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IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF FLORIDA
PENSACOLA DIVISION
| WARD DEAN, | ) | |
| ) | ||
| Plaintiff, | ) | |
| ) | ||
| v. | ) | No.3 :03 cv 00065 (LAC/MCR) |
| ) | ||
| UNITED STATES, et al., | ) | |
| ) | ||
| Defendants. | ) | |
| ) | ||
DEFENDANTS' STATEMENT OF MATERIAL FACTS TO WHICH NO GENUINE ISSUE IS TO BE TRIED
1. Tanya Burgess is a Special Agent with the Internal Revenue Service ("IRS" or "Service") Criminal Investigation Division, in Pensacola, Florida. As part of her job, she is authorized to investigate possible criminal violations of the Internal Revenue Code (26 U.S.C.) and related statutes. (Burgess Decl. 1, 2.) Tanya Burgess was the special agent assigned to the Dean investigation. (Id. 3.)
| [This is what we are trying to determine. Is she really a special agent? Does she have an oath on file as required by 5 USC 3331, and is it on file and in custody as required by 5 USC 2906; as well as any specific oaths required by the IRS? What is her job description (not what she says her job description is?] |
2. In October 2002, IRS Criminal Investigation, upon the referral of civil examination, initiated an investigation of Dean for the years 1997 through 2001. (Id. 4; Compl. 4.) The purpose of the investigation was to determine whether Dean has committed an offense under the Internal Revenue code by attempting to evade Federal income taxes, filing fraudulent Federal income tax returns or any other tax related offenses. (Burgess Decl. 3.) The investigation was the result of Dean's filing income tax returns that indicated that he earned zero income and thus, claimed zero income tax liability for the years in question, except for 2000 when Dean failed to file any return. (Id. '4.)
| [What is “any other tax related offenses?” Is that another name for a “fishing expedition?” Also, I did file a return for 2000, for which I have a stamped Return Receipt.] |
3. On October 3, 2002, Special Agent Burgess went in person with Revenue Agent Wayne Jackson to Dean’s residence to inform him that he was under investigation and attempt to interview him. (Compl. 5; Burgess Decl. 6.) After Special Agent Burgess introduced herself as a special agent with IRS Criminal Investigation, she displayed her pocket credentials and badge and advised Dean of his constitutional rights. Dean declined the opportunity to be interviewed or provide any information, and ordered Special Agent Burgess and Revenue Agent Jackson off his property. (Burgess Decl. 6. )
4. In response to a letter that Dean sent to Special Agent Burgess after the visit to Dean's residence on October 3, 2002, Special Agent Burgess informed Dean that he could provide the IRS with any information that he would like to be considered as part of the investigation. To date, Dean has not provided any information. (Id. 7; Ex. 2.)
| [It should be noted that my letter was a request for a Criminal Investigation Conference, pursuant to 26 CFR 601.107, which she denied in her letter]. |
5. Dean sent letters to financial institutions and his employers that were summonsed as part of the civil examination notifying them that "they were under no obligation to comply with this fraudulent summons." He further stated: "That it is not a court order. It is a phony document sent by a 'Revenue Agent' who has no authority to send a lawful summons to anyone." Dean concluded that he would hold anyone who releases the records personally liable if they complied with the "phony document." (Id. -,r8.)
| [She neglected to point out the substance of my letter, on which my statements cited above were based. These included that the “Revenue Agent…has no authority to send a lawful summons to anyone;” 26 USC 7602 (a) authorizes the Secretary (or his delegate) to send summonses (delegation orders were requested during my meeting with agents Poole and Jackson [transcript], and with Poole’s superior Van O’Neal [letter]. Special Agents are authorized by 26 USC Section 7608 to send summonses to enforce Subtitle E and other laws pertaining to alcohol, tobacco and firearms; other challenges raised but not answered] |
6. Special Agent Burgess issued a summons to Dillon Vickery, which is
attached as Exhibit B to the complaint. Dean sought to quash the summonses
on the grounds that it was wrongfully issued because Dean is "not
one who is 'liable for any tax.’” In other words, Dean does
not believe he is required to pay income tax and, therefore, the IRC
provisions related to summonses did not apply to him. (Id. 9.)
| [Another phony summons. Also, where are parts A and B of the Summonses sent by Jackson and Burgess? On what basis does she claim that my statement that I am "not one who is 'liable for any tax’” is incorrect?] |
7. As part of the ongoing investigation into Dean's tax years 1997 through 2001, a subpoena for a handwriting exemplar was issued in order to verify Dean's signatures on the returns for the years that Dean is under investigation. On or about June 4, 2003, Special Agent Burgess with Wayne Jackson personally served the subpoena on Dean. As indicating by the hearing transcript posted on Dean's website, Dean was forced to comply with the subpoena by court order. Dean objected to complying with the subpoena under "threat, duress and coercion." Dean's defense to the subpoena and basis for not complying voluntarily was that special agents do not have the authority to conduct an income tax investigation. (Id. '10.)
| [I complied with the subpoena. I appeared and testified before the Grand Jury, which the subpoena required me to do. It is true that I did not produce the handwriting exemplars until ordered to do so by the Judge. I am not required to do what I am requested to do by a U.S. Attorney. I am required to comply with a judge’s lawful orders. I complied with the order of the judge under threat, duress and coercion, pending determination of the order’s lawfullness]. |
8. The culmination of events -- (1) Dean's attempt to hinder the civil investigation; (2) Dean's refusal to be interviewed on October 3, 2003 and then ordering Special Agent Burgess and Revenue Agent Wayne Jackson to exit his property; (3) Dean refusing to comply with subpoena for a handwriting exemplar; (4) Dean's motion to quash the summons issued to Dillon Vickery; and (5) Dean not providing any information to the Service to date -- led Special Agent Burgess to reasonably believe that Dean would not voluntarily provide information in connection with her investigation. (Id. 6-11.)
| [(1) I am not attempting to hinder the criminal investigation. I am trying to determine if it is lawfull and procedurally correct. If so, the criminal investigation will be strengthened. (2) It is within my rights not to be interviewed (the right of which she informed me I had), and it is also my right to order trespassers off my property; (3) I complied with the subpoena. I appeared and testified before the grand jury; (4) I did file a Motion to Quash Dillon Vickery’s summons, pursuant to 26 USC Section 7609(b)(2); (5) I provided the Service with a great deal of information in connection with the investigation. See the numerous letters written to Mr. Jackson and Ms. Burgess.] |
9. Even if a subject of an investigation does voluntarily provide information in connection with an investigation, it is still the practice of Tanya Burgess to issue summonses to witnesses and financial institutions and conduct personal interviews because it is necessary to corroborate, verify and obtain additional information. (Id. 12.)
10. The Internal Revenue Manual states that it is a special agent's duty when conducting a criminal investigation to interview the taxpayer and witnesses connected with the investigation. The Internal Revenue Manual that pertains to criminal investigations, in particular, instructs special agents that investigations are presented to a jury through the testimony of witnesses. (Id. 13; Int. Rev. Man. §9.4.5.3.)
11. The Internal Revenue Manual sets forth situations where "necessary information generally will not be available from the taxpayer or will not be in a usable form." (Int. Rev. Man. §§9.3.1.3.1(2)(a.) and 11.3.21.3(5)(a.).) One of the situations set forth is when "corroboration is needed for a taxpayer's statement or records." (Id.) As set forth in Special Agent Burgess' declaration, she was able to identify third parties from Dean's bank records with which Dean had engaged in financial transactions. She then contacted these specific entities, in accordance with the Internal Revenue Manual, in order to verify and corroborate the transaction. (Burgess Decl. 18, 24.) The Internal Revenue Manual allows for the disclosure of return information to third parties when it is necessary to corroborate the subject of the investigation's statements or information, or the information is within the control of a third party. (Burgess Decl. 14-15.)
| [I will provide an Affidavit from one such witness who stated that it would not have been necessary for her to identify herself as being from the Criminal Investigation Division, nor that I was under criminal investigation for him to “corroborate the subject of the investigation’s statements or information.”] |
12. Specific to the investigation of Dean, Special Agent Burgess sought information through two methods: Issuing summonses to third-parties and personally contacting witnesses. (Id. 16.)
13. Special Agent Burgess as part of her investigative activities issued administrative summons that indicated that they were issued from the "Criminal Investigation" Division of the Internal Revenue Service. (Compl. 7-8.) Copies of three of the summonses are attached as Exhibits A through C to the complaint.
| [I have since obtained five more such summonses that were not submitted with the complaint] |
14. For the oral disclosures, Special Agent Burgess
contacted third parties and conducted verbal interviews. (Compl. 6;
Burgess Decl. 17.) All of the verbal contacts with third parties were
by telephone, except for one in person contact when Special Agent Burgess
served a summons on Dillon Vickery by hand. (Burgess Decl. 20.) Special
Agent Burgess contacted third parties by telephone for three reasons.
As she stated: "First, I would call individuals to
obtain needed information related to the Dean investigation. Second,
before I issued and served some of the summonses by mail, I would call
the third party to confirm the address. Third, after the summonses were
mailed, I would then sometimes follow up with a telephone call to check
on the status or when I could expect a response to the summonses."
(Id. ~17.)
15. The telephone calls were discrete and specific and resulted from Special Agent Burgess' review and evaluation of bank records that were obtained during the civil examination. Upon reviewing these records, she identified payments and attempted to determine if they were sources of income. After identifying these particular payments, she then contacted the party that made payments to gather more information about the nature of the payment. Special Agent Burgess attempted to verify how Dean disposed of any income. Again, to do this, she identified from the bank records third parties to whom Dean made payments and contacted them as well. (Id. 18.)
16. When Special Agent Burgess spoke with a witness, she used a procedure authorized by IRS policy and procedure. The procedure is as follows: She identified herself by providing her first and last name, told the third party contact that she was with IRS Criminal Investigation, and told them that she was assigned to an investigation involving a person. (Id. 21; Ex. 9.) It is Special Agent Burgess' practice to follow procedure when contacting third parties by telephone. In accordance with the IRS's policy and procedure, Special Agent Burgess stated: My name is Tanya Burgess. I am with IRS Criminal Investigation. I have been assigned to an investigation involving Ward Dean. I would like to ask you some questions. (Id. 19.)
17. The only instance when Special Agent Burgess contacted
a witness in person was when she served a summons on Dillon Vickery
on October 16, 2002. The reason for serving the summons in person was
that Mr. Vickery had earlier declined to provide information over the
telephone. All of the oral disclosures made to Mr. Vickery during the
earlier telephone conversation were made in accordance with the procedure
described above in paragraph 16.
When the summons was served on Vickery, Special Agent Burgess identified
herself as Tanya Burgess a special agent with IRS Criminal Investigation,
displayed her badge and credentials and she served Mr .Vickery with
the summons and explained to him what he was required to do in response
to the summons. (Id. 20.)
18. The IRS's policy and procedure for making oral disclosures when contacting third parties is stated in the IRS's memorandum dated February 2, 2001, from Mark Matthews, Chief, Criminal Investigation, IRS to CI Special Agents in Charge. This memorandum instructs that special agents can identify themselves, the IRS division that they work for and the taxpayer that is under investigation. The policy reflected in this February 2nd memorandum was the IRS policy in effect at the time that Special Agent Burgess made the verbal disclosures of Dean's return information. This memorandum reflects that Special Agent Burgess' understanding of what disclosures are allowed is consistent with IRS policy and procedures. (Id. 21.)
| [IRS Disclosure Litigation Reference Book Rev. 4-2000, Section I.A.2. (a) (Investigative Disclosures for Tax Administration Purposes) authorizes the disclosure of the “nature of the official duties (collection inquiry, tax audit, criminal investigation) to obtain necessary information. However, Section I.A. 2(c) cautions agents to do so “only if such return information cannot otherwise reasonably be obtained in accurate and sufficiently probative form, or in a timely manner, without impairing the proper performance of official duties without making the disclosure. Section I.A.4. instructs that Barrett v. United States, 795 F2d 446 (5th Cir., 1986) found that “the relevant inquiry is NOT whether the information sought is necessary for the investigation or examination; the inquiry is whether the disclosure of each element of return information is necessary to obtain the particular information sought.” Sectiona I.A.7(c) warns to “Disclose only the return information that is necessary to obtain the information sought.” In Section I. D. 2., In-Person Investigative Disclosures, agents were advised that in Gandy v. United States, 1999 U.S. District Lexis 1029 (E.D. Tex. 1999) the court found that the disclosure that the plaintiff was under criminal investigation was not necessary to secure the desired information. Section I.C.4. states that: “The current guidance proscribes the use of the words “criminal investigation division” in the ancillary heading (return address), text, or signature block of circular letters. Although the text does not explicitly say so, by extension, the words should not be used on the return address of the envelope in we letter is sent. Section I.C.6.(a) cites Barrett v. Unites States, 51 F.3d 475 (5th Cir., 1995), finding that “it was not necessary to reveal the fact of criminal investigation in letters sent to patients of a surgeon to determine the amount of money paid to the surgeon (and that the agent did not act good faith in sending the letters, where the letters disclosed that the plaintiff was under criminal investigation, contrary to then-existing IRM).” Furthermore, Section I.C.6.(b) cites Diamond v. United States, 944 .2d 41 (8tir. 1991), rehearing denied, 1991, U.S. App.Lexis 25773 (8th Cir. Oct. 30, 1991), in which the court found that it “was not necessary to disclose the fact of criminal investigation with a signature block that read, “Special Agent, Criminal Investigation Division.” Although the court affirmed the district court’s grant of the government’s motion for summary judgment based on a good faith but erroneous {emphasis added} interpretation of IRC Section 6103 by the Service, since the IRM at the time advised including the title, “Special Agent, Criminal Investigation Division “ in the signature block of “circular letters.” Section I.C.6.(e) cites May v. United States, 141 F.3d (table cite), 81 AFTR 2d (RIA) 98-853, 98-1 U.S. Tax Case (CCH 50, 220 (8th Cir. 1998) in which the court found that since the Eighth Circuit decision in Diamond had not been published at the time that letters were sent, which included Criminal Investigation Division in the signature block, therefore the government did so in “good faith.” Section I.D.2. In Person Investigative Disclosures, cited further findings from the Gandy case (supra). “The court found the agents disclosed that the IRS was conducting a criminal investigation of the plaintiff, and that the disclosure that the plaintiff was under criminal investigation was not necessary to secure the desired information. The court also found that “for a special agent to identify himself to a third party witness by displaying his credentials, and by for information pertaining to the identified taxpayer under investigation—whether or not the special agent mentions that the investigation is a criminal investigation—is a disclosure that the taxpayer is under criminal investigation.” The manual went on to state (Section I.D.3.) that “Gandy is the first court to hold that the disclosure of the fact of criminal investigation in the context of in-person interviews through oral statements and/or display of special agent enforcement badges or pocket commissions is not authorized pursuant to section 6103(k)(6). Section I.D.3. stated that “the disclosure of the fact of criminal investigation in the context of in-person interviews through oral statements and/or the display of special agent enforcement badges or pocket commissions is not authorized (emphasis added) pursuant to section 610(k)(6).” Section I. D.4.(b) advised that Heller v. Plave, 657 F. Supp. 95 (S.D. Fla 1987) held that “the disclosures were unnecessary and violated section 6103(k)(6).” Section I.D.4.(f), cites Payne v. United States, No. H-93-1738 (S.D. Tex. Final Order entered 12/13/99), in which the court determined that “the United States was liable because the special agent had introduced himself as a special agent of the Criminal Investigation division conducting a criminal investigation and had issued summonses to the plaintiff’s clients despite the plaintiff’s assurances that he would supply the information.” (It should be noted that Plaintiff in the instant case has twice requested a Criminal Investigation Conference (refused by the Ms. Burgess and AUSA Beard, respectively), and has requested three times to appear before the Grand Jury (twice refused, once not answered), at which Plaintiff stated unequivocally that he would answer “all their questions”). Section I.E. (Conclusions) reminded agents that (Para 3.) The courts’ customary inquiry is NOT whether the information sought is necessary; the focus is on whether the disclosure is necessary to obtain the information; and the admonition (4) “(Do not use the words “Criminal Investigation Division” anywhere within circular letters [or, by extension, upon any envelope enclosed with or used to send circular letters].)] |
19. Because Special Agent identified herself from the Criminal Investigation Division, Dean asserts that those individuals contacted were informed that Dean was under criminal investigation. (Compl. 6, 11.)
| [Not true. Plaintiff was informed by several individuals that Ms. Burgess advised them that he was under criminal investigation. Ex X, Affidavit from Jim Kelly] |
20. For the written contacts made with third parties in connection with the investigation of Dean, administrative summonses were issued to obtain information relating to financial transactions third parties had with Dean. Three examples of the summonses are attached as Exhibits A-C of the complaint. (Comp. 7.) The summonses indicate that they were issued from the "Criminal Investigation" Division of the Internal Revenue Service. (Comp. 9.) The purpose of the inquires was to determine Dean's income. (Id. 23.)
21. Individuals and entities summonsed were those individuals and entities that made payments to Dean or to which Dean made payments. These individuals and the entities contacted were identified from Dean's bank records that were received from the civil examination. The summonses were, thus, sent to a very specific and discrete group of persons and entities. (Id. 24.)
22. Third parties that receive administrative summonses must also be apprised as to whether the summonses were issued by IRS Criminal Investigation. IRS policy dictates that field offices enter "Criminal Investigation" as the issuing compliance function on line two of the administrative summons, Form 2039, which is indicated by a March 5, 2001 memorandum from Howard Levine, Special Litigation Assistant, Office of Chief Counsel to Area III Counsel. This policy with respect to identifying Criminal Investigation as the issuing office on administrative summonses was the IRS policy in effect -- and was the policy that Special Agent Burgess was aware of-- at the time the summonses were issued to third parties in conjunction with the IRS, investigation of the Deans. (Id. 25.)
23. "Criminal Investigation" or "CI”,
as alleged by Dean, appeared on the return addresses of the envelopes
in which the summonses were sent. (Compl. 9.) But, the disclosure of
criminal investigation on the envelopes is an authorized disclosure
just like the disclosures made on line two of the summons, Form 2039.
These are the envelopes provided by the Service for the mailing of the
correspondence. Thus, Special Agent Burgess believed that it was
necessary to use the Service's official envelopes when mailing the summonses
that she issued to third parties as part of her investigation of Dean.
(Id. 26.)
| [Necessary??] |
24. It is the IRS's policy and procedure to authorize special agents to disclosure return information to third parties to obtain information not otherwise reasonably available in connection with an investigation. (Id. ~27; Int. Rev. Man. §9.3.1.3(1).)
| [Mr. Kelly states that he would have answered the same without knowledge of the criminal investigation] |
25. During my investigation of Dean, Special Agent Burgess did not disclose to any third party that Dean was under "criminal investigation." (Undisputed Facts 28.) Her only representations were that she was a special agent from IRS Criminal Division and that she was conducting an investigation of Dean in accordance with IRS policy and procedure. (Id. 19-21, 25-26.)
| [Not true. See affidavit of Jim Kelly] |
DATED: October 16, 2003
Respectfully submitted,
GREGORY R. MILLER
United States Attorney
MICHAEL J. SALEM
LINDSEY W. COOPER, JR.
(TN Bar No.020705, DC Bar No.473895)
Trial Attorney, Tax Division
U.S. Department of Justice
P .0. Box 227, Ben Franklin Station
Washington, DC 20044
Telephone: (202) 307-6528
Facsimile: (202) 514-6866
Attorneys for the United States and
Internal Revenue Service
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