United States v. Gachette
| Decision Date | 20 May 2021 |
| Docket Number | 6:20-cv-1267-ACC-EJK |
| Parties | UNITED STATES OF AMERICA, Plaintiff, v. WALNER G. GACHETTE, A2Z RENTALS, LLC, LBS HOME LOAN, INC., MARIA GACHETTE, SCOTT RANDOLPH, VICKIE L. POTTS, JOE G. TEDDER, LISA CULLEN, VENTURA COUNTRY CLUB HOMEOWNER'S ASS'N, INC., SKY LAKE SOUTH HOMEOWNER'S ASSOCIATION, INC., POLK COUNTY, FLORIDA, ORANGE COUNTY, FLORIDA, CITY OF ORLANDO, FLORIDA and CHARLOTTE COUNTY, FLORIDA, Defendants. |
| Court | U.S. District Court — Middle District of Florida |
REPORT AND RECOMMENDATION
This cause comes before the undersigned, referred from the Court on Plaintiff United States of America's Motion for Judgment on the Pleadings (the “Motion”) on all counts of the Complaint as to Defendant Walner G. Gachette (“W. Gachette”) pursuant to Federal Rule of Civil Procedure 12(c), filed on November 19, 2020. (Doc. 106.) As no opposition to the Motion has been filed by W. Gachette and the time to respond has passed, I review this Motion as unopposed pursuant to Local Rule 3.01(c).
Upon consideration, and for the reasons set forth herein, I respectfully recommend that the Motion be granted in part.
The United States initiated this action (the “Complaint”) against W. Gachette in his individual capacity and as Trustee of the Walner G. Gachette Living Trust (the “Trust”), A2Z Rentals, LLC (“A2Z”), LBS Home Loan, Inc. (“LBS”) Maria Gachette (“M. Gachette”), Ventura Country Club Homeowner's Association, Inc., Sky Lake South Homeowner's Association, Inc., a No. of Florida Counties, and a No. of individuals in their capacity as county tax collectors.[1](Doc. 1.) W. Gachette responded to the Complaint, filing a one-page answer (the “Answer”) on September 16, 2020. (Doc. 89.)
The United States alleges that W. Gachette owned, operated, and franchised a tax return preparation business that produced thousands of fraudulent federal income tax returns generating profits via tax preparation fees for W. Gachette and his associates. (Id. ¶¶ 18, 21.) The United States avers that with the profits from his tax business W. Gachette invested in real estate, among other things, and created LBS in 2012 to purchase and sell properties for his own personal portfolio. (Id. ¶ 33.) The United States asserts that LBS also lent money to, and took mortgages from, other individuals working in W. Gachette's tax preparation businesses to purchase properties. (Id.)
W. Gachette created A2Z in 2014 and used this company to acquire and sell residential rental properties for his personal portfolio. (Id. ¶ 34.) In August 2018, W. Gachette created a revokable trust under Florida law. (Id. ¶¶ 74, 77.) After the Trust was created, he transferred properties previously titled in his own name into the Trust. (Id. ¶ 75.) The United States asserts W. Gachette purchased residential rental properties or provided the funds to do so and titled them in the name of himself or his wife, M. Gachette, and later transferred the properties titled in his name to the Trust. (Id. ¶ 35.) As a result of his real estate investing, utilizing the profits from his tax preparation businesses, the United States asserts W. Gachette directly or indirectly controls and is the beneficial owner of at least 32 residential properties as of the date the Complaint in the instant action, 24 of which are at issue in the Complaint. (Id. ¶ 36.)
The United States names and discusses the method upon which various Defendants hold title to the 24 properties (collectively the “Properties”) in the Complaint, all of which it alleges are located in the state of Florida.[2] (Id. ¶¶ 39-61.) The sole property held by W. Gachette is located at 2932 Willie Mays Parkway, Orlando, Florida ) (initially acquired by M. Gachette on January 7, 2015 and transferred to W. Gachette on January 18, 2019). (Id. ¶¶ 36, 38.) The properties held by the Trust are: 14404 Hertha Avenue, Orlando, Florida (acquired June 28, 2015); 4646 Zorita Street, Orlando, Florida (acquired January 28, 2015); and 5804 Laconia Road, Orlando, Florida (acquired June 28, 2015) (the “Trust Properties”). (Id. ¶¶ 36, 39- 41.) The properties held by A2Z are: 14 S. Apollo Drive, Apopka, Florida (acquired June 12, 2015); 332 Apopka Hills Circle, Apopka, Florida (acquired November 13, 2014); 5251 Clarion Hammock Drive, Orlando, Florida (acquired April 29, 2014); 2081 San Jose Boulevard, Orlando, Florida (acquired June 29, 2015); 10125 Donhill Court, Orlando, Florida (acquired August 3, 2014); 3519 Clear Stream Drive, Orlando, Florida (acquired October 1, 2014); 2132 Rouse Lake Road, Orlando, Florida (acquired February 18, 2014); 705 Spring Creek Drive, Ocoee, Florida (acquired January 27, 2017); and 1172 Salina Avenue, Port Charlotte, Florida (acquired June 23, 2017) (the “A2Z Properties”). (Id. ¶¶ 36, 42-50.) The properties held by LBS are: 1413 Pine Lake Road, Orlando, Florida (acquired April 4, 2019); 11110 Iron Bridge Road, Orlando, Florida (acquired March 22, 2012); 9817 Carmel Park Drive, Orlando, Florida (acquired June 11, 2012); 2437 Stone Cross Circle, Orlando, Florida (acquired April 3, 2014); 7954 Soft Pine Circle, Orlando, Florida (acquired February 3, 2014); 2182 Patterson Avenue, Orlando, Florida (acquired June 12, 2018); 2129 Hillcrest Road, Auburndale, Florida (acquired August 11, 2017); 1096 Stewart Avenue, Frostproof, Florida (acquired August 15, 2017); and 3115 Wiley Avenue, Mims, Florida (acquired March 29, 2019) (the “LBS Properties”). (Id. ¶¶ 36, 51-59.) M. Gachette holds title to the following properties: 4785 Piedmont Court, Orlando, Florida (acquired May 7, 2015); and 1318 Queensway Road, Orlando, Florida (acquired November 3, 2015) ). (Id. ¶¶ 36, 60-61.)
The Internal Revenue Service began an investigation into W. Gachette's tax preparation businesses in 2011, which resulted in the filing of a complaint in September 2014 against W. Gachette and his companies in the Middle District of Florida. United States v. Walner Gachette, et al., No. 6:14-cv-1539 (the “2014 Civil Action”); (Id. ¶¶ 22-25). As a result of the 2014 Civil Action, the United States obtained a consensual permanent injunction against W. Gachette and his companies to cease their tax preparation businesses and for W. Gachette to disgorge $5, 000, 000 dollars in illicit profits (the “Disgorgement Judgment”), of which the United States alleges it is still owed over $4, 100, 000. (Id. ¶ 25.)
The United State alleges that W. Gachette and his companies underpaid their own income taxes. (Id. ¶ 18.) Specifically, the United States sets forth in its Complaint that W. Gachette failed to report his federal income tax liabilities for 2010, 2011, 2012, and 2014 accurately resulting in tax deficiencies of $680, 000 plus interest and penalties. (Id. ¶ 27.) Additional income tax assessments were made against W. Gachette for 2010, 2011, 2012, and 2014, of which the years 2012 and 2014 remain unpaid. (Id.) The United States asserts W. Gachette also has not paid his 2013, 2017, or 2018 federal income taxes, for which assessments were also made. (Id. ¶¶ 27, 62, 64, 66-67.) Pursuant to IRC § 6701, a penalty of $84, 000 (the “6701 Penalty”) was assessed against W. Gachette for aiding in the preparation of 84 false tax returns in conjunction with his involvement in the fraudulent tax preparation businesses. (Id. ¶¶ 26, 68.)
These assessments (the “Assessments”), totaling $1, 692, 540.79, for income tax liabilities for the tax years 2012, 2013, 2014, 2017, and 2018, and the 6701 Penalty are set forth in the Complaint as follows:
Period
Date of Assessment
Amount of Assessment
Nature of Assessment
Income Tax December 31, 2012
November 17, 2014
$70, 441
Tax reported on return
Income Tax December 31, 2012
November 17, 2014
$1, 254
Penalty for failure to pay estimated tax
Income Tax December 31, 2012
April 18, 2016
$40
Collection fees
Income Tax December 31, 2012
July 4, 2016
$161, 195
Additional tax after examination
Income Tax December 31, 2012
July 4, 2016
$32, 239
Accuracy related penalty, IRC § 6662
Income Tax December 31, 2012
July 4, 2016
$17, 411.36
Interest accrued to date of assessment
Income Tax December 31, 2012
October 15, 2018
$17, 736.06
Penalty for late payment
Income Tax December 31, 2012
November 12, 2018
$689.03
Penalty for late payment
Income Tax December 31, 2012
November 12, 2018
$9, 310.97
Interest accrued to date of assessment
Income Tax December 31, 2013
November 23, 2015
$634, 869
Tax reported on return
Income Tax December 31, 2013
November 23, 2015
$1, 535.29
Penalty for failure to pay estimated tax
Income Tax December 31, 2013
November 23, 2015
$142, 724.92
Penalty for late filing
Income Tax December 31, 2013
November 23, 2015
$63, 433.30
Penalty for late payment
Income Tax December 31, 2013
November 23, 2015
$36, 171.98
Interest accrued to date of assessment
Income Tax December 31, 2014
July 11, 2016
Tax as determined by IRS in the absence of a return
July 11, 2016
Penalty for fraudulent failure to file return, IRC § 6651(f)
July 11, 2016
$12, 617.10
Penalty for late payment
Income Tax December 31, 2014
July 11, 2016
$9, 940.40
Interest accrued to assessment date
Income Tax December 31, 2017
November 5, 2018
$24, 231
Tax reported on return
Income Tax December 31, 2017
November 5, 2018
$310.09
Penalty for failure to pay estimated tax
Income Tax December 31, 2017
November 5, 2018
$728.08
Penalty for late payment
Income Tax December 31, 2017
November 5, 2018
$596.91
Interest accrued to date of assessment
Income Tax December 31,...
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