Arthur Bedrosian v. IRS, 42 F.4th 174

Arthur Bedrosian held two UBS Swiss accounts and failed to report them on FBARs until 2008; the FBAR he filed omitted his larger account and reported under $1 million though he admitted knowing the account exceeded $1 million.
The IRS assessed a willful FBAR penalty equal to 50% of the undisclosed account balance, calculated at $975,789.17, which Bedrosian refused to pay.
At a one-day bench trial the District Court initially found the Government failed to prove willfulness; this court vacated and remanded, holding willfulness includes reckless conduct and an objective standard applies.
On remand the District Court made supplemental factual findings (e.g., Bedrosian closed accounts after exposure, had a mail hold, saw news about government tracing, was warned by his accountant, and acknowledged large balances) and concluded he acted willfully; it also upheld the IRS penalty amount.
On appeal Bedrosian challenged (1) the court’s authority to make supplemental findings on remand and (2) the sufficiency/admissibility of evidence proving the account balance; the Government relied principally on a single document (Exhibit R) and argued counsel’s trial statements were judicial admissions.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Scope of remand / supplemental findings	Remand was only to confirm result under new legal standard, not reopen factual findings	Remand permitted reconsideration of facts consistent with appellate mandate	Court acted within scope; supplemental findings were permissible under the mandate and law of the case
Willfulness standard applied to FBAR omission	Omission was negligent, not willful; district court previously erred	Reckless conduct and objective standard satisfied willfulness given facts	Finding of willfulness affirmed (recklessness = willfulness under Bedrosian test)
Admissibility and sufficiency of Exhibit R (account records)	Exhibit R lacked foundation (no account ID, currency, or witness); inadmissible and insufficient to prove balance	Exhibit R and related exhibits established the balance	District Court erred to admit Exhibit R without foundation, so it cannot alone establish balance
Judicial admission of account balance	Counsel’s statements were not binding admissions; Government bore burden to prove balance	Opening statement/concessions amounted to judicial admission that account was ~ $2M (so IRS penalty ≤ statutory max)	Even if Exhibit R inadmissible, counsel’s trial opening statement conceded roughly $2M in the account; that admission sufficed to uphold penalty amount

Bedrosian v. United States, 912 F.3d 144 (3d Cir. 2018) (defines FBAR willfulness to include reckless, objectively unreasonable conduct)
Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47 (2007) (objective recklessness: awareness of an unjustifiably high risk)
United States v. Carrigan, 31 F.3d 130 (3d Cir. 1994) (objective standard for reckless conduct)
Bankers Tr. Co. v. Bethlehem Steel Corp., 761 F.2d 943 (3d Cir. 1985) (mandate-scope principles on remand)
Interfaith Cmty. Org. v. Honeywell Int’l, Inc., 399 F.3d 248 (3d Cir. 2005) (clear-error standard for factual findings)
United States v. Collins, 36 F.4th 487 (3d Cir. 2022) (agency discretion and penalty review in FBAR context)
Herman & MacLean v. Huddleston, 459 U.S. 375 (1983) (civil sanctions proven by preponderance of evidence)
Anderson v. Commissioner, 698 F.3d 160 (3d Cir. 2012) (definition and effect of judicial admissions)
United States v. Southard, 700 F.2d 1 (1st Cir. 1983) (self-authenticating business records still require linkage to the defendant for relevance)