Jacobson v. Organized Crime and Racketeering Section of U.S. Dept. of Justice

• Decision Date: 03 November 1976
• Docket Number: No. 23,D,23
• Citation: 544 F.2d 637
• Parties: 76-2 USTC P 9768 Mark JACOBSON and Ranger Bakers, Inc., Plaintiffs-Appellants, v. The ORGANIZED CRIME AND RACKETEERING SECTION OF the UNITED STATES DEPARTMENTOF JUSTICE et al., Defendants-Appellees. ocket 76-6015.
• Court: U.S. Court of Appeals — Second Circuit

Page 637

544 F.2d 637

76-2 USTC P 9768

Mark JACOBSON and Ranger Bakers, Inc., Plaintiffs-Appellants, v. The ORGANIZED CRIME AND RACKETEERING SECTION OF the UNITED

STATES DEPARTMENTOF JUSTICE et al., Defendants-Appellees.

No. 23, Docket 76-6015.

United States Court of Appeals, Second Circuit.

Argued Oct. 13, 1976.

Decided Nov. 3, 1976.

Irving Mandell, Forest Hills, N. Y., for plaintiffs-appellants.

James E. Crowe, Jr., Atty., Tax Div., Dept. of Justice, Washington, D. C. (Scott P. Crampton, Asst. Atty. Gen., Gilbert E. Andrews and Jonathan S. Cohen, Attys., Tax Div., Dept. of Justice, Washington, D. C., and David G. Trager, U. S. Atty., E. D. N. Y., Brooklyn, N. Y., on the brief), for defendants-appellees I. R. S. and its Officials.

Before MEDINA, ANDERSON and MULLIGAN, Circuit Judges.

MEDINA, Circuit Judge:

Plaintiffs Mark Jacobson and Ranger Bakers, Inc., appeal from a judgment denying their application for a preliminary injunction and dismissing their complaint against the Internal Revenue Service and the four individual defendants, Senzer, Pallila, Keenan, and Brennan. ¹ This action was taken, after a hearing, by Judge Edward R. Neaher of the Eastern District of New York, and the opinion is reported at 403 F.Supp. 1332.

While plaintiffs present a number of alleged grievances, the thrust of their case begins with and centers around the Service's declaration and collection of two employment tax jeopardy assessments for the second and third quarters of 1975. The facts, as set out in the complaint and affidavit of Mark Jacobson submitted in support of plaintiffs' motion for a preliminary injunction, are as follows.

Mark Jacobson is the president and sole stockholder of Ranger Bakers, Inc. On October 29, 1974, Ranger purchased certain assets of Silvercup Bakers, Inc., then in bankruptcy proceedings under Chapter XI, and took over the running of the company. Ranger paid its federal employment taxes for the first quarter of 1975, which ended March 30.

However, beginning around May of 1975, Ranger fell into financial difficulties, and failed to make the weekly withholding tax deposits required under the Internal Revenue Code, ² amassing a delinquency of approximately $264,500 for the second quarter of 1975.

Ranger maintains that its financial problems were caused by the concerted efforts of the Organized Crime and Racketeering Section of the Department of Justice and the Internal Revenue Service, which, it claims, were resolved to drive it out of business. Appellants allege that the Organized Crime Section, carrying on a "personal vendetta" against the Jacobson family (App. 7a, 26a), "leaked" to a New York City newspaper a story which appeared in May 1975 to the effect that Jacobson was a front for his father, Sam, who, the article asserted, manages an underworld gambling cartel. Appellants also allege vaguely that the Organized Crime Section intimidated and spread "false and malicious stories" among plaintiffs' customers, vendors, and banks in an effort to dissuade them from dealing with or extending credit to appellants. They claim it was as a result of the consequent loss of business and credit that they were unable to meet their federal tax obligations.

On September 30, 1975, appellants received a deficiency notice for the second quarter employment taxes, requesting payment by October 9. A meeting was held on September 30 in Ranger's office, between Jacobson and his attorney and three IRS officers, including defendants Senzer and Pallila, at which time Jacobson explained Ranger's financial "plight" (App. 32a) and sought to be allowed to pay their tax debt in weekly installments of $10,000. No decision was reached, however, and the next day the Service made a jeopardy assessment under Section 6862 of the 1954 Code, and levied on Ranger's payroll account and on a number of its customers. Despite Ranger's representations to the IRS agents the day before that it would have difficulty raising the money, it paid the assessment and accrued interest on October 2nd.

On October 9, the Service having determined that payments for the third quarter, which ended September 30, were also delinquent, Revenue Officer Senzer informed appellants that the third quarter tax was due immediately. ³ On October 14 a jeopardy assessment was made with respect to these taxes, and levies followed. Apparently sometime shortly thereafter Ranger paid the second assessment. Allegedly as a result of the consequent strain on its resources, Ranger ceased operations one month later, on November 15, 1975.

The motion for a preliminary injunction was properly denied for lack of subject matter jurisdiction. The Anti-Injunction Act, 26 U.S.C. Section 7421, is specific and it is too clear for reasonable debate that all the acts sought to be enjoined constitute in one form or another "the assessment and collection of any tax." The denial of "even-handed treatment," which appellants choose to describe as required by constitutional due process, appears on the face of the complaint to be the refusal to allow appellants to pay their tax debt in installments as the Treasury Regulations permit.

Nor is the recent Supreme Court decision in Laing v. United States, 423 U.S. 161, 96 S.Ct. 473, 46 L.Ed.2d 416 (1976), strongly relied upon by appellants, of any avail to them. In Laing the...