United States v. Hopkins

• Decision Date: 30 October 2018
• Docket Number: No. CIV 11-0416 JB\WPL,CIV 11-0416 JB\WPL
• Parties: UNITED STATES OF AMERICA, Plaintiff, v. MARK HOPKINS; SHARON HOPKINS; and STATE OF NEW MEXICO REVENUE DEPARTMENT, Defendants.
• Court: U.S. District Court — District of New Mexico

UNITED STATES OF AMERICA, Plaintiff, v. MARK HOPKINS; SHARON HOPKINS;and STATE OF NEW MEXICO REVENUE DEPARTMENT, Defendants.

No. CIV 11-0416 JB\WPL

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW MEXICO

October 30, 2018

MEMORANDUM OPINION¹

THIS MATTER comes before the Court on Hopkins' Motion for Relief from Order [Doc #164], filed February 27, 2013 (Doc. 167)("Motion"). The Court denied the Motion, filed by the Defendants Mark Hopkins and Sharon Hopkins ("the Hopkins'") in an Order, filed September 15, 2014 (Doc. 175)("Order"). The primary issue is whether the Court should modify its Memorandum Opinion and Order, filed February 14, 2013 (Doc. 164)("SJ MOO"), granting summary judgment in favor of Plaintiff United States of America against Defendants Mark Hopkins and Sharon Hopkins, based on excusable neglect resulting in a mistake of fact as to the amount for which Defendant Mark Hopkins ("M. Hopkins") is indebted to the United States. The primary issues which the Court addresses in the SJ MOO are:

(i) whether Plaintiff United States of America may reduce to judgment the outstanding tax assessments for tax years 1996, 1997, 1999, 2000, and 2001against Defendants Mark Hopkins and Sharon Hopkins, who were convicted of tax evasion for these same years in the United States' case against them, United States v. Mark E. Hopkins and Sharon J. Hopkins, No. CR 09-0863 MCA (D.N.M.); and (ii) whether the United States is entitled to foreclosure on its federal tax liens encumbering the Hopkins' interest in certain real properties located in Eddy County, New Mexico, in partial satisfaction of their tax liabilities owed to the Internal Revenue Service ("IRS").

SJ MOO at 1-2. The Court granted the Hopkins' Motion for Surreply and their Defendants' Motion for Telephonic Appearance Re: Motion Hearing on January 3, 2013, "for the reasons stated on the record at the hearing." SJ MOO at 2. Concluding that there were no genuine issues of material fact, and that the United States was entitled to judgment as a matter of law, the Court granted in part and denied in part the United States' Motion for Summary Judgment, filed July 16, 2012 (Doc. 66)("SJ Motion"). See SJ MOO at 2. The Court concluded that the Hopkins' "have a liberty interest in their right to engage in the common occupation of their choosing, pursuant to Article I, section 8 and the Sixteenth Amendment of the United States Constitution," and concluded that "Congress constitutionally can tax the Hopkins' income from the exercise of that right . . . and has not specifically exempted, excepted, or excluded the Hopkins' income from taxation under the Internal Revenue Code . . . ." SJ MOO at 2. Accordingly, the Court concluded that the Hopkins' income from their labor is not exempted from taxation. See SJ MOO at 2. The Court concluded that, in the criminal case against the Hopkins', establishing that the Hopkins' owed the United States a "substantial amount of tax" and that the Hopkins' used "nominees and/or alter-egos to shelter their income from the United States to evade taxes," was necessary to the jury's verdict that the Hopkins' were guilty of Criminal Tax evasion for tax years 1996-1997, and 1999-2001. SJ MOO at 2. The Court concluded, therefore, that res judicataprevents the Hopkins' from relitigating those issues in the civil case against them. See SJ MOO at 2. The Court concluded that:

[b]ecause the record establishes that there is no genuine dispute whether the IRS assessments underlying the IRS' federal tax liens on which they seek to foreclose are valid and accurate, and there is no material dispute whether the Hopkins used the Defendants Grace Trust, Shalom Enterprises, Inc., and House of Royale, Inc. as their nominees or alter-egos to shield their assets from the IRS, there is no genuine dispute that the United States is entitled to foreclose on its liens against the subject property and is entitled to summary judgment as a matter of law. Because the United States has agreed with Defendant Bayview Loan Servicing, LLC, that they will equitably divide profits from the sale of Tract #1, the Court denies the United States' Summary Judgment to the extent it seeks the Court to declare that its interest in Tract #1 is prior and superior to any other interest in the property.

SJ MOO at 2-3. Granting summary judgment in favor of Plaintiff United States of America against Defendant Mark Hopkins, the Court ordered that "M. Hopkins is indebted to the United States for $732,811.61, as of October 19, 2010, for the federal income taxes assessed against him for the tax years 1996, 1997, 1999, 2000 and 2001, plus interest and all statutory additions provided by law until paid.". SJ MOO at 100. The Court also ordered that, granting summary judgment in the United States' favor against Defendant Sharon Hopkins, "S. Hopkins is indebted to the United States for $123,670.98, as of October 19, 2010, for the federal income taxes assessed against her for the tax years 1996 and 1997, plus interest and all statutory additions provided by law until paid.". SJ MOO at 100. The Court remains persuaded that its SJ MOO ruling isappropriate. Accordingly, the Court will not alter its prior ruling. Consequently, the Court will deny the Motion.

FACTUAL BACKGROUND

The Court recites the factual background as stated in the SJ MOO. The footnotes associated with the quoted text -- footnotes 2-6 -- are also quoted in full from the SJ MOO. The SJ MOO stated:

In support of its motion, the United States relies on specific pleadings, admitted United States exhibits, and trial transcripts from the Hopkins' criminal case, United States v. Hopkins.² Additionally, the United States relies upon a declaration and its IRS exhibits. Finally, the United States relies upon the following undisputed facts:³

1. Federal Income Tax Liabilities and Liens Against Hopkins.

M. Hopkins worked as an emergency room physician and earned significant income. Before 1996, the Hopkins filed federal income tax returns and incurredtax debt that they failed to pay fully. See IRS Notices of Tax Liens, Hopkins Crim. Gov. Ex. 39, filed July 16, 2012 (Doc. 69-1). In 1996, the Hopkins took steps to avoid liability and payment. They met and consulted with several individuals and groups that advocate recognized tax protestor arguments and tactics, and made multiple library visits.

In 1997, M. Hopkins filed an "Affidavit of Citizenship and Domicile" with the Chaves County, New Mexico, Clerk, stating that he is a citizen of the "Texas Republic," is a nonresident alien of the United States, and is not required to pay federal income tax. M. Hopkins' Affidavit of Citizenship and Domicile, Hopkins Crim Gov. Ex. 35, filed July 16, 2012 (Doc. 69-2). S. Hopkins filed a similar document. See S. Hopkins' Affidavit of Citizenship and Domicile, Hopkins Crim Gov. Ex. 36, filed July 16, 2012 (Doc. 69-3).

The Hopkins asserted to the IRS that their compensation for labor earned was not income subject to federal income tax. See, e.g., Hopkins' 1996 Form 1040, Hopkins Crim. Gov. Ex. 152, filed July 16, 2012 (Doc. 69-4). In furtherance of their arguments, the Hopkins filed a joint federal income tax "return" that listed "zero income" for tax year 1996, while attaching W-2's showing M. Hopkins' wages as $81,000.00 and S. Hopkins' wages as $9,000.00. Hopkins' 1996 Form 1040. The Hopkins' Form 1040, filed jointly, for tax year 1996 reported "0" income, and attached letters and documents to support their tax positions. SeeHopkins' 1996 Form 1040 at 5. Hopkins altered the jurat, and attached three signed statements containing tax protest language: "Affidavit of Claims for Exemption and Exclusion from Gross Income of Remuneration, Wages and Withholding," "Affidavit of Citizenship and Domicile," and "Contract and Declaration of Citizenship." Hopkins' 1996 Form 1040 Attachments, HopkinsCrim. Gov. Ex. 152, filed July 16, 2012 (Docs. 69-5 and 69-6). Statements attached to the Hopkins 1996 tax return stated: "The income tax is voluntary. We do not wish to volunteer." Hopkins' 1996 Form 1040 Attachments at & 8, at 6. Also, the Hopkins stated: "We are natural born sovereigns, preamble, de jure Citizen of one of the 50 sovereign Republic, freely associated compact American states." Hopkins' 1996 Form 1040 Attachments at & 5, at 9. The Hopkins stated that they were sovereign citizens of one of the fifty states, were "not citizen[s] of the United States," and were "not subject to jurisdiction of the United States," and filed a "Notice of Election to Terminate U.S. Taxpayer Status" and a "Declaration of Independence." Hopkins Crim. Gov. Ex. 270, filed July 16, 2012 (Docs. 70, 70-1, 70-2, and 70-3); Hopkins Crim Gov. Ex. 37, filed July 16 2012 (Doc. 70-4).

As part of their activities designed to avoid the IRS receiving any of their income for their tax liabilities, the Hopkins set up nominees including two trust -- Guadalupe Medical Service Trust ("GMST") and Grace Trust -- and corporate shells -- Shalom Enterprises, Inc. and House of Royale, Inc. Shalom Enterprises is an Oregon corporation, whose officers were M. Hopkins and S. Hopkins. House of Royale is a Nevada corporation, whose only officer was S. Hopkins. See Default Judgment Against Defendants House of Royale, Inc. and Shalom Enterprises, Inc. at 1-2, filed December 7, 2011 (Doc. 36)(ordering, adjudging and decreeing that House of Royale and Shalom Enterprises are "nominee[s]/alter ego[s] of Mark Hopkins and Sharon Hopkins").

Hopkins instructed the hospitals or physician staffing groups for which he worked to send his earnings directly to GMST and, later, to Shalom Enterprises. Trans-Mountain Emergency Physicians Group decided to honor an IRS levy for the Hopkins' unpaid income taxes that seized his May 1997 paycheck. M. Hopkins protested, saying his income was exempt. The Trans-Mountain Group's Chief Executive Officer rejected that argument, and M. Hopkins quit. See Hopkins Crim. Doc. 340; Crim. Trial Tr. at 555-560 (Sept.

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