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Richard Philip Kaufman and Michael Norley v. Internal Revenue Service

May 26, 2011


The opinion of the court was delivered by: Robert L. Wilkins United States District Judge


Pro se Plaintiffs Richard Philip Kaufman and Michael Norley have filed this "Complaint on Contract and Promise on Value (Sweat Equity) Loaned" purportedly as relators on behalf of "The People of the State of Pennsylvania." Plaintiffs have named more than 60 Defendants, including the Internal Revenue Service ("IRS"), the Secretary of the Treasury, the chairman of the Federal Reserve, the entire Pennsylvania state court system, Pennsylvania state judges, federal judges and federal prosecutors. Plaintiffs make wholesale attacks on the legitimacy of the IRS, the Federal Reserve Bank, the U.S. treasury and system of currency, some state and federal courts, and other individuals or entities that Plaintiffs believe to be "acting as agents" for the IRS.

Defendants have moved to dismiss the Complaint under Rules 12(b)(1), (2), (5) and (6). For the reasons set forth below, this Court lacks subject matter jurisdiction to entertain Plaintiffs' suit. Accordingly, Defendants' Motions to Dismiss (Docket Nos. 4, 11, 52, 74, 75, & 76) are granted. Moreover, because Plaintiffs have abused the litigation process through their numerous improper filings, including signing and filing counterfeit orders as "common law magistrates" or "private attorney generals," Plaintiffs' CM/ECF privileges are revoked and they are enjoined from submitting any additional filings in this case without prior leave of the Court.


A.Plaintiffs' Previous Federal and State Cases

Although Plaintiffs are proceeding pro se, they are no strangers to the court system.

Residents of the Commonwealth of Pennsylvania, Plaintiffs have between them filed at least 15 pro se suits in federal district and bankruptcy courts over the last ten years, almost all of which have been dismissed.*fn1 Some of the federal cases, moreover, detail the numerous state cases they have filed to attempt to prevent adverse action against them. It appears that, whenever Plaintiffs are unhappy with the result of a case (including criminal prosecutions), they file a new lawsuit- often in a different court-suing the judge, court staff, lawyers, and/or other government officials involved in the previous case. Their strategy appears, at least in part, to challenge the authority of those who have taken action against them. See Order at 3, n.1, Norley, et al. v. Wolfe, et al., No. 09-cv-1129 (N.D.N.Y. Jan. 13, 2010), ECF No. 3 (demanding credentials of clerk of court and judges that had failed to enter judgment sought by plaintiffs; in dismissing case, Court stated that "it is cases like this one that delay the resolution of other cases, and that contribute to this District's dubious distinction has having . . . one of the longest median times to disposition for civil cases . . . ."); see also Complaint, Norley v. State of Pennsylvania, et al., No. 05-cv-5311 (E.D. Pa. Oct. 7, 2005) (suing and challenging authority of judges, sheriffs and other government officials who had taken adverse action against Norley in previous cases).

Plaintiffs have both been reprimanded for successive bankruptcy filings in the U.S. Bankruptcy Court for the Eastern District of Pennsylvania seeking to, among other things, stop the foreclosure and sheriff's sales of their properties. Kaufman has already been ordered not to file any further bankruptcy cases without prior leave of that court. See Order, In re Kaufman, No. 08-13185 (Bankr. E.D. Pa. Aug. 27, 2008), ECF No. 38. In Plaintiff Norley's most recent bankruptcy filing, Norley "repeatedly" admitted that the sole reason he filed that case and "all but one of his prior bankruptcy cases was to prevent the [local municipality] from moving forward with the Sheriff's Sale of his real property or to stop other actions by [that municipality]." See Order at 7-8, In re Norley, No. 10-10436 (Bankr. E.D. Pa. Mar. 30, 2010), ECF No. 33. After holding an evidentiary hearing at which Norley was present, the Court ultimately found Norley had filed his bankruptcy case in bad faith, dismissed his case, and enjoined any future bankruptcy filings without leave of the court "to prevent [Norley's] continued abuse of the bankruptcy process." Id. at 7-10.

B.The Complaint and Filings in this Case

In August 2010, Plaintiff Kaufman was indicted in the U.S. District Court for the Eastern District of Pennsylvania for, among other things, failure to file tax returns in violation of 26 U.S.C. § 7203, attempt to obstruct lawful function of Internal Revenue Service in violation of 26 U.S.C. § 7212(a), and making false claims in violation of 18 U.S.C. § 287. See Indictment, United States v. Kaufman, No. 10-cr-553 (E.D. Pa. Aug. 24, 2010), ECF No. 1. Approximately one month after he was indicted, Kaufman, along with Norley, filed this suit against the IRS and other Defendants "acting as agents" for the IRS.

In this case, Plaintiffs allege that Defendants, particularly the IRS, have fraudulently induced Plaintiffs into "involuntary servitude" (¶¶ 21, 30). Plaintiffs allege, among other things, that: 1) the IRS operates in the United States without disclosing that it is a "private" or "foreign usury" debt collector, and an "offshore trust maintained in Puerto Rico" that fraudulently operates in the "secret collection of usury" (¶¶ 11-12; 23-4); 2) the Internal Revenue Code is applicable only to "those who elect to volunteer to submit" to it (¶ 23(k)); and 3) that the IRS and other Defendants have "converted Plaintiffs' value sweat equity to private money for enrichment of Defendants" (¶¶ 30-2). Plaintiffs appear to allege that they are immune from the power of the IRS to impose and collect taxes (¶ 59).

Plaintiffs allege a wide conspiracy, including the IRS and the other Defendants, who have "routinely aided and abetted" the IRS (¶¶ 23(o), 30, 53). In addition to the IRS, the alleged conspiracy includes:*fn2 1) Secretary of the Treasury Timothy Geithner; 2) Chairman of the Federal Reserve Benjamin Bernanke; 3) the Depository Trust Company; 4) the Delaware County, Pennsylvania court in which criminal charges for attempted homicide and aggravated assault are currently pending against Norley and Kaufman (Magisterial District Court 32-2-49);*fn3 5) the arresting officer on those state criminal charges (Erjon Mollaj); 6) federal prosecutors representing the United States in the pending federal criminal tax case against Kaufman (Zane David Memeger and Joan E. Burnes); 7) the IRS special agents investigating Kaufman (Jeffrey S. Brown and Joseph C. Keiper); 8) federal judges who have presided over Kaufman's criminal prosecution and a previous civil case Norley filed (Judges Eduardo C. Robreno, Jr., M. Faith Angell, J. Curtis Joyner ); and 9) the Clerk of the U.S. District Court for the Eastern District of Pennsylvania (Michael E. Kunz).*fn4

Although Plaintiffs cite many constitutional and statutory provisions, it is often unclear which claims Plaintiffs are asserting and what authority justifies the relief they seek. Because Plaintiffs' pro se Complaint must be construed liberally, this Court has carefully read Plaintiffs' Complaint and attempted to decipher the claims therein. The Court assumes that Plaintiffs are attempting to assert: 1) breach of contract; 2) fraud; 3) constitutional claims under the Fifth Amendment for improper takings (¶¶ 23(o), 28(b), 54); 4) a claim under the Racketeer Influenced Corrupt Organizations Act, 18 U.S.C. §§ 1961 et seq. (referred to as simply a "conspiracy" in Plaintiffs' complaint) (¶ 53); 5) claims for declaratory relief under the Declaratory Judgment Act, 28 U.S.C. §§ 2201, 2202 (2006); and 6) claims for injunctive relief.

At its core, Plaintiffs' Complaint is a challenge to IRS' right to assess and collect taxes against them. It is also clear from the ultimate relief sought by Plaintiffs that one of-if not the-main purposes of Plaintiffs' suit is to frustrate the government's collection of taxes and to enjoin any criminal and civil prosecutions against them. Plaintiffs demand, inter alia, that: 1) Defendants "provide a full independent audit and accounting" of the IRS, DTC, DTCC, and Magisterial District Court to account for, among other things, "all books and records relating to legal fiction taxpayer accounts hypothecated from Plaintiffs' equity and credit, the origin of and authority for hypothecating the said accounts"; 2) a protective order be issued to immunize Plaintiffs from process from U.S. agencies, particularly the IRS; 3) all civil and criminal actions and legal action be enjoined against ...

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