U.S. v. Letscher

• Decision Date: 27 September 1999
• Docket Number: No. 95 CIV. 993(JGK).,95 CIV. 993(JGK).
• Citation: 83 F.Supp.2d 367
• Parties: UNITED STATES of America, Plaintiff, v. Joseph LETSCHER, et al., Defendants.
• Court: U.S. District Court — Southern District of New York

83 F.Supp.2d 367

UNITED STATES of America, Plaintiff, v. Joseph LETSCHER, et al., Defendants.

No. 95 CIV. 993(JGK).

United States District Court, S.D. New York.

September 27, 1999.

Order Denying Reconsideration, December 21, 1999.

Kathleen Zebrowski, AUSA, for the Plaintiff.

Joseph Letscher, New York City, pro se.

OPINION AND ORDER

KOELTL, District Judge.

The complaint in this action seeks to reduce to judgment an assessment of federal tax liabilities, interest, fees, penalties, and statutory additions (collectively, the "tax liabilities") against the defendant Joseph Letscher, who was convicted of failing to file federal tax returns and tax evasion. Pending now are: cross-motions for summary judgment by the Government and by Mr. Letscher; the Government's motion for a default judgment against defendant Irene Letscher Vingo; the Government's motion to amend the caption and to dismiss various defendants; and Mr. Letscher's motion to strike various evidentiary materials submitted by the Government.

I.

The standard for granting summary judgment is well established. Summary judgment may not be granted unless "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Gallo v. Prudential Residential Servs., Ltd. Partnership, 22 F.3d 1219, 1223 (2d Cir.1994). In determining whether summary judgment is appropriate, a court must resolve all ambiguities and draw all reasonable inferences against the moving party. See Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (citing United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962)); see also Gallo, 22 F.3d at 1223. Summary judgment is improper if there is any evidence in the record from any source from which a reasonable inference could be drawn in favor of the nonmoving party. See Chambers v. TRM Copy Ctrs. Corp., 43 F.3d 29, 37 (2d Cir.1994). "In considering the motion, the court's responsibility is not to resolve disputed issues of fact but to assess whether there are factual issues to be tried." Knight v. U.S. Fire Ins. Co., 804 F.2d 9, 11 (2d Cir.1986), cert. denied, 480 U.S. 932, 107 S.Ct. 1570, 94 L.Ed.2d 762 (1987). Because the defendants Joseph Letscher and Irene Letscher Vingo appear pro se, their pleadings, "however inartfully pleaded," must be held to less stringent standards than formal pleadings drafted by lawyers. Estelle v. Gamble, 429 U.S. 97, 106, 97 S.Ct. 285, 50 L.Ed.2d 251 (1976); Patrick v. LeFevre, 745 F.2d 153, 160 (2d Cir.1984).

On a motion for summary judgment, once the moving party meets its initial burden of demonstrating the absence of a genuine issue of material fact, the nonmoving party must come forward with specific facts to show there is a factual question that must be resolved at trial. See Fed. R.Civ.P. 56(e); see also Cornett v. Sheldon, 894 F.Supp. 715, 724 (S.D.N.Y.1995). A party opposing summary judgment must produce evidence in the record and "may not rely simply on conclusory statements or on contentions that the affidavits supporting the motion are not credible." Ying Jing Gan v. City of New York, 996 F.2d 522, 532 (2d Cir.1993); see Wyler v. United States, 725 F.2d 156, 160 (2d Cir. 1983); Cornett, 894 F.Supp. at 724; see also Ali v. Bank of New York, 934 F.Supp. 87, 91 (S.D.N.Y.1996).

II.

There is no genuine dispute with respect to the following facts. In March 1993, Mr. Letscher was convicted of willfully evading the payment of federal taxes for the years 1986 and 1987, and of failing to file federal income tax returns for the years 1984 and 1985. See United States v. Letscher, No. 91 Cr. 331(KC), judgment (S.D.N.Y. July 20, 1993), attached as Ex. C to Declaration of Kathleen Zebrowski dated Sept. 25, 1998 ("9/25/98 Zebrowski Decl."). Mr. Letscher was sentenced to 33 months imprisonment, followed by 3 years supervised release. See id. At sentencing, Judge Kenneth Conboy determined that Mr. Letscher's actions warranted an enhanced sentence under the federal sentencing guidelines. See United States v. Letscher, 40 F.3d 1237, slip op., at 2-3 (2d Cir. Oct. 26, 1994), attached as Ex. D to 9/25/98 Zebrowski Decl. The district court found that a two level increase in the offense level was warranted because of Mr. Letscher's use of sophisticated means of concealing income through his use of unincorporated business organizations and the abuse of W-4 forms. The Court found a further two level increase was warranted based on the defendant's perjury during trial, material misrepresentations to Government agents, and "flooding the court" with frivolous and redundant motions during the two years prior to trial. The Court also found that a three-level upward departure was justified based on Mr. Letscher's filing frivolous post-trial criminal complaints against the Internal Revenue Service (the "IRS") and the Assistant United States Attorney who prosecuted the case and Mr. Letscher's attempts to file liens against property owned by Government personnel. See id. at 2.

The judgment of conviction and sentence were affirmed by the Court of Appeals for the Second Circuit. See id. The Court of Appeals noted that the evidence at trial showed that Mr. Letscher had:

engaged in a systematic, long-term plan to evade the payment of income taxes. He minimized and even eliminated withholding taxes by submitting false Internal Revenue Service ("IRS") W-4 forms to employers, resulting in the under-withholding of significant taxes. Letscher then failed to file tax returns to report income earned from these employers. He also created sham organizations to conceal real estate profits.

See id. at 1-2.

In his own defense, Mr. Letscher did not dispute that he earned income during the years charged in the indictment, or that he had not filed tax returns. See id. at 2. Rather, he contended that he did not believe that individuals are required to file tax returns or pay taxes. See id. He therefore argued that he had a good faith misunderstanding of the federal tax laws. See id.

At his criminal trial, Mr. Letscher testified that he filed tax returns and paid his taxes until 1980. (Tr.¹ at 648.) In 1981, he began listening to and reading materials prepared by Irwin Schiff, a tax protester. (Tr. at 651.) Starting from late 1980, Mr. Letscher attended several seminars hosted by Mr. Schiff. (Tr. at 700.) He also subscribed to newsletters prepared by Mr. Schiff. (Tr. at 702-03.) On the basis of information from Mr. Schiff and Mr. Letscher's own research, Mr. Letscher decided not to file any more tax returns because he could not find any law which required him to do so. (Tr. at 675, 708.)

In or about March 1987, Mr. Letscher went to Hawaii to learn about, among other things, "trusts." (Tr. at 744-45.) There, he met Michael Kailing, an accountant who is not a party to this action, who was allegedly knowledgeable about trusts. (Tr. at 746-47, 758.) Shortly afterwards, Mr. Letscher formed New York Investment International, Inc. ("NYII") and named Mr. Kailing, whom Mr. Letscher had allegedly known for only a few months, as the trustee. (Tr. at 747, 751, 758.) Mr. Letscher funded the trust in part with his own paychecks. (Tr. at 901.) In 1987, he deposited approximately $22,895 into the NYII account. (Tr. at 993-94.) He also stated that he served as the "agent-president" of NYII and his sister, Irene Letscher Vingo, was the secretary of NYII. (Tr. at 897, 900.) Mr. Letscher had signing and deposit authority over the trust account. (Tr. at 902.)

Mr. Letscher testified at his criminal trial that he created NYII in 1987 as a trust for the benefit of his nieces and nephews. (Tr. at 747.) Other than his title as agent-president, Mr. Letscher alleged that he retained no interest in the trusts. (Tr. at 898.) He described NYII was an "irrevocable" trust and understood that he was not to use the trust fund for his personal expenses. (Tr. at 903). However, he also characterized the money that he deposited into NYII as "loans" even though there were no loan documents. (Tr. at 903-04.) Mr. Letscher testified that he believed he could write himself a check if he needed the money he had allegedly loaned to the trust, provided the amount of the check was for less than $25,000. (Tr. at 904, 908.) Evidence adduced at trial proved that Mr. Letscher wrote checks drawn on the NYII bank account to pay his dentist, to rent a summer house, to pay off his credit card balances, to buy clothing, and to purchase groceries. (Tr. at 908-11.)

Mr. Letscher also testified that in 1969, his mother executed a deed transferring title to the property at 113 Glover Avenue in Yonkers, New York (the "Property") to him and his sister, Irene Letscher Vingo, reserving a life estate. (Tr. at 708-10.) In 1972, when their mother died, Mr. Letscher and Ms. Vingo obtained full title to the Property. (Tr. at 711.) In January 1988, Mr. Letscher transferred his interest in the Property to NYII. (See Indenture dated Jan. 4, 1988 and Sch. A attached as Ex. G to 9/25/98 Zebrowski Decl.)

Mr. Letscher testified that he personally incurred expenses to maintain the Property during 1983-1987. (Tr. at 834.) He stated that he fixed the plumbing in the house and also made some of the premium payments to maintain the insurance on the Property. (Tr. at 834.) Moreover, he testified that he occasionally lived at the Property. (Tr. at 846.)

In April 1992, the Government, through the IRS District Office, assessed the defendant for unpaid federal income taxes, interest, and penalties for the tax years 1981 through 1990. (See Letter...