United States v. Hunter
Civil Action No. 2015-2148
| D.D.C. | Dec 12, 2017Background
- Nancy E. Kelley-Hunter and her husband Burt moved to France; in ~2006 they transferred funds to a UBS Swiss account nominally held in Towers International, Inc., but Kelley-Hunter exercised control (POA, met with rep, directed investments and payments).
- 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 its dividends and value.
- UBS informed Kelley-Hunter in February 2009 that it had disclosed the account to the IRS; she thereafter filed a document reporting the account and valuing it at $3.8M (end-of-2007 value ~ $3.4M).
- The Government sued in 2015 under the FBAR reporting statute and related penalty provisions to recover civil penalties for willful non‑disclosure; Burt Hunter died and his estate was substituted, and the Government obtained a default judgment against his estate for $857,625.
- Kelley-Hunter failed to comply with discovery and did not oppose the Government’s summary-judgment motion despite a court order warning that failure to respond could lead to judgment.
- The Government sought a 50% penalty of the taxpayer’s interest; it requested $857,625 against Kelley-Hunter individually (representing half of Burt’s 50% share). The Court granted summary judgment for that amount.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Kelley‑Hunter had a reportable foreign financial interest / signatory authority | Kelley‑Hunter controlled the UBS account (POA, direction of investments/payments) so she had a financial interest/signatory authority | No opposition filed; facts treated as admitted | Court held she had a reportable financial interest/signatory authority |
| Whether she willfully failed to file FBAR/related disclosure for 2007 | She knew filing requirements (had previously disclosed other accounts), had knowledge of account activity/value, and made statements showing consciousness of guilt or willful blindness | No opposition; no evidence rebutting willfulness | Court held failure was willful (willful blindness/reckless disregard sufficient) |
| Whether the account met statutory thresholds (foreign, > $10,000) | Account was in Geneva, balance ≈ $3.4M, exceeding $10,000 | No opposition | Court held thresholds satisfied |
| Whether the penalty amount is appropriate | Seeks 50% penalty applied to Burt’s 50% share; $857,625 is proper for Kelley‑Hunter individually | No opposition | Court awarded $857,625 in civil penalties |
Key Cases Cited
- Winston & Strawn, LLP v. McLean, 843 F.3d 503 (D.C. Cir.) (standard for treating facts as admitted when opponent does not contest with record evidence)
- Anderson v. Liberty Lobby, 477 U.S. 242 (summary judgment/genuine dispute standard)
- Holcomb v. Powell, 433 F.3d 889 (D.C. Cir.) (summary judgment standard articulation)
- United States v. McBride, 908 F. Supp. 2d 1186 (D. Utah) (elements and willfulness discussion for FBAR/section 5314/5321 claims)
- Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754 (willful blindness/reckless-disregard can satisfy mens rea requirement)