2-03-CV-0281-LDG-RJJ
UNITED STATES DISTRICT COURT DISTRICT OF NEVADA
UNITED STATES OF AMERICA,
Plaintiff,
v.
IRWIN SCHIFF and CYNTHIA NEUN,
Defendants.
2:03-cv-0281-LDG-RJJ
ORDER
On February 21, 2008, the United States renewed its motion for
summary judgment (#157) converting the preliminary injunction
against defendants Irwin Schiff and Cynthia Neun (#63) into a
permanent injunction (#224; Schiffs opposition #240; Schiffs
uncontested issues of fact #241; Schiffs supplement to
opposition #245; Neuns opposition #232; Neuns errata
to opposition #233; Neuns supplement to opposition #234;
Neuns second supplement to opposition #246; reply # 244,
Neuns rejoinder to reply #247).
Summary judgment is appropriate only if the pleadings, the
discovery and disclosure materials on file, and any affidavits
show that there is no genuine issue as to any material fact and
that the movant is entitled to judgment as a matter of law.
Fed.R.Civ.P. 56c. In determining whether summary judgment is
appropriate, we view the facts in the light most favorable to the
nonmoving party and draw reasonable inferences in favor of that
party. Scheuring v. Traylor Bros., Inc.,476 F.3d 781, 784 (9th
Cir. 2007) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
255 (1986)). To defeat summary judgment, the opposing parties
must make a showing sufficient to establish a genuine dispute of
a material fact regarding the existence of the essential elements
of [the] case that [they] must prove at trial. Galen v.
County of Los Angeles, 477 F.3d 652, 658 (9th Cir.2007) (citation
omitted). On a motion for summary judgment, it is not the
province of a district court judge to weigh the evidence.
Anderson, 477 U.S. at 255 (Credibility determinations, the
weighing of the evidence, and the drawing of legitimate
inferences from the facts are jury functions, not those of a
judge, whether [she or] he is ruling on a motion for summary
judgment or for a directed verdict.).
In its order granting a preliminary injunction (#63), the court
enjoined Schiff and Neun from promoting an abusive tax program.
United States v. Schiff, 269 F. Supp.2d 1262 (D. Nev. 2003).
Among its conclusions, the court found that Schiff and Neun had
violated 26 U.S.C. § 6701 by preparing false tax returns
and other tax-related documents for their customers, and
that Schiff and Neun knowingly, and as a matter of employment,
participated directly in the sale and promotion of the scheme
which involved over 3,000 individuals and an estimated $56
million in attempted tax evasion. Id. at 1271-72. The Ninth
Circuit affirmed this courts decision. United States v.
Schiff, 379 F.3d 621 (9th Cir. 2004).1
The court has, on numerous occasions and at Schiff and Neuns
request, extended dispositive motion and briefing deadlines and
discovery. The court also cautioned Schiff and Neun that the
relevant issues of fact to be addressed in the case included:
[W]hether they organized and sold an arrangement that they
claimed enabled customers to legally stop paying federal taxes;
whether they assisted others in filing frivolous zero
income tax returns, paying no income taxes, or stopping all
taxes from being withheld from wages and other income sources;
whether they prepared tax returns and related documents of
customers in which they falsely claimed that the customers had no
income and therefore no federal tax liability; and whether they
assisted others to impede and obstruct the enforcement of the
internal revenue laws by sending frivolous correspondence to the
IRS and by filing frivolous lawsuits, petitions and hearing
requests.
In their oppositions and papers, Schiff and Neun have made no
effort to rebut these, and other, material facts. Instead, Schiff
and Neun assert legal arguments which were rejected by the court
in the preliminary injunction.
Neun argues that the court lacks subject matter jurisdiction and
should dismiss the United States complaint. In its
preliminary injunction order, the court ruled that § 7408 of the
Internal Revenue Code authorized it to enjoin any person from
further engaging in any conduct subject to penalty under
§§ 6700 or 6701. 269 F. Supp.2d at 1265. The court also held
that § 7407 authorized it to enjoin a tax preparer who has
engaged in conduct subject to penalty in violation of §§ 6694
and 6695. Neun argues that the court lacks jurisdiction because
the United States did not provide defendants with proper notice
that they were engaging in a fraudulent scheme. No such notice is
required by §§ 7407 or 7408, however. In any event, as the
court indicated in the preliminary injunction order, the United
States provided defendants with ample notice of violation.
In his opposition to summary judgment, Schiff persists in arguing
that paying income taxes is voluntary. The court has previously
rejected various angles of Schiffs position, which stem
from the conceptual infirmities, rejected time and again by
the courts, that there is no legal obligation to pay income
taxes. 269 F. Supp.2d at 1268-69. 2 Schiffs latest
arguments are more of the same. Schiff criticizes the courts
preliminary determinations that his programs contain false or
fraudulent claims, and maintains that neither the government nor
the court have ever specifically identified anything false or
fraudulent in his materials. The courts preliminary
injunction, however, went into detail about the fraudulent and
misleading content of Schiffs programs and materials. The
Ninth Circuit, throughout its opinion, also makes specific
reference to Schiffs misleading and fraudulent claims. 379
F.3d 626-630.
Schiffs attempt to ground his legal theories on certain
discovery propounded to the United States is likewise unavailing.
During discovery, the court ruled that [w]hile Schiff is
not precluded from arguing to the court the validity of the
revenue laws, or the IRS actions based on them, Schiff will
not be allowed to debate through discovery his tax-based theories
or positions. (#159 and #183). Subsequently, the court
ruled that the United States had complied with its discovery
obligations, and that Schiff had not legally justified the
relevance or materiality of his requests. Schiff has failed to
present a meritorious challenge to the validity of the revenue
laws or the United States action based on them.
The United States has made a showing that, based on the record in
this case, no genuine issue of material fact exists, and it is
entitled to judgment as a matter of law. Accordingly,
THE COURT HEREBY ORDERS that the United States motion for
summary judgment of permanent injunction against defendants
Schiff and Neun (#224) is GRANTED.
THE COURT FURTHER ORDERS that within thirty days from the filing
of this order, the United States shall file a proposed judgment
of permanent injunction.3
DATED this _____ day of September, 2008.
______________________________
Lloyd D. George
United States District Judge