Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

United States v. Edmond

United States District Court, W.D. Tennessee, Western Division

December 12, 2016

UNITED STATES OF AMERICA, Plaintiff,
v.
STEPHANIE EDMOND, et al., Defendants.

          ORDER DENYING MOTION TO STRIKE ORDERS OF CONTEMPT, GRANTING CROSS-MOTION TO REIMPOSE CONTEMPT SANCTIONS, AND GRANTING MOTION TO COMPEL TURNING OVER OF FUNDS

          S. THOMAS ANDERSON UNITED STATES DISTRICT JUDGE

         This matter began on December 3, 2013, when the United States filed a complaint against Defendants Stephanie Edmond and Tax Factory Enterprise, Inc. (“Tax Factory”), to enjoin them from operating a tax return preparation business. Before the Court are the motion of the United States to compel Kevin Williams to turn over recently discovered funds (ECF No. 74), the motion to strike orders of contempt filed by Kevin Williams (ECF No. 97), and the cross-motion of the United States to reimpose contempt sanctions (ECF No. 98.) A recitation of the procedural history of the case is in order before the Court addresses the pending motions.

         On April 17, 2015, the Court entered an “Order and Judgment of Permanent Injunction” upon consent motion of the parties. (ECF No. 24.)

         On July 16, 2015, on motion of the United States (ECF No. 27), the Court ordered Defendants to show cause why they should not be held in contempt for failing to comply with the terms of the permanent injunction. (ECF No. 28.)

         On August 7, 2015, the Court vacated the order to show cause at the request of the United States based on the compliance of Defendants with the April 17, 2015, order. (ECF No. 34.)

         On December 31, 2015, the United States filed a second motion for order to show cause (ECF No. 35), contending that, again, Defendants were not in compliance with the permanent injunction. At a hearing held on January 15, 2016, the Court granted the United States' second motion to show cause and enjoined Defendants, as well as their agents, servants, employees, independent contractors, and all persons in active concert or participation with them, from preparing any federal tax returns until further orders of the Court. (ECF Nos. 39, 40.)

         On March 18, 2016, at the request of Defendants' new counsel, the Court held an evidentiary hearing on the United States' second motion to show cause. (ECF No. 45.) At the conclusion of the hearing, the Court determined that the injunction from January 15, 2016, should remain in effect until the Court issued a written order and ordered Defendant Edmond to display a copy of the injunction at her place of business. (Id.)

         On April 4, 2016, the Court entered Findings of Fact and Conclusions of Law. (ECF No. 51.) The Court found the following facts concerning Movant Kevin Williams:

Williams, the husband of Defendant Stephanie Edmond, is also a tax return preparer. Defendant Tax Factory is a corporation formed under the laws of the State of Nevada. Edmond is the corporation's vice president. Williams is the corporation's president. The Tax Factory's address is 2826 Coleman Road, Memphis, Tennessee.
The permanent injunction entered on April 17, 2015, inter alia, prohibited Defendants Edmond and the Tax Factory, as well as their “agents, servants, employees independent contractors, . . . and all persons in active concern or participation with them, ” from engaging in conduct that would interfere with tax administration, including (but not limited to) preparing false returns, claiming improper deductions or credits, or otherwise engaging in conduct that could result in tax penalties.
Shortly after December 1, 2015, Williams contacted Marcus Lane, a college friend, for help in creating a new tax return preparation entity. Williams arranged to use the Electronic Filing Identification Number (“EFIN”) that Lane had obtained for his own company for a fee. Other than providing an EFIN, Lane had no role with the new entity and did not consent to have any other role with the new entity. Williams had sufficient time to obtain his own EFIN prior to the start of the new tax season without using Lane's services.
The application for the new tax return preparation entity, the “Tax Firm, ” lists Marcus Lane as the primary contact, principal, and responsible official for the Tax Firm. Neither Edmond nor Williams are listed on the application, although Williams should have been listed on the application rather than Lane. The physical address of the Tax Firm is listed as 2828 Coleman Road, Memphis, Tennessee.
Although Edmond testified that the 2828 Coleman Road address is next door to 2826 Coleman Road and that the two addresses are completely separate, Revenue Officer Renesha Turnage conducted a field visit and observed that the two adjacent offices are combined into one large office space. The address at 2828 Coleman Road has an arrow sign that states “use other door” and points to 2826 Coleman Road, i.e., the address of the enjoined Tax Factory.
There is no evidence in the record to show the incorporation of any corporation or company known as the Tax Firm in the State of Tennessee or elsewhere. Out of the thirteen tax return preparers at the Tax Firm, ten had worked for Defendants in the calendar year 2015. Ninety per cent of the income tax returns that had been filed by the Tax Firm were prepared by former employees of and/or independent contractors associated with Defendants.
There is no evidence of any sale agreements for the assets of the Tax Factory, any evidence of an assumption of any leases or real property, or any other evidence to show that the Tax Firm is anything more than a successor and continuation of the Tax Factory. Instead, the evidence shows that Williams, the president of the Tax Factory, is the owner of the Tax Firm. The Tax Firm shares the same address as the Tax Factory and carries on the same business purpose of preparing federal tax returns. And, the Tax Firm retained substantially the same workers as its predecessor. Accordingly, the Court finds that the Tax Firm is the successor of the Tax Factory.

(Findings Nos. 2-4, 10-15, 17, ECF No. 51.)

         The Court then concluded that the permanent injunction was definite and specific and that Defendants' actions violated the permanent injunction. The Court also found that the second injunction was definite and specific and bound Defendants as well as their agents, servants, employees, independent contractors, and all persons in active concert or participation from preparing federal tax returns. (Conclusions Nos. 3, 5, ECF No. 51.)

         As related to Movant Williams, the Court concluded as follows:

Defendants and its successor, the Tax Firm, are in violation of the second injunction, and they are in contempt of this Court. There is no evidence that the Tax Firm was created for any reason except to escape the review of the monitor and the injunctions issued by this Court. There is no evidence to show a legitimate separate entity. Instead, the evidence demonstrates that Tax Firm was created for the improper purpose of flouting the Court's orders.
As a successor to Defendants, the Tax Firm had actual notice of the injunction. Moreover, Williams was the president of the Tax Factory, and he engaged in repeated subterfuge designed to escape detection by the IRS, allowing the inference that he possessed actual notice of the order.
Based on this finding of contempt, Defendants, including their successor Tax Firm and its owner, Kevin Williams, are enjoined from preparing tax returns as of January 15, 2016. Notice of the order entered today shall be provided by Defendant Edmond to Williams, the Tax Firm, and all persons performing services at the location of 2826 and 2828 Coleman Road, Memphis, Tennessee. In addition, a copy of this order shall be posted on the front doors at 2826 and 2828 Coleman Road to protect both the public and the United States.
Additionally, Defendants, including the successor Tax Firm and its owner, Kevin Williams, are ordered to disgorge all fees collected for the preparation of returns at 2826 and/or 2828 Coleman Road, Memphis, Tennessee, or using the EFIN held by the Tax Firm or any further successors from January 15, 2016, and forward, to the United States. Defendants may not reduce the fees to be disgorged on account of the payment to Marcus Lane ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.