3:21-cv-12090
D.N.J.Oct 31, 2023Background
- From 2004–2007 Fridman, a U.S. citizen residing in Manalapan, NJ, had foreign financial accounts with aggregate balances exceeding $10,000 and did not timely file FBARs.
- On June 28, 2019 a Treasury delegate assessed $10,000 per account violations (initial total $240,000); Fridman did not fully pay.
- The United States sued to collect FBAR penalties on June 2, 2021; Fridman was personally served but did not answer and the Clerk entered default on August 19, 2021.
- The Government originally sought per-account penalties; the Court found liability but denied damages without additional proof and ordered further submission.
- After the Supreme Court decided Bittner (holding §5321(a)(5) penalties are per-report, not per-account), the Government filed a renewed motion seeking $10,000 per missed annual report for 2004–2007 ($40,000) plus interest and late-payment penalties (totaling $50,188.04 as of April 14, 2023).
- The Court granted the Government’s renewed motion, entered default judgment for the requested amount, and ordered post-judgment interest and late-payment penalties to accrue until paid.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Subject-matter & personal jurisdiction | Federal jurisdiction exists under 28 U.S.C. §§1331, 1345, 1355; Fridman domiciled in NJ so personal jurisdiction proper | No opposition | Court has subject-matter and personal jurisdiction |
| Sufficiency of service | Fridman was personally served at his home; proof submitted | No opposition | Service was sufficient |
| Liability under the BSA/FBAR (31 U.S.C. §5314) | Fridman was required to file FBARs for 2004–2007 and failed to do so, entitling the U.S. to penalties under §5321(a)(5) | No answer or defense pleaded | Default admits factual allegations; liability for failure to file established |
| Damages calculation (per-report v. per-account) | Initially sought per-account penalties; after Bittner seeks $10,000 per missed annual report for 2004–2007 (total $40,000) plus interest and late-payment penalties (total $50,188.04) | No opposition | Applying Bittner, Court awards the per-report penalties and the asserted interest/late-payment amounts; post-judgment interest and penalties accrue |
| Appropriateness of default judgment (Chamberlain factors) | Default prejudices Government; damages supported; factors weigh for default judgment | No opposition or defenses raised | Court finds prejudice, no meritorious defense, and willful delay; default judgment appropriate |
Key Cases Cited
- Bittner v. United States, 143 S. Ct. 713 (Sup. Ct. 2023) (penalties under §5321(a)(5) for non-willful FBAR failures are assessed per-report)
- Bedrosian v. United States, 912 F.3d 144 (3d Cir. 2018) (FBAR filing obligations and civil-penalty framework under the BSA)
- Chamberlain v. Giampapa, 210 F.3d 154 (3d Cir. 2000) (three-factor test for evaluating entry of default judgment)
- Chanel, Inc. v. Matos, 133 F. Supp. 3d 678 (D.N.J. 2015) (domicile as paradigm for general personal jurisdiction)