281 F.Supp.3d 121
D.D.C.2017Background
- Nancy E. Kelley‑Hunter and her husband Burt moved to France; in ~2006 they transferred funds into a UBS account in Geneva nominally held in the name of Towers International, Inc.
- Kelley‑Hunter exercised control over the UBS account: met with the UBS rep, communicated about payments/investments, and held a power of attorney form at UBS.
- Kelley‑Hunter prepared the couple’s tax returns for 2003–2007; she disclosed other foreign accounts in earlier years but did not disclose the UBS account on the 2007 return, despite knowledge of dividends and the account’s operation.
- UBS later informed Kelley‑Hunter that it had reported the account to the IRS; she then filed a document listing the account at $3.8 million, but the 2007 year‑end value was about $3.4 million.
- The Government sued in 2015 seeking civil penalties under the FBAR statute; a default judgment against Burt Hunter’s estate already awarded $857,625 (half of his 50% share). Kelley‑Hunter failed to respond to discovery and did not oppose the Government’s summary‑judgment motion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Kelley‑Hunter had an FBAR reporting obligation for the UBS account | UBS account was foreign, >$10,000, and Kelley‑Hunter had financial interest/signatory authority, so FBAR required | No opposition/denial raised (no responsive brief) | Court found FBAR obligation satisfied and undisputed |
| Whether Kelley‑Hunter willfully failed to report the account | Prior foreign‑account filings, email evidence showing consciousness of guilt, and willful blindness/reckless disregard support willfulness | No argument presented | Court held failure was willful (willful blindness/recklessness sufficed) |
| Whether the Government met elements for statutory penalty | All statutory elements: citizenship, interest/authority, amount, foreign location, nondisclosure, willfulness, and proper penalty amount | No opposition | Court found all elements met and granted judgment |
| Proper amount of civil penalty under 31 U.S.C. § 5321(a)(5) | Penalty equal to 50% of taxpayer’s interest; Government sought $857,625 (25% of total account; half of Burt’s 50% share) | No opposition | Court awarded $857,625 in civil penalties |
Key Cases Cited
- Winston & Strawn, LLP v. McLean, 843 F.3d 503 (D.C. Cir. 2016) (treating unopposed facts as admitted for summary‑judgment purposes requires record support)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) (summary judgment standards regarding materiality and genuine dispute)
- Holcomb v. Powell, 433 F.3d 889 (D.C. Cir. 2006) (standard for genuine disputes at summary judgment)
- United States v. McBride, 908 F. Supp. 2d 1186 (D. Utah 2012) (setting out elements for FBAR civil penalty and willfulness analysis)
- Global‑Tech Appliances, Inc. v. SEBSA, 563 U.S. 754 (2011) (willful blindness can satisfy mental‑state requirements)