Wednesday, June 6, 2018

Evidentiary Rulings in FBAR Collection Suit (6/6/18)

In United States v. Garrity, 2018 U.S. Dist. LEXIS 92561 (D. Conn. 2018), here, the Court rules on objections to evidence in this FBAR collection action about which I have previously written (blog entries collected at the end of this blog entry).  Because of the number of the exhibits and objections, the Court opens with a general discussion titled "I. General Principles and Observations About the Parties' Objections to Exhibits."  Then in part II, titled "II. The Court's Rulings on Specific Proposed Exhibits," the Court addresses the specific exhibits and objections in chart form.  I address here only the general discussion.  Readers may, however, find the specific discussion useful.

The particular part of the general discussion I found interesting is:
1. Authenticity 
Finally, courts have held that the fact that the records were produced by a party in response to a discovery request, "while not dispositive of the issue of authentication, is surely probative." McQueeney, 779 F.2d at 929. See also Burgess v. Premier Corp., 727 F.2d 826, 835-36 (9th Cir. 1984) (holding that "the district court could properly have found that all of the exhibits were adequately authenticated by the fact of being found in [defendant's] warehouse"). 
In this case, as noted below in the specific rulings, the documents whose authenticity defendants challenge include records bearing the signature and/or initials of Mr. Garrity, Sr., and/or his sons—and those signatures, which appear to be by the same person(s), are also contained in other records to which Defendants do not object. See, e.g., Exs. 25 (signed by Kevin Garrity, and to which Defendants do not object), 61 (will signed by Mr. Garrity and submitted to the Court at ECF No. 115-13), and 99 (promissory notes signed by Mr. Garrity and submitted to the Court at ECF No. 115-11). Other documents include the same bank account number and appear to be records of the same bank as to which Defendants have made judicial admissions in their answer; appear to be records of the same foundation, and bear the same dates, about which Defendants have made judicial admissions in their answer; and provide evidence of the same "shared signature authority" about which defendants have made judicial admissions in their answer. See ECF No. 9 ¶¶ 7, 8, and 21. Further, Plaintiff has represented that all of these documents were produced by Defendants after the documents were obtained from the foundation or "after Defendants' counsel travelled to Liechtenstein and obtained it directly from" the bank that served as the foundation's agent. See ECF No. 155 at 1-2. Defendants have not contested this representation.
In addition, for some related context of the above, I picked up two recently filed documents related to specific requests for jury instructions on specific subjects requested by the Court.  The item  of particular interest is both sides' proposed instructions on "Judicial Admissions from Answer" (Gov't description) and "Uncontested Facts" (Defendant's description).
  • Government Instructions, here.
  • Defendant's Instructions, here.
In the defendant's submission, I found the following interesting:
In the Court’s Order dated June 4, 2018 (Doc. 161), addressing to Defendants’ Proposed Exhibit 602 (Plaintiff United States of Americas Objections and Responses to Defendants’ First Request for Admission), the Court allowed Defendants to identify relevant admissions that the Court would consider to be treated as conclusively established. Defendants may require this relief if Plaintiff seeks an inference from the Court, or tries to create an inference to the jury that the Lichtenstein Stiftung was set up for an improper purpose, argues to the jury regarding a false invoicing or tax scheme in this case, or otherwise attempts to use the prior tax years in this case to suggest something improper. In addition, such evidence may be necessary to rebut some of the foundations for the Plaintiff’s medical expert who claims prior year tax information was relevant to the foundation of his opinions. 
Although Plaintiff represented to the Court during the May 24, 2018 pretrial conference that it did not intend to prove a false invoicing or other improper tax scheme in this case. But still pending before the Court is Plaintiff’s request for an adverse inference regarding a tax scheme through Kevin and Sean Garrity’s invocation of the Fifth Amendment. Further, Paul G. Garrity, Sr., (unlike the defendants in other reported case decisions, i.e. Williams, McBride) did not try to avoid any income taxes through this Stiftung. That evidence is circumstantial evidence that he was not willfully failing to file. 
Defendants respectfully reserve the right to seek the following jury instructions based on the admissions in the event that the United States raises inferences or suggests there is any circumstantial evidence that the purpose of Lion Rock was tax motivated or otherwise had an improper purpose. In the event that Plaintiff makes any such inference, Defendants propose the following admissions from Plaintiff’s Response to Defendants’ First Request for Admissions 8-10, 12-23, and 30-32.
Previous blog entries (reverse chronological order):
  • Court Rejects Defense Expert Testimony as to State of Law and Duty in Government FBAR Willful Penalty Case (Federal Tax Crimes Blog 6/3/2018), here.
  • District Court Holds Government FBAR Willful Penalty Burden of Proof is Preponderance and Recklessness is Willfulness for FBAR Willful Penalty (Federal Tax Crimes Blog 4/5/18), here.
  • Wrongful Disclosure Counterclaim in FBAR Willful Penalty Suit Dismissed Because Decedent Taxpayer Did Not Assert the Wrongful Disclosure (Federal Tax Crimes Blog 5/30/16), here.

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