United States v. Williams

• Docket Number: 2:21-cv-538-JES-NPM
• Decision Date: 16 June 2023
• Parties: UNITED STATES OF AMERICA, Plaintiff, v. JOSEPH B. WILLIAMS III and MEREDITH LEE SMITH-WILLIAMS, as nominee for Joseph B. Williams III, Defendants.
• Court: U.S. District Court — Middle District of Florida

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UNITED STATES OF AMERICA, Plaintiff,
v.
JOSEPH B. WILLIAMS III and MEREDITH LEE SMITH-WILLIAMS, as nominee for Joseph B. Williams III, Defendants.

No. 2:21-cv-538-JES-NPM

United States District Court, M.D. Florida, Fort Myers Division

June 16, 2023

OPINION AND ORDER

JOHN E. STEELE, SENIOR UNITED STATES DISTRICT JUDGE

The United States of America (Plaintiff or the United States) filed a four-count Complaint against Joseph B. Williams III (Williams) and Meredith Lee Smith-Williams (Smith-Williams), as nominee for Joseph B. Williams III (collectively Defendants). (Doc. #1.) This matter comes before the Court on Plaintiff's Motion for Summary Judgment. (Doc. #50.) Defendants filed a Response in Opposition (Doc. #54), to which Plaintiff filed a Reply (Doc. #55.) For the reasons set forth, the motion is granted.

I.

Summary judgment is proper where the evidence “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). “A genuine issue of material fact exists ‘if the evidence is such

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that a reasonable jury could return a verdict for the nonmoving party.'” Edmondson v. Velvet Lifestyles, LLC, 43 F.4^th 1153, 1159 (11^th Cir. 2022) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). “If there is not sufficient evidence for a jury to find for the non-moving party, or ‘[i]f the evidence is merely colorable,' or if it ‘is not significantly probative,' then summary judgment is appropriate.” Id. (quoting Anderson, 477 U.S. at 249-50).

The movant bears the initial burden of demonstrating an absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). “Once the movant adequately supports its motion, the burden shifts to the nonmoving party to show that specific facts exist that raise a genuine issue for trial.” James River Ins. Co. v. Ultratec Special Effects Inc, 22 F.4^th 1246, 1251 (11^th Cir. 2022) (quoting Dietz v. Smithkline Beecham Corp., 598 F.3d 812, 815 (11^th Cir. 2010)). In ruling on a motion for summary judgment, the Court views all evidence and draws all reasonable inferences in favor of the non-moving party. Scott v. Harris, 550 U.S. 372, 380 (2007); Baxter v. Roberts, 54 F.4^th 1241, 1253 (11^th Cir. 2022).

II.

In 2003, Williams pled guilty in New York federal court to a two-count superseding criminal information charging tax evasion and conspiracy to defraud the United States. The offenses related

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to depositing monies into Swiss bank accounts from 1993 through 2000.^[1] In September 2003, United States District Judge Harold Baer sentenced Williams to 46 months imprisonment, followed by three years of supervised release, and set restitution at $3.512 million - the stipulated amount of readily provable tax loss. Judge Baer ordered Williams to transfer the total balance held in the Swiss Bank accounts to the Clerk of the Court for the Southern District of New York. The Clerk of Court received the money and from it issued the restitution payment to the IRS on January 7, 2004. The parties agreed that the remaining balance from the Swiss accounts - $4,431,051.33 - would stay with the Clerk of Court until final determination of Williams' liability, including penalties and interest.

When Williams was released from incarceration on May 21, 2006, the IRS was still examining his tax returns for tax years 1993 to 2000. On October 29, 2007, the IRS determined the deficiencies and penalties for these years and issued Williams a notice of deficiency. Williams disagreed with the assessment and filed suit in Tax Court to redetermine the deficiencies and penalties.

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In April 2011, the Tax Court sided with the IRS, finding (among other things) that Williams was liable for tax in each year, the civil fraud penalty for the entire underpayment, and the accuracy-related penalty. Williams, 2011 WL 1518581. In December 2012, the Fourth Circuit Court of Appeals affirmed. Williams v. Comm'r, 498 Fed.Appx. 284 (4th Cir. 2012).

The Clerk of the Court transferred the leftover balance from the Swiss bank accounts to the IRS in 2013, but unpaid tax liabilities remained on Williams' tax accounts. The IRS began efforts to collect the unpaid amount. From March 2013 to January 2016, Williams received at least four notice letters of unpaid tax liabilities from the IRS. The last of these, dated January 4, 2016, stated that Williams owed $5,611,075.19 and that a failure to pay by January 19, 2016 could subject him to “enforced collection,” such as “placing a levy on your bank accounts, wages, receivables, commissions, etc. It could also involve seizing and selling your property, such as real estate, vehicles, or business assets.” (Doc. 50, Ex. 5.)

Roughly four months later, a series of relevant transactions occurred:

• May 10, 2016: Williams wrote a check to Smith-Williams for $152,745 from his personal bank account

• May 11, 2016: A check made payable to Williams for $47,255 was deposited in Smith-Williams' personal account;

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• May 19, 2016: Williams wrote a check to Smith-Williams for $7,000 from his personal bank account;

• May 19, 2016: Smith-Williams wrote a check to herself for $22,000 from a joint bank account she shared with Williams;

• May 19, 2016: A tax refund check from the State of Virginia for $6,983.00 made payable to Williams and Smith-Williams was deposited in Smith-Williams' personal account;

• May 25, 2016: Williams wired $51,955.70 from his personal account to Superior Title Services of Sanibel.

All told, a total of $287,938.70 was transferred. Smith-Williams purchased a house on Sanibel Island (the Sanibel Property) a few days later. The Sanibel Property was purchased without a mortgage and titled exclusively to Smith-Williams.

On June 25, 2019, a Notice of Federal Tax Lien was recorded in Lee County, Florida against Williams. It was refiled on June 22, 2021. On September 13, 2019, a Notice of Federal Tax Lien was recorded in Lee County, Florida against Smith-Williams, as Williams' nominee.

The United States asserts that, as of March 2, 2023, Williams still owes $6,897,077.16 in tax liabilities.

III.

Based on “[t]he undisputed material facts,” the United States seeks (1) a monetary judgment against Williams for unpaid federal tax liabilities and (2) a declaratory judgment that federal tax

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liens attach to all of Williams' property, including his alleged interest in the Sanibel Property. (Doc. #50, pp. 1, 25.) The Court addresses each matter in turn.

A. Williams' Tax Liability

Count I of the Complaint alleges that Williams owes unpaid tax liabilities for years 1996 through 1999. (Doc. #1, ¶¶ 21-23.) The United States asserts that a monetary judgment is warranted because (1) the Tax Court and the Fourth Circuit Court of Appeals have already rendered a final decision on Williams' tax liabilities for the years in question, and Williams is barred from relitigating the issue under res judicata, and alternatively, (2) Williams has not provided evidence to overcome the assessment's presumption of correctness. (Doc. #50, p. 14.) Williams, on the other hand, argues against these positions and asserts that he has long ago paid all of the taxes owed when he paid the restitution imposed in his criminal case.

(1) Res Judicata

“To invoke res judicata-also called claim preclusion-a party must establish four elements: that the prior decision (1) was rendered by a court of competent jurisdiction; (2) was final; (3) involved the same parties or their privies; and (4) involved the same causes of action.” TVPX ARS, Inc. v. Genworth Life & Annuity Ins. Co., 959 F.3d 1318, 1325 (11th Cir. 2020) (citing Trustmark Ins. Co. v. ESLU, Inc., 299 F.3d 1265, 1269 (11th Cir. 2002)). At

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its core, “res judicata bars only those claims that could have been raised in the prior litigation.” Griswold v. Cnty. Of Hillsborough, 598 F.3d 1289, 1293 (11th Cir. 2010).

It is clear from the record that the first three requirements are met. The Tax Court is a court of competent jurisdiction. Williams challenged the tax deficiency notice in Tax Court, and the Tax Court had jurisdiction pursuant to 26 U.S.C. § 6213(a)(granting the Tax Court jurisdiction to redetermine a deficiency assessed by the IRS). The Fourth Circuit Court of Appeals was also a court of competent jurisdiction and its judgment was final. 26 U.S.C. § 7482(a)(1) (“The United States Courts of Appeals . . . shall have exclusive jurisdiction to review the decisions of the Tax Court . . . and the judgment of any such court shall be final . . . .”) The Tax Court and Fourth Circuit cases were litigated by the same parties or their privities. Sunshine Anthracite Coal Co. v. Adkins, 310 U.S. 381, 402-03 (1940) (“There is privity between officers of the same government so that a judgment in a suit between a party and a representative of the United States is res judicata in relitigation of the same issue between that party and another officer of the government.”).

The fourth requirement-that the cases involve the same causes of action-turns on whether the “case ‘arises out of the same nucleus of operative facts, or is based upon the same factual predicate, as a former action.'” TVPX ARS, Inc., 959 F.3d at 1325

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(quoting Griswold, 598 F.3d at 1293). Two cases arise out of the same nucleus of operative facts if “the primary right and duty are the same.” Id. (quoting Adams v. S. Farm Bureau Life Ins. Co., 493 F.3d 1276, 1289 (11th Cir. 2007)). The Eleventh Circuit has repeatedly recognized that “[r]es judicata applies not only to the exact legal theories advanced in the prior case, but to all legal theories and claims arising out of the same nucleus of operative facts.” De Souza v. JP Morgan Chase Home Lending Div., 608 Fed.Appx. 776, 780 (11th Cir. 2015) (quoting Wesch v. Folsom, 6 F.3d 1465, 1471 (11th Cir. 1993)).

The sums disputed by Williams...