United States v. Simcho ( 2009 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
May 15, 2009
No. 08-10733
Summary Calendar Charles R. Fulbruge III
Clerk
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
DAVID M. SIMCHO; VICTORIA J. SIMCHO,
Defendants-Appellants.
Appeal from the United States District Court
for the Northern District of Texas
No. 4:06-CV-618
Before SMITH, STEWART, and SOUTHWICK, Circuit Judges.
PER CURIAM:*
The United States sued David Simcho to reduce his tax liabilities to judg-
ment and to foreclose. The district court granted the government’s motion for
summary judgment and denied Simcho’s various motions to stay. Simcho ap-
peals, and we affirm.
*
Pursuant to 5TH CIR . R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .
R. 47.5.4.
No. 08-10733
I.
Simcho did not file federal income tax returns from 1986-1994. In Septem-
ber 1996, the Internal Revenue Service (“IRS”) assessed Simcho for his 1986 and
1990 tax liability; in May 1997, it did the same for 1987-1994. Eight years later,
it filed a notice of a tax lien for nearly $300,000 based on the tax liability.1
Before the IRS filed the lien, Simcho purchased a house in Southlake, Tex-
as (“the Southlake property”). He refinanced it in March 2005 and June 2006.
The government brought this lawsuit to foreclose on the Southlake property 2 and
moved for summary judgment.
Simcho requested a stay until the final resolution of a criminal case re-
garding failure to pay federal taxes from 1999-2002. He also claimed that the
government had seized his financial records for the criminal case and that he
needed access to them to oppose summary judgment. In response, the govern-
ment filed a declaration for Special Agent Tracy Wong, who testified that the
only documents taken from Simcho related to taxes not filed from 1993 onward
and that Simcho had been permitted to scan all the documents to determine
whether copies were needed for his civil case. In addition, Wong stated that
there were only eights items in the seized documents that related to Simcho’s
taxes from 1986-1994, and all those items were delivered to Simcho’s counsel.
The court denied the request for a stay, granted summary judgment, ordered the
Southlake property sold, and denied Simcho’s motion to stay its order.
II.
The district court was right to deny a stay. “The decision whether . . . to
stay civil litigation in deference to parallel criminal proceedings is discretionary.
1
It also included Simcho’s tax liability from 1995.
2
Option One and Dallas Home Loans were joined, because they may have had a claim
on the property.
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No. 08-10733
Accordingly, we review the denial of a motion to stay for abuse of discretion.”
Microfinancial, Inc. v. Premier Holidays Int’l, Inc., 385 F.3d 72, 77 (1st Cir.
2004) (citations omitted).
There is no general federal constitutional, statutory, or common law
rule barring the simultaneous prosecution of separate civil and
criminal actions by different federal agencies against the same de-
fendant involving the same transactions. Parallel civil and criminal
proceedings instituted by different federal agencies are not uncom-
mon occurrences because of the overlapping nature of federal civil
and penal laws. The simultaneous prosecution of civil and criminal
actions is generally unobjectionable because the federal government
is entitled to vindicate the different interests promoted by different
regulatory provisions even though it attempts to vindicate several
interests simultaneously in different forums.
F.D.I.C. v. Maxxam, Inc., 523 F.3d 566, 592 (5th Cir. 2008) (citing SEC v. First
Fin. Group, 659 F.2d 660, 666-67 (5th Cir. Oct. 1981)). “[T]he granting of a stay
of civil proceedings due to pending criminal investigation is an extraordinary
remedy, not to be granted lightly.” In re Who’s Who Worldwide Registry, Inc.,
197 B.R. 193, 195 (Bankr. E.D.N.Y. 1996) (citations omitted).
The court did not abuse its discretion. Critically, the court properly deter-
mined that the criminal case involved tax returns from 1999-2002; the civil case,
1986-1995. In addition, Simcho has failed to delineate how the civil case’s con-
clusion could affect his criminal case; the government will be able to use the
same evidence regarding his tax returns (or lack thereof) from 1986-1995 with
or without resolution of the civil case.3 Finally, Simcho has refinanced his house
twice for $90,000, and interest continues to accrue on the property, which gives
the government a substantial interest in moving forward with its civil claim.
3
Simcho’s argument that a stay should be granted because the outcome of the trial
could be used against him in his upcoming criminal trial is weakened by the fact that the
evidence could likely be used regardless of whether his civil trial had concluded. To the degree
this evidence would be given more weight post-trial rather than pre-trial, this concern is out-
weighed by the government’s substantial interest in proceeding to trial.
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No. 08-10733
The court properly balanced these interests and denied the stay.
III.
The district court properly granted summary judgment. The government
submitted copies of IRS Form 4340, which demonstrated that the IRS prepared
substitute returns for Simcho for 1986-1994. “IRS Form 4340 constitutes valid
evidence of a taxpayer’s assessed liabilities and the IRS’s notice thereof.” Perez
v. United States, 312 F.3d 191, 195 (5th Cir. 2002) (footnote omitted). Simcho
submitted no evidence to rebut the validity of those tax assessments. The IRS’s
assessment is given “a presumption of correctness” and places “the burden on
the taxpayer ‘to prove by a preponderance of the evidence that the Commission-
er’s determination was erroneous.’” United States v. Lochamy, 724 F.2d 494,
497-98 (5th Cir. 1984) (quoting Carson v. United States, 560 F.2d 693, 696 (5th
Cir. 1977)). Simcho’s failure to submit evidence means that he did not meet this
burden.
Simcho inaccurately alleges that the evidence he needed to contest the
IRS’s prepared returns was not available to him. First, the IRS seized only docu-
ments relating to taxation from 1993 onward. Nothing stopped Simcho from pre-
paring a defense for the IRS’s tax assessments from 1986-1992. Second, the IRS
returned eight documents from Simcho’s criminal trial and allowed Simcho to
make copies of any documents seized. Simcho presents no evidence to demon-
strate the court erred in making these findings.
IV.
Simcho contends the district court improperly foreclosed on the Southlake
property in contravention of Texas’s homestead exemption. The court properly
noted, however, that United States v. Rodgers, 461 U.S. 677, 700-02 (1983), al-
lows a court to foreclose on real property covered by the Texas exemption.
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No. 08-10733
V.
Simcho argues that the court erred in denying his motion to stay the judg-
ment pending appeal. We review for abuse of discretion. See Wildmon v. Ber-
wick Universal Pictures, 983 F.2d 21, 23 (5th Cir. 1992). “The party who seeks
a stay must show: (1) likelihood of success on the merits, (2) irreparable injury
if the stay is not granted, (3) absence of substantial harm to the other parties
from granting the stay, and (4) service to the public interest from granting the
stay.” Hunt v. Bankers Trust Co., 799 F.2d 1060, 1067 (5th Cir. 1986). Simcho
urges irreparable injury from the violation of his constitutional right to silence.
The court properly denied the stay. Simcho had no likelihood of success
on the merits. The court did not abuse its discretion.
AFFIRMED.
5