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CM/ECF Mobile - NCED
61 Docket Entries for Case 5:07-cv-00117-FL
03/22/2007 COMPLAINT for Permanent Injunction against Ray...
12/12/2007 First MOTION for Extension of Time to Complete Discovery by UNITED STATES OF AMERICA.
(Noyes, Frederick)
12/27/...
notice of the mediation on the defendant. Signed by USMJ David W. Daniel on 2/7/2008. Cys served. (Deputy
Clerk - DR, )
02...
10/02/2008 NOTICE OF DEFICIENCY re: 33 Notice of Appearance, 34 Certificate of Service - Counsel has
not evidenced service...
11/05/2009 NOTICE of Appearance by Jessica S. Reimelt on behalf of UNITED STATES OF AMERICA
(Reimelt, Jessica)
11/16/2009 ...
Query Reports Utilities Logout
5:07-cv-00117-FL UNITED STATES OF AMERICA v. Renfrow
Louise Wood Flanagan, presiding
Date f...
Query Reports Utilities Logout
5:07-cv-00117-FL UNITED STATES OF AMERICA v. Renfrow
Louise Wood Flanagan, presiding
Date f...
-1- 2292205.2
UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
NO. 1:07-CV-117(__)...
-2- 2292205.2
I.R.C. § 6695;
e. Engaging in activity subject to penalty under I.R.C. § 6700, including
making, in connecti...
-3- 2292205.2
Activities of Defendant, Concept Marketing International,
National Trust Services and Trust Educational Serv...
-4- 2292205.2
worth of silver coins and would receive a $100 commission.
b. Next, the first-tier customer would recruit a ...
-5- 2292205.2
customers to use sham trusts, CMI instructs customers on how to use sham home-based
businesses to fraudulent...
-6- 2292205.2
business assets into the business trust.
20. Thereafter, the business continued to operate as it did before,...
-7- 2292205.2
federal income tax returns. Case No. 03-cv-3123 (D. Ore. 2003). The injunction order is
available at www.usd...
-8- 2292205.2
31. Renfrow continues to promote the same tax-fraud schemes sold by NTS and TES,
at CMI seminars that he has...
-9- 2292205.2
businesses through the business trusts. Renfrow prepares business trust returns for customers
based on this ...
-10- 2292205.2
41. For example, Renfrow prepared the 2002 and 2003 federal trust income tax
returns for the purported trus...
-11- 2292205.2
47. Renfrow falsely advises customers that they can legally deduct the cost of the
coins purchased from CMI...
-12- 2292205.2
53. Renfrow failed to list his name, or a trade name, as preparer on some of the
income tax returns he has ...
-13- 2292205.2
taxes.
62. Thus far, the IRS has identified over sixty federal individual income tax returns
and fifty fede...
-14- 2292205.2
68. The IRS estimates that during 2001 the difference between the amount of taxes
paid by U.S.-taxpayers, a...
-15- 2292205.2
c. engaging in any other fraudulent or deceptive conduct that substantially interferes
with the proper admi...
-16- 2292205.2
77. I.R.C. § 7408 authorizes a court to enjoin persons engaging in any conduct subject
to penalty under I.R...
-17- 2292205.2
82. Renfrow sells and organizes tax-fraud schemes that falsely promised tax benefits
to customers.
83. Renf...
-18- 2292205.2
harm the conduct is causing to the United States Treasury.
92. If defendant is not enjoined, he is likely t...
-19- 2292205.2
(2) Appearing as a representative on behalf of any person or organization
before the Internal Revenue Servi...
-20- 2292205.2
F. That the Court, pursuant to IRC §§ 7402(a), 7407, and 7408, enter an injunction
requiring Raymond A. Ren...
JS 44 (Rev. 11/04) CIVIL COVER SHEET
The JS 44 civil cover sheet and the information contained herein neither replace nor ...
JS 44 Reverse (Rev. 11/04)
INSTRUCTIONS FOR ATTORNEYS COMPLETING CIVIL COVER SHEET FORM JS 44
Authority For Civil Cover Sh...
AO 440 (Rev. 8/01) Summons in a Civil Action
UNITED STATES DISTRICT COURT
District of
SUMMONS IN A CIVIL ACTION
V.
CASE NU...
AO 440 (Rev. 8/01) Summons in a Civil Action
RETURN OF SERVICE
Service of the Summons and complaint was made by me(1)
DATE...
Case 5:07-cv-00117-FL Document 2 Filed 03/23/07 Page 1 of 2
Case 5:07-cv-00117-FL Document 2 Filed 03/23/07 Page 2 of 2
Case 5:07-cv-00117-FL Document 2 Filed 03/23/2007 Page 1 of 2
Case 5:07-cv-00117-FL Document 3 Filed 04/13/07 Page 1 of 2
Case 5:07-cv-00117-FL Document 3 Filed 04/13/07 Page 2 of 2
UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
NO. 5:07-CV-117(FL)
UNITED STATES...
-2-
Renfow is currently on active duty in the United States military. Copies of the database report
for Raymond A. Renfow ...
Upon searching the information data banks of the Department of Defense Manpower Data Center, based
on the information that...
by the requester. Providing an erroneous name or SSN will cause an erroneous certificate to be provided.
Report ID:CJAPZWW...
1
Newman Decl. ¶¶ 3-6.
UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
NO. 5:07-C...
657440.1
FRED D. WHITNEY
United States Attorney
/s/Thomas M. Newman
THOMAS M. NEWMAN
Trial Attorney, Tax Division
U.S. Dep...
Case 5:07-cv-00117-FL Document 5 Filed 04/20/07 Page 1 of 1
Case 5:07-cv-00117-FL Document 6 Filed 05/03/07 Page 1 of 3
Case 5:07-cv-00117-FL Document 6 Filed 05/03/07 Page 2 of 3
Case 5:07-cv-00117-FL Document 6 Filed 05/03/07 Page 3 of 3
Case 5:07-cv-00117-FL Document 7 Filed 05/08/07 Page 1 of 1
Case 5:07-cv-00117-FL Document 8 Filed 05/29/07 Page 1 of 5
Case 5:07-cv-00117-FL Document 8 Filed 05/29/07 Page 2 of 5
Case 5:07-cv-00117-FL Document 8 Filed 05/29/07 Page 3 of 5
Case 5:07-cv-00117-FL Document 8 Filed 05/29/07 Page 4 of 5
Case 5:07-cv-00117-FL Document 8 Filed 05/29/07 Page 5 of 5
Case 5:07-cv-00117-FL Document 9 Filed 06/20/07 Page 1 of 6
Case 5:07-cv-00117-FL Document 9 Filed 06/20/07 Page 2 of 6
Case 5:07-cv-00117-FL Document 9 Filed 06/20/07 Page 3 of 6
Case 5:07-cv-00117-FL Document 9 Filed 06/20/07 Page 4 of 6
Case 5:07-cv-00117-FL Document 9 Filed 06/20/07 Page 5 of 6
Case 5:07-cv-00117-FL Document 9 Filed 06/20/07 Page 6 of 6
2607191.1
UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
NO. 5:07-CV-117(FL)
UNI...
2607191.1
Renfrow denies making the false claims alleged in the complaint.
Neither party contends that this case is partic...
2607191.1
d. Motion deadlines:
(1) Dispositive motions: January 31, 2008.
(2) non-dispositive (including motions in limine...
Case 5:07-cv-00117-FL Document 10 Filed 07/25/07 Page 4 of 4
Case 5:07-cv-00117-FL Document 11 Filed 07/31/07 Page 1 of 10
Case 5:07-cv-00117-FL Document 11 Filed 07/31/07 Page 2 of 10
Case 5:07-cv-00117-FL Document 11 Filed 07/31/07 Page 3 of 10
Case 5:07-cv-00117-FL Document 11 Filed 07/31/07 Page 4 of 10
Case 5:07-cv-00117-FL Document 11 Filed 07/31/07 Page 5 of 10
Case 5:07-cv-00117-FL Document 11 Filed 07/31/07 Page 6 of 10
Case 5:07-cv-00117-FL Document 11 Filed 07/31/07 Page 7 of 10
Case 5:07-cv-00117-FL Document 11 Filed 07/31/07 Page 8 of 10
Case 5:07-cv-00117-FL Document 11 Filed 07/31/07 Page 9 of 10
Case 5:07-cv-00117-FL Document 11 Filed 07/31/07 Page 10 of 10
UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
NO. 5:07-CV-117(FL)
UNITED STATES...
CERTIFICATE OF SERVICE
IT IS HEREBY CERTIFIED that service of the foregoing WITHDRAWAL OF
COUNSEL AND ENTRY OF APPEARANCE ...
UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
NO. 5:07-CV-117(FL)
UNITED STATES...
other deadlines in the case management order need be extended.
Counsel for the United States spoke with the pro se defenda...
CERTIFICATE OF SERVICE
IT IS HEREBY CERTIFIED that service of the foregoing UNITED STATES’ MOTION
TO EXTEND DISCOVERY DEAD...
U.S. Department of Justice
Tax Division
Please reply to: Civil Trial Section, Central Region
Facsimile No. (202) 514-6770 ...
CERTIFICATE OF SERVICE
IT IS HEREBY CERTIFIED that service of the foregoing LETTER TO THE COURT has been
made upon the fol...
Case 5:07-cv-00117-FL Document 15 Filed 01/03/08 Page 1 of 1
Case 5:07-cv-00117-FL Document 17 Filed 01/10/08 Page 1 of 3
Case 5:07-cv-00117-FL Document 17 Filed 01/10/08 Page 2 of 3
Case 5:07-cv-00117-FL Document 17 Filed 01/10/08 Page 3 of 3
Case 5:07-cv-00117-FL Document 18 Filed 01/15/08 Page 1 of 1
UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
NO. 5:07-CV-117(FL)
UNITED STATES...
conferences even when it would be unfeasible to have an official with full settlement authority
physically present.
A memo...
CERTIFICATE OF SERVICE
IT IS HEREBY CERTIFIED that service of the foregoing UNITED STATES’
MOTIONTION PURSUANT TO LOCAL RU...
UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
NO. 5:07-CV-117(FL)
UNITED STATES...
-2-
Under 26 U.S.C. § 7122, settlement authority for this case rests with the Attorney
General or his delegate. Cases hand...
-3-
make it infeasible for him to attend or be available by telephone for settlement conferences
throughout the United Sta...
-4-
Government counsel is aware of only one appellate decision on point with the situation
presented here. In re Stone, 98...
-5-
the person who will try the case if trial becomes necessary. He therefore is the person most
familiar with the conside...
-6-
proceed with its trial attorney present at the conference and two officials with combined full
settlement authority av...
-7-
CERTIFICATE OF SERVICE
IT IS HEREBY CERTIFIED that service of the foregoing MEMORANDUM IN
SUPPORT OF UNITED STATES’ MO...
Case 5:07-cv-00117-FL Document 21 Filed 01/25/08 Page 1 of 1
Case 5:07-cv-00117-FL Document 22 Filed 02/06/08 Page 1 of 1
RayRen98 - Raymond Renfrow - TNT Showtime Activeboard - TNT Dinar pages 1-105
RayRen98 - Raymond Renfrow - TNT Showtime Activeboard - TNT Dinar pages 1-105
RayRen98 - Raymond Renfrow - TNT Showtime Activeboard - TNT Dinar pages 1-105
RayRen98 - Raymond Renfrow - TNT Showtime Activeboard - TNT Dinar pages 1-105
RayRen98 - Raymond Renfrow - TNT Showtime Activeboard - TNT Dinar pages 1-105
RayRen98 - Raymond Renfrow - TNT Showtime Activeboard - TNT Dinar pages 1-105
RayRen98 - Raymond Renfrow - TNT Showtime Activeboard - TNT Dinar pages 1-105
RayRen98 - Raymond Renfrow - TNT Showtime Activeboard - TNT Dinar pages 1-105
RayRen98 - Raymond Renfrow - TNT Showtime Activeboard - TNT Dinar pages 1-105
RayRen98 - Raymond Renfrow - TNT Showtime Activeboard - TNT Dinar pages 1-105
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RayRen98 - Raymond Renfrow - TNT Showtime Activeboard - TNT Dinar pages 1-105

  1. 1. CM/ECF Mobile - NCED 61 Docket Entries for Case 5:07-cv-00117-FL 03/22/2007 COMPLAINT for Permanent Injunction against Raymond A. Renfrow, filed by UNITED STATES OF AMERICA. (Attachments: # 1 Civil Cover Sheet # 2 Civil Summons)(Newman, Thomas) 03/23/2007 Summons Issued as to Raymond A. Renfrow. (Deputy Clerk - LKF, ) 04/13/2007 SUMMONS Returned Executed by UNITED STATES OF AMERICA. Raymond A. Renfrow served on 3/29/2007, answer due 4/18/2007. (Newman, Thomas) 04/19/2007 MOTION for Entry of Default by UNITED STATES OF AMERICA. (Attachments: # 1 Declaration of Thomas M. Newman# 2 Newman Decl. Exhibit A)(Newman, Thomas) 04/19/2007 NOTICE OF DEFICIENCY re: 4 Motion for Entry of Default. There was no proposed order attached to motion. Please submit a proposed order to proposedorders_nced@nced.uscourts.gov - Thank You. (Deputy Clerk - DR, ) 04/20/2007 MOTIONS 4 MOTION for Entry of Default REFERRED to Clerk. (Deputy Clerk - DR, ) 04/20/2007 ORDER granting 4 Motion for Entry of Default. Signed by Dennis P. Iavarone, Clerk of Court on 4/20/2007. Cys dist. (Deputy Clerk - DR, ) 05/03/2007 RESPONSE in Opposition re [4 MOTION for Entry of Default and Order of Default filed by Raymond A. Renfrow. (Deputy Clerk - LKF, ) 05/08/2007 ORDER - This matter comes now before the court upon defendant's Objection to Application for Entry of Default. Defendant, appearing pro se, urges several grounds for setting aside default entered against him by the Clerk of Court on 4/20/07. Good cause having been shown, the entry of default against defendant now is SET ASIDE. Defendant's request for additional time within which to respond to complaint is ALLOWED IN PART, and defendant shall have TWENTY (20) DAYS from date of entry of this order within which to respond to the complaint. Signed by Judge Louise Wood Flanagan on 5/8/2007. cys dist.(Deputy Clerk - DR, ) 05/29/2007 ANSWER to Complaint for Permanent Injunction and other Equitable Relief by Raymond A. Renfrow.(Deputy Clerk - JA, ) 06/20/2007 INITIAL ORDER REGARDING PLANNING & SCHEDULING: Discovery Plan due by 7/25/2007.Signed by Judge Louise Wood Flanagan on 6/19/2007. Cys dist. (Deputy Clerk - DR, ) 07/25/2007 REPORT of Rule 26(f) Planning Meeting by UNITED STATES OF AMERICA, Raymond A. Renfrow. (Newman, Thomas) 07/31/2007 CASE MANAGEMENT ORDER: Discovery due by 1/1/2008. Motions due by 2/10/2008. The Parties have chosen court-hosted settlement as their type of ADR. A final PTC shall be sch two (2) weeks prior to trial. Bench Trial set for 7/21/2008 10:00 AM in New Bern - Courtroom before Chief Judge Louise Wood Flanagan. Signed by Judge Louise Wood Flanagan on 7/30/2007. Cys dist. (Deputy Clerk - DR, ) 11/30/2007 NOTICE of Appearance by Frederick Nicholas Noyes on behalf of UNITED STATES OF AMERICA (Noyes, Frederick) 1 2 3 4 5 6 7 8 9 10 11 12 Case Number or Last, First
  2. 2. 12/12/2007 First MOTION for Extension of Time to Complete Discovery by UNITED STATES OF AMERICA. (Noyes, Frederick) 12/27/2007 Motions Submitted: 13 First MOTION for Extension of Time to Complete Discovery (Deputy Clerk - LL) 01/02/2008 NOTICE by UNITED STATES OF AMERICA Letter to the Court (Noyes, Frederick) 01/03/2008 ORDER granting 13 Motion for Extension of Time to Complete Discovery. IT IS HEREBY ORDERED that the Court's Initial Case Management Order, docket entry 11, is modified to permit the parties until 1/15/08 to file supplemental disclosures, until 2/15/08 to complete discovery, and until 3/15/08 to file all dispositive motions. All other provisions of the order remain in effect, including but not limited to bench trial setting for the term beginning 7/21/08. Signed by Chief Judge Louise Wood Flanagan on 1/2/2008. (Deputy Clerk - DR, ) 01/10/2008 ORDER - This matter comes now before the court pursuant to correspondence of the parties, dated 1/7/08, requesting court-hosted settlement conference. The court hereby GRANTS this request and the case is referred for court hosted settlement conference pursuant to Local Civil Rule 101.1, EDNC, to Magistrate Judge David W. Daniel, who shall preside at the conference for the purpose of resolving all issues in dispute. Signed by Chief Judge Louise Wood Flanagan on 1/10/2008. Cys served. (Deputy Clerk - DR, ) 01/15/2008 Order Setting Hearing - A court-hosted settlement conference is set for 2/6/2008, beginning at 10:00 AM in the 5th Floor Courtroom of the Raleigh Federal Building before USMJ David W. Daniel. Signed by USMJ David W. Daniel on 1/15/2008. (Deputy Clerk - JRH ) 01/18/2008 MOTION relief from requirement to have official with full settlement authority at settlement conference by UNITED STATES OF AMERICA. (Noyes, Frederick) 01/18/2008 Memorandum in Support re 19 MOTION relief from requirement to have official with full settlement authority at settlement conference filed by UNITED STATES OF AMERICA. (Noyes, Frederick) 01/23/2008 MOTIONS REFERRED: 19 MOTION relief from requirement to have official with full settlement authority at settlement conference Motions referred to David W. Daniel. (Deputy Clerk - DR, ) 01/25/2008 ORDER granting 19 Motion to allow its official with full settlement authority to be available by telephone. The plaintiff shall have trial counsel present and his immediate supervisor and Internal Revenue Service counsel available by telephone for consultation, if needed, for the conference on 2/6/08. Signed by USMJ David W. Daniel on 1/24/2008. Cys served electronically. (Deputy Clerk - DR, ) 02/06/2008 Minute Entry for proceedings held before Judge USMJ David W. Daniel: Settlement Conference held on 2/6/2008, in Raleigh. Govt. represented by Attorney Frederick Noyes, Raymond Renfrow not present. Court issues Order to Show Cause. Show Cause Hearing set for 2/19/08 at 2:00 p.m. in the 5th Floor Courtroom, Raleigh. Govt. may substitute one of our local AUSAs to stand in or may attend telephonically. (Court Reporter FTR.) (Deputy Clerk - STP, ) 02/06/2008 **STRICKEN ORDER TO SHOW CAUSE Show Cause Hearing set for 2/19/2008 02:00 PM in Raleigh - 5th Floor Courtroom before USMJ David W. Daniel.. Signed by USMJ David W. Daniel on 2/6/08. (Deputy Clerk - STP, ) Modified on 2/7/2008 to show Stricken See DE #23. (Deputy Clerk - DR, ). 02/07/2008 ORDER - This matter is before the Court with regard to the mediation previously set by the Court for Wednesday, February 6, 2008 in Raleigh. It now appearing to the Court that the Order setting the mediation for February 6, 2008, was inadvertently not served on the defendant, the Court will reschedule the mediation for February 19, 2008 at 2:00pm in the 5th Floor Courtroom of the Raleigh Federal Building. The defendant is directed to attend in person. The plaintiff may participate by teleconference. The Courts prior order setting a show cause [DE-22] is hereby STRICKEN based on the apparent inadvertent failure to serve 13 14 15 17 18 19 20 21 22 23
  3. 3. notice of the mediation on the defendant. Signed by USMJ David W. Daniel on 2/7/2008. Cys served. (Deputy Clerk - DR, ) 02/19/2008 Minute Entry for proceedings held before USMJ David W. Daniel: Settlement Conference held on 2/19/2008(5th Floor Courtroom). Present: Pltf - Frederick Noyes( by telephone); Dft - Raymond Renfrow, pro se; Law Clerk - Melissa Metz. Settlement negotiations started. (Court Reporter FTR.) (Deputy Clerk - SP, ) 03/14/2008 MOTION for Summary Judgment by UNITED STATES OF AMERICA. (Noyes, Frederick) 03/14/2008 Memorandum in Support re 25 MOTION for Summary Judgment filed by UNITED STATES OF AMERICA. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D-Part One, # 5 Exhibit D-Part Two, # 6 Exhibit E, # 7 Exhibit F, # 8 Exhibit G, # 9 Exhibit H, # 10 Exhibit I, # 11 Exhibit J, # 12 Exhibit K, # 13 Exhibit L, # 14 Exhibit M, # 15 Exhibit N, # 16 Exhibit O, # 17 Exhibit P, # 18 Text of Proposed Order Proposed Order) (Noyes, Frederick) 03/19/2008 Rule 56 Letter issued as to Raymond A. Renfrow. (Deputy Clerk - DR, ) 04/11/2008 RESPONSE re 27 Rule 56 Letter filed by Raymond A. Renfrow. (Attachments: # 1 Envelope) (Deputy Clerk - JA, ) 04/11/2008 REPLY to Response to Motion re 25 MOTION for Summary Judgment filed by UNITED STATES OF AMERICA. (Noyes, Frederick) 04/14/2008 Motions Submitted: 25 MOTION for Summary Judgment submitted to Chief Judge Louise W. Flanagan for consideration. (Deputy Clerk - CB, ) 04/29/2008 MOTIONS REFERRED: 25 MOTION for Summary Judgment - Motions referred to USMJ James E. Gates. (Deputy Clerk - CB) 05/16/2008 NOTICE of Hearing: Bench Trial set for 7/21/2008 10:00 AM in New Bern - Courtroom before Chief Judge Louise Wood Flanagan. Final Pretrial Conference set for 7/2/2008 10:00 AM in New Bern - Courtroom before Chief Judge Louise Wood Flanagan. Cys served. (Attachments: # 1 Final PTC Calendar) (Deputy Clerk - CB) 06/13/2008 MOTION to Continue by UNITED STATES OF AMERICA. (Attachments: # 1 Text of Proposed Order) (Noyes, Frederick) 06/16/2008 ORDER - In order to promote the continued efficient administration of justice,in light of the pendency of the motion for summary judgment and attendant matters, the court CONTINUES the case from the final pre-trial and trial calendar. After decision, the case will be reset on the docket as appropriate. All deadlines governing the parties' pre-trial preparations set forth in the court's case management order accordingly now are stayed. Plaintiff's motion to continue, lodged on the docket at entry no. 31, and opposed by defendant, is DENIED as MOOT. Signed by Chief Judge Louise Wood Flanagan on 06/16/08. Cys served. (Deputy Clerk - CB) 10/02/2008 NOTICE of Appearance by Shana M. Starnes on behalf of UNITED STATES OF AMERICA (Starnes, Shana) 10/02/2008 NOTICE OF DEFICIENCY re: 33 Notice of Appearance - A Certificate of Service should accompany this filing. Please file the Certificate of Service using the event code titled as such under the "Service of Process" heading. Thank you. (Baker, C.) 10/02/2008 CERTIFICATE OF SERVICE by UNITED STATES OF AMERICA re 33 Notice of Appearance (Starnes, Shana) 25 26 27 28 29 30 31 32 33 34
  4. 4. 10/02/2008 NOTICE OF DEFICIENCY re: 33 Notice of Appearance, 34 Certificate of Service - Counsel has not evidenced service of Notice of Appearance upon pro se Defendant, who is not a CM/ECF filer. See Section F(4) of the Electronic Case Filing Administrative Policies and Procedures Manual available on the Court's website. (Baker, C.) 10/02/2008 CERTIFICATE OF SERVICE by UNITED STATES OF AMERICA re 33 Notice of Appearance (Starnes, Shana) 01/26/2009 MEMORANDUM AND RECOMMENDATIONS re 25 MOTION for Summary Judgment filed by UNITED STATES OF AMERICA. It is RECOMMENDED that the Government's motion for summary judgment be ALLOWED and that the court issue an injunction. SEE DOCUMENT FOR SPECIFICS . Signed by U.S. Magistrate Judge James E. Gates on 01/26/09. (Attachments: # 1 M&R Notice). Copies served. (Baker, C.) 02/17/2009 Motions Submitted: 36 MEMORANDUM AND RECOMMENDATIONS re 25 MOTION for Summary Judgment filed by UNITED STATES OF AMERICA submitted to Chief Judge Flanagan for consideration. (Baker, C.) 03/09/2009 ORDER AND PERMANENT INJUCTION granting 25 Motion for Summary Judgment and adopting 36 Memorandum and Recommendations. Signed by Chief Judge Louise Wood Flanagan on 03/08/09. Copies served. (Baker, C.) 03/10/2009 JUDGMENT - IT IS ORDERED, ADJUDGED AND DECREED, in accordance with the court's order entered March 9, 2009, that Plaintiff's Motion for Summary Judgment is granted as there is no dispute of material fact. Plaintiff is entitled, pursuant to 26 U.S.C. §§ 7402, 7407, and 7408, to the permanent injunction against Defendant as more specifically set forth in the court's March 9, 2009 order. Signed by Clerk of Court on 03/10/09. Copies served. (Baker, C.) 04/24/2009 AFFIDAVIT of Service for Memo and Recommendation; Order and Perm. Injunction; Judgment served on Raymond Renfrow on April 7, 2009, filed by UNITED STATES OF AMERICA. (Starnes, Shana) 09/15/2009 MOTION for Contempt by UNITED STATES OF AMERICA. (Attachments: # 1 Memorandum of Law in Support of United States' Motion for Contempt, # 2 Declaration of Shana M. Starnes, # 3 Exhibit 1 - Letter dated 08/19/09, # 4 Exhibit 2 - Delivery tracking information (Starnes, Shana) Modified on 10/13/2009 to correct docket entry text (Baker, C.). 09/17/2009 NOTICE OF DEFICIENCY re: 40 Motion for Contempt - Pursuant to Local Civil Rule 6.1, or the judge's practice preferences on the court's website, counsel must submit a proposed order. The order must be filed electronically using the event PROPOSED ORDER located in the RESPONSES AND REPLIES category. (Baker, C.) 09/17/2009 Proposed Order re 40 MOTION United States' Motion for Contempt filed by UNITED STATES OF AMERICA. (Starnes, Shana) 10/13/2009 Motions Submitted: 40 MOTION for Contempt submitted to Chief Judge Flanagan for consideration. (Baker, C.) 10/23/2009 Declaration re 37 ORDER AND PERMANENT INJUNCTION by Raymond A. Renfrow filed by Raymond A. Renfrow. (Attachments: # 1 Envelope) (Atkinson, J.) 10/27/2009 ORDER Setting Hearing on Motion re 40 United States' Motion for Contempt : Hearing is set in the case at the United States Courthouse at New Bern, North Carolina on Monday, November 16, 2009, at 3:00 p.m., at which defendant is ORDERED to appear and show cause why he should not now be found in contempt of court for failure to fully adhere to the court's order dated March 9, 2009. Signed by Chief Judge Louise Wood Flanagan on 10/26/09. Copies served. (Baker, C.) 35 36 37 38 39 40 41 42 43
  5. 5. 11/05/2009 NOTICE of Appearance by Jessica S. Reimelt on behalf of UNITED STATES OF AMERICA (Reimelt, Jessica) 11/16/2009 Minute Entry for proceedings held before Chief Judge Louise Wood Flanagan: Show Cause Hearing held on 11/16/2009 in New Bern. Present for Plaintiff - Jessica Reimelt. Pro se Defendant not present. Court grants plaintiff's 40 Motion to Compel. Plaintiff to submit proposed amended order for consideration. Attached document for court use only. (Court Reporter Harry Hagopian.) (Baker, C.) 11/18/2009 ORDER granting 40 Motion to Hold Defendant in Contempt. Signed by Chief Judge Louise Wood Flanagan on 11/18/09. Copies served. (Baker, C.) 12/08/2009 SUMMONS Returned Executed by UNITED STATES OF AMERICA. Raymond A. Renfrow served on 11/19/2009, answer due 12/9/2009. (Starnes, Shana) 12/28/2009 Motions Submitted: 47 SEALED MOTION by Defendant Raymond A. Renfrow submitted to Chief Judge Flanagan for consideration. (Baker, C.) 12/29/2009 ORDER granting 47 Motion for Reconsideration. Defendant is relieved now of the court sanctions and shall pay nothing. Signed by Chief Judge Louise Wood Flanagan on 12/29/09. Copies served. (Baker, C.) 12/31/2009 AFFIDAVIT of Service for Court Order dated 11/18/2009 served on Raymond A. Renfrow on 12/17/2009 filed by UNITED STATES OF AMERICA. (Atkinson, J.) 44 45 46 48 49 50
  6. 6. Query Reports Utilities Logout 5:07-cv-00117-FL UNITED STATES OF AMERICA v. Renfrow Louise Wood Flanagan, presiding Date filed: 03/22/2007 Date terminated: 03/10/2009 Date of last filing: 12/31/2009 Parties with aliases Raymond A. Renfrow 309 E. Nash Street Elm City, NC 27822 (Defendant) PRO SE dba Ideal Tax Service and First Class Limousine PACER Service Center Transaction Receipt Avoid Raymond Renfrow PACER Login: Raymond Renfrow Client Code: Description: Aliases Search Criteria: 5:07-cv-00117- FL Billable Pages: 1 Cost: 0.10
  7. 7. Query Reports Utilities Logout 5:07-cv-00117-FL UNITED STATES OF AMERICA v. Renfrow Louise Wood Flanagan, presiding Date filed: 03/22/2007 Date terminated: 03/10/2009 Date of last filing: 12/31/2009 Filer Raymond A. Renfrow Doc. No. Event Name Filed 6 Response in Opposition to Motion 05/03/2007 8 Answer to Complaint 05/29/2007 10 Discovery Plan 07/25/2007 28 Response 04/11/2008 42 Declaration 10/23/2009 PACER Service Center Transaction Receipt Crybaby RayRen98 PACER Login: RayRay Client Code: Description: Filer List Search Criteria: 5:07-cv-00117-FL Billable Pages: 1 Cost: 0.10
  8. 8. -1- 2292205.2 UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NORTH CAROLINA WESTERN DIVISION NO. 1:07-CV-117(__) UNITED STATES OF AMERICA, ) ) Plaintiff, ) ) vs. ) COMPLAINT FOR PERMANENT ) INJUNCTION AND OTHER RAYMOND A. RENFROW, ) EQUITABLE RELIEF individually and d/b/a ) IDEAL TAX SERVICES and ) FIRST CLASS LIMOUSINE, ) ) Defendant. ) _________________________________________ ) The plaintiff, the United States of America, complains and alleges against defendant Raymond A. Renfrow, individually and doing business as Ideal Tax Services and First Class Limousine, as follows: 1. This is a civil action brought by the United States pursuant to sections 7402(a), 7407, and 7408 of the Internal Revenue Code (26 U.S.C.) (“I.R.C.”) to restrain and enjoin Renfrow and all those in active concert or participation with him from: a. Acting as a federal tax return preparer or requesting, assisting in, or directing the preparation and/or filing of federal tax returns for any person or entity other than himself; b. Appearing as a representative on behalf of any person or organization before the Internal Revenue Service; c. Understating customers’ tax liabilities as penalized by I.R.C. § 6694; d. Failing to list a tax identification number or to sign tax returns for which he is a tax-return preparer and other conduct subject to penalty under Case 5:07-cv-00117-FL Document 1-1 Filed 03/22/2007 Page 1 of 20
  9. 9. -2- 2292205.2 I.R.C. § 6695; e. Engaging in activity subject to penalty under I.R.C. § 6700, including making, in connection with the organization or sale of any plan or arrangement, any statement about the securing of any tax benefit that the defendant knows or has reason to know is false as to any material matter; f. Engaging in activity subject to penalty under I.R.C. § 6701, including preparing or assisting in the preparation of a document related to a matter material to the internal revenue laws that includes a position that he knows would result in an understatement of another person’s tax liability; and g. Engaging in any other conduct subject to any penalty under the Internal Revenue Code or any conduct that interferes with the administration and enforcement of the internal revenue laws. Jurisdiction 2. This suit is brought under Sections 7402, 7407, and 7408 of the Internal Revenue Code (26 U.S.C.) to restrain and enjoin defendant from preparing federal income tax returns for others, engaging in any activity subject to penalty under 26 U.S.C. §§ 6694, 6695, 6700 or 6701, and engaging in conduct that substantially interferes with the proper administration and enforcement of the internal revenue laws. 3. Jurisdiction is conferred on this Court by Sections 1340 and 1345 of Title 28, United States Code, and I.R.C. §§ 7402(a), 7407, and 7408. Defendant 4. Renfrow resides in Elm City, North Carolina within this judicial district. 5. Renfrow conducts business through Ideal Tax Services and First Class Limousine, which are located in Elm City, North Carolina, within this judicial district. Case 5:07-cv-00117-FL Document 1-1 Filed 03/22/2007 Page 2 of 20
  10. 10. -3- 2292205.2 Activities of Defendant, Concept Marketing International, National Trust Services and Trust Educational Services 6. Renfrow, operating under the business names of Ideal Tax Services and First Class Limousine, prepares and files fraudulent and frivolous federal income tax returns or claims for refunds for customers. Renfrow generally signs as a paid preparer on the returns he prepares, but he does not list his own Social Security number but instead lists Employer Identification Number issued for Ideal Tax Services and First Class Limousine. 7. Renfrow prepares income tax returns primarily for customers of Concept Marketing International (“CMI”), National Trust Services (“NTS”), and Trust Educational Services (“TES”). 8. CMI was founded by James E. Aldridge, Jr., in October 1991, as a retail and direct sales company that primarily operated a multi-level marketing scheme involving the sale of American Silver Eagle coins. 9. In March, 1993, Renfrow helped Aldridge form a purported trust known as CMI Trust. Aldridge purportedly transferred his CMI business to the CMI Trust. Renfrow, as the principal of Ideal Tax Services, acted as a trustee of the CMI Trust along with Aldridge and his wife, Shirley Aldridge. 10. In 1993, Renfrow formed Ideal Tax Services in order to provide bookkeeping guidance and tax preparation services for CMI clients. As a CMI sales representative, Renfrow also promoted and sold to customers CMI’s purported business plan at nationwide seminars. 11. CMI’s business plan contemplates a four-tiered pyramid commission sales strategy as follows: a. The first-tier sales representative recruited a customer to purchase $1,000 Case 5:07-cv-00117-FL Document 1-1 Filed 03/22/2007 Page 3 of 20
  11. 11. -4- 2292205.2 worth of silver coins and would receive a $100 commission. b. Next, the first-tier customer would recruit a second-tier customer to purchase the silver coins. For this sale, the second-tier salesperson received a $50 commission and the first-tier salesperson received a $100 commission. c. This chain of sales extended through two additional tiers. At the third and fourth tier, the first through third-tier CMI customer, who they called members, received commissions for any lower-tier sales. 12. CMI representatives, including Renfrow, falsely advised prospective CMI customers that their purchasing the American Silver Eagle coins would constitute a legitimate home-based business. This was part of a tax-fraud scheme Renfrow devised and promoted under which CMI customers could falsely claim to have home-based businesses in order to fraudulently deduct personal living expenses from their taxable income, including deductions for such non-deductible items as groceries, furniture, clothing, housekeeping, utilities, and rent. 13. CMI explained its false promise to increase customers’ income while reducing tax liability in its mission statement, entitled “A Different Economic Reality,” which stated that CMI has the resources, resolve, and intent to return control of a family’s financial destiny back to the family, and out of the hands of the employer, the Internal Revenue Service, and the Government. 14. CMI has sponsored numerous promotional seminars, mainly in the Kansas City area. As part of these seminars, CMI directed customers to purchase American Silver Eagle coins, and form so-called Unincorporated Business Organizations or business trusts, which CMI promoters falsely promised to reduce their taxes by 97% or more. In addition to urging Case 5:07-cv-00117-FL Document 1-1 Filed 03/22/2007 Page 4 of 20
  12. 12. -5- 2292205.2 customers to use sham trusts, CMI instructs customers on how to use sham home-based businesses to fraudulently deduct personal living expenses from their taxable income, including non-deductible items such as groceries, furniture, clothing, housekeeping, utilities, and rent. 15. In the mid-1990s, Renfrow and Aldridge formed a series of sham trusts to be used in connection with the CMI promotion. These trusts were used to promote the sale of a sham- trust tax-fraud scheme. 16. In January of 1994, Renfrow helped Aldridge establish the Aldridge Family Trust (“AFT”) and the Liberty Commerce Group Trust (“LCGT”). AFT was both the grantor and beneficiary of the LCGT trust. Aldridge and his wife Shirley were the trustees of LCGT. 17. Renfrow and Aldridge created LCGT to market and distribute sham-trust packages consisting of a multi-tiered web of sham trusts, designed to purportedly receive customers’ income and purportedly hold title to customers’ assets and pay their expenses, while purporting to exempt their income and assets from taxation. 18. LCGT contracted with a sham-trust promoter called National Trust Services (“NTS”), which was created by Leroy E. Fritts and Roderick Prescott, to have NTS sell its sham- trust scheme to LCGT and CMI customers. Renfrow, as CMI’s principal income tax preparer, also prepared fraudulent federal income tax returns for NTS customers based on the NTS sham- trust tax-fraud scheme. By 2002, Renfrow was preparing false and fraudulent income tax returns for CMI, NTS, and TES customers. 19. NTS and TES salespersons instructed customers to create at least two so-called “complex” trusts generally consisting of a sham business trust and a sham family trust. NTS and TES representatives further advised customers to purportedly transfer their businesses and Case 5:07-cv-00117-FL Document 1-1 Filed 03/22/2007 Page 5 of 20
  13. 13. -6- 2292205.2 business assets into the business trust. 20. Thereafter, the business continued to operate as it did before, except that: (1) the business trust would pay rent to either the family trust or a “holding” trust for the purported use of equipment or office space and then take a tax deduction for the rent paid as a “business expense”; (2) the business trust distributed any net income to the family trust; and (3) the family trust purported to reduce its federal income tax liability by 97% by deducting non-deductible personal expenses, including personal household expenses. 21. Prescott directed many TES and TES customers who purchased TES and NTS sham trusts to have their federal income tax returns prepared by Samuel Fung. As part of the tax-fraud scheme, Fung prepared income tax returns that falsely understated his customers’ income tax liabilities by deducting personal expenses that customers purportedly assigned to the sham TES and NTS trusts. 22. On June 2, 2003, a federal court permanently enjoined Prescott from selling the sham-trust tax-fraud scheme, individually and through TES, Case No. 03:02-cv-692-L-JFS (S.D. Cal.). The injunction order is available at www.usdoj.gov/tax/prtax/txdv03332.htm. 23. While the injunction suit against Prescott was pending, Renfrow purchased his own series of sham trusts from TES in 2002 and 2003. This included the Renfrow Family Foundation Trust, Renfrow Group Trust, and the Renfrow Family Trust. In keeping with Prescott’s sham-trust tax-fraud scheme, Renfrow named himself and his wife as both the beneficiary and trustee of each trust. 24. On February 11, 2004, a federal court permanently enjoined Fung from preparing income tax returns and representing that customers can deduct personal expenses on their trusts’ Case 5:07-cv-00117-FL Document 1-1 Filed 03/22/2007 Page 6 of 20
  14. 14. -7- 2292205.2 federal income tax returns. Case No. 03-cv-3123 (D. Ore. 2003). The injunction order is available at www.usdoj.gov/tax/prtax/txdv04081.htm. 25. Thereafter, on April 12, 2005, Fritts and Prescott were indicted in the Northern District of California for tax evasion, under 26 U.S.C. § 7201, and conspiracy to defraud the United States, pursuant to 18 U.S.C. § 371 for their role in the TES and NTS tax-fraud schemes. 26. The CMI entities and directors have faced similar law-enforcement actions. On January 23, 2004, Aldridge, CMI and Liberty Commerce Group Trust were ordered by the State of Missouri to cease and desist offering or selling notes or evidences of indebtedness in CMI, Liberty Commerce Group Trust, and Continental Fiduciary Management. 27. On June 27, 2006, James and Shirley Aldridge were indicted for filing false income tax returns and aiding and abetting others to file false tax returns. 28. On information and belief, Renfrow is aware of the injunctions issued against Fung and Prescott. Nevertheless he continues to sell sham trusts and prepare fraudulent federal income tax returns based on the fraudulent methods described above. 29. On August 11, 2004, IRS agents interviewed Renfrow and advised him that he was being investigated in connection with possible conduct subject to penalty under IRC §§ 6700 and 6701 and possible improper conduct in preparing tax returns for customers. During this meeting, Renfrow asserted the frivolous argument that the Constitution does not require individuals to file income tax returns and he referred to himself as a “tax protester.” 30. Following Renfrow’s meeting with the IRS, Renfrow has continued to prepare false income tax returns based on the tax-fraud schemes promoted by NTS and TES, while working with CMI. Case 5:07-cv-00117-FL Document 1-1 Filed 03/22/2007 Page 7 of 20
  15. 15. -8- 2292205.2 31. Renfrow continues to promote the same tax-fraud schemes sold by NTS and TES, at CMI seminars that he has arranged nationwide in 2006 and 2007. Renfrow’s Fraudulent Trust Promotion and Return Preparation 32. From about 1994 through 2002 Renfrow sold a “Complex Trust System” package through his affiliation with NTS and TES. Renfrow has also prepared false and fraudulent federal income tax returns for NTS and TES customers who have used the complex-trust scheme. 33. The typical “Complex Trust Package” sold by NTS, TES, and CMI calls for an individual to create a family trust, a business trust, and a private charitable trust, all of which are shams. NTS and TES representatives promoting this trust arrangement, including Renfrow, advised customers to transfer their businesses into the business trust, and to transfer personal property into the family trusts. 34. In each instance, the trust instruments provided as part of the Complex Trust System names the individual customer as the grantor and trustee of the trusts. In many cases, Renfrow is also named as the trustee of the trusts he has sold to customers of NTS, TES, and CMI. 35. The individual customer, as grantor or trustee, continues to have complete control over the assets that were purportedly transferred to the trusts. In addition, the customer who purchased the Complex Trust System is usually the signatory on the bank accounts opened in the various trusts’ names, thereby giving the individual control over any funds purportedly belonging to the trusts. 36. As CMI’s tax advisor, Renfrow directs customers to conduct their purported CMI Case 5:07-cv-00117-FL Document 1-1 Filed 03/22/2007 Page 8 of 20
  16. 16. -9- 2292205.2 businesses through the business trusts. Renfrow prepares business trust returns for customers based on this fraudulent method, which includes improper deductions for the customers cell phone use, CMI meeting fees, and the cost of the silver coins purchased from CMI as purported business expenses. 37. Next, Renfrow prepares trust tax returns that falsely purport to distribute the net income of the business trust to the customer’s family trust in an attempt to prevent the business trust from incurring any federal income tax liability. 38. The Complex Trust System then calls for the customer, as the trustee of the family trust, to sign a resolution designating his or her personal residence as the “trust headquarters.” Thereafter, under Renfrow’s sham-trust scheme, the family trust improperly deducts — as purported business expenses — all expenses associated with the maintenance and operation of the “trust headquarters.” These include the customer’s personal expenses such as insurance on the house, utilities, home repairs, and homeowner’s association fees. 39. The effect of complex-trust tax-fraud scheme is that participants live in the same residence and operate the same business as they did before participating in the program. Under the program, participants’ living expenses are paid from the participants’ earnings just as they were before creating the trusts. The trusts are shams because participants receive the full benefit of, and have full control over, all trust funds. The only substantive change in the participants’ regular business and lifestyle activities is the purported benefit of no taxation. 40. The trusts used by Renfrow’s customers are operated for the benefit of the owner, are devoid of economic substance and are shams for federal tax purposes. The program constitutes an improper assignment of income and a fraudulent transfer of assets. Case 5:07-cv-00117-FL Document 1-1 Filed 03/22/2007 Page 9 of 20
  17. 17. -10- 2292205.2 41. For example, Renfrow prepared the 2002 and 2003 federal trust income tax returns for the purported trusts of a customer in Raytown, Missouri. In furtherance of the scheme, Renfrow prepared federal trust returns (Forms 1041) for the business trust that both reported income paid from CMI. On the business trust returns, Renfrow reported distributions of the net income to the family trust. On the Forms 1041 for the family trust for the same year, Renfrow deducted the Raytown, Missouri customer’s personal living expenses on the return, including expenses paid to maintain the trust “headquarters,” which was the customer’s home. 42. Renfrow knew or had reason to know this trust arrangement was a sham. Renfrow’s Participation in the Concept Marketing International Tax-Fraud Scheme 43. Renfrow is the Regional Sales Director and a trustee of the CMI trust. In 2000, Renfrow, individually and through his business, Ideal Tax Services, agreed to provide tax preparation and training courses for CMI customers. 44. As part of that agreement, Renfrow has conducted monthly “Income Tax Boot Camps” throughout the country in 2006 and 2007, to promote tax-fraud schemes. 45. At these seminars, Renfrow instructs customers on the use of a sham home-based business to deduct personal living expenses from the customer’s taxable income, including among other things, groceries, furniture, clothing, housekeeping, utilities, and rent. Renfrow promotes a tax-fraud schemes that use multiple sham Schedule C businesses for the ostensible purpose of legal tax savings. 46. As part of the scheme, Renfrow and CMI sell to customers American Silver Eagle coins, and falsely advise customers that purchasing the coins from CMI constitutes a bona fide business for the participant. Case 5:07-cv-00117-FL Document 1-1 Filed 03/22/2007 Page 10 of 20
  18. 18. -11- 2292205.2 47. Renfrow falsely advises customers that they can legally deduct the cost of the coins purchased from CMI as part of their fictitious business, even though CMI’s promotional materials state that the coins are held for investment by the customers. 48. Renfrow also prepares income tax returns for CMI participants that fraudulently deduct their personal expenses as fictitious CMI business expenses. 49. The non-deductible personal expenses Renfrow deducts as business expenses on customers’ federal income tax returns include, inter alia, (1) the cost of the silver coins, which Renfrow falsely and fraudulently reports as “CMI association dues” on customers’ income tax returns, (2) driving expenses, (3) the cost of attending CMI meetings, and (4) personal expenses related to the customers’ homes. 50. The CMI businesses Renfrow reports on customers’ income tax returns are shams for federal income tax purposes. Renfrow’s customers’ fictitious businesses are operated for the sole purpose of falsely deducting personal expenses or the cost of purchasing CMI products as purported legitimate businesses. The only substantive change in the participants’ regular business and lifestyle activities is the purported benefit of no taxation. 51. Thus far, the IRS has examined more than sixty false and fraudulent income tax returns Renfrow has prepared for CMI customers. All of the federal income tax returns examined by the IRS include expenses for “CMI association dues” on Schedule C forms. The purported “association dues” are, in fact, the cost of the American Eagle Coins that the CMI customers bought. 52. Not one of the federal income tax returns that Renfrow has prepared for CMI customers that has been examined by the IRS is accurate. Case 5:07-cv-00117-FL Document 1-1 Filed 03/22/2007 Page 11 of 20
  19. 19. -12- 2292205.2 53. Renfrow failed to list his name, or a trade name, as preparer on some of the income tax returns he has prepared for customers. Defendant’s Knowledge of the Falsity of the Tax Benefits of His Tax-Fraud Schemes 54. Renfrow knows that the positions he is asserting on his customers’ income tax returns are contrary to law because he has referred to himself as a “tax protester.” 55. Renfrow knows or has reason to know the federal income tax returns he prepares for NTS and TES customers fraudulently reduced their reported tax liabilities. 56. Renfrow knows or has reason to know the federal income tax returns he prepares for NTS and TES customers fraudulently reduced their reported income tax liabilities because he knows that Roderick Prescott and Samuel Fung were enjoined from selling the TES and NTS sham-trust schemes. 57. Renfrow knows or has reason to know that the CMI tax-fraud scheme is illegal. 58. Renfrow knows or has reason to know that trust misuse and preparer fraud scams are identified in the IRS’s annual consumer alert of tax scams that taxpayers should avoid. 59. Renfrow is also aware that his customers have been the subject of IRS audits because the income tax returns he prepares for them contain false information. Harm to the Public 60. The tax-fraud schemes that Renfrow promotes and markets harm the government by fraudulently reducing customers’ reported tax liabilities. 61. The Internal Revenue Service is harmed because it must dedicate scarce resources to detecting and examining inaccurate returns filed by defendant’s customers, to preparing substitute returns for customers failing to file tax returns, and to attempting to recover unpaid Case 5:07-cv-00117-FL Document 1-1 Filed 03/22/2007 Page 12 of 20
  20. 20. -13- 2292205.2 taxes. 62. Thus far, the IRS has identified over sixty federal individual income tax returns and fifty federal trust returns that Renfrow has prepared for customers that have resulted in a tax loss exceeding $347,640. 63. Since 2001, Renfrow has prepared 993 individual income tax returns for customers. The potential tax loss from Renfrow’s conduct based on the returns examined could exceed $2,907,792. 64. The United States is also harmed because the IRS is forced to devote its limited resources to identifying defendant’s customers and recovering any erroneous refunds that are issued. Given these limited resources, identifying and recovering all revenues lost from defendant’s preparation of false and fraudulent returns may be impossible. 65. For Renfrow’s customers that the IRS has identified, the IRS must review and respond to correspondence, request that they file correct returns, assess penalties, and audit them to determine the correct tax liability. This effort is required for each return filed. 66. In addition to the harm caused by his preparation of tax returns that understate his customers’ tax liabilities, Renfrow’s activities undermine public confidence in the administration of the federal tax system and incite noncompliance with the internal revenue laws. 67. Defendant’s customers have been harmed because they have paid defendant fees to prepare tax returns that understate their correct federal income tax liabilities. Customers who receive erroneous refunds then must pay back the taxes plus interest. Regardless of whether the IRS issues a refund, customers may have to pay penalties and some customers could also face criminal prosecution. Case 5:07-cv-00117-FL Document 1-1 Filed 03/22/2007 Page 13 of 20
  21. 21. -14- 2292205.2 68. The IRS estimates that during 2001 the difference between the amount of taxes paid by U.S.-taxpayers, and the amount that should have been paid, equaled $345 billion. See http://www.irs.gov/newsroom/article/0,,id=154496,00.html. Tax-fraud schemes such as those promoted by defendant contribute to the under-reporting of taxes estimated in the report. 69. Despite notice from the IRS of this investigation in 2004, Renfrow and CMI continue to promote their tax-fraud schemes and false and fraudulent return preparation services and have schedule monthly seminars promoting their tax-fraud schemes in 2007. Defendant’s background and extensive involvement in these elaborate tax-fraud schemes indicate that the misconduct described in this complaint or other similar misconduct is likely to recur unless he is permanently enjoined. Count I: Injunction under I.R.C. § 7407 for violation of I.R.C. §§ 6694 and 6695 70. The United States incorporates by reference the allegations in paragraphs 1 through 69. 71. Section 7407 of the Internal Revenue Code authorizes a district court to enjoin an income tax preparer from: a. engaging in conduct subject to penalty under I.R.C. § 6694 (which penalizes a tax return preparer who prepares or submits a return that contains an unrealistic position); b. engaging in conduct subject to penalty under I.R.C. § 6695 (which penalizes a tax return preparer who fails to sign a return as a paid preparer or to furnish an identifying number on the return or to keep a list of customers or copies of tax returns and turn over the list or copies to the IRS upon request); or Case 5:07-cv-00117-FL Document 1-1 Filed 03/22/2007 Page 14 of 20
  22. 22. -15- 2292205.2 c. engaging in any other fraudulent or deceptive conduct that substantially interferes with the proper administration of the internal revenue laws, if the court finds that injunctive relief is appropriate to prevent the recurrence of such conduct. Additionally, if the court finds that a preparer has continually or repeatedly engaged in such conduct, and the court finds that a narrower injunction (i.e., prohibiting only that specific enumerated conduct) would not be sufficient to prevent that person’s interference with the proper administration of the internal revenue laws, the court may enjoin the person from further acting as a federal income tax return preparer. 72. Defendant has prepared at least 993 federal income tax returns that included false or fraudulent deductions for his customers’ non-deductible personal expenses and their fictitious CMI businesses. In so doing, he understated his customers’ federal tax liabilities and asserted positions which he knew or reasonably should have known were unrealistic under I.R.C. § 6694. 73. On some of these returns, defendant failed to list his name or a trade name as preparer, subjecting him to penalty under I.R.C. § 6695. 74. Defendant’s actions, as described above, are subject to penalty under I.R.C. § 7407(b)(1)(A) and (D), and are, thus, subject to being enjoined under I.R.C. § 7407. 75. If he is not enjoined, defendant is likely to continue to prepare and file tax returns that include false or fraudulent deductions and the use of sham trusts as a device to evade the proper payment of tax. Count II: Injunction under I.R.C. § 7408 for violation of I.R.C. §§ 6700 and 6701 76. The United States incorporates by reference the allegations in paragraphs 1 through 75. Case 5:07-cv-00117-FL Document 1-1 Filed 03/22/2007 Page 15 of 20
  23. 23. -16- 2292205.2 77. I.R.C. § 7408 authorizes a court to enjoin persons engaging in any conduct subject to penalty under I.R.C. § 6701 from engaging in such conduct or any conduct subject to penalty under the Internal Revenue Code if the court finds that injunctive relief is appropriate to prevent the recurrence of such conduct. 78. Section 6700 imposes a penalty on any person who organizes or participates in the sale of a plan or arrangement and in so doing makes a statement with respect to the allowability of any deduction or credit, the excludability of any income, or the securing of any tax benefit by participating in the plan or arrangement which that person knows or has reason to know is false or fraudulent as to any material matter. 79. I.R.C. § 6701 imposes a penalty on any person who prepares or assists in the preparation of a return, affidavit, or other document that the person knows or has reason to believe will be used in connection with any material matter arising under the internal revenue laws, and that the person knows would result in an understatement of tax liability. 80. Defendant prepares false and fraudulent individual and trust income tax returns, trust documents, individual income tax returns, and other documents that he files for his customers. Renfrow knows or has reason to believe, that the returns he prepared would be used in connection with material matters arising under the internal revenue laws. 81. Defendant knows that the returns and other documents he prepares will result in understatements of his customers’ tax liabilities because he knowingly deducts his customers’ personal expenses on trust returns, false and fraudulently deducts the cost of coins purchased as part of his customers fictitious businesses, and prepares other documents that inflate expenses report on his customers’ federal income tax returns. Case 5:07-cv-00117-FL Document 1-1 Filed 03/22/2007 Page 16 of 20
  24. 24. -17- 2292205.2 82. Renfrow sells and organizes tax-fraud schemes that falsely promised tax benefits to customers. 83. Renfrow knew or had reason to know that these statements were false or fraudulent statements within the meaning of 26 U.S.C. § 6700. 84. If he is not enjoined, Renfrow is likely to continue to organize and sell tax- fraud schemes. Count III: Injunction under I.R.C. § 7402(a) for unlawful interference with the enforcement of the internal revenue laws 85. The United States incorporates by reference the allegations of paragraphs 1 through 84. 86. Section 7402 of the Internal Revenue Code authorizes a court to issue orders of injunction as may be necessary or appropriate for the enforcement of the internal revenue laws. 87. Defendant, through his actions as described above, has engaged in conduct that substantially interferes with the enforcement of the internal revenue laws. 88. The federal income tax returns that defendant prepared for his customers improperly and illegally understated his customers’ federal income tax liabilities. 89. If defendant is not enjoined from engaging in fraudulent and deceptive conduct, such as preparing false or fraudulent tax returns, the United States will suffer irreparable injury from revenue losses caused by defendant. 90. While the United States will suffer irreparable injury if he is not enjoined, defendant will not be harmed by being compelled to obey the law. 91. The public interest would be advanced by enjoining defendant because an injunction, backed by the Court’s contempt powers if needed, will stop his illegal conduct and the Case 5:07-cv-00117-FL Document 1-1 Filed 03/22/2007 Page 17 of 20
  25. 25. -18- 2292205.2 harm the conduct is causing to the United States Treasury. 92. If defendant is not enjoined, he is likely to continue to interfere with the enforcement of the internal revenue laws. WHEREFORE, the plaintiff, the United States of America, respectfully prays as follows: A. That the Court find that Raymond A. Renfrow, individually or doing business as Ideal Tax Services or First Class Limousine, has continually and repeatedly engaged in conduct subject to penalty under I.R.C. §§ 6694 and 6695 and has continually and repeatedly engaged in other fraudulent or deceptive conduct substantially interfering with the administration of the tax laws, and that a narrow injunction prohibiting only this specific misconduct would be insufficient; B. That the Court find that Raymond A. Renfrow, individually or doing business as Ideal Tax Services or First Class Limousine, has engaged in conduct subject to penalty under I.R.C. §§ 6700 and 6701 and that injunctive relief under I.R.C. § 7408 is appropriate to prevent a recurrence of that conduct; C. That the Court find that Raymond A. Renfrow, individually or doing business as Ideal Tax Services or First Class Limousine, has engaged in conduct that interferes with the enforcement of the internal revenue laws, and that injunctive relief is appropriate to prevent the recurrence of that conduct pursuant to the Court’s inherent equity powers and IRC § 7402(a); D. That the Court, pursuant to IRC §§ 7402(a), 7407, and 7408, enter a permanent injunction prohibiting Raymond A. Renfrow, individually or doing business as Ideal Tax Services or First Class Limousine, and all those in active concert or participation with him from: (1) Acting as a federal tax return preparer or requesting, assisting in, or directing the preparation and/or filing of federal tax returns for any person or entity other than himself; Case 5:07-cv-00117-FL Document 1-1 Filed 03/22/2007 Page 18 of 20
  26. 26. -19- 2292205.2 (2) Appearing as a representative on behalf of any person or organization before the Internal Revenue Service; (3) Understating customers’ tax liabilities as penalized by IRC § 6694; (4) Failing to list a tax identification number or to sign tax returns for which he is a tax-return preparer and other conduct subject to penalty under IRC § 6695; (5) Engaging in activity subject to penalty under IRC § 6701, including preparing or assisting in the preparation of a document related to a matter material to the internal revenue laws that includes a position that he knows would result in an understatement of another person’s tax liability; (6) Organizing, promoting, marketing, or selling any tax shelter, plan or arrangement that advises or assists customers to attempt to violate the internal revenue laws or unlawfully evade the assessment or collection of their federal tax liabilities, including by means of Pure Trust and sovereignty programs; (7) Falsely representing that customers may continue to control and receive beneficial enjoyment from assets irrevocably transferred to a trust without regard to the grantor trust rules of IRC §§ 673 through 677; (8) The false representation that customers’ personal residences can be transferred to a trust for the purpose of claiming personal expenses in order to reduce their federal tax liability; (9) The false representation that the purchasing or American Silver Coins is a deductible business expense; and (10) Engaging in any other conduct subject to any penalty under the Internal Revenue Code or any conduct that interferes with the administration and enforcement of the internal revenue laws. E. That the Court, pursuant to IRC §§ 7402(a), 7407, and 7408, enter an injunction requiring Raymond A. Renfrow within fifteen days to contact by United States Mail and, if an e- mail address is known, by e-mail, all persons for whom he and those in active concert with him prepared a federal tax return to inform them of the Court’s findings concerning the falsity of his prior representations and enclose a copy of the permanent injunction against him; Case 5:07-cv-00117-FL Document 1-1 Filed 03/22/2007 Page 19 of 20
  27. 27. -20- 2292205.2 F. That the Court, pursuant to IRC §§ 7402(a), 7407, and 7408, enter an injunction requiring Raymond A. Renfrow to produce to counsel for the United States within fifteen days a list that identifies by name, social security number, address, e-mail address, and telephone number and tax period(s) all persons for whom he prepared federal tax returns or claims for refund since January 1, 2001; G. That the Court retain jurisdiction over Raymond A. Renfrow, individually or doing business as Ideal Tax Services or First Class Limousine, and over this action for the purpose of enforcing any permanent injunction entered against defendant; H. That the United States be entitled to conduct discovery for the purpose of monitoring defendant’s compliance with the terms of any permanent injunction entered against him; and I. That this Court grant the United States such other and further relief, including costs, as is just and equitable. DATED this 22nd day of March 2007. FRED D. WHITNEY United States Attorney /s/Thomas M. Newman____ THOMAS M. NEWMAN Trial Attorney, Tax Division United States Department of Justice Post Office Box 7238 Washington, DC 20044 Telephone: (202) 616-9926 Fax: (202) 514-6770 Case 5:07-cv-00117-FL Document 1-1 Filed 03/22/2007 Page 20 of 20
  28. 28. JS 44 (Rev. 11/04) CIVIL COVER SHEET The JS 44 civil cover sheet and the information contained herein neither replace nor supplement the filing and service of pleadings or other papers as required by law, except as provided by local rules of court. This form, approved by the Judicial Conference of the United States in September 1974, is required for the use of the Clerk of Court for the purpose of initiating the civil docket sheet. (SEE INSTRUCTIONS ON THE REVERSE OF THE FORM.) I. (a) PLAINTIFFS DEFENDANTS United States of America Raymond A. Renfrow, individually and d/b/a Ideal Tax Service and First Class Limousine (b) County of Residence of First Listed Plaintiff County of Residence of First Listed Defendant Wilson (EXCEPT IN U.S. PLAINTIFF CASES) (IN U.S. PLAINTIFF CASES ONLY) NOTE: IN LAND CONDEMNATION CASES, USE THE LOCATION OF THE LAND INVOLVED. (c) Attorney’s (Firm Name, Address, and Telephone Number) Attorneys (If Known) Thomas M. Newman, U.S. Department of Justice, Tax Division, P.O. Box 7238, Ben Franklin Station, Washington DC 20044 II. BASIS OF JURISDICTION (Place an “X” in One Box Only) III. CITIZENSHIP OF PRINCIPAL PARTIES(Place an “X” in One Box for Plaintiff (For Diversity Cases Only) and One Box for Defendant) x 1 U.S. Government 3 Federal Question PTF DEF PTF DEF Plaintiff (U.S. Government Not a Party) Citizen of This State 1 1 Incorporated or Principal Place 4 4 of Business In This State 2 U.S. Government 4 Diversity Citizen of Another State 2 2 Incorporated and Principal Place 5 5 Defendant (Indicate Citizenship of Parties in Item III) of Business In Another State Citizen or Subject of a 3 3 Foreign Nation 6 6 Foreign Country IV. NATURE OF SUIT (Place an “X” in One Box Only) CONTRACT TORTS FORFEITURE/PENALTY BANKRUPTCY OTHER STATUTES 110 Insurance PERSONAL INJURY PERSONAL INJURY 610 Agriculture 422 Appeal 28 USC 158 400 State Reapportionment 120 Marine 310 Airplane 362 Personal Injury - 620 Other Food & Drug 423 Withdrawal 410 Antitrust 130 Miller Act 315 Airplane Product Med. Malpractice 625 Drug Related Seizure 28 USC 157 430 Banks and Banking 140 Negotiable Instrument Liability 365 Personal Injury - of Property 21 USC 881 450 Commerce 150 Recovery of Overpayment 320 Assault, Libel & Product Liability 630 Liquor Laws PROPERTY RIGHTS 460 Deportation & Enforcement of Judgment Slander 368 Asbestos Personal 640 R.R. & Truck 820 Copyrights 470 Racketeer Influenced and 151 Medicare Act 330 Federal Employers’ Injury Product 650 Airline Regs. 830 Patent Corrupt Organizations 152 Recovery of Defaulted Liability Liability 660 Occupational 840 Trademark 480 Consumer Credit Student Loans 340 Marine PERSONAL PROPERTY Safety/Health 490 Cable/Sat TV (Excl. Veterans) 345 Marine Product 370 Other Fraud 690 Other 810 Selective Service 153 Recovery of Overpayment Liability 371 Truth in Lending LABOR SOCIAL SECURITY 850 Securities/Commodities/ of Veteran’s Benefits 350 Motor Vehicle 380 Other Personal 710 Fair Labor Standards 861 HIA (1395ff) Exchange 160 Stockholders’ Suits 355 Motor Vehicle Property Damage Act 862 Black Lung (923) 875 Customer Challenge 190 Other Contract Product Liability 385 Property Damage 720 Labor/Mgmt. Relations 863 DIWC/DIWW (405(g)) 12 USC 3410 195 Contract Product Liability 360 Other Personal Product Liability 730 Labor/Mgmt.Reporting 864 SSID Title XVI 890 Other Statutory Actions 196 Franchise Injury & Disclosure Act 865 RSI (405(g)) 891 Agricultural Acts REAL PROPERTY CIVIL RIGHTS PRISONER PETITIONS 740 Railway Labor Act FEDERAL TAX SUITS 892 Economic Stabilization Act 210 Land Condemnation 441 Voting 510 Motions to Vacate 790 Other Labor Litigation x 870 Taxes (U.S. Plaintiff 893 Environmental Matters 220 Foreclosure 442 Employment Sentence 791 Empl. Ret. Inc. or Defendant) 894 Energy Allocation Act 230 Rent Lease & Ejectment 443 Housing/ Habeas Corpus: Security Act 871 IRS—Third Party 895 Freedom of Information 240 Torts to Land Accommodations 530 General 26 USC 7609 Act 245 Tort Product Liability 444 Welfare 535 Death Penalty 900Appeal of Fee Determination 290 All Other Real Property 445 Amer. w/Disabilities - 540 Mandamus & Other Under Equal Access Employment 550 Civil Rights to Justice 446 Amer. w/Disabilities - 555 Prison Condition 950 Constitutionality of Other State Statutes 440 Other Civil Rights V. ORIGIN Transferred from another district (specify) Appeal to District Judge from Magistrate Judgment (Place an “X” in One Box Only) 1 Original Proceeding 2 Removed from State Court 3 Remanded from Appellate Court 4 Reinstated or Reopened 5 6 Multidistrict Litigation 7 VI. CAUSE OF ACTION Cite the U.S. Civil Statute under which you are filing (Do not cite jurisdictional statutes unless diversity): 26 U.S.C. §§ 7402, 7407, & 7408 Brief description of cause: Suit for permanent injunction VII. REQUESTED IN COMPLAINT: CHECK IF THIS IS A CLASS ACTION UNDER F.R.C.P. 23 DEMAND $ none CHECK YES only if demanded in complaint: JURY DEMAND: Yes x No VIII. RELATED CASE(S) IF ANY (See instructions): JUDGE DOCKET NUMBER DATE SIGNATURE OF ATTORNEY OF RECORD March 22, 2007 /s/Thomas M. Newman FOR OFFICE USE ONLY RECEIPT # AMOUNT APPLYING IFP JUDGE MAG. JUDGE Case 5:07-cv-00117-FL Document 1-2 Filed 03/22/07 Page 1 of 2
  29. 29. JS 44 Reverse (Rev. 11/04) INSTRUCTIONS FOR ATTORNEYS COMPLETING CIVIL COVER SHEET FORM JS 44 Authority For Civil Cover Sheet The JS 44 civil cover sheet and the information contained herein neither replaces nor supplements the filings and service of pleading or other papers as required by law, except as provided by local rules of court. This form, approved by the Judicial Conference of the United States in September 1974, is required for the use of the Clerk of Court for the purpose of initiating the civil docket sheet. Consequently, a civil cover sheet is submitted to the Clerk of Court for each civil complaint filed. The attorney filing a case should complete the form as follows: I. (a) Plaintiffs-Defendants. Enter names (last, first, middle initial) of plaintiff and defendant. If the plaintiff or defendant is a government agency, use only the full name or standard abbreviations. If the plaintiff or defendant is an official within a government agency, identify first the agency and then the official, giving both name and title. (b) County of Residence. For each civil case filed, except U.S. plaintiff cases, enter the name of the county where the first listed plaintiff resides at the time of filing. In U.S. plaintiff cases, enter the name of the county in which the first listed defendant resides at the time of filing. (NOTE: In land condemnation cases, the county of residence of the “defendant” is the location of the tract of land involved.) (c) Attorneys. Enter the firm name, address, telephone number, and attorney of record. If there are several attorneys, list them on an attachment, noting in this section “(see attachment)”. II. Jurisdiction. The basis of jurisdiction is set forth under Rule 8(a), F.R.C.P., which requires that jurisdictions be shown in pleadings. Place an “X” in one of the boxes. If there is more than one basis of jurisdiction, precedence is given in the order shown below. United States plaintiff. (1) Jurisdiction based on 28 U.S.C. 1345 and 1348. Suits by agencies and officers of the United States are included here. United States defendant. (2) When the plaintiff is suing the United States, its officers or agencies, place an “X” in this box. Federal question. (3) This refers to suits under 28 U.S.C. 1331, where jurisdiction arises under the Constitution of the United States, an amendment to the Constitution, an act of Congress or a treaty of the United States. In cases where the U.S. is a party, the U.S. plaintiff or defendant code takes precedence, and box 1 or 2 should be marked. Diversity of citizenship. (4) This refers to suits under 28 U.S.C. 1332, where parties are citizens of different states. When Box 4 is checked, the citizenship of the different parties must be checked. (See Section III below; federal question actions take precedence over diversity cases.) III. Residence (citizenship) of Principal Parties. This section of the JS 44 is to be completed if diversity of citizenship was indicated above. Mark this section for each principal party. IV. Nature of Suit. Place an “X” in the appropriate box. If the nature of suit cannot be determined, be sure the cause of action, in Section VI below, is sufficient to enable the deputy clerk or the statistical clerks in the Administrative Office to determine the nature of suit. If the cause fits more than one nature of suit, select the most definitive. V. Origin. Place an “X” in one of the seven boxes. Original Proceedings. (1) Cases which originate in the United States district courts. Removed from State Court. (2) Proceedings initiated in state courts may be removed to the district courts under Title 28 U.S.C., Section 1441. When the petition for removal is granted, check this box. Remanded from Appellate Court. (3) Check this box for cases remanded to the district court for further action. Use the date of remand as the filing date. Reinstated or Reopened. (4) Check this box for cases reinstated or reopened in the district court. Use the reopening date as the filing date. Transferred from Another District. (5) For cases transferred under Title 28 U.S.C. Section 1404(a). Do not use this for within district transfers or multidistrict litigation transfers. Multidistrict Litigation. (6) Check this box when a multidistrict case is transferred into the district under authority of Title 28 U.S.C. Section 1407. When this box is checked, do not check (5) above. Appeal to District Judge from Magistrate Judgment. (7) Check this box for an appeal from a magistrate judge’s decision. VI. Cause of Action. Report the civil statute directly related to the cause of action and give a brief description of the cause. Do not cite jurisdictional statutes unless diversity. Example: U.S. Civil Statute: 47 USC 553 Brief Description: Unauthorized reception of cable service VII. Requested in Complaint. Class Action. Place an “X” in this box if you are filing a class action under Rule 23, F.R.Cv.P. Demand. In this space enter the dollar amount (in thousands of dollars) being demanded or indicate other demand such as a preliminary injunction. Jury Demand. Check the appropriate box to indicate whether or not a jury is being demanded. VIII. Related Cases. This section of the JS 44 is used to reference related pending cases if any. If there are related pending cases, insert the docket numbers and the corresponding judge names for such cases. Date and Attorney Signature. Date and sign the civil cover sheet. Case 5:07-cv-00117-FL Document 1-2 Filed 03/22/07 Page 2 of 2
  30. 30. AO 440 (Rev. 8/01) Summons in a Civil Action UNITED STATES DISTRICT COURT District of SUMMONS IN A CIVIL ACTION V. CASE NUMBER: TO: (Name and address of Defendant) YOU ARE HEREBY SUMMONED and required to serve on PLAINTIFF’S ATTORNEY (name and address) an answer to the complaint which is served on you with this summons, within days after service of this summons on you, exclusive of the day of service. If you fail to do so, judgment by default will be taken against you for the relief demanded in the complaint. Any answer that you serve on the parties to this action must be filed with the Clerk of this Court within a reasonable period of time after service. CLERK DATE (By) DEPUTY CLERK Case 5:07-cv-00117-FL Document 1-3 Filed 03/22/07 Page 1 of 2 EASTERN NORTH CAROLINA UNITED STATES OF AMERICA RAYMOND A. RENFROW, individually and d/b/a IDEAL TAX SERVICE and FIRST CLASS LIMO. Raymond A. Renfrow 309 E. Nash Street Elm City, NC 27822 Thomas M. Newman United States Department of Justice Tax Division P.O. Box 7238, Ben Franklin Station Washington, DC 20044
  31. 31. AO 440 (Rev. 8/01) Summons in a Civil Action RETURN OF SERVICE Service of the Summons and complaint was made by me(1) DATE NAME OF SERVER (PRINT) TITLE Check one box below to indicate appropriate method of service G Served personally upon the defendant. Place where served: G Left copies thereof at the defendant’s dwelling house or usual place of abode with a person of suitable age and discretion then residing therein. Name of person with whom the summons and complaint were left: G Returned unexecuted: G Other (specify): STATEMENT OF SERVICE FEES TRAVEL SERVICES TOTAL DECLARATION OF SERVER I declare under penalty of perjury under the laws of the United States of America that the foregoing information contained in the Return of Service and Statement of Service Fees is true and correct. Executed on Date Signature of Server Address of Server (1) As to who may serve a summons see Rule 4 of the Federal Rules of Civil Procedure. Case 5:07-cv-00117-FL Document 1-3 Filed 03/22/07 Page 2 of 2 $0.00
  32. 32. Case 5:07-cv-00117-FL Document 2 Filed 03/23/07 Page 1 of 2
  33. 33. Case 5:07-cv-00117-FL Document 2 Filed 03/23/07 Page 2 of 2
  34. 34. Case 5:07-cv-00117-FL Document 2 Filed 03/23/2007 Page 1 of 2 Case 5:07-cv-00117-FL Document 3 Filed 04/13/07 Page 1 of 2
  35. 35. Case 5:07-cv-00117-FL Document 3 Filed 04/13/07 Page 2 of 2
  36. 36. UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NORTH CAROLINA WESTERN DIVISION NO. 5:07-CV-117(FL) UNITED STATES OF AMERICA, ) ) Plaintiff, ) ) vs. ) ) RAYMOND A. RENFROW, ) individually and d/b/a ) IDEAL TAX SERVICES and ) FIRST CLASS LIMOUSINE, ) ) Defendant. ) _________________________________________ ) DECLARATION OF TRIAL ATTORNEY THOMAS M. NEWMAN 1. I am over 18 years of age and am competent to testify to the facts stated below. 2. I am the attorney for the United States in the above-captioned action. 3. A summons and copy of the complaint for the above-captioned case were served personally on defendant Raymond A. Renfrow on March 29, 2007. 4. Renfrow was required to serve and file an answer in this matter on or before April 18, 2007. (Docket No. 3.) 5. Upon information and belief, Raymond A. Renfow is not incompetent or an infant. 6. I consulted the Department of Defense Manpower Data Center Servicemembers’ Civil Relief Act database at https://www.dmdc.osd.mil/scra/owa/home, and entered in its search parameters the Social Security number of Raymond A. Renfow along with his name as it is listed in the complaint. The database did not possess any information indicating that Raymond A. Case 5:07-cv-00117-FL Document 4-2 Filed 04/19/07 Page 1 of 2
  37. 37. -2- Renfow is currently on active duty in the United States military. Copies of the database report for Raymond A. Renfow is attached to this declaration as Exhibit A. I declare, under penalty of perjury, that the foregoing is true and correct. Executed on the 19th day of April, 2007. /s/ Thomas M. Newman________ THOMAS M. NEWMAN Trial Attorney, Tax Division U.S. Department of Justice Post Office Box 7238 Ben Franklin Station Washington, D.C. 20044 Telephone: (202) 616-9926 Fax: (202)514-6770 Email: thomas.m.newman@usdoj.gov Case 5:07-cv-00117-FL Document 4-2 Filed 04/19/07 Page 2 of 2
  38. 38. Upon searching the information data banks of the Department of Defense Manpower Data Center, based on the information that you provided, the above is the current status of the individual as to all branches of the Military. The Defense Manpower Data Center (DMDC) is an organization of the Department of Defense that maintains the Defense Enrollment and Eligibility Reporting System (DEERS) database which is the official source of data on eligibility for military medical care and other eligibility systems. The Department of Defense strongly supports the enforcement of the Servicemembers Civil Relief Act [50 USCS Appx. #167;#167; 501 et seq] (SCRA) (formerly the Soldiers' and Sailors' Civil Relief Act of 1940). DMDC has issued hundreds of thousands of "does not possess any information indicating that the individual is currently on active duty" responses, and has experienced a small error rate. In the event the individual referenced above, or any family member, friend, or representative asserts in any manner that the individual is on active duty, or is otherwise entitled to the protections of the SCRA, you are strongly encouraged to obtain further verification of the person's active duty status by contacting that person's Military Service via the "defenselink.mil" URL provided below. If you have evidence the person is on active-duty and you fail to obtain this additional Military Service verification, provisions of the SCRA may be invoked against you. If you obtain further information about the person ( e.g., an SSN, improved accuracy of DOB, a middle name), you can submit your request again at this Web site and we will provide a new certificate for that query. This response reflects current active duty status only. For historical information, please contact the Military Service SCRA points-of-contact. See: http://www.defenselink.mil/faq/pis/PC09SLDR.html WARNING: This certificate was provided based on a name and Social Security number (SSN) provided Department of Defense Manpower Data Center APR-19-2007 07:12:11 Military Status Report Pursuant to the Servicemembers Civil Relief Act Last Name First/Middle Begin Date Active Duty Status Service/Agency RENFROW Raymond Based on the information you have furnished, the DMDC does not possess any information indicating that the individual is currently on active duty. ________________________________ Mary M. Snavely-Dixon, Director Department of Defense - Manpower Data Center 1600 Wilson Blvd., Suite 400 Arlington, VA 22209-2593 Page 1 of 2Request for Military Status 4/19/2007https://www.dmdc.osd.mil/scra/owa/scra.prc_Select Exhibit A Case 5:07-cv-00117-FL Document 4-3 Filed 04/19/07 Page 1 of 2
  39. 39. by the requester. Providing an erroneous name or SSN will cause an erroneous certificate to be provided. Report ID:CJAPZWWEPQQ Page 2 of 2Request for Military Status 4/19/2007https://www.dmdc.osd.mil/scra/owa/scra.prc_Select Case 5:07-cv-00117-FL Document 4-3 Filed 04/19/07 Page 2 of 2
  40. 40. 1 Newman Decl. ¶¶ 3-6. UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NORTH CAROLINA WESTERN DIVISION NO. 5:07-CV-117(FL) UNITED STATES OF AMERICA, ) ) Plaintiff, ) ) vs. ) UNITED STATES APPLICATION ) FOR ENTRY OF DEFAULT RAYMOND A. RENFROW, ) individually and d/b/a ) IDEAL TAX SERVICES and ) FIRST CLASS LIMOUSINE, ) ) Defendant. ) _________________________________________ ) Plaintiff, the United States of America, moves for entry of default by the Clerk of this Court under Fed. R. Civ. P. 55(a) against defendant Raymond A. Renfrow based on his failure to answer or otherwise plead in response to the United States’ claims against him. Renfrow was personally served with a complaint and summons on March 29, 2007. (Docket No. 3.) Pursuant to Fed. R. Civ. P. 12(a)(1), Renfrow was required to answer by April 18, 2007, but he has failed to respond or otherwise plead in this matter.1 Id. Therefore, the Clerk should enter default against Renfrow pursuant to Rule 55(a) of the Federal Rules of Civil Procedure. Case 5:07-cv-00117-FL Document 4 Filed 04/19/07 Page 1 of 2
  41. 41. 657440.1 FRED D. WHITNEY United States Attorney /s/Thomas M. Newman THOMAS M. NEWMAN Trial Attorney, Tax Division U.S. Department of Justice Post Office Box 7238 Ben Franklin Station Washington, D.C. 20044 Telephone: (202) 616-9926 Fax: (202)514-6770 Email: thomas.m.newman@usdoj.gov CERTIFICATE OF SERVICE IT IS HEREBY CERTIFIED that service of the UNITED STATES’ APPLICATION FOR ENTRY OF DEFAULT FOR FAILURE TO ANSWER has been made upon the following by depositing a copy in the United States mail, postage prepaid, this 19th day of April, 2007: Raymond A. Renfrow 309 E. Nash Street Elm City, NC 27822 /s/Thomas M. Newman_____________ THOMAS M. NEWMAN Case 5:07-cv-00117-FL Document 4 Filed 04/19/07 Page 2 of 2
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  58. 58. 2607191.1 UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NORTH CAROLINA WESTERN DIVISION NO. 5:07-CV-117(FL) UNITED STATES OF AMERICA, ) ) Plaintiff, ) ) vs. ) PARTIES’ JOINT RULE 26(f) REPORT ) RAYMOND A. RENFROW, ) individually and d/b/a ) IDEAL TAX SERVICES and ) FIRST CLASS LIMOUSINE, ) ) Defendant. ) _________________________________________ ) I. Joint Report and Plan. 1. Nature and Complexity of the case. The United States is seeking a permanent injunction to bar the defendant, Raymond Renfrow, from allegedly promoting an abusive tax program; namely, his and abusive trust program and preparing income tax returns that under report his customers income. The United States is also seeking an injunction requiring Renfreow to produce his customer list and to notify his customers of the results of this suit. The United States is not seeking monetary relief. As alleged in the complaint, the United States contends that Renfrow makes erroneous statements regarding the tax benefits of his complex trust program that he knows or has reason to know are false or fraudulent. The United States contends that Renfrow advises and assists customers to form a complex trusts, transfer assets and income to that entity, and falsely or fraudulently personal expenses as business expenses. Case 5:07-cv-00117-FL Document 10 Filed 07/25/07 Page 1 of 4
  59. 59. 2607191.1 Renfrow denies making the false claims alleged in the complaint. Neither party contends that this case is particularly complex. a. Jurisdiction is conferred on this Court by 28 U.S.C. §§ 1340 and 1345, and I.R.C. §§ 7402(a) and 7408. Both parties believe that no additional parties need to be served. b. The only issue is whether the United States is entitled to a permanent injunction under 26 U.S.C. §§ 7407 and 7408 for engaging in conduct subject to penalty under 26 U.S.C. §§ 6694, 6695, 6700, 6701, and an injunction under 26 U.S.C. §7402 for interfering with the administration of the income tax laws. c. Neither party is seeking damages. 2. Specific information regarding the Parties’ Plan for Discovery: a. Discovery will be conducted on defendants’ trust promotion, preparation of income tax returns, and return preparation seminars. b. Discovery will not be conducted in phases. c. Discovery will be limited to 25 interrogatories, 25 requests for production, 50 Requests for Admissions, and 6 depositions. d. Discovery deadline: January 10, 2008. e. No discovery related problems are expected at this time. 3. Proposed discovery deadlines: a. Disclosure of expert reports: September 15, 2007. b. Joining additional parties: August 31, 2007. The parties agree that all parties have been served, and no additional parties are necessary. c. Amended pleading: August 31, 2007. Case 5:07-cv-00117-FL Document 10 Filed 07/25/07 Page 2 of 4
  60. 60. 2607191.1 d. Motion deadlines: (1) Dispositive motions: January 31, 2008. (2) non-dispositive (including motions in limine) March 15, 2008. e. Pre-trial conference April 7, 2008. f. Trial Date: April 28, 2008. The United States contends that the trial in this case would take no longer than two days. Renfrow believes that the trial would take five days. 4. The parties do not believe formal ADR should be used in this case. The parties will however attempt to resolve the case without ADR intervention. Notwithstanding, the parties believe that a settlement conference before a United States Magistrate Judge would be appropriate. The parties agree the settlement should be set on or about February 18, 2008, after dispositive motion are due. 5. Whether all parties will consent to assignment of the case to a magistrate judge to conduct all further proceedings including trial: The United States consents to assignment of the case to a magistrate judge to conduct all further proceedings including trial. Defendant does not consent to assignment of the case to a magistrate judge for further proceedings. 6. Neither party requests that a Fed. R. Civ. P. 16(b) conference be held in this matter. Case 5:07-cv-00117-FL Document 10 Filed 07/25/07 Page 3 of 4
  61. 61. Case 5:07-cv-00117-FL Document 10 Filed 07/25/07 Page 4 of 4
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  72. 72. UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NORTH CAROLINA WESTERN DIVISION NO. 5:07-CV-117(FL) UNITED STATES OF AMERICA, ) ) Plaintiff, ) ) vs. ) ) RAYMOND A. RENFROW, ) individually and d/b/a ) IDEAL TAX SERVICES and ) FIRST CLASS LIMOUSINE, ) ) Defendant. ) _________________________________________ ) WITHDRAWAL OF COUNSEL AND ENTRY OF APPEARANCE OF SUBSTITUTED COUNSEL The United States of America hereby gives notice that trial attorney Thomas M. Newman is withdrawing from this case as counsel of record. Trial attorney Frederick N. Noyes is substituting and appearing as counsel on behalf of the United States. All notice and copies of pleadings, papers, and other materials should be directed to and served upon Mr. Noyes. GEORGE E.B. HOLDING United States Attorney s/ Frederick N. Noyes FREDERICK N. NOYES Trial Attorney, Tax Division U.S. Department of Justice Post Office Box 7238, Ben Franklin Station Washington, D.C. 20044 Telephone: (202) 305-3083 Facsimile: (202) 514-6770 Email: Frederick.N.Noyes@usdoj.gov Case 5:07-cv-00117-FL Document 12 Filed 11/30/07 Page 1 of 2
  73. 73. CERTIFICATE OF SERVICE IT IS HEREBY CERTIFIED that service of the foregoing WITHDRAWAL OF COUNSEL AND ENTRY OF APPEARANCE OF SUBSTITUTED COUNSEL has been made by U.S. Mail to the defendant this 30th day of November, 2007, at: Raymond A. Renfrow 309 E. Nash Street Elm City, NC 27822 s/ Frederick N. Noyes FREDERICK N. NOYES Trial Attorney, Tax Division U.S. Department of Justice Post Office Box 7238 Ben Franklin Station Washington, D.C. 20044 Telephone: (202) 305-3083 Facsimile: (202) 514-6770 Email: Frederick.N.Noyes@usdoj.gov Case 5:07-cv-00117-FL Document 12 Filed 11/30/07 Page 2 of 2
  74. 74. UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NORTH CAROLINA WESTERN DIVISION NO. 5:07-CV-117(FL) UNITED STATES OF AMERICA, ) ) Plaintiff, ) ) vs. ) UNITED STATES’ MOTION ) TO EXTEND DISCOVERY RAYMOND A. RENFROW, ) DEADLINE individually and d/b/a ) IDEAL TAX SERVICES and ) FIRST CLASS LIMOUSINE, ) ) Defendant. ) _________________________________________ ) Plaintiff, the United States of America, pursuant to Rule 6(b) of the Federal Rules of Civil Procedure, moves for an extension of the discovery schedule to allow more time for the parties to complete discovery. This federal tax case involves complicated sham trusts and the nationwide promotion of illegal tax schemes. The additional time is needed because the plaintiff’s original counsel of record has left the Tax Division of the Department of Justice. The undersigned trial attorney entered his appearance in this matter on November 30, 2007, and requires additional time to familiarize himself with the case and the administrative files. In addition, relevant witnesses are located in multiple states and the winter holidays have complicated scheduling of depositions. The deadline for completing discovery is currently January 10, 2008. The United States requests that the Court extend the deadline two months until March 10, 2008, extend the deadline for filing supplemental disclosures from December 3, 2007, to January 29, 2008, and to extend the deadline for filing dispositive motions from February 10, 2008, to April 10, 2008. No Case 5:07-cv-00117-FL Document 13 Filed 12/12/07 Page 1 of 3
  75. 75. other deadlines in the case management order need be extended. Counsel for the United States spoke with the pro se defendant, Raymond A. Renfrow, by telephone, on December 12, 2007, concerning the possibility of a 30 day extension of the deadlines for completing discovery and filing dispositive motions. Defendant stated he had no opinion on the motion. Counsel for the United States later attempted to contact the defendant again concerning a 60 day extension of the deadline, but this time was unable to reach him. Accordingly, the United States moves for an extension of the discovery schedule to allow more time for the completion of discovery, until March 10, 2008. A proposed order is attached. Dated: December 12, 2007 GEORGE E. B. HOLDING United States Attorney /s/ Frederick N. Noyes FREDERICK N. NOYES Trial Attorney, Tax Division U.S. Department of Justice Post Office Box 7238 Ben Franklin Station Washington, D.C. 20044 Telephone: (202) 305-3083 Facsimile: (202) 514-6770 Email: Frederick.N.Noyes@usdoj.gov Case 5:07-cv-00117-FL Document 13 Filed 12/12/07 Page 2 of 3
  76. 76. CERTIFICATE OF SERVICE IT IS HEREBY CERTIFIED that service of the foregoing UNITED STATES’ MOTION TO EXTEND DISCOVERY DEADLINE has been made upon the following by depositing a copy in the United States mail, postage prepaid, this 12th day of December, 2007: Raymond A. Renfrow 309 E. Nash Street Elm City, NC 27822 _/s/ Frederick N. Noyes________ FREDERICK N. NOYES Case 5:07-cv-00117-FL Document 13 Filed 12/12/07 Page 3 of 3
  77. 77. U.S. Department of Justice Tax Division Please reply to: Civil Trial Section, Central Region Facsimile No. (202) 514-6770 P.O. Box 7238 Trial Attorney: Frederick N. Noyes Ben Franklin Station Attorney’s Direct Line: (202) 305-3083 Washington, D.C. 20044 RTM:SGH:Noyes 5-54-3078 CMN2006105392 January 2, 2008 BY ECF and US MAIL United States District Court Clerk’s Office Attn: Donna Rudd, Case Manager 413 Middle Street New Bern, NC 28560 Re: United States of America v. Raymond A. Renfrow Case No. 5:07-cv-117 (FL) (E.D.N.C.) Dear Ms. Rudd, As required by the Case Management Order entered on July 30, 2007, the United States conferred with Raymond A. Renfrow and submits the following three dates of mutual availability for a court-hosted settlement conference before a U.S. Magistrate Judge: January 16, 2008; February 6, 2008; February 13, 2008. Mr. Renfrow agreed to these dates in a telephone conversation on December 12, 2007. Counsel for the United States mailed to Mr. Renfrow a joint letter to the Court listing the above dates and requesting his signature. As of today, the letter has not been returned. In order to meet the Court’s deadline, this letter is submitted without the signature of Mr. Renfrow. The United States has filed a motion to extend the discovery period. Should that motion be granted by the Court, the above dates would be prior to the completion of discovery, and the Court may wish the parties to submit new dates. The United States does not object to attending a settlement conference prior to the close of discovery. Sincerely, /s/ Frederick N. Noyes FREDERICK N. NOYES Trial Attorney United States Justice Department, Tax Division P.O. Box 7238, Ben Franklin Station Washington, DC 20044 Attorney for the Plaintiff Case 5:07-cv-00117-FL Document 14 Filed 01/02/08 Page 1 of 2
  78. 78. CERTIFICATE OF SERVICE IT IS HEREBY CERTIFIED that service of the foregoing LETTER TO THE COURT has been made upon the following by United States mail this 2nd day of January, 2008: Raymond A. Renfrow 309 E. Nash Street Elm City, NC 27822 /s/ Frederick N. Noyes FREDERICK N. NOYES Trial Attorney, Tax Division U.S. Department of Justice Post Office Box 7238 Ben Franklin Station Washington, D.C. 20044 Telephone: (202) 305-3083 Facsimile: (202) 514-6770 Email: Frederick.N.Noyes@usdoj.gov Case 5:07-cv-00117-FL Document 14 Filed 01/02/08 Page 2 of 2
  79. 79. Case 5:07-cv-00117-FL Document 15 Filed 01/03/08 Page 1 of 1
  80. 80. Case 5:07-cv-00117-FL Document 17 Filed 01/10/08 Page 1 of 3
  81. 81. Case 5:07-cv-00117-FL Document 17 Filed 01/10/08 Page 2 of 3
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  83. 83. Case 5:07-cv-00117-FL Document 18 Filed 01/15/08 Page 1 of 1
  84. 84. UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NORTH CAROLINA WESTERN DIVISION NO. 5:07-CV-117(FL) UNITED STATES OF AMERICA, ) ) Plaintiff, ) ) vs. ) ) ) RAYMOND A. RENFROW, ) individually and d/b/a ) IDEAL TAX SERVICES and ) FIRST CLASS LIMOUSINE, ) ) Defendant. ) _________________________________________ ) UNITED STATES’ MOTION FOR RELIEF FROM LOCAL RULE 101:1'S REQUIREMENT TO HAVE AN OFFICIAL WITH FULL SETTLEMENT AUTHORITY AT THE COURT HOSTED SETTLEMENT CONFERENCE Plaintiff, the United States of America moves the Court for relief from Local Rule 101:1's requirement that “a representative of a corporate or governmental agency with full settlement authority” attend Court Hosted Settlement Conferences. On January 15, 2008, this Court ordered a court-hosted settlement conference to take place February 6, 2008 at the Raleigh Federal Building before United States Magistrate Judge David W. Daniel. (Docket No. 18). The United States is able and willing to participate in such a conference, and believes it can participate productively in the settlement conference with its trial attorney in attendance and his immediate supervisor and Internal Revenue Service counsel available by telephone for consultation if needed. The United States is an unusual litigant, and this procedure has worked well for it in the past to participate meaningfully in settlement Case 5:07-cv-00117-FL Document 19 Filed 01/18/08 Page 1 of 3
  85. 85. conferences even when it would be unfeasible to have an official with full settlement authority physically present. A memorandum of law in support of this motion is attached. Dated: January 18, 2008. GEORGE E.B. HOLDING United States Attorney /s/ Frederick N. Noyes FREDERICK N. NOYES Trial Attorney, Tax Division U.S. Department of Justice Post Office Box 7238 Ben Franklin Station Washington, D.C. 20044 Telephone: (202) 305-3083 Facsimile: (202) 514-6770 Email: Frederick.N.Noyes@usdoj.gov Case 5:07-cv-00117-FL Document 19 Filed 01/18/08 Page 2 of 3
  86. 86. CERTIFICATE OF SERVICE IT IS HEREBY CERTIFIED that service of the foregoing UNITED STATES’ MOTIONTION PURSUANT TO LOCAL RULE 101:1 FOR RELIEF FROM THE OBLIGATION TO HAVE AN OFFICIAL WITH FULL SETTLEMENT AUTHORITY PRESENT AT THE COURT HOSTED SETTLEMENT CONFERENCE has been made upon the following by depositing a copy in the United States mail, postage prepaid, this 18th day of January, 2008: Raymond A. Renfrow 309 E. Nash Street Elm City, NC 27822 /s/ Frederick N. Noyes FREDERICK N. NOYES Case 5:07-cv-00117-FL Document 19 Filed 01/18/08 Page 3 of 3
  87. 87. UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NORTH CAROLINA WESTERN DIVISION NO. 5:07-CV-117(FL) UNITED STATES OF AMERICA, ) ) Plaintiff, ) ) vs. ) ) ) RAYMOND A. RENFROW, ) individually and d/b/a ) IDEAL TAX SERVICES and ) FIRST CLASS LIMOUSINE, ) ) Defendant. ) _________________________________________ ) MEMORANDUM IN SUPPORT OF UNITED STATES’ MOTION FOR RELIEF FROM LOCAL RULE 101:1'S REQUIREMENT TO HAVE AN OFFICIAL WITH FULL SETTLEMENT AUTHORITY AT COURT HOSTED SETTLEMENT CONFERENCE Plaintiff, the United States of America, moves for relief from Local Rule 101:1's requirement that “a representative of a corporate or governmental agency with full settlement authority” attend the court hosted settlement conference scheduled for February 6, 2008 before United States Magistrate Judge David W. Daniel. (Docket No. 18.) While LR 101:1 authorizes the Magistrate Judge, upon written application, to “allow a party or representative having full settlement authority to be telephonically available” in lieu of being physically present, this too presents extraordinary hardship for the United States in this case. The United States requests that it be allowed to proceed with its trial attorney present at the settlement conference, and two officials with combined full settlement authority to be telephonically available. Case 5:07-cv-00117-FL Document 20 Filed 01/18/08 Page 1 of 7
  88. 88. -2- Under 26 U.S.C. § 7122, settlement authority for this case rests with the Attorney General or his delegate. Cases handled by the Department of Justice Tax Division may be settled by delegates of the Attorney General only in accordance with regulations published in 28 C.F.R. Part O, Subpart Y, Appendix, as amended in 60 Fed. Reg. 31244 (June 14, 1995)(“settlement regulations”). Justice Department regulations confining settlement authority to selected officers and officials are valid and binding. See White v. United States Dep’t of Interior, 639 F. Supp. 82, 88-90 (M.D. Pa. 1986), aff’d, 815 F.2d 697 (3rd Cir. 1987); Bohlen v. United States, 623 F. Supp. 595 (C.D. Ill. 1985). See generally, United States ex rel. Touhy v. Ragen, 340 U.S. 462 (1951); Swett v. Schenk, 792 F.2d 1447 (9th Cir. 1986). In this civil action, the United States is seeking injunctive relief only. While the government’s trial attorney, Frederick N. Noyes, is the person most familiar with the case, and will be at the court-hosted settlement conference, Mr. Noyes has no settlement authority. His role is to make a recommendation to the senior officials who have the authority to compromise this case. Full settlement authority - the authority to accept or reject offers over the objection of the Internal Revenue Service - will rest with the Assistant Attorney General for the Tax Division, Nathan Hochman. Nathan Hochman was appointed by the President and confirmed by the Senate. He is expected to be sworn in as Assistant Attorney General on January 22, 2008. The position of Assistant Attorney General is among the highest in the Justice Department. The position entails wide-ranging responsibilities involving litigation throughout the United States. The importance and scope of the Assistant Attorney General’s responsibilities Case 5:07-cv-00117-FL Document 20 Filed 01/18/08 Page 2 of 7
  89. 89. -3- make it infeasible for him to attend or be available by telephone for settlement conferences throughout the United States in all cases for which he may have the final settlement authority. Congress was aware of the problems inherent in requiring the personal attendance of high government officials with final or full settlement authority when it drafted the Judicial Improvements Act of 1990, Pub. L. No. 101-650, 104 Stat. 5089, 5093 (1990). The legislative history reveals that Congress believed district courts should “account for:” the unique situation of the Department of Justice. The Department does not delegate broad authority to all trial counsel, but instead reserves that authority to senior officials in the United States Attorneys’ Offices or in the litigating divisions in Washington. Clearly the Department cannot realistically send officials with full settlement authority to each settlement conference. H.R. Rep. No. 101-732, 101st Cong., 2d Sess. 16-17; S. Rep. No. 101-426, 101st Cong. 2d Sess. 59 (emphasis added). See also In re Stone, 986 F.2d 898 (5th Cir. 1993). The Advisory Committee Notes on the amendment to Rule 16 of the Federal Rules of Civil Procedure, effective December 1, 1993, provide that, [p]articularly in litigation in which governmental agencies or large amounts of money are involved, there may be no one with on-the-spot settlement authority, and the most that should be expected is access to a person who would have a major role in submitting a recommendation to the body or board with ultimate decision-making responsibility. The selection of the appropriate representative should ordinarily be left to the party and its counsel. Even if the only responsibility of the relevant officials here was reviewing settlements (which is not the case), it is a physical impossibility for them to participate in any meaningful manner in every case where their approval may potentially be required. Of greater significance is the fact that if they were required to participate in such conferences on a regular basis, their ability to supervise all other aspects of litigation would be seriously compromised. Case 5:07-cv-00117-FL Document 20 Filed 01/18/08 Page 3 of 7
  90. 90. -4- Government counsel is aware of only one appellate decision on point with the situation presented here. In re Stone, 986 F.3d 898 (5th Cir. 1993). In Stone, the Fifth Circuit held that a federal district court has inherent power to manage its own docket, including the authority to “require a party to have a representative with full settlement authority present – or at least reasonably and promptly accessible – at pretrial conferences.” Id. at 903. Even then, however, according to the Fifth Circuit, such power should be used sparingly with regard to the United States - the United States, the court observed, is in a “special category” in a number of respects, including its “need for centralized decision making” and the additional fact that the United States is party to “a far greater number of cases on a national basis than even the most litigious private entity.” Id. at 904. The Stone court concluded that it was an abuse of discretion for the district court to routinely enter an order requiring a Government official with final authority to attend a conference. The court of appeals emphasized that the district court should consider less drastic steps before entering such an order. The Fifth Circuit then stated that only when the district court’s reasonable efforts to conduct an informed settlement discussion in a particular case are thwarted because the government official with settlement authority will not communicate with government counsel or the court in a timely manner, the court, as a last resort can require the appropriate official with full settlement authority to attend a pretrial conference. Id. at 905 (emphasis added). The settlement conference desired by the parties and the Court can lead to settlement without the attendance of the person with ultimate settlement authority. The Department of Justice trial attorney who will attend the settlement conference, Frederick Noyes, has primary responsibility for handling this case. He is most familiar with the relevant facts and law, and is Case 5:07-cv-00117-FL Document 20 Filed 01/18/08 Page 4 of 7
  91. 91. -5- the person who will try the case if trial becomes necessary. He therefore is the person most familiar with the considerations relevant to settlement. Under 28 U.S.C. §§ 515 through 519, trial attorneys are authorized to represent the United States in this lawsuit, and may negotiate settlement offers which the trial attorneys are willing to recommend to the Justice Department official having settlement authority. In exercising their settlement authority, the appropriate Department officials generally accord substantial weight to the trial attorneys’ recommendations, since the recommendations will be based on the trial attorneys’ knowledge of the strengths and weaknesses of the parties’ positions. Prior to the Court Hosted Settlement Conference, the trial attorney will discuss the range of settlement offers that he would be willing to recommend to his superiors and the Internal Revenue Service. In addition, the United States will have Seth Heald, Section Chief for the Tax Division’s Civil Trial Section, Central Region, and the Internal Revenue Service counsel assigned to the case, Amy Seals, available for telephone consultation. If Mr. Heald and the Internal Revenue Service are in agreement, they have the combined authority to reject or approve settlement agreements in this case without the need for further review. Only in the event of disagreement between them would an offer need to be submitted to the Tax Division’s Office of Review and the Assistant Attorney General for approval or rejection. WHEREFORE, the United States respectfully requests relief from Local Rule 101:1's requirement that it have an official with full settlement authority present at the court-hosted settlement conference schedule for February 6, 2008, and requests instead that it be allowed to Case 5:07-cv-00117-FL Document 20 Filed 01/18/08 Page 5 of 7
  92. 92. -6- proceed with its trial attorney present at the conference and two officials with combined full settlement authority available for consultation by telephone. Dated: January 18, 2008. GEORGE E.B. HOLDING United States Attorney /s/ Frederick N. Noyes FREDERICK N. NOYES Trial Attorney, Tax Division U.S. Department of Justice Post Office Box 7238 Ben Franklin Station Washington, D.C. 20044 Telephone: (202) 305-3083 Facsimile: (202) 514-6770 Email: Frederick.N.Noyes@usdoj.gov Case 5:07-cv-00117-FL Document 20 Filed 01/18/08 Page 6 of 7
  93. 93. -7- CERTIFICATE OF SERVICE IT IS HEREBY CERTIFIED that service of the foregoing MEMORANDUM IN SUPPORT OF UNITED STATES’ MOTION FOR RELIEF FROM RULE 101:1's REQUIREMENT TO HAVE AN OFFICIAL WITH FULL SETTLEMENT AUTHORITY PRESENT AT THE COURT HOSTED SETTLEMENT CONFERENCE has been made upon the following by depositing a copy in the United States mail, postage prepaid, this 18th day of January, 2008: Raymond A. Renfrow 309 E. Nash Street Elm City, NC 27822 /s/ Frederick N. Noyes FREDERICK N. NOYES Case 5:07-cv-00117-FL Document 20 Filed 01/18/08 Page 7 of 7
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  95. 95. Case 5:07-cv-00117-FL Document 22 Filed 02/06/08 Page 1 of 1

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