United States v. Goldsmith, Case No.: 3:20-cv-00087-BEN-KSC

CourtUnited States District Courts. 9th Circuit. United States District Court (Southern District of California)
Writing for the CourtHON. ROGER T. BENITEZ United States District Judge
PartiesUNITED STATES OF AMERICA, Plaintiff, v. ROBERT GOLDSMITH, Defendant.
Docket NumberCase No.: 3:20-cv-00087-BEN-KSC
Decision Date25 May 2021

UNITED STATES OF AMERICA, Plaintiff,
v.
ROBERT GOLDSMITH, Defendant.

Case No.: 3:20-cv-00087-BEN-KSC

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA

May 25, 2021


ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

[ECF Nos. 19, 20, 21, 24]

I. INTRODUCTION

Plaintiff, the United States of America ("Plaintiff" or the "Government"), with the authorization of the Secretary of the Treasury, see 31 U.S.C. § 3711(g)(4)(C), and at the direction of the Attorney General of the United States, brings this action to collect from the Defendant, Robert Goldsmith ("Defendant" or "Mr. Goldsmith"), an outstanding civil penalty pursuant to 31 U.S.C. § 5321(a)(5) for failure to timely file Reports of Foreign Bank and Financial Accounts ("FBARs") for the 2008, 2009, and 2010 calendar years. First Amended Complaint, ECF No. 1 ("FAC") at 11; Motion, ECF No. 19-1 ("Mot.") at 4:1-3.

Before the Court is the Government's Motion for Summary Judgment (the

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"Motion"). ECF No. 19. The Motion was submitted on the papers without oral argument pursuant to Civil Local Rule 7.1(d)(1) and Rule 78(b) of the Federal Rules of Civil Procedure. ECF No. 22. After considering the papers submitted, supporting documentation, and applicable law, the Court finds no genuine issue of material fact exists as to whether Mr. Goldsmith willfully failed to file his FBARs, and as such, GRANTS the Government's Motion.

II. BACKGROUND

A. Statement of Facts2

Mr. Goldsmith is a United States ("U.S.") citizen, who currently resides in San Diego, California. FAC at 2, ¶ 4.

Sometime prior to 1982, Mr. Goldsmith's father opened a bank account at Basler Kantonalbank, a Swiss cantonal bank ("Basler"). FAC at 3, ¶ 9; see also Ans. at 2, ¶ 9. When Mr. Goldsmith's father died in 1982, Mr. Goldsmith's mother inherited that account. FAC at 3, ¶ 9; see also Ans. at 2, ¶ 9; Mot. at 6:3-6 (citing Deposition Transcript of Robert Goldsmith3 at 34:2-6, 104:25-105:8). Sometime while his mother still had control of the

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account and prior to 1989, Mr. Goldsmith was added as a signatory to the account at Basler. FAC at 3, ¶ 10; see also Ans. at 2, ¶ 10.

From 1989 through 2012, Mr. Goldsmith used Howard Zipser, CPA ("Mr. Zipser"), as his accountant and tax preparer. See FAC at 4, ¶ 14; Ans. at 3, ¶ 14; Mot. at 6:19-20. Each year, Mr. Zipser relied on information provided by Mr. Goldsmith and his wife to prepare their Form 1040. FAC at 4, ¶ 15; Ans. at 3, ¶ 15. After Mr. Goldsmith started using Mr. Zipser, but also in 1989, Mr. Goldsmith's mother died, and Mr. Goldsmith inherited the funds at Basler, so Defendant traveled to Switzerland to meet with a Basler representative. FAC at 3, ¶ 11; see also Exhibit 13 to Petrila Suppl. Decl., November 13, 2020 Deposition Transcript of Robert Goldsmith, ECF No. 26-1 ("R. Goldsmith Dep.") at 344:2-6, 104:25-105:8). Mr. Goldsmith transferred the funds he inherited in this account to a new numbered Swiss bank account5 ending in 8171 at Basler (the "Account"), which contained hundreds of thousands of dollars for decades, including during the three years at issue here: 2008, 2009, and 2010. Mot. at 4:6-9, 5:27-28, 6:3-6; see also R. Goldsmith Dep. at 34:2-6, 104:25-105:8); FAC at 3, ¶ 12; Ans. at 3, ¶ 12.

Even though Mr. Goldsmith had been working with Mr. Zipser when he inherited the Account, Mr. Goldsmith did not disclose the Account's existence to Mr. Zipser until

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July 1, 2011. See Mot. at 6:19-24; see also Declaration James J. Petrila in Support of Plaintiff's Motion for Summary Judgment, ECF No. 19-3, ("Petrila Decl."), Exhibit 6 at 31. However, when his mother passed away, Mr. Goldsmith also inherited an interest in commercial properties located within the U.S., informed Mr. Zipser of their existence, and paid taxes on the income the properties generated accordingly. Mot. at 11:22-26 (citing R. Goldsmith Dep. at 13:1-13, 16:23-17:1). Mr. Goldsmith testified that he did not inform Mr. Zipser of the Swiss Account because "[i]t wasn't an account"; rather, "[i]t was a fund." R. Goldsmith Tr. at 88:17-89:6. However, he also testified that he had other "non-bank accounts," which earned him income, like "distributions from Monterey Pass or income earned from [his] Hawaii condo," about which he informed Mr. Zipser. Id.

From 1989 until approximately 2012, Mr. Goldsmith owned the Account. Mot. at 4:6-9, 5:27-28; see also FAC at 3, ¶ 12; Ans. at 3, ¶ 12. As part of his management of the Account, Mr. Goldsmith added his wife and son as signatories to the Account and met annually with an account advisor from Basler in Switzerland. FAC at 3, ¶¶ 12-13; Ans. at 3, ¶ 12. In fact, during his deposition, Mr. Goldsmith testified that the only reason he went to Switzerland was to visit Basler and withdraw cash from the Account. See R. Goldsmith Dep. at 36:19-23, 37:8-12. During these annual in person meetings, Mr. Goldsmith made cash withdrawals from the Account, which he used for various expenses, including personal vacations in Europe. See FAC at 3, ¶ 13; Ans. at 3, ¶ 13. Mr. Goldsmith also made decisions—or at least participated in such decisions—regarding how the money in the Account was invested. See R. Goldsmith Dep. at 34:20-35:5, 54:6-14, 58:9-15. His management included opening the Account, id. at 104:21-105:11, directing what kind of investor profile Basler applied to the Account, id. at 92:6-13, "direct[ing] the people who were running the funds," id. at 92:14-18, and spending the money however he decided, whether on charitable causes or hotels, car rentals, and meals for his travels in Europe, id. at 47:21-25. Despite making determinations about how the money in the Account was invested; deciding how to spend the money in the Account, including on travel expenses and via disbursals of money in the Account to his son; and planning to leave the money in

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the Account to his children, Mr. Goldsmith testified that "it was my account in my name, but it wasn't my money." See R. Goldsmith Dep. at 53:18-19; 54:6-11).

On August 29, 2000, Basler asked Mr. Goldsmith to sign a form, which referenced "new US withholding tax and reporting obligations" and gave Mr. Goldsmith a choice between disclosing his Account to the U.S. Internal Revenue Service ("IRS") or divesting all of his U.S. securities. See Exhibit 11 to Petrila Decl. at 61. This form, often referred to as a Qualified Intermediary ("QI") Form, was part of "the Qualified Intermediary Program—a program which, until October 2008, allowed foreign banks to promise to identify clients with U.S. Securities, and send the taxes due on those securities."6 Norman v. United States, 138 Fed. Cl. 189, 194, n.7 (2018), aff'd, 942 F.3d 1111 (Fed. Cir. 2019) (Norman I) (citing Rev. Proc. 2000-12, 2000-1 C.B. 387 (2000)). When presented with the QI form, Mr. Goldsmith chose to divest the Account of all U.S. securities rather than disclose the Account to the IRS. See id. at 61-68 (attaching multiple forms from 2000 to 2011 which Mr. Goldsmith signed, stating that he is "liable to US tax" and that the choice between disclosure to the IRS and divestment is due to "new US withholding tax and reporting regulations")). On September 18, 2002, August 9, 2007, and August 5, 2009, Mr. Goldsmith signed additional, similar QI forms confirming his choice to forego the opportunity to hold U.S. securities so he could avoid disclosing the Account to the IRS. Id.

Since the 1980s, when Mr. Goldsmith hired Mr. Zipser, Mr. Zipser had been providing Mr. Goldsmith and his wife with a financial questionnaire to assist with tax planning and compliance. FAC at 4, ¶ 15; Ans. at 3, ¶ 15; Mot. at 7:4-8. Upon receiving the questionnaire, Mr. Goldsmith and his wife collected financial information to answer it,

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which they returned to Mr. Zipser. FAC at 4, ¶ 15; see also Ans. at 3, ¶ 15. This questionnaire asked whether the individual had (1) "any foreign income . . . during the year" or (2) "an interest in or a signature or other authority over a bank account, securities account, or other financial account in a foreign country." See Exhibit 7 to Petrila Decl at 35-36; see also Mot. at 7:4-8; FAC at 4, ¶ 16; Ans. at 3, ¶ 16. Although Mr. Goldsmith testified at his deposition that he never personally completed the questionnaire, stating instead, that his wife regularly completed it, R. Goldsmith Dep. at 83:19-84:3, he also testified that "we would fill it in and take it to [Mr. Zipser]," R. Goldsmith Dep. at 59:20-60:3. Further, even though Mrs. Goldsmith testified that she would complete the questionnaire, she also state that she would "discuss what was sent off [in the questionnaire] with her husband," who "took an active role in those discussions" as they "used to gather the documents together and put them in a package." M. Goldsmith Dep. at 62:17-63:21. Similarly, Mr. Zipser testified that he thought both Mr. Goldsmith and his wife were involved in their tax preparation although "[Mrs. Goldsmith] was the primary person preparing the records on an annual basis." Zipser Dep. at 25:19-25.

As of June 30, 2005, the Account had a value of CHF7 638,446.333. See Exhibit 4 to Petrila Decl. at 18. In subsequent years, including 2008 through 2010, the Account continued to maintain a value exceeding $10,000.00.8 Mot. at 6:11-18; see also Exhibit 5 to Petrila Decl. at 25. Despite an Account balance exceeding $10,000.00, and thereby requiring disclosure to the IRS, Mr. Goldsmith indicated in Mr. Zipser's questionnaire for 2008, 2009, and 2010 that he had no foreign income for those years. See Exhibit 7 to Petrila Decl. at 35-40. For one of those years,9 when asked whether Mr. Goldsmith had

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"an interest in or signature or other authority over a bank account, securities account, or other financial account in a foreign country," the returned questionnaire shows a response of "no" despite Mr. Goldsmith's ownership of the Account. Compare Exhibit 7 to Petrila Decl. at 35-40 (showing Mr. Goldsmith answering "no" to the...

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