United States v. Mahyari
| Decision Date | 24 January 2023 |
| Docket Number | 3:20-cv-1887-IM |
| Parties | UNITED STATES OF AMERICA, Plaintiff, v. ALI MAHYARI AND ROZA MALEKZADEH, Defendants. |
| Court | U.S. District Court — District of Oregon |
Ty Halasz and Alexander Stevko, U.S. Department of Justice, Tax Division, Attorneys for Plaintiff.
Bear Wilner-Nugent, Counselor & Attorney at Law LLC, Attorney for Defendants.
This action comes before this Court on Plaintiff United States of America's (“the Government”) Motion for Partial Summary Judgment. ECF 15. The Government has brought this action against Ali Mahyari and Roza Malekzadeh (collectively, “Defendants”) for willfully failing to file Reports of Foreign Bank and Financial Accounts (“FBARs”) in 2011, 2013, and 2014 through which taxpayers are required to disclose qualifying foreign bank accounts to the Internal Revenue Service (“IRS”). The Government now moves for summary judgment on the issue of whether Defendants' failure to file FBARs was willful. A hearing on the motion was held on November 29, 2022. ECF 19. For the reasons stated on the record and for the following reasons, this Court finds that there are genuine issues of material fact regarding whether Defendants willfully failed to disclose their Iranian bank accounts in 2011. However, this Court finds that Defendants willfully failed, as a matter of law, to disclose their Iranian back accounts in subsequent years and their Canadian bank accounts for all three years at issue. Accordingly, the Government's Motion for Partial Summary Judgment, ECF 15, is GRANTED in part and DENIED in part.
A party is entitled to summary judgment if the “movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The moving party has the burden of establishing the absence of a genuine dispute of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The non-movant, in opposition to the motion “must set forth specific facts showing that there is a genuine issue for trial.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986). The court must view the evidence in the light most favorable to the non-movant and draw all reasonable inferences in the non-movant's favor. Clicks Billiards, Inc. v Sixshooters, Inc., 251 F.3d 1252, 1257 (9th Cir. 2001). Although “[c]redibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge . . . ruling on a motion for summary judgment,” the “mere existence of a scintilla of evidence in support of the plaintiff's position [is] insufficient ....” Anderson, 477 U.S. at 252, 255. “Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citation and quotation marks omitted).
Defendants are an Iranian-American married couple. ECF 15 at 3. They both received degrees in architecture in Tehran, and Mr Mahyari received a Ph.D. in architecture from Sydney University in Australia. ECF 15 at 3; ECF 16 at 2. In 2001, Ms. Malekzadeh moved to the United States. ECF 15 at 3. Mr. Mahyari followed in 2005, and both Defendants became United States citizens in 2006. Id.
Farsi is Defendants' primary language. ECF 16 at 2. According to Defendants, both struggle with English and have missed professional opportunities in the United States as a result. Id. at 2-3. While Mr. Mahyari received a Ph.D. from an English-based program in Australia, he was apparently regularly advised by his instructors that his English skills were weak. Id. at 3. Mr. Mahyari alleges that he has been unable to secure a job as an architect in the United States because of his limited English proficiency. Id. At first, Mr. Mahyari accepted a position teaching Farsi at the United States Department of Defense's graduate language institute in California, but he eventually started his own home remodeling business. Id. Ms. Malekzadeh has worked as an architectural drafter for MacKenzie, Inc., the TDA Group, the Bonneville Power Administration (“BPA”), and the City of Portland. Id. Ms. Malekzadeh alleges she was terminated from her jobs at MacKenzie, the TDA Group, and the BPA, due primarily to her limited English proficiency. Id. She is currently employed by the City of Portland, but alleges that her supervisors have identified concerns with her English. ECF 16 at 4. Ms. Malekzadeh was also licensed as an insurance agent and mortgage broker, both of which require passing licensing examinations administered in English. ECF 17 at 15.
After moving to the United States, Defendants decided to sell their property in the Lavasan neighborhood of Tehran (“the Lavasan property”). ECF 15 at 3-4. Mr. Mahyari traveled to Iran to facilitate the sale, which was completed on May 4, 2011 for the price of 23,692,500,000 rials, or 2,369,250,000 toman, less fees and taxes, which in 2011 equated to $2,879,146.92 in United States currency. Id. at 4. Defendants paid Iranian taxes on the sale and started to try to move the proceeds to the United States. Id. at 4-5.
Defendants moved the proceeds from the Lavasan property to the United States through two avenues. First, Defendants used existing bank accounts in Canada: Defendants opened two bank accounts in Canada with the Canadian Imperial Bank of Commerce (“CIBC”) sometime between 2001 and 2005. ECF 15 at 6. When Defendants were close to completing the sale of the Lavasan property, Defendants began moving assets to the United States through Canada by purchasing gold and silver bars with their CIBC accounts and having those bars sent to the United States Id. at 7-8. Ultimately, Defendants used the CIBC accounts to purchase over $474,000 in gold and silver between 2010 and 2011 and sell $170,577 between 2012 and 2013, sometimes using their son's name. ECF 15-6 at ¶ 23. Second, Defendants opened a series of bank accounts in Iran with Eghtestad Novin (EN) Bank to house the proceeds before moving them to the United States through a series of money exchanges. ECF 15 at 4-5, 7. However, the exchanges were subject to unpredictably high exchange rates because they were “operating in a sort of unofficial capacity to avoid existing sanctions against Iran.” Id. at 5.
While these transfers were occurring, Defendants retained an attorney, Mehrnoush Yazdanyr, in April 2011 to procure a license from the Office of Foreign Asset Control (“OFAC”) to enable them to transfer the proceeds to the United States without penalties resulting from U.S. sanctions against Iran. Id. at 5. Even though Defendants had already sold the Lavasan property and started transferring the proceeds, the application to OFAC indicated that the property would be sold within the next year. Id. OFAC issued the license on October 24, 2011. Id. at 5-6. The license stated, in relevant part, that it does not “release Licensees or third parties from civil or criminal liability for violation of any law or regulation,”; that the license “should not be interpreted to excuse the Licensees from compliance with other laws, regulations, orders or rulings to which they may be subject,”; and that the “Licensees are subject to . . . recordkeeping and reporting requirements ....” Id. at 6.
In March 2012, the Society for Worldwide Interbank Financial Telecommunications (“SWIFT”) cut off Iranian banks and money exchanges as part of sanctions against Iran. Id. At this point, Defendants had moved approximately $1,350,295 in proceeds from the sale of the Lavasan property to the United States prior to the imposition of the SWIFT sanctions. Id. at 5, 21. These proceeds comprised over ninety-six percent of Defendants' gross income for 2011. Id. at 21. After the expulsion of Iran from SWIFT, it became even more difficult to move money into the United States, and Defendants left significant assets behind in the EN accounts.[1] Id. at 7.
For 2011, the EN accounts had a high balance of $1,257,020 and a balance as of the FBAR filing date of $785,357. ECF 1 at ¶ 43. For 2012, they had a high balance of $897,121 and a balance as of the FBAR filing date of $726,429. Id. For 2013, they had a high balance of $388,652 and an unknown balance as of the FBAR filing date. Id. For 2011, the CIBC account ending in -2234 had a high balance of $44,621 and a balance as of the FBAR filing date of $4,653. Id. For 2012 and 2013, it also had a high balance of $4,653. Id. For 2012, the balance as of the FBAR filing date was also $4,653, and for 2013, the balance as of the FBAR filing date was unknown. Id. For 2011, the CIBC account ending in -5238 had a high balance of $36,873 and a balance as of the FBAR filing date of $0. Id. For 2012 and 2013, it also had a high balance of $0. Id. For 2012, the balance as of the FBAR filing date was also $0, and for 2013, the balance as of the FBAR filing date was unknown. Id.
Upon moving to the United States in 2001, Ms. Malekzadeh filed her first federal income tax return by enlisting the help of a local librarian. ECF 16 at 13. In subsequent years Defendants retained professional tax preparers. Id. at 5. In 2006, Defendants began employing David Niebur of Niebur's Tax Service to prepare their returns. ECF 15 at 8. Mr. Niebur is a licensed tax consultant in Oregon and an enrolled agent with the Internal Revenue Service (“IRS”). Id. at 8. Mr. Niebur meets with clients in person and conducts interviews as he prepares the clients' tax returns-the interviews involve...
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