1
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
CAROLINE D. CIRAOLO
Principal Deputy Assistant Attorney General
NITHYA SENRA, CA SBN 291803
Trial Attorney, Tax Division
U.S. Department of Justice
P.O. Box 683, Ben Franklin Station
Washington, D.C. 20044
Telephone: (202) 307-6570
Facsimile: (202) 307-0054
E-mail: nithya.senra@usdoj.gov
Attorneys for the United States of America
JOHN S. LEONARDO
United States Attorney
District of Arizona
Of Counsel
IN THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF ARIZONA
United States of America,
Plaintiff,
v.
Michael A. Bigley; Carolyn E. Bigley;
Robert B. Kelso; Raeola D. Kelso;
and ISA Ministries;
Defendants.
Case No. 2:14-cv-00729-HRH
UNITED STATES’ (1) MOTION FOR
SUMMARY JUDGMENT AGAINST
MICHAEL BIGLEY, CAROLYN BIGLEY,
ROBERT KELSO AND RAEOLA KELSO
AND (2) MOTION FOR DEFAULT
JUDGMENT AGAINST ISA MINISTRIES
ORAL ARGUMENT NOT REQUESTED
The United States of America (“United States”), through undersigned counsel,
moves this Court pursuant to Fed. R. Civ. P. 56(a) for summary judgment against
Michael A. Bigley, Carolyn E. Bigley, Robert B. Kelso and Raeola D. Kelso, and moves
the Court pursuant to Fed. R. Civ. P. 55(b) for default judgment against ISA Ministries.
The United States filed this action seeking to reduce to judgment federal tax assessments
Case 2:14-cv-00729-HRH Document 195 Filed 12/22/16 Page 1 of 18
2
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
against Michael A. Bigley and Carolyn E. Bigley, to determine that ISA Ministries and
the Kelso defendants are the nominees and/or alter-egos of the Bigley defendants, to set
aside fraudulent transfers between the Bigley defendants and ISA Ministries and the
subsequent transfer between ISA Ministries and the Kelso defendants, and to foreclose
federal tax liens and order a judicial sale of the real property at issue.
Summary judgment should be granted if there is no genuine issue as to any
material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ.
P. 56(a). There are no genuine disputes of material fact regarding: (1) Michael A.
Bigleys’ tax liabilities at issue in this action; (2) the Bigleys’ frivolous filing penalty
liabilities; or (3) the Bigleys’ true ownership of the property at issue in this case, or in the
alternative, the fraudulent transfers of the subject property that should be set aside.
Accordingly, the United States respectfully requests that the Bigleys’ federal income tax
and penalty assessments be reduced to judgment and this Court issue an order permitting
the United States to enforce its tax liens against the property at issue.
The United States has also asked this Court to enter default judgment against
defendant ISA Ministries, an entity that has failed to appear in this case, and its default
has been entered by the Clerk of Court. (Dkt. 73) Because ISA Ministries is in default
and because the undisputed facts show that it is a mere nominee, alter-ego and fraudulent
transferee of the Bigley defendants, this Court should enter default judgment against it by
declaring that it has no interest in the property at issue in this case. In support of these
motions, Plaintiff submits “United States’ Statement of Facts in Support of Summary
Judgment and Default Judgment”, the declaration of J.C. Sellers (Sellers Decl.) with
Case 2:14-cv-00729-HRH Document 195 Filed 12/22/16 Page 2 of 18
3
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
exhibits 1 through 24, Exhibits 25 through 27 (Requests for Admissions, previously
lodged as exhibits to discovery sanctions motions), and Exhibits A through L (self-
authenticating, certified public records and/or business records).
I. Michael A. Bigley’s 2004, 2005 and 2006 Federal Income Tax Liabilities Should
be Reduced to Judgment.
In an action brought to collect federal taxes, the United States bears the initial
burden of proof. Palmer v. Internal Revenue Service, 116 F.3d 1309, 1312 (9th Cir.
1997). The tax assessments for unpaid taxes are normally entitled to a presumption of
correctness so long as they are supported by a minimal factual foundation. Id. “The
presumption shifts the burden of proof to the taxpayers to show that the determination is
incorrect.” Id. The United States has submitted Forms 4340, Certificates of
Assessments, Payments and Other Specified Matters (Exh. A, B, C), pertaining to
Michael A. Bigley’s federal tax liabilities for each of the tax years at issue. The Ninth
Circuit has consistently held that IRS Certificates of Assessments and Payments “are
probative evidence in and of themselves and, in the absence of contrary evidence, are
sufficient to establish that notices and assessments were properly made.” Hughes v.
United States, 953 F.2d 531, 540 (9th Cir. 1992); Koff v. United States, 3 F.3d 1297, 1298
(9th Cir. 1993).
Forms 4340 are generated under seal and signed by an authorized delegate of the
Secretary of the Treasury, are self-authenticating under Federal Rule of Evidence 902(1),
and are admissible into evidence pursuant to Rule 803(8) of the Federal Rules of
Evidence. The Ninth Circuit has also found that Certificates of Assessments and
Case 2:14-cv-00729-HRH Document 195 Filed 12/22/16 Page 3 of 18
4
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
Payments are self-authenticating pursuant to Fed. R. Evid. 902(1) and qualify within the
exception to the hearsay evidence rule as public records under Fed. R. Evid. 803(8).
Hughes, 953 F.2d at 539-40; see also United States v. Zolla, 724 F.2d 808 (9th Cir.
1984). Forms 4340 are the appropriate means of establishing an assessment, and show
that the federal tax liabilities were properly assessed against the defendant in the manner
prescribed by 26 U.S.C. § 6203 and the accompanying regulations, that the notices and
demand for payment were properly sent, and that the defendant is presumptively liable
for the unpaid taxes, interest, penalties, and other statutory additions identified thereon.
See Hughes, 953 F.2d at 540 (9th Cir. 1992).
Courts have repeatedly held that a Certificate of Assessments is sufficient
evidence that tax assessments were properly made and so can be relied upon in ruling on
a motion for summary judgment. See, e.g., United States v. Janis, 428 U.S. 433, 440-41
(1976), Long v. United States, 972 F.2d 1174, 1181 (10th Cir. 1992); United States v.
Chila, 871 F.2d 1015 (11th Cir. 1989); United States v. Miller, 318 F.2d 637, 639 (7th
Cir. 1963). Taxpayers are presumptively liable for the unpaid taxes, penalties and interest
shown on the respective Certificates. Huff v. United States, 10 F.3d 1440, 1445-47 (9th
Cir. 1993). Therefore, the United States has met its initial burden in this case by
providing the Certificates to the Court in support of this motion.
Additionally, the United States has provided the minimal factual foundation and
evidence of income. With respect to the 2004 tax liabilities, the tax assessments were
made at the conclusion of, and in accordance with, the United States’ Tax Court case
Michael Andrew Bigley v. Commissioner of Internal Revenue, Docket No. 14223-08
Case 2:14-cv-00729-HRH Document 195 Filed 12/22/16 Page 4 of 18
5
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
(SOF ¶ 11). Additionally with respect to the 2005 and 2006 tax liabilities, Michael A.
Bigley has admitted that he received payments from KLA-Tencor and Ameriplan (Dkt.
86), the entities that filed either Forms W-2 (wages) or Forms 1099 (non-employee
compensation) with the IRS, and upon which the assessments were based, but whose
forms he attempted to “correct” when advancing the frivolous contention that these
wages or non-employee compensation paid to him were not taxable income. (Sellers
Decl. ¶ 4, 7, Exh. 5 at IRS-02190, IRS-02191, Exh.11 at IRS-02287).
II. The Bigley’s Frivolous Filing Penalties Should be Reduced to Judgment.
Section 6702 of the Internal Revenue Code provides that:
A person shall pay a penalty of $5,000 if –
(1) such person files what purports to be a tax return, but
which –
(A) does not contain information on which the substantial
correctness of the self-assessment may be judged, or
(B) contains information that on its face indicates that the
self-assessment is substantially incorrect, and
(2) the conduct referred to in paragraph (1) –
(A) is based on a position which the Secretary has identified
as frivolous . . . or
(B) reflects a desire to delay or impede the administration of
Federal tax laws.
26 U.S.C. § 6702(a).1 Prior to the imposition of a frivolous return penalty,
taxpayers are to be given an opportunity to withdraw the submission. 26 U.S.C. §
1 As several courts have determined, this statute is self-executing. Therefore,
frivolous return penalties may be assessed even though the Secretary has not issued
(continued...)
Case 2:14-cv-00729-HRH Document 195 Filed 12/22/16 Page 5 of 18
6
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
6702(b). Further, frivolous return penalties are subject to the review requirements of 26
U.S.C. § 6751. Borchardt v. Comm’r, 338 F.Supp.2d 1040 (D. Minn. 2004); Cole v.
United States, 90 A.F.T.R.2d 6987 (W.D. Mich. 2002).
Under the undisputed facts of this case, Michael and Carolyn Bigley are subject to
frivolous return penalties. Both Michael and Carolyn Bigley repeatedly filed returns (or
amended returns) that did not report the actual income Michael A. Bigley received during
the tax years 2004, 2005, 2006 and 2007. (Exh. 3, 4, 5, 10, 11, 14, 16, 17) Instead, the
Bigleys wrote zeros in the places where income is required to be reported, and Mr. Bigley
also enclosed various letters and “corrected forms” with each of these Forms 1040 or
1040X arguing that no statutory authority exists for imposing an income tax on the
payments he received from KLA-Tencor and/or Ameriplan. Id.
Section 61(a) of the Internal Revenue Code defines gross income as “all income
from whatever source derived,” including compensation for services, gross income
derived from business, interest, dividends, discharge of indebtedness, pensions, and
income from an interest in an estate or trust. 26 U.S.C. § 61(a). While the frivolous
returns did include some interest income, it failed to include the income received as
compensation for services provided by Mr. Bigley to either KLA-Tencor and/or
Ameriplan. As previously briefed in this case (Dkt. 182), and as discussed by this court
(… continued)
regulations detailing what constitutes frivolous positions. See, e.g., Carrillo v. United
States, 91 A.F.T.R.2d 1608 (D. Nev.), aff’d 72 Fed. Appx. 732, 92 A.F.T.R.2d 5917 (9th
Cir. 2003); Hummon v. United States, 53 A.F.T.R.2d 1542 (S.D. Ohio 1984).
Case 2:14-cv-00729-HRH Document 195 Filed 12/22/16 Page 6 of 18
7
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
(Dkt. 188), Mr. Bigley is subject to income tax on account of the payments he received
from KLA-Tencor and Ameriplan. See 26 U.S.C. § 7701(a)(14), Murphy v. United
States, 992 F.2d 929, 930 (9th Cir. 1993). As a result, the Bigleys failed to report the
actual income received, and each return is subject to a civil penalty.
Further, the IRS followed all required administrative procedures in assessing the
penalty. In accordance with the provisions of 26 U.S.C. § 6702(b)(3), the IRS notified the
Bigleys that their filings were frivolous, and provided them with the opportunity to
withdraw those filings. Sellers Decl., ¶¶ 10, 11. However, the Bigleys refused to do so.
The decision to impose the frivolous return penalty was then properly reviewed by the
IRS Penalty Screening Committee. Sellers Decl. ¶¶ 12, 13, 15, 16, 22, 23. Review and
approval by the IRS Penalty Screening Committee has been uniformly held to satisfy the
review requirements of 26 U.S.C. § 6751. Deyo v. United States, 296 Fed. Appx. 157,
102 A.F.T.R.2d 6664 (2nd Cir. 2008); Borchardt v. Comm’r, 338 F.Supp.2d 1040 (D.
Minn. 2004); Cole v. United States, 90 A.F.T.R.2d 6987 (W.D. Mich. 2002). As the
positions advanced by the Bigleys are clearly frivolous under the law, and as all
procedural steps have been followed by the IRS, Michael Bigley is subject to penalties
for the years 2005, 2006 and 2007 (SOF ¶ 15) and Carolyn Bigley is subject to penalties
for the years 2004, 2005, and 2006 (SOF ¶ 18).
In sum, the Certificates of Assessments and other material submitted herewith
conclusively establish that: (1) federal income taxes, penalties and interest were assessed
against Michael A. Bigley for each tax year at issue (26 U.S.C. §§ 6201-6203); (2) notice
and demand for payment of these taxes, penalties and interest were properly made to the
Case 2:14-cv-00729-HRH Document 195 Filed 12/22/16 Page 7 of 18
8
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
Bigleys (26 U.S.C. §§ 6303(a) and 6321); and (3) the Bigleys are presumptively liable for
the unpaid taxes, penalties and interest shown on the Certificates of Assessments. Finally,
pursuant to the Court’s sanction issued on November 22, 2016, both Michael A. Bigley
and Carolyn E. Bigley are precluded from presenting testimonial or documentary
evidence to challenge the United States’ entitlement to judgment for federal taxes and
civil penalty assessments as described in plaintiff’s complaint for their willful failure to
attend properly noticed depositions. (Dkt. 189)
Accordingly, the liabilities have been properly assessed, and Michael A. Bigley is
liable for these taxes and civil penalties, and Carolyn E. Bigley is liable for the relevant
civil penalties. With accruals computed through December 16, 2016, Michael A. Bigley
owes the United States $227,853.27 and Carolyn E. Bigley owes the United States
$33,928.07 for the liabilities at issue in this case. SOF ¶ ¶ 15, 18.
III. This Court should Enforce the United States’ Federal Tax Liens against the
Bigley’s personal residence.
A. Discovery Sanctions
On August 22, 2016, as a sanction against the Kelso defendants for their willful
disobedience of this court’s discovery order dated May 4, 2016, the court ordered that
“all matters asserted in the United States’ first set of requests for admissions to Robert B.
Kelso and to Raeola Kelso are deemed admitted. For purposes of this litigation, the Kelso
defendants are deemed to be the nominees, alter-egos, and fraudulent transferees of the
Bigley defendants with respect to the property which is the subject of this action.” (Dkt.
170) On November 22, 2016, as a sanction against Michael A. Bigley for his willful
Case 2:14-cv-00729-HRH Document 195 Filed 12/22/16 Page 8 of 18
9
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
failure to comply with this court’s August 25, 2016 order compelling discovery, this
Court ordered that “all matters asserted in the United States’ first set of requests for
admissions directed to Mr. Bigley are deemed admitted for purposes of this case” and the
issue establishment sanction that ISA Ministries and the Kelso defendants are the
nominees, alter-egos, and fraudulent transferees of defendant Michael A. Bigley with
respect to the subject property.
The Court re-imposed the same issue establishment sanction against defendants
Robert B. Kelso and Raeola D. Kelso for their willful failure to appear for depositions.
(Dkt. 189) Additionally, the Court imposed the issue establishment sanction against both
Michael and Carolyn Bigley, for willfully failing to appear at their depositions, that ISA
Ministries and the Kelso defendants are the nominees, alter-egos, and fraudulent
transferees of defendants Michael A. Bigley and Carolyn E. Bigley with respect to the
Subject Property. Id. The Court additionally sanctioned defendants Michael A. Bigley
and Carolyn E. Bigley as being precluded from presenting testimonial or documentary
evidence to challenge the claim that ISA Ministries and the Kelso defendants are the
nominees, alter-egos, and fraudulent transferees of the Bigleys with respect to the Subject
Property, nor may they challenge the United States’ entitlement to judgment for federal
taxes and civil penalty assessments as described in plaintiff’s complaint. (Dkt. 189,
Order dated Nov. 22, 2016) As discussed in further detail below, these sanctions are
further supported on the merits by the undisputed facts in this action as both ISA
Ministries and the Kelso defendants are in fact the nominees, alter-egos and fraudulent
transferees of the Bigley defendants with respect to the subject property.
Case 2:14-cv-00729-HRH Document 195 Filed 12/22/16 Page 9 of 18
10
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
B. Federal tax liens attached to all of the Bigley’s property and rights to property.
If any person liable for federal taxes neglects or refuses to pay them after
assessment, notice, and demand, the amount of the unpaid taxes (including interest,
penalties, costs, and accruals) “shall be a lien in favor of the United States upon all
property and rights to property, whether real or personal,” belonging to the person. 26
U.S.C. §§ 6321, 6322; Drye v. United States, 528 U.S. 49, 55 (1999). The lien continues
to exist until the taxpayer’s liability is satisfied or becomes unenforceable due to the lapse
of time. 26 U.S.C. § 6322. Accordingly, as of the dates of the Bigleys’ federal income tax
assessments and frivolous filing penalty assessments, a tax lien arose in favor of the
United States on all of the Bigleys’ property that they then owned or thereafter acquired.
Once a lien under 26 U.S.C. § 6321 has arisen, the United States may file an action to
enforce the lien against any property in which the taxpayer has an interest. 26 U.S.C. §
7403.
C. The United States May Foreclose its Tax Liens against the Subject Property
Because it is Held by Nominees of Michael and Carolyn Bigley
Federal tax liens are exceptionally broad, reaching every property interest
belonging to the taxpayer. United States v. Nat’l Bank of Commerce, 472 U.S. 713, 719-
20 (1985). When a taxpayer’s property or rights to property are held in the name of
another, or are transferred to another, but the taxpayer retains beneficial ownership, the
third party is said to be a “nominee” for the taxpayer. W. Elliott, Federal Tax
Collections, Liens, and Levies ¶ 9.10[1] (2d ed. 2003); S.R. Mather and P.H. Weisman,
Federal Tax Collection Procedure, 638-2nd Tax Management Portfolio at pp. A-105-A-
Case 2:14-cv-00729-HRH Document 195 Filed 12/22/16 Page 10 of 18
11
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
106 (2000). While there is no direct statutory authority providing for nominee liens, it is
well-established that a federal tax lien attaches to property held by a taxpayer’s nominee.
See G.M. Leasing Corp. v. United States, 429 U.S. 338, 350-51 (1977); Towe Antique
Ford Foundation v. IRS, 791 F.Supp. 1450, 1454 (D. Mont. 1992),aff'd 999 F.2d 1387
(9th Cir. 1993). Factors which suggest nominee status include inadequate consideration
paid by the nominee, property placed in the nominee’s name in anticipation of a lawsuit
while the transferor continues to exercise control over the property, a close relationship
between transferor and nominee, failure to record the conveyance, retention of possession
by the transferor, and continued enjoyment by the transferor of benefits of the transferred
property. See United States v. Richardson, Case No. CV–04–0739–PCT–DGC, 2006 WL
388347, at *6 (D.Ariz. Nov. 21, 2006) (quoting Towe Antique Ford Foundation v. I.R.S.,
791 F.Supp. 1450, 1454 (D.Mont.1992)).
Here, the Bigleys transferred the subject property to ISA Ministries for no
consideration on May 2, 2008. They were notified of civil penalty assessments for the
submission of frivolous tax returns that were made on March 10, 2008. They were also
notified of proposed tax and penalty assessments exceeding $40,000 against Michael
Bigley for the 2004 tax year, in a notice of deficiency dated March 26, 2008 which
provided Mr. Bigley 90 days from the date of the letter to contest the proposed
assessments in the United States’ Tax Court. (SOF ¶ 7, 8, 9, Exh. L.) On May 30, 2008,
Mr. Bigley in fact petitioned the Tax Court, and thus the transfer on May 2, 2008 was on
the eve of litigation with the IRS. (Exh. L.) The entity that the property was transferred
to, ISA Ministries, was founded by Michael Bigley, who also set up a bank account for
Case 2:14-cv-00729-HRH Document 195 Filed 12/22/16 Page 11 of 18
12
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
the entity, and registered the entity’s address as the Bigleys’ personal residence. Michael
and Carolyn Bigley both wrote checks for personal expenses out of ISA Ministries’
checking account, and the Bigleys continue to retain possession and enjoy the benefits
and burdens of ownership of the home. (SOF ¶ 23-25)
The subsequent transfer between ISA Ministries to the Kelso defendants took
place a few weeks after the IRS sent Michael A. Bigley another notice of deficiency, this
time proposing additional assessments of tax interest and penalties exceeding $60,000 for
the 2005 tax year, and again providing Mr. Bigley 90 days to contest the assessments in
the United States’ Tax Court. (SOF ¶ 12) Again, within weeks of receiving a notice of
deficiency, the Bigleys’ personal residence (SOF ¶ 1) was transferred again to someone
they had a close relationship with, this time to Robert and Raeola Kelso, Michael
Bigley’s in-laws. (SOF ¶ 22). The Kelso defendants never spoke with or met with the
purported director of ISA Ministries, Andrew Wilkins, regarding the property transfer
and instead exclusively dealt with their relatives Michael and Carolyn Bigley. (SOF ¶ 21)
Thus, the undisputed facts make clear that ISA Ministries and the Kelso defendants are
both nominees of defendants Michael A. Bigley and Carolyn E. Bigley with respect to the
real property at issue in this action. (SOF ¶ 27).
D. Setting aside fraudulent conveyances.
Beyond nominee liability, the timing of the transfers of the subject property gives
rise to the inference that it was transferred in each instance with actual intent to hinder,
delay or defraud the United States of America. See A.R.S. § 44-1004(A) (“A transfer
made or obligation incurred by a debtor is fraudulent as to a creditor, whether the
Case 2:14-cv-00729-HRH Document 195 Filed 12/22/16 Page 12 of 18
13
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
creditor’s claim arose before or after the transfer was made or the obligation was
incurred, if the debtor made the transfer or incurred the obligation under any of the
following: 1. With actual intent to hinder, delay or defraud any creditor of the debtor.”)
Additionally, the transfer between the Bigley defendants and ISA Ministries was
to an insider (an entity established and controlled by the Bigleys at the time), where
debtors (the Bigleys) retained possession and control of the residence, there were already
civil penalty assessments that had been made and had not been paid, the transfer was
substantially all of the Bigleys’ assets, and the transfer occurred shortly before a
substantial ($40,000) debt was incurred. See A.R.S. § 44-1004(B) (factors for
determining actual intent under A.R.S. § 44-1004(A)). Thus, sufficient factors are
present to determine that the Bigleys transferred the property with the actual intent to
hinder, delay or defraud their creditor the United States and it was a fraudulent transfer
pursuant to A.R.S. § 44-1004(A)(1).
Further “A debtor who is not paying his debts as they become due is presumed to
be insolvent.” A.R.S. § 44-1002(B). And thus, the Bigleys were presumed to have been
insolvent, because they had outstanding civil penalty obligations at the time of the
transfer of the property to ISA Ministries that they had not paid at the time of the transfer,
and continue to remain unpaid. Additionally, they transferred the property for no
consideration, so the debtors did not receive reasonably equivalent value, and the transfer
is therefore fraudulent pursuant to A.R.S. § 44-1002(A)(2). Accordingly, the transfer
between the Bigleys and ISA Ministries is of no effect as to the United States under the
provisions of the Arizona Uniform Fraudulent Transfer Act, Ariz. Rev. Stat. §§§ 44-
Case 2:14-cv-00729-HRH Document 195 Filed 12/22/16 Page 13 of 18
14
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
1001, et seq. and this Court can and should set them aside, and the subsequent transfer
between ISA Ministries and the Kelso defendants, with respect to the United States, and
determine that the Bigleys are the true owners of the real property.
Similarly, the transfers can be set aside as fraudulent pursuant to the Federal Debt
Collection Procedure Act, 28 U.S.C. § 3301, et seq., which provides an analogous
fraudulent transfer statute to the Arizona Revised Statute, 28 U.S.C. § 3304(b)(1)(A)
(actual intent to hinder, delay or defraud) and 28 U.S.C. § 3304(b)(1)(B) (without
receiving reasonably equivalent value), and provides a similar remedy to the United
States of setting aside the transfer, 28 U.S.C. § 3306.
E. The Court should enter default judgment against ISA Ministries.
Because the undisputed material facts show that ISA Ministries is a mere nominee,
alter-ego and fraudulent transferee of the Bigleys, this Court should enter default
judgment against ISA Ministries and declare that ISA Ministries has no interest in the
subject property.
F. The Court should enforce the federal tax liens and order judicial sale of the
Bigleys’ personal residence
When “there has been a refusal or neglect to pay any tax, or to discharge any
liability in respect thereof,” the United States may bring an action in federal court to
enforce its federal tax liens. 26 U.S.C. § 7403(a). The Court may, after adjudicating the
merits of the United States’ claim to the property encumbered by the federal tax lien,
decree a sale of the property and order a distribution of the proceeds from its sale. 26
U.S.C. § 7403(c). While the Court has limited discretion in deciding whether to order
Case 2:14-cv-00729-HRH Document 195 Filed 12/22/16 Page 14 of 18
15
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
judicial sale, the Supreme Court has stated that “[w]e can think of virtually no
circumstances . . . in which it would be permissible to refuse to authorize a sale simply to
protect the interests of the delinquent taxpayer himself or herself.” United States v.
Rodgers, 461 U.S. 677, 709 (1983). Accordingly, the subject property should be sold and
the proceeds of sale should be paid to the United States to satisfy (or partially satisfy) the
Bigleys’ tax liabilities.
IV. Conclusion
The undisputed material facts show that Michael A. Bigley and Carolyn E. Bigley
are liable to the United States for unpaid federal income taxes and frivolous filing
penalties. The undisputed material facts also show that the Bigleys are the true beneficial
owners of the subject property, located at 3115 E. Park Avenue, Gilbert, Arizona 85234,
because the persons holding current title to the subject property, the Kelso defendants, are
the nominee, alter ego, and the fraudulent transferee of the subject property, and the
entity ISA Ministries is also the nominee, alter ego and fraudulent transferees of the
Bigleys. Because no genuine disputes of material fact exists and the United States is
entitled to judgment as a matter of law, the government respectfully requests this Court
enter judgment as follows.
A. Judgment against Michael A. Bigley, and in favor of the United States, in
the amount of $227,853.27, less any payments, plus interest and statutory
accruals from December 16, 2016, pursuant to 26 U.S.C. §§ 6601, 6621,
and 6622, and 28 U.S.C. § 1961(c)(1), until the judgment is fully paid;
Case 2:14-cv-00729-HRH Document 195 Filed 12/22/16 Page 15 of 18
16
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
B. Judgment against Carolyn E. Bigley, and in favor of the United States, in
the amount of $33,928.07, less any payments, plus interest and statutory
accruals from December 16, 2016, pursuant to 26 U.S.C. §§ 6601, 6621,
and 6622, and 28 U.S.C. § 1961(c)(1), until the judgment is fully paid;
C. An order decreeing that the United States has valid and subsisting federal
tax liens that attach to all of the Bigleys’ property and rights to property;
D. An order declaring that the Kelso defendants who currently hold bare legal
title to the property are the mere nominees, alter-egos and fraudulent
transferees of the Bigleys and have no interest in the subject property;
E. An order entering default judgment against ISA Minstries, declaring that it
is a mere nominee, alter-ego and fraudulent transferee of the Bigley
defendants and has no interest in the subject property;
F. An order declaring that the United States may enforce its federal tax liens
against the subject property;
G. An order of sale of the subject property, which proposed order shall be
submitted to the Court by the United States within 14 days of the Court’s
entry of summary judgment; and
//
//
//
//
//
Case 2:14-cv-00729-HRH Document 195 Filed 12/22/16 Page 16 of 18
17
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
H. Any such other relief the Court deems just and proper, including
entertaining a motion for reasonable fees and costs incurred with respect to
various discovery-related motions, and any such other relief as may be
appropriate pursuant to either state law or the Federal Debt Collection
Procedures Act.
DATED this 22nd day of December, 2016.
Respectfully submitted,
CAROLINE D. CIRAOLO
Principal Deputy Assistant Attorney General
/s/ Nithya Senra
NITHYA SENRA (CA SBN 291803)
Trial Attorney, Tax Division
U.S. Department of Justice
Attorneys for the United States of America
JOHN S. LEONARDO
United States Attorney
for the District of Arizona
Of Counsel
Case 2:14-cv-00729-HRH Document 195 Filed 12/22/16 Page 17 of 18
1
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
CERTIFICATE OF SERVICE
IT IS HEREBY CERTIFIED that service of the foregoing: (1) MOTION FOR
SUMMARY JUDGMENT AGAINST MICHAEL BIGLEY, CAROLYN BIGLEY,
ROBERT KELSO AND RAEOLA KELSOAND (2) MOTION FOR DEFAULT
JUDGMENT AGAINST ISA MINISTRIES, along with the United States’ Statement of
Facts, the declaration of J.C. Sellers, Exhibits 1- 27 and Exhibits A - L, has been made
this 22nd day of December, 2016, pursuant to defendants’ requests at ECF No. 24 and
No. 25, upon the following parties electronically via e-mail:
Raeola D. Kelso,
raeola7@msn.com
Robert Kelso
4kelso3@msn.com
Michael Bigley
mbigley10@cox.net
Carolyn Bigley
cbigley@cox.net
/s/ Nithya Senra
NITHYA SENRA
Trial Attorney, Tax Division
United States Department of Justice
Case 2:14-cv-00729-HRH Document 195 Filed 12/22/16 Page 18 of 18
