at 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 22 the time was under $10,000 as, you know, tax benefit to my siblings and myself. Q When you would -- when your parents would give you a share of stock, right, you would just hold the stock in your name now? A Yes. Q Is that correct? And did anyone ever sell their stock? A We purchased shares of stock from my mother when she passed away. We purchased Pamela's shares of stock in her complaint when we settled. And we purchased my brother Jeff's shares of stock, I believe, in 2010. Q Do you know how many shares he had at that time? A I think he had 18 voting, and 22 or something nonvoting. Q Just make sure I understand, so you had 100 shares of voting stock originally? A Yes. Q And then at some point along the line it got turned into 100 voting and approximately 400 nonvoting? A Yes. Q Okay. And you believe that switch happened prior to 2000 for sure? A Yes. Q Possibly prior to 1995? 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 23 A Yes. My brother Jeff's stock -- he had, I believe, 50 nonvoting shares. I think I said 22, but that was wrong. 50 nonvoting shares. Q This is 2010 about? A Yes. Q Okay. So let's go back to your role at Gotham, so you mentioned that you served as CEO, about when did you step into that role? A Maybe 2000, 2002. Q Okay. So between -- so starting in 1970 you started on, you know, warehouse-type stuff. Then you transitioned to sales about '73, '74 you said? A Yes '74, '75, yes. Q And then from '75 until 2000, what did you do at the company? A We expanded it by opening branches in the Columbus area, and west side of Cleveland, Ohio. Q Okay. And that was through your sales role? A Well, management, you know, it was in 1982, I believe, is when I went basically full-time management. Q And do you recall what your title was when you went and became full-time management? A Probably vice president. Q Did you hold any other official positions at the company prior to being vice president? 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 24 A No. Title? Q Yes. A No, I don't -- title didn't mean anything. It was only the three of us; my mother, father and I. But I think it was vice president. Q So you went from sales with some -- A I was vice president back we -- when we -- when they issued stock 1974. Q Okay. A I think I was president in 1974. My mother was secretary/treasurer, and my father was president. We only had five people at the company. So -- Q Slim pickings? A Yes. Majority of the people had titles. Q And when you became -- I am sorry, did you guys have a board of directors? A It was my father, myself and my mother. Q And when, what timeframe are you referring to? A From '74 to, I would say -- I don't know, until probably my mother's death in 2002. Q So the only three people on the board from 1974 to 2002? A Best of my knowledge, yes. Q And was there a board resolution to issue the nonvoting stock? Case 2:16-cv-00741-SPC-MRM Document 47-3 Filed 06/30/17 Page 6 of 22 PageID 189 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 25 A I am sure there was, but I was not involved in it, the legal part of it. Discussion of it I was, but my father handled all the legal stuff. My cousin, first cousin, Linda Bluso, she was our attorney. Q So you weren't involved in the legal -- or the actual crafting of the legal paperwork? A No, I was not. She did advise myself, my father and my mother that probably not a good idea putting them into this without them working, because you don't know what is going to happen down the road. And you know, we thought, you know, we were all going to put this thing together and enjoy the fruits of it and be able to take care of my sister Pamela. And should have listened to her advice. Q When you say put them into this, you are referring to your siblings? A Stock. Q Because they didn't work at the company? A They didn't work at the company at the time. Q Okay. So directing, or narrowing the timeframe to 1999 to 2004, if you can remember, what were your roles and responsibilities at Gotham? A CEO running the whole company. Q And how many employees did you guys have at that time? 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 26 A 2004, I think we had 55. Q Was that about typical for the other years? A Probably a little -- maybe we had like 50 in 2000, and we were up to 55 in 2004. Q And of the 50 employees, do you know who was the highest paid employee? A Myself. Q Do you know who was the second highest paid? A John Manfroni is my president now. Q Do you know how about how much he made? A He probably made maybe $80,000. Q Any other high paid employees? A Nora was paid. What years are you talking about? Q 1999 to 2004. A Okay. Well, in 1999, I would have to -- I would have to put my father in there. He was -- him and I basically, whatever it was, you know, him and I were paid close to the same. He was probably paid a little more than me. Q Okay. And you said -- do you know when your father stopped being paid by the company? A No, I don't -- I don't know. My mother was paid by the company also, but she was, you know, secretary/treasurer. Q Do you know about how much she made each year? 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 27 A No, I don't. Maybe $100,000. I don't know. I don't know. I don't want to give a number. I don't know. Q And your father was an employee all 1999 to 2004 though? A I'm not sure about -- I would think so, yes. He did not have stock ownership, you know, towards the end of 2004, because he gifted it -- a lot of his shares away. Actually, he had zero shares of Gotham when he passed away in 2004. Q So from 1999 to 2004, he was actively gifting shares of stock? A I don't know if he did in that timeframe, but he was doing it in some timeframe. Q Okay. All right. So I'm going to show you some more documents now. MS. LAYNE: John, we are going to start with a document with number 1 at the bottom. MR. BLAKELY: Thank you. (Whereupon, Exhibit 3 was marked for identification.) BY MS. LAYNE: Q Can you tell me what this is when you've had a chance to review it, and have you seen this before? A Yes. Q Can you please look at page nine at the bottom 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 28 numbers? A Okay. My W-2. Q Okay. From what year? A 1999. Q All right. And can you tell me how much it says your compensation was that year? A I can't read -- $765,400. Q That's what it looks like to me also. A All right. Q And does that sound about right? A Yes. Q Did you receive any other compensation from Gotham for your -- as an employee? A I think we had a profit sharing program going. Q And do you recall about how much you would have received from that? A No. Q No idea? A No idea. Q $100, $1,000? A I don't -- it was probably a good sum. But I don't remember what it is. I truly don't. Q Okay. Okay. You can put that aside. (Whereupon, Exhibit 4 was marked for identification.) Case 2:16-cv-00741-SPC-MRM Document 47-3 Filed 06/30/17 Page 7 of 22 PageID 190 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 29 BY MS. LAYNE: Q Now I'm going to show you, it's page 26, will you tell me if you recognize that document? A My 1040, 2000. Q And you've seen this document before? A Yes. Q Great. Will you please look at page 38? A My W-2 year 2000 in the amount of $855,400. Q And does that sound about right? A Yes. MR. BLAKELY: What page, Rebecca, is that W-2 on? MS. LAYNE: 38. MR. BLAKELY: Thank you. (Whereupon, Exhibit 5 was marked for identification.) BY MS. LAYNE: Q Okay. I'll show you another document marked as Exhibit 5 for identification, do you recognize this document? A Yes. 1040, 2001. Q Have you seen this before? A Yes. Q Can you turn to page 60, please? A Yes. W-2 2001 income $1,065,400. Q And is that about -- sound about right for you? 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 30 A That's correct. Q That's your correct income. (Whereupon, Exhibit 6 was marked for identification.) BY MS. LAYNE: Q Okay. I'm going to show you another marked for identification as Exhibit 6, do you recognize this document? A Yes. My 1040, 2002. Q Great. And have you seen this before? A Yes. Q Can you please turn to page 84? A Yes. My 2002 W-2 income $1,145,400. That's correct that amount. Q I'll show you another document now -- are you able to follow along with the PDF? MR. BLAKELY: Yes. MS. LAYNE: Okay. (Whereupon, Exhibit 7 was marked for identification.) BY MS. LAYNE: Q This one starts page 107, marked for identification as Exhibit 7. A My 1040, 2003. Q Have you seen this before? 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 31 A Yes. Q And can you please turn to page 112? A W-2 from year 2003, income $1,065,400. (Whereupon, Exhibit 8 was marked for identification.) BY MS. LAYNE: Q Okay. The last one of these, marked as Exhibit 8, and would you tell me if you've seen this before? A Yes. 2004, 1040. Q Okay. Will you -- and you identified it. Can you please turn to page 152? A Okay. Q Can you tell me what it says? A 152 has first item is Nora Bluso W-2 from 2004, and on the same page my W-2, 2004. Q Okay. And what does it say your compensation was? A My compensation was $1,100,600. Q Great. Thank you for obliging me there. So how was your compensation set at Gotham during 1999 to 2004? A I had a base salary. I don't know what the base was. And then at the end of the year we would look at the profit and loss. And I would -- you know, my father and myself, I don't know, maybe could be some other people 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 32 received, I don't know, call it a bonus or whatever, but we would receive money out of it if there was a profit there. Q And when you said your base salary, was your base salary, did it comprise most of your compensation? A No. Q Okay. Do you have a ball park? A I do not. Q Was it $10,000? A I don't know what the -- I don't know what the biweekly was set up. I don't know. Q Do you know what the annual was? A The annual was in 2004 whatever number I gave you one million, whatever, one-hundred. Q So would you get paid a biweekly set amount, and then at the end of the year would you just get a lump sum? A Yes, yes. Q Was your biweekly amount the same every two weeks? A I don't know. I believe it would be. But I don't really know. Q Okay. I'm sorry, you said that you and your father would discuss at the end of the year the profit or was anyone else involved? A My accountant. Case 2:16-cv-00741-SPC-MRM Document 47-3 Filed 06/30/17 Page 8 of 22 PageID 191 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 33 Q Do you recall if there was any board resolutions passed regarding your salary? A I don't remember. Q Did you ask any of the other board members, I guess, just your mom? A I don't believe we did. We might have told her. But I don't think it was -- we -- it was between my father and myself. Q Did you disclose to your siblings who were nonvoting shareholders at that time your salary? A I don't believe so. If my father talked to them I'm not aware of it. Q Did Gotham have any sort of like shareholders reporting documents that it would send out to the nonvoting shareholders? A I don't recall. Q We've been on the record about 50 minutes, it's kind of a good time to take a break. Would you be able to take a five minute break? A I'd like to finish up if we can. But if you want to do a five minute break, that's fine. Q Yeah, can we take a five minute break, is that okay with you? MR. BLAKELY: Yes. That's fine. Thank you. (Whereupon, a short break was taken.) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 34 BY MS. LAYNE: Q Okay. So as we just went over your compensation from 1999 to 2004 was about million dollars give or take each year? A Yes. Q Do you recall what your compensation was in 1997, 1998 just prior to 1999? A No. Q Was it near a million? A I don't know. I never really paid attention to the numbers on it. Q So was there any reason why you were making a million dollars that you can think of? A The company was very successful. We were making a good profit. Q Was that abnormal starting in 1999? A I believe we were doing pretty good in 1999. Q Better than 1998 or years prior to? A I don't know. Q So you don't remember a big spike in sales in '99 or anything? A No. Q Okay. So I want to shift gears a little bit now. You mentioned before that you were sued by your sister Pamela? 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 35 A Yes. Q Would you mind telling me a little bit about that litigation? A Well, it's in the complaints they issued. Q Let the record reflect that he's looking at a document he brought to prepare for the deposition today, it looks like it's a complaint -- A Yes. Q -- from his sister. Should we mark it for identification? Let's mark this document for identification as Exhibit 9. (Whereupon, Exhibit 9 was marked for identification.) MR. BLAKELY: Got it. THE WITNESS: And well, she was the -- mainly was the complaint was about myself, excessive compensation, Lake Effect Investment Corporation, which was a company controlled by myself and my mother. Gotham Staple Company. Smith Barney. KeyBank. And John and Jane Doe. It speaks for itself. That's all. BY MS. LAYNE: Q Okay. So you said there is an excessive compensation claim in the complaint? 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 36 A Yes. Q Were you the only person that that was alleged against? A What it shows, yes. Q So she didn't sue your father? A No. Q Do you know why that would be? A No. Q Your father made a similar salary to you, though, correct? A Toward the end I don't believe so. But I don't know what his pay was. Q Okay. Was Nora named a party to this lawsuit? A No. Q And to be clear, excessive compensation claims were only against you? A You have to read the complaint. But I only show two items in here that state that item number 22, that says that I have grossly excessive salary payments from '99 to 2000. And eighth cause of action, number 41, that I breached my fiduciary duties to minority shareholder. And for forgery of her signatures, and wrongfully wasting and depleting company assets, including grossly exorbitant salary payments made to myself. Q And going back to number 22, did you just say Case 2:16-cv-00741-SPC-MRM Document 47-3 Filed 06/30/17 Page 9 of 22 PageID 192 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 37 1999 to 2000? A That's what it states. Q Okay. Do you know why those years would have been singled out? A No, 1999 to 2002. Q And do you know why she would have picked those years specifically? A No. Q And what happened after the complaint was filed, do you recall? A We had to take depositions and, you know, whatever you guys all do to protect your client. All the proceedings and gathering of documents, and it was quite a drawn-out affair. Q So you fought the lawsuit and the complaint? A Yes. Q Why is that? A Because we didn't believe a lot of it in the lawsuit was correct. Q Do you believe that you were excessively compensated? A I don't know. (Whereupon, Exhibit 10 was marked for identification.) BY MS. LAYNE: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 38 Q I want to show you a document now page 173, it's marked for identification as Exhibit 10, would you tell me if you recognize this document? A Oh, okay. Yes. Settlement agreement and release from the complaint with my sister. Q And have you seen this document before? A Yes. Q And can I turn your attention to page 175 in the bottom right corner? A Okay. Q Do you see paragraph four there? A Yes. Q Can you tell me what that paragraph is dealing with? A Making the settlement payment to end the case of excessive compensation from Gotham Staple. And only states for the years ending on or before December 1st, 2004. And I made two payments to her attorneys, one in 2007, I believe, and the other one 2008. Q Okay. How did you guys arrive at this term? A It was something was drawn out with the attorneys for settlement. Q Why $600,000? A Why did she get $150,000 out of my father's trust? I don't know. Same thing. I don't -- the 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 39 numbers -- I don't know how they came about what the numbers. Q Okay. A I really don't. It was just a matter of trying to settle the case and all these numbers. I don't really know why the numbers are what the numbers are. (Whereupon, Exhibit 11 was marked for identification.) BY MS. LAYNE: Q Okay. So I want to show you another document, page 204 -- you can set that aside, sir -- this one is marked 11, and do you recognize this document? A Yes. Q What is it? A W-2, 2005. Q All right. And what does it say -- this is your W-2 from 2005? A Yes. Q What does it say your compensation was in 2005? A $496,333.28. Q Great. (Whereupon, Exhibit 12 was marked for identification.) BY MS. LAYNE: Q And then I want to show you one more document, 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 40 it's page 205 marked for identification as Exhibit 12? A 2006 W-2 wages, $492,500. Q All right. Thank you, Mr. Bluso. And can you explain the drop in compensation from 2004 to 2005 and '06? A No. Maybe business was down. I don't know. Q Was it in -- as a result of the Pam Barnes Bluso litigation? A I don't know. Q So going back to the settlement agreement in that paragraph four that we were talking about -- John, going back to page 175. MR. BLAKELY: Thank you. BY MS. LAYNE: Q So the $600,000 that you agreed to pay out, you don't know how you arrived at that number, correct? A No. Q Okay. Why did you agree to pay out anything? A Number one, I did not want to go to jury trial. Q Why is that? A Well, you know, I don't think anybody is going to feel sorry for someone that's making a million dollars a year, number one. Number two, there was a lot of stuff that went on with -- in the suit and, you know, again, we signed -- I Case 2:16-cv-00741-SPC-MRM Document 47-3 Filed 06/30/17 Page 10 of 22 PageID 193 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 41 should say, I signed, my mother signed Pamela's name to many documents, and the whole time none of the money was ever transferred out of her account, money was only put into her account. But she is blind. I make a million bucks. You know, I don't think going to a jury trial would have been the right thing to do. So as you know -- so the same as the divorce, we settled out of court without a Judge making a decision for us. And I didn't want to have a jury make a decision for us. So this is what we came up with and the advice of my attorneys, here we are today. Q Okay. So you didn't pay the money, the $600,000, because you believed you were excessively compensated? A I think I was paid a lot of money. If I go back to over those period of time from say 1996 -- from 1996 to 2004, my sister was paid a -- she owned 15 percent of the company. She was paid $3,840. I was paid at that time $7,676,500. Q And let the record reflect that he is looking at that letter. A This is a letter for settlement -- to have settlement with -- Q The October 2nd, 2008 letter to Nora? A And there was income that she made. So combined 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 42 we made 8.1 million dollars. My sister made $3,840. Q Okay. A So quite a discrepancy. Q Okay. But you testified that Pamela didn't work for the company? A She worked between 1996 and 2004. She worked whatever to make $3,840. Q Okay. Okay. So her compensation was for work, not just as a shareholder? A No. We did not pay any dividends. Q Didn't pay any dividends. Have you ever paid any dividends? A One time we paid a dividend. Q When was that? A Back in the '80s. Q Why was that? A I don't know. But we decided not to do that again. Q Why did you decide not to do it again? A It was just not worth the effort. It defeated our purpose of why we were taking the money out of our company, either -- the company is a C Corp, but either we paid tax on the money that left in profit to the government, or we took it out as personal income to the people that were working there and pay tax on it. Either 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 43 way we got paid tax, but we took the money out of the company and not distributed to any of the shareholders. Q So -- A Just the officers. Q So in lieu of paying dividends you sort of bulked up compensation? A Right. At the end of the year we figured out what we made and what we're going to leave profit in the company, and what my father and myself was going to take out of the company. Q And at the end of the year when you guys were looking at this profit and loss, it was only you and your dad that were -- A And my accountant. Q Yes, but -- that were paid the money that were paid big bonuses? A My sister might have had -- Michelle has gotten some. My president probably got a little something. Q Would you say the lion's share would go to you and your dad though? A Yes. Q Did you ever discuss your compensation with Nora during -- from 1999 to 2004? A In those -- not really. I mean, what it was I was bringing home, is what I was bringing home. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 44 Q Okay. Were you sued by anyone regarding your compensation from 1999 to 2004? A No. Q And as far as you remember, was anyone else paid -- did anyone else pay out to Pamela in her litigation for excessive compensation? A No. Q All right. I want to switch gears a little bit now. So after the Barnes litigation settled, you had that agreement that I just showed you, how did you go about getting payments from Nora pursuant to your divorce settlement? A My attorney Elaine Tassi attempted to settle up the score. She was unsuccessful, and so I released her from -- not that she did anything wrong, but I didn't need to pay an attorney to rightfully go after what I needed to talk to her attorney with. So I released Elaine Tassi, and I handled it myself up until, oh, I don't know, maybe 2009. I had to hire another attorney, I don't remember his name, to -- you know, I was going to go to court if I wasn't going to get paid back. Q So do you know what Elaine did to try to get money from Nora? A I think -- I believe she wrote some letters to Dennis Ibold. And you know, their claim -- how I looked Case 2:16-cv-00741-SPC-MRM Document 47-3 Filed 06/30/17 Page 11 of 22 PageID 194 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 45 at it and how they looked at it, that's why we got attorneys, they could argue the case and they argued it and I just didn't want to pay my attorney to do that. So I handled it on my own. They just didn't see eye-to-eye with me. Q Okay. And do you know what they were arguing about? A Paying back the attorney fees from Lake Effect Investment, which was about $100,000. My personal attorney fees, which were about $60,000. And the $300,000 of the excessive compensation. Q And regarding excessive compensation, do you recall what they were saying about that? A No, I don't. Q And then after you let Elaine go, did you deal with Dennis Ibold directly? A Yes. Q And do you recall how those -- regarding the excessive compensation claims, what the back and forth was? A There was a lot of letters written to me. I did not review them when I came here. But you know, it was just -- it was -- I think that -- I don't know what his claims were. I mean, I have the letters I can read them, but I didn't review them. But you know, they just 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 46 didn't -- they were just -- I don't -- he was very incompetent, that guy. And I don't mind dealing with someone that's competent, but when someone is incompetent -- I don't know if he was just milking the system or what he was doing trying to -- gobs of money had to be spent on what, you know, with all his research and everything else he was doing. But the bottom line was I didn't want to pay until I hire another attorney then threaten to take him to court, and then again, we settled before we had to go in front of a Judge. Q Okay. A So -- Q Okay. Thank you. (Whereupon, Exhibit 13 was marked for identification.) BY MS. LAYNE: Q I want to show you a document page 182, this will be marked as Exhibit 13, marked for identification as Exhibit 13. Will you tell me if you recognize this document? Have you had a chance to review it? MR. BLAKELY: Rebecca, which document is that or is that on one of the pages exhibits that you sent? MS. LAYNE: Yes, it is page 182. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 47 MR. BLAKELY: Thank you. MS. LAYNE: Sorry about that. THE WITNESS: Yes. I remember getting this. This was three years after -- well, this was a year and nine months after settling with my sister Pam. BY MS. LAYNE: Q What is this document? A Basically Dennis telling me that, you know, again, this was all mumbo jumbo of about excessive income and all these other things talking about why -- okay. All right. This is what they wanted to -- they figured out what they wanted to pay me to resolve the final thing would be $120,000, and their reasoning behind it. Q And did you -- A I did not accept it, no. Q Why not? A Because the divorce decree was to split the marital assets and also split the cost of Pamela Barnes suit so we can -- we settled our divorce with that open-ended. But that was open-ended. Q So you didn't feel $120,000 was fair? A No. Q Okay. A You could see that he wrote the letter directly to me. Elaine Tassi was not involved in this at this 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 48 time. (Whereupon, Exhibit 14 was marked for identification.) BY MS. LAYNE: Q So I'll show you one more document -- John, we are going to be looking at page 202. MR. BLAKELY: 202. Thank you. BY MS. LAYNE: Q Marked for identification Exhibit 14, would you please tell me if you recognize this document? A This letter I wrote concerning myself and Lake Effect Investment Corp for settlement with Nora, what I was asking for. Q What you are asking for? A In what she owed me from the divorce decree. Q Was this letter, if you would take a look at Exhibit 13, was this in response to the letter from Exhibit 13, if you recall? A It could have been. There was a lot of letters flying around. If there was something in between there I'm not aware of it. Q Okay. Take a second, and would you mind reviewing the letter? A Okay. Q If you'll notice at the bottom, the bottom Case 2:16-cv-00741-SPC-MRM Document 47-3 Filed 06/30/17 Page 12 of 22 PageID 195 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 49 paragraph there is a sentence there where you say this tax matter falls squarely on my shoulders? A Yes, I see that. Q Do you know what you meant by that? A Well, obviously if I didn't get paid back the money, and I took the additional $300,000 compensation, that would be -- write-off, probably fallback on me. What I believe what it was was -- also was that they -- they were trying to hold an ace in the hole by claiming we are going to send you 1099's on all this. And I didn't really care if they send me 1099's or not, because I can connect all the dots, that if I paid it out and they send me 1099 made no difference, because it was paid out. They were trying to use this 1099 against me to like make me settle for less if I didn't send you a 1099. I didn't really care if they sent me a 1099. I just want them to send me the money. Again, this was games that, I think, Dennis Ibold was playing. And since I was representing myself, they say only a fool represents himself, so maybe they thought I was a fool, probably still do. Q Okay. Thank you. So Nora ended up paying you the $300,000 for excess compensation? A Yes. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 50 Q Did she pay you anything for the attorney's fees? A Yes. Q Did she pay you -- do you recall what she paid? A No. But whatever she paid me that was a 1099 attached to that, which I claimed as income, because I've already written off the Lake Effect part of -- through my business the attorney fees. So I put that back into my -- that 1099 I use as income, because I already wrote off attorney fees from the prior years. Q But the attorney's fees that she paid you back, were they -- were they the full amount that you were asking for? A No, a lot less. Q And why was that? A They claim somewhere in the letter that, you know, signing my sister's name and doing other things it was my fault, not their fault and, you know, those claims were for, you know, my bad judgment of doing that. Q So why would they take that out of the attorney's fees then? A Because they didn't feel that was part of a settlement of marital assets. Q Was it ever discussed reducing the $300,000 that Nora would pay you back because of that? A No, no. That was not ever in any of my 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 51 correspondence was ever a question. Q Okay. Did you and Nora ever discuss her being able to take a tax deduction for the payment to you? A Well, with all these 1099s that was being threatened to me, or used as, you know, like a crutch, we'll send you one, we won't send you one, take less money, blah, blah, blah. I said, hey, I'm taking my $300,000 as a deduction or, you know, it's lost income. And I did. You know, I told them I was going to do it, and I think that she should be able to do it herself. Q Did you ever talk about you taking the full $600,000? A No. You know, they wanted me to take the full $600,000. Yes. They wanted me to take the full $600,000. And then they would pay me, you know, 52 percent less or 48 percent of it, because that would be used as, you know, tax deduction. I don't -- I didn't -- I told them, no. Q Why? A Because if I paid the full $600,000, the divorce decree said she would have to pay back half of it since she, you know, benefited in half, and all these 1040s you gave me both my name and her name is on it. We both paid income tax on that. We paid income tax on her salary. She paid income tax on my salary. When I paid back the money to my sister, that was for excess compensation. I 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 52 only felt that I was due $300,000 of it, and she can go and do her own 1099 since they wanted to give everybody a 1099, she might as well have one herself so -- Q Okay. A I never issued her a 1099. Q Pamela? A I don't remember if I gave Pamela a 1099, if my accountant did or not. I never gave Nora one. I don't -- you know, just -- all these 1099's didn't make any sense. My sister Pamela, yes, probably. But I don't know if one of them was issued to her. But the ones between us excess compensation made no sense. Q Had Nora agreed to settle the $150,000 in the divorce proceedings, and you just paid out the $600,000 to Pamela yourself, would you have deducted the full $600,000? A Yes. Q Do you recall any conversations -- we may have covered this -- do you recall any conversations, any final conversations between you and Nora about her finally agreeing to pay over the $300,000? A No, I don't. Q Do you recall if there are any letters after that last one you sent? A Well, there is one October 2nd I sent, and it is Case 2:16-cv-00741-SPC-MRM Document 47-3 Filed 06/30/17 Page 13 of 22 PageID 196 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 53 basically the only one I ever reviewed. There could be others, I don't know. They're in a file. But this was the one that was sent to me from my assistant that basically stated excess compensation claims. Q Okay. And let the record reflect he's reviewing that October 2nd letter again. A Right. Q As far as you know, that's the last -- A I don't know. There could be others. One thing I wanted to say, the letters from my attorney that I hired after Elaine Tassi, I don't remember the gentleman's name, my assistant could not find any letters or anything from him. Q Why did you feel you needed to get him involved again? A Because they weren't going to pay me. They wanted to give me $120,000 out of $600,000 -- more than that. It was they -- my claim to them was for -- well, $300,000, half the compensation, and the attorney fees, which were like $100,000 with Lake Effect, and $60,000 with my personal attorney. MS. LAYNE: Okay. I believe I would like to take just a quick break to review everything to see if I have any further questions. And John, I anticipate that I will maybe have a 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 54 few more questions, then if you have any you can ask him, is that okay with you? MR. BLAKELY: Yes. I don't anticipate that I have questions. I think you are covering things, you know, as far as the same things, some of the same things I would cover. But if I do, it will only be five minutes if that. MS. LAYNE: Why don't we take five a minute break. (Whereupon, a short break was taken.) BY MS. LAYNE: Q I just have a few more short questions for you. A Okay. Q So I had a chance to look at October 2nd letter -- and John, I'll make sure to get you a copy of this. MR. BLAKELY: Great. Thank you. BY MS. LAYNE: Q So I see that -- can I direct your attention to the very last paragraph where I'll read it out loud for John's benefit, Dennis, they demanded $300,000 for excess compensation and a compromising option with attorney's fees in Lake Effect is open until 5:00 p.m. And then above it, Mr. Bluso, can you please tell me what the two options for the attorney's fees were that 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 55 you list? A I asked for reimbursement to reimburse me for Lake Effect and my attorney fees. And I asked for -- say $96,000 by reducing spousal support and/or cash settlement of $74,000 on the attorney fees. Q Were either of those options chosen by Nora? A No. Q Do you know what you finally settled on? A No. Q Okay. And after the Barnes litigation settled, how was your compensation set at Gotham moving forward? A Well, I believe I reduced my salary and, I guess, with whatever we took out of -- I took out of Gotham. The suit was still in play in 2005 and 2006. There was -- someone was hired to, you know, say what should an executive make, you know, and of course, you know, my expert was high and hers were low, just no different than any other case. And I don't know if I was advised, I don't know if I did it on my own, but my salary was reduced to this amount. Q But would you say it was reduced as a result of the Barnes litigation? A Yes. Q And Pamela Barnes' claims were only from 1999 to 2004? 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 56 A Yes. I don't understand that, but that's what the complaint said. Q But moving forward, she wasn't involved in the company, yet you still reduced your salary? A My salary was reduced. I mean, it could have been, you know, we were coming into the housing crisis of 2005 and '06, and so you know, business could have been less. Q And since that time, has your salary remained relatively constant or -- A No. It's been -- it's gone down like say 2009, '10. And started going back up in 2012, amount increased every year including up to 2016. Q And just to make sure I covered this completely, while you were at Gotham, your only compensation from the company was in the form of W-2 wages; is that correct? A W-2 wages -- oh, yes. Yes. I mean, right. No other loans or no other things just, you know, my pay. Q And this might be included in your answer, but you weren't also given stock? A No. Q And the other shareholders, they were not paid any wages? A My sister Pam didn't -- hasn't worked there, so she -- from the time of the lawsuit, she was working there Case 2:16-cv-00741-SPC-MRM Document 47-3 Filed 06/30/17 Page 14 of 22 PageID 197 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 57 just beforehand a little bit. My brother Jeff worked there, and he was paid in 2010. The company repurchased his stock. And my sister Michelle, the vice president, she's worked there since mid '80s, and she's the vice president, and she's been paid. Q Okay. But they weren't paid -- let me figure out how I want to ask this -- were they hourly employees? A No. They were salary and then my sister would get a bonus at the end of the year. Q Pamela? A No. Pamela made -- she -- Pamela only made between 1996 and 2004, $3,800. My sister Michelle works there actively, we still do what we do -- we did back then. At the end of the year, if are fortunate to have some profit, we will give bonuses to employees and then her and I split whatever we deem 70/30. Q And is that 70/30 based on share ownership? A Yes. Q And from 1999 to 2004, when you got your bonuses, was it based on your ownership percentage of the company? A No. Q Okay. A You have to remember, my father was alive, not that he was active in the company, but he still was the head of the family. It was a family business and 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 58 everything was shared with him before anything was done. Q All right. A He passed away in 2004. Q When did your mom pass away? A 2000. June of 2002. MS. LAYNE: I believe that's it for me. John, do you have any questions? CROSS-EXAMINATION BY MR. BLAKELY: Q Mr. Bluso, just a couple, if I may. As far as the divorce decree, both you and Nora were ordered by the Court that both of you were jointly liable for any liability found against you in the Pamela Barnes litigation; is that correct? A We made the agreement. We never went in front of a Judge. Q And that agreement was made, I am presuming, based upon negotiations and recommendations from counsel as to what would happen if you did actually litigate that issue before a Judge? A Well, we tried to make this -- we tried to make -- we tried to resolve -- I tried to resolve it by taking her out of it. And then when that didn't work, because I didn't want any loose ends, they didn't want to do that. And so we wound up making that fact on the 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 59 courthouse steps the day of. I don't know if it was written, however it was, because if we didn't have an agreement on that date, I was going to have the Judge decide it. But -- and take my own fate in my own hands. But we were able to come up with something the day of in the courthouse before we went in front of the Judge to make this thing work. Q And do you believe, just in your opinion, if you have one, whether the Court would have ordered a split on any liability that was found with your sister's lawsuit? A I have no idea what the Judge would have done, but I was told let him make the decision if we could not make it happen, because both attorneys, my attorney and her attorney wanted to dismiss the divorce case and re-file, which meant it would be another year of going through the divorce. And we had a Judge can make that decision, so I was all for letting him make it, but never got that far. So our agreement is what it is. Q Did Nora have any say in the settlement that you reached with Pamela Barnes? A I tried to make her active. I tried to make her attorney active in it by sending in the beginning, sending all my attorney fees, sending any paperwork I had on the case to her, and her attorney said, don't send me anything. We will just settle it at the end. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 60 So obviously, he didn't really care or review it. And, you know, I said okay. But I'd like to get reimbursed as I'm paying money out, I'd like to be reimbursed now for my attorney fees. And he said not until it settles, we won't even think about it. And don't send me anything. You can send it all at the end. So, okay. And you can handle it as you see fit. I don't know if he said handle it as you see fit, you are in charge of this, you take care of it. And at the end let me know what the deal is and we'll discuss it. So no, they had nothing to do with it. They didn't want anything to do with it. Q And Nora never had any input with you directly as to how much it should be settled for, whether it should be settled or anything like that; is that correct? A No. They did not want to take an active part. Q Then moving onto later, after the litigation was settled, and then Nora was not paying, there is no doubt in your mind that you would have sued her in effect and forced her through a contempt proceeding, I believe, to pay you for half of that settlement; is that correct? A Yes. I don't know what the legal term of it is. But, you know, the divorce decree said that she owed me half of whatever the liability would be from the marriage end of it with the Barnes case. And, you know, they Case 2:16-cv-00741-SPC-MRM Document 47-3 Filed 06/30/17 Page 15 of 22 PageID 198 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 61 didn't want to pay that amount. And yes, I would have taken whatever steps necessary. Q Okay. MR. BLAKELY: Thank you very much. I do not have any questions. MS. LAYNE: I actually have one follow-up question based on what John just asked you. REDIRECT EXAMINATION BY MS. LAYNE: Q When you talked about you guys were going to the courthouse about to have the divorce put in front of a Judge, what were the final things that you -- or provisions of the divorce settlement that you weren't agreeing on? A I think it was a little bit of money extending the alimony payments for three months or something. And I truly believe that it was everything about that Article 5 of how we are going to try to, you know, put this together. And like I said, they -- both my attorney and her attorney wanted to, you know, keep it open until we could settle this, and it's like, I'm not to go through waiting on that either, you know, I gave an offer to buy you out. If you don't want to be bought out, then you are going to have to take responsibility for half of whatever we 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 62 decide. And that's how it was written up to, you know, split whatever it is, split it. Q But you didn't come to that agreement until the last hour? A I believe so. Whatever it was, it was a lot of stuff that days was thrown in, taken out, whatever, and it was all in a room, you know, the Judge was going to see us at whatever time. We got it done somewhere near that, so we never had to go in front of a Judge. But I told my attorney prepare to go in front of the Judge. And I think she was ready to go. She didn't want to go, but I was the client, so we settled out. MS. LAYNE: That's it for me. MR. BLAKELY: If I can, just one follow-up. I think just one follow-up question. RECROSS-EXAMINATION BY MS. LAYNE: Q As far as Nora not settling for the $150,000 that you or Elaine Tassi had offered, that was because of Nora's attorney that rejected that offer, I believe? A My letter here -- MS. LAYNE: October 2nd. THE WITNESS: October 2nd letter, in it they want -- one of the paragraphs said I offered to indemnify Nora from the Barnes litigation 2005, but 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 63 was refused. Nora stated to me she discussed it, but it was decided that Barnes had no case. So my calculation -- I calculated that the net cost to Nora was approximately $150,000 in marital assets to be taken out of it. And there was a lot of -- what I wanted to do, and the reason I offered it is because I wanted to get the divorce done, over with, complete and just settled. And that's why I made the offer, which as it turned out, glad she didn't take it. BY MR. BLAKELY: Q Did your attorneys in the Barnes litigation strongly encourage you to settle? A It went on forever. We wound up going in front of -- what is the guy in the middle? MS. LAYNE: Mediator? THE WITNESS: Mediator. MR. BLAKELY: Mediator. THE WITNESS: It was a two-day mediation to settle the Barnes case. BY MR. BLAKELY: Q How soon after mediation was the case settled? A I think it was -- it was done that day, but the last check I sent to my -- her attorneys was, I think, January of 2008. And she got a check from me in 2007. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 64 And then whatever the attorneys had to do close my father's estate up, you know, Lake Effect bought shares. Gotham paid her back shares -- or paid her for her shares. So whatever paperwork all that had to do, I don't know how long it took. But I was done paying her my excessive compensation in January, 2008. Q But the agreement to settle wasn't regardless of when the payment ended up being made, the agreement to settle was made during the mediation? A It was signed and done -- Q Was the mediator court appointed? A I believe so. He was, I think, a retired Judge. Both parties agreed upon him, because he was well respected. Q Was -- did the mediator take an active role? In other words, did he point out the strengths and weaknesses of both parties' positions, or did he -- was he more or less passive? A He was more or less what I can believe, now this goes back, you know, 11 years, that -- or 10 years, whatever, but he was more like, you know, kicking a football back and forth of, you know, like our offer would go to them, then they would come back and blah, blah, blah. It went on for two days. Q And do you recall, did he ever say anything in Case 2:16-cv-00741-SPC-MRM Document 47-3 Filed 06/30/17 Page 16 of 22 PageID 199 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 65 your presence that this -- why this should be settled or that there were substantial risks that you would have if this went to trial? A Basically he came to us and said that, you know, he is going to be the mediator. He's going to -- he has no favoritism to either party. His job was to help us help each other settle the case without going to court, because we didn't want -- I don't think anybody wanted to go to court and have a jury decide it. Q Do you remember the mediator's name? I know it's going back a long time. A No, I don't. MR. BLAKELY: Thank you. I do not have any questions. MS. LAYNE: I don't as well. This concludes the deposition. MR. BLAKELY: Thank you for letting me attend by phone. MS. LAYNE: You have the opportunity to read and review the deposition and to sign it when you are done to make sure that there are no typographical errors and the testimony was correct. Look at it, sign it and mail it back. (Deposition concluded at 11:00 a.m.) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 66 CERTIFICATE OF DEPONENT I have read the foregoing transcript of my deposition given on April 20, 2017, and it is true, correct and complete, to the best of my knowledge, recollection and belief, except for the list of corrections, if any, attached on a separate sheet enclosed herewith. Name: ________________________________________________ MICHAEL BLUSO Date: ________________________________________________ The foregoing instrument was acknowledged before me this ___ day of __________ 2017, by __________________ who is personally known to me or who has produced ___________________________ as identification. ____________________________ Notary Public in and for the State of Florida at Large 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 67 E R R A T A S H E E T CASE: Nora Mihelick vs. United States of America Deposition of Michael Bluso taken on April 20, 2017. DO NOT WRITE ON TRANSCRIPT--ENTER CHANGES HERE: Page No. Line No. Change Reason / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / Under penalties of perjury, I declare that I have read my deposition and that it is true and correct, subject to any changes in form or substance as reflected above. DATED: SIGNED: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 68 CERTIFICATE OF OATH STATE OF FLORIDA ) COUNTY OF LEE ) I, Maryanne Wagner, RPR, FPR, Court Reporter, Notary Public, State of Florida, certify that MICHAEL BLUSO personally appeared before me on the 20th day of April, 2017 and was duly sworn. Signed this 20th day of April, 2017. _______________________________ Maryanne Wagner, RPR, FPR Court Reporter Notary Public in and for the State of Florida at Large Case 2:16-cv-00741-SPC-MRM Document 47-3 Filed 06/30/17 Page 17 of 22 PageID 200 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 69 REPORTER'S DEPOSITION CERTIFICATE STATE OF FLORIDA ) COUNTY OF LEE ) I, Maryanne Wagner, RPR, FPR, Court Reporter and Notary Public in and for the State of Florida at Large, certify that I was authorized to and did stenographically report the deposition of MICHAEL BLUSO; that a review of the transcript was requested and that the transcript is a true and complete record of my stenographic notes. I further certify that I am not a relative, employee, attorney, or counsel of any of the parties; nor am I a relative or employee of any of the parties' attorney or counsel connected with the action; nor am I financially interested in the action. DATED this 20th day of April, 2017. Maryanne Wagner, RPR, FPR Court Reporter Notary Public in and for the State of Florida at Large 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 70 MERIT COURT REPORTING, INC. 6213 Presidential Court, Suite 100 Fort Myers, FL 33919 239.481.1300 239.481.1451 Fax TO: REBECCA E. LAYNE, ESQ. FROM: Maryanne Wagner, RPR, FPR DATE: April 20, 2017 RE: Nora L. Mihelick vs. United States of America Enclosed please find your copy of the deposition of Michael Bluso taken on April 20, 2017 in the above-captioned case. Per your request, the deponent is to read and sign the deposition through arrangements made by your office. We have enclosed an extra errata sheet and Certificate of Deponent for the deponent to execute by reading your copy of the transcript. We will not be retaining the original transcript in our possession. Please forward a copy of the signature and errata pages, if any, to Attorney Jonathan Blakely. If you have any questions, do not hesitate to contact us. MERIT COURT REPORTING, INC. cc: Jonathan P. 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32:11, 32:15, 32:18 blah [6] - 51:7, 64:23, 64:24 Blakely [2] - 70:17, 70:22 BLAKELY [24] - 2:4, 11:22, 14:9, 14:23, 27:18, 29:11, 29:13, 30:17, 33:24, 35:15, 40:13, 46:23, 47:1, 48:7, 54:3, 54:17, 58:9, 61:4, 62:14, 63:11, 63:18, 63:21, 65:13, 65:17 Blakely.................. [1] - 3:6 Blakely..................... [1] - 3:4 blind [1] - 41:5 BLUSO [5] - 1:10, 5:2, 66:12, 68:7, 69:9 Bluso [17] - 5:10, 5:12, 5:19, 7:14, 12:13, 14:9, 15:14, 17:7, 17:13, 25:4, 31:14, 40:3, 40:7, 54:24, 58:10, 67:2, 70:11 Bluso............... 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42:22, 42:25, 55:6, 61:23, 65:6 Elaine [9] - 11:13, 12:24, 44:13, 44:17, 44:22, 45:15, 47:25, 53:11, 62:19 employed [1] - 17:20 employee [5] - 26:6, 27:3, 28:13, 69:12, 69:14 employees [5] - 25:24, 26:5, 26:12, 57:7, 57:15 Enclosed [1] - 70:11 enclosed [2] - 66:8, 70:14 encourage [1] - 63:13 end [14] - 27:6, 31:23, 32:16, 32:23, 36:11, 38:15, 43:7, 43:11, 57:9, 57:14, 59:25, 60:6, 60:9, 60:25 ended [8] - 12:20, 13:2, 13:10, 13:17, 47:20, 49:23, 64:8 ending [1] - 38:17 ends [1] - 58:24 enjoy [1] - 25:12 ENTER [1] - 67:3 Entry [1] - 4:4 equal [2] - 16:17, 20:5 errata [2] - 70:14, 70:17 errors [1] - 65:21 ESQ [3] - 2:4, 2:8, 70:6 Esq [1] - 70:22 estate [2] - 15:11, 64:2 ex [2] - 10:20, 10:23 ex-wife [2] - 10:20, 10:23 exactly [2] - 9:17, 21:9 EXAMINATION [4] - 5:6, 58:8, 61:8, 62:16 Examination [3] - 3:3, 3:5, 3:6 examination [1] - 3:4 examined [1] - 5:4 except [1] - 66:6 excess [5] - 49:24, 51:25, 52:12, 53:4, 54:21 excessive [13] - 9:18, 14:14, 35:17, 35:24, 36:15, 36:19, 38:16, 44:6, 45:11, 45:12, 45:19, 47:9, 64:5 excessively [2] - 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33:17, 54:7 Merit Court Reporting, Inc. 5 mom [2] - 33:5, 58:4 money [17] - 32:2, 41:2, 41:3, 41:13, 41:15, 42:21, 42:23, 43:1, 43:15, 44:23, 46:5, 49:6, 49:17, 51:7, 51:25, 60:3, 61:15 months [2] - 47:5, 61:16 morning [1] - 7:15 most [2] - 21:21, 32:5 mother [15] - 18:24, 19:8, 19:11, 19:14, 20:3, 20:21, 20:24, 22:9, 24:4, 24:10, 24:17, 25:8, 26:22, 35:20, 41:1 mother's [1] - 24:20 moving [3] - 55:11, 56:3, 60:17 MR [23] - 11:22, 14:9, 14:23, 27:18, 29:11, 29:13, 30:17, 33:24, 35:15, 40:13, 46:23, 47:1, 48:7, 54:3, 54:17, 58:9, 61:4, 62:14, 63:11, 63:18, 63:21, 65:13, 65:17 MS [41] - 5:7, 6:11, 6:15, 11:23, 14:19, 15:4, 16:5, 27:16, 27:21, 29:1, 29:12, 29:16, 30:5, 30:18, 30:21, 31:6, 34:1, 35:23, 37:25, 39:9, 39:24, 40:14, 46:17, 46:25, 47:2, 47:6, 48:4, 48:8, 53:22, 54:8, 54:11, 54:18, 58:6, 61:6, 61:9, 62:13, 62:17, 62:22, 63:16, 65:15, 65:19 mumbo [1] - 47:9 must [1] - 10:23 MYERS [1] - 1:2 Myers [5] - 1:15, 1:21, 1:22, 5:20, 70:2 N nails [1] - 18:11 Name [1] - 66:11 name [13] - 9:25, 10:1, 10:6, 18:23, 22:5, 41:1, 44:20, 50:16, 51:22, 53:11, 65:10 named [1] - 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20:3, 21:4, 28:1, 34:11, 39:1, 39:2, 39:5, 39:6 O OATH [1] - 68:1 oath [1] - 5:4 obliging [1] - 31:19 obviously [2] - 49:5, 60:1 October [9] - 8:8, 8:9, 14:22, 41:24, 52:25, 53:6, 54:14, 62:22, 62:23 OF [10] - 1:1, 1:7, 1:10, 1:16, 66:1, 68:1, 68:3, 68:4, 69:3, 69:4 offer [6] - 13:21, 17:1, 61:23, 62:20, 63:9, 64:22 offered [4] - 15:9, 62:19, 62:24, 63:6 Office [1] - 1:21 office [1] - 70:13 officer [1] - 18:2 officers [1] - 43:4 official [1] - 23:24 Ohio [2] - 2:5, 23:17 older [1] - 21:24 ON [2] - 1:16, 67:3 one [36] - 10:1, 12:7, 12:23, 13:8, 14:21, 16:14, 19:7, 20:20, 30:22, 31:7, 32:14, 38:18, 38:19, 39:11, 39:25, 40:19, 40:23, 42:13, 46:24, 48:5, 51:6, 52:3, 52:8, 52:11, 52:24, 52:25, 53:1, 53:3, 53:9, 59:9, 61:6, 62:14, 62:15, 62:24 one-hundred [1] - 32:14 ones [2] - 8:18, 52:11 open [8] - 12:20, 13:2, 13:10, 13:17, 47:20, 54:23, 61:21 open-ended [6] - 12:20, 13:2, 13:10, 13:17, 47:20 opening [1] - 23:16 operating [1] - 18:2 opinion [1] - 59:8 opportunity [1] - 65:19 option [1] - 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[1] - 4:12 released [2] - 44:14, 44:17 remained [1] - 56:9 remaining [1] - 19:19 remember [19] - 7:3, 7:8, 10:13, 13:5, 14:11, 18:5, 19:25, 21:4, 25:21, 28:22, 33:3, 34:20, 44:4, 44:19, 47:3, 52:7, 53:11, 57:23, 65:10 repair [1] - 17:23 repayment [1] - 9:18 report [1] - 69:9 REPORTER [1] - 1:17 Reporter [5] - 1:17, 68:6, 68:16, 69:6, 69:22 REPORTER'S [1] - 69:1 reporting [1] - 33:14 Reporting [1] - 1:13 REPORTING [3] - 1:20, 70:1, 70:20 representing [1] - 49:19 represents [1] - 49:20 repurchased [1] - 57:2 request [1] - 70:12 requested [1] - 69:10 research [1] - 46:6 resolution [1] - 24:24 resolutions [1] - 33:1 resolve [3] - 47:12, 58:22 respected [1] - 64:14 response [3] - 15:16, 15:17, 48:17 responsibilities [1] - 25:22 responsibility [1] - 61:25 result [4] - 13:4, 15:20, 40:7, 55:21 retaining [1] - 70:16 retired [1] - 64:12 Return....................... ..... [6] - 4:5, 4:6, 4:7, 4:8, 4:9, 4:10 review [13] - 6:1, 8:3, 8:17, 9:5, 12:1, 27:23, 45:22, 45:25, 46:22, 53:23, 60:1, 65:20, 69:9 reviewed [4] - 8:24, 9:3, 15:2, 53:1 reviewing [2] - 48:23, 53:5 rightfully [1] - 44:16 risks [1] - 65:2 road [1] - 25:10 role [5] - 17:22, 23:6, 23:8, 23:18, 64:15 roles [2] - 17:25, 25:21 room [1] - 62:7 RPR [6] - 1:17, 68:6, 68:15, 69:6, 69:21, 70:7 rules [2] - 5:11, 6:21 running [1] - 25:23 S salary [16] - 31:22, 32:4, 32:5, 33:2, 33:10, 36:9, 36:19, 36:24, 51:23, 51:24, 55:12, 55:19, 56:4, 56:5, 56:9, 57:8 sales [6] - 18:2, 18:4, 23:12, 23:18, 24:6, 34:20 school [1] - 18:6 score [1] - 44:14 second [5] - 10:1, 12:8, 16:7, 26:8, 48:22 secretary/treasurer [2] - 24:11, 26:24 Security [1] - 10:2 see [15] - 7:5, 8:18, 8:23, 12:10, 13:10, 14:3, 38:11, 45:4, 47:24, 49:3, 53:23, 54:19, 60:7, 60:8, 62:7 sell [2] - 18:10, 22:8 selling [1] - 9:23 send [15] - 7:25, 8:15, 8:22, 14:24, 33:14, 49:10, 49:11, 49:13, 49:15, 49:17, 51:6, 59:24, 60:6 sending [3] - 59:22, 59:23 sense [2] - 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[2] - 4:13, 4:14 wages [4] - 40:2, 56:16, 56:17, 56:23 Wagner [6] - 1:17, 68:6, 68:15, 69:6, 69:21, 70:7 waiting [1] - 61:22 warehouse [2] - 17:23, 23:11 warehouse-type [1] - 23:11 Washington [1] - 2:10 wasting [1] - 36:22 water [1] - 7:12 Merit Court Reporting, Inc. 8 weaknesses [1] - 64:17 week [4] - 13:12, 13:13, 13:19, 13:20 weeks [1] - 32:19 west [1] - 23:17 whole [3] - 10:11, 25:23, 41:2 wife [3] - 10:20, 10:23, 16:9 witness [1] - 5:3 WITNESS [7] - 14:11, 14:24, 35:16, 47:3, 62:23, 63:17, 63:19 word [1] - 16:13 words [2] - 16:14, 64:16 workings [1] - 13:15 works [1] - 57:12 worth [1] - 42:20 wound [2] - 58:25, 63:14 WRITE [1] - 67:3 write [1] - 49:7 write-off [1] - 49:7 writing [1] - 14:15 written [6] - 16:22, 17:2, 45:21, 50:6, 59:2, 62:1 wrongfully [1] - 36:22 wrote [5] - 8:6, 44:24, 47:24, 48:11, 50:8 Y year [20] - 10:13, 11:9, 19:25, 26:25, 28:3, 28:6, 29:8, 31:3, 31:23, 32:16, 32:23, 34:4, 40:23, 43:7, 43:11, 47:4, 56:13, 57:9, 57:14, 59:15 years [14] - 13:24, 18:7, 20:21, 21:17, 26:2, 26:13, 34:18, 37:3, 37:7, 38:17, 47:4, 50:9, 64:20 yourself [1] - 52:15 Z zero [1] - 27:8 Case 2:16-cv-00741-SPC-MRM Document 47-3 Filed 06/30/17 Page 20 of 22 PageID 203 Case 2:16-cv-00741-SPC-MRM Document 47-3 Filed 06/30/17 Page 21 of 22 PageID 204 Case 2:16-cv-00741-SPC-MRM Document 47-3 Filed 06/30/17 Page 22 of 22 PageID 205 9 Case 2:16-cv-00741-SPC-MRM Document 47-4 Filed 06/30/17 Page 1 of 1 PageID 206 38 Case 2:16-cv-00741-SPC-MRM Document 47-5 Filed 06/30/17 Page 1 of 1 PageID 207 60 Case 2:16-cv-00741-SPC-MRM Document 47-6 Filed 06/30/17 Page 1 of 1 PageID 208 84 Case 2:16-cv-00741-SPC-MRM Document 47-7 Filed 06/30/17 Page 1 of 1 PageID 209 112 Case 2:16-cv-00741-SPC-MRM Document 47-8 Filed 06/30/17 Page 1 of 1 PageID 210 Case 2:16-cv-00741-SPC-MRM Document 47-9 Filed 06/30/17 Page 1 of 1 PageID 211 Case 2:16-cv-00741-SPC-MRM Document 47-10 Filed 06/30/17 Page 1 of 10 PageID 212 Case 2:16-cv-00741-SPC-MRM Document 47-10 Filed 06/30/17 Page 2 of 10 PageID 213 Case 2:16-cv-00741-SPC-MRM Document 47-10 Filed 06/30/17 Page 3 of 10 PageID 214 Case 2:16-cv-00741-SPC-MRM Document 47-10 Filed 06/30/17 Page 4 of 10 PageID 215 Case 2:16-cv-00741-SPC-MRM Document 47-10 Filed 06/30/17 Page 5 of 10 PageID 216 Case 2:16-cv-00741-SPC-MRM Document 47-10 Filed 06/30/17 Page 6 of 10 PageID 217 Case 2:16-cv-00741-SPC-MRM Document 47-10 Filed 06/30/17 Page 7 of 10 PageID 218 Case 2:16-cv-00741-SPC-MRM Document 47-10 Filed 06/30/17 Page 8 of 10 PageID 219 Case 2:16-cv-00741-SPC-MRM Document 47-10 Filed 06/30/17 Page 9 of 10 PageID 220 Case 2:16-cv-00741-SPC-MRM Document 47-10 Filed 06/30/17 Page 10 of 10 PageID 221 Merit Court Reporting, Inc. 1 IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF FLORIDA FORT MYERS DIVISION ______________________________ ) NORA L. MIHELICK, ) ) Plaintiff, ) ) v. ) Case No. 2:16-cv-00741 ) UNITED STATES OF AMERICA, ) ) Defendant. ) ______________________________) DEPOSITION OF NORA L. MIHELICK DATE TAKEN: May 18, 2017 TIME TAKEN: 9:40 a.m. - 11:30 a.m. PLACE TAKEN: Merit Court Reporting 6213 Presidential Court Suite 100 Fort Myers, Florida ON BEHALF OF: Counsel for Defendant REPORTER: Maryanne Wagner, RPR, FPR Court Reporter _________________________________________________________ MERIT COURT REPORTING, INC. 6213 Presidential Court, Suite 100, Fort Myers, FL 33919 (Main Office) 2022 Hendry Street, Suite 104, Fort Myers, FL 33901 (Downtown) 1415 Panther Lane, Naples, FL 34109 239.481.1300 FAX: 239.481.1451 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 2 A P P E A R A N C E S On behalf of the Plaintiff: JONATHAN P. BLAKELY, ESQ. 15210 Lake Avenue Middlefield, Ohio 44062 On behalf of the Defendant: REBECCA E. LAYNE, ESQ. Trial Attorney, Tax Division U.S. Department of Justice P.O. Box 14198 Washington, D.C. 20044 _ _ _ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 3 I N D E X PAGE Direct Examination by Ms. Layne....................... 6 Cross-Examination by Mr. Blakely...................... 55 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 4 E X H I B I T S EXHIBIT NO. DESCRIPTION PAGE 1 Judgment Entry and Decree of Divorce............. 9 2 August 24, 2005 Letter........................... 12 3 August 3, 2005 Letter............................ 13 4 1999 W-2 Earnings................................ 17 5 2000 W-2 Earnings................................ 18 6 2001 W-2 Earnings................................ 19 7 2002 W-2 Earnings................................ 19 8 2003 W-2 Earnings................................ 20 9 2004 W-2 Earnings................................ 21 10 March 7, 2008 Letter............................. 31 11 May 14, 2008 Letter.............................. 31 12 March 26, 2008 Letter............................ 32 13 April 1, 2008 Letter............................. 33 14 April 2, 2008 Letter............................. 34 15 April 2, 2006 Letter............................. 35 16 April 3, 2008 Letter............................. 35 17 April 25, 2008 Letter............................ 36 18 May 9, 2008 Letter............................... 37 19 August 20, 2008 Letter........................... 38 20 August 26, 2008 Letter........................... 39 21 August 28, 2008 Letter........................... 39 22 September 9, 2008 Letter......................... 40 Case 2:16-cv-00741-SPC-MRM Document 47-11 Filed 06/30/17 Page 1 of 17 PageID 222 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 5 E X H I B I T S EXHIBIT NO. DESCRIPTION PAGE 23 September 25, 2008 Letter...................... 41 24 October 6, 2008 Letter......................... 42 25 October 17, 2008 Letter........................ 42 26 October 24, 2008 Letter........................ 43 27 November 24, 2008 Letter....................... 44 28 January 20, 2009 Letter........................ 45 29 February 2, 2009 Letter........................ 46 30 Check for $323,700.00.......................... 47 31 Agreed Judgment Entry.......................... 50 32 Nora Mihelick 2009 Federal Tax Return.......... 51 33 Nora Mihelick Amended Tax Return............... 52 34 December 28, 2009 Letter....................... 53 35 December 29, 2009 Letter....................... 54 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 6 Thereupon, NORA L. MIHELICK, the witness, being first duly sworn for and in her own behalf, was examined and testified upon her oath as follows: DIRECT EXAMINATION BY MS. LAYNE: Q This is the deposition of Nora Mihelick in the case of Mihelick versus U.S.A. Case Number 2:16-CV-00741 in the U.S. District Court for the Middle District of Florida. This deposition is being taken in accordance with the Federal Rules of Civil Procedure. Do you understand your duty to testify fully, truthfully and completely here today? A I do. Q Please state your name and home address for the record? A My name is Nora Louie Mihelick. 16285 Coco Hammock Way, Unit 102 Fort Myers, 33908. Q I'm going to go through a few ground rules just so it will go more smoothly. If you answer a question, I will assume that is based on your personal knowledge. If you don't know or can't remember an answer to a question, just say so. If you don't understand a question, just say so, ask me, I'll try to clarify. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 7 You have to provide verbal responses, so sometimes we shake our head, so Maryanne can get it down. If you ever need to take a break, just let me know. My only request is that if we are in a line of related questions or in the middle of a question to let us finish that topic and then we'll take a break. A Okay. Q Have you taken any medication or any other substance that would affect your ability to answer questions truthfully here today? A No. Q Did you do anything to prepare for deposition today? A I did. I reread my paperwork. Q And do you have copies of what you read over or have those been provided to me? A Those have been provided to you. Q Okay. And did you speak with anyone to prepare? A Just Jonathan Blakely. Q Okay. And what did you guys talk about? A Just how to proceed, and the fact that it is gone on for eight years and what we can do to remedy the whole situation. Q Did you guys talk about anything else? A His trip here. Nothing related to the case. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 8 Q Okay. Okay. So now we are going to kind of get into more of the substance. So have you ever been married? A Yes. Q And who were you married to? A Mike Bluso, Jr. Q And have you ever married anyone else? A No. Q And you said you were married, so does that mean you've been divorced? A Yes. Happily for 12 years. Q When did you guys get divorced? A In September, I believe, of 2006. Q And when did you file for divorce or when was the divorce filed? A August of 2005. Q And were you represented by a lawyer during the divorce? A Yes. Q Who was your lawyer? A Dennis Ibold. Q And was Mr. Michael Bluso represented by a lawyer? A Yes. Q Who was his lawyer? Case 2:16-cv-00741-SPC-MRM Document 47-11 Filed 06/30/17 Page 2 of 17 PageID 223 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 9 A Elaine Tassi, T-A-S-S-I. Q And were you represented by any other professionals during the divorce proceeding? A No. Q Were your accountants involved during the divorce? A In the divorce, yes. Q And who was your accountant? A Shawn Neece, Neece, Malec & Seifert. Q And did Michael have any accountants involved? A Yes. Q Do you recall the name of them, his accountant? A Only first name, Amos something. Q So I'm going to show you a document now. This will be marked for identification as Exhibit 1. Here's one for you take a look at it. Take a look at it and tell when you've had a chance to review it, and tell me if you recognize the document. (Whereupon, Exhibit 1 was marked for identification.) THE WITNESS: This is my divorce decree. BY MS. LAYNE: Q Great. And have you seen this document before? A Yes. Q Okay. And is that a true and accurate copy of 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 10 your divorce decree? A Yes. Q You can go ahead and set that aside. Thank you. I'm sorry, can you look at that and tell me the date that it says it was entered? A 8-30-05. So I was off by a year when I -- I misspoke when I said 2006, which is nice, because I've been divorced 12 years. It's a great thing. Q And can you talk to me a little bit -- what was the divorce settlement process like? A Horror story. Very stressful. Q Were there any terms in particular that were problematic? A His lawsuit that was filed probably two months after I filed for divorce by his sister Pam. That's the biggest thing aside from him trying to steal land and cars and boats. Q And you just talked about the sister Pam lawsuit? A Yes. Pam Barnes. Q And when did you say that was filed? A I think two months after I filed for divorce. Q Okay. A At that point we were estranged. I didn't get any information. What little information I had was cut off totally. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 11 Q When did you find out about the -- A I found out about it through my lawyer, Dennis Ibold. Q Do you know how he found out? A I'm assuming that Elaine Tassi had to notify him. Q Okay. Would you mind flipping through in the document I just handed you to Article 5, I think it is the page of the separation agreement page six. A Well, that definitely was written in there. Q And how did that provision come to be in the settlement agreement? A That was placed there by Dennis Ibold. Q Did Dennis Ibold put that in there at your direction? A No. I fought it. Q Did he unilaterally decide -- he decided to put it in there without your permission? A I had to give him permission. I want you to know that I fought it. Q What did you want put there in? A That I'm not liable for anything that Pam Barnes comes up with. Q Did Michael ever suggest another way of handling the litigation? A No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 12 Q I want to hand you -- set that aside. Okay. This is a document I'm handing you marked for identification as Exhibit 2. (Whereupon, Exhibit 2 was marked for identification.) BY MR. LAYNE: Q Take a look at this letter, and my first question will be, have you ever seen this letter? A I remember this letter, but I do not remember the content in total. Q And aside from the little graphic at the top and then on the second page, is this a fair and accurate representation of the letter? A Yes. Those obviously weren't there (indicating). Q Those are my notes that I -- when I print it out. A Okay. Yes. Q Okay. And looking at the second to last paragraph on the second page, does this refresh your recollection about any offers Michael may have made to you? A Made to me? Q I'm looking specifically at it -- looks like the second paragraph or the second sentence? A Yes. Q Third sentence? Case 2:16-cv-00741-SPC-MRM Document 47-11 Filed 06/30/17 Page 3 of 17 PageID 224 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 13 A Uh-huh. Q Do you recall what that offer was? A No. Q Do you know why you didn't accept it? A I was advised not to by my lawyer. Q Do you remember any other offers made by Michael? A No. Q Did you guys discuss handling the Barnes litigation in any other manner other than how it ended up in Article 5 or the offer referred to in this letter? A No. I was given no choice. Q When did you guys agree on that term, Article 5 term? A I don't remember. Q Was it the last term agreed to in your divorce proceedings? A I don't remember. Q One more document. This one will be marked as Exhibit 3. (Whereupon, Exhibit 3 was marked for identification.) BY MS. LAYNE: Q My question is, do you recognize this document? A Okay. Yes. Q Did you receive this letter? 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 14 A I don't remember. Q And aside from my graphic from my notes, does it look like a fair and accurate representation of the letter? A Yes. Q You can go ahead and set that aside. I want to shift gears a little bit now. Where did you go to high school? A Kenston High School in Bainbridge, Ohio. Shegrin Falls Post Office. Q And what did you do after high school? A I went to one year of college. Q Where was that? A Kent State. Q What did you do after your one year at Kent State? A I managed an exercise salon. Q And after that? A I got married when I was 20, turned 21 on my honeymoon. Mike and I were in the fast track to have children, and we did right away. Q After the exercise salon, what was your next job? A That's it. Party planner and event planner Gotham Staple. Q When did you start working at Gotham Staple? 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 15 A I don't remember. Q Did you work there during 1999? A Yes. Q Did you work there 1999 to 2004? A Yes. Q During those years, what was your role? A Mainly Christmas party organization and planning, and taking care of Mike's parents that were failing, his father having been the prior president of Gotham. Q What was the Christmas party like? A It was rather big. Q How many people attended? A Oh, at least 100 maybe 120, 150. Q Was it mostly Gotham employees? A It was customers and employees, and their employees' families. Q What was your budget for the Christmas party? A I never had one. Q How did you pay for stuff? A With Costco credit card and my checkbook. Q So it was personal -- A Somewhat. Q -- funds? A Yes. Q Was your -- who paid your Costco credit card? 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 16 A Gotham Staple. Q Did the majority of the expenses go on the Costco credit card for the Christmas party? A 50 percent. Q What did you do to help care for Mike's parents? A Oh, I moved in as a caregiver with his father when nobody else would come to Florida to take care of him after his mother passed. I built a handicapped ramp going into the house for his mother when she needed a cart to get in. She suffered from shingles the last six months of her life and it affected her legs, and stopped her ability to be able to stand. So she was definitely an invalid. Q And while you were working at Gotham, who was your supervisor? A I know what I want to say, my supervisor was Mike Bluso, but it really was me. Q Were you ever promoted while you were at Gotham? A No. Q So any other roles aside from the Christmas events, planning and Mike's parents? A I maintained their homes also. Q What did that entail? A Landscaping arrangements, maintenance on appliances, cleaning. They had a home in Madison, Ohio. A home in Bainbridge, Ohio. And Mike and I shared a home Case 2:16-cv-00741-SPC-MRM Document 47-11 Filed 06/30/17 Page 4 of 17 PageID 225 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 17 with them in Florida on Fort Myers Beach. Q And when you say they, you are referring to -- A Frances and Mike Bluso, Sr. Q Anything else for Gotham Staple? A Occasionally I did mailings and stuff. But nothing to write home about. Picked up the slack if I needed to. Q All right. So I'm going to show you a bunch of documents now, all right? So this document is marked for identification as Exhibit 4. (Whereupon, Exhibit 4 was marked for identification.) BY MS. LAYNE: Q And can you just tell me if you recognize this document? A Yes. Q Okay. What is it? A It's W-2 earnings for both Mike and myself for 1999. Q Great. And is this a fair and accurate copy? A As far as I remember. Q And can you please take a look at box one and tell me what the wages are for Michael? A Is that -- looks like a typo -- $765,400 -- is that a six? 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 18 Q It looks like a six to me. A Uh-huh. Q Okay. And can you tell me on the next page what your wages were? A $41,800. Q Okay. You can set that side. This will be marked as Exhibit 5, please take a look at it and tell me if you recognize it? (Whereupon, Exhibit 5 was marked for identification.) THE WITNESS: Yes. BY MS. LAYNE: Q Okay. What is this document? A 2000 -- year 2000 W-2 earnings statements for Mike and myself. Q And is this a fair and accurate copy? A As far as I remember. Q All right. And can you please, like we did the last document, tell me how much Mike made? A Mike made $855,400. And I made $70,080. Q Do you know why there was a discrepancy from 1999 to 2000? A I do not. Q Okay. You can set that aside. I'm handing you what is marked for identification 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 19 as Exhibit 6, please took at that and tell me if you recognize it? (Whereupon, Exhibit 6 was marked for identification.) THE WITNESS: Yes. BY MS. LAYNE: Q Great. And what is it? A It is a W-2 for the year 2001 for Mike Bluso and myself. Q Great. And can you tell me how much is -- I believe yours is the first one. A Mine is the first one? Q Can you tell me how much you made? A $70,080. Q And can you tell me on the next page how much it says Mike made? A $1,065,400. Q You can put that aside. I'm going to hand you what has been marked for identification as Exhibit 7, please take a look and tell me if you recognize this document? (Whereupon, Exhibit 7 was marked for identification.) THE WITNESS: Yes. BY MS. LAYNE: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 20 Q And what is it? A W-2 earnings for the year 2002 for Mike Bluso and myself. Q Great. And on the first page there can you tell me what it says your wages were? A I made $70,080. Q And what did Mike make? A Mike made $1,145,400. Q Great. You can set that aside. I'm handing you a document that's being marked for identification as Exhibit 8, can you tell me if you recognize this document? (Whereupon, Exhibit 8 was marked for identification.) THE WITNESS: Yes. BY MS. LAYNE: Q And what is it? A They are W-2 earnings for the year 2003 for myself and Mike Bluso. Q Great. And can you tell me on the first page how much it says you made? A Oh, I got a raise, $71,040. Q Can you tell me how much it says Mike made? A $1,065,400. Q I'm handing you what's been marked as Case 2:16-cv-00741-SPC-MRM Document 47-11 Filed 06/30/17 Page 5 of 17 PageID 226 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 21 identification as Exhibit 9, can you tell me if you recognize this document? (Whereupon, Exhibit 9 was marked for identification.) THE WITNESS: Yes. BY MS. LAYNE: Q What is it? A W-2 earnings for the year 2004 for Mike Bluso and myself. Q Great. And can you tell me how much it says you made? A $73,200. Q And how much does it say Mike made? A One million one -- $1,100.600. Q And is this a fair and accurate copy of your W-2? A I believe so. I have to tell you I've never seen my W-2 before. Q You can set that aside. So when you worked at Gotham from 1999 to 2004, how were you paid? A Money into our mutual account. Q Were you salaried? A I don't know. Q Did you get a bi-weekly paycheck? A No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 22 Q Would it come in at a lump sum at the end of the year? A I don't know. Q Okay. And were you on the board of directors at Gotham? A No. Q Were you involved in any of the leadership or management of Gotham? A No. Q Did you ever sit in on a board meeting? A No. Q Were you ever consulted about salaries for other employees? A No. Q Did you ever discuss your own salary? A No. Q Were you aware of how much you were making each year? A No. Q Were you aware how much Mike was making each year? A In the ball park. Q How did you know that? A He told me. And of course, I signed my tax return when it was completed by somebody else, and he told 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 23 me to sign it. Q Were you aware of the discrepancy between what Mike was making and what other employees were making? A No. Q As you sit here now, are you aware of how Mike's pay was determined when he was at Gotham? A No. Q And I'm sorry, and as you sit here now, are you aware that Pamela Bluso was a stockholder in Gotham? A Yes. Q And when did you find out? A I knew that she had stock all along. Q All along meaning? A From the time she was a child. Q Who told you she had stock? A My mother-in-law Frances Bluso. Q When did Frances tell you? A I don't recall. Q Was it prior to 1999? A Yes. Q And as you sit here now, are you aware that Pamela Barnes was not receiving any money for her stock from 1999 to 2004? A No. I'm not aware. Q What did you understand that Pamela Barnes 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 24 lawsuit to be about or what do you understand? A It has a whole lot to do with -- she moved to Florida and got married. Had nothing to do with the company. And got involved with a church, and the church started saying to her, wow, your northern relatives are living quite wealthy and you are not, and we would like to share in that wealth with you. So they backed her for the lawsuit. That's what I'm aware of. Q Would you like to take a break? A No, thank you. Q What was the church? A I believe it's First Baptist of Milton, Florida. Q Do you know generally the claims that she brought against Michael? A No. Q Were you a party to that lawsuit? A I was not. Q Were you deposed in that Barnes litigation? A No. Q Were you ever contacted by lawyers from either side in that litigation? A No. Q As the litigation was going on, were you in discussions with Michael about it? A No. Case 2:16-cv-00741-SPC-MRM Document 47-11 Filed 06/30/17 Page 6 of 17 PageID 227 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 25 Q Did Michael ever try to keep you involved in the lawsuit? A No. Other than threatening me in the divorce terms. Q Did Michael contact you about the divorce terms while the Barnes litigation was going on? A No. Q When did Michael first contact you about the Article 5 of the divorce settlement agreement? A Probably -- I don't know, it went on longer than our divorce. Our divorce took a year. I think Barnes litigation took quite a bit longer than that. And by that point he -- every time that he would call me he would be very agitated, and I no longer would receive his calls. I told him contact my lawyer only. Q And to clarify the timeframes that we're talking about, so the Barnes litigation, is that what you are talking about that he would call you while that was going on or -- is that what you are talking about? A No. During the separation he came up with quite a few things, and I referred to him to my lawyer and said I won't speak to you about it again. So the next time I saw him was in divorce court, and the time following that I think I didn't have any contact with him, and he took my alimony away, and didn't pay my alimony. So at that 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 26 point, we realized there might be a settlement, and he flipped right into that, I'm going to -- because you are not giving me $400,000 right now, I'm going to start taking your alimony away from you. So I turned him into Ohio Child Services and had his own wages garnished from his company for my alimony. Q When did he stop making alimony payments? A I do not remember. It lasted for a month, because it would be ridiculous to charge yourself $150 to have to pay your alimony, whatever the rate was. Q So this was after the Barnes litigation had settled? A Yes. But he had just been in contact with my lawyer, not me. Q Okay. So just to be clear, during the divorce settlement negotiations, Michael talked to your lawyer only, not to you? A Yes. Q During the -- after the divorce settlement, but during the Barnes litigation, did Michael talk to you or your lawyer? A My lawyer. Q Do you know what those conversations were about? A No. Q Was your lawyer -- who's your lawyer? 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 27 A Dennis Ibold. Q Was Dennis Ibold authorized to talk to Mike on your behalf about that? A Yes. Mike was trying to act as his own attorney at that point. He had tried to shake Elaine Tassi loose and thought he knew what he was doing. Q And then after the Barnes litigation settled, when you did first hear from Mike? A I heard from Dennis Ibold. Q When did you first hear from Dennis? A I don't remember. Q Was it soon after? A I'm sure. Q Was it longer than a year after it settled? A No, shorter. Q What did Dennis say about his conversation with Mike? A He said that Mike was being unreasonable. That he was acting as his own lawyer. That he wouldn't provide us with an exact accounting of what his attorneys fees were. And that he just thought he should be paid immediately, which is why he took away my alimony payment. Q Why didn't you just pay Mike exactly what he asked for? A He didn't deserve it. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 28 Q Why do you believe he didn't deserve it? A Because I didn't do anything to his sister. I wasn't a part of the suit. And, you know, I'm not the one that had to hire a criminal attorney. I was not a party to any of that. I was not given any decisions to any of the maneuvers or anything to do with the Barnes litigation. Q Did you ever consider intervening in the Barnes litigation? A No. Q Why not? A I was free. Freedom means a lot more than that. Q Did Michael ever try to involve you in the Barnes litigation? A No. Q All right. So the timeframe we are talking about now is after the Barnes litigation settled to when Mike started asking for repayment pursuant to the settlement agreement from your divorce. Who was your lawyer during that timeframe? A Dennis Ibold. Q Did you have any other professionals representing you? A I did, Shawn Neece, my accountant. Q Anyone else? Case 2:16-cv-00741-SPC-MRM Document 47-11 Filed 06/30/17 Page 7 of 17 PageID 228 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 29 A Yes. Followed up with some of Shawn's staff. Gosh, I would have to see her name. Christina Kolowski (phonetic spelling) or something was my main person. I was passed around a little bit. Q And anyone else? A Tim Bender who was an -- I don't know what he was -- was he a lawyer -- he held onto everything for quite a bit of time, and then said he didn't want to deal with it. Q Held onto everything, what does that mean? A He waited until the end of the statute of limitations, which was two years, didn't move ahead on it. Even though I was talking to Shawn and it just -- everything stalled. MR. BLAKELY: For the record, and this is Jon Blakely speaking, Tim Bender is a tax attorney in Cleveland. He was supposed to file what we ended up filing, and apparently held onto things for almost two years. MS. LAYNE: I see. BY MS. LAYNE: Q So he was the attorney that you hired to represent you against the IRS? A He is the attorney that Shawn Neece turned my paperwork over to with the assurance that proper filings 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 30 would be handled. Q Do you know when Shawn Neece got Tim involved? A I do not. Q Was it prior to filing your 2009 tax return? A No. I would have to go back through those papers, no. Jonathan's been with me for two years. It's 2017 -- 2015 -- I think he was around more like 2013. Q Okay. So he got involved after you had had some back and forth with the IRS? A Yes. Through Christina Kolowski, and Shawn Neece. Q And sorry, where is Shawn Neece located? A Chardon, Ohio. Q Do you still live in Ohio? A No. Q Do you spend any time there? A I am going for a week vacation. Q You don't split your time? A No. I have no family there. I stay in a hotel. Q Okay. So I think now we are going to go through a bunch of documents. A Okay. Q Are you doing okay? A Yes. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 31 MR. BLAKELY: If you need a break at anytime, just say something. THE WITNESS: Okay. I shall. BY MS. LAYNE: Q So I'm handing you what has been marked for identification as Exhibit 10, and just take a look and tell me if you recognize this document? (Whereupon, Exhibit 10 was marked for identification.) THE WITNESS: Yes. I recognize this document. BY MS. LAYNE: Q Great. And can you tell me what it is? A It's a good question. It's a letter from Dennis Ibold concerning the Barnes litigation. Q Can you tell me the date of the letter? A It's dated March 7th, 2008. Q And is this a fair and accurate copy of the letter? A I believe so. Q You can set it aside. I'll hand you another document that's been marked for identification as Exhibit 11, can you tell me if you recognize this document? (Whereupon, Exhibit 11 was marked for identification.) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 32 THE WITNESS: Yes. BY MS. LAYNE: Q And what is it? A It's a letter to me from Dennis Ibold concerning what Mike was doing with the Barnes litigation. Q And is this a fair and accurate copy of the letter? A Yes. Q And what was the date of the letter again? A May 14, 2008. Q Great. You can set that aside. I'll hand you another document marked for identification as Exhibit 12, can you tell me if you recognize this document? (Whereupon, Exhibit 12 was marked for identification.) THE WITNESS: Yes, I do. BY MS. LAYNE: Q Okay. And what is it? A It is a letter from Dennis Ibold to Mike Bluso as follow-up of the voice message with questions about why he felt that payment in full was due to him without any accounting. Q And what was the date of letter? A That was March 26, 2008. Case 2:16-cv-00741-SPC-MRM Document 47-11 Filed 06/30/17 Page 8 of 17 PageID 229 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 33 Q You can set that aside. I'm handing you a document marked for identification as Exhibit 13. (Whereupon, Exhibit 13 was marked for identification.) BY MS. LAYNE: Q Can you tell me if you recognize this letter? A Yes. Q And what is it? A This is a letter from Mike Bluso to Dennis Ibold with a little bit of accounting, creative accounting. Q And why do you recognize this document? A Because it angered me very much. I had to have it recopied, because I made notes all over it initially. Q So did you -- when did you receive -- when did you first see the document? A Well, I would say mid to early April. This document is dated April 1st, 2008. Q It's addressed to Dennis Ibold? A Yes. Q How would you get letters that were addressed to Ibold on your behalf? A I think that he copied it to me. Q Was that his regular practice to send you all correspondence? 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 34 A No. Q How would he handle getting you copies of documents? A Sometimes I would just go in and we would discuss. Q When he would send out letters, would he always send you a copy of what he had sent out? A No, not necessarily, I don't believe. Q You can set that aside. I'm handing you another document that's been marked for identification as Exhibit 14, can you please take a look at that and tell me if you recognize this? (Whereupon, Exhibit 14 was marked for identification.) THE WITNESS: I recognize this. BY MS. LAYNE: Q And what is it? A It is a letter from Dennis Ibold to Mike Bluso concerning the valuation of his company where he has pulled accounting from July of 2005, that obviously Mike had done his worksheet. Q What is the date of the letter? A This letter is dated April 2nd, 2008. Q And is this a fair and accurate copy of the letter? 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 35 A I believe so. Q Okay. You can set it aside. I'll hand you what has been marked for identification as Exhibit 15, can you please take a look and tell me if you recognize this letter? (Whereupon, Exhibit 15 was marked for identification.) THE WITNESS: Yes. BY MS. LAYNE: Q What is the letter? A This is a letter from Brouse McDowell, which was a company that my ex-husband's cousin, Linda Bluso, worked for at the time, to Dennis Ibold. About the fees billed by Brouse McDowell. Our concern was that the fees were escalated to shine a better light on Mike by virtue of the fact his cousin was involved. Q Okay. And is that a fair and accurate copy of the letter? A Yes. Q You can set it aside. Okay. I'm handing you another document marked for identification as Exhibit 16, please take a look and tell me if you recognize that? (Whereupon, Exhibit 16 was marked for identification.) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 36 THE WITNESS: Yes. BY MS. LAYNE: Q What is it? A It is a letter from Dennis Ibold to the attorney at Brouse McDowell correcting him, first of all, on the date. His original letter, last exhibit, was dated on, and for stating that I didn't have any -- I didn't have any responsibility to Lake Effect Corp. Q Is this a fair and accurate copy of the document? A Yes. Q And when you retained Dennis Ibold, he was sending letters of this sort authorized on your behalf? A Yes. Q I'm handing you another document marked for identification as Exhibit 17, please take a look at that and tell me if you recognize this document? (Whereupon, Exhibit 17 was marked for identification.) THE COURT: Yes. BY MS. LAYNE: Q What is it? A It is a letter from Dennis Ibold to Mike Bluso. Q What was the date of the letter? A April 25, 2008. Q And is this a fair and accurate copy of the Case 2:16-cv-00741-SPC-MRM Document 47-11 Filed 06/30/17 Page 9 of 17 PageID 230 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 37 letter? A Yes. Q And was Dennis authorized to send letters on your behalf of this sort? A Yes. Q Was he authorized to send this letter? A Yes. Q Okay. Great. MR. BLAKELY: Just for the record, I want to make an objection to any questions that have been asked or will be asked regarding settlement discussions, and also from Exhibits 10 through 17 going forward, but please proceed to answer. I just want to state that for the record. BY MS. LAYNE: Q I'll show you a document that is being marked for identification as Exhibit 18, please take a look and tell me if you recognize this document? (Whereupon, Exhibit 18 was marked for identification.) THE WITNESS: Yes. BY MS. LAYNE: Q What is it? A It is a letter from Mike Bluso to Dennis Ibold speaking of valuations in his company. Once again, he's 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 38 acting as his own attorney. Q What is the date of the letter? A May 9th, 2008. Q Is this a fair and accurate copy of the letter? A Yes. Q You can set that aside. I'll hand you another document that's been marked for identification as Exhibit 19, please take a look and tell me if you recognize this document? (Whereupon, Exhibit 19 was marked for identification.) THE WITNESS: Yes. BY MS. LAYNE: Q Okay. And what is it? A Well, it is a fax number, appears from Dennis Ibold to Shawn Neece, discussing my financial settlement, and a little bit of the Barnes lawsuit. Q What is the date of the letter? A 8-20-08. Q And is this a true and accurate copy of the letter? A Yes. Q And was Dennis Ibold authorized to send this on your behalf? A Yes. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 39 Q Now I'm handing you a document that's marked for identification as Exhibit 20, would you take a look and tell me if you recognize this document? (Whereupon, Exhibit 20 was marked for identification.) THE WITNESS: Yes. BY MS. LAYNE: Q And what is it? A It is a letter from Shawn Neece to Dennis Ibold speaking of my tax liability. I guess, my tax liability versus my payment to Mike, or my payment to Mike with what liabilities. Q What date? A August 26, 2008. Q Is this a fair and accurate copy of the document? A Yes. Q And was Shawn authorized to send this on your behalf? A Yes. Q This is Exhibit 21 for identification, please tell me if you recognize this? (Whereupon, Exhibit 21 was marked for identification.) THE WITNESS: Yes. BY MS. LAYNE: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 40 Q And what is it? A This is a letter from Dennis Ibold to Mike Bluso speaking of the Barnes litigation and my part of the legal fees. Q And what is the date of the letter? A It is August 28, 2008. Q Is that a fair and accurate of the copy letter? A Yes. Q Was Dennis authorized to send this on your behalf? A Yes. Q I'm handing you what has been marked for identification as Exhibit 22, would you take a look and tell me if you recognize this letter? (Whereupon, Exhibit 22 was marked for identification.) THE WITNESS: Yes. BY MS. LAYNE: Q And what is it? A This is a letter from Dennis Ibold to me discussing some of the same legal things that Mike was trying to accomplish. Q What is the date of the letter? A September 9, 2008. Q And when you got this letter, did you have any Case 2:16-cv-00741-SPC-MRM Document 47-11 Filed 06/30/17 Page 10 of 17 PageID 231 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 41 reason to believe that it misrepresented what happened at the meeting with Michael? A No. Q And did I ask if it's a fair and accurate copy? A Yes. Q Is it a fair and accurate copy? A Yes. Q Okay. You can set it aside. I'm handing you what has been marked for identification as Exhibit 23, can you tell me if you recognize this document? A Yes. Q Okay. What is it? A This is a letter from Mike to Dennis Ibold talking about the excess claims and having to do with something with the spousal support, because that's about when he was doing that kind of game, which was -- I mean, we were only -- okay. He talks about Dennis' crack-down on him using my spousal support to offset his financial problems with the Barnes lawsuit. Q What is the date of the letter? A September 25th, 2008. Q Is this a fair and accurate copy of the letter? A It is. Q Okay. I'm going to hand you now Exhibit 24 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 42 marked for identification, would you please tell me if you recognize this document? (Whereupon, Exhibit 24 was marked for identification.) THE WITNESS: Okay. Yes. I recognize this. BY MR. LAYNE: Q Can you tell me what it is? A Yes. This is a group of letters back and forth between Mike Bluso and Dennis Ibold concerning my ability to 1099 him on the payment that I gave him. And I guess we had some incorrect or typographical errors, and we did the back and forth. Q Okay. What is the date of the letter? A There are a couple dates on this letter. We have October 6th, 2008. We have September 29, 2008. We have October 2nd, 2008. September 30, 2008. Q Okay. That's it. You can set that aside. I'm handing you another document that's been marked for identification as Exhibit 25, can you tell me if you recognize this document? (Whereupon, Exhibit 25 was marked for identification.) THE WITNESS: Yes. BY MS. LAYNE: Q What is it? 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 43 A This is a letter from Petersen & Ibold giving Mike Bluso our final payment option to cover the Barnes lawsuit. Q What is the date of the letter? A The letter is dated October 17, 2008. Q Was Dennis Ibold authorized to send this letter on your behalf? A Yes. Q Fair and accurate copy? A Yes. Q Do you know if he actually sent this letter, do you recall? A If he actually sent the letter? I'm under the belief that, yes, he did just because he was my lawyer and I was paying him to do so. If he didn't, I don't know. But Mike received this letter. Q Will you look at the bottom of the letter where it says Dennis Ibold, do you see his signature on the letter? A No, I don't. Q I'm handing you another document that's been marked for identification as Exhibit 26, would you take a look and tell me if you recognize the document? (Whereupon, Exhibit 26 was marked for identification.) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 44 THE WITNESS: Yes. BY MS. LAYNE: Q Can you tell me what it is? A It is a letter from me from Petersen & Ibold -- for me from Petersen & Ibold, with a forward of Mike's letter, which he titled final demand. Mike's letter to Dennis Ibold with a final demand. Q What is the date of the letter? A The letter from Dennis Ibold to me is October 24, 2008. The letter from Mike Bluso to Dennis Ibold was October 20, 2008. Q Is this a fair and accurate copy of the letters? A Yes. Q And was Mr. Ibold authorized to send this letter on your behalf? A Yes. Q Showing you another document that's been marked for identification as Exhibit 27, can you please tell me if you recognize this document? (Whereupon, Exhibit 27 was marked for identification.) THE WITNESS: Yes. BY MS. LAYNE: Q Can you tell me what it is? A It is a letter from Dennis Ibold to David Lowe of Case 2:16-cv-00741-SPC-MRM Document 47-11 Filed 06/30/17 Page 11 of 17 PageID 232 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 45 Thrasher, Dinsmore & Dolan discussing my final payment -- my final payment offer to Mike to take care of my half of the lawsuit. Q And what is the date of the letter? A November 24, 2008. Q And was Dennis authorized to send this on your behalf? A Yes. Q And is this a fair and accurate copy of the letter? A Yes. Q Who is Thrasher, Dinsmore & Dolan? A I have not a clue. Q Do you know who David Lowe is? A No. Maybe Mike got some representation finally. Q Handing you another document marked for identification as Exhibit 28, would you tell me if you recognize this document? (Whereupon, Exhibit 28 was marked for identification.) THE WITNESS: Yes. BY MR. LAYNE: Q What is it? A It is a letter from David Lowe -- it is a letter from Petersen & Ibold to David Lowe, and it was concerning 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 46 settlement, but it was not acceptable. Q What is the date of the letter? A January 20, 2009. Q And is this a fair and accurate copy of the letter? A Yes. Q And was Dennis authorized to send this on your behalf? A Yes. Q Do you have any reason to believe he actually didn't send the letter? A I have no reason to believe that. Q Thank you. You can set this aside. I'm handing you another document, it's been marked for identification as Exhibit 29, can you tell me if you recognize this document? (Whereupon, Exhibit 29 was marked for identification.) THE WITNESS: Yes. BY MS. LAYNE: Q And can you tell me what it is? A It is a letter from Petersen & Ibold to me speaking of Mike acceptance of our settlement in full concerning the Barnes lawsuit. Q And what is the date of the letter? 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 47 A It is February 2nd, 2009. Q Okay. And is this a fair and accurate copy of the letter? A Yes. MR. BLAKELY: Just for the record, continuing objections for Exhibits 10 through 29 and questions related to them. BY MS. LAYNE: Q Now I'm going to show you what has been marked for identification as Exhibit 30, can you tell me if you recognize this document? (Whereupon, Exhibit 30 was marked for identification.) THE WITNESS: Yes. BY MS. LAYNE: Q And what is it? A It is a copy from my investment company a check for $323,700 to Mike Bluso. Q What is the date? A The date on that is 2-25-09. Q And is this a fair and accurate copy of the check? A Yes. Q And what was that check written for? A For my part of the Barnes litigation against Mike 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 48 Bluso. Q And was all of the payment for one purpose? A No. Q What were the -- what were the payments for? A Partial payment to Pam Barnes. And some coverage of his legal fees. Q Did you pay Pam Barnes anything directly? A No. Q Why not? A She didn't deserve anything, nor did she ask. Q What was the breakdown of what went to Pam Barnes and -- A I do not know. Q How much went for the legal fees? A I do not know. Q Can you look at the letter dated -- so your -- the $323,000 payment, it was to Michael Bluso? A Correct. Q And the payment was pursuant to Article 5 of your settlement agreement, or was it pursuant to Article 5 of your divorce agreement? A I was told by Dennis Ibold that it was my obligation. Q Do you know how much of it was for the excess compensation claims in the Barnes litigation? Case 2:16-cv-00741-SPC-MRM Document 47-11 Filed 06/30/17 Page 12 of 17 PageID 233 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 49 A I do not. Q As you sit here now, are you aware that you believed you would -- did you believe that you would get a tax deduction for the payment to Michael? A Yes. Q Why did you believe that? A I was told by my attorney and Shawn Neece that if it fell within the grounds of right of claim. Q And did that influence your decision to pay Michael? A Yes. Q If you had not -- if you didn't believe you were going to get the tax deduction, would you have paid Michael less? A Yes. Q And why? A Because my lawyer and Shawn Neece advised me. I didn't want to pay any of it. I was not a part of any of it, other than unfortunately still married to Mike. Q And the check I just showed you with the $323,000 payment on it, was that the full settlement amount for that litigation? A Yes. Q And so you just paid in a lump sum? A Yes. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 50 Q Did you ever consider paying a different way? A No. Q Did you ever consider paying -- taking -- foregoing alimony in lieu of making the lump sum payment? A No. Q Why not? A I don't think it was fair or ethical to do that. Q Okay. Did you ever pay anything to Gotham Staple Co.? A No. Q And you never -- did you ever pay anything to Pam Barnes? A No. Q So I just have a little bit more, maybe 30 minutes, and then I'm sure you have questions. It would be a good time to take a break. A I would like to take a break. (Whereupon, a short break was taken.) BY MS. LAYNE: Q Back on the record. Okay. More documents. This is marked for identification as Exhibit 31, can you tell me if you recognize this document? (Whereupon, Exhibit 31 was marked for identification.) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 51 THE WITNESS: Yes. BY MS. LAYNE: Q And what is it? A This is a document dated March 9th, 2009, and it has to do with Mike paying me spousal support. Q And is this a fair and accurate copy of the document? A It is. Q Okay. You can set that aside. Okay. I'll hand you another document that's been marked for identification as Exhibit 32, would you please tell me if you recognize it? (Whereupon, Exhibit 32 was marked for identification.) THE WITNESS: This is my 2009 tax return. BY MS. LAYNE: Q Excellent. And do you recognize it? A Yes. Q And is it a fair and accurate copy of your 2009 tax return? A I believe so. Q And can you please look at the second page, not including the cover page, so third page in, can you tell me whose name is at the bottom? A Shawn Neece. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 52 Q And did Shawn Neece prepare this tax return on your behalf? A I believe so. Q You can set it aside. I'll show you what has been marked for identification as Exhibit 33, can you tell me if you recognize this document? (Whereupon, Exhibit 33 was marked for identification.) THE WITNESS: It is my name, my writing. Yes, I recognize it. BY MR. LAYNE: Q Can you tell me what it is? A It has two cover pages of amended income tax return dated August 7th, 2012, as an amended concerning my 2009 tax return. Q Okay. Is this a fair and accurate copy of the document? A Yes. Q And do you know why you filed an amended return? A No. Q Do you remember filing an amended return? A No. Q You can set it aside. Do you recall if your original 2009 return was Case 2:16-cv-00741-SPC-MRM Document 47-11 Filed 06/30/17 Page 13 of 17 PageID 234 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 53 filed timely, on time? A They were never on time. Q Okay. A So potentially, no. I can't say for 100 percent, but the fact that I resided in two states and was very often in Florida for tax season, not in Ohio, where they physically needed my information and sort of needed me to do it on time, we had extensions. Q Do you believe that you filed within the extension time? A Yes. Q I'm going to hand you a document that's being marked for identification as Exhibit 34, can you tell me if you recognize this document? (Whereupon, Exhibit 34 was marked for identification.) THE WITNESS: I recognize it. BY MR. LAYNE: Q Can you tell me what it is? A It's a letter from Shawn Neece to Dennis Ibold concerning my settlement payment. Q And can you tell me the date of the letter? A December 28, 2009. Q And is this a fair and accurate copy of the letter? 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 54 A Yes. Q And was Shawn Neece authorized to send this letter on your behalf? A Yes. Q Last document being marked for identification is Exhibit 35, can you tell me if you recognize this document? (Whereupon, Exhibit 35 was marked for identification.) THE WITNESS: Yes. BY MS. LAYNE: Q What is it? A It is a letter from Dennis Ibold to Shawn Neece pertaining to my paying Mike and 1099ing him, I believe. Q What was the date of the letter? A Letter is December 29, 2009. Q Is this a fair and accurate copy of the letter? A Yes. Q And was Mr. Ibold authorized to send this letter on your behalf? A Yes. MS. LAYNE: Okay. I believe that's it for me. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 55 CROSS-EXAMINATION BY MR. BLAKELY: Q I might just ask a couple questions. I'm not going to have too much. But Nora, did you feel obligated to make any payment to Michael Bluso? A Yes. Q And do you feel any payment you ended up making was voluntary or involuntary? A I don't know. An obligation is an obligation. Q Have you been threatened to be taken to court and let a Judge determine your liability, if any, to Mr. Bluso? A Yes. Q Do you believe that in light of that threat, the settlement offer you entered into was the best you could do under the circumstances? A Yes. MR. BLAKELY: I don't have any questions. MS. LAYNE: Okay. I don't have any follow-up questions. MR. BLAKELY: What I'd like to do is explain waiving the signature, you have the right to review the deposition transcript and to look for any errors, and you have right to then sign it, or you can waive 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 56 signature, meaning, that you are not concerned with typos and things like that. Normally it's okay to waive signature, very rarely have I advised someone not to. This is not one of those cases. I would recommend waiving signature. THE WITNESS: To waive signature? MR. BLAKELY: Yes. THE WITNESS: That's what I would like to do. (Proceedings concluded at 11:30 a.m.) Case 2:16-cv-00741-SPC-MRM Document 47-11 Filed 06/30/17 Page 14 of 17 PageID 235 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 57 CERTIFICATE OF OATH STATE OF FLORIDA) COUNTY OF LEE ) I, Maryanne Wagner, RPR, FPR, Court Reporter and Notary Public, State of Florida, certify that NORA MIHELICK personally appeared before me on May 18, 2017, and was duly sworn. Signed this 19th day of May, 2017. _______________________________ Maryanne Wagner, RPR, FPR Court Reporter Notary Public in and for the State of Florida at Large 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Merit Court Reporting, Inc. 58 CERTIFICATE OF REPORTER STATE OF FLORIDA) COUNTY OF LEE ) I, Maryanne Wagner, RPR, FPR, Court Reporter, do hereby certify that I was authorized to and did stenographically report the deposition of NORA MIHELICK; that a review of the transcript was not requested; and that the foregoing transcript, pages 1 through 58, is a true record of my stenographic notes. I FURTHER CERTIFY that I am not a relative, employee, or attorney, or counsel of any of the parties, nor am I a relative or employee of any of the parties' attorney or counsel connected with the action, nor am I financially interested in the action. Dated this 19th day of May, 2017, at Lee County, Florida. _______________________________ Maryanne Wagner, RPR, FPR Court Reporter $ $1,065,400 [2] - 19:17, 20:24 $1,100.600 [1] - 21:14 $1,145,400 [1] - 20:8 $150 [1] - 26:9 $323,000 [2] - 48:17, 49:20 $323,700 [1] - 47:18 $400,000 [1] - 26:3 $41,800 [1] - 18:5 $70,080 [3] - 18:20, 19:14, 20:6 $71,040 [1] - 20:22 $73,200 [1] - 21:12 $765,400 [1] - 17:24 $855,400 [1] - 18:20 1 1 [5] - 4:3, 4:15, 9:15, 9:19, 58:10 10 [5] - 4:12, 31:6, 31:8, 37:12, 47:6 100 [4] - 1:14, 1:21, 15:13, 53:4 102 [1] - 6:19 104 [1] - 1:22 1099 [1] - 42:10 1099ing [1] - 54:14 11 [3] - 4:13, 31:22, 31:24 11:30 [2] - 1:12, 56:9 12 [6] - 4:4, 4:14, 8:11, 10:8, 32:13, 32:15 120 [1] - 15:13 13 [4] - 4:5, 4:15, 33:3, 33:4 14 [5] - 4:13, 4:16, 32:10, 34:11, 34:13 1415 [1] - 1:23 14198 [1] - 2:9 15 [3] - 4:17, 35:4, 35:6 150 [1] - 15:13 15210 [1] - 2:4 16 [3] - 4:18, 35:22, 35:24 16285 [1] - 6:18 17 [7] - 4:6, 4:19, 5:5, 36:15, 36:17, 37:12, 43:5 18 [6] - 1:11, 4:7, 4:20, 37:17, 37:19, 57:8 19 [5] - 4:8, 4:9, 4:21, 38:8, 38:10 1999 [8] - 4:6, 15:2, 15:4, 17:19, 18:21, 21:19, 23:19, 23:23 19th [2] - 57:10, 58:18 1st [1] - 33:18 2 2 [6] - 4:4, 4:16, 4:17, 5:9, 12:3, 12:4 2-25-09 [1] - 47:20 20 [9] - 4:10, 4:21, 4:22, 5:8, 14:19, 39:2, 39:4, 44:11, 46:3 2000 [4] - 4:7, 18:14, 18:22 2001 [2] - 4:8, 19:8 2002 [2] - 4:9, 20:2 2003 [2] - 4:10, 20:18 2004 [5] - 4:11, 15:4, 21:8, 21:19, 23:23 20044 [1] - 2:10 2005 [4] - 4:4, 4:5, 8:16, 34:20 2006 [3] - 4:17, 8:13, 10:7 2008 [36] - 4:12, 4:13, 4:14, 4:15, 4:16, 4:18, 4:19, 4:20, 4:21, 4:22, 4:23, 4:24, 5:3, 5:4, 5:5, 5:6, 5:7, 31:16, 32:10, 32:25, 33:18, 34:23, 36:24, 38:3, 39:14, 40:6, 40:24, 41:22, 42:15, 42:16, 43:5, 44:10, 44:11, 45:5 2009 [15] - 5:8, 5:9, 5:12, 5:14, 5:15, 30:4, 46:3, 47:1, 51:4, 51:15, 51:19, 52:16, 52:25, 53:23, 54:16 2012 [1] - 52:15 2013 [1] - 30:8 2015 [1] - 30:8 2017 [5] - 1:11, 30:8, 57:9, 57:10, 58:18 2022 [1] - 1:22 21 [5] - 4:11, 4:23, 14:19, 39:20, 39:22 22 [3] - 4:24, 40:13, 40:15 23 [2] - 5:3, 41:10 239.481.1300 [1] - 1:23 239.481.1451 [1] - 1:24 24 [8] - 4:4, 5:4, 5:6, 5:7, 41:25, 42:3, 44:9, 45:5 25 [6] - 4:19, 5:3, 5:5, 36:24, 42:19, 42:21 25th [1] - 41:22 26 [7] - 4:14, 4:22, 5:6, 32:25, 39:14, 43:22, 43:24 27 [3] - 5:7, 44:18, 44:20 28 [7] - 4:23, 5:8, 5:14, 40:6, 45:17, 45:19, 53:23 29 [7] - 5:9, 5:15, 42:15, 46:15, 46:17, 47:6, 54:16 2:16-CV-00741 [1] - 6:9 2:16-cv-00741 [1] - 1:6 2nd [3] - 34:23, 42:16, 47:1 3 3 [5] - 4:5, 4:18, 13:19, 13:20 30 [5] - 5:10, 42:16, 47:10, 47:12, 50:14 31 [5] - 4:12, 4:13, 5:11, 50:22, 50:24 32 [4] - 4:14, 5:12, 51:11, 51:13 323,700.00................. ........ 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[1] - 3:4 Bluso [25] - 8:6, 8:22, 16:16, 17:3, 19:8, 20:2, 20:19, 21:8, 23:9, 23:16, 32:20, 33:10, 34:18, 35:12, 36:22, 37:24, 40:2, 42:9, 43:2, 44:10, 47:18, 48:1, 48:17, 55:6, 55:13 board [2] - 22:4, 22:10 boats [1] - 10:17 bottom [2] - 43:17, 51:24 box [1] - 17:22 Box [1] - 2:9 break [7] - 7:3, 7:6, 24:9, 31:1, 50:16, 50:17, 50:18 breakdown [1] - 48:11 brought [1] - 24:13 Brouse [3] - 35:11, 35:14, 36:5 budget [1] - 15:17 built [1] - 16:8 bunch [2] - 17:8, 30:22 BY [41] - 6:7, 9:22, 12:6, 13:22, 17:13, 18:12, 19:6, 19:25, 20:16, 21:6, 29:21, 31:4, 31:11, 32:2, 32:18, 33:6, 34:16, 35:9, 36:2, 36:20, 37:15, 37:22, 38:13, 39:7, 39:25, 40:18, 42:6, 42:24, 44:2, 44:23, 45:22, 46:20, 47:8, 47:15, 50:19, 51:2, 51:16, 52:12, 53:18, 54:11, 55:2 C card [3] - 15:20, 15:25, 16:3 care [4] - 15:8, 16:5, 16:7, 45:2 caregiver [1] - 16:6 cars [1] - 10:16 cart [1] - 16:9 Case [1] - 1:6 case [3] - 6:9, 7:25 cases [1] - 56:4 CERTIFICATE [2] - 57:1, 58:1 CERTIFY [1] - 58:12 certify [2] - 57:7, 58:7 chance [1] - 9:17 Chardon [1] - 30:14 charge [1] - 26:9 check [4] - 47:17, 47:22, 47:24, 49:20 Check [1] - 5:10 checkbook [1] - 15:20 child [2] - 23:14, 26:5 children [1] - 14:21 choice [1] - 13:11 Christina [2] - 29:2, 30:11 Christmas [5] - 15:7, 15:10, 15:17, 16:3, 16:19 church [3] - 24:4, 24:11 circumstances [1] - 55:17 Civil [1] - 6:12 claim [1] - 49:8 claims [3] - 24:13, 41:15, 48:25 clarify [2] - 6:25, 25:16 cleaning [1] - 16:24 clear [1] - 26:15 Cleveland [1] - 29:17 clue [1] - 45:13 Co [1] - 50:9 Coco [1] - 6:18 college [1] - 14:12 company [6] - 24:4, 26:6, 34:19, 35:12, 37:25, 47:17 compensation [1] - 48:25 completed [1] - 22:25 completely [1] - 6:14 concern [1] - 35:14 concerned [1] - 56:1 concerning [8] - 31:14, 32:4, 34:19, 42:9, 45:25, 46:24, 52:15, 53:21 concluded [1] - 56:9 connected [1] - 58:15 consider [3] - 28:8, 50:1, 50:3 consulted [1] - 22:12 contact [5] - 25:5, 25:8, 25:15, 25:24, 26:13 contacted [1] - 24:20 content [1] - 12:10 continuing [1] - 47:5 conversation [1] - 27:16 conversations [1] - 26:23 copied [1] - 33:23 copies [2] - 7:15, 34:2 copy [30] - 9:25, 17:20, 18:16, 21:15, 31:17, 32:6, 34:7, 34:24, 35:17, 36:9, 36:25, 38:4, 38:20, 39:15, 40:7, 41:4, 41:6, 41:23, 43:9, 44:12, 45:9, 46:4, 47:2, 47:17, 47:21, 51:6, 51:19, 52:17, 53:24, 54:17 Corp [1] - 36:8 correct [1] - 48:18 correcting [1] - 36:5 correspondence [1] - 33:25 Costco [3] - 15:20, 15:25, 16:2 counsel [2] - 58:13, 58:15 Counsel [1] - 1:16 COUNTY [2] - 57:4, 58:4 County [1] - 58:18 couple [2] - 42:14, 55:3 course [1] - 22:24 COURT [3] - 1:1, 1:20, 36:19 court [2] - 25:23, 55:11 Court [9] - 1:13, 1:14, 1:17, 1:21, 6:10, 57:6, 57:18, 58:6, 58:22 cousin [2] - 35:12, 35:16 cover [3] - 43:2, 51:23, 52:14 Merit Court Reporting, Inc. 2 coverage [1] - 48:5 crack [1] - 41:18 crack-down [1] - 41:18 creative [1] - 33:11 credit [3] - 15:20, 15:25, 16:3 criminal [1] - 28:4 Cross [1] - 3:4 CROSS [1] - 55:1 Cross-examination [1] - 3:4 CROSS- EXAMINATION [1] - 55:1 customers [1] - 15:15 cut [1] - 10:24 D D.C [1] - 2:10 DATE [1] - 1:11 date [23] - 10:5, 31:15, 32:9, 32:24, 34:22, 36:6, 36:23, 38:2, 38:18, 39:13, 40:5, 40:23, 41:21, 42:13, 43:4, 44:8, 45:4, 46:2, 46:25, 47:19, 47:20, 53:22, 54:15 dated [8] - 31:16, 33:18, 34:23, 36:6, 43:5, 48:16, 51:4, 52:15 Dated [1] - 58:18 dates [1] - 42:14 David [4] - 44:25, 45:14, 45:24, 45:25 deal [1] - 29:8 December [4] - 5:14, 5:15, 53:23, 54:16 decide [1] - 11:16 decided [1] - 11:16 decision [1] - 49:9 decisions [1] - 28:5 Decree [1] - 4:3 decree [2] - 9:21, 10:1 deduction [2] - 49:4, 49:13 Defendant [3] - 1:8, 1:16, 2:7 definitely [2] - 11:9, 16:12 demand [2] - 44:6, 44:7 Dennis [41] - 8:21, 11:2, 11:12, 11:13, 27:1, 27:2, 27:9, 27:10, 27:16, 28:21, 31:13, 32:4, 32:20, Case 2:16-cv-00741-SPC-MRM Document 47-11 Filed 06/30/17 Page 15 of 17 PageID 236 33:10, 33:19, 34:18, 35:13, 36:4, 36:11, 36:22, 37:3, 37:24, 38:15, 38:23, 39:9, 40:2, 40:9, 40:20, 41:14, 42:9, 43:6, 43:18, 44:7, 44:9, 44:10, 44:25, 45:6, 46:7, 48:22, 53:20, 54:13 Dennis' [1] - 41:18 Department [1] - 2:9 deposed [1] - 24:18 DEPOSITION [1] - 1:10 deposition [5] - 6:8, 6:11, 7:12, 55:24, 58:8 DESCRIPTION [2] - 4:2, 5:2 deserve [3] - 27:25, 28:1, 48:10 determine [1] - 55:12 determined [1] - 23:6 different [1] - 50:1 Dinsmore [2] - 45:1, 45:12 Direct [1] - 3:3 DIRECT [1] - 6:6 direction [1] - 11:14 directly [1] - 48:7 directors [1] - 22:4 discrepancy [2] - 18:21, 23:2 discuss [3] - 13:8, 22:15, 34:5 discussing [3] - 38:16, 40:21, 45:1 discussions [2] - 24:24, 37:11 DISTRICT [2] - 1:1, 1:1 District [2] - 6:10 Division [1] - 2:8 DIVISION [1] - 1:2 divorce [22] - 8:14, 8:15, 8:18, 9:3, 9:6, 9:7, 9:21, 10:1, 10:10, 10:15, 10:21, 13:15, 25:3, 25:5, 25:9, 25:11, 25:23, 26:15, 26:19, 28:19, 48:21 Divorce............ [1] - 4:3 divorced [3] - 8:10, 8:12, 10:8 document [60] - 9:14, 9:18, 9:23, 11:7, 12:2, 13:18, 13:23, 17:9, 17:15, 18:13, 18:19, 19:21, 20:10, 20:12, 21:2, 31:7, 31:10, 31:21, 31:23, 32:12, 32:14, 33:2, 33:12, 33:16, 33:18, 34:10, 35:21, 36:9, 36:14, 36:16, 37:16, 37:18, 38:7, 38:9, 39:1, 39:3, 39:15, 41:11, 42:2, 42:18, 42:20, 43:21, 43:23, 44:17, 44:19, 45:16, 45:18, 46:14, 46:16, 47:11, 50:23, 51:4, 51:7, 51:10, 52:7, 52:18, 53:12, 53:14, 54:5, 54:7 documents [4] - 17:9, 30:22, 34:3, 50:21 Dolan [2] - 45:1, 45:12 done [1] - 34:21 down [2] - 7:2, 41:18 Downtown [1] - 1:22 due [1] - 32:22 duly [2] - 6:3, 57:9 during [10] - 8:17, 9:3, 9:5, 15:2, 15:6, 25:20, 26:15, 26:19, 26:20, 28:20 duty [1] - 6:13 E early [1] - 33:17 earnings [5] - 17:18, 18:14, 20:2, 20:18, 21:8 Earnings................... ............ [6] - 4:6, 4:7, 4:8, 4:9, 4:10, 4:11 Effect [1] - 36:8 eight [1] - 7:22 either [1] - 24:20 Elaine [3] - 9:1, 11:5, 27:5 employee [2] - 58:12, 58:14 employees [4] - 15:14, 15:15, 22:13, 23:3 employees' [1] - 15:16 end [2] - 22:1, 29:11 ended [3] - 13:9, 29:17, 55:8 entail [1] - 16:22 entered [2] - 10:5, 55:16 Entry [1] - 4:3 Entry......................... [1] - 5:11 errors [2] - 42:11, 55:24 escalated [1] - 35:15 ESQ [2] - 2:4, 2:8 estranged [1] - 10:23 ethical [1] - 50:7 event [1] - 14:23 events [1] - 16:20 ex [1] - 35:12 ex-husband's [1] - 35:12 exact [1] - 27:20 exactly [1] - 27:23 Examination [1] - 3:3 EXAMINATION [2] - 6:6, 55:1 examination [1] - 3:4 examined [1] - 6:4 excellent [1] - 51:17 excess [2] - 41:15, 48:24 exercise [2] - 14:17, 14:22 exhibit [7] - 32:13, 36:6, 36:15, 37:17, 43:22, 44:18, 47:10 EXHIBIT [2] - 4:2, 5:2 Exhibit [63] - 9:15, 9:19, 12:3, 12:4, 13:19, 13:20, 17:10, 17:11, 18:7, 18:9, 19:1, 19:3, 19:20, 19:22, 20:11, 20:13, 21:1, 21:3, 31:6, 31:8, 31:22, 31:24, 32:15, 33:3, 33:4, 34:11, 34:13, 35:4, 35:6, 35:22, 35:24, 36:17, 37:19, 38:8, 38:10, 39:2, 39:4, 39:20, 39:22, 40:13, 40:15, 41:10, 41:25, 42:3, 42:19, 42:21, 43:24, 44:20, 45:17, 45:19, 46:15, 46:17, 47:12, 50:22, 50:24, 51:11, 51:13, 52:6, 52:8, 53:13, 53:15, 54:6, 54:8 exhibits [2] - 37:12, 47:6 expenses [1] - 16:2 explain [1] - 55:22 extension [1] - 53:10 extensions [1] - 53:8 F fact [3] - 7:21, 35:16, 53:5 failing [1] - 15:8 fair [29] - 12:12, 14:3, 17:20, 18:16, 21:15, 31:17, 32:6, 34:24, 35:17, 36:9, 36:25, 38:4, 39:15, 40:7, 41:4, 41:6, 41:23, 43:9, 44:12, 45:9, 46:4, 47:2, 47:21, 50:7, 51:6, 51:19, 52:17, 53:24, 54:17 Falls [1] - 14:10 families [1] - 15:16 family [1] - 30:20 far [2] - 17:21, 18:17 fast [1] - 14:20 father [2] - 15:9, 16:6 FAX [1] - 1:24 fax [1] - 38:15 February [2] - 5:9, 47:1 Federal [2] - 5:12, 6:12 fees [6] - 27:20, 35:13, 35:14, 40:4, 48:6, 48:14 fell [1] - 49:8 felt [1] - 32:22 few [2] - 6:20, 25:21 file [2] - 8:14, 29:17 filed [8] - 8:15, 10:14, 10:15, 10:20, 10:21, 52:20, 53:1, 53:9 filing [3] - 29:18, 30:4, 52:22 filings [1] - 29:25 final [5] - 43:2, 44:6, 44:7, 45:1, 45:2 finally [1] - 45:15 financial [2] - 38:16, 41:19 financially [1] - 58:15 finish [1] - 7:5 first [13] - 6:3, 9:13, 12:7, 19:11, 19:12, 20:4, 20:20, 24:12, 25:8, 27:8, 27:10, 33:16, 36:5 FL [3] - 1:21, 1:22, 1:23 flipped [1] - 26:2 flipping [1] - 11:6 FLORIDA [3] - 1:1, 57:3, 58:3 Florida [10] - 1:15, 6:11, 16:7, 17:1, 24:3, 24:12, 53:6, 57:7, 57:19, 58:19 follow [2] - 32:21, 55:20 follow-up [2] - 32:21, Merit Court Reporting, Inc. 3 55:20 followed [1] - 29:1 following [1] - 25:23 follows [1] - 6:5 FOR [1] - 1:1 foregoing [2] - 50:4, 58:10 FORT [1] - 1:2 Fort [5] - 1:15, 1:21, 1:22, 6:19, 17:1 forth [3] - 30:10, 42:8, 42:12 forward [2] - 37:12, 44:5 fought [2] - 11:15, 11:19 FPR [5] - 1:17, 57:6, 57:18, 58:6, 58:21 Frances [3] - 17:3, 23:16, 23:17 free [1] - 28:12 freedom [1] - 28:12 full [3] - 32:22, 46:23, 49:21 fully [1] - 6:13 funds [1] - 15:23 FURTHER [1] - 58:12 G game [1] - 41:17 garnished [1] - 26:5 gears [1] - 14:7 generally [1] - 24:13 given [2] - 13:11, 28:5 gosh [1] - 29:2 Gotham [14] - 14:24, 14:25, 15:9, 15:14, 16:1, 16:13, 16:17, 17:4, 21:19, 22:5, 22:8, 23:6, 23:9, 50:8 graphic [2] - 12:11, 14:2 great [12] - 9:23, 10:8, 17:20, 19:7, 19:10, 20:4, 20:9, 20:20, 21:10, 31:12, 32:11, 37:8 ground [1] - 6:20 grounds [1] - 49:8 group [1] - 42:8 guess [2] - 39:10, 42:10 guys [5] - 7:20, 7:24, 8:12, 13:8, 13:12 H half [1] - 45:2 Hammock [1] - 6:19 hand [9] - 12:1, 19:19, 31:21, 32:12, 35:3, 38:7, 41:25, 51:10, 53:12 handed [1] - 11:7 handicapped [1] - 16:8 handing [16] - 12:2, 18:25, 20:10, 20:25, 31:5, 33:2, 34:10, 35:21, 36:14, 39:1, 40:12, 41:9, 42:18, 43:21, 45:16, 46:14 handle [1] - 34:2 handled [1] - 30:1 handling [2] - 11:23, 13:8 happily [1] - 8:11 head [1] - 7:2 hear [2] - 27:8, 27:10 heard [1] - 27:9 held [3] - 29:7, 29:10, 29:18 help [1] - 16:5 Hendry [1] - 1:22 hereby [1] - 58:7 high [3] - 14:8, 14:9, 14:11 hire [1] - 28:4 hired [1] - 29:22 home [5] - 6:16, 16:24, 16:25, 17:6 homes [1] - 16:21 honeymoon [1] - 14:20 horror [1] - 10:11 hotel [1] - 30:20 house [1] - 16:9 husband's [1] - 35:12 I Ibold [43] - 8:21, 11:3, 11:12, 11:13, 27:1, 27:2, 27:9, 28:21, 31:14, 32:4, 32:20, 33:10, 33:19, 33:22, 34:18, 35:13, 36:4, 36:11, 36:22, 37:24, 38:16, 38:23, 39:9, 40:2, 40:20, 41:14, 42:9, 43:1, 43:6, 43:18, 44:4, 44:5, 44:7, 44:9, 44:10, 44:14, 44:25, 45:25, 46:22, 48:22, 53:20, 54:13, 54:19 identification [67] - 9:15, 9:20, 12:3, 12:5, 13:21, 17:10, 17:12, 18:10, 18:25, 19:4, 19:20, 19:23, 20:11, 20:14, 21:1, 21:4, 31:6, 31:9, 31:22, 31:25, 32:13, 32:16, 33:3, 33:5, 34:11, 34:14, 35:4, 35:7, 35:22, 35:25, 36:15, 36:18, 37:17, 37:20, 38:8, 38:11, 39:2, 39:5, 39:20, 39:23, 40:13, 40:16, 41:10, 42:1, 42:4, 42:19, 42:22, 43:22, 43:25, 44:18, 44:21, 45:17, 45:20, 46:15, 46:18, 47:10, 47:13, 50:22, 50:25, 51:11, 51:14, 52:6, 52:9, 53:13, 53:16, 54:5, 54:9 immediately [1] - 27:22 IN [1] - 1:1 INC [1] - 1:20 including [1] - 51:23 income [1] - 52:14 incorrect [1] - 42:11 indicating) [1] - 12:14 influence [1] - 49:9 information [3] - 10:24, 53:7 interested [1] - 58:16 intervening [1] - 28:8 invalid [1] - 16:12 investment [1] - 47:17 involuntary [1] - 55:9 involve [1] - 28:13 involved [8] - 9:5, 9:10, 22:7, 24:4, 25:1, 30:2, 30:9, 35:16 IRS [2] - 29:23, 30:10 J January [2] - 5:8, 46:3 job [1] - 14:22 Jon [1] - 29:15 JONATHAN [1] - 2:4 Jonathan [1] - 7:19 Jonathan's [1] - 30:7 Jr [1] - 8:6 Judge [1] - 55:12 Judgment [2] - 4:3, 5:11 July [1] - 34:20 Justice [1] - 2:9 K keep [1] - 25:1 Kenston [1] - 14:9 Kent [2] - 14:14, 14:15 kind [2] - 8:1, 41:17 knowledge [1] - 6:22 Kolowski [2] - 29:2, 30:11 L Lake [2] - 2:4, 36:8 land [1] - 10:16 landscaping [1] - 16:23 Lane [1] - 1:23 Large [1] - 57:19 last [6] - 12:17, 13:15, 16:10, 18:19, 36:6, 54:5 lasted [1] - 26:8 law [1] - 23:16 lawsuit [11] - 10:14, 10:18, 24:1, 24:8, 24:16, 25:2, 38:17, 41:20, 43:3, 45:3, 46:24 lawyer [19] - 8:17, 8:20, 8:23, 8:25, 11:2, 13:5, 25:15, 25:21, 26:14, 26:16, 26:21, 26:22, 26:25, 27:19, 28:20, 29:7, 43:14, 49:17 lawyers [1] - 24:20 LAYNE [44] - 2:8, 6:7, 9:22, 12:6, 13:22, 17:13, 18:12, 19:6, 19:25, 20:16, 21:6, 29:20, 29:21, 31:4, 31:11, 32:2, 32:18, 33:6, 34:16, 35:9, 36:2, 36:20, 37:15, 37:22, 38:13, 39:7, 39:25, 40:18, 42:6, 42:24, 44:2, 44:23, 45:22, 46:20, 47:8, 47:15, 50:19, 51:2, 51:16, 52:12, 53:18, 54:11, 54:22, 55:20 Layne...................... [1] - 3:3 leadership [1] - 22:7 least [1] - 15:13 Lee [1] - 58:18 LEE [2] - 57:4, 58:4 legal [4] - 40:3, 40:21, 48:6, 48:14 legs [1] - 16:11 less [1] - 49:14 letter [86] - 12:7, 12:8, 12:9, 12:13, 13:10, 13:25, 14:4, 31:13, 31:15, 31:18, 32:4, 32:7, 32:9, 32:20, 32:24, 33:7, 33:10, 34:18, 34:22, 34:23, 34:25, 35:5, 35:10, 35:11, 35:18, 36:4, 36:6, 36:22, 36:23, 37:1, 37:6, 37:24, 38:2, 38:4, 38:18, 38:21, 39:9, 40:2, 40:5, 40:7, 40:14, 40:20, 40:23, 40:25, 41:14, 41:21, 41:23, 42:13, 42:14, 43:1, 43:4, 43:5, 43:6, 43:11, 43:13, 43:16, 43:17, 43:19, 44:4, 44:6, 44:8, 44:9, 44:10, 44:14, 44:25, 45:4, 45:10, 45:24, 46:2, 46:5, 46:11, 46:22, 46:25, 47:3, 48:16, 53:20, 53:22, 53:25, 54:3, 54:13, 54:15, 54:16, 54:17, 54:19 Letter..................... [1] - 5:3 Letter...................... [3] - 5:7, 5:14, 5:15 Letter....................... [4] - 5:5, 5:6, 5:8, 5:9 Letter........................ [2] - 4:24, 5:4 Letter......................... . [4] - 4:4, 4:21, 4:22, 4:23 Letter......................... .. [3] - 4:5, 4:14, 4:19 Letter......................... ... [5] - 4:12, 4:15, 4:16, 4:17, 4:18 Letter......................... .... [1] - 4:13 Letter......................... ..... [1] - 4:20 letters [6] - 33:21, 34:6, 36:12, 37:3, 42:8, 44:12 liabilities [1] - 39:12 liability [3] - 39:10, 55:12 liable [1] - 11:21 lieu [1] - 50:4 life [1] - 16:11 light [2] - 35:15, 55:15 Merit Court Reporting, Inc. 4 limitations [1] - 29:12 Linda [1] - 35:12 line [1] - 7:4 litigation [21] - 11:24, 13:9, 24:18, 24:21, 24:23, 25:6, 25:12, 25:17, 26:11, 26:20, 27:7, 28:7, 28:9, 28:14, 28:17, 31:14, 32:5, 40:3, 47:25, 48:25, 49:22 live [1] - 30:15 living [1] - 24:6 located [1] - 30:13 look [22] - 9:16, 10:4, 12:7, 14:3, 17:22, 18:8, 19:20, 31:6, 34:12, 35:4, 35:22, 36:15, 37:17, 38:8, 39:2, 40:13, 43:17, 43:23, 48:16, 51:22, 55:24 looking [2] - 12:17, 12:22 looks [3] - 12:22, 17:24, 18:1 loose [1] - 27:5 Louie [1] - 6:18 Lowe [4] - 44:25, 45:14, 45:24, 45:25 lump [3] - 22:1, 49:24, 50:4 M Madison [1] - 16:24 mailings [1] - 17:5 Main [1] - 1:21 main [1] - 29:3 maintained [1] - 16:21 maintenance [1] - 16:23 majority [1] - 16:2 Malec [1] - 9:9 managed [1] - 14:17 management [1] - 22:8 maneuvers [1] - 28:6 manner [1] - 13:9 March [5] - 4:12, 4:14, 31:16, 32:25, 51:4 marked [68] - 9:15, 9:19, 12:2, 12:4, 13:18, 13:20, 17:9, 17:11, 18:7, 18:9, 18:25, 19:3, 19:19, 19:22, 20:10, 20:13, 20:25, 21:3, 31:5, 31:8, 31:21, 31:24, 32:12, 32:15, 33:2, 33:4, 34:11, 34:13, 35:3, 35:6, 35:21, 35:24, 36:14, 36:17, 37:16, 37:19, 38:7, 38:10, 39:1, 39:4, 39:22, 40:12, 40:15, 41:9, 42:1, 42:3, 42:19, 42:21, 43:22, 43:24, 44:17, 44:20, 45:16, 45:19, 46:15, 46:17, 47:9, 47:12, 50:21, 50:24, 51:11, 51:13, 52:5, 52:8, 53:13, 53:15, 54:5, 54:8 married [7] - 8:3, 8:5, 8:7, 8:9, 14:19, 24:3, 49:19 Maryanne [6] - 1:17, 7:2, 57:6, 57:18, 58:6, 58:21 McDowell [3] - 35:11, 35:14, 36:5 mean [3] - 8:9, 29:10, 41:17 meaning [2] - 23:13, 56:1 means [1] - 28:12 medication [1] - 7:8 meeting [2] - 22:10, 41:2 Merit [1] - 1:13 MERIT [1] - 1:20 message [1] - 32:21 Michael [20] - 8:22, 9:10, 11:23, 12:19, 13:6, 17:23, 24:14, 24:24, 25:1, 25:5, 25:8, 26:16, 26:20, 28:13, 41:2, 48:17, 49:4, 49:10, 49:14, 55:6 mid [1] - 33:17 Middle [1] - 6:10 MIDDLE [1] - 1:1 middle [1] - 7:5 Middlefield [1] - 2:5 might [2] - 26:1, 55:3 Mihelick [5] - 5:12, 5:13, 6:8, 6:9, 6:18 MIHELICK [5] - 1:4, 1:10, 6:2, 57:8, 58:8 Mike [52] - 8:6, 14:20, 16:15, 16:25, 17:3, 17:18, 18:15, 18:19, 18:20, 19:8, 19:16, 20:2, 20:7, 20:8, 20:19, 20:23, 21:8, 21:13, 22:20, 23:3, 27:2, 27:4, 27:8, 27:17, 27:18, 27:23, 28:17, 32:5, 32:20, 33:10, 34:18, 34:20, 35:15, 36:22, 37:24, 39:11, 40:2, 40:21, 41:14, 42:9, 43:2, 43:16, 44:10, 45:2, 45:15, 46:23, 47:18, 47:25, 49:19, 51:5, 54:14 Mike's [6] - 15:8, 16:5, 16:20, 23:5, 44:5, 44:6 million [1] - 21:14 Milton [1] - 24:12 mind [1] - 11:6 mine [1] - 19:12 minutes [1] - 50:15 misrepresented [1] - 41:1 misspoke [1] - 10:7 money [2] - 21:21, 23:22 month [1] - 26:8 months [3] - 10:14, 10:21, 16:10 mostly [1] - 15:14 mother [3] - 16:8, 16:9, 23:16 mother-in-law [1] - 23:16 move [1] - 29:12 moved [2] - 16:6, 24:2 MR [13] - 12:6, 29:15, 31:1, 37:9, 42:6, 45:22, 47:5, 52:12, 53:18, 55:2, 55:19, 55:22, 56:7 MS [38] - 6:7, 9:22, 13:22, 17:13, 18:12, 19:6, 19:25, 20:16, 21:6, 29:20, 29:21, 31:4, 31:11, 32:2, 32:18, 33:6, 34:16, 35:9, 36:2, 36:20, 37:15, 37:22, 38:13, 39:7, 39:25, 40:18, 42:24, 44:2, 44:23, 46:20, 47:8, 47:15, 50:19, 51:2, 51:16, 54:11, 54:22, 55:20 mutual [1] - 21:21 MYERS [1] - 1:2 Myers [5] - 1:15, 1:21, 1:22, 6:19, 17:1 N name [7] - 6:16, 6:18, 9:12, 9:13, 29:2, 51:24, 52:10 Naples [1] - 1:23 necessarily [1] - 34:8 Neece [16] - 9:9, 28:24, 29:24, 30:2, 30:12, 30:13, 38:16, 39:9, 49:7, 49:17, 51:25, 52:1, 53:20, 54:2, 54:13 need [2] - 7:3, 31:1 needed [4] - 16:9, 17:7, 53:7 negotiations [1] - 26:16 never [4] - 15:18, 21:16, 50:11, 53:2 next [4] - 14:22, 18:3, 19:15, 25:22 nice [1] - 10:7 NO [2] - 4:2, 5:2 nobody [1] - 16:7 NORA [5] - 1:4, 1:10, 6:2, 57:8, 58:8 Nora [5] - 5:12, 5:13, 6:8, 6:18, 55:5 normally [1] - 56:2 northern [1] - 24:5 Notary [2] - 57:7, 57:19 notes [4] - 12:15, 14:2, 33:14, 58:11 nothing [3] - 7:25, 17:6, 24:3 notify [1] - 11:5 November [2] - 5:7, 45:5 number [2] - 6:9, 38:15 O OATH [1] - 57:1 oath [1] - 6:4 objection [1] - 37:10 objections [1] - 47:6 obligated [1] - 55:5 obligation [3] - 48:23, 55:10 obviously [2] - 12:14, 34:20 occasionally [1] - 17:5 October [8] - 5:4, 5:5, 5:6, 42:15, 42:16, 43:5, 44:9, 44:11 OF [10] - 1:1, 1:7, 1:10, 1:16, 57:1, 57:3, 57:4, 58:1, 58:3, 58:4 offer [4] - 13:2, 13:10, 45:2, 55:16 offers [2] - 12:19, 13:6 office [1] - 14:10 Office [1] - 1:21 offset [1] - 41:19 often [1] - 53:6 Ohio [8] - 2:5, 14:9, 16:24, 16:25, 26:5, 30:14, 30:15, 53:6 ON [1] - 1:16 once [1] - 37:25 one [14] - 9:16, 13:18, 14:12, 14:15, 15:18, 17:22, 19:11, 19:12, 21:14, 28:3, 48:2, 56:4 option [1] - 43:2 organization [1] - 15:7 original [2] - 36:6, 52:25 own [6] - 6:3, 22:15, 26:5, 27:4, 27:19, 38:1 P P.O [1] - 2:9 page [11] - 11:8, 12:12, 12:18, 18:3, 19:15, 20:4, 20:20, 51:22, 51:23 PAGE [3] - 3:2, 4:2, 5:2 pages [2] - 52:14, 58:10 paid [5] - 15:25, 21:20, 27:21, 49:13, 49:24 Pam [8] - 10:15, 10:18, 10:19, 11:21, 48:5, 48:7, 48:11, 50:11 Pamela [3] - 23:9, 23:22, 23:25 Panther [1] - 1:23 papers [1] - 30:6 paperwork [2] - 7:14, 29:25 paragraph [2] - 12:18, 12:23 parents [3] - 15:8, 16:5, 16:20 park [1] - 22:22 part [4] - 28:3, 40:3, 47:25, 49:18 partial [1] - 48:5 particular [1] - 10:12 parties [1] - 58:13 parties' [1] - 58:14 party [7] - 14:23, 15:7, 15:10, 15:17, 16:3, 24:16, 28:4 Merit Court Reporting, Inc. 5 passed [2] - 16:8, 29:4 pay [10] - 15:19, 23:6, 25:25, 26:10, 27:23, 48:7, 49:9, 49:18, 50:8, 50:11 paycheck [1] - 21:24 paying [5] - 43:15, 50:1, 50:3, 51:5, 54:14 payment [18] - 27:22, 32:22, 39:11, 42:10, 43:2, 45:1, 45:2, 48:2, 48:5, 48:17, 48:19, 49:4, 49:21, 50:4, 53:21, 55:6, 55:8 payments [2] - 26:7, 48:4 people [1] - 15:12 percent [2] - 16:4, 53:4 permission [2] - 11:17, 11:18 person [1] - 29:3 personal [2] - 6:22, 15:21 personally [1] - 57:8 pertaining [1] - 54:14 Petersen [5] - 43:1, 44:4, 44:5, 45:25, 46:22 phonetic [1] - 29:3 physically [1] - 53:7 picked [1] - 17:6 PLACE [1] - 1:13 placed [1] - 11:12 Plaintiff [2] - 1:5, 2:3 planner [2] - 14:23 planning [2] - 15:7, 16:20 point [4] - 10:23, 25:13, 26:1, 27:5 post [1] - 14:10 potentially [1] - 53:4 practice [1] - 33:24 prepare [3] - 7:12, 7:18, 52:1 president [1] - 15:9 Presidential [2] - 1:14, 1:21 print [1] - 12:15 problematic [1] - 10:13 problems [1] - 41:20 Procedure [1] - 6:12 proceed [2] - 7:21, 37:13 proceeding [1] - 9:3 Proceedings [1] - 56:9 proceedings [1] - 13:16 process [1] - 10:10 professionals [2] - 9:3, 28:22 promoted [1] - 16:17 proper [1] - 29:25 provide [2] - 7:1, 27:19 provided [2] - 7:16, 7:17 provision [1] - 11:10 Public [2] - 57:7, 57:19 pulled [1] - 34:20 purpose [1] - 48:2 pursuant [3] - 28:18, 48:19, 48:20 put [4] - 11:13, 11:16, 11:20, 19:18 Q questions [9] - 7:5, 7:10, 32:21, 37:10, 47:6, 50:15, 55:3, 55:19, 55:21 quite [4] - 24:6, 25:12, 25:20, 29:8 R raise [1] - 20:22 ramp [1] - 16:8 rarely [1] - 56:3 rate [1] - 26:10 rather [1] - 15:11 read [1] - 7:15 realized [1] - 26:1 really [1] - 16:16 reason [3] - 41:1, 46:10, 46:12 REBECCA [1] - 2:8 receive [3] - 13:25, 25:14, 33:15 received [1] - 43:16 receiving [1] - 23:22 recognize [41] - 9:18, 13:23, 17:14, 18:8, 19:2, 19:21, 20:12, 21:2, 31:7, 31:10, 31:23, 32:14, 33:7, 33:12, 34:12, 34:15, 35:5, 35:23, 36:16, 37:18, 38:9, 39:3, 39:21, 40:14, 41:11, 42:2, 42:5, 42:20, 43:23, 44:19, 45:18, 46:16, 47:11, 50:23, 51:12, 51:17, 52:7, 52:11, 53:14, 53:17, 54:6 recollection [1] - 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[1] - 5:12 Return.............. 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22:24, 29:16, 30:4, 39:10, 49:4, 49:13, 51:15, 51:20, 52:1, 52:14, 52:16, 53:6 Tax [3] - 2:8, 5:12, 5:13 term [3] - 13:12, 13:13, 13:15 Case 2:16-cv-00741-SPC-MRM Document 47-11 Filed 06/30/17 Page 16 of 17 PageID 237 terms [3] - 10:12, 25:4, 25:5 testified [1] - 6:4 testify [1] - 6:13 THE [35] - 1:1, 1:1, 9:21, 18:11, 19:5, 19:24, 20:15, 21:5, 31:3, 31:10, 32:1, 32:17, 34:15, 35:8, 36:1, 36:19, 37:21, 38:12, 39:6, 39:24, 40:17, 42:5, 42:23, 44:1, 44:22, 45:21, 46:19, 47:14, 51:1, 51:15, 52:10, 53:17, 54:10, 56:6, 56:8 Thereupon [1] - 6:1 third [2] - 12:25, 51:23 Thrasher [2] - 45:1, 45:12 threat [1] - 55:15 threatened [1] - 55:11 threatening [1] - 25:3 Tim [3] - 29:6, 29:16, 30:2 TIME [1] - 1:12 timeframe [2] - 28:16, 28:20 timeframes [1] - 25:16 timely [1] - 53:1 titled [1] - 44:6 today [3] - 6:14, 7:10, 7:13 took [5] - 19:1, 25:11, 25:12, 25:24, 27:22 top [1] - 12:11 topic [1] - 7:6 total [1] - 12:10 totally [1] - 10:25 track [1] - 14:20 transcript [3] - 55:24, 58:9, 58:10 Trial [1] - 2:8 tried [1] - 27:5 trip [1] - 7:25 true [3] - 9:25, 38:20, 58:11 truthfully [2] - 6:14, 7:10 try [3] - 6:25, 25:1, 28:13 trying [3] - 10:16, 27:4, 40:22 turned [3] - 14:19, 26:4, 29:24 two [7] - 10:14, 10:21, 29:12, 29:18, 30:7, 52:14, 53:5 typo [1] - 17:24 typographical [1] - 42:11 typos [1] - 56:2 U U.S [2] - 2:9, 6:10 U.S.A [1] - 6:9 under [2] - 43:13, 55:17 unfortunately [1] - 49:19 unilaterally [1] - 11:16 Unit [1] - 6:19 UNITED [2] - 1:1, 1:7 unreasonable [1] - 27:18 up [9] - 11:22, 13:9, 17:6, 25:20, 29:1, 29:17, 32:21, 55:8, 55:20 V vacation [1] - 30:18 valuation [1] - 34:19 valuations [1] - 37:25 verbal [1] - 7:1 versus [2] - 6:9, 39:11 virtue [1] - 35:15 voice [1] - 32:21 voluntary [1] - 55:9 W W-2 [14] - 4:6, 4:7, 4:8, 4:9, 4:10, 4:11, 17:18, 18:14, 19:8, 20:2, 20:18, 21:8, 21:15, 21:17 wages [4] - 17:23, 18:4, 20:5, 26:5 Wagner [5] - 1:17, 57:6, 57:18, 58:6, 58:21 waited [1] - 29:11 waive [3] - 55:25, 56:3, 56:6 waiving [2] - 55:23, 56:5 Washington [1] - 2:10 wealth [1] - 24:7 wealthy [1] - 24:6 week [1] - 30:18 weekly [1] - 21:24 whole [2] - 7:22, 24:2 witness [1] - 6:3 WITNESS [32] - 9:21, 18:11, 19:5, 19:24, 20:15, 21:5, 31:3, 31:10, 32:1, 32:17, Merit Court Reporting, Inc. 7 34:15, 35:8, 36:1, 37:21, 38:12, 39:6, 39:24, 40:17, 42:5, 42:23, 44:1, 44:22, 45:21, 46:19, 47:14, 51:1, 51:15, 52:10, 53:17, 54:10, 56:6, 56:8 worksheet [1] - 34:21 wow [1] - 24:5 write [1] - 17:6 writing [1] - 52:10 written [2] - 11:9, 47:24 Y year [13] - 10:6, 14:12, 14:15, 18:14, 19:8, 20:2, 20:18, 21:8, 22:2, 22:18, 22:21, 25:11, 27:14 years [7] - 7:22, 8:11, 10:8, 15:6, 29:12, 29:19, 30:7 yourself [1] - 26:9 Case 2:16-cv-00741-SPC-MRM Document 47-11 Filed 06/30/17 Page 17 of 17 PageID 238 Case 2:16-cv-00741-SPC-MRM Document 47-12 Filed 06/30/17 Page 1 of 16 PageID 239 Case 2:16-cv-00741-SPC-MRM Document 47-12 Filed 06/30/17 Page 2 of 16 PageID 240 Case 2:16-cv-00741-SPC-MRM Document 47-12 Filed 06/30/17 Page 3 of 16 PageID 241 Case 2:16-cv-00741-SPC-MRM Document 47-12 Filed 06/30/17 Page 4 of 16 PageID 242 Case 2:16-cv-00741-SPC-MRM Document 47-12 Filed 06/30/17 Page 5 of 16 PageID 243 Case 2:16-cv-00741-SPC-MRM Document 47-12 Filed 06/30/17 Page 6 of 16 PageID 244 Case 2:16-cv-00741-SPC-MRM Document 47-12 Filed 06/30/17 Page 7 of 16 PageID 245 Case 2:16-cv-00741-SPC-MRM Document 47-12 Filed 06/30/17 Page 8 of 16 PageID 246 Case 2:16-cv-00741-SPC-MRM Document 47-12 Filed 06/30/17 Page 9 of 16 PageID 247 Case 2:16-cv-00741-SPC-MRM Document 47-12 Filed 06/30/17 Page 10 of 16 PageID 248 Case 2:16-cv-00741-SPC-MRM Document 47-12 Filed 06/30/17 Page 11 of 16 PageID 249 Case 2:16-cv-00741-SPC-MRM Document 47-12 Filed 06/30/17 Page 12 of 16 PageID 250 Case 2:16-cv-00741-SPC-MRM Document 47-12 Filed 06/30/17 Page 13 of 16 PageID 251 Case 2:16-cv-00741-SPC-MRM Document 47-12 Filed 06/30/17 Page 14 of 16 PageID 252 Case 2:16-cv-00741-SPC-MRM Document 47-12 Filed 06/30/17 Page 15 of 16 PageID 253 Case 2:16-cv-00741-SPC-MRM Document 47-12 Filed 06/30/17 Page 16 of 16 PageID 254 Case 2:16-cv-00741-SPC-MRM Document 47-13 Filed 06/30/17 Page 1 of 9 PageID 255 Case 2:16-cv-00741-SPC-MRM Document 47-13 Filed 06/30/17 Page 2 of 9 PageID 256 Case 2:16-cv-00741-SPC-MRM Document 47-13 Filed 06/30/17 Page 3 of 9 PageID 257 Case 2:16-cv-00741-SPC-MRM Document 47-13 Filed 06/30/17 Page 4 of 9 PageID 258 Case 2:16-cv-00741-SPC-MRM Document 47-13 Filed 06/30/17 Page 5 of 9 PageID 259 Case 2:16-cv-00741-SPC-MRM Document 47-13 Filed 06/30/17 Page 6 of 9 PageID 260 Case 2:16-cv-00741-SPC-MRM Document 47-13 Filed 06/30/17 Page 7 of 9 PageID 261 Case 2:16-cv-00741-SPC-MRM Document 47-13 Filed 06/30/17 Page 8 of 9 PageID 262 Case 2:16-cv-00741-SPC-MRM Document 47-13 Filed 06/30/17 Page 9 of 9 PageID 263 Case 2:16-cv-00741-SPC-MRM Document 47-14 Filed 06/30/17 Page 1 of 1 PageID 264 1 Layne, Rebecca (TAX) From: Layne, Rebecca (TAX) Sent: Friday, June 23, 2017 1:21 PM To: 'jblakelylaw@windstream.net' Subject: RE: Mihelick, Nora - Interrogatory Supplement Thanks Jon. You don’t need to type these into the interrogatories themselves. From: jblakelylaw@windstream.net [mailto:jblakelylaw@windstream.net] Sent: Friday, June 23, 2017 12:00 PM To: Layne, Rebecca (TAX) Subject: RE: Mihelick, Nora ‐ Interrogatory Supplement Hey Rebecca, As a follow‐up to the Interrogatories: # 3 - the IRC section (other than 1341) for the deduction is 26 USC section 165(c)(2). Also, NMS relied upon the IRS Publication 25. I believe the section of that publication is marked “Repayments” and it explains to the taxpayer how to claim a deduction or tax credit when income from a prior year on which tax was paid has to be repaid. I do not know if there were any other sections they relied upon. That may be a legal issue. # 8 - Nora Mihelick is not sure how NMS calculated the basis for the refund. It is her understanding NMS took the amount of income from the tax periods (1999‐2004?) that were paid back as part of the settlement. NMS calculated the amount of income attributable to those periods and the amount of income tax that would have been paid. The calculations were explained in detail in the materials NMS provided to the IRS’ various agents and appeals officers. Also, the IRS did not question prior to this lawsuit the amount of the refund/tax credit/deduction. The only real objection was whether the settlement paid by Ms. Mihelick was voluntary or not. Please let me know if this suffices, or if you want me to type responses on the Interrogatory questions themselves. Thanks, and thank you for your patience. Jon Jonathan P. Blakely, Esq. P.O. Box 217 Middlefield, OH 44062 (440) 339‐1201 (440) 632‐9091 jblakelylaw@windstream.net www.blakelylaw.org From: Layne, Rebecca (TAX) Sent: Thursday, June 22, 2017 4:33 PM Case 2:16-cv-00741-SPC-MRM Document 47-15 Filed 06/30/17 Page 1 of 8 PageID 265 2 To: jblakelylaw@windstream.net Subject: RE: Mihelick, Nora ‐ Interrogatory Supplement Hey Jon, Just let me know the code section for now, and you can provide the full response tomorrow by noon, but no later. Thanks, Rebecca From: jblakelylaw@windstream.net [mailto:jblakelylaw@windstream.net] Sent: Thursday, June 22, 2017 4:30 PM To: Layne, Rebecca (TAX) Subject: Mihelick, Nora ‐ Interrogatory Supplement Hey Rebecca, I am sorry to ask this, but would it be ok if I supplemented the Interrogatory re: the section of the IRC (other than 1341) for the deduction of the settlement payments by noon tomorrow (Friday)? I had a few client situations that kept me from spending the time I had hoped to on this. I understand you need this, as I am sure you intend to file a summary judgment motion. I will have the supplement by noon tomorrow to you, and will not request any additional time. Jon Jonathan P. Blakely, Esq. P.O. Box 217 Middlefield, OH 44062 (440) 339‐1201 (440) 632‐9091 jblakelylaw@windstream.net www.blakelylaw.org Case 2:16-cv-00741-SPC-MRM Document 47-15 Filed 06/30/17 Page 2 of 8 PageID 266 IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF FLORIDA FORT MYERS DIVISION NORA L. MIHELICK, ) ) Plaintiff, ) ) v. ) ) UNITED STATES OF AMERICA, ) ) Defendant. ) __________________________________________ ) Case No. 2:16-cv-741-FtM-38MRM UNITED STATES’ FIRST SET OF INTERROGATORIES The United States of America, by and through its undersigned counsel and pursuant to Federal Rule of Civil Procedure 33, requests that defendant Nora L. Mihelick answer the following interrogatories fully, separately, in writing and under oath, and serve a copy of their answers upon undersigned counsel for the United States within thirty (30) days after service of these interrogatories. Definitions: The terms below, as used in these interrogatories, as well as in the “United States’ First Requests for Production” and the “United States’ First Requests for Admission” served contemporaneously herewith, are defined as follows: (i) “Document” shall be defined, without limiting the generality of the term, to include correspondence, agreements, offers, demands, memoranda, calendars, diary entries, electronic mail communications, notes of conversation or other communication, reports, inquiries, bulletins, summaries, newsletters, brochures, compilations, photographs, films, microfilms, announcements, books, books of account, ledgers, vouchers, canceled checks, invoices, bills, opinions, and all other tangible things upon which any handwriting, typing, Case 2:16-cv-00741-SPC-MRM Document 47-15 Filed 06/30/17 Page 3 of 8 PageID 267 2 printing, communication, representation, magnetic or electrical impulse or other form of communication is recorded. Further, the word “document” is employed in the broadest sense possible and includes all originals, prior drafts, copies, and nonidentical copies (whether by reason of handwritten notations thereon or otherwise) of any writing or other tangible thing, including but not limited to any written, recorded, visually or aurally reproduced material, or computer-generated or computer-maintained material of any kind in any medium in your possession, custody, control, or known to exist by you, your family members, agents, employees and/or any other source from which or whom you may reasonably secure. (ii) The term “communication” shall be defined, without limiting the generality of the term, to include every disclosure, transfer or exchange of information whether orally, or face- to-face or by telephone, facsimile transmission, or other electronic transmission, or by mail, personal delivery, document or otherwise. (iii) The term “identify” or “name,” when used in reference to a natural person, means to state each of the following in addition to the specific information requested by the interrogatory: full name, present home, business, and e-mail addresses, and present business, home, and mobile telephone numbers. (iv) The term “identify” or “name,” when used in reference to an entity other than a natural person, means to state each of the following in addition to the specific information requested by the interrogatory: its full name, the present or last known address of its principal office or place of business, and present business telephone number. (v) The term “identify,” when used in reference to a document, means to state the following in addition to the specific information requested by the interrogatory: sufficient Case 2:16-cv-00741-SPC-MRM Document 47-15 Filed 06/30/17 Page 4 of 8 PageID 268 3 information to distinguish the document from any other document identified or provided in response to these interrogatories or the “United States’ First Requests for Production” and the “United States’ First Requests for Admission” served herewith. Specific information you should include whenever you are asked to identify a document is the document’s subject matter, length, date, author, addressee and custodian of the original. (vi) The singular shall include the plural, the plural shall include the singular, and masculine pronouns shall include the feminine and the neutral. (vii) The term “or” shall be construed either conjunctively or disjunctively to bring within the scope of these interrogatories any information which might otherwise be construed to be outside their scope. (viii) The terms “you” and “your” refer to Nora Mihelick. (ix) The term “marital settlement” refers to the divorce decree and incorporated Separation Agreement entered on August 31, 2005. (x) Any request to “state the basis” for a particular allegation or position shall be construed as a request that you: (a) Identify each and every material fact upon which you rely in support of that allegation; (b) Identify each and every document which you contend supports your position; (c) Identify each and every person whose testimony or information you contend supports that allegation or position; and (d) Identify and describe the substance of each and every communication you have had with anyone concerning that particular allegation or position. Case 2:16-cv-00741-SPC-MRM Document 47-15 Filed 06/30/17 Page 5 of 8 PageID 269 4 (xi) The term “improper means” means fraudulent conduct, embezzlement, intentional misappropriation, or unlawful conduct. (xii) The term "IRS" means the Internal Revenue Service, including its employees, agents, and representatives. (xiii) The term "person" means any natural person or any business, legal or government entity, or association. (xiv) The terms "and" and "or" encompass both "and" and "or." (xv) The term “the Barnes litigation” means the litigation referenced in paragraph 11 of the Complaint. INTERROGATORIES 1. Identify all persons who assisted you in responding to these Interrogatories, the United States’ First Requests for the Production and the United States’ First Requests for Admission that were served contemporaneously herewith. 2. Identify all documents in your possession, custody, or control that evidence, concern, or relate to your assertion - whether supporting or undermining - that you are entitled to a refund pursuant to 26 U.S.C. § 1341. 3. State the basis for your assertion that you are entitled to deduct the payment identified in paragraph 20 of the Complaint. Include the provision of the Internal Revenue Code under which you are claiming the deduction. 4. Identify your job title and describe your job responsibilities at Gotham Staple Co during January 1, 1994-December 31, 2004. 5. Identify Michael Bluso’s job title and describe his job responsibilities while at Gotham Staple Co. from January 1, 1994-December 31, 2004. Case 2:16-cv-00741-SPC-MRM Document 47-15 Filed 06/30/17 Page 6 of 8 PageID 270 5 6. Identify all documents or correspondence between you, or someone acting on your behalf, and Michael Bluso, or someone acting on his behalf, relating to the martial settlement. 7. Identify all documents or correspondence between you, or someone acting on your behalf, and Michael Bluso, or someone acting on his behalf relating to the payment identified in paragraph 20 of the Complaint. 8. Explain how you calculated the refund amount identified in paragraph 21 of the Complaint. 9. Do you contend that Michael Bluso did not obtain the compensation that he paid in settlement of the Barnes litigation by improper means? If so, state the basis for that contention. 10. Identify anyone who might have information regarding the Barnes litigation. 11. Identify any documents that you are unable to secure and produce in response to the accompanying Requests for Production. 12. For each request contained in the Request for Admissions being served concurrently herewith that Plaintiff does not admit: a. state the basis for Plaintiff’s inability to admit the request; b. identify each individual with knowledge that supports Plaintiff’s response; c. identify each document that supports Plaintiff’s response. Case 2:16-cv-00741-SPC-MRM Document 47-15 Filed 06/30/17 Page 7 of 8 PageID 271 6 Dated: March 13, 2017 DAVID A. HUBBERT Acting Assistant Attorney General /s/ Rebecca E. Layne REBECCA E. LAYNE Trial Attorney, Tax Division U.S. Department of Justice P.O. Box 14198 Washington, D.C. 20044 202-514-5879 (v) 202-514-4963 (f) Rebecca.Layne@usdoj.gov CERTIFICATE OF SERVICE A copy of this Certificate and Disclosure Statement was served by email upon the following on March 13, 2017: Jonathan P. Blakely jblakelylaw@windstream.net Attorney for Plaintiff Darren McCartney darren@waltersmccartney.com Attorney for Plaintiff /s/ Rebecca E. Layne REBECCA E. LAYNE Case 2:16-cv-00741-SPC-MRM Document 47-15 Filed 06/30/17 Page 8 of 8 PageID 272