United States District Court, District of Columbia
E. BOASBERG UNITED STATES DISTRICT JUDGE
effort to hide assets beyond the long arm of the taxman, some
people occasionally maintain secret foreign bank accounts.
When such banks pass along this information to the Internal
Revenue Service, however, the gambit appears less wise. The
United States here has sued Nancy E. Kelley-Hunter -
individually and as the representative of the estate of her
late husband, Burt Hunter - for her willful failure to
disclose a bank account in Switzerland worth about $3.4
million. In such a circumstance, the Government may assess a
civil penalty of up to 50% of a taxpayer's interest in
such account. Having already obtained a default judgment
against the estate for $857, 625, which represents half of
Burt Hunter's 50% share in the account, the Government
now moves for summary judgment for the same amount from
Kelley-Hunter individually. As the United States has
sufficiently demonstrated its entitlement to the sum sought -
and she has filed no opposition - the Court will grant its
that Defendant has not opposed the Government's Motion,
the Court may treat as true the facts set forth in
Plaintiff's Statement of Undisputed Material Facts.
See Fed.R.Civ.P. 56(e)(2). Before doing so, however,
it ensures that each fact is properly supported by record
evidence. See Winston & Strawn, LLP v. McLean,
843 F.3d 503, 505 (D.C. Cir. 2016).
married Burt Hunter in 1997, and the two moved to France the
following year. See ECF No. 25-5 (Statement of
Undisputed Material Facts), ¶ 3. In approximately 2006,
they transferred money to an account at UBS, a Swiss
financial-services entity. Id., ¶ 5.
Kelley-Hunter exercised control over the account, meeting
with the UBS account representative a couple of times a year;
communicating with him by phone and fax, including when she
desired to pay a bill from the account; and possessing
authority to direct investments from the account.
Id., ¶¶ 8-11. The account was nominally
held in the name of Towers International, Inc., but this did
not affect Kelley-Hunter's ability to control its assets.
Id., ¶¶ 17-18. In fact, UBS possessed a
form giving her power of attorney and granting her authority
over the account. Id., ¶ 32.
personally prepared the couple's returns for tax years
2003-07. Id., ¶ 21. Although she indicated an
interest in another foreign account in the earlier of those
years, she did not do so for the UBS account for the 2007
return. Id., ¶¶ 21-23. This was so even
though she had knowledge of the operation of the account at
this time and had even received an email from the account
representative indicating that “dividends between [June
13, 2006] and [December 7, 2007] were €46,
817EUR.” Id., ¶ 24 (alteration in
original). When she received a letter from UBS in February
2009 that the bank had disclosed the existence of her account
to the IRS, she subsequently filed a document with the
Service mentioning the account and listing its value as
$3.8m. Id., ¶¶ 27-28. The value at the end
of 2007, however, was approximately $3.4 million.
Id., ¶ 36.
Government brought this action in 2015 to recover the civil
penalties it believed were due. It originally sued both
Kelley-Hunter and Hunter individually, but when he died in
January 2016, the Government substituted his estate as a
party for him. See ECF No. 5 (Motion for
Substitution) at 1. The case proceeded through lengthy and at
times contentious discovery, in part delayed by
Defendant's residing in France. Ultimately, the
Government successfully obtained a default judgment against
Burt Hunter's estate in the amount of $857, 625.
See ECF No. 20. Kelley-Hunter, meanwhile, was
refusing to respond to Court Orders regarding discovery, and
her counsel ultimately withdrew. See Minute Orders
of August 17 and September 26, 2017. The Government
subsequently moved for summary judgment against her, and she
never responded, despite the Court's specifically
instructing her to do so or risk entry of judgment against
her. See ECF No. 26 (Order).
Standard of Review
judgment is warranted 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); see also Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 247-48 (1986); Holcomb v.
Powell, 433 F.3d 889, 895 (D.C. Cir. 2006). A fact is
“material” if it is capable of affecting the
substantive outcome of the litigation. See Liberty
Lobby, 477 U.S. at 248; Holcomb, 433 F.3d at
895. A dispute is “genuine” if the evidence is
such that a reasonable jury could return a verdict for the
nonmoving party. See Liberty Lobby, 477 U.S. at 248;
Holcomb, 433 F.3d at 895. “A party asserting
that a fact cannot be or is genuinely disputed must support
the assertion” by “citing to particular parts of
materials in the record” or “showing that the
materials cited do not establish the absence or presence of a
genuine dispute, or that an adverse party cannot produce
admissible evidence to support the fact.” Fed.R.Civ.P.
31 U.S.C. § 5314(a), a taxpayer must “file reports
. . . when the . . . person makes a transaction or maintains
a relation for any person with a foreign financial
agency.” That means that anyone “having a
financial interest in, or signature or other authority over,
a bank, securities or other financial account [over $10, 000]
in a foreign country shall report such relationship . . . for
each year in which such relationship exists.” 31 C.F.R.
§§ 1010.350(a), 1010.306(c). Taxpayers do so via
Form 1040, Schedule B, which directs them to Form TD F
90-22.1, which in turn provides instructions for reporting
such financial interest. See United States v.
McBride, 908 F.Supp.2d 1186, 1200 n.2 (D. Utah 2012).
Willful failure to do so may result in penalties equal to 50%
of the value of the undisclosed account. See 31
U.S.C. § 5321(a)(5)(C)(i).
Government, accordingly, may prevail by satisfying the
following elements: (1) Kelley-Hunter was a U.S. citizen (or
other qualified person) at the time of her filing; (2) she
had a financial interest in or signatory authority over the
account at issue; (3) the account balance exceeded $10, 000;
(4) the account was in a foreign country; (5) she failed to
disclose the account; (6) the failure was willful; and (7)
the amount of the proposed penalty is proper.
McBride, 908 F.Supp.2d at 1201.
can be little doubt that the Government has checked all of
the above boxes. First, Kelley-Hunter was a U.S. citizen at
the relevant time. See ECF No. 10 (Answer), ¶
3. Second, as the Background sets forth, she had a clear
interest in the account. Third, the balance of $3.4m easily
exceeds the $10, 000 threshold. Fourth, the UBS account was
maintained in Geneva, Switzerland. Fifth, she has admitted
that she did not disclose the UBS account in her return for
tax year 2007. See SUMF, ¶ 23.
sixth element is willfulness, which at times can prove
challenging to establish, but not here. To begin,
Kelley-Hunter did file previous returns that mentioned
foreign accounts, so she clearly knew of the requirement. In
addition, she sent emails to her accountant, Peter Kent, that
display a consciousness of guilt, including references to the
IRS being “so far behind us with the UBS junk, that
they won't catch up with [her husband Burt] in his
lifetime and I'll be on my way to Tahiti.”
Id., ¶ 46. In any event, willful blindness or
reckless disregard satisfies the required mental state, and