United States of America v. Pomerantz

MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM AND/OR MOTION TO TRANSFER VENUE

W.D. Wash.April 4, 2017

-1- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF WASHINGTON SEATTLE DIVISION UNITED STATES OF AMERICA Plaintiff, v. JEFFREY P. POMERANTZ, Defendant. ) ) ) ) ) ) ) ) ) ) ) ) CASE NO. 2:16-cv-00689-JLR DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S COMPLAINT AND/OR MOTION TO TRANSFER VENUE UNDER 28 U.S.C. §1404 NOTE ON MOTION CALENDAR: FRIDAY APRIL 28, 2017 DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S COMPLAINT AND/OR MOTION TO TRANSFER VENUE UNDER 28 U.S.C. §1404 COMES NOW, Plaintiff Jeffery Pomerantz, and pursuant to Federal Rules of Civil Procedure 12(b)(3), and 12(b)(6), and 28 U.S.C §1404., respectfully submits this Motion to Dismiss Plaintiff’s Complaint, or in the alternative Motion to Transfer Venue pursuant to 28 U.S.C §1404 to the United States District Court for the District of Columbia. As grounds therefor, Defendant states as follows: BACKGROUND Jeffery Pomerantz is a citizen of the United States and a citizen of Canada. He is married to Eleonore who is not a citizen of the United States. They have Case 2:16-cv-00689-JLR Document 9 Filed 04/04/17 Page 1 of 10 -2- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 resided in North Vancouver Canada from 2001 to the present, other than 153 days present in the California in 2008 and 181 days in 2009. The defendant paid taxes based on his worldwide income to Canada in all relevant years. He prepared and filed his United States tax returns on his own for all the years in question to the best of his ability, though he may have done so incorrectly through inadvertent technical errors, or through lack of knowledge or expertise in this area for which he was unaware he was lacking. His tax returns when prepared professionally in prior years may have been done correctly, but he was not aware of how those returns were completed. The Defendant’s wife (who is not a U.S. citizen) is of European descent opened an account in Switzerland to protect against some specific family law issues relating to her European status and the Defendant’s adult children from a former marriage upon the sale of real property in her name. The Defendant was a signatory on this account. The proceeds from the sale of her personal residence was deposited in that account by his wife some time later. The IRS has agreed there was no taxable transaction on that deposit, and no income was earned in that account. The amount has over the remaining years been depleted. The money was moved at some point from this Swiss account to their personal accounts in Canada to fund their day-to-day activities. The Defendant had very large business losses over the years and needed to use the money for everyday expenses. The United States now brings forward an excessive penalty for the non-filing of a form which results in no tax to the U.S. government. Case 2:16-cv-00689-JLR Document 9 Filed 04/04/17 Page 2 of 10 -3- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ARGUMENT I. The Complaint Should Be Dismissed for Improper Venue Under Rule 12(b)(3). Plaintiff alleges that venue is proper in this district pursuant to 28 U.S.C §1391(b)(2). That allegation is insufficient on its face, and this case should be dismissed based on improper venue under Rule 12(b)(3). In Mitrano v. Hawes, 377 F.3d 402, 405 (4th Cir. 2004) the Court considers the “entire sequence of events underlying the claim” to determine where venue is appropriate. A court does not take all facts pled in the complaint as true, and is free to consider facts outside the pleadings. Sucampo Pharmaceuticals, Inc v. Astellas Pharma, Inc. 471 F.3d 544, 549-50 (4th Cir. 2006). Once venue is challenged, the plaintiff bears the burden of showing that venue is proper. Rice Contracting Corp. v. Callas Contractors Inc., No. 1:08CV1163, 2009 WL 21597 (E.D. Va. Jan. 2, 2009). Plaintiff cannot meet its burden here. In this case, the Plaintiff had the opportunity to file its complaint in any jurisdiction under 28 U.S.C. §1391(c)(3) as the Defendant is a non-resident of the United States. The Plaintiff was permitted to file it in any jurisdiction, but chose the Western District of Washington due to the presumption of his perceived sense of Defendant’s connection to that State. The Plaintiff was made aware that the Defendant has no connection with Washington state other than a rental mailbox for a short time in Blaine, Washington and has never lived nor been employed in the state. Case 2:16-cv-00689-JLR Document 9 Filed 04/04/17 Page 3 of 10 -4- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 The Plaintiff was made aware that if the case remained in this district, the Defendant would not have access to adequate representation. When this case gained media attention the Defendant was contacted by an attorney with expertise in this field who was willing to take on this case considering my lack of financial resources. Mark Feigenbaum is an attorney based in Canada whose practice deals exclusively with cross-border tax issues. He has a doctorate in international taxation, and has written extensively on this topic. He has dealt with similar situations before and the defendant feels he would be the best representation. Dr. Feigenbaum is a member of the Bar in the District of Columbia and is admitted to the following federal courts: United States District Court for the District of Columbia, Northern District of Florida, Northern District of Illinois, and the U.S. Court of Appeals for the Seventh Circuit, Eleventh Circuit, Federal Circuit Armed Forces and Veterans Claims. He is also a Certified Public Accountant in the state of Illinois and the District of Columbia. Feigenbaum is not admitted to the United States District Court for the Western District of Washington, and is unable to be admitted to this court as he is not a member of the Washington State Bar. He is not able to be admitted on a pro hac vice motion as he has no connection with anyone who may be willing to act as local counsel. The Defendant has no connection with anyone in Washington state to act as his counsel and doesn’t feel that anyone there would be more qualified than his choice of representative. Case 2:16-cv-00689-JLR Document 9 Filed 04/04/17 Page 4 of 10 -5- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 The Plaintiff is aware of this situation and has continued to refuse to stipulate a change of venue even though he is also based in the District of Columbia. The Plaintiff’s steadfast refusal to stipulate to move this file to the District of Columbia until an appearance and answer is filed (knowing that is an impossibility based on these facts) is denying the Defendant’s right of chosen counsel which will result in default judgment and effectively is denying the Defendant’s right to due process afforded him under the United States Constitution, and at best would be considered malicious prosecution on the Plaintiff’s part. The Defendant asks the court to dismiss this case due to the prosecutorial misconduct on the Plaintiff’s part. II. The Complaint Fails to State a Claim on Which Relief Can Be Granted Even if the Complaint were not barred by improper venue, it would nevertheless warrant dismissal under Rule 12(b)(6). The Complaint alleges a judgment for civil penalty under 31 U.S.C. §5321(a)(5). This section permits a penalty for violations of 31 U.S.C. §5314. The Plaintiff’s investigation of the facts which lead to their complaint contains gross errors which would not be considered violations of 31 U.S.C. §5314. The IRS has now attempted to seek an excessive penalty based on his inadvertent non disclosure of the Foreign Bank Account Reporting forms. There has been no explanation as to the amount of penalty. Based on the size of the penalty approaching $1 million USD for the failure to file this form, one can Case 2:16-cv-00689-JLR Document 9 Filed 04/04/17 Page 5 of 10 -6- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 surmise they have assessed the penalty based on the inadvertent non disclosure of the balance of the Swiss account and then again on the same money transferred to a Canadian US dollar denominated account, and then assessed the penalty again on the same funds being converted to a Canadian dollar account. The United States has made significant factual errors, which if even true would not necessarily give rise to a claim, and cloud the fact that the Plaintiff has not made a claim to which this Court can grant relief. In paragraph 6 (at 20) the plaintiff makes mention of a corporation formed in the Turks and Caicos. This corporation was not in existence by the time of the years in question by the United States. That paragraph and the subsequent claim in paragraph 7 were incorrect and inflammatory inferring nefarious business dealings by the Defendant Further in paragraphs 8, 9, and 10, this account which was mentioned in the background was opened, but the Plaintiff has made it seem there were several accounts when in fact it was the same account with different currency denomination possibilities. The only money in this account was from the sale of the house which was identified above. They were not the “Grand Turk Oppenheim Accounts.” If the plaintiff was referring to the account in paragraph 6, then that account was not opened by the Defendant and was closed prior to the years at issue in this case. The Defendant has never been to Grand Turk. Paragraph 12 relates to an RBC account. First, that account is based in the U.S. (and thus not subject to FBAR reporting), and second was not opened by Defendant. It was opened by a corporation and the Defendant had no signing authority on this account. Case 2:16-cv-00689-JLR Document 9 Filed 04/04/17 Page 6 of 10 -7- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Paragraph 13 is blatantly false. The Defendant did not have any signing authority on this account. Based on the above sampling of errors, the Court must question the validity of the claims by the Plaintiff, and there is no specific evidence of how they computed this monetary claim. The claim to which the Plaintiff is seeking relief specifically bars relief in the situations such as this case. Specifically, 31 U.S.C. §5321 (a)(5)(B)(II) states that “No penalty shall be imposed under subparagraph (A) with respect to any violation if such violation was due to reasonable cause.” Willful neglect on the part of the taxpayer means a “conscious, intentional failure or reckless indifference” while reasonable cause requires that the taxpayer demonstrate that he “exercised ordinary business care and prudence.” United States v. Boyle, 105 S.Ct. 687, 690 (1985). In Cheek v. United States, 498 U.S. 192 (1991), the Supreme Court stated that “[w]illfulness … require[d] the Government to prove that the law imposed a duty on the defendant, and that the defendant knew of this duty, and that he voluntarily and intentionally violated that duty”. Furthermore, at 202, “carrying this burden required negating a defendant’s claim of ignorance of the law or a claim that because of a misunderstanding of the law, he had a good faith belief that he was not violating any of the provisions of the tax laws.” The IRS was delegated civil enforcement authority for the FBAR in April 2003. The IRS Internal Revenue Manual (IRM) directs examiners in determining willfulness with respect to issuing the penalty the plaintiff is asserting and requires that the person had knowledge of the FBAR reporting requirements and the person consciously chose not to comply. Case 2:16-cv-00689-JLR Document 9 Filed 04/04/17 Page 7 of 10 -8- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 IRM 4.26.16.6.5.1 directs examiners in defining willfulness for this purpose. It states that “(1) the test for willfulness is whether there was a voluntary, intentional violation of a known legal duty; (2) a finding of willfulness under the BSA must be supported by evidence of willfulness; and (3) the burden of establishing willfulness is on the Service.” Willfulness can be proven “through inference from conduct meant to conceal or mislead sources of income of other financial information.” United States v. Williams, 489 Fed.App. 655, 658 (2012) (quoting United States v. Sturman, 951 F.2d. 1466, 1476 (6th Cir. 1991). The Defendant’s failure to file under FBAR requirements was not a willful or intentional disregard of the law, but rather an inadvertent omission and thus a monetary penalty is not permissible by law. The Plaintiff has not pleaded any elements of this willfulness. Nowhere in the complaint has the Plaintiff pleaded that there was any semblance of willful acts on the Defendant’s part and thus has not pleaded a claim to which relief can be granted. III. In the Alternative, This Case Should be Transferred to the District of Columbia In the event that this case is not dismissed for the aforementioned reasons, the Defendant requests that this Court transfer venue of this action to the U.S. District Court for the District of Columbia. “For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.” 28 U.S.C. §1404(a). The Court should exercise its power to transfer a case in order “to prevent the waste of time, energy, and money and to Case 2:16-cv-00689-JLR Document 9 Filed 04/04/17 Page 8 of 10 -9- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 protect litigants, witnesses and the public against unnecessary inconvenience and expense.” Original Creatine Patent Co., Ltd. v. MET-RX USA, Inc., 387 F.Supp.2d 564, 566 (E.D. V.A. 2005). Requiring the Defendant to defend this case in the state of Washington would be extremely inconvenient, burdensome, expensive and prejudicial to the Defendant based on the fact he would not have access to the representation he desires. The Defendant has no current contact with Washington. As noted above, there was a temporary mailbox in Blaine, Washington used by a company which the Defendant was affiliated with at that time. This is the only contact Defendant even peripherally had with Washington State. The Plaintiff is based in Washington D.C., and the counsel that the Defendant wishes to represent him who is most suited for this complex litigation is admitted to the Court in Washington, D.C. Accordingly, it is neither convenient nor in the interest of justice that this case be heard in the State of Washington. Conclusion For all the foregoing reasons, the Court should enter an order: (1) dismissing the Complaint in its entirety under Rules 12(b)(3) and 12(b)(6) with prejudice. In the alternative, this action should be transferred to the U.S. District Court for the District of Columbia under 28 U.S.C. §1404(a). Dated this 4th day of April, 2017 /s/ Jeffrey P. Pomerantz Pro se Case 2:16-cv-00689-JLR Document 9 Filed 04/04/17 Page 9 of 10 -10- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 CERTIFICATE OF SERVICE I hereby certify that on April 4, 2017 a true copy of the foregoing DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S COMPLAINT AND/OR MOTION TO TRANSFER VENUE was filed electronically with the Clerk of the Court using the CM/ECF system, which will send a notification of such filing to the following: Paul Butler Trial Attorney, Tax Division U.S. Department of Justice P.O. Box 683 Washington DC. 20044 Counsel for Plaintiff United States of America /s/ Jeffrey P. Pomerantz Pro se Case 2:16-cv-00689-JLR Document 9 Filed 04/04/17 Page 10 of 10 -1- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF WASHINGTON SEATTLE DIVISION UNITED STATES OF AMERICA Plaintiff, v. JEFFREY P. POMERANTZ, Defendant. ) ) ) ) ) ) ) ) ) ) ) ) CASE NO. 2:16-cv-00689-JLR PROPOSED ORDER [PROPOSED] ORDER AND NOW, after consideration of Jeffery Pomerantz’s motion to dismiss the complaint and any responses or replies thereto, it is hereby ORDERED that the complaint be dismissed for improper venue and failure to state a claim upon which relief can be granted. SO ORDERED Date __________ United States District Judge Presented by: Plaintiff Jeffrey A. Pomerantz Case 2:16-cv-00689-JLR Document 9-1 Filed 04/04/17 Page 1 of 1