Free Response to Motion [Dispositive] - District Court of Federal Claims - federal

Case 1:05-cv-00773-EJD

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Nos. 05-773 T and 06-169 T
( Consolidated)

(Chief Judge Damich)

IN THE UNITED STATES COURT OF FEDERA CLAIMS

DAVID SUNSHIN and KELL Y T. HICKEL,
Plaintiffs
v.

THE UNITED STATES,

Defendant

APPENDIX TO THE UNITED STATES' BRIEF IN OPPOSITION TO

PLAINTIFFS' MOTION FOR SUMY JUDGMENT
EILEEN 1. O'CONNOR Assistant Attorney General

DAVID GUSTAFSON ROBERT J. HIGGINS JENNIFERP. WILSON Attorneys Justice Deparment (Tax) Federal Claims Section P.O. Box 26 Ben Franklin Post Office Washington. D.C. 20044 (202) 307-6494 (202) 514-9440 (facsimile)
Court of

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TABLE OF CONTENTS
Appendix:
Exhibit 1:
Copy of Affdavit of

Kelly T. Hickel, fied in the United

States Bankptcy Court for the District of Colorado in the

matter ofInterstate Sweeping, Ltd. Case No. 99-11500,
dated July 1, 1999.

Exhibit 2:

Copy of Affidavit of David Sunshine, President of Interstate

Sweeping, Ltd., filed in the United States Banptcy Cour
for the District of Colorado in the matter of Interstate
Sweeping, Ltd. Case No. 99-11500, dated Februar 8, 2000.

Exhibit 3:

Transcript excerpts from deposition of Kelly Hickel, taken on May 2, 2006, in this case.
Transcript excerpts from deposition of

Exhibit 4:

David Sunshine, taken

on May 3, 2006, in this case.
Exhibit 5:

Copy of First Amended Disclosure Statement to Interstate Sweeping, Ltd., IG Services Group, LLC and Sweepco, LLC Reorganization, filed in the Second Amended Joint Plan of United States Banptcy Cour for the District of Colorado in Interstate Sweeping, Ltd. Case No. 99-11500, the matter of
dated August 18, 1999 (excluding exhibits).

Exhibit 6:

Copy of notice of default from IRS to Interstate Sweeping,
dated Februar 27, 2001.

Exhibit 7:

Copy of notice of default from IRS to Interstate Sweeping,
dated September 21, 2001 .

Exhibit 8:

Copy of notice of default from IRS to Interstate Sweeping, dated October 29,2001.

Exhibit 9:

Employer's Quarerly Federal Tax Retur, Form 941, for Interstate Sweeping, Ltd., for the quarer ending June 30, 1999, dated Februar 21, 2000.
Copy of

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Exhibit 10: Copy of

Employer's Quarerly Federal Tax Retur, Form 941, for Interstate Sweeping, Ltd., for the quarer ending
September 30, 1999, dated Februar 21, 2000.

Exhibit 11: Copy of

Employer's Quarerly Federal Tax Retur, Form 941,

for Interstate Sweeping, Ltd., for the quarer ending
December 31,1999, dated Februar 21, 2000.
Exhibit 12: Copy of

Community First National Ban signature card for Interstate Sweeping, Ltd., debtor-in-possession operating
account, dated Februar 12, 1999.

Exhibit 13: Copy of

Community First National Ban signature card for Interstate Sweeping, Ltd., debtor-in-possession operating
account, dated December 3, 1999.

Exhibit 14: Copies of selected cancelled operating account checks for

Interstate Sweeping, Ltd., from May through December, 1999.

Exhibit 15: Copy ofletter from Glenn Keller to IRS, dated Februar 23,
2000, enclosing copies of each check written by Interstate
Sweeping, Ltd. for payroll tax deposits made after Februar 11,

1999 (enclosures included).
Exhibit 16: Transcript excerpts from deposition of James Hil, taken on

May 2, 2006, in this case.

Exhibit 17: Copy ofInternal Revenue Manual section 1.2.1.5.14.

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IN TH UN STATES.BANUPTCY COURT
FOR TH DISTRCT OF COLORAO

INRE:

INTATE SWEING LTD.,
EIN: 84-145-8582

Case No. 99- i i 500 MSK
Chapter 1 1

IG SERVICES GROUP, LLC
EIN: 84-1296000

Case No. 99-11501 MSK
Jointly Adnustered: Case No. 99-11500 MSK

Debtors.

AFAVI OF KELLY T. mCK

Kelly T. Hickel, upon his oath deposes and says:
1. He is the CEO of

Interstate Sweeping, Ltd. and IG Servces Group, LLC.

2. . That afer the fig ofthe withi Chapter i 1 Petition, he personaly solicited nie

commercial lenders, two investment groups, two professionals experienced in the location of
debtor-in-possession capital and investent parers, and had extended conversations with the

Maone Group, a pseudonym fOT Best Business Servces, in an effort to obtai the maxum value for ths debtor and its assets.
3. His results included one offer by a commercial lender for post-confation

fiancing, a series of rejections and an expression of interest coupled with an inabilty to operate
with the lited the tie frame from one of the investent groups.
4. He had specifc conversations over a period of several months with the pricipal
of the Mazone group who regularly promised an offer throughout the month of

May and who

never delivered an offer no matter how many times request was made.

5. The only par who was able to come to the table with any concrete discussion
and with the capital to back up the discussion was Sweepco, LLC who has jointly proposed a plan with the Debtor.
6. The Debtor's operations have commenced to show a positive cash flow without
takng into account the banptcy expenses or debt servce.
oo5-191184.! July I, 1m 10:52 am

l

l :i

~ GOVERNMENT .; EXHIBIT ¡¡

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7. The Sweepco plan provides the only offer received by the Debtor from its broad solicitation which shows any hope of providing satisfacton for administrative expenses, payment to secured creditors and some payment to unsecured creditors.
8. Termation of

the exclusive period wi provide no benefit and substantial

detrient to al of the paries interested in ths estate.

I declare under penalty of peijuiy that the foregoing is true and correct.
Executed ths 1st day of

July, 1999.

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IN TH UN STATES BANUPTCY COURT
FOR TH DISTRCT OF COLORAO
In re:
)

INSTATE SWEEPING LTD.
Tax ID. No. 84-145-8582 IG SERVICES GROUP, LLC Tax lD. No. 84-14129601
Debtors.

) )
)

Jointly Adinistered Case No. 99-11500 MSK

) ) ) )

CHATE 11

AFAVI OF DAVI SUNSHI, PRESIDEN OF INTATE SWEEPING, LTD.
David Sunhie hereby deposes and says:
the Debtor, Interstate Sweeping, Ltd. ("Interstate"), and have the company. I am also the president of the served in such capacity since the fonnation of Debtor, IG Servces Group, LLC ("IG") and was servg in that capacity at the time when IG
1. -. I am the president of

contrbuted its asset to Interstate.
2. Interstte and IG fied their respective voluntar petitions seekig Chapter 11 relief

on Februar 11, 1999. Since that time, Interstate has operated its business and made good and digent efforts to fonnulate a viable and succssf plan of reorgantion. To that end, Interstate negotiated with a number of entities and individuas to fid the appropriate entity to join with Interstate and propose a feaible plan.
3. Interstate, together with IG, have joined with Sweepco, LLC ("Sweepco") and
have submitted the Fif Amended Joint Plan of Reorgantion of

Interstate Sweeping, Ltd., IG
the plan comply with the

Servces Group, LLC and Sweepco, LLC (the "Plan") which complies with the applicable
provisions of Title 11, United States Code. The proponents of applicable provisions of

Title 11, United States Code.

4. The Plan has been proposed in good faith and not by any means forbidden by law

and Interstate believes this Plan represents the best opportnity for the repayment of debt and continuation of the business.
5. Any payments made or to be made by either Interstate or IG, from the estate or by

a person issuing securities or acquirg propert under the PLan for servces or for costs and
expenses in or in connection with the cae, or in connection with the plan and incident to the case,

has been approved by, or is subject to the approval of, the court as reasonable.

the Plan have disclosed in their Fourt Amended Disclosure Statement to Interstate Sweeping, Ltd., IG Servces Group, LLC and Sweepco, L
7. The proponents of

~GOVERNMENT
iMii;2; 1 Feb 8, 200

il EXHIBIT

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Amended Joint Plan of

Reorgantion ("Disclosure Statement"), approved by the Coùrt on

Januar 3, 2000, the identity of Sweepco, LLC who will succeed the Debtor under the provisions

the Plan upon its confrmation. The Disclosure Statement reveas that Sweepco is composed of three members: Richard S. Frar; Joel A Mael; and James R. Hi. It also discloses that Sweepco has employed Lar D. Nelson and James A Mogen to act as CEO and CFO, respecively, of the
of

Reorganed Interstate upon the Effecve Date of the Plan. .
8. The proponents have further disclosed in the Disclosure Statement that no insider

of either Interstate Sweeping, Ltd. or IG Servces Group, LLC win be retaied in any capacity by
the Reorganed Debtor.

9. The Debtor and Reorganed Debtor have no rates that are subject to the approval
of any governental regulatory commssion.

I declare under pe of perury that the forego~Bj~ t~d c0'7~ecte on

g h:~ .2000 ~ ~-- .David Sunshine

President, Interstate Sweeping, Ltd.

iM~;IFcb 8, 200

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SUNSHINE v. UNITED STATES
May 2, 2006

CASE NO.05-773-T

DEPOSITION OF
KELL Y HICKEL

.

ORIGINAL
Mackereth Lombritto & Associates, Inc.
Specializing in Digital Litigation Services Serving all of Colorado since 1989

~ GOVERNMENT

.it
II

.. g

!i .. z

EXHIBIT '3

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75
I I :02:3 I

information to the Internal Revenue Service which
2
3

II :02:34
II :02:38
I 1:02:38

has been ignored, in my feeling, and so that is the
party who I was referring.

4
5

II :02:57 II :02:59 II :03:04
II :03:06 II :03:08
I I :03: II
II :03: 13

Q. Thank you for clarifying that. All right. Mr. Hickel, I'm going to show you another
document, and don't worry, I'm not going to march

6
7

you through the entire production of documents that
the parties have been engaging in, but I am going

8 9
10

to show you a document i marked KH 2.

It appears to be a filing from the
bankruptcy court --

II
12

II :03: 15

13

(Exhibit KH-2 was marked.) MS. WILSON: I'm sorry, Mr. Gelt,
there's a copy of the document for you.

II :03: 16 II :03: 18

14
15

Q. (BY MS. WILSON) It appears to be a

II :03: 19

16 17 18 19

filing from the bankruptcy court for the District
of Colorado regarding the Interstate Sweeping

II :03:22 II :03:24 II :03:28

bankruptcy. The document is entitled affidavit of

Kelly T. HickeL. First, Mr. Hickel, I'll ask you

II :03:32 20

to turn to the second page and ask you if that's
your signature.
A. That's my signature.

II :03:34 21
II :03:35 22

II :03:36 23
I 1:03:38 24

Q. And of course this is a copy of a document, but you agree that's your signature?
A. Yes.

II :03:40 25

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II :03:45
2 3

Q. Would you agree with me that the
document is dated the I st day of July 19991
A. Yes.

II :03:45 II :03:48

4
5

Q. Now, I would like -- i have some

questions about this document. But first of all,
it is your signature, and so I'm assuming, but i

II :03:50 II :03:52 II :03:56 II :03:57

6
7

would like you to clarify, do you recognize this
document?

8 9
10
I I

A. No. But I'm sure it is my signature.
I'm sure it is a document that was found on the
floor.
Q. Okay.

12
13

A. But recognize six years later? No.
Q. Okay. Do you recall preparing or
signing this document?
A. No.

14
15

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16 17
18

I I :04:0 I

I I :04:08

Q. Do you have any doubt that you did sign this document?
A. No.

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I I :04: I 3 I I :04: I 5

19

20
21

Q. You just don't have any present
recollection of doing it?
A. Right.

22
23

Q. If you turn back to the first page of

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24
25

the document, and you just agreed with me that it's
dated July i, 1999?

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A. Yes.

Q. It's represented in the first 11:04:26 3 paragraph -- actually, well let me read the first
11:04:28 4 sentence: Kelly T. Hickel, upon his

I 1:04:23 2

oath, deposes

Ii :04:31 5 and says. And then the first numbered paragraph

11:04:33 6 says: He is the CEO of Interstate Sweeping, Ltd.
11:04:37 7 and IG Services Group LLC?

i I :04:40 8

A. Yes.

i i :04:40 9

Q. Were you, in fact, in July of 1999, the

II :04:43 10 C EO of I nterstate Sweeping?
i i :04:45 II

A. At the time I resigned all the

Ii :04:47 12 positions, and as I said to you, I was involved
11:04:50 13 prior to and subsequent to efforts to try to get
11:04:53 14 financing for the company.

II :04:54 I 5

Q. I'm not sure that answers my question.

II :04:56 16
i i :04:57 17

A. Okay.

Q. Were you, in fact, the CEO of Interstate

11:05:00 18 Sweeping as of July I, 1999?
II :05:02 19

A. I represented it in the oath, and so

II :05:04 20 I'll accept that I was. But I did not practice
11:05:06 21 that position.

Ii :05:07 22
II :05:08 23

Q. Okay.

A. And there is a very clear definement
Q. Why don't you explain that a little

11:05:10 24 (sic) in my mind of the difference.
11:05:13 25

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II :05: 13 II :05: 15
2
3

more, the distinction between in practice and
stating it?
A. Locked out of the company. Not involved

II :05: 17 II :05: 18

4
5

with the day-to-day. No decision-making. No
effect on the decisions. No effect on the filing.

II :05:21

II :05:23

6 7 8 9
10

But I did try to complete as much as I

II :05:27 II :05:32 II :05:36 II :05:39

could to pre-petition financing efforts and the
Hill financing efforts to get money for the debtor

so it could emerge from the Chapter Ii. That was
all i did.

II :05:40
II :05:43

II
12
13

Q. Okay. So you did retain the title formally of CEO of Interstate Sweeping as of JulY
I, 1999?

II :05:47 II :05:48 II :05:50 II :05:50 II :05:50 II :05:52
II :05:55

14
15

A. Certainly, for the purpose of that
effort.
Q. Okay.

16

17 18 19

A. But normally, in that title, that
includes other day-to-day decision-making which I

did not have the opportunity to practice with.

II :05:57 20 II :05:59 21
II :06:03 22

Q. All right. Was there another
individual, on July I, 1999, who was, for practical
purposes, the CEO of Interstate Sweeping?

II :06:06 23
I I :06: I 0

A. I believe it was Larry Nelson, from an
operating standpoint.
Q. Now, I would like to clarify something.

24

II :06:16 25

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2
3

You told me earlier you actually did prepare a

written resignation of your position as chairman of
the board of directors of Interstate Sweeping?

II :06:27 II :06:28 II :06:29 II :06:36 II :06:38
I I :06:40
I I :06:4 I

4
5

A. Chairman, yes.

6
7

Q. When did do you that? A. I believe that was done post- TRO. But i
don't know the date.
Q. So after December 1998?

8
9
10

A. Yes.

I 1:06:46

II
12
13

Q. Was it before July i, 1999? A. Yes. But that did not include the title
CEO.

II :06:50
I I :06:50

Q. What did it include?

II :06:52 II :06:54 II :06:57 II :06:59 II :06:59
11:07:01

14
15

A. Chairman of the board.
Q. So after your written resignation as
chairman of the board you retained the title CEO of
Interstate Sweeping?

16

17
18

A. I didn't resign from the position, so I
guess that means I retained it.
Q. And so if you could, explain to me the
parameters of your obligations as CEO of Interstate

19

II :07:03 20

II :07:07 21
II :07: 14 22

Sweeping as of July i, 1999?

11:07:16 23

A. I don't believe I had any obligations.
In fact, as it states, I can continue to pursue the
financing efforts, including the discussions with

II :07:20 24 II :07:24 25

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1 I: 18:35

2
3

So the fact that I'm about to ask these questions by no means is an indication that the
U.S. waives its objections.
However, in order to defend the United
States in this matter, I do believe I need to ask

II: 18:37 II: 18:38
I I: I 8:4 I

4
5

I I: 18:43 II : 18:45

6
7 8 9

these questions and get them on the record. So
that was just for the lawyers, Mr. Hickel, don't

11:18:47

worry about it.
THE DEPONENT: That's the funniest thing
I have heard in a long time.
MR. GEL T: I think I understood what she

I I: I 8:5 I

10

I I: 18:5 I

II
12
13

I I: I 8:52

said.

Ii: 18:53
I i: I 8:55

THE DEPONENT: I think I understood it

14
15

too, which is why it's so funny.

II: 18:58 II: 18:59
I I: I 9:00

16

Q. (BY MS. WILSON) Okay. All right. Now, were you -- all right. Well, you were involved
with the bankruptcy proceeding, and we have been
through that several times today?

17
18

II: 19:03
II : 19:04

19

A. Yes.

I i: 19:05

20

Q. Okay. Specifically, though, in

I I: 19:09 21
I I: 19: 12
II: 19: 13

connection with the bankruptcy proceeding of
Interstate Sweeping, were you involved in any
negotiations with the IRS?

22
23

II: 19: 15

24
25

A. No. Not to my knowledge.
Q. But Mr. Keller was?

II: 19: 18

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01
II :21 :31

Mr. Hill's associates, group, company, whatever it
2
3

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II :21 :35

turned out to be.
Q. Was any distinction being made with
respect to pre-petition versus post-petition

II :21 :42
I I :21 :48

4
5

employment taxes?

II :21 :49 II :21 :52
I 1:2 I :52 I I :21 :54

6

A. I believe there were arrangements for
both.

7 8 9
10

Q. What were the arrangements for both? A. As part of the settlement, he would take
care of the pre. And during the operation, he

II :21 :59
II :22:0 I

II
12
13

would take care of the current, where he was
responsible.

II :22:05
I 1:22:05
I I :22: 19

Q. Okay. Who in the negotiations with the

14
15

IRS, do you remember who was representing Mr. Hil.
Was he represented by an attorney?

II :22:21

II :22:23
I I :22:25

16

A. He had an attorney that i had met.
don't remember the guy's name. And I don't know if
that's the one who helped him with the IRS.

17 18 19

II :22:27 II :22:30

Q. Does the name Neil Goff ring a bell?
G-O-F-F?

II :22:34 20
II :22:35 21

A. No. A gentleman from California.
Q. Okay.
A. I cannot remember his name.

II :22:37 22
I 1:22:38 23

II :22:41

24

Q. I understand that there was a meeting on
February 22, 2000 between some representatives of

II :22:44 25

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II :22:48
the IRS and Mr. Keller and Mr. Hil, possibly

II :22:54 2 others, did you attend that meeting?

II :22:57 3
II :22:59 4

A. Not to my recollection. I don't believe
I was involved in that.

II :23:00 5
II :23:02 6 II :23:07 7
II :23:08 8
II :23: 13 9

Q. Did you have any direct contact with the

IRS with respect to the unpaid employment taxes?
A. No.

Q. Did anyone, at any time, either
Mr. Keller or any of the other people involved in

Ii :23: 16 i 0 this process, tell you that you could not be held

Ii :23:20 Ii responsible for the unpaid employment taxes of
11:23:23 12 Interstate Sweeping as a result of the bankruptcy

Ii :23:25 13 plan?
II :23:26 14
i 1:23:33 15

A. I don't know the answer to that.
Q. Okay.

A. I do know that I was told that the 11:23:36 17 agreement in the court, approved by the IRS, was
II :23:33 16

II :23:40 18 satisfactory to take care of the obligations. And
Ii :23:43 19 I believe that that took care of any obligations on

Ii :23:46 20 my part.

Q. Okay. And who told you -- let's start II :23:49 22 with what was told to you versus your belief. Who
Ii :23:5 I 23 told you what you just said?
Ii :23:53 24
Ii :23:55 25
A. Glen Keller.

II :23:46 21

Q. And what was the basis for your belief?

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SUNSHINE v. UNITED STATES
May 3, 2006

CASE NO.05-773-T

DEPOSITION OF
DAVID SUNSHINE

.
.,~,

ORIGINAL
Mackereth Lombritto & Associates, Inc.
Specializing in Digital Litigation Services Serving all of Colorado since 1989

~ GOVERNMENT

13= EXHIBIT

I

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28
10:04:56

client that I think we talked -- maybe there was

10:04:59 2 several large clients that we talked to him about
10:05:02 3 that required big capital for start-up costs. But
10:05:08 4 smaller clients, just routine stuff, I wouldn't

10:05:11 5 talk to him about. In fact, I probably wouldn't
10:05:13 6 have even gotten involved in it, just routine
10:05: 17 7 day-to-day stuff.

10:05:18 8
10:05:19 9

Q. Who would have handled that? A. Butch Hartman or Julie Beldon.
Q. What about deciding -- or making

i 0:05:22 10

10:05:25 II decisions about what bills to pay during this
10:05:27 12 period of time, would that be operational or larger

10:05:30 13 scale?
10:05:30 14

A. If it was just routine, gas or payroll

10:05:34 15 or things like that, it was just the regular stuff,
10:05:38 16 regular course.
10:05:38 17

Q. So Julie Beldon, you, people in
A. Yes.

10:05:41 18 accounting?
10:05:43 19 10:05:43 20

Q. Okay. And who was signing checks on

10:05:54 21 behalf of Interstate Sweeping post-bankruptcy

10:05:57 22 filing?
10:05:58 23

A. I was.
Q. Okay. Under the category of operational

10:05:59 24

10:06: I 0 25 expenses, we included things like gas, payroll.

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I 0:06: 13 I 0:06: 15

Obviously the reason we're here is because of
2
3

unpaid employment taxes. Included with payroll,

I 0:06:20

are you including employment taxes?
A. Yes.

I 0:06:22
I 0:06:23

4
5

Q. So then it was your job to make sure the
employment taxes were paid during February '99 to

I 0:06:26

6

10:06:31 7 the end of December 99?
10:06:32 8

A. From February of '99 until probably May

10:06:37 9 of '99, maybe June.

i 0:06:39 10

i 0:06:42 Ii
10:06:47 12

Q. What happened in Mayor June? A. Jim Hill's guys took control.

Q. All right. Describe that process to me.
A. I did. But it was when Jim Hil put

i 0:06:49 i 3

10:06:56 14 money into the company through the bankruptcy
10:06:59 15 court, the debtor-in-possession financing, he got

10:07:06 16 Larry Nelson and Jim Mogen to come into the company
i 0:07: Ii 17 and become the CEO and CFO.
10:07:15
18 19

Q.
A.

That was in Mayor June of '99?
Yes.
But as a practical matter, you have said

10:07:18

10:07:18 20
10:07:21
21

Q.

that before, and I understand that statement, I'm

10:07:23 22

trying to understand as a real practical matter,
day to day, were you still coming to the office?
A.

10:07:26 23
10:07:29 24

Yeah. But i mostly worked with Glen

10:07:32 25

Keller at his office. But, yes, i did come to the

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:10

10:07:34
10:07:34 2

office.

Q. And did Larry Nelson or and/or Jim Mogen

10:07:39 3 have an office at that point at Interstate?
10:07:41 4
10:07:42 5

A. Yes, they did.
Q. Did they come to work every day?

10:07:44 6 10:07:45 7

A. Every day.
Q. They were making these operational

10:07:47 8 financial decisions?
10:07:48 9
10:07:49 10

A. Yes, they were.
Q. So when I asked you before about who

10:07:5 I II made the operational decisions, day-to-day

10:07:53 12 financial decisions, I was asking -- just to get

10:07:56 13 clarity on this, I was asking about February '99
10:07:59 14 through the end of December '99, and I asked who
10:08:0 I 15 made those decisions, and you said you?
10:08:03 16

A. Right.

I 0:08:04 17
10:08:05 18

Q. Do you want to correct that? A. Yes, I do.
Q. Okay. Who made the decisions from May

I 0:08:06 19

10:08:08 20 or June of '99, now, through the end of the year?

10:08: II 21 Who was making those day-to-day decisions?
I 0:08: 14 22
I 0:08: I 7 23

A. Larry Nelson and Jim Mogen.

Q. Now this had been your company for a

10:08: 19 24 couple years. How did you feel about the fact that
10:08:21 25 these two gentlemen came in and took over the

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JI

I 0:08:24
I 0:08:26
2
3

day-to-day management of the company u
A.
Not good.
u according to you?

10:08:27 10:08:28 10:08:28 10:08:30
10:08:32

Q.
A.

4
5

Not good.

Q.
A.

How did you react?

6
7

It was not a u it was not a real
Okay. Describe it to me. Day to day,

amicable situation.
Q.

10:08:34
10:08:36

8 9

what was it like?

10:08:38 10

A. Actually, I didn't have that u it was a

i 0:08:41 II lot of conflict. I mean, they really took over and
10:08:44 12 started running things, and obviously I didn't like
10:08:48 13 the way they were doing certain things. And it
10:08:51 14 just wasn't a comfortable situation.

10:08:56

15

Q. Now you mentioned that up through, I
guess, Mayor June of '99, you would make

10:08:59
i 0:09:0 i

16

17
18 19

day-to-day financial decisions in conjunction with

i 0:09:04
I 0:09:08

Julie Beldon and maybe some other folks, clerks,
accountants. To your knowledge, did Mr. Nelson and

i 0:09: 12
i 0:09: i 5

20
21

Mr. Mogen also work with those people after they

came on board?
A. Yes.

i 0:09: 17
i 0:09: i 7

22 23

Q. So at what point u never mind that.
Did u at some point, did you stop

i 0:09:23

24
25

i 0:09:26

signing checks on behalf of Interstate Sweeping?

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I 0:09:28

A. Well, obviously that's another reason

10:09:32 2 we're here. But they used my stamp to sign checks.

10:09:36 3 They couldn't change the bank account, because it

10:09:40 4 was a debtor-in-possession bank account. In
10:09:42 5 retrospect, they probably could have, but we

10:09:46 6 didn't, for whatever reason.

10:09:48 7 I took Jim Hill to meet our banker that
10:09:53 8 had the debtor-in-possession account. And after
10:09:56 9 Larry Nelson and Jim Mogen came in, I brought them
i 0:09:59 i 0 to meet our banker. And it was agreed that they
i 0: i 0:02 II were going to leave the account in place and use my
10: I 0:07 12 stamp.
i 0: I 0:07 13

Q. Okay. And when had that stamp been

10:10:11 14 created? Did the stamp preexist this whole

10:10:15 15 bankruptcy thing?
10: I 0: 16 16 I 0: I 0: 17 17 I 0: I 0: 19 18

A. Yes.

Q. And who else would use the stamp? A. Julie Beldon, mostly.

i 0: i 0:23 19

Q. Who was -- who was the banker that you

i 0: i 0:27 20 were referring to? What bank?
I 0: I 0:28 21

A. It was, at the time, I think it was

10:10:33 22 Community First Bank, in Englewood. And the
10:10:38 23 banker's name was Nick Panetta, P-A-N-E-T-T-A.
10: I 0:42 24

Q. And have you spoken with Mr. Panetta

10: I 0:51 25 about this lawsuit?

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41
I 0:20: 19

assumptions. My question is: Do you know whether

10:20:21 2 the company --

I 0:20:22 3

A. No.

I 0:20:22 4
10:20:23 5

Q. -- whether it had -- you don't know?
A. No.

6

(Exhibit 05-1 was marked.)
Q. (BY MS. WILSON) All right. I would like

I 0:20:24 7

10:20:25 8 to show you a document, it's been marked OS-I. And
10:20:34 9 I have just handed you this document and a copy to

10:20:37 10 your attorney. It was a document filed in the

i 0:20:39 Ii United States Bankruptcy Court for the District of
10:20:42 12 Colorado, in the I nterstate Sweeping bankruptcy

10:20:45 13 proceeding. Affidavit of David Sunshine, president
10:20:46 14 of Interstate Sweeping.

10:20:47 15 And actually, first, before we talk
10:20:49 16 about the document, I would like you to look at the
10:20:51 17 second page and tell me -- there's a signature

10:20:54 18 block. It's labeled David Sunshine, president,
10:20:58 19 Interstate Sweeping; is that your signature?
10:21 :00 20
i 0:21 :0 i 21

A. Yes.

Q. All right. It looks like 8 February of
A. Yes.
Q. All right. Now turning back to the

10:21 :03 22 2000?
10:21:03 23

10:21 :03 24

10:21 :08 25 front page, do you have any memory of this

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41
I 0:21 : II

document?
2

A.

None.
Preparing it? Signing it?
No.

I 0:2 I : I I
I 0:21 : I 3
10:21: 13

3

Q.
A.

4
5

Q.

Do you have any doubt that you actually
No. I don't have a doubt I did sign it.

I 0:21 : I 5

6
7 8 9
10

did sign it?
A.

I 0:21 : 16 I 0:2 I : I 7 I 0:21 : 18

Q.

Would you have reviewed it before

signing it?
A. Yes.

i 0:21 : 19
I 0:2 I : 19

II
12
13

10:21 :25

Q. All right. Now the first paragraph, if you turn with me to the first page, it states in
the first sentence, I am -- and this is, David

10:21 :27 10:21 :30
10:21 :35

14
15

Sunshine hereby deposes and says: i, I'm the
president of the debtor, Interstate Sweeping, and

10:21 :39

16

have served in such capacity since the formation of
A. Yes.

10:21:41 17 the company. Did I read that correctly?
10:21 :43 18 10:21 :44 19
10:21 :50
I 0:21 :5 I
I 0:21 :5 I

Q. Was that an accurate statement as of 8
February 2000?

20
21

A.

Yes.

22
23

Q.

SO other than the bankruptcy -- handling

10:21 :55

of the bankruptcy with Glen Keller, did you have
any other duties as president of the company as of
that date?

10:21 :58
i 0:22:0 i

24
25

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70
II :03:50

have the ability to direct the payment of payroll

II :03:55 2 taxes?
II :03:56 3
II :03:58 4
A.. Probably not, no.

Q. Which one, probably not or no?
A. No.

II :04:02 5
II :04:02 6

Q. You can put that exhibit aside. Let me

11:04:10 7 introduce two new names on the list. We talked
11:04:12 8 about Jim Hil, we talked about Larry Nelson, we

11:04:16 9 talked about Jim Mogen. Who were Richard Frary and

Ii :04: 19 10 Joel Mael?

II :04:20 II
i I :04:24 I 2

A. Richard Frary and Joel Mael?

Q. i think it's M-A-E-L. I'm not entirely Ii :04:27 13 sure how that's pronounced?
11:04:29 14

A. i think I met Richard and Joel maybe

11:04:32 15 once or twice. They were Jim Hill's partners.
i i :04:35 i 6

Q. Okay. Did they have any practical
during the bankruptcy period?

Ii :04:38 17 management or administrative responsibilities
i i :04:40
18

Ii :04:42

19

A.

No.

Ii :04:42 20

Q.

Okay. So when we're talking about

Ii :04:47 21
Ii :04:50 22
i i :04:5 i

Sweepco, are we really just talking about Jim Hill?
A.

Yes.

23

Q.

Did you continue signing tax returns

Ii :05:0 i

24

after Nelson and Mogen came on board, that Form 941

Ii :05: i 0 25

employment tax returns?

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71
II :05: II
A. I'm sure it was a stamp, if my name was

11:05: 15 2 on it, yes. And I don't know. I didn't personally

II :05: 17 3 sign them. If my name is on them, it was a stamp.
4

(Exhibit DS-5 was marked.)

II :05:21 5

Q. (BY MS. WILSON) All right. Let's take a

11:05:22 6 look at a document I've marked DS-5. This is a

II :05:31 7 signature card from Community First National Bank

II :05:34 8 in Englewood, Colorado. It appears to be a
11:05:37 9 signature card for Interstate Sweeping Limited DIP

II :05:41 10 operating account. And it looks like the date this

11:05:45 II account was opened was February 12, 1999. First of
II :05:49 12 all is -- there are signature blocks. And above
11:05:52 13 the name David Sunshine, is that your actual
II :05:55
14
15

signature?
A.

II :05:56
II :05:59 II :05:59

Yes. I -- yes.

16 17 18

Q.
A.

Okay.

It might be a stamp, but yes, it is.
Well, do you have any memory of this
No, but --- signing it?

II :06:04 II :06:08
I I :06:08
I I :06: I 0

Q.

19

document -A.

20
21

Q.
A.
Q..

I I :06: I I

22
23

No, but I'm sure we did it.
Do you have any doubt that you went into

I I :06: 13
I I :06: 16
11:06: 19

24
25

Community First National Bank and opened an account

on behalf of Interstate Sweeping, debtor in

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81
II: 18: II

Q. Other than some payments that he may
2
3

I I: I 8: I 7

have received, and I assume his personal interest
in mentoring you through the process, what was
Mr. Hickel's interest in this bankruptcy proceeding

I I: 18:21

II: 18:24
II : 18:28
I I: 18:3 I

4
5

and getting all of this wrapped up?
A. Well, he was personally guaranteeing on

6 7 8
9
10
i i

II: 18:33

a lot of loans. It was a hard thing. It was
emotionally a very tough situation.
Q.

II: 18:36
11:18:39

You mentioned earlier that he wasn't --

II: 18:42
Ii : 18:45

he wasn't even in Colorado. What -- did you see

him in person very often?
A.

11:18:47
i I: i 8:48

12
13

No.
During that period of time?

Q.
A.

II: 18:50 II: 18:50
11:18:52
11:18:53

14
15

No.

Q.

Was he going to the office at all the

16

Interstate Sweeping offices?

17
18

A. No. He was -- had a restraining order.
He couldn't go to the Interstate Sweeping office.

Ii: 18:56
I i: I 9:00

19

Q. All right. Now let's focus in -- the
thing I'm particularly interested in, obviously,

I i: 19:02

20

I i: 19:04 21
I I: I 9:09
II: 19: 12

since we're here, is the unpaid employment taxes.
What negotiations, if any, were you involved in

22
23

with respect to the unpaid employment taxes?
A. None.

I I: I 9: I 5
II: 19: 15

24
25

Q. None?

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8)
I i: I 9: I 7

A. None.
2
3

I I: 19: I 7

Q. You didn't participate in any
negotiations with the IRS?

I i: 19: 19

II : 19:20
II : 19:21

4
5

A. No.

Q. But Mr. Keller did, I assume?

II : 19:24

6
7

A. Yes. With Mr. Hill.
Q. You never went to a meeting with anyone

11:19:27

11:19:30 8 at the IRS?

I i: I 9:3 I 9

A. I did go, but they didn't let me go to
Q. Explain that. A. I don't know. I just walked up the

Ii: 19:33 i 0 the meeting.
Ii: 19:34 Ii
Ii : 19:34 12

Ii: 19:37 13 front steps with them, and they said, you know

11:19:39 14 what, you ought to not come to this. We'll do it
11:19:43 15 ourselves.

Ii : 19:43 16

Q. There's a couple of days there. You

11:19:45 17 went to a meeting at the IRS building?
11:19:47 18

A. Yeah. i think -- yes.
Q. That was in Denver?

i i: 19:49 19

Ii: 19:50 20
I i: 19:5 i 21

A. Yes.

Q. Who did you go with?
A. I went with Glen Keller, and we met Jim

Ii: 19:52 22

11:19:56 23 Hil there.

Ii :19:57 24

Q. And who prevented you from attending the

11:19:59 25 meeting?

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