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United States v. Planes

United States District Court, M.D. Florida, Tampa Division

July 11, 2019

UNITED STATES, Plaintiff,
v.
WILLIAM PLANES, et al., Defendants.

          FINDINGS OF FACT, CONCLUSIONS OF LAW, PRELIMINARY INJUNCTION, AND ORDER

          STEVEN D. MERRYDAY UNITED STATES DISTRICT JUDGE.

         In 2016, the United States sued Regina Planes and claimed that South Capital Construction, Inc., controlled by William Planes, had failed to pay employment taxes and, while tax liability mounted, fraudulently transferred about $600, 000 to Regina Planes. (Doc. 1 at ¶¶ 22-24) Before the lawsuit and to escape liability for South Capital's employment taxes, Regina Planes denied under oath to the IRS that she was a “financially responsible officer” of South Capital. But, attempting to defend against the United States' fraudulent transfer claim, Regina Planes contradicted her statement to the IRS, affirmed that she was a financially responsible officer, and asserted that South Capital paid her for meaningful services. The district court found “very troubl[ing]” Mrs. Planes's “repeated efforts at trial to undermine prior sworn testimony” and found unconvincing Regina Planes's attempt to explain that work performed at a school and a veterinary center “was actually on behalf of a construction company.” (United States v. South Capital, 8:16-cv-705, Doc. 139 at 6)

         After a bench trial, the district court in South Capital entered a $622, 226 judgment against Regina Planes and found that the Planeses - to defeat tax collection - had “intentionally” engineered the following “fraudulent” scheme:

By managing the [the Planeses'] businesses while retaining no ownership interest in them, Mr. Planes ensured that he would be the person assessed with trust fund recovery penalties. However, by placing the assets in Mrs. Planes's name, the couple also ensured that Mr. Planes lacked funds to satisfy the penalties. This structure has allowed the couple to accrue substantial liabilities that have been virtually impossible to collect.

(South Capital, Doc. 139 at 6)

         In this action, the United States sues (Doc. 1) to disregard the corporateness of entities on which William and Regina Planes allegedly rely to thwart tax collection. A temporary restraining order (Doc. 6) prohibits the Planeses - and anyone acting on behalf or in concert with the Planeses - from transferring the entities' assets. Two hours after an IRS agent served Regina Planes with the temporary restraining order, William Planes transferred $160, 000 - 99% of the entities' money - to a third-party. A contempt hearing followed.

         Although I received the evidence - and arrived at my conclusions in this action without consideration of the South Capital action, the evidence in this action clearly and convincingly establishes that the Planeses manifest the same penchant for eluding, and the same willingness to elude, creditors that was revealed in the South Capital action. In other words, the Planeses are “at it again.” The details follow.

         BACKGROUND

         Under 26 U.S.C. § 6672, an employer who willfully fails to remit an employee's withholding to the IRS is liable to pay a “trust fund recovery penalty.” From 2000 to 2012, at least ten entities managed by William Planes failed to remit employee withholdings, and the IRS has assessed William Planes with trust fund recovery penalties exceeding $9, 000, 000. (Doc. 1 at ¶¶ 132-229)

         The United States alleges that William Planes has hidden the Planes's assets, which include several companies, properties, and vehicles, by scattering title among Regina Planes and a network of LLCs owned by two irrevocable trusts, which William Planes allegedly formed a day after the IRS assessed William Planes with a $529, 000 tax penalty. (Doc. 1 at ¶ 9) Although the trust formation documents limit the Planeses' ability to spend the trusts' assets, William Planes allegedly ignores the limits, disregards the corporateness of the trusts and the LLCs, and treats the trusts' assets as unencumbered personal property. (Doc. 1 at ¶ 51) Also, the United States alleges that the Planeses funnel the trusts' assets to Quality Holdings of Florida, Inc., which Regina Planes wholly owns. (Doc. 1 at ¶ 51)

         On November 5, 2018, the United States sued (Doc. 1) to reduce William Planes's tax liability to judgment; to disregard the corporateness of the trusts, the LLCs, and Quality Holdings; and to apply the entities' assets to the judgment. A November 6, 2018 order (Doc. 6) grants the United States' motion for a temporary restraining order, enjoins the Planeses from transferring the entities' assets, and schedules for November 19, 2018, a hearing on the United States' motion for a preliminary injunction.

         A business day before the preliminary-injunction hearing, the defendants filed (Doc. 14) an emergency motion to continue the hearing to January 2019 and stipulated (Doc. 15) to the temporary restraining order's remaining in effect until further order. A November 16, 2018 order (Doc. 28) grants the emergency motion. At the conclusion of the hearing, the parties agreed to mediate. After an eighty day delay for mediation, the mediator declared (Doc. 137) an impasse, and the parties supplemented (Docs. 144, 152, 171) the preliminary-injunction briefing.

         During the pendency of the mediation, the United States moved (Doc. 127) for an order requiring the defendants to explain why William Planes's transferring $160, 000 from three LLCs to Coast-to-Coast was not contemptuous of the temporary restraining order. The United States appended to the motion evidence showing that (1) at about 1:00 p.m. on November 7, 2018, an IRS Officer served Regina Planes with the temporary restraining order, (2) at 1:41 p.m. Regina Planes attempted to call William Planes, (3) at 1:43 p.m. William Planes called and spoke with Regina Planes for seven minutes, (4) at 1:50 p.m. William Planes tried three times to call two lawyers, (5) at 1:55 p.m. William Planes called and spoke with Regina Planes for five minutes, and (6) at 3:20 p.m. William Planes transferred to Coast-to-Coast $160, 000 from three LLCs bound by the temporary restraining order. (Doc. 127 at 3-4)

         The United States argues that the rapid calls to his lawyers and the timing and amount of the transfer demonstrate that William Planes learned about the temporary restraining order during the 1:43 p.m. call with Regina Planes. Also, the United States contends that Coast-to-Coast's receiving the transfer and later spending the transferred money constitutes contempt. The United States claims that William Planes has created within Coast-to-Coast a “slush fund” on which William Planes draws to lease luxury automobiles, to pay for household maintenance, and to pay the Planeses' legal expenses. (Doc. 127 at 5-6) Further, the United States contends that, because William Planes is a director of Coast-to-Coast and used a Coast-to-Coast email account to transfer the money, the agent-principal relation imputes to Coast-to-Coast knowledge about the temporary restraining order. (Doc. 127 at 7)

         Finally, the United States contends that Gene Santella's receiving payment from Coast-to-Coast constitutes contempt. The United States asserts that Santella - the owner and president of Coast-to-Coast - learned about the temporary restraining order before the transfer, knew that William Planes contemptuously transferred the $160, 000, and knew that Coast-to-Coast paid Santella with “frozen assets.” (Doc. 127 at 5) The United States requests (Doc. 127) an order finding William Planes, Santella, and Coast-to-Coast in contempt and compelling Santella and Coast-to-Coast to repay the $160, 000.

         An April 15, 2019 order (Doc. 141) grants the United States' motion and requires William Planes, Santella, and Coast-to-Coast to explain why the $160, 000 transfer and later payments were not contemptuous of the temporary restraining order. William Planes responds (Doc. 163) that Regina Planes never told him about the temporary restraining order. Santella and Coast-to-Coast respond (Doc. 162) that neither learned about the temporary restraining order until the day after the transfer and that the spending by Coast-to-Coast - an entity not mentioned in the temporary restraining order - cannot constitute contempt.

         FINDINGS OF FACT

         An assessment of both the evidence presented and the credibility of the witnesses at the June 5, 2019 evidentiary hearing yields the following findings.

         The Transaction and the Temporary Restraining Order

         The United States has assessed against William Planes tax penalties exceeding $9, 300, 000. (Tr. at 121:4-9) On May 6, 2003, a day after the IRS assessed a $529, 000 tax penalty against William Planes, the Planeses created the William Planes 2003 Irrevocable Trust and the Regina M. Planes 2003 Irrevocable Trust. (Tr. at 156:20-22; Doc. 3-7 at 2, 11) The trusts collectively own six LLCs: Corklico LLC, 3-22-18 LLC, 2801 Corner Holdings LLC, 32801-15 Holdings LLC, 2801 Keystone LLC, and Trinity Corner LLC. (Docs. 3-3, 3-4, 3-5) William Planes is the manager and CEO of Corklico LLC, and Santella is the manager of 2801 Keystone LLC, 2801 Corner Holdings, and 32801-15 Holdings LLC. (Docs. 5-16; 63 at 19-22) Also, Regina Planes wholly owns Quality Holdings of Florida, Inc., which ceased business in 2016. (Doc. 3-13) Bank records and other documents reveal that William Planes directs the LLCs' business, which primarily comprises renting, leasing, and selling real property.

         On November 1, 2018, William Planes sold an office building in Palm Harbor, Florida. (Tr. at 136:13-23) On November 2, 2018, the purchaser wired $213, 611.45 to 2801 Corner Holdings. (Doc. 127-10) On November 2, 2018, William Planes transferred from 2801 Corner Holdings $101, 000 to 32801-15 Holdings and $20, 000 to 2801 Keystone. (Docs. 127-9 at 2; 127-11 at 2)

         On November 5, 2018, the United States sued (Doc. 1) to reduce to judgment the taxes assessed against William Planes and to disregard the corporateness of the trusts, the LLCs, and Quality Holdings. The same day, the United States moved (Docs. 3, 5) for a temporary restraining order and a preliminary injunction.

         A November 6, 2018 order (Doc. 6) grants the United States' motion for a temporary restraining order and states:

Effective NOVEMBER 6, 2018, the defendants-as well as anyone acting on their behalf or in concert or participation with them-are enjoined from directly or indirectly encumbering, liquidating, transferring, spending, diminishing, or otherwise disbursing the assets of any of the following entities:
A) The William Planes 2003 Irrevocable Trust;
B) The Regina M. Planes 2003 Irrevocable Trust;
C) Corklico LLC;
D) 3-22-18 LLC;
E) 2801 Corner Holdings LLC;
F) 32801-15 Holdings LLC;
G) 2801 Keystone LLC;
H) Trinity Corner LLC; and
I) Quality Holdings of Florida Inc.

         Morris serves Regina Planes

         At the June 5, 2019 hearing, Bryan Morris, an IRS Revenue Officer, testified about serving Regina Planes with the temporary restraining order. On November 7, 2018, Morris drove to the Planeses' residence in Tarpon Springs, Florida. (Tr. at 13:2-3) Soon after arriving at the Planeses' residence, Morris saw an SUV backing-out the garage. (Tr. at 13:5-6) Morris walked toward the SUV, and the driver stopped the SUV and lowered the driver's side window. (Tr. at 13:7-8) Morris asked the driver whether she was Regina Planes, and Regina Planes responded “Yes.” (Tr. at 13:9) Morris stated that he had “some documents for [Regina Planes] from the Department of Justice” and asked Regina Planes “whether she would accept service of the documents for herself, for Mr. Planes, . . . and [for] Ana Planes.” (Tr. at 14:6-8) Regina Planes responded that she would accept the documents and instructed Morris to place the documents in the trunk of the SUV. (Tr. at 14:8-10) Morris struggled to find the latch to open the trunk, and Regina Planes exited the SUV and pulled the latch. (Tr. at 14:11-14) While Regina Planes opened the trunk, Morris retrieved three binders, each of which contained a copy of the complaint, the summons, and the temporary restraining order. (Tr. at 11:20-22) The exterior of each binder displayed a cover sheet, and the center of each cover sheet ...


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