Motion Picture Association of America v. CrystalTech Web Hosting Inc.

Filing 1294

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Motion Picture Association of America v. CrystalTech Web Hosting Inc. Doc. 1294 Att. 3 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA PRESCOTT DIVISION UNITED STATES OF AMERICA, Plaintiff, v. ELI ZABETH A. GARDNER and FREDRIC A. GARDNER, each Case No. CVOS-3073-PCT-EHC individually and d/b! a Defendants. BETHEL ARAM MINISTRIES, ** ****** ***** ***** ****** ***** ORAL DEPOSITION OF * * *** *** ** *** ***** * ***** * **** ORAL DEPOSITION of KATHY CRO~EY, produced as a wi tness at the KATHY CRONEY May 25, 2007 instance of the Plaintiff, and duly sworn, was taken in the above-styled and -numbered cause on the 25th day of May, 2007, from 10:01 a.m. to 10:43 a.m., before Hope Lewandoski, CSR, Certified Shorthand Reporter in and for the State of Texas, Reported by computerized stènotype machine at the U. S. Attorneys office, 801 Cherry Street, Suite 1700, Fort Worth, Texas, 76102, pursuant to the Federal Rules of Civil Procedure and the provisions stated on the record or attached hereto. ~ ,. DOWRE STEWART & ASSOCIATES, me. CERTIFIED COURT REPORTERS 1701 PENNSYLVAN AVENU FORT WORTH, TEXAS 76104 (817) 810:0244 · (800) 676-2401 · :FAX 810-006 ~(Ö rFy ';; P=:;" r 2. 032 KATHY CRONEY Taken: 5-25-07 2 i 2 FOR THE PLAINTIFF: APPEARANCES Trial Attorney 3 MR. MARTIN M. SHOEMAKER 4 U. S. Department of Justice 5 P .0. Box 7238 Washington, DC 20044 6 (202) 514-6491 (202) 514-6770 7 Tax Division 8 FOR THE DE FENDANT S : 9 ELI ZABETH A. GARDNER 10 Bethel Aram Ministries P.O. Box 2038 Pro Se 11 Dewey, Arizona 86327 (928) 775-5454 12 13 14 15 16 17 i8 19 20 21 22 23 24 25 HOPE LEWANDOSKI, CSR DOLORES STEWART & ASSOCIATES (817) 810-0244 033 KATHY CRONEY Taken: 5-25-07 3 1 I ND EX 2 PAGE 2 4 3 Appearances... 4 Stipulations.. 5 KATHY CRONEY 6 7 Direct Examination by Mr. Shoemaker..... Cross-Examination by Ms. Gardner........ Redirect Examination by Mr. Shoemaker... Recross-Examination by Ms. Gardner...... 6 30 39 40 44 8 9 Signature and Changes....... 10 Reporter's Certificate..__.. 11 46 l2 i3 EXHIBITS PAGE i 4 NO. DESCRIPTION 15 i 16 2 Copies of checks 26 27 Information packet for a corporation sole 17 18 19 20 21 22 23 24 25 HOPE LEWANDOSKI, CSR DOLORES STEWART & ASSOCIATES (817) 810-0244 034 KATHY CRONEY Taken: 5-25-07 6 i KATHY CRONEY, 2 having been first duly sworn, testified as follows: 3 DIRECT EXAMINATION 4 BY MR. SHOEMAKER: 5 6 7 8 Q. please _ Ms. Croney, could you give your full name, A. Q. Katherine Marie Walton Croney_ Could you tell me your address? 928 Jonathan Court, Weatherford, Texas 76086. 9 A. Q. 10 1i Have you ever had your deposition taken. before? No. Have you ever testified in a court proceeding A. Q. 12 13 14 before? A. Q. No. 15 All right. Let me briefly explain what's I just 16 happening. I will ask you a series of questions. 17 ask that you answer them completely and truthfully. 18 If I ask you something you do not 19 understand, stop me, let me know, and I' ii try to clarify 20 it. 2i A. Q. Okay. The court reporter will take down everything we 22 23 say, so try to speak as clearly as you can and loudly, 24 also for Ms. Garner's benefit, who is on the speaker 25 phone. HOPE LEWANDOSKI, cSR DOLORES STEWART & ASSOCIATES (817 ) 810-0244 035 KATHY CRONEY Taken: 5-25-07 8 1 A. Q. Yes. And could you tell me what his current 2 3 employment is? 4 A. He wo~ks for Hill-Rom Industries, account 5 clinical sales. 6 7 8 Q. He's Yes. a salesman for them? long has he been doing tha t? A. Q. And how 9 A. Q. A. 1999. Does he have He 10 11 other part-time employment? we i 1 , is a full time -- he i s not full time. 12 But he's an ordained minister, I would say, also with our 13 church. 14 Q. With Christ the King Covenant Church? He's ordained, but not under their covering. 15 A. 16 It's with a different covering, but we're all in the same 17 group. 18 We're part of the same group. Q. Does he earn income as being an -- as an 19 20 21 22 ordained minister? I wouldn't say so. A. All r i gh t . Do you Q. A. Q. A. Not know really. Elizabeth Gardner? I i ve met her .When We 23 24 did you meet her? had a conference at our church wi th our -- an It -- it's 25 organization we were a part of at that time. HOPE LEWANDOSKI, CSR DOLORES STEWART & ASSOCIATES (817) 810-0244 036 KATHY CRONEY Taken: 5-25-07 9 1 changed -- it's a new name now, but it -- it was called 2 Kingdom Covenant Ministries, KCM, at that time. We had a 3 conference at our church, a ministry conference. And I 4 believe it was in October of '03, from the best of my 5 recollection. And that was the first 6 00lY time I've met her. That's the only time you -7 Q. 1 time -- that's the 8 A. That I've seen her personally was during that 9 conference. 10 Q. All right. Ministry. And what was the topic of the 11 conference or what was the purpose of the conference? 12 A. Just helping with people that are in 13 ministry and just new ideas, what -- whatever is going i 4 on. 15 Q. Did Mrs. Gardner speak at that conference? 16 i7 A. Q. Yes, she did. And do you know wha t her subj ect wa s? It was on the corporation sole. But at that 18 A. 1 9 con fer e n c e , I a 1 sod 0 a lot 0 f a dm in i s t rat ion wit hi n 0 u r 20 church, and I was in and out quite a bit in helping with 21 the lunch preparation, so I missed a lot of the 22 conversation -- or the meeting as I was coming and going 23 and doing what T had to do, as well, the responsibilities 24 that I had. So I -- I had heard some of it, but not -- I 25 wasn't there for all of it. HOPE LEWANDOSKI, CSR DOLORES STEWART & ASSOCIATES (817) 810-0244 037 KATHY CRONEY Taken: 5-25-07 12 1 Q. A. And the topic was this deposition? Yes, about making -- that she was going to be 2 3 here. ~. 4 Q. All right. Well, in 2004, 2005, 2006, did you 5 speak with the Gardners? 6 A. Q. Not tha t I can recaii. 7 All right. When was the corporation sole 8 created? 9 A. I t m us t h a ve bee n inN 0 v e mb e r be c a use the 10 canceled checks went through during that time. 11 12 Q. You i re talking about November of 2003? Of '03, yes. A. Q. 13 So since late fall of 2003, can you recall 14 speaking with either of the Gardners? 15 A. Q. A. ( No. Are you familiar with Bethel Aram Ministries? That was the name of the ministry covering that 16 17 18 we wrote our check to. 19 Q. A. Q. Who at Bethel Aram Ministries did you deal with? I believe it was Elizabeth. 20 21 Was there anyone else you deal t wi th wi th Possibly we may have spoken to her husband. 11m 22 respect to Bethel Ararn Ministries? 23 A. ( 24 not sure. 25 Q. All right. Other than -- HOPE LEWANDOSKI, CSR DOLORES STEWART & ASSOCIATES (817) 810-0244 038 KATHY CRONEY Taken: 5-25-07 13 1 A. Q. But no one else. Okay. Now, you may have already answered this, 2 3 but how did you learn of the GardnQrs? 4 A. The conference that KCM put on at our church. That was the first I 5 They invi ted her to come and speak. 6 heard of them. 7 8 Q. Did you have a No. role in the invi tation process -- A. Q. 9 -- to invite the -- the Gardners? No. So un t i 1 10 11 A. Q. they actually introduced themselves at 12 the conference, you didn i t know them? 13 14 A. Q. No, I had never met them. Are you familiar wi th the websi te I've never been there. Are you No. 15 16 17 18 A. Q. A. Q. familiar wi th it? it? me 19 Have you ever heard of Can you 20 21 A. Q. Huh-uh. All right. kind of walk through or 22 discuss the corporation sole creation process? 23 Now, I take it you attended this conference 24 in October of 2003, you heard Ms. Gardner speak of a 25 corporation sole. And then what happened after that that HOPE LEWANDOSKI f CSR DOLORES STEWART & ASSOCIATES ( 8l7) 810-0244 039 KATHY CRONEY Taken: 5-25-07 22 1 homeschooler. So between the -- what was going on and 2 the luncheon, I -- I heard it, but I don't really know 3 the differences between the two. 4 Q. Did you -- did Ms. Gardner express any -- or 5 make any comment about whether or not the IRS could 6 challenge the status of the corporation sole? 7 8 A. Q. I don't recall. How about did Ms. Gardner state that you could 9 assign your outside income to the corporation sole, say 10 from your home-based business or from your father's 11 or, excuse me -12 13 14 A. Q. Not A. Q. the corp sole. -- your husband's sales position? No. Only mini st ry funds could be 15 16 17 A. Q. All right. -- placed in that. And I take it from what you said earlier, that 18 you did not, in fact, transfer any of your outside income 19 or your main source of income -20 21 22 A. Q. No. -- to the corporation sole? A. No. We never established a checking account or 23 separate accounts. 24 Q. Did you talk about an LLC with the Gardners? 25 A. Yes. HOPE LEWANDOSKI, CSR DOLORES STEWART & ASSOCIATES (817) 810-0244 040 KATHY CRONEY Taken: 5-25-07 23 1 Q. Was that a topic of that October 2003 seminar or 2 conference? 3 4 A. Q. Yes. And Ms. Gardner spoke about that? I believe so. 5 A. Q. 6 Can you recall what she said the selling points 7 of an LLC were? 8 A. .. I don i t know what she said. To us it -- it was 9 with -- my husband had a desire to do business, as well, 10 for the Kingdom, but have a business. r And, 0 f co u r s e, 11 what that meant I don i t know yet because we never got to 12 that point. 13 LLC, as well. 14 But tha t i s why we decided to go wi th the Q. You bought an LLC, as well? 15 A. I don't know if you -- we acquired it, but I 16 don't know that there was an additional fee for it or 17 i not. 18 Q. You acquired it from the Gardners? 19 A. .: Yes. And what paperwork was involved with formation LLC? 20 21 22 Q. .. of the A. Whatever we filled out on the original 23 paperwork. 24 Q. ( All right. How about a trust? 25 A. .. It was part of that, as well. HOPE LEWANDOSKI, CSR DOLORES STEWART & ASSOCIATES (817) 810-0244 041 KATHY CRONEY Taken: 5-25-07 24 1 Q. So the Gardners helped you form a corporation 2 3 4 sale and A. Q. an LLC and a trust; is that correct? Wh-huh. And Yes _ -what 5 6 7 8 A. Q. LLC? -- is -- what is the current status of the We 1 ve A. We i ve never used any of them. we -- as far 9 as I understand, Q. have rescinded everything. 10 11 All right. Did the L -That was my understanding. A. Q. 12 13 Does -- did the LLC have a name? A. It was all part of this Kingdom Resource Group 14 that we formed that -- using that name. 15 Q. All right. Yes. And that goes for the trust, as 16 well? 17 A. As far as I can remember, it had to do 18 with Kingdom Resource. 19 20 Q. Can you recall how the trust was supposed to LLc? 21 22 23 function wi th respect to the No. I' m sorry. A. Q. All We r igh t. A. -- we 24 we never used it, acquired all -- all of this in so we never really de 1 ved into i 03, and it 25 because we thought our circumstances would have changed. HOPE LEWAN DOSKI, CSR DOLORES STEWART & ASSOCIATES (817) 810-0244 042

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