Free Proposed Findings of Uncontroverted Fact - District Court of Federal Claims - federal

Case 1:05-cv-00738-TCW Document 36-7 DALE PARKER, CPA

Filed 11/22/2006

10/18/2006

Page 1 of 33
1

1 2
3

IN THE UNITED STATES COURT OF FEDERAL CLAIMS

BROWNING- FERRIS INDUSTRIES &

4 SUBSIDIARIES

5 Plaintiff,
6

vs.

No. 05-738 T (Judge Wheeler)

7 THE UNITED STATES,

8 Defendant.
9

10 11 12

DEPOSITION OF _DALE PARKER, CPA
13

BROWNING-FERRIS INDUSTRIES & SUBSIDIARIES 30(b)(6)
14

15 16 17
18

Phoenix, Arizona October 18, 2006

19 20

c,\) oS-v\)
-v..C,V

ARIZONA REPORTING SERVICE, INC.
Court Report ing

21
22
23

Suite Three 2627 North Third Street Phoenix, Arizona 85004-1126

By:

JODY L. LENS

CHOW , RMR, CRR

Prepared for:
Mr. Stuart J. Bassin Attorney at Law

Certified Reporter Certificate No. 50192
L C'- .i

24 25

¡m.:o copy
, . \" : , i ~... ;..

h,:in 'in (Dr))

ARIZONA REPORTING SERVICE, INC.

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Case 1:05-cv-00738-TCW Document 36-7 DALE PARKER, CPA

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10/18/2006

Page 2 of 33
2

1 2
3

INDEX TO EXAMINATIONS
WITNESS
PAGE

DALE PARKER, CPA
4

Examination by Mr. Bassin
5 6 7 8 9

5

INDEX TO EXHIBITS
NO.

10 11 12

DESCRIPTION
1997 BFI, Inc. Form 1120 top page

MARKED IDENTIFIED
14 16 22
14

22
23

13 14

1998 BFI, Inc. Form 11209 top page

16 22

24

15 16 17

Directors of BFI, Inc.
25 26

12/31/2004 Unanimous Written Consent of the Board of

Delaware Certificate of

Conversion

27 32 39

27 32

18 19 20

27
28

excerpt 7/27/2000 BFI, Inc.
Form 1139

2004 Allied Form 1120

39 41 42

21
22 23 24 25

BFI, Inc. Form 1120X for tax year ending 9/1998
4/25/2005 letter from Mr. Parker to Mr. Mastracchio

41
42

29

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Case 1:05-cv-00738-TCW Document 36-7 DALE PARKER, CPA

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10/18/2006

Page 3 of 33
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1
2 3 4 5
6

OTHER PREMARKED EXHIBITS REFERRED TO HEREIN
NO.
1 2
5

DESCRIPTION

IDENTIFIED
5 5

30(b) (6) Notice of Deposition
Notice of Deposition of Dale Parker
BFI, Inc. Form 112 OX for tax year

ending 9/30/l997

46 46

6
7 8 9
8

BFI, Inc. Form 1120X for tax year ending 9/30/1998
BFI, Inc. Form 112 OX for tax year ending 9/30/1999

7

46
48

10

5/5/2005 letter to Mr. Mastracchio from winston & Strawn

11
12

9

BFI, LLC Form L120X for tax year ending 9/30/1997
BFI, LLC Form 112 OX for tax year ending 9/30/1998

49,70 49,70 49,70

10
13 14 15

11
12

BFI, LLC Form 1120X for tax year ending 9/30/1999 BFI Waste Form 1120X for tax year ending 9/30/1997 BFI Waste Form 1120X for tax year ending 9/30/1998 BFI Waste Form 1120X for tax year

49,70 49,70 49,70
25,48
49

16 17
18

13
14

19 20 21 22
23
24

ending 9/30/l999

18 19

Allied Waste Form 10-K
Amended Notice of Deposition

25

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Case 1:05-cv-00738-TCW Document 36-7 DALE PARKER, CPA

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10/18/2006

Page 4 of 33
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1

DEPOSITION OF DALE PARKER, CPA

2 was taken on October 18,2006, commencing at 9:52 a.m., at
3 the Offices of the United States Attorney, Two Renaissance
4 Center, 40 N. Central Avenue, Suite 1200, Phoenix,

5 Arizona, before JODY L. LENSCHOW, Certified Reporter 6 No. S0192 for the State of Arizona.
7 8

9 APPEARANCES:
10

11 For the Plaintiff:
12 13 14

West Conshohocken, Pennsylvania
- and-

MILLER & CHEVALIER By Mr. Philip Karter 300 Conshohocken State Road

19428

is
16 17
18

ALLIED WASTE INDUSTRIES, INC.
By Mr. Joseph Sciarrotta, Jr. Managing Corporate Counsel 15880 N. Greenway-Hayden Loop Suite 100 Scottsdale, Arizona 85260

19

20 For the Defendant:

21 U. S. DEPARTMENT OF JUSTICE
By Mr. Stuart J. Bassin

22 and Mr. Jacob E. Christensen

23 Room 7203
25

Tax Division
555 Fourth Street, N.W.

24 Washington, D. C. 20001

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Case 1:05-cv-00738-TCW Document 36-7 DALE PARKER, CPA

Filed 11/22/2006

10/18/2006

Page 5 of 33
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1

DALE PARKER, CPA,

2 called as a witness herein, having been first duly sworn
3 by the Certified Reporter to speak the truth and nothing
4 but the truth, was examined and testified as follows:
5 6 7

EXAMINATION

8 BY MR. BASSIN:
9

Q.

We i re on the record.

We're here today for two

10 depositions, the 30 (b) (6) deposition of the plaintiff, as
11 well as the personal, which is in the premarked exhibits
12
13

as a Government Exhibit 1.

There is an amended notice,

which is Government Exhibit 19.

We also are here for the

14 personal deposition of Dale Parker, which is marked as

15 Exhibi t NO.2.
16

MR. BASSIN:

Do we have any obj ection to doing

17 them as a combined exercise?
18

MR. KARTER: MR. BASSIN:

No objection.

19

We're going to assume that

20 Mr. Parker is the designee?
21

MR. KARTER:

Correct, for the items listed in

22 the 30(b)(6) deposition notice, other than the Item i). MR. BASSIN: Correct. 23
24 BY MR. BASSIN:
25
Q.

Mr. Parker, I would like to go through a couple
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1 preliminaries before we start.

2 Have you given depositions before?
3

A.
Q.

Yes.
In what context?

4
5 6 7

A.
Q.

Two with my work at Allied.

What kind of depositions?

A.

There was a lawsuit brought against Allied by a

8 company called Power Strategies, so I participated in
9 that; and then one deposition by the IRS associated with
10 our contingent liability transaction, or, sorry, contested

11 liability transaction.

12 Q. Is that the same transaction as the one that's
13 ensued here?
14

A.
Q.

No.
What contested liability?
It's a contested liability transaction.

15 16 17 18

A.
Q.

Do you know who the lawyer was who handled that?

A.

I think it was handled all by the exam team with

19 the attorney from the local IRS office there.
20 21
22 23
Q. A.
Q.

John Duncan?

Yes, correct.
For your reference, we use a question-and-answer
We ask you to answer as clearly

format in the deposition.

24 25

and as fully and as accurately as possible.

You r re under

oath.

There's a court reporter taking stenographic notes
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Case 1:05-cv-00738-TCW Document 36-7 DALE PARKER, CPA

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10/18/2006

Page 7 of 33
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1

here.

There will be a transcript, which you'll want to

2 review?
3

MR. KARTER: MR. BASSIN: MR. KARTER:

We'll -will he want to review?

4 5

We'll decide that at the end of the

6 deposition.
7 BY MR. BASSIN:
8 9

Q.

It's as though you were in a courtroom for your Because we have a court reporter, there are
Number one, we

purposes.

10

three things that I think are important.

11 will have a number of documents here that we'll be
12

referring to.

It's important to refer to them by exhibit

13 number and page number, so that a month from now we will
14 know what document you are actually referring to.
15 16
A.
Q.

Okay.
And we'll assist you, and you try to watch
I think virtually every page has a page

yourself as well. 18 number on it.
17
19

Second thing is, audible answers are real

20

important.
A. Q.

If you shake your head now, I'LL understand

21 what you're saying, but the record won't show anything.
22
23

Uh-huh.

Just like that.

Okay.

Exactly.

And I've found that my uh-huhs and

24 huh-uhs are really embarrassing and confusing when I see
25

them on a transcript.

Okay.

The only other thing is, we
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Case 1:05-cv-00738-TCW Document 36-7 DALE PARKER, CPA

Filed 11/22/2006

10/18/2006

Page 8 of 33
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1 can only speak one at a time, because our fine court

2 reporter wi I 1 short - c ircui t if three of us are talking at
3 once and she's trying to write it all down.

4 From a scheduling standpoint it's about
5 6
7 8

10:00 a.m. right now.

My guess is that we have something
We'll try to
If you need a

under three hours' worth of work to do here.
take a break, say about an hour and a half.

break, let us know, we' i i take one.

If we get to a point

9 where you need to be fed lunch, let us know, we'll work on

10 that.
11
12 13 14 15
A.
Q.

Okay.

Any questions before we get started?
No.
If any develop, let me know, and we'll try to
We're not trying to trick you.
We i re

A.
Q.

get them clarified.

16 just trying to get your view of the facts as clearly and

17 as accurately as possible.
18

For the record, we have premarked I think
Exhibits 1 through 20.

19

They are in the binder, and they

20 have been handed - - and there were a couple of them that 21 were added during Ms. Kuether's deposition. There's also
22 an index, and we'll refer to them from time to time.
23

Mr. Parker, can you summarize your educational

24 experience after high school?
25
A.

I have an undergraduate degree, Bachelor of
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10/18/2006

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i Science in business management.
2 3

Q.

From where?
BYU, and then a Master's of accounting from BYU.

A.
Q.

4
5

What years?
You make me go way back here, Stu.
1979 for the

A.

6 B. S. degree in business and 1983 for the Master's degree

7 in accounting.
8 9

Q.

That isn't so far.
Yes.
No.
I hold a CPA.

Those are the same years of

my degrees.
A.
Q.

Okay, do you hold any professional licenses?

10 11
12 13

Any others?
From the time that you got your Master's degree,

A.
Q.

14 can you summarize your professional experience?
15
A.

About six years in public accounting.

Following

16 that, about six years in two different industry jobs and
17 then the last eleven years with Allied Waste.
18
Q.

The industry jobs are about 1990 through about

19 1995?
20
A. Q. A.

Correct.
What were the employers?

21
22

First employer was Bell Atlantic Systems Leasing

23 Company and the second employer was Walsh America.
24 25
Q.

What kind of company is Walsh America?
It was a pharmaceutical information company.
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A.

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Case 1:05-cv-00738-TCW Document 36-7 DALE PARKER, CPA

Filed 11/22/2006

10/18/2006

Page 10 of 33
10

1

Q.

And then in 1995, roughly, you went to work for

2 Allied?
3

A.
Q.

Correct.
What was your first position at Allied?
Tax director.

4 5
6 7 8

A.
Q.

What were your duties as tax director?
Primarily, initially was compliance-related.
I was the first tax

A.

Allied did not have a tax department.

9 employee.
10
Q.

At the time, who did their tax planning and

11 advisory function?
12 13
A. Q.

Primarily Arthur Andersen.

Who were the people at Arthur Andersen '95

14 through, say, '99 who worked the account primarily?
15
A.

First couple of years, primarily Tray Maxwell is

16 his name; and then the partner after that was Dean Bakke.
17 18
Q.

How is his last name spelled?

A.
Q.

B-A-K-K-E.
Was there a time after '95 where your duties at

19

20 Allied started to expand or change?
21
22 23
A.
Q.

Sure.
Can you explain how it changed and when?
Maybe be a little bit more specific.
Help me

A.

24 with your question.
25
Q.

Did your title change at some point?
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10/18/2006

Page 11 of 33

11

1

A.

I believe at the end of 2002, was made vice

2 president of tax.
3

Q.

What was the difference between your duties as

4 tax director and as vice president of tax?
5

A.

Initially when I started with Allied, like I

6 indicated, it was more compliance-driven, and then further
7 into Allied, still had compliance responsibilities, but

8 then involved in tax planning.
9

Q.

When did you start becoming involved in tax

10 planning?
11
A.

To a certain extent, even from day one with

12 Allied. The return had been outsourced to Arthur

13 Andersen, so my initial couple years was getting familiar
14 with the compliance process, getting more familiar with

15 the company.
16
Q.

Did the tax function grow during this period,

17 say, from 1995 through 2002 in terms of number of people

18 employed there?
19
20
A. Q.

Yes.
In what ways did it change?
Hired a tax manager.

21

A.

Again, you're testing my

22 memory here, but by the end of 2002, maybe had ten people

23 in the tax department, nine to ten.
24
Q.

25

A.

And you were on top? Correct.
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12

1
2 3

Q.

Throughout this period?

A.
Q.

Correct.
Who were some of those - - who were the other

4 professionals in that group by 2002?
5 6 7
8

A.

At the end of 2002, Ann Couture, C-O-U-T-U-R-E, I'm trying to remember a few of the
There was a couple of

was tax manager.

other names at that point in time.
staff people.

I believe by that time we had hired a State
That's about the

9

tax manager by the name of Jeff Stair.

10 best I can do off the top of my head.
11
Q.

We know that in 1999 there was a merger with

12 Browning-Ferris Industries. A. Correct. 13
14
Q.

After that merger, what was done for taking care

15 of the historic Browning-Ferris Industries' tax issues?
16 17
A.
Q.

Wha t do you mean by what was done?

Okay.

Prior to the merger, who was responsible

18 for Browning-Ferris Industries' tax compliance and

19 planning?
20 21
22 23
A.
Q.

Rich Howe.

He was the director of tax for BFI.

And what happened after the merger?

A.

It became a process of my becoming familiar with
So I worked

BFI, and it was an integration process.

24 closely with Rich Howe and the members of his staff.
25
Q.

Who were the other principal members of his
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Case 1:05-cv-00738-TCW Document 36-7 DALE PARKER, CPA

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10/18/2006

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13

1 staff?
2

A.

Wal t Stone worked wi th Rich.

He was primarily

3 in treasury at the time, but he had previously been in the
4

tax department so had some tax knowledge.

Terri Page was

5 one of the managers under Rich Howe; Ann Smith, another 6 manager under Rich Howe; and then he had about three or

7 four staff.
8 9

Q.

Where were these people located?
In Houston.

A.
Q.

10

Did they ever come to Phoenix?

11
12 13 14

A.
Q.

I don't believe so.
At what point
well, are any of them still
or by Allied?
She's a

employed by Browning
A.

Terri Page is still -- not employed.

15 consultant for Allied.
16
Q.

At what time did any of the others depart the

17 combined company?
18 19
A.
Q.

Again, you're asking for my best guess?

Right.
Rich Howe
MR. KARTER:

20

A.

21

Don't guess.

If you recall, state

22 what your recollection is.
23

THE WITNESS:

Best of my recollection, about a

24 year for Mr. Howe and about a year and a half, two years

25 for Mr. Stone.
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10/18/2006

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14

1 BY MR. BASSIN:
2

Q.

So by the beginning of about 2002, they were

3 both out?
4 5
6

A.
Q.

Approximately, yes.
What about Ann Smith?

A.

She stayed as a consultant for a period of time;

7 and correct a prior statement, Walt Stone stayed as a
8 consultant for a period of time as well.
9

Q.

Do you know where they are now?

10

A.
Q.

I know where Walt Stone is.
Where?

11
12
13

A.
Q.

Houston.
What about Rich Howe?

14 15

A.
Q.

I'm not sure.
Have you had occasion to become familiar with

16 the tax returns that were filed for the BFI Consolidated
17 Group for the last couple years before the merger?
18
A.
Q.

Yes.
I would like to start with the tax return for

19

20

the year ending September 30, 1998.

We're up to

21 Exhibit 22.
22

(Deposi tion Exhibit No. 22 was marked for

23 identification.)
24 BY MR. BASSIN:
25
Q.

I would like you to look at Exhibit 22.
(602) 274-9944

Can you

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15

1 tell me what Exhibit 22 is?
2

A.

Page 1 of the 9-30-98 consolidated tax return

3 for BFI.
4 5 6

Q.

Can you tell me whose signature that is?

A.
Q.

No.
Now, a couple basic questions about this return.

7 Was this a single company or a consolidated return?
8

A.
Q.

Consolidated return.
And the name of the entity that was filing was

9

10 Browning- Ferris Industries, Inc.? A. Correct. 11
12
Q.

With the EIN, employer identification number, of

13 74-1673682?
14
A.
Q.

Correct.
Are you familiar with the process whereby

15

16 Browning- Ferris Industries, Inc. had obtained the consent
17 or authorization of the members of the group, its
18 subsidiaries, to file the consolidated return on behalf of

19 the group?
20
A.
Q.

No.
Do you know if there was any kind of tax sharing

21

22 agreement amongst the various members of the
23 Browning-Ferris Industries, Inc. Consolidated Group?
24
A.
Q.

I don't know.

25

Let's go to Exhibit 23.
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16

1

(Deposition Exhibit No. 23 was marked for

2 identification.)
3 BY MR. BASSIN:
4
5

Q.

Can you tell me what Exhibit 23 is?

A.

The consolidated tax return for Browning-Ferris

6 Industries, Inc. and subs for the short year ended

7 July 30th, 1999.
8

Q.

Do you know whose signature that is as the

9 person who signed the return?
10
A.

Are you talking about the officer or the paid

11 preparer?
12 13 14
Q.

The officer. I don't know.

A.
Q.

What about the paid preparer; do you know who

15 that was?
16
A.
Q.

Yes.
Who was that?
Teresa Dieguez.

17
18 19 20

A.
Q.

Any idea how to spell that?
I believe it's D-I-E-G-U-E-Z.

A.
Q.

21

Do you know if there was any change in the

22 composition of the group, of the BFI Group, that reported

23 the tax on Exhibit 23?
24
A.
Q.

Change from -The prior year.
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25

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10/18/2006

Page 17 of 33
17

1
2

A.
Q.

I don't know of any.

To your knowledge, has there ever been - - well,

3 was there ever i prior to the current controversy / been any

4 question regarding the authorization of Browning-Ferris
5 Industries, Inc. to file returns for this group, prior to

6 the current controversy?
7
8

A. Q.

Not that I'm aware of.

Now, after the BFI/Allied merger, do you know

9 how the income earned by the former Browning-Ferris
10 Industries Consolidated Group was reported to the Internal

11 Revenue Service for postmerger years?
12
13 14
A.
Q.

Yes.
Can you explain how that was done?

A.

It was included in the Allied Consolidated Group

15 tax return.
16 17
Q.

And that's for the first year after the merger?
It's for the period July 31st, '99 through the

A.

18 end of the year and then forward.
19
Q.

Are there any separate Form 1120 returns filed

20 by Browning-Ferris Industries, Inc. for any period after
21 July 30, 1999?

22 A. No.
23 Q. What was the process whereby the members of the
24 old Browning-Ferris Industries Consolidated Group

25 indicated their consent to be part of the Allied
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10/18/2006

Page 18 of 33

l8
1 consolidated return and to file on that, if there was any?
2

A.

I don't know of any consent, any process that

3 was gone through.
4

Q.

Is there any kind of a tax sharing agreement

5 amongst the members of the Allied Consolidated Group?
6 7

A.
Q.

No.
Was there any change made prior to the current

8 controversy regarding Browning-Ferris Industries' role as

9 the head of the Browning Consolidated Group for premerger

10 years?
11
A. Q.

Repeat the question for me, Stu.

l2

Prior to the current controversy, was there any

13 change that you're aware of made regarding Browning-Ferris

14 Industries' role as the head of the Browning Consolidated

l5 Group for tax purposes for premerger years?

l6
17

A.
Q.

No, that I'm aware of.

Let's shift gears a little bit.

18 Do you know when the first time you heard about
19 the possibility that the old Browning-Ferris Industries,

20 Inc. might be restructured as a Delaware LLC, limited

21 liability company?
22 23

MR. KARTER: MR. BASSIN:

Object to form.
Is your obj ection to the term

24 "restructuredrr or -25

MR. KARTER:

Correct, and then, also, with
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19

1

regard to he heard.

Both assume certain facts that aren't

2 in evidence.
3

MR. BASSIN:

Okay.

4 BY MR. BASSIN:

5 Q. What was your first awareness of the possibility
6 that the old Browning-Ferris Industries, Inc.' s corporate

7 structure might be changed?
8

A.

We started talking about some State tax planning

9 opportunities.
10 11 12
Q.

When was thi s?

A.
Q.

Gi ve or take, summer of '04.
What kind of State tax planning opportunities

13 were you discussing?
14
A~

The opportunity was trying to reduce our cash

15 taxes that we were paying on behalf of the BFI North

16 America entity.
17
Q.

And how did a change of the old Browning-Ferris

18 Industries, Inc. corporate structure fit into that
19 potential opportunity?
20
A.

It was a step in providing a way for the income

21 of BFI North America to flow up into Allied Waste North

22 America.
23
Q.

Can you explain how that would work?

Excuse me.

24 Can you explain how you thought that would work?
25
A.

I f we could get the income wi thin BFI North
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20

1 America to flow up into Allied Waste North America, Allied
2 Waste North America is the entity with all the debt of the
3 company, and it had losses, so to the extent we could get

4 income matched with those losses, cash taxes would be

5 reduced.
6

Q.

And is this a State tax issue or a Federal tax

7 issue or both?
8

A.
Q.

State.
And how did you think you could accomplish that

9

10 matching of income and losses through the restructuring or

11 through the modification of the BFI, Inc. corporate 12 structure?
13 14

A.

Again, the losses were in Allied Waste North
It owned 100 percent of BFI, Inc., and BFI, Inc.
The only way that you're

America.

15

owned BFINA, BFI North America.

16 going to get that income to flow up is if you have a
17 liquidation of BFI North America and then a liquidation of

18 BFI, Inc.
19 20
Q.

You're using the term "liquidation."

I've also
Can you

seen the terms irdissolution" and .'termination. ii

21 explain what the relationship, if any there is, between

22 those terms?

23 A. I can explain for tax purposes it was a
24 liquidation under Section 332.
25
Q.

Of the Internal Revenue Code?
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21
A.
Q.

1
2

Correct.
What was a liquidation for Section 332 of the

3 Internal Revenue Code?
4

MR. KARTER:

Are you asking him to explain what

5 332 is?
6 BY MR. BASSIN:
7

Q.

No.

What event did you understand would create

8 a liquidation for purposes of Section 332 of the Internal

9 Revenue Code?
10
11 12
13 14

A.
Q. A. Q.

With respect to? BFI, Inc.
A convers ion to a single member LLC.

Did that have anything - - strike that.

Did such a liquidation have anything to do

15 with what happened to BFI, LLC - - can you change LLC to
16
Inc. ?

Did such a liquidation have anything to

17 do -- strike that.
18

MR. KARTER:

The trans c r ipt says what it says.

19 BY MR. BASSIN:

20 Q. Did such a liquidation have anything to do with 21 what happened to BFI, Inc. for State corporate law
22 purposes?
23

MR. KARTER:

I'm sorry, would you mind repeating

24 the question?
25

THE WITNESS:

For me, too.
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22

1 BY MR. BASSIN:

2 Q. Was there any connection between a liquidation
3 for Federal income tax purposes of BFI, Inc. occurring and

4 what happened to BFI, Inc. for State corporate law

5 purposes?
6 7 8

MR. KARTER:

I'm just going to object to the

form.

You can answer it if you understand the question.
THE WITNESS:

I'm not an attorney.

I know wha t

9 it was for tax purposes.

10 BY MR. BASSIN:

11 Q. Were there any other benefits that you were
12 aware of to changing BFI, Inc. to a limited liability

13 company?
14

A.
Q.

None that I was aware of. Our next exhibit is No. 24.

15 16 17

Handing you Exhibit 24.
MR. KARTER:

Do you want to give him the

18 original to give to the reporter?
19
20

MR. BASSIN:
MR. KARTER:

Jacob has it someplace.

I have no objection if you want to

21 use this as the original.
22

MR. BASSIN:

It isn't even marked.

There you

23 go.
24

(Deposi tion Exhibi t No. 24 was marked for

25 identification.)
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23

1 BY MR. BASSIN:
2

Q.

I would like to ask you - - well, have you seen

3 Exhibit 24 before?
4
5

A. Q.

Yes.
Let's start with on the third page, we have some

6 signatures of the board of directors of Browning-Ferris 7 Industries, Inc., Donald Slager, Thomas Martin and James
8

Gray.
A.

Who are they?

9

Don Slager is currently our president/chief

10 operating officer.
11
12
Q.

When you say Ilourli

A.

Sorry, Allied's.

At the end of '04, I'm not

13 sure what his title was.
14

Thomas Martin was the treasurer at the time and

15 James E. Gray was chief accounting officer/controller.
16
Q.

There's a reference in the first whereas clause

17 to a phrase that the company has entered into a restated
18

indenture with JPMorgan Chase Bank, N .A.

Do you know wha t

19 that is?
20 21
22
A.
Q.

It would be the bank credit agreement.

What bank credit agreement?

A.

And I'm not in treasury, but this would be in

23 effect the line of credit, the -- a source of borrowing

24 for Allied.
25
Q.

What did Browning-Ferris Industries, Inc. have
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24

1 anything to - - have to do with that line of credit?
2

A.

It is Allied's line of credit.

It's my

3 understanding
4
5

MR. KARTER:
THE WITNESS:

There's no question.
Okay.

6 BY MR. BASSIN:
7

Q.

I think I'm getting a little confused here.

In

8 the first paragraph of Exhibit 24, they refer to
9 Browning-Ferris Industries, Inc. as the company.
10
A.
Q.

Uh-huh.
And in the second paragraph in the whereas, it

11

12 talks about the company, Browning- Ferris Industries, Inc.

13 having entered into a restated indenture as of
14

September 1, 1991 with certain banks.

That's premerger

15 16 17

date.
A.

I'm confused.

Right.

I need to correct my previous statement.

I'm not familiar. I don't 18 indenture is referring to.
19
Q.

know what that restated

In the second whereas of Exhibit 24 on the first

20 page, it says it is no longer desirable in the conduct of

21 the business of the company to preserve the corporate

22 status and that it is in the best interests of the company
23 to convert into a limited liability company.

24 Do you know what determination the board made or
25 what the basis for the board's determination was?
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25

1
2

A.
Q.

No.
Did you have anything to do with advising the

3 board of Browning-Ferris Industries, Inc. regarding
4 whether to convert Browning-Ferris Industries, Inc. into a

5 limited liability company?
6
7 8 9

A.
Q.

Not that I can recall.

Do you know who would, who did?

A.
Q.

No.
Did it have anything to do with what you

10 described prior as the tax advantages, at least for State
11 tax purposes, of converting into an LLC?
12
13

A.
Q.

For tax purposes that's why we wanted to do it.

Were you aware of any other purposes for wanting

14 to convert BFI, Inc. into an LLC?
15 16
A.
Q.

No.
I would like you to look at Exhibit 18 in the

17 binder, and this is the Form 10-K filed by Allied for the

18 fiscal year ended December 31, 2005, and I would
19 specifically direct your attention to what's labeled as
20

Exhibi t 149 or Page 149.
A.
Q.

On Page 149 - - are you there?

21
22

Uh-huh.

I am.

Under Section 9, Footnote 9 to the consolidated

23 financial statements of Browning-Ferris, LLC, there's a
24 paragraph there, and it says, "Effective for 2005,

25 Browning-Ferris Industries, Inc. was converted to a single
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26

1

member limited liability company (LLC).

Allied NA, a

2 wholly-owned subsidiary of the Allied Waste Industries,
3 Inc., is the sole member in Browning- Ferris Industries,

4 LLC and therefore BFI continues to be wholly-owned by
5 Allied NA, which ownership has not changed since Allied

6 acquired BFI in 1999."
7 8

To your knowledge, is that statement accurate?
MR. KARTER:

Just for my own clarification, can

9 we be clear, when it references BFI, which entity it's
10

talking about now?

I haven't looked at this prior to

11 this, and I want to make sure I understand, because
12 there's so many entities floating around and many of them

13 have a BFI in them.
14 15

MR. BASSIN:

Okay.

Well, we are -- it's

Allied's document, of course, so I

but I think if you

16 were to go forward in the document to Page - - if you go to

17 Page 119, I think you'll get a -- you'll see the
18 definition of Browning-Ferris Industries for purposes of

19 these financial statements.
20

MR. KARTER: MR. BASSIN:

Browning- Ferris Industries, LLC.

21

Is the short.

BFI becomes the

22 short form for Browning- Ferris Industries, LLC.
23

So if we go back to Page 149, that may help

24 clarify.
25

THE WITNESS:

So the question, again?
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27

1 BY MR. BASSIN:
2

Q.

Is the statement in Footnote 9 on Page 149 of

3 Exhibit 18 accurate, to your knowledge?
4
5 6

A. Q.

Let me state what my understanding is.

Please.
Allied North America owned all of the stock of

A.

7 BFI, Inc. through 12-31-04; and then when Inc. converted
8

to an LLC, it was the sole member.

It held the sole

9 member interest in BFI, LLC.
10
Q.

One other thing in

let's go back to

11

Exhibit 24.

On the second page of Exhibit 24, in the last

12 resolved, do you know why BFI, Inc. adopted as a
13 resolution the particular terms shown in that final 14 paragraph; that the company will not be required to wind
15 up its affairs or pay its liabilities and distribute

16 assets, and that the conversion shall not constitute a
17 dissolution of the company and that shall constitute a 18 continuation of the existence of the converted company in
19 the form of a limited liability company of the State of

20 Delaware?

21 Do you know why those terms were adopted?
22 23 24
A.
Q.

No.
Let's go next to Exhibit 25.

(Deposition Exhibit No. 25 was marked for

25 identification.)
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28

1 BY MR. BASSIN:
2

Q.

Have you seen the documents in Exhibit 25

3 before?
4
5 6

A. Q.

Yes.
When?
When I was reviewing certain documents in

A.

7 preparation for this deposition.
8

Q.

The third and fourth pages, or the third and
Do you

9

fifth pages of Exhibit 25 are dated December 2004.

10 recall having seen them at a date anywhere near December

11 2004?
12 13
14

A.
Q.

I don't recalL.

Who is Jo Lynn White?

A.

She was in the legal department for Allied

15 Waste.
16 17
Q.

On the fifth page, we have the certificate of
Do you

formation that is dated as of December 31, 2004.

18 know what date Ms. White actually signed the document?
19
A.
Q.

No.
Does the phrase "dated as of" indicate the

20

21 possibility that it wasn't actually signed on
22 December 31st, 2004, to your knowledge?
23

MR. KARTER:

Obj ect to form, speculation.

24 BY MR. BASSIN:

25 Q. Do you know?
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A.
Q.

1

No.
When we were looking at Exhibit 18~ which was

2

3 the Form 10-K, we were looking at financial statements,

4 separate financial statements for BFI after it had

5 merged - - several years after it had merged into Allied.
6 Do you know why those financial statements were prepared

7 and published as part of the 10-K?
8 9

A. Q.

I know it was required.

For tax purposes?

10

A.

My understanding, it was required for credit

11 agreement purposes, but that's about all I know.
12
13 14
Q.

Allied's credit agreement or BFI's?
I believe it was BFI's.

A.
Q.

Can you tell me what your understanding is of

15 why it was that somebody required publication of BFI

16 separate financial statements as of 2004, 2005?
17
A.

It's my understanding they were BFI bondholders

18 and that is what required - - or that is what required the

19 separate BFI financial statements.
20
Q.

So BFI had bonds that predated the merger; is

21 that correct?
22
23
A.
Q.

Correct.
And that those bonds remained outstanding

24 through 2004?
25
A.

Correct.
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30
1

Q.

And as part of the terms of those bonds,

2 separate financials for BFI had to be prepared even after

3 the merger with Allied?
4

A.

I don't know if it was the terms of the bonds or

5 if it was an SEC requirement.
6

Q.

Did the conversion from BFI, Inc. to BFI, LLC

7 change the substance of those financial reports, other

8 than the name at the top?
9

MR. KARTER:

Object to form.

When you say

10 IIsubstancell
11

THE WITNESS:

Yeah, what do you mean by

12 substance?
13 BY MR. BASSIN:
14
Q.

Do we zero - - were the accounts zeroed out, or

15 did they just carryover the way they had always been as

16 shown in those financial reports?
17
A.

I don't know the specific changes, if any, that

18 were made in the general ledger.
19
Q.

Are you aware of any changes that were made?

20 21

A.
Q.

No.
Do you know if any specific notice was given to

22 these bondholders that there had been a change of BFI from

23 Inc. to BFI, LLC?
24 25
A.
Q.

I don't know.

Let's change the subject a little bit here.
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31

1
2 3

We were talking about designations of agents for
the consolidated - - for the BFI Consolidated Group.
Now,

let's make sure I have this correct.

Prior to the merger

4 and for premerger years, the designated agent of BFI, Inc.
5 and the Consolidated Group was Browning-Ferris Industries,

6 Inc. for Federal income tax purposes?
7
8

MR. KARTER:

Did you say designated agent?

MR. BASSIN:

Let me rephrase that.

9 BY MR. BASSIN:
10
Q.

As of the date of the merger, was

11 Browning- Ferris Industries, Inc. the agent for the

12 Browning-Ferris Industries Consolidated Group for Federal

13 income tax purposes?
14

A.

It was the parent of the Browning-Ferris

15 Industries group.
16
Q.

Up until August 2006, are you aware of any

17 ac t ion that was taken to change the iden t i ty of the agent
18 for the Browning-Ferris Industries Consolidated Group for
19 Federal income tax purposes for premerger tax years?
20
A.
Q.

State it one more time, please.

21

Up until August 2006, are you aware of any

22 action that was taken to change the identity of the agent 23 for the Browning-Ferris Industries Consolidated Group for
24 Federal income tax purposes for premerger tax years?
25
A.

No.
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1

MR. KARTER:

Stu i when we have a moment, can we

2 take a short break?
3

MR. BASSIN:

Sure.

Why don't we take five

4 minutes now.

5 (A recess was taken.)
6 BY MR. BASSIN:
7

Q.

I would like to hand you what's labeled as

8 Exhibit 26.
9

(Deposition Exhibit No. 26 was marked for

10 identification.)
11 BY MR. BASSIN:

12 Q. Can you tell me what that document is?
13

A.

Looks like a portion of Allied Waste Industries,

14 Inc. and Subsidiaries' consolidated return for the

15 calendar year '04.
16 17
18
Q.

Would you have been the signatory on that?

A.

Yes.
MR. BASSIN:

Just to clarify, Mr. Karter, can we

19 stipulate that this is - - these are documents off that CD

20 that you sent us?
21

MR. KARTER:

I'll take your word that they are.

22 Obviously I don't know for certain, but if that's what you 23 printed them off, then I'll stipulate that that's where

24 they came from.
25

MR. BASSIN:

Okay.

Please advise us if you find
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1 that they aren't.
2

MR. KARTER:

Dale, is there anything about this

3 that is inconsistent with your recollection of a piece of

4 the 2004 return?
5 6

THE WITNESS: MR. KARTER:

No.

Okay.

7 BY MR. BASSIN:
8

Q.

Mr. Parker, there are handwritten numbers on the

9 bottom of Exhibit 26 for page numbering purposes, and I'll
10

admit -- I'LL state that those are mine.

But we'll start

11 wi th Page 5.

12 Was this the document that Allied submitted to
13 the Internal Revenue Service reporting the conversion of

14 BFI, Inc. to an LLC?
15

MR. KARTER:

Object to form.

You said reporting

16 the conversion to the IRS.
17 18

You can answer it, if you can.
THE WITNESS:

It's the liquidation statement for

19 BFI, Inc.
20 BY MR. BASSIN:

21 Q. Do you know if there was any tax effect for 22 Federal income tax purposes to this associated with this
23 complete liquidation?
24
A.
Q.

What do you mean by tax effect?
Did the amount of Allied's Federal income,
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