Harvey v. US
| Decision Date | 06 February 1990 |
| Docket Number | No. 88-6119-CIV.,88-6119-CIV. |
| Citation | 730 F. Supp. 1097 |
| Parties | Jerry Lee HARVEY, Plaintiff, v. UNITED STATES of America, Defendant. |
| Court | U.S. District Court — Southern District of Florida |
COPYRIGHT MATERIAL OMITTED
Edward Guttenmacher, Miami, Fla., for plaintiff.
Alvarez L. LeCesne, Jr., Asst. U.S. Atty., U.S. Dept. of Justice, Tax Div., Washington, D.C., for defendant.
FINAL JUDGMENT FINDINGS OF FACT AND CONCLUSIONS OF LAW
THIS MATTER came before the Court for judicial review of jeopardy assessments made by the Internal Revenue Service against the Plaintiff, Jerry Lee Harvey for the tax years 1978 through 1983. The Court held an evidentiary hearing in this matter at which time evidence was received and testimony adduced, including the testimony of Jerry Lee Harvey through his deposition taken on May 18, 1988 (Pl. Exhibit 6). Counsel submitted their closing arguments in writing. Having fully considered and reviewed the matter, having reviewed the court file and being otherwise fully advised in the premises and after due consideration, the Court makes the following Findings of Fact and Conclusions of Law:
FINDINGS OF FACT
1. Plaintiff, Jerry Lee Harvey, is a citizen of the United States, residing in Fort Lauderdale, Florida.
2. Plaintiff has a history of involvement in large-scale drug smuggling. In 1977, Plaintiff was arrested and sentenced to five years probation for possession of over 100 pounds of cannabis and conspiracy to import cannabis. (Govt. Exhibit 1; Tr. 67). In 1980, Plaintiff was arrested in Alabama for possession with intent to distribute more than 100,000 quaaludes. (Tr. 70-71). More recently, the Plaintiff has been indicted for conspiracy to traffic in cocaine. (Govt. Exhibit 33; Tr. 73-75 and testimony of Ken Kibort, January 30, 1989). Plaintiff, himself, admits to conspiring to smuggle drugs. (Pl. Exhibit 6 at 157).
3. In relation to Plaintiff's 1980 arrest for importing quaaludes, the United States Attorney for the Southern District of Alabama granted Harvey immunity from prosecution in exchange for his providing information to the United States. See United States v. Harvey, 869 F.2d 1439 (11th Cir. 1989). The immunity agreement was never reduced to writing and its parameters have been the subject of subsequent legal proceedings. Id. at 1441; Harvey v. United States, Case No. 87-6193 (S.D.Fla. September 24, 1987) ().
4. In 1985, a grand jury in the Southern District of Florida returned an indictment charging Plaintiff with 5 counts of income tax evasion for the years 1978 through 1982, in violation of 26 U.S.C. section 7201 and one count of filing a false income tax return for the 1980 tax year. The indictment alleges that Harvey failed to report interest income from his Cayman Islands bank accounts on his 1978 through 1982 individual income tax returns and that he failed to report any interest income in any foreign bank account on his 1980 tax return. Harvey, 869 F.2d at 1441. At a pre-Kastigar hearing held in connection with this criminal case, Plaintiff testified that in 1980 he had revealed to DEA agents that he had deposited millions of dollars, earned through illegal drug transactions, into his accounts at the Nova Scotia Bank in the Cayman Islands. He also testified that he had told the agents how he set up corporations in the Cayman Islands to launder drug money. Id. at 1448. The District Court determined that Harvey had divulged his financial dealing with respect to his illegal drug deals, including the identification of funds in the Cayman Islands bank, to the Government pursuant to his 1980 immunity grant. Based on this determination, the Court in United States v. Harvey, 651 F.Supp. 894 (S.D.Fla.1986), rev'd, 869 F.2d 1439 (11th Cir.1989), dismissed the indictment for all years on the grounds that it was improperly based on immunized testimony. (Pl. Exhibit 6 at Exhibit 4).
5. The United States appealed the dismissal of the indictment as it pertained to the tax years 1980 through 1982. On appeal, the Eleventh Circuit reversed the District Court and determined that the 1980 immunity grant did not extend to the 1980 through 1982 tax years because these violations occurred after the grant of immunity. Harvey, 869 F.2d at 1449. The Court of Appeals also determined that the scope of the grant of immunity was coextensive with Plaintiff's Fifth Amendment privilege which he gave up in exchange for immunity. Id. at 1446.
6. In 1986, Plaintiff was indicted and arrested in the Eastern District of Missouri for conspiracy to defraud the United States by impeding the Internal Revenue Service's ascertainment and collection of federal taxes in violation of 18 U.S.C. section 371. (Tr. 22-31; Pl. Exhibit 6 at Exhibit 11). Plaintiff was tried and convicted for this crime and is currently incarcerated pursuant to this conviction. (Govt. Exhibit 32, Testimony of Ken Kibort, January 30, 1989).
7. Subsequent to the arrest of Plaintiff in 1986, the Internal Revenue Service made a termination assessment against Plaintiff for his 1986 tax year. (Tr. 22-26). Plaintiff challenged that assessment in Harvey v. United States, Case No. 87-6193 (S.D. Fla. September 24, 1987). In addressing objections of Plaintiff's counsel during the termination proceeding, the District Court determined that no immunity had been granted for protection against civil actions for taxes. (Govt. Exhibit 12).
8. Based on filed pleadings, exhibits, and facts discussed in decisions in the various criminal and civil cases involving Harvey, the Internal Revenue Service determined that the collection of unpaid income taxes from Plaintiff was in jeopardy and on December 10, 1987, the Service made jeopardy assessments against Plaintiff for the tax years 1978 through 1983. (Govt. Exhibit 13). Harvey timely filed a complaint for review of these jeopardy assessments.
9. During all tax years at issue, Plaintiff held personal assets in the names of corporations. He purchased a condominium in North Carolina in 1978 in the name of Cayman Aviation Finance, Inc. (Tr. 130-132; Govt. Exhibits 8(f)-8(j)). Plaintiff referred to Cayman Aviation as "my company." (Govt. Exhibit 8(j)). From 1979 until early 1983, Plaintiff also maintained a bank account in the name of Cayman Aviation Finance at the Bank of Nova Scotia in the Cayman Islands. Harvey had sole signature authority on this account. (Govt. Exhibits 4 and 8(c)). Cayman Aviation Finance has never filed any federal tax return. (Govt. Exhibit 8(d)).
10. Plaintiff also held real estate, including his personal residence, in the name of Intercontinental Aircraft Leasing, Inc., a corporation which as of January 30, 1986, had never filed a tax return of any kind. (Tr. 124-127, Govt. Exhibits 8(d), 8(g) 8(i); Govt. Exhibit 4, Exhibit B, p. 6 of 6 thereto). Although the house was titled in the name of Intercontinental Aircraft Leasing, Harvey deducted the interest payments associated with the mortgage on this property on his personal income tax returns. (Govt. Exhibits 9(e)-9(f), Schedule A).
11. Since at least 1978, Plaintiff has maintained funds in foreign bank accounts. From 1978 until 1983, Plaintiff had bank accounts at the Bank of Nova Scotia in the Cayman Islands, including accounts in his own name and those in the name of Cayman Aviation Finance, Inc. (Govt. Exhibit 4).
12. In June 1983, Plaintiff was informed that he was the target of a grand jury investigation and was served a subpoena requesting the production of records of various corporate accounts, including Cayman Aviation Finance, Inc. (Tr. 110-111; Pl. Exhibit 6 at Exhibit 15). Approximately one month later, Harvey transferred $3,125,000 out of the accounts in the Cayman Islands. (Tr. 109-110; Exhibit E, p. 2 of 29 to Govt. Exhibit 4).
13. During the course of the present proceedings, the United States revealed its belief that Plaintiff currently has substantial assets in accounts at the Panama branch of the Bank of Credit and Commerce (BCCI) and that it had served a levy on the bank. (Tr. 26-27; Govt. Exhibits 14-17). Aware of the Service's levy, Plaintiff, acting through an agent to whom he had given power of attorney over his bank accounts, attempted to withdraw his funds from BCCI while this jeopardy review action was pending. (Tr. 136-141; Govt. Exhibits 17-19).
14. Plaintiff admittedly has used at least one alias. In his trial deposition, Harvey admitted to using the name of David Funston and to having a birth certificate, a Canadian passport, and a driver's license issued in that name. Harvey also acknowledges that he used these documents issued to an alias as late as 1985, one year before his current incarceration. (Pl. Exhibit 6 at 94-95). It further appears that Harvey issued checks out of his Panama accounts to David Funston. (Govt. Exhibit 15).
15. Plaintiff filed federal income tax returns for the tax years 1978 through 1983. In none of these returns does he report any income from interest earned from foreign bank accounts. (Govt. Exhibits 9(a)-9(f)). In his 1980 tax return, Plaintiff specifically denies having any foreign bank accounts. (Govt. Exhibit 9(c)).
16. In its jeopardy assessments, the Internal Revenue Service determined that Harvey had unreported income for the years 1978 through 1983 in the aggregate amount of $4,643,567.53. (Govt. Exhibit 13). The Service based this figure on the total dollar amount of the 46 checks issued from accounts at the Bank of Nova Scotia, which were either held in the Plaintiff's own name or which were controlled by him. (Govt. Exhibit 13; Govt. Exhibit 4 at Exhibit B at p. 6; Govt. Exhibit 23).
17. The Government obtained these financial documents pursuant to a letter agreement with the Cayman Islands. (Govt. Exhibit 4).
18. Of this amount, the Service designated $1,800,000 as being interest income earned on the foreign bank accounts during the years 1978 through 1982. (Govt. Exhibit 13). This interest figure is a...
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