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

Filing 1294

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

Doc. 1294 Att. 4

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA
PRESCOTT DIVISION

UNITED STATES OF AMRICA,

)
) ) )

Plaintiff,
v.
ELIZABETH A. GARDNER and FREDRIC A. GARDNER, each individually and

LJ COpy

) Case No. ) CV05-3073-PCT-EHC
)

d/b/a BETHEL AR MINISTRIES,

)
)

Defendants.

)
)

)

DEPOSITION OF ELIZABETH A. GARDNER Prescott, Arizona May 31, 2007
8:59 a.m.

REPORTED BY: Eve K. Burton, RPR, CRR Certified Reporter No. 50261

~ PLAINT

II 3 I
I EXIBI
043
Dockets.Justia.com

LOTT REPORTING, INC.
316 North Alarcon Street Prescott, AZ 86301

928.776.1169

2

i
2 ELI ZABETH A. GARDNER

INDEX
PAGE
4

3 Examination by Mr. Shoemaker

4 Examination by Mr. Gardner
5 Further Examination by Mr. Shoemaker
6
7
8

130

l37

EXHIBITS
. DESCRIPTION
PAGE

9 NO.

10 11
11
12

Booklet: Corporation Sole vs. 501 (c) (3)
Corporation by Elizabeth Gardner
Corporation Sole Conference announcements

85
88
93

12
13

13
14 14

Bank spreadsheet
9/4/05 Statement of Fact of Rev. Kenneth

Swenson
10/11/04 Affidavit of Larry Michael Baugher
Printout of excerpts from www. corpsole. org

96

15 15

99

16 16
17
17

Re: Corporation Sole
Corporation Sole Manual

101

18
1S

109

Hand-drawn diagrams by Mr. Shoemaker
Updated Corporation Sole Manual

19
19

119
125

20 21
22
INFORMTION REQUESTED

23 Updated version of Exhibit II
24

Page Line
85 17

25
LOTT REPORTING, INC./928.776.1169

044

3

1 THE DEPOSITION OF ELIZABETH A. GARDNER,
2 taken on May 31, 2007, commencing at 8:59 a.m., at the

3 offices of Lott Reporting, Inc., located at 316 North
4 Alarcon Street, Prescott, Arizona, before Eve K. Burton,

5 Registered Professional Reporter, Certified Reporter
6 No. 50261, in the State of Arizona.
7

8 APPEARACES:
9

10 11 12

U _ S. DEPARTMENT OF JUSTICE By: Martin M. Shoemaker, Esq. Tax Division P.O. Box 723S Washington, D. C. 20044
Mrs. Elizabeth A. Gardner, In Propria Persona P.O. Box 2038 Dewey, Arizona 86327
Mr _ Fredric A. Gardner, In Propria Persona P.O. Box 2038

13
14

15

16
17 18

Dewey, Arizona 86327

19 20
21

22

23
24

25
LOTT REPORTING, INC./928.776.1169

045

4

1 ELIZABETH A. GARDNER,
2 a witness herein, having been first duly sworn by the

3 Certified Court Reporter to speak the truth and nothing

/

4 but the truth, was examined and testified as follows:
5 6
7
8

EXAMINATION

BY MR. SHOEMAER:

Q.

All right. Ms. Gardner, could you state your

9 full name, please.

10 11

A.
Q.

Elizabeth A. Gardner.

Could you tell me your address, residential

12 address.
13
14

A.
Q.

The actual street address?

Yes.
570 Apache, A-p-a-c-h-e, Knolls, K-n-o-l-l-s,

15

A.

16 Trail, T-r-a-i-l.
17
18
Q.

In?
MR. GARDNER:

Dewey.
Oh.

19

THE WITNESS:
BY MR.

Where?

20 21
22

SHOEMAKER:

Q.

Yes.
Dewey.
Dewey,

A.
Q.

I'm

sorry.

23
24

Arizona?

A.
Q.

Yeah.

25

And what's the ZIP there?
LOTT REPORTING, INC./928.776.1169

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1

A. S6327.

2
3
4

Q. Do you use the post office for other personal
purposes?

A. Yeah. You can 1 t mail out there.
Q. All right. What 1 s your mailing address?

5
6
7 8 9

A. Post Office Box 2038.

Q. And that's in Dewey?

A. Yes.
Q. Have you had your deposition taken before?

10
11

A. Yes.
Q. When was that?

12

A. 1997 or 15? '7. I'm sorry. 1997, I'm pretty

13
14

sure.
Q. Around 10 years ago?

15

A. Yeah.
Q. And what were those circumstances?
A. It was an issue -- we had a lawsuit against the
radio station. I had a lawsuit against a radio station.

16
17

18

19

Q. You sued a radio station?
A. Yes, uh-huh.

20 21
22

Q. And they topk your deposition during that

litigation?
A. Yes, uh-huh.
Q. All right. Then you understand I'm going to ask

23
24

25

you questions.
LOTT REPORTING, INC ./928.776.1169

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1 2 3
4

A. Oh, yes.
Q. You're under oath. You're going to answer them.
If you don't understand me, stop me. Don't talk over me.

A. Okay.
Q. i'll try not to talk over you.

5
6
7
8

A. Okay.
Q. Everything will be taken down by the court

reporter
A. I understand.
Q. and you'll have the opportunity to

9

10

review it

11
12

afterwards.
Your phone number, ls that 928-775-5454?

13
14

A. Correct.
Q. Is that a personal phone number?

15

A. No. It's a church phone number.
Q. Do you have a personal phone number?

16
17 18

A . No.
Q - You have a cell phone number, don't you?

19 20
21

A. Cell phone. Belongs to the church.
Q. The cell phone belongs to the church?

A. Uh-huh.
Q - What's the cell phone number?

22

23
24

A. 928-710-3379.
Q. And when you say "the church," what church are

25

you tal king about?
LOTT REPORTING, INC./928.776.1169

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rJ
1

A. Bethel, B-e-t-h-e- l, Aram, A-r-a-m, Ministries.

2 3
4

Q. And we'll be talking about -- is it Bethel
Ar am --

A. Bethel Aram Ministries.

5

Q. All right. I'll probably mispronounce it. In
fact, I'll probably call it Bethel Aram (pronouncing)
Ministries, but that's what we i II be talking about.

6
7 8

Tell me your education since high school.

9

A. I've been to Bible college: Christ for the
Nations Institute in Dallas, Texas.

10

11
12

Q. That is the Bible college, or is that -A. Uh-huh. Christ For the Nations Institute.
Q. Anything else?

13
14
1S

A. II ve been to -- well, yes. Actual -- been to a
school, but I did Internet school: Suffield College.

16
17

Q. Suffield College was your Internet schooling?

A. Yes, uh-huh. And that's a doctorate.
Q. Where is Suffield?
A. It's in Idaho. And I received my doctorate in

18

19

20
21
22

theology.
Q.

And lIve been

Where

to -- I forgot. did you receive a doctorate in theology?

A.
Q.

23
24

Suffield. Suffield?
And I've been

A.
Q.

25

When were

to Arizona Paralegal Institute. you at Arizona Paralegal Institute?

LOTT REPORTING, INC. /928 . 776.1169

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8

il
1 2 3
4

A.

193

through '96.
MR.

' 94?

' 94

through

' 96

--

or

not

yeah.
GARDNER:

' 97.

THE WITNESS:

'97.

Excuse me.

5 6
7 8

BY MR. SHOEMAKER:

Q. Did you get some sort of a certificate or
diploma?
A.
Q.

Yes, I did.
You

Diploma, yes.

9

passed the

--

10
11 12

A.
Q.

Yes.

-- paralegal studies -Yes.

A.

13
14

Q. or you, I guess -- ls there a license for a
paralegal?

15

16
17

A. Arizona -- I have a degree. It's just a degree in paralegal/legal assistant.
Q - So you're qualified to be a paralegal?

18

A. Oh, yes. Oh, yes. They don' t give you a
license. They just give you a diploma, and you're

19 20

Q. When was the doctorate in theology?

21

A. Last year, '06, I finished it.
Q. And the Bible college in Dallas, when was that?

22 23
24

A. 1976 through '78.

25

Q. And, okay, is that it? A . Tha t's it.
LOTT REPORTING, INC. /928.776.1169

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i
3
4

Q.

All right. In any of these schools or courses,

2 did you have any tax courses?

A.
Q.

/

No.
How about business courses?
In paralegal.

5
6 7 8

A.
Q.

Basic business- law-type stuff?

A.
Q.

Yeah. Law, law-based, business law.
Did they touch on income taxes?

9

A.
Q.

Huh-uh. No. I'm sorry.
Okay. Avoid

10 11 12

A.
Q.

Yes.
-- that sort of thing.

13
14

A.
Q.

Okay.
Could you go through your employment history for

15 the past 20 years.

16

A.

20 years? Last 20 years?

1 7 Q. Yes.
18 A. We owned a business called Cornerstone Christian
19 Center. It 1 S a Christian bookstore down in Phoenix,

20 Arizona.
21
Q.
When did you -- you owned and operated it; is

/

22 that correct?

23
24

A.
Q.

Yes.
And when was this?

25

A.

1978 through 1993. No -- yeah.

, 93.

LOTT REPORTING, INC./928.776.1169

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1 2 3
4

Q. All right. Was that your primary employment
during that --

A. Yes.
Q. -- 1S-year period?

5 6
7
8

A. Well, I was a minister also at this time. I
owned it well, we had a company called Maranatha
Enterprises that owned the business, but we operated
but I also was on the evangelistic field preaching also.

9

Q. All right. Have you been a minister of some
sort, I guess

10
11 12

A. Yes. I'm an ordained minister.
Q. -- since '78?

13
14

A. Yes.
Q. All right. Since' 93, what's been your primary

15

employment?
A. We have none.
Q. SO you're currently unemployed; 1S that correct?

16
17

18

A. Yes.
Q. Where does your income originate?

19

20 21 22 23
24
2S

A. We don't have any income.

Q. All right. How do you pay the bills?
A. I don't have any personal bills.

Q . How about --

A. The ministry takes care of everything.
Q. "The ministry, II being Bethel Aram Ministries?
LOTT REPORTING, INC. /928.776.1169

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1

A. Right.
Q . It pays

2

3
4
S

A. Yes.
Q. -- transportation costs?
A . Everything.

6
7 8 9

Q. Food, utili ties, housing? A. Yes. I've taken a vow of poverty. I don't know
if you're familiar with that.

Q. When was the vow of poverty?

10
11
12

A. 1993 -- or no. When did I -- 1997. I need my
helper here.

Q. Bethel Aram Ministries i 1ncome, where does that

13 14

come from?

A. Donations.
Q. Donations. All donations?

15

16
17

A. Yes.
Q. Solely donations?
A. Solely donations.

18 19

Q. Are most of the donations related to assisting
and forming corporations sole?

20 21 22

A. No. Half and half, maybe. Q. What's the other half?
A. We have a congregation.
Q. And they just donate as a basic Sunday
offering-type thing?

23
24

25

LOTT REPORTING, INC./928.776.1169

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1

A . Yes, uh - huh.

2

Q. All right. Bethel Aram Ministries, tell me what

3
4
S

that is.

A. It1s a church.
Q. Is it a corporation sole?

6 7 8 9

A. No.
Q. Is it a ministry?

A. It 1 S a church.

Q. All right.
A. You have to define to me what you mean by

10 11
12

"ministry. "
Q. Well, I was golng to ask you if you know what I
mean, or does that -- if I were to just say, Is ita
ministry, would you answer it, or would you go into what

13
14

15 16
17

you're going into?
A. Well, it's both. I mean, the church is a body of
believers coming together with like-mindedness and it's

18

the ministering to -- ministering to people. Ministry is

19

the church. It's ministering to people. I can't -Q. All right. I've seen in some of your literature
and in the CD you sent me that you essentially promote the idea that churches should be or can be formed or

20
21
22

23
24

structured as corporations sole.
A. I think you don't understand. The church 1S not

25 the corporation sole. It's one person holding the office

LOTT REPORTING, INC./928. 776 .1169

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1 on behalf of the church. The church stands alone under

2 the Constitution of freedom of religion. The corporation
3 sole is like the administrator or the office, like bishop, / 4 pastor, whatever capacity that it holds, whatever office

5 it holds, whatever has been designated by the body of
6 believers that holds that office of corporation sole on 7 behalf of the ministry for the protection of assets and to

8 hold property, to buy and sell.
9

So this

there's a lot of confusion about

10 corporation sole. A lot of people think the church is a
11 corporation sole. No, it's not the corporation sole. It
12 can be. Some statutes allow that, allow -- you know, say
13 that it can be the church. But in our position, it's the
14 office of one person, because

1S

Q. A.

Well, would it be an officeholder of the church?

16
17 18

There you go. Right. Correct.

Q. A.
Q.

Okay. Well, do you have a corporation sole?
I am a corporation sole, yes.

19 20

What is the name of it?
Elizabeth -- Evangelist/Prophetess Gardner,

A.

21 incorporation sole. The office is, I think, a prophetess.

22

Q.
~

All right. Is that registered with the State of

23 Nevada?
24
A.
Q.

Yes.
And when was that set up?

25

LOTT REPORTING, INC. /928.776.1169

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1

A. I think 2000 or 1999, I think.

2
3
4

Q. Was that your first corporation sole?
A. Yes, uh-huh.

Q. All right.
A. Do you understand the Catholic church, their
operation as a corporation sole?

5
6
7 8 9

Q. You know, I hear that a lot, but I've never
really gotten confirmation of that.

A. See, this is where corporation sole came from is

10 11 12 13
14

the Cathoìic church. They are the ones that really
brought it into view back in the 1400s or whatever. It's
an ancient religious order that came up, and then now we

developed the United States, and our similar state
statutes took it here because the Catholic church is here.
It's like the vicar of the Catholic church, the bishop,

15 16
17

they hold the office over the assets of the church,
administrati ve.

18

Q. All right. I'm trying to get terms down.
A . 0 kay .

19

20 21
22

Q. SO you're a corporation sole.
A. I hold the pffice of corporation

Q. You hold the office of corporation sole for -A. Yes.
Q. -- Bethel Aram Ministries?

23
24 25

A. Correct.
LOTT REPORTING, INC./928.776.1169

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1

Q.

Okay. And the corporation sole you i re talking

2 about was established in 1999?
3
4

A.
Q.

Correct.
When was Bethel Aram Ministries founded?

5
6

A.
Q.
-

Oh, 1990 -- was that -- maybe it's not

1993.

Can you tell me about the hierarchy of Bethel

7 Aram Ministries?
8
9

A.
Q.

Hierarchy? What do you mean by hierarchy?

Sorry. Management. Who is in management, for

10 want of a better
11

A.

There is no such thing as management in the

12 church. There 1S no such thing as management 1n the

13 church. That 1 s business. Church is not a business. It's
14 a -- church really means the ecclesiae, the called-out

15 ones, a group of people like-minded together that believe
16 in the same thing.
17

Q.

All right. In a nonbusiness sense, who manages

18 Bethel Aram Ministries?

19

A.

Well, there is -- the management -- the

20 corporation sole does the management. It's the overseer,
22 behalf of the church. We do have elders.
I

, 21 the administrator, o,f the assets that does the speaking on

23

Q.

Are you the only person associated with the

24 corporation sole that you've been talking about, the

25 evangelist?
LOTT REPORTING, INC. /928 .776. i i 69

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1

A.
Q.

Evangelist (pronouncing). Evangelist (pronouncing).

2 3
4

A.
Q.

Okay. The sole, that's why it's called a "sole."
Yes.

s

A.

It 1 S one person. But we do have, quote-quote
All right. A board of elders?

6 we could say, . for secular terms, a board of elders. ..
7 8

Q.
-

A.

We call ita council of elders. See, 1n the

9 501 (c) (3), they call it a board. We call it a council.

10

Q.

The council of elders, is that the council of

11 elders for Bethel Aram Ministries or for the corporation

12 sole-13
14 15

A.
Q.

No, no.
-- that you're talking about?

A.

The corporation sole does n0~ function like a

16 regular corporation. A corporation sole is a religious
17 entity derived out of Christendom, out of the church, that

1 8 gives asset protection for the buildings, for the assets,
19 and someone to oversee everything.

20 The bishop, like -- or the vicar of the
21 Catholic church does. the same thing. Many, many -22 there's -- the synagogues have. a -- the Mormon church is a

23 corporation sole. There are many churches, quote-quote,
24 that were known, like denominational, that have

25 corporation sole. It's also in just small churches, too.

LOTT REPORTING, INC./928.776.1169

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i And that's what we are. We 1 re not a big denomination.
2

Q.

Does your husband have his own corporation sole?

3
4

A.
Q.

No. There is no reason for it.
So Bethel Aram Ministries has a council of

5 elders?
6
7

A.
Q.
.

Uh-huh.
Who are the elders?

8

A.

Okay. Now you're getting into church questions.

9 Bethel Aram Ministries is not here to answer that

10 question. I don't think -11 12
Q.
,

Well, you're a pastor
I am a pastor,

of Bethel Aram Ministries,

are you not?
A.
Q.

13
14

but --

Your husband is a pastor of Be.thel Aram

15 Ministries, correct?
16
17

A.
Q.

Correct.
Is there another pastor in Bethel Aram

18 Ministries? 19 A. No. There 1 s an elder.
20
21
('

Q.

And who is the elder?

A.

I can' t te~l you that. I don't know if that's

22 because a church has to stand on its own. Bethel Aram
23 Ministries is not being deposed today. I am.

24

Q.

Are you refusing to answer the question?

25

A.

Yes. I think Bethel Aram Ministries should

LOTT REPORTING, INC./928.776.1169

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18
1 answer that separately.
2

Q.

I f I were to serve a subpoena on Bethel Aram

3 Ministries-"
4
S

A.
Q.

Uh-huh.
-- who would be the person who would -Our -- the attorney.

6 7

A.
Q.

who would testify on behalf of Bethel Aram

8 Ministries?
9

A.

It could be the elder. It could be me. I don't

10 know. Whoever the attorney -1 1 Q. But you're not going to tell me who 1S on the
12 council of elders; is that correct?

13

A.

I don't think it's -- it' s privileged information

14 for the privacy of the church. That's private.
15
Q.
All right. But you're telling me there's
This has nothing -- the church is not involved

16

A.

17 with this. You're deposing me as a person, Elizabeth A.

18 Gardner, not Elizabeth Gardner as a person -19
Q.
I'm deposing you based on all your knowledge,

20 however acquired. And it sounds like you know who is on

21 the council of eldeLs --

22 A. Oh, of course, I do.
23 Q. -- but you i re simply refusing to answer it. 24 A _ I'm refusing to answer because it i S a church 25 1ssue, and the church 1S not a part of this lawsuit.
LOTT REPORTING, INc./928.776.l169

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1

Q. Isn 1 t one of your defenses that, Hey, we're
getting into church issues, and we shouldn i t be?

2 3
4

A. Yes.

Q. All right.
A. The church has intervened 1n this lawsuit, as you
know.

5 6
7

Q. Yes. Whose decision was it to try to intervene?
A. It was my decision but -- and the board 18

8

9

decision.
Q. Okay. So it sounds like well, iS there anyone
other than yourself who has -- or 18 there anyone other
than you who has more

10 11
12

knowledge of the goings on of Bethel

13
14

Aram Ministries?

A. Ric and one of the elders, I think.
Q. The unnamed elder?
A. Well, really, they all do, because we talk about

15

16
17

ita lot.
Q. All right. How many elders are there, total?

18

19
20
21

A. There's one other elder. Q. Okay. So there's Ric, you and one other person?

A. Correct.
Q. And who would be the decision

22

makers for Bethel

23
24

Aram Ministries?

A. I would be, as the corporation sole. The final.
I would say the final.

25

LOTT REPORTING, INC. /928.776.1169

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All right. Does Bethel Aram have employees?

1

Q.

2
3
4

A.
Q.

No.
Does it have workers?

A.
Q.

What do you mean by "workers"?
Well, anybody who does work for them.

5 6
7 8
9

A.
Q.

Well, we have ministers. I 1m a minister.

Okay. Other than you and your husband -No. We i re the ministers of the corporation sole.'

A.
Q.

All right. So you and your husband are the only

10 workers for --

11 A. Well, if you want to -- we're not "workers."
12 Q. I'm using just common -- this isn i t a term of art
13 here. It's -- even the Internal Revenue Code doesn't
i 4 really define "worker."

15

A.

We -- I do the preaching. I preach. I counsel.

16 He does some, but I do it mostly. 11m general pastor.

17

Q.

Who does like financial records or bookkeeping,

18 to the extent there is
19
20 21
22

A.
Q.

Oh, he does.
administrative work?

A.
Q.

He does. .
Okay. "He," being your husband?
I'm sorry. My husband, Ric.

23
24

A.
Q.

Okay. What 1S Bethel Aram Ministries i address?
Same as my address. The church and the parsonage

25

A.
L

LOTT REPORTING, INC./928.776.1169

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i is together. ,
2

Q.

All right. Do you have a separate structure,

3 like a church building?
4

A.
Q.

No. It 1 S all together.
So you hold services in your home --

5 6
7
8

A.
Q.

Uh-huh.
-- is that correct?

A;

Uh-huh. And not 1n my home. It belongs to -- it

9 legally belongs to Bethel Aram Ministries.

10

Q.

And you were going, "Uh-huh, uh-huh." Was that a

11 "yes"?
12

A.
Q.

What was the question, please?

13

What was the question? Do you hold serV1ces 1n

l4 your home?

l5
17

A.
~

Yes. Yes, we do. Every Sunday morn1ng and

16 Thursdays.

Q.

All right. And then you meant not your home; it

18 belongs to the church, but it's still

19

A.
Q.

20 21
22

A.
Q.

to live there. It's still your residence? No, it's nO,t my residence.
Allows me

Well, where do you live? Well,
Okay.

23
24

A.
Q.

that's

where I

live, but --

25

A.

Okay.
LOTT REPORTING, INC./928.776.1169

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1

Q.

You reside there?
I reside there.

2 3

A.
Q.

,

All right. We just talked about this a little

4 bit. How do you and your husband split up your Bethel

S Aram Ministries duties?
6

A.

I don't think we really -- I do most of the -- I

7 do most of the talking on the phone, because I have more 8 education on the corporation sole, because I studied it

9 and researched it. And being an ex-nun, I know about the

10 Catholic church capacity of a corporation sole. So I do ii most -- I do most of the everything. He talks to
12 13
14

people and

-MR.
SHOEMAKER:
Wha t ?

THE WI TNESS :

He's not allowed to speak,

15

right?
MR.
SHOEMAKER:

16
17

You can chime in, if you 1 d

like.
MR. GARDNER:

18

I'm sorry. Because I didn't

19 want to interrupt. But I do things -- the menial jobs,
20 things that are administrative, I guess you'd say.

21 BY MR. SHOEMAER:

22

Q.

All right. I was going to say, it sounds like

23 you 1 re the face of the church. You do the public

24 speaking, seminars, sermons -25
A.
What do you mean by "seminars"?

LOTT REPORTING, INC./928. 776. 1169

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1

A. No .
Q. Any experience 1n tax-related matters?

2 3
.v

A. No.

4

Q. Any education in tax-related matters?
A. I would say yes.
Q. And where was that? How did you -- how did that

5 6
7 8 9

come about?

A. Just studying the stat- -- not the statutes -the code and --

10 11 12 13

Q. Self-study?

A. Self-study, yes.
Q. All right _ You give talks, public speaking
engagements, related to Internal Revenue Code Section
SOl (c) (3); is that correct?

l4
15

A. I give education on the difference between

16
17 18

corporation sole and SOL (c) (3) .
Q. All right. And you wrote a book on that subject;
is that correct?

19

A. Correct.
Q. All right. So how did you obtain your expertise

20
21 22

1n SOl (c) (3)?
A. Through the code.

23
24
2S

Q. Self-study?

A. Self-study.
Q. All right. How did you first learn of the
LOTT REPORTING, INC./928.776.1169

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1 structure called corporation sole?

2 A. Through the Catholic church.
3 Q. Is Bethel Aram Ministries Catholic?

4 A. No.
5 Q. Were you raised Catholic?

6 A. Yes. I'm an ex-nun.
~ 7 Q. Oh. And what research have you done to educate
8 yourself as to what a corporation sole is?

9 A . Much.
10 Q. Much self-study again?

i i A. Much research.
12 Q. Much research looking at books?

13 A. Catholic church dòctrine, talking to bishops and
14 canon law lawyers, which -- canon law lawyers. And

15 researched statutes and case cites. 16 Q. Have you researched both state and federal law on
i 7 that subject?

18 A. Yes, uh-huh.

19 Q. Now, you help people set up their own corporation
20 sole; is that correct?

21 A. I don't help them set it up. I help them
22 establish it. I yes. Not people. Just pastors and
23 ministers, those of the church leadership.

24 Q. Well, you've established a lot of corporation 25 soles for persons -LOTT REPORTING, INC. /928. 776.1169

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1 2
V

other churches, so I know that they are part of the

church.
/ A. Oh, yes.
Q. Do these references come from across the country?

3
4 5 6
7

Q. Is there a predominant geographic region where
they come from, like locally?

8 9

A. No. Just various -- they're at various churches. Q. SO you might you are just as likely to get
someone from Michigan as someone from

10

11
12 13
14
1-

A. Florida. Q. -- Florida to -A. Texas or whatever.

Q. -- call you up?

A. Yes. Yeah.
Q. All right. Okay. If someone were to call you
and say, "Ms. Gardner" --

15

16
17

Do they call you Reverend Gardner or just
Ms. Gardner?

18

19 20

A. Just call me Elizabeth.
Q _ All right.
"Ellzabeth, I've been on this Web site or

21
22
23 24 25

I've heard about you. I'm interested in a corporation
sole," could you walk me through how --

A. I would
Q . -- how it happens?

LOTT REPORTING, INC./928.776.l169

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1

Q. -- religious articles, a corporation sole --

2
3
4

A . Ri gh t .
Q. -- manual.

A. Like this would be (indicating) -- 1S that what
you mean?

S

6
7 8

Q. Yes.
A. Yes. A package
Q . A notebook

9

A. Notebook. There you go.
Q. -- of materials?

10
11
~ 12

A. Yes.
Q. All right. Do you charge for this?

13
14

A. No.
Q. Do you have suggested donations?

15 16
17

A. The church does.
Q. All right. What i s the typical suggested donation

for
A. 1,200.

18

19

Q. $1,200 for a basic corporation sole?
A. Uh-huh. Yes.
Q. Now, is that donation mandatory?

20 21 22

A. No.
Q _ Is it ever negotiated?

23
24

A. Never. Once 1n a while, I may have someone, "You
know, I can't afford it." I say, "Okay, that's fine."

25

LOTT REPORTING, INC./928.776.1169

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37

Q. Do you do any for free?

2 3
4
S

A. Yes.
Q. What percentage are for free?
A. Oh, very little. People are just happy to donate
to the ministry to support our ministry.

6
7
8

Q. Is the same type of paperwork involved for a
trust? Do you set up trusts for individuals?

A. We establish trusts for church-related purposes
and for estate planning for the pastors and ministers. We

9

10
11

only deal with pastors and ministers. We don't deal with
the congregations or the general public.

12

Q. You don't register trusts with states; is that
correct?

13
14

A. No. It's a church trust.
Q. What's the typical suggested donation for setting
up a church trust for someone?

15

16
17

A. 800, i think.
Q. And the same line of questions for an LLC, or
limited liability company.

18

19 20 21 22

A. The questions? Oh, they have to -- there's -it's a little different for the LLC.

Q. All right. What's different?
A. Well, you have to have a name, and we have to
make sure the name is available. And so we have to call
the state and see if that name is available.

23
24

25

LOTT REPORTING, INC. /928.776.1169

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i
2

Q.

All right. You register those with --

A.
Q.

Nevada.
-- a state; 1S that correct?

3
4
S

A.
Q.

Oh, yes.
And you use Nevada --

6

A.
Q.

Yeah.
-- for your LLCs?

7 8
9

A.
Q.

Yes.
What 1S the Nevada fee for registering LLCs?

10
11
12

A.
Q.

155.
And what's your suggested donation --

A.
Q.

500.
-- for LLCs? $500?

13
14
1S

A.
Q.

Uh-huh.

"Yes"?
Yes.
Are LLcs just set up for ministers?

;\ 16
17

A.
Q.

18

A. Yes. Those who are -- usually, the LLCs - are set
up for, like, a church or a ministry -- it's like a -- we

19 20

have for this -- it's a nursing -- this church wanted to do a nursing home far Christian people, a Christian

21

22 nursing home. So we suggested that they -- that the
23 church didn't do it. We try to keep business away from

24 church. So we told them to set up an LLC to run the 25 business, and then the net profits would be distributed to
LOTT REPORTING, INC./928.776.ll69

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40

1

Q.

I was going to say, a church doesn't have to

2 be
3
4

A.
Q.

A church is not --- any entity
But see --

S
6

A.
Q. A.

-- 1S that correct?

7

Don't get confused. A church is not

8 incorporated. It's just the office of one person. That's

9 why we do that. Because the SOL (c) (3) incorporates the
10 whole church, the whole body.

11

Q.

Did I hear you misspeak? You said the church 1S

12 just the office of one person?

13

A.

I'm sorry; you did mishear me. I i m sorry. A
holds the office on behalf of the

l4 corporation sole is

15 church. The church is separate from the corporation sole. 16 The church is a body of believers, as I told you earlier. 1 7 The corporation sole is one person 1n the body that's
18 appointed in this position to hold the assets, to carryon 19 administratively, the voice of the ministry.
20 21
22
Q.
You've answered this, but I i II ask it anyway.

A. Q.

Okay.
What states do you register your corporation

23 soles in? ,
24

A.
Q.

Nevada.
Solely Nevada?

25

LOTT REPORTING, INC./928.776.1169

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1

A.
Q. ,

Yes. Because it has the best statutes.
And is that true also for your LLcs?

2
3 4

A.
"

Yes.
Had you previously tried other states?

Q.

5

A.

We1ve been looking at Arizona. And we looked at

6 California. And California, forget it. Arizona, okay.

7 But really -8

Q.

How about the State of Washington?

9

A.
Q.

No. I don't like their statutes at aii.
There i S a lot of corporation soles incorporated

10

11 up there?
12

A.

Oh, but they're bad corporation soles.
MR.

13
14

GARDNER:

Nasty.

THE WITNESS:

Illegal corporation soles.
Can

I

15

know about

them.
MR. GARDNER:
MR.

l6
17

I

say something?
you may.
In t_he State

SHOEMAKER:

Yes,
Okay.

18

MR. GARDNER:

of

19 Washington -- the difference between the State of Nevada 20 is, Washington really uses corporation sole as a business

21 trust.

22 State of Nevada, the reason why we use it is
23 because it i S exclusively for church and church operations.
24 Their statute is specific in the fact that it can hold

25 church property and act on behalf of the church as far as
LOTT REPORTING, INC./928.776.1169

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42

1

the legal aspect of it goes, where the church can be

2
3
4

operated separately as the corigregation goes. Sort of

like an unincorporated association, so to speak. So the

assets are being protected. It's -- the statutes of
Nevada are very strict on that that you don't use it for
any other purpose except religious purposes.
BY MR. SHOEMAKER:

5

6
7

8

Q. SO you've researched other states -A. Oh, yes.
Q. -- and determined that Nevada is the best?

9

10
11 12

A. Correct.
Q. Now, the term "business" has a commercial
connotation, but, that aside, I'm going to ask you: Do
you conduct most of your --

13
14

15

A. Church business.
Q. -- church business by telephone, by email, by
mail, or can you split it up?

16
17

18

A. "Church business," meaning what? What kind of
church business are you referring to?

19

20 21
22

Q. The church business involving LLCs, trusts and

corporation soles.
A. Well, usually if it's out of state -- I mean, we
can't travel to every state -- we do it by email or
sometimes telephone, fax, mail.

23
24

25

Q. Do you have many in-person meetings with persons

LOTT REPORTING, INC./928.776.1169

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1

Q.

And then that registered agent, that's her

2

duty -A.
Q.

3

Right.
-- to get it to the actual entity or person --

.4
5
6 7 8
J¡ 9

A.
Q.

Yes.
or whoever she 1S serv1ng as a registered

agent for?

A. Correct.
Q. How many corporation soles have you established?

10
11

A. Oh, approximately? I can 1 t tell you exactly,
because I didn't keep a count.

12 13
14 15

Q. Give me an approximate.

A. About 300.
Q. Over what period of time?

16
17

A. Oh, '97, so 10 years. Q. 300 in the last 10 years?
A. Yeah.
Q. How many in the past year?

18

19
20

A. About two a month. Say about 24.
Q. Is that usually how it goes, about two a month?

'721 22

A. Yeah. Sometimes one a month.

Q. In the past -A. Sometimes none a month.
Q. In the past 10 years, has there been for whatever
reason any particular year a spike or where you did three

23
24 25

LOTT REPORTING, INC./928.776.1169

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48

i times or four times 1n a month?
2

A.

When we first started, I think it was a spike.

3 It was like a spike because people were all interested. )

4 And now they're pretty much getting it. But I think a lot

5 has to do with the situation of the lawsuit. I think when

6 that's cleared up -.J 7

Q.

Now, at your husband's deposition, I'm gOlng to

8 ask how many corporation soles he has established.
9

MR. GARDNER: None.

10 BY MR. SHOEMAKER:

11 12

Q.

A.
Q.

Okay. So you're the I'm the - - I' m it.
-- the establisher?

13
14

A.
Q.

Yeah.
Is that true also for LLCs and trusts?

15

16
i7

A.
Q.
A.

Uh-huh.

I s that a "yes"?
Yeah, that's a yes, but -- and a no exact,

18

19 because he does some of the trust work, because he 1S an 20 estate planner, certified estate planner, so he does most

21 of the trusts. And he does some of the LLcs, too.
Lt 22

Q.

When 1S the last time you filed a Form 1040?

23
24

A.
Q.

1993.
1993?

25

A.

Uh-huh.
LOTT REPORTING, INC./928.776.i169

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59
1 2 3
4

Q. All right. And your legal department is being
set up so that -- to assist those persons who you lve

helped establish these entities for if they face IRS

problems?

5 6
7

A. Correct.
MR. GARDNER:
THE WITNESS:
May I interj ect?

No.

8
9

BY MR. SHOEMAKER:

Q. Do you assist persons in having their corporation
soles declared exempt from local property taxes?

10
11

A. No, I can't do that.
Q. Are you familiar with the Web site
www. corpsole. org?

l

12

13
14

A. Let me see. Yes.
Q. Is that your Web site?

15

16
17 18

A. No. It's the church1s Web site.
Q. It's Bethel Aram Ministries' Web site?

A. Correct.
Q. Who started the Web site?

19

20
21 22 23 24

A. The church did.
Q. When was it started?

THE WITNESS: Four years ago?
Four years ago.

BY MR. SHOEMAKER:

25

Q. 2003?
LOTT REPORTING, INC./928.776.1169

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2 3
4

60

A . Yeah.
Q. Who is 1n charge of the content that's on the Web

site? A. A pastor from Australia.
Q. Who is that? What's his name?

5
6
7

A. Martin Spratt.
Q. What's his connection with Bethel Aram

8 9

Ministries? A. He 1 s a corporation sole, and he has a church. He
was here, and he had a church here. And then he now is a
missionary and working and is now 1n Australia and lives
1n Australia.

10 11 12 13
14

Q. Does Bethel Aram Ministries just use him as the
computer person to input or change --

15 16
17 18

A. Correct, yeah.
Q .-- or modify --

A. Yes. He controls the Web site.
Q. Well, who makes decisions about what goes on the
Web site?

19

20
21 22

A. The church. And -- and I have input, too,
because I do a lot qf writing. I do all the writing, in
fact, on behalf of the church.

23
24

Q. If something were to be removed from the Web
si te, who has the authority to move it -- remove it?

25

A . I do.
LOTT REPORTING, INC./928.776.ll69

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1

Q.

You do?
Uh-huh.
"Yes" ?

2 3
4

A.
Q.

A.
Q.

Yes.
Does your husband?
Oh,

5
6
7
8

A.

sure.

Well, he

would refer to me

first.

MR. GARDNER:
BY MR.

We'll

talk

it

over.

SHOEMAKER:

9

Q. On the Web site, www.corpsole.org, I've seen some
biographical data about you and your husband.

110
i i

: 11

A. As pastors?
Q. As pastors. Is that information correct?

! 12 I 13
!

A. Correct.
MR. SHOEMAER: All right. Let's take a
little break here, about 5 minutes.
(Recess taken from 10:00 a.m. to 10:04 a.m.)

14
i ¡ j I

15

16
17

I I I

BY MR. SHOEMAER:

18

Q. Mrs. Gardner, are you familiar with legal
problems faced by other corporation sole promoters?

i

19 20 21 22

I

A. Yes.
Q. You underst,and the IRS 1S kind of going after
corporation soles?

I I

23
24
,;

A. Oh, yes. Oh, yes. I didn't know that at first,
but when it started, everybody says, "Do you know what's

25

going on?11 I said, "What?" I couldn i t imagine that
LOTT REPORTING, INC ./928.776.1169

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69

Q. Now, why is a corporation sole for church
purposes better than another tyPe of corporation or a
regular type of corporation?

2

3
4

A. Corporation sole is not the church. It's one
person holding the office on behalf of the church. And
the reason why we prefer corporation sole is because we
don't want to be a SOl (c) (3), but we still want to be

5
6
7

8

recognized as nonprofit in the general public and to

9

recei ve
Q. Well, a church that qualifies or is tax exempt

10 11
12 13 14

under soi (c) (3) is going to be tax exempt regardless of
its structure; is that correct?

A. A church is not exempt under 501 (c) (3). It's
exempt under S08. A church is -- SOS gives the exemption.
The church does not have to file a SOl (c) (3). There's no

is
17 18

l6 law, there i s no statute, that a church has to be a
501 (c) (3) .
Q. All right. I think that's where there 1 s some
misunderstanding, because I understand S08 as just saying
churches don't have to file an application with the IRS --

19

20 21 22

A. To be

Q. to be a SOl(c) (3).
A . No, not to be -- to be exempt.

23
24
2S

Q. To be exempt under SOl (c) (3)?
A. Right. Right. There is no law -- you can talk
LOTT REPORTING, INC./928.776.ll69

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J¡

1

to the Treasury Department. There 1 s no statute, no
federal law stating that a church has to file.

2 3
4

Q. All right. But what I'm saY1ng is a corporate

church
A. Corporate church?
Q. -- a church that's formed as a corporation --

5 6
7

A. Nonprofi t corporation.
Q. -- doesn't have to file that application either.

8

9

A. No.

10

Q. And a church that's under the ausp1ces of a
corporation sole, it doesn't have to file that application

11 12

13
14
1S

ei ther A. No.

Q. and that's because all these entities are
churches.
A. Correct. Or a parachurch.
Q. SO what benefits does a corporation sole church
have over a nonprofit corporation church?

16
17

18

19 20
21

A. Number one is, not incorporated. The Bible -- if
you want to get into the spiritual aspects of it, the
Bible says make no covenant with the nations.

22

Q. But it's still registered with the state?
A. No, no, no. The.

23
24

corporation sole is not -- it's

not remember, one person is not the church. The
corp- -- the 501 (c) incorporates the whole body, the

25

LOTT REPORTING, INC./928.776.1169

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v
1 church.

2 The corp sole only incorporates one person.
3 And that's why we want it that way, because it does not

4 bring the body under an entity. It doesn't become "it."

5 As you know, a corporation is an "it." And when you

6 become -- and this is our spiritual it's a spiritual
7 8

if you want me to go into it and a religious belief
with us, that we do not want to be -- we want to keep
separation of church and state pure and go all

9

the way.

10 11 12 13
14

And the church should be free under a

constitutional right of religion. It has no filing

requirements. It does not have to incorporate. It just
is the church. And so when --

Q. But a corporation sole has filing requirements.

lS
16
17

A. Correct. That's -- but that's the office of one
person. That's not the church. Remember, we're sitting
here; I'm a corporation sole. We i re all -- and everyone

18

of us is part of the church. But only I hold the office
of corporation sole. You don 1 t. Ric doesn't, and neither
does this young lady.

19

t

20 21
22

Q. All right. ; What tax benefits, if any, does a
corporation sole have that a nonprofit corporation --

23 24

A. There is no difference.
Q. -- does not have?

25

A. There is no difference.
LOTT REPORTING, INC. /928.776.1169

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74
1 corporation sole program?
2 3

A.
Q.
"

Yes. There is no -- we don 1 t have no program.

But you're not denying that you set up

4 corporation soles for individuals?
5

A.

I establish -- I help them establish corporation

6 soles for church and ministry.
7

Q.

And you've established over 300 1n the past

8 decade?
9

A.

Yes. For church and ministry, which is totally
All right. Well, nobody said it wasn't.

10 legal.
11 12
13 14
Q.

A.
Q.

Okay.

All right.
So this -- I don't have seminars, number one. I

A.

15 don't promote anything. I'm only -- when I speak on

16 corporation sole versus SOl (c) (3), Ilm invited to the
17 church, to a church where church ministers and leaders are

18 there, and it's usually a conference of -- for church

19 business. We'll say that word, "business." My booklets
20 have nothing to do with tax. It just gives the code as

21 for church -22
Q.
The title has a tax section on it.

23

A.

Well, because, you know, when you write a book,

24 you have to grab ahold of -25 Okay. Almost every page of the book -Q.
LOTTREPORTING, INC. /928.776.1169

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1

Q. All right. So if the interrogatory would have
been reworded to state: Statè the number of corporation
sole packages you have established during the past five

2 3
4

years, you would have answered that in probably, what, 150
or something like that?

5
6 7 8
9

A. Well, I don't even know if I would have answered
it that way, also, because I donlt do it. The church does

it. I do it for the church. So itls really Bethel Aram
Ministries that's doing the corporation sole.

10 11
12

Q. Okay. Bethel Aram Ministries -A . I am the -It writes them. It does the, you know --

13

MR. GARDNER: Agen t .
THE WITNESS: -- agent. The agent, if you
want to call it that, the pastor.

l4
15

16

BY MR. SHOEMAER:
Q. Have I asked how many LLCs you 1 ve established in
the last decade?

d/17
18

19

A. Did you ask that question here? No, you haven't
asked me that.

20
21 22

Q: How many?

A. None.
Q. How many has Bethel Aram Ministries established?

23
24

A. Maybe four or five.
MR. GARDNER: In the last decade?
LOTT REPORTING, INC. /928.776.1169

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082

81

1

THE WITNESS:
BY MR.

In the last decade?

2 3
4
S

SHOEMAKER:

Q.

Ever.

18?
THE WITNESS:
MR.

Really?
18.
18?

That many?

GARDNER:

6
7 8

THE WITNESS:

MR. GARDNER:
THE WITNESS:
BY MR.

Over 10 year s , yeah.
Over 10

years.

Are you

sure?

9

SHOEMAKER:

10
11

Q. Bethel Aram Ministries has established 18 LLCs in
the past 10 years?

12 13
14

A. I didn't think that many. That seems ridiculous.

No way.
THE WITNESS:

Where did you get that number?
In the last 10 years.

15

MR. GARDNER:
THE WITNESS:

16
17

Honey, we have not done

that -- I mean, hardly any.

Welve done, I'd say, maybe

18

eight.
MR. GARDNER: You're talking 10 --

19

20 21
22

BY MR. SHOEMAER:

Q. All right. Let me just cut you off here. Your
husband believes the number is about 18?
A. I believe it i S maybe 10, at the most.

23
24
2S

Q. And you believe itls maybe 10, at the most?

A. Yeah.
LOTT REPORTING, INC./928.776.1169

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1
.v 2

this next exhibit is Exhibit 18.

(Document marked previously as Government
Exhibit No. 18 was presented.)
BY MR. SHOEMAKER:

3
4

5
6 7
8
9

Q. It's two pages, handwritten by me --

A. Handwritten by you. Okay.

Q. based on

A. My -- what I say. Q. what you said in that -A. Video.
Q. -- video.

10 11
12

A. Okay. That's good.
Q. And, one, I just want you to look at it, and
we'll go through it and see if it's accurate.

13
14
1S

A. Okay.
Q. You gave an example --

16
17

A. Uh-huh.
Q. -- in your speech --

18

19

A. Uh-huh.

20 21 22

Q. and you talked about the relationship
essentially between? corporation sole, LLc and a trust.
A. Uh-huh.

23
24 25

Q. And you talked about the first page there of
Exhibit 18.

A. Remember, this lS an example.

LOTT REPORTING, INC./928.776.1169

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~
1

Q. Yes.

2

A . 0 ka y .
Q. You said there is an individual businessman, and
he conducts XYZ Business_

3
4 5 6 7
8

A. Uh-huh.
Q. And it's a good idea to put the XYZ under the
name of the LLC or operate the business through the LLc.
LLC is a pass-through entity.

9

A. Uh-huh.
Q. And then you talked about, the LLC had to have at
least two members. And it would be a good idea to make
one of the members a trust, which you or Bethel Aram would

10 11 12

13
14 15

set

up
A.
Q.

Uh-huh.
-- along with the LLC --

16
17

A.
Q.

Uh- huh.
-- and the corporation sole.

18 19

A.
Q.

Uh-huh.

Okay. And in your example, in your speech, you

20
21 22

said the individual would be the managing member but own
10 percent --

A. As an example.

23
24 25

Q. as an example. The trust would own 90
percent. And is that pretty much what that first page

represents?
LOTT REPORTING, INc./928.776.1169

085

~
1

121
A. Yes. Want to go to page 2?

2

Q. Yes. Go to page 2.

3
4

Okay. In your example, you said let 1 s say
the business has income, net income, of $100,000 for a
particular year.

5
6

A. Uh-huh.

7
8

Q. 10,000 of it, 10 percent of it, goes to the
individual businessman.

9

A. Uh-huh.

10
11

Q. And then 90 percent of it, $90,000, go to the
90 percent owner, the trust?

12

A. Uh-huh.

13
14

Q. And then there is a separate corporation sole? A. Ministry, yeah.
Q. And I take it the individual businessman has that

15 16
17

corporation sole. It's--

A. Yeah, when I say corporation sole -- in fact,
we're going to redo that video -- it's going to be

18

19

ministry. It 1 S really when I -- I think it says on there
ministry. It says church ministry on there. It doesn't
say corporation sole. It says church ministry. This is

20
21 22

23
24

incorrect. Q. Okay. So the corporation sole could be
changed -- and I will change it.

25

A. It should be church ministry.

LOTT REPORTING, INc./928.776.1169

086

122
J¡

1

Q.

Should just be changed to church?

2 3
4

A.
Q.
,/

Church, yeah.
Church or church ministry?
Either one, yeah.

A.

5
6
7 8 9

MR. GARDNER: Church.
THE WITNESS: Church, parachurch. Do you
understand parachurch?

BY MR. SHOEMAER:
Q. But it could also be a corporation sole, couldn't
it? Or does it matter?

10

11
12

A. No. The corporation sole is a person. I mean,
he could hold it. He does. He holds the assets for the
church. But it's for the church.

13
14

Q. And, well, the church that's listed on the second
page of that exhibit now is the church that the individual
businessman is the corporation sole for?

15 16
17

A. Right.

18

Q. Okay. Going further into the example -A . 0 ka y .
Q. -- you talk about an individual can glve up to
SO percent of theirAGI, adjusted gross income, to a

19

20 21
22

charity.

23
24

A. Correct.
Q. SO in this example, the person takes his $10,000
distribution, gives 50 percent of it to the church

25

LOTT REPORTING, INC./928.776.1169

087

123

~
i ministry, gl ves $5, 000 to it, so he 1 s left wi th $5,000.

2 The trust can give 100 percent --

3 A. Correct. Per IRS 642.

4 Q. Is that a publication or a statute?

5 A. Statute.

6 Q. -- could give 100 percent to a --

7 A. Nonprofi t.

8 Q. -- nonprofit. So in this example, it gives
9 100 percent, 90,000, to the church ministry. So the end
10 result is, the church ministry has $95,000 to do its

11 deeds?

12 A. Right.
13 Q. The individual businessman has $5,000 --

14 A. To live on.
1S Q. and it's your position that he's taxable -i 6 A. Oh, yeah.

17 Q. -- he's taxed on that 5,000? 18 A. Well, he's taxed on the 10,000, but after his
19 deduction he could -- on his Schedule C, I think it is, he

20 could take whatever he donates to the ministry. 21 Hel s taxable on his -Q.
22 23
24
2S

A.
Q. A.
Q.

His income.

Well,

AGI 1S

Adj usted

gross. -- above tax.
LOTT REPORTING, INC./928.776.1169

088

124
1

MR. GARDNER: Uh-huh.
BY MR. SHOEMAER:
Q. SO he's going to be taxed on the 5, OOO?

2 3
4

A. Yeah. After the deduction.
Q. All right. And in the example, I believe, he had
a spouse who earned 20,000.

5
6

7
8
9

A. Right. She works. Then she 1 s got to add that to
that amount.

Q. All right. Just so it sounds like I at least
followed you. And does that Exhibit 18, from what you can
tell, match what you speak about or spoke about at least
in that?

10 11
12 13 14

A. Yeah. Not totally, but it gives an illustration,
yes.

l5
16
17 18

Q. Okay. Okay. All right. A. Now, this business is for -- if this church
wants -- wants to use a business, sometimes, like I told
you earlier, the church will start a business, say,

19

selling widgets, to support its ministry. Like we have a
lot of on-the-street ministries. We have food ministries,
para

20
21 22

church ministri~s that support -- they form a company.

They'll'

sell widgets to support that ministry, and that's

23
24

what this illustration ïs for.
We have a pastor that has, like I told you,

25

a nursing home, and this is the illustration we tell them.

LOTT REPORTING, INC ./928.776.1169

089

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(Ç 1997 Bethel Aram Ministries All Rights Reserved Printed in the United States of America
Second Printing (Q 1999 Bethel Aram Ministries
Third Printing ~ 2000 Bethel Aram Ministries

Fourth Printing (Ç 2005 Bethel Aram Ministries
Fifth Printing ~ 2006 Bethel Aram Ministries
No par of ths book may be reproduced in any manner without

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the writtenpemùssion from the publisher except in the case of brief quotations in critical aricles and reviews.

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092

ABOUT THE AUTHOR

ELIZBETH GARDNER holds ordination with the
FROM THE AUTHOR

~
In America today, most churches and minístries are licensed, regulated business enterprises. Most churches in
America have incorporated with the state and have obtained taxexempt status from the Internal Revenue Service under Title 26,
U.S. Code, Section 50l(c)(3). Incorporation has become ,so

Independent Assembly of God, the Full Gospel Fellowship International, Brothers of Christ International and Bethel Aram Ministries.

She attended Christ for the Nations Bible Institute and has been an ordained ITnister since 1978. She completed her doctorate in Theology with Suffield University in 2006. She ministered as an evangelist for three and a half years and is active as a pastor in Dewey, Arizona.

She also attended The Paralegal Institute of Arizona and has a dpgrèe as a Certified Paralegalgal Assistant. She specialized

common that such a practice is rarely questioned, and to speak out publicly against incorporation wil often subject the critic to immediate censure and verbal abuse. In spite of the fact that there is no justifiable reason for a church to incorporate under a government charer (contract) as a business entity and to seek tax-exempt status; the church seems

in Contracts, Business Organizations, Litigation and Trial
..i "

Practice.

to be blind to this reality. It has become a state government
business agency. It is, by statute and IRS code, immune from

She is the author of several books including: Lord, Why Me?;

Christmas, A Christian Holiday, Or is It?; Corporation Sole vs.

taxes and not required to incorporate for any reason. In most cases, attorneys and accountants have convinced the clergy to
file for this status to gain alleged benefits and privileges offered by the government, such as: (a) Limited Liability - clergy and members are not liable for church actions (b) Perpetuity _
continuous succession, irrespective of changes in membership

501

(c)(3) Corporation; and a booklet, How to Protect

Everything You Own in This Life and After.

Since 1997, Elizabeth has been writing Aricles of Incorporation
.""~!:- -

for the office of corporation sole within the Canon Law for

(c) Tax Exemption - government exemption from property, sales, and income taxes, etc.: and (d) Tax Deduction - for
charitable organizations - for income tax purposes. Many thousands of churches in America have joined in a

churches and various ministries. She has been dedicated to

warning and teaching the body of Messiah of the trappings of 501 (c )(3) Corporation and how they can release themselves

legally from the worldly system of Babylon. Her ministry

embraces the church's obligation to come back under the headship of the Master Yahshua, and stil remain as a tax

exempt status to those who desire to have a donation

acknowledgment for the gifts they give to the ministry.

contractual agreement with the Babylonian System and have incorporated as non-profit businesses functioning as statutory business corporations under the control of the state government and the Internal Revenue Service. Prior to 1954, this. incorporation status was virtually not known. We now have to
judge whether Y ahshua/J esus, the Messiah, is the sovereign

.,.!

head of His called-aut-ones or the State is. They aren't really the "ecclesia", the called-aut-ones, by our Lord Yahshua. The true church cannot enter into a contract
5

4

o (0

w

¡¡ ,

of submission and collusion with the world and remain called out and in union with the .Messiah. If it does, it desires to be other than the church of the Most High, the called-out-ones.

The true church is represented as sojourners. Its citizenship lies

in the heavenly region. This earhly region in which it is traveling is a foreign country. As Israel was instructed not to .make any covenant with the foreign countries they passed through on the way to the Promised Land, so we as citizens of
.,

the same Kingdom are under the same mandate. This book is addressed to the called-out-ones who desire

to be separate people and in total submission to the Lord

Messiah and to remain the "ecclesia." It is for those who have

incorporated and have become a state agent of government but

now want to. be unincorporated. This book is for those who

have never incorporated but desire to put in order "their calling"

in the ministry to encourage privacy back to the church and

provides for an arrangement in the church in which the house of God may not be divided against itself.

.-..

If, after reading this book, you have any questions please contact:
Bethel Aram Ministries
,

P. O. Box 2038 * Dewey, AZ 86327

Phone: [phone] * Fax: [phone]

E-Mail: bethelaram(gcableone.net

Website: corpsole.org

6

(0

~

a

~ . '.;' " ,.'

and (b) SHALL NOT applies to: (a) Churches. their integrated

W
the same status and category as a non-profit c.. ../Jration, without being one, and without being under their jurisdiction.
They understand the difference between a church, the calledout-ones, and a non-profit business corporation. The Benefits of the canon law corporation sole are: 1. They are not subject to the "public policy" rule

auxilaries, and conventions or associations of churches.

IRS Code Section 6033(a) provides church "Mandatory

Exceptions" from the need for filing returns of any kind. It also

.l

acknowledges the church has complete immunity to disclosure.
page 33.

The regulations explain that it is not necessary to maintain

records of any kind. In Section 6033(1 )(g)( l)(i) it states that annual returns

II II
way.

and regulations governing the 50l(c)(3) noted on

2. They are not created by the government and are
not under any government agency including the IRS.

are not required to be filed by an organization described in

section 501(c)(3), which has established its right to exemption

from taxation under 501(a) and which is organized and operated exclusively for religious purposes. In Section 6033(2)(a)(i)(iii) of the Code it states: (a) Mandatory Exceptions, (i) Churches, their integrated auxiliaries, i etc. (iii) exclusively religious activities of a Religious Order.

As stated, the corporation sole has complete immunity to

3. They are subject to the private government of those who create them. 4. The only rules for their government are the laws and constitution as signed by the founder. 5. The government is not able to interfere in any

,

6. The government may not alter or amend the
charer/covenant.

disclosure. The regulations explain that it is not necessar to maintain records of any kind except for the organizations' own purposes and reasons. In Section 170(B) provides for Chartable Contributions and gifts that can be deducted for an individual.
.

7. All church workers are no longer classified as employees, but considered as ministers of the
gospel.

In Section 170 B(1)(a)(i) it states: (1) Individuals (a)

8. No government control of the administration.
9. There are no filing requirements of any kind.
10. There are no withholding or self-employment

General Rule for any charitable contribution to: (i) A church or association of churches.

The church/ministr (called-aut-ones) are recognized

under Section 170 for charitable contribution.

taxes or income tax with corporation sole.
11. The corporation sole can receive donations and

give tax-deductible receipts.
12. The corporation sole can do and operate as any

Since the IRS Codes are subject to the First Amendment to .the United States Constitution, there are NO requirements for a corporation sole of'he church or the church related ministries

individual can in this world, but at the same time
not

to apply to the IRS for recognition of tax exemption or tax-

be par of it.

exempt status. In fact, the codes themselves provide a specific EXCEPTION to reporting and taxation for churches/ministry. The IRS Codes are for corporations, i.e. non-profit and for-profit business corporations. The corporation sole is NOT a
!I

13, Most of all, the headship becomes Messiah and not the government.
A benefit of the corporation sole is its abilty to support

business corporation of any kind. Even though it is not a

business corporation, IRS recognizes the corporation sole as in

the ministr with income earned outside the ministry by the
49

48

(J

a (0

',.

essence, a corporation sole is self-governing withi.Ahe church like a sovereign nation; the holy kingdom of the Most High. We choose to record the corporation sole in the state of

corporation sole offce and at the same time drastically reduces your income taxes. If you are a corporation sole and you are also a W-2 employee for a company, you may donate 50% of your adjusted gross income you earned to the ministry of the corporation sole and take the deduction off your 1040 form. If your spouse is also working outside the ministry and is a W-2 employee, he/she may also donate 50% of hislher gross income

Nevada. The reason being is they are the only state that wil accept the ecclesiastical canon law corporation sole written as
an office and not as an entity. In statutory form surrounding both types of corporation

to the corporation sole, thus reducing yoUr tax responsibility drastically and adding more proceeds to the corporation sale for
They are:
Alabama Alaska
"

. . .
sole, seventeen states in the United States of America have
corporation sole separtely, directly and openly in there statutes.
Code Section 10-4-Ito 9 (1975) Stat. Section 10.40.060 (1985)

the purpose of the llnistr. There is no tax liability for_ the corporation sole working within the ministry.

Eared income of a private business outside the ministry

that has no relationship to the corporation sale is taxable. If you are a corporation sole and operate your own business and want

Arwna
¥",.

Revised Stat. 42-10-11901-1011908
Corp. Code Sees. I 0000

to support the ministr by using monies of the business, you

to 100 1 5

wil want to form a Parnership LLC (Limited Liabilty

Rev. Stat. 7-52-101 to 104
Rev. Stat. Section 419-1 to 9

Company) to operate the outside business and form a canon law trst to be the majority member.

,

The LLC has no corporate IRS return accountabilty,

California Colorado Hawaii Idaho Michigan

Code Section 30-304 Compo Laws Ann. Section 458.1-2,
458.271-27 (West 1983)

only the parners do. A 1065 K -1 report is fied for the LLC.

Code Ann. 35-3-101 to 209 (1985)
Rev. Stat. Section 84.010-080 (1985)

In a parnership LLC, a trust can be the majority member

(parner) of the LLC, which in turn according to IRS 7701.4 can
,

Rev. Stat. Ann. Sec. 306.6-8(1984)
Code Ann. Section 33-31- 140 Code Ann. Sec. 16-7-1 to 12 (1973)

pass 100% its income to a nonprofit entity. Whatever the percentage amount of the other parner is is that parners tax

liabilty. The percentage passed to the ministry of the

corporation sole is tax free to the ministry and totally supports

Montana Nevada New Hampshire South Carolina Utah Washington Wyoming

Rev. Code ann. Sec. 24.12.010-040
Stat. Section 17-8-109 to 1 i 3 (1977)

the ministry.

t. The corporation sole presiding within the church is as

follows: Christ is the-head of the church. Under the headship of Christ, is the congregation (body of Christ). and within the

At least nine other states or jurisdictions have at least one corporation sole created under special or private charer, sometimes dating before the time of the passage of a general
incorporation statute. They are the District of Columbia, llinois,
Kentucky, Maine, Marland, Massachusetts, Nebraska, Rhode

congregation, is the administrative Offce (Pastor, Elder,

Bishop, Apostle, Minister, Deacon, Prophet, etc.) of corporation sole_ The Aricles of Incorporation of the Offce only is recorded
!'

Island and Texas. No authoritative listing has been found listing

in the Secretar of State for a Certificate of Existence as an

ambassador of the Kingdom of God. The congregation is not
50

the states which have corporations sole under private law or special incorporation. The foregoing nine jurisdictions were
drawn from cases citing a corporation sole in a judicial opinion,
51

recognized by the State or any of its adllnistrations. In

(J

a (0

incorporated, not the person, not thp, Church
Ministr, nor the congregation.

Question: Answer:
.,

Are there by-laws in a corporation sole?

No. The corporation sole does not have the usual trappings of a corporation, Le., 501(c)(3). It does

CORPORATION SOLE
name.

not have by-laws, a board of directors, offcers,
stock, stockholders, official minutes, or corporate

QUESTIONS AND ANSWERS Question:
of incorporation?

Question: Answer:
Answer:

What is a corporation sole?

A corporation sole is an offce consisting of one

Does the corporation sole have a charter/articles
1;he older corporation soles are devoid of a royal charer or other formal approved characteristics.
Since then the state acknowledgment later

person only, and his successors in some

parcular position within the Body of Christ or religious order to give them sole legal capacities

and

advantages, paricularly that of perpetuity,

which in their natural person they could not have

had.

became an alleged requirement, or at least a state policy, a theory had to be developed to justify the corporation sole existence of the ancient church.
"

Question: Answer:
Question:
Answer:
,

How are the articles of incorporation sole
written?

What is an offce of corporation sole? The office of a corporation sale is an official administrational position of a person succeeding

one another in some offcial positions

They can be written by following the statutes
requirements of the paricular state but are

(officeholders) within the Church Ministry for

the work of the ministry. Example: Pastor, Elder, Bishop, Apostle, Prophet, Prophetess,

written out of the ecclesiastical, canon law. If

Missionary.

Question: Answer:

W'at is a corporation sole formed for? Corporation Sole may be formed to acquire, hold

they are written out of the state statutes, they are a corporation sole of the state. If they are written out of the canon law, they are pre-dating of its existence of an ancient religious order and not par of the state. The fiing is for recognition as a . non profit by the state only.
Question:
Answer:

and dispose of Church or religious society property and for the benefit of religion, for eleemosynary works (charity), for education,

Can a corporation sole receive donations and L
give tax deductions?

scientific research and for public worship.

Yes. Because a corporation sole is in the same
status (standing) as a 501(c)(3) corporation.

Question: Answer:
54

Is the Church Ministry incorporated?

No. The office of corporation' sole is

according to the IRS èode as a non profit organization, it can receive and give tax
55

a

CD

-.

deduction receipts as a state granted Church

must donate the assets to anc.. A' exempt
purpose described in this chapter, or to the

G

Ministry can.

Question:

Can a corporation sole be fonned to' do

federal government or to a state or local government for a public purpose." In chapter
three, page 15 of publication 557 those that are

buszness?
".

Answer:

NO! There are a lot of promoters that are

exempt automatically are exempt if they
meet the requirements of the 501(c)(3) section

making wild claims that corporation sole can be used for business. In reality the IRS wil look at
sole proprietorship or at least a business

of the IRC include: churches, interchurch
organizations, auxilares of church. "IRS .
publication 1828 states on page 3, "Churches
may be

this as

trust. In both cases the taxation benefit is totally

lost. A true corporation sole is not an entity or

legally organized in a variety of ways

an organization or a trst.

under state law, including . . . . . .corporation
sole." The IRS is stating that a Church Ministry

..Question:

Can a corporation sole be formed for estate

that is under a corporation sole is recognized as
the same status as a 501(c)(3) corporation. Thus

planning?

Answer:

NO! There are a lot of promoters that are

the assets of the 501(c)(3) corporation can be

donated to the corporation sole without loss of
assets.

promoting corporation sole as an estate planning tool. A corpration sole is not an instrument for estate planning.
Question: Answer:

Can the corporation sole purchase property?

Question:

If i am in ministry as a corporation sole and my spouse is my successor and I die, and my

Yes. Holding property for Church in the
corporation sole is one of the purposes for
establishing a corporation sole. This includes:

spouse succeeds my offce, when my spouse dies,

how wil shelhe get our hereditaments to our children?

Answer:

parsonage, vehicles, and buildingsJor the Church Ministry.
Does the IRS recognize a corporation sole?

If you have heirs to pass hereditaments to, a

Canon Law Trust can be formed. Your children/

heirs are the beneficiaries, thus receiving the

Question: Answer:

hereditaments by