United States v. Toth

• Decision Date: 16 September 2020
• Docket Number: Civil Action No. 15-cv-13367-ADB
• Parties: UNITED STATES OF AMERICA, Plaintiff, v. MONICA TOTH, Defendant.
• Court: U.S. District Court — District of Massachusetts

UNITED STATES OF AMERICA, Plaintiff, v. MONICA TOTH, Defendant.

Civil Action No. 15-cv-13367-ADB

UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS

September 16, 2020

MEMORANDUM AND ORDER ON MOTION FOR SUMMARY JUDGMENT

BURROUGHS, D.J.

The United States of America filed this case to collect a civil penalty assessed against Defendant Monica Toth ("Defendant") for her failure to timely report her financial interest in, and/or her signatory or other authority over, a bank account in her name at UBS AG ("UBS") in Zurich, Switzerland (the "Account") for the 2007 calendar year, in violation of 31 U.S.C. § 5314 and 31 C.F.R. § 1010.350. [ECF No. 1]. Currently before the Court is the Government's motion for summary judgment. [ECF No. 164]. For the reasons set forth below, the Government's motion, [ECF No. 164], is GRANTED.

I. BACKGROUND

A. Factual Background

Except as otherwise noted, the following facts are not in dispute.

Defendant has been a citizen of the United States since 1988 or 1989. [ECF No. 165 ¶ 1 ("PSOF")]. Defendant currently resides in the United States and resided here during the 2007 calendar year. [Id.]. In 1999, while in Argentina, Defendant signed paperwork to open the Account in her name with UBS in Switzerland. [Id. ¶ 2; ECF No. 168 at 1-2 ("DSOF")]. Defendant's father and her brother advised her not to tell anyone about the Account. [PSOF ¶ 3]. The Government states that in 2001, it entered into a Qualified Intermediary Agreement ("QIA") with UBS that required UBS account holders to (1) disclose their identities to U.S. authorities by completing a W-9 form, or (2) sell their U.S. securities. [Id. ¶ 4]. Defendant disputes this fact.¹ [DSOF at 3]. Defendant did not complete a W-9 form. [PSOF ¶ 5; DSOF at 3-4]. In 2004, after UBS notified Defendant that it would no longer send her monthly transfer of $15,000.00 from the Account to her bank account in the United States without listing the ordering party, Defendant told UBS that she no longer wanted to make these transfers. [PSOF ¶ 6; DSOF at 4]. From 2006-2008, relatives in South America transferred money to Defendant's U.S. bank account and Defendant then reimbursed them by transferring funds to them from the Account. [Id. ¶¶ 7-8; DSOF at 4-5].

As discussed in previous Orders, the following four facts have already been established for the purposes of this litigation:

1. Defendant had legal control over, and the legal authority to direct the disposition of the funds in, the Account (and any sub-accounts), by investing the funds, withdrawing the funds, and/or transferring the funds to third-parties, between the date the Account was opened and at least December 31, 2008.

2. For the purposes of calculating the amount of a penalty, the Account (and any sub-accounts) contained $4,347,407.00 as of the penalty-calculation date.

3. Defendant had a legal obligation to timely file a Financial Bank Account Report ("FBAR") regarding the Account in each calendar year that the Account was open, including with regard to calendar year 2007.

4. Defendant willfully failed to file an FBAR regarding the Account with respect to calendar year 2007.²

[ECF No. 110 at 12]; see [ECF No. 158 at 3; PSOF ¶¶ 18-21; DSOF at 11-12].

In addition to failing to file an FBAR for the 2007 calendar year, when Defendant prepared and signed her 2007 federal income tax return, she failed to mark "yes" or "no" in response to Question 7a on the return, which asked whether she had an interest in or signature or other authority over a foreign financial account. [PSOF ¶¶ 12-13]. In a letter dated May 3, 2012, the Internal Revenue Service ("IRS") informed Defendant that it was proposing to assess a penalty against her for willful failure to file an FBAR for the 2007 calendar year. [Id. ¶ 22]. The letter explained that the penalty amount could not exceed the greater of $100,000 or fifty percent of the balance on the account. [Id. ¶ 23]. The letter included a "write-up" with further explanation for the proposed penalty, including Defendant's failure to disclose the Account on her tax returns for 2005-2009, failure to disclose the Account on amended returns for 2007-2009, and delinquent FBARs for 2005-2009. [Id. ¶ 24].

Defendant states that she disclosed the Account with her amended returns for 2007-2009, [DSOF at 13], while the Government maintains that Defendant did not properly disclose the Account on the amended returns, [ECF No. 171-1 at 12, 13]. On September 19, 2013, a penalty of $2,173,703.00 was assessed against Defendant for willful failure to timely file an FBAR for the 2007 calendar year. [PSOF ¶ 25]. The total amount the Government now seeks, includinglate fees and interest, is $3,138,097.48. [Id. ¶ 26; ECF No. 166 (declaration of Thomas P. Cole with supporting documentation on the penalty, late fees, and interest)].³

B. Procedural Background

The Court provided a detailed discussion of the procedural history of this matter in its Order denying Defendant's motion to vacate sanctions. [ECF No. 158]. In short, throughout the two years during which Defendant represented herself pro se, Defendant repeatedly missed deadlines, refused to comply with discovery rules, and failed to observe this Court's explicit orders regarding her discovery obligations. See, e.g., [ECF Nos. 61, 62, 63, 75, 80, 81, 81-1, 82, 83, 84, 86, 92, 93, 93-2, 96, 97, 99, 102, 106, 109]. In response to Defendant's persistent violations, the Government filed a motion seeking sanctions against Defendant, which it later amended following further discovery lapses by Defendant. [ECF Nos. 83, 86, 93]. The Defendant did not oppose the Government's motion for sanctions or show sufficient cause as to why its motion should be denied. [ECF Nos. 97, 99, 102, 106, 109]. The Court granted the Government's motion on October 15, 2018 and imposed sanctions. [ECF No. 110]. The sanctions the Court imposed on Defendant included accepting as fact the four statements outlined above. See [id. at 12].

On March 15, 2019, Defendant filed a motion to vacate the Court's sanctions order, [ECF No. 130], which the Court denied, [ECF No. 158]. The Government filed its motion for summary judgment on February 21, 2010, [ECF No. 164], which Defendant opposed, [ECF No. 167]. The parties then filed a reply and sur-reply. [ECF Nos. 171, 174].

II. LEGAL STANDARD

Summary judgment is appropriate where the moving party can show 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). "[A]n issue is 'genuine' if it 'may reasonably be resolved in favor of either party.'" Robinson v. Cook, 863 F. Supp. 2d 49, 60 (D. Mass. 2012) (quoting Vineberg v. Bissonnette, 548 F.3d 50, 56 (1st Cir. 2008)). "A fact is material if its resolution might affect the outcome of the case under the controlling law." Cochran v. Quest Software, Inc., 328 F.3d 1, 6 (1st Cir. 2003) (citation omitted). Thus, "[a] genuine issue exists as to such a fact if there is evidence from which a reasonable trier could decide the fact either way." Id. (citation omitted). By invoking summary judgment, "the moving party in effect declares that the evidence is insufficient to support the nonmoving party's case." United States v. One Parcel of Real Prop. (Great Harbor Neck, New Shoreham, R.I.), 960 F.2d 200, 204 (1st Cir. 1992) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986)).

"To succeed in showing that there is no genuine dispute of material fact," the moving party must "'affirmatively produce evidence that negates an essential element of the non-moving party's claim,' or, using 'evidentiary materials already on file . . . demonstrate that the non-moving party will be unable to carry its burden of persuasion at trial.'" Ocasio-Hernández v. Fortuño-Burset, 777 F.3d 1, 4-5 (1st Cir. 2015) (quoting Carmona v. Toledo, 215 F.3d 124, 132 (1st Cir. 2000)). Conversely, "[t]o defeat a properly supported motion for summary judgment, the nonmoving party must establish a trial-worthy issue by presenting enough competent evidence to enable a finding favorable to the nonmoving party." ATC Realty, LLC v. Town of Kingston, N.H., 303 F.3d 91, 94 (1st Cir. 2002) (internal quotation marks and citation omitted). That is, the nonmoving party must set forth specific, material facts showing that thereis a genuine disagreement as to some material fact. One Parcel of Real Prop., 960 F.2d at 204 (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986)).

In reviewing the record, the Court "must take the evidence in the light most flattering to the party opposing summary judgment, indulging all reasonable inferences in that party's favor." Cochran, 328 F.3d at 6 (citation omitted). The First Circuit has noted that this review "is favorable to the nonmoving party, but it does not give him a free pass to trial." Hannon v. Beard, 645 F.3d 45, 48 (1st Cir. 2011). "The factual conflicts upon which he relies must be both genuine and material[,]" Gomez v. Stop & Shop Supermarket Co., 670 F.3d 395, 397 (1st Cir. 2012), and the Court may discount "conclusory allegations, improbable inferences, and unsupported speculation." Cochran, 328 F.3d at 6 (quoting Medina-Munoz v. R.J. Reynolds Tobacco Co., 896 F.2d 5, 8 (1st Cir. 1990)).

III. DISCUSSION

As an initial matter, the Court notes that in light of its Order on sanctions, which found the elements necessary to prove the Government's claim against Defendant, there is no dispute of material fact. See [ECF No. 110]. Although Defendant disputes aspects of the Government's statement of facts, [ECF No. 158], in light of the Court's previous Order these disputes are not material and therefore do not preclude the entry of summary judgment. See Anderson, 477 U.S. at 247-48 ("By its very terms, this standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be...