Beeman Redux - Take Out Your Dead!

[Joey Smith]

U.S. v. Beeman, 2011 WL 3021789 (W.D.Pa., Slip Copy, July 22, 2011).

United States District Court,

W.D. Pennsylvania.

UNITED STATES of America, Plaintiff,

v.

Ebert G. BEEMAN, et al., Defendants.

No. 1:10–cv–237–SJM.

July 22, 2011.

MEMORANDUM OPINION AND ORDER

McLAUGHLIN, SEAN J., District Judge.

*1 This case was commenced on September 22, 2010 when the United States filed its complaint seeking, among other things, to reduce to judgment various assessments made against Defendant Ebert G. Beeman ("Ebert") for unpaid federal income taxes and statutory additions relative to tax years 1994, 1996, 1997, and 2002 through 2006. Apart from the foregoing relief, the complaint seeks to: (a) foreclose on the corresponding federal tax liens which the United States holds against certain real properties (referred to herein as the "Four Real Properties") FN1 allegedly owned by Ebert, (b) sell the properties, and (c) distribute the proceeds in accordance with the rights of the parties, with amounts attributable to Ebert's interests to be paid to the United States in satisfaction of his unpaid federal tax liabilities. Finally, the Government seeks to (i) obtain a determination that certain entities controlled by Ebert are his nominees or alter egos and/or (ii) obtain a declaration that certain transfers relating to these properties were fraudulent transfers or sham transactions.FN2

FN1. The properties in question are all located in Waterford, Pennsylvania within the County of Erie at the following addresses: (i) 12744 Route 19; (ii) 12752 Route 19; (iii) 12803 Route 19; and (iv) 777 Old State Road. All four properties are situated within the geographical boundaries of this Court's jurisdiction.

FN2. This Court has subject matter jurisdiction over the instant lawsuit by virtue of 28 U.S.C. secs. 1331, 1340, and 1345 and 26 U.S.C. sec. 7402(a).

Aside from Ebert, the named Defendants in this action include Ebert's parents, Howard and Lillian Beeman, and two limited liability companies organized under the laws of New Mexico and wholly owned by Ebert— to wit, Fifth Third Financial, LLC ("Fifth Third") and Autumn Frost, LLC ("Autumn Frost"). These parties were named as Defendants because it was thought by the Government that some or all of these Defendants might attempt to assert an interest in the Four Real Properties. In fact, each of the Four Real Properties is titled in the name of Defendant Fifth Third; however, the United States asserts that it is entitled to foreclose upon the properties because Fifth Third is merely Beeman's nominee.

Following the commencement of this action, summonses were issued and, along with the complaint, were served on all Defendants. Defendant Lillian Beeman was initially served on October 14, 2010, when she was personally given a copy of the complaint and summons at a bowling alley located in Waterford. ( See Doc. No. [5].) Lillian Beeman subsequently filed an "answer" [15] in which she acknowledged residing at 777 Old State Road (one of the Four Real Properties at issue) but seemingly disclaimed any ownership interest in Ebert's properties. Lillian Beeman further indicated that, although she resides at 777 Old State Road, she receives her mail at 781 Old State Road (not one of the Four Real Properties at issue here).

According to the Government's proof of service, Howard Beeman was served, and Lillian Beeman was re-served, on November 5, 2010, when copies of the complaint and summonses for both Defendants were given to Lillian Beeman at 781 Old State Road. ( See Doc. Nos. [17] and [19].) Howard Beeman failed to enter an appearance, file a pleading, or otherwise defend the action. Defendants Fifth Third and Autumn Frost similarly failed to properly enter an appearance, plead, or otherwise defend the action. Accordingly, defaults were entered against these Defendants on December 3, 2010[21] pursuant to Fed.R.Civ.P. 55(a). FN3

FN3. Ebert later moved to set aside the defaults entered against Fifth Third and Autumn Frost on the ground that he had personally answered the complaint on their behalf [27]; however, this Court denied the motion on the ground that the corporate Defendants could not be represented pro se by Ebert Beeman, a non-lawyer, and had to instead enter an appearance through legal counsel. ( See Mem. Op. of 6/30/11 [39] at pp. 13–14.)

*2 On June 30, 2011, this Court entered a Memorandum Opinion and Order [39] which disposed of various motions and, among other things, granted summary judgment in favor of the United States with respect to Count I of the complaint. In accordance with this ruling, a separate Order of Judgment [40] was entered that same date ordering, adjudging, and decreeing "that Defendant Ebert G. Beeman is indebted to the United States for unpaid income taxes for the taxable years 1994, 1996, 1997, and 2002 through 2006 in the amount of $2,124,396.80, as of November 15, 2010 with interest accruing after that date according to law until paid." ( See Doc. No. [40].) On July 6, 2011, this Court entered an order [43] certifying the June 30 Order of Judgment as a final, appealable judgment in accordance with Fed.R.Civ.P. 54(b).

A.

Still pending before the Court, however, is the United States' second motion for summary judgment [29] relative to Counts II through VI of the complaint. Count II of the Government's complaint seeks an order adjudging and decreeing: (i) that the United States has valid and subsisting federal tax liens on all of Ebert's property and rights to property, including his interest in the Four Real Properties; (ii) that any putative interests in the Four Real Properties on the part of Fifth Third, Autumn Frost, Howard Beeman, or Lillian Beeman are void; and (iii) that the federal tax lien attaching to Ebert's interest in the Four Real Properties be foreclosed upon and the proceeds applied toward Ebert's tax liabilities for the years in question. Count III seeks an order adjudging and decreeing that Fifth Third is the nominee or alter ego of Ebert Beeman. Counts IV and V seeks orders setting aside, respectively, Ebert's putative transfer of his interest in the Four Real Properties to Fifth Third and his transfer of a mortgage interest in the properties located at 12744 and 12752 Route 19 to Autumn Frost on the ground that these transfers were fraudulent. Count VI seeks an order adjudging and decreeing that the various transfers between Ebert and the other named Defendants are sham transactions and that Ebert is the true and sole owner of the Four Real Properties. In actuality, a grant of summary judgment in favor of the United States relative to Counts II and III of the complaint would render the remaining counts moot, as Counts IV through VI merely present alternative legal theories in support of the Government's case.

The Defendants were directed to respond to this second motion for summary judgment on or before March 17, 2011; however, no responsive documents have been filed to date by Defendants Howard Beeman, Lillian Beeman, Fifth Third, or Autumn Frost. Ebert Beeman also did not file any documents responding directly to the Government's second motion for summary judgment, although he did file a motion [32] and supporting briefs ( [36] and [38] ) directed at the Government's initial motion for summary judgment relative to Count I.

*3 In my June 30, 2011 Memorandum Opinion and Order, I evaluated the merits of the United States' second motion for summary judgment in light of the record as it then stood. ( See Mem. Op. dated 6/30/11 [39] at pp. 23–29.) I found that the evidence of record did not give rise to any genuinely disputed issue of material fact relative to the Government's request for summary judgment on Counts II and III of the complaint. Nonetheless, this Court indicated that it would defer entering judgment for a period of twenty (20) days, during which time Defendants Fifth Third and Autumn Frost would have to secure legal counsel if they wished to defendant the instant litigation. I also directed that Defendants Fifth Third, Autumn Frost, and Howard Beeman show cause, on or before the expiration of the twenty (20) days, why the Government's motion for summary judgment relative to Counts II and III should not be granted. I specifically indicated that failure by any of these Defendants to show cause as directed would be construed by the Court as an indication that said Defendant has no intention of defending this litigation.

Thereafter, on July 18, 2011, the Court received a letter [46] from an individual purporting to be Defendant Howard Beeman and stating as follows:

Ebert Beeman has never paid me for the property on Old State Road. As far as I'm concerned it is still mine! He has paid the taxes and built things on this property, but he has never paid me the money he agreed to pay. I just learned about the action the United States government is attempting to take concerning my property on Old State Road through an article I read in the Erie Times News on 7/9/2011. I bought this property in the 1940's and Ebert Beeman never gave me a dime for it and now the government wants to steal it from me. It is not Ebert's property, it is mine. I have always paid my taxes and I want the government to leave my property alone.

Thank you for your time and protecting my property rights[.]

(See Letter Response filed 7/18/2011 [46] at p. 1.) The letter is signed "Howard Beeman."

This document might prove problematic for the Government's foreclosure action, were it not for the fact that Howard Beeman is deceased. According to an obituary published by the Erie Times News on April 7, 1997 (and appended to this Memorandum Opinion), Howard Beeman died at the age of 75 on April 6, 1997. An Erie Times News article published on July 20, 2011 quotes Defendant Ebert Beeman as denying knowledge of the letter but acknowledging that his father is deceased. (See "Letter from Beeman's deceased father raises questions in tax case," published at http://www.goerie.com/apps/ pbcs.dll/article? AID=2011307209974.) Pursuant to Federal Rule of Evidence 201, judicial notice may be taken of a fact that is "not subject to reasonable dispute in that it is either (1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned." Fed.R.Evid. 201(b) (emphasis added). Based upon the aforementioned April 7, 1997 obituary, this Court will take judicial notice of the fact that Defendant Howard Beeman is, in fact, deceased. The Court further notes that at no point in time since the commencement of this action has any personal representative of Howard Beeman's ever stepped forward to appear in this action or to offer a defense on behalf of his estate.FN4 As for the issue of who supplied the letter purporting to be signed by Howard Beeman, the Court will leave the resolution of that mystery for another day. Suffice it to say that the Court will disregard the letter response filed on July 18, inasmuch as it is clearly inauthentic and, therefore, incapable of supporting the existence of a genuinely disputed issue of material fact.

FN4. The Court notes that, according to the obituary appended to this Memorandum Opinion, Howard and Lillian Beeman were no longer married as of the time of his death.

*4 In sum, based upon the reasons previously set forth in this Court's June 30, 2011 Memorandum Opinion, the Court finds that there is no genuine dispute as to any material fact and that the United States is entitled to judgment as a matter of law with respect to Counts II and III of the complaint. Because Counts IV through VI are rendered moot by this ruling, they need not be addressed. The United States' Second Motion for Summary Judgment will be granted and a separate order of judgment will be entered accordingly.

B.

The Court also notes that, on July 13, 2011, Ebert filed a motion [44] to stay this Court's June 30, 2011 Order of Judgment [40] relative to Count I of the complaint, pending an appeal to the Third Circuit Court of Appeals. Upon consideration of that motion and the Government's response thereto, I find that the motion lacks merit, and it will therefore be denied.

When an appeal is taken, the appellant may obtain a stay of proceedings to enforce a judgment pursuant to Rule 62(d) of the Federal Rules of Civil Procedure, but only by filing a supersedeas bond "given upon or after filing the notice of appeal or after obtaining the order allowing the appeal." Fed.R.Civ.P. 62(d). In such cases, the stay takes effect when the court approves the bond. Id. In this case, Ebert has neither filed a notice of appeal from the June 30 Judgment Order nor posted a bond as required by the rule. Accordingly, a stay of proceedings is inappropriate.

Moreover, to the extent this Court has the discretion to waive the bond requirement, it declines to do so in this case. While our circuit court of appeals has not spoken directly to the issue, some courts within the Third Circuit have held that district judges possess the discretion, in certain cases, to grant a rule 62(d) stay in the absence of a bond. See AMG Nat. Trust Bank v. Ries, Civil Action No. 06–CV–4337, 2008 WL 2312352 at *1 (E.D. Pa. June 4, 2008) (citing authority). However, it is generally recognized that such discretion should be exercised only in exceptional circumstances and where there exists an alternative means of securing the judgment creditor's interest. See id.; Porter v. NationsCredit Consumer Discount Co., Civ. A. No. 03–3768, 2007 WL 674709 at *1 (E.D.Pa. Feb. 28, 2007) (citations omitted); Schreiber v. Kellogg, 839 F.Supp. 1157, 1159 (E.D.Pa.1993).

Among the factors which courts have considered in determining whether a Rule 62(d) stay should be granted in the absence of the appellant posting a supersedeas bond are the following:

(1) the complexity of the collection process; (2) the amount of time required to obtain a judgment after it is affirmed on appeal; (3) the degree of confidence that the district court has in the availability of funds to pay the judgment; (4) whether the defendant's ability to pay the judgment is so plain that the cost of a bond would be a waste of money; and (5) whether the defendant is in such a precarious financial situation that the requirement to post a bond would place other creditors of the defendant in an insecure position.

*5 See Munoz v. City of Philadelphia, 537 F.Supp.2d 749, 751 (E .D. Pa.2008) (citing Dillon v. City of Chicago, 866 F.2d 902, 904–05 (7th Cir.1988)). Although the financial hardship which a bond would impose upon the appellant is an important factor, "the mere prospective inability to pay a judgment is insufficient for a stay without a bond unless the judgment debtor has 'objectively demonstrated his ability to satisfy the judgment and maintain the same degree of solvency through the appellate process.' " AMG Nat. Trust Bank, supra, at *2 (quoting Hurley v. Atlantic City Police Department, 944 F.Supp. 371, 377–87 (E.D.Pa.1996)). See also HCB Contractors v. Rouse & Associates, 168 F.R.D. 508, 512 (E.D.Pa.1995) ("It is the appellant's burden to demonstrate objectively that posting a full bond is impossible or impracticable; likewise it is the appellant's duty to propose a plan that will provide adequate (or as adequate as possible) security for the appellee.") ( quoting Grand Entertainment Group, Ltd. v. Star Media Sales, Inc., No. 86–5763, 1992 WL 114593 at *1–2 (E.D.Pa. May 18, 1992)).

Here, Ebert has failed to offer any information about his financial circumstances, much less has he demonstrated his ability to satisfy the judgment and maintain the same degree of solvency through the appellate process. In short, he has failed to demonstrate the type of exceptional circumstances that would justify waiver of a supersedeas bond.

Moreover, the record in this case, and in other matters before this Court, demonstrate that Ebert has previously engaged in illegitimate machinations in order to evade the IRS's collection efforts. In separate litigation, the Government earlier sought and obtained from this Court an order compelling Ebert to comply with an IRS summons. See United States of America v. Ebert G. Beeman, No. 1:09–cv–158–SJM, 2010 WL 653062 (W.D.Pa. Feb. 19, 2010), aff'd, U.S. v. Beeman, 388 Fed. Appx. 82 (3d Cir. July 28, 2010). In the case at bar, Ebert's own filings, together with the Government's uncontested evidence, establish that Ebert has attempted to evade the IRS's collection efforts by employing empty shell corporations, invoking spurious tax-defier theories, and (in one instance) claiming that the property and business located at 12744 Route 19 were owned by an individual later determined to be a long-deceased signer of the Declaration of Independence.

Given all of the foregoing circumstances, the Court finds that issuance of a Rule 62(d) stay would be inappropriate. Accordingly, the Motion to Stay Pending Appeal will be denied.

An appropriate order follows.

ORDER

AND NOW, to wit, this 22nd Day of July, 2011, for the reasons set forth both in the accompanying Memorandum Opinion and this Court's Memorandum Opinion entered on June 30, 2011[39],

IT IS ORDERED that the United States' Second Motion for Summary Judgment [29] shall be, and hereby is, GRANTED, and, accordingly, a separate Order of Judgment in favor of the United States relative to Counts II and III of the complaint shall be entered forthwith.

*6 IT IS FURTHER ORDERED that the Motion to Stay Pending Appeal [44] filed by Defendant Ebert G. Beeman shall be, and hereby is, DENIED.

[Famspear]

I know there's a joke in there somewhere.......

[littleroundman]

I know there's a joke in there somewhere.......

Only one ?

[Gregg]

and (in one instance) claiming that the property and business located at 12744 Route 19 were owned by an individual later determined to be a long-deceased signer of the Declaration of Independence.

I like that one, shows a little imagination. It reminds me of my own habit of telling telemarketers and other people who assume they must have my phone number that I can be reached @ 202.456.1414 (try it)

Of course, theres a bit of a difference between telling the Pizza Boy that and claiming it to a Federal Judge. Someone really has to explain to me how he isn'g going to jail just for that little stunt.

[ArthurWankspittle]

Ebert Beeman has never paid me for the property on Old State Road. As far as I'm concerned it is still mine! He has paid the taxes and built things on this property, but he has never paid me the money he agreed to pay. I just learned about the action the United States government is attempting to take concerning my property on Old State Road through an article I read in the Erie Times News on 7/9/2011. I bought this property in the 1940's and Ebert Beeman never gave me a dime for it and now the government wants to steal it from me. It is not Ebert's property, it is mine. I have always paid my taxes and I want the government to leave my property alone.

Thank you for your time and protecting my property rights.

Signed
My Dad
Oh....damn....

[notorial dissent]

Adds a whole new dimension to the old voting the graveyard schtick.

[LPC]

According to this local news report, Beeman's now got a real lawyer and is trying to get the district court judge to reconsider his rulings (or something).

Apparently, Beeman has seen the light and "has agreed to follow the law as written and not as interpreted by tax protesters." He wants to file back tax returns, get the IRS to recalculate his taxes, and make a deal to pay his taxes. (He claims that his taxes were overstated by about $1,000,000 for one year because the IRS calculated his gross income based on the gross proceeds of stock sales without regard to basis. We've seen that before, and that's what happens when you don't file returns.)

I suspect it's too late to argue about the amount of the tax liability. The IRS has a valid assessment and is entitled to enforce its lien. Beeman can file his tax returns and claim a refund. That's his remedy.

[Imalawman]

According to this local news report, Beeman's now got a real lawyer and is trying to get the district court judge to reconsider his rulings (or something).

Apparently, Beeman has seen the light and "has agreed to follow the law as written and not as interpreted by tax protesters." He wants to file back tax returns, get the IRS to recalculate his taxes, and make a deal to pay his taxes. (He claims that his taxes were overstated by about $1,000,000 for one year because the IRS calculated his gross income based on the gross proceeds of stock sales without regard to basis. We've seen that before, and that's what happens when you don't file returns.)

I suspect it's too late to argue about the amount of the tax liability. The IRS has a valid assessment and is entitled to enforce its lien. Beeman can file his tax returns and claim a refund. That's his remedy.

If he's never filed, couldn't he file returns and establish liability that way. I know I've done that with clients and its seemed to work.

[LPC]

I suspect it's too late to argue about the amount of the tax liability. The IRS has a valid assessment and is entitled to enforce its lien. Beeman can file his tax returns and claim a refund. That's his remedy.

If he's never filed, couldn't he file returns and establish liability that way. I know I've done that with clients and its seemed to work.

I think that's what I said.

Beeman never filed, so it seems that the IRS prepared "substitutes for returns" and then sent notices of deficiencies based on the SFRs. Beeman didn't respond to the notices, so the IRS assessed the taxes and is now seeking to collect the taxes by getting a judgment against Beeman and then foreclosing on the judgment in order to sell the properties he owns.

My understanding is that Beeman can still file tax returns to establish is true liabilities, but that's not necessarily going to stop the foreclosures already under way. To the extent that the proceeds of the foreclosures exceed Beeman's tax liabilities as eventually determined by the tax returns he eventually files, Beeman can get a refund.

It's quite possible that, when taxpayers have failed to file and the IRS starts judgment and foreclosure proceedings, the IRS will suspend the foreclosures until the returns have been processed. But I wouldn't expect the IRS to do that for an A-hole who has fought them every step of the way arguing tax protester trash and apparently presenting false evidence as well. Under those circumstances, the IRS has every legal (and, I think, moral) right to complete foreclosure, sell the properties, and then issue a refund if and when one is found to be due.

[ArthurWankspittle]

Is there a point where if Beeman is fast enough with his real figures and they leave him enough to keep the property(ies) he could get the foreclosures stopped? Or say he needs to sell a couple and not all. I guess it's all down to how much he has "seen the light" and is now playing straight.

[The Observer]

It's quite possible that, when taxpayers have failed to file and the IRS starts judgment and foreclosure proceedings, the IRS will suspend the foreclosures until the returns have been processed. But I wouldn't expect the IRS to do that for an A-hole who has fought them every step of the way arguing tax protester trash and apparently presenting false evidence as well.

Your first thought is correct. The IRS should do so. Seizure and sale procedures require that the IRS has established that the tax being collected is the correct tax. As you point out, there is the legal assessment that the IRS could base their sale on - that would be the correct tax. But if Beeman has filed returns with the IRS, it sets up the situation that the IRS will have to consider the validity of their assessment versus what Beeman is claiming. They will, at the least, have to look at the returns and see if the figures Beeman is proposing approach economic reality. And if so, then there will be doubt about the tax liability and how much the IRS should be collecting.

Of course, if Beeman still owes taxes on the returns that we are assuming he is filing (and from the article it appears that his attorney is claiming something in the area of $45k) and cannot pay, it will be all rather academic in regards to whether the sale happens.

Is there a point where if Beeman is fast enough with his real figures and they leave him enough to keep the property(ies) he could get the foreclosures stopped? Or say he needs to sell a couple and not all. I guess it's all down to how much he has "seen the light" and is now playing straight.

Anything is possible, provided that Beeman has excellent timing. When it comes to seizure and sale of real property, in particular personal residences, federal judges have been known to be very patient before ordering the sale to happen. But I note two things from the article:

Andrezeski claimed Kunofsky said he would help Beeman if Beeman provided an accurate list of his properties, a statement of the value and location of Beeman's checking account and financial institutions where Beeman did business, and the value and location of Beeman's IRA account.

Andrezeski said he sent Kunofsky Beeman's financial information as requested, but Kunofsky then told Andrezeski "he had no further intention of working or interacting" with Andrezeski.

Andrezeski said Beeman tried to withdraw his appeal, but the paperwork he submitted was deemed incorrect by court officials in the 3rd U.S. Circuit Court of Appeals.

Since it appears that Beeman and/or his attorney might still be playing games, I wouldn't hold much hope for Beeman saving his home on the range.

[Lambkin]

http://www.goerie.com/apps/pbcs.dll/art ... 1312229846

For years, Erie County Councilman Ebert Beeman managed to avoid prison as he racked up convictions for driving under a suspended driver's license.

That risky game of legal brinkmanship with the government ended Thursday in Erie County Court as a pair of handcuffs locked on Beeman's wrists.

[The Observer]

Andrezeski told Domitrovich that Beeman now knows he has made big mistakes and followed bad advice. Beeman now lives with his 89-year-old mother in a trailer and has lost his belongings to the IRS, Andrezeski said.

Looks like the issue of the house has been finalized.

[Famspear]

Here's a TV news report from earlier this month to the effect that the IRS threw the personal belongings from Beeman's house into a dumpster.

http://www.youtube.com/watch?v=yI3xuFLA8DA

[notorial dissent]

Unless I have missed a page in here somewhere, the IRS seizing the property was not a surprise and had come with a good deal of warning and notice that they were foreclosing on the property. That being the case, he had more than sufficient time to have gotten his stuff out of the premises before it was seized, and didn't. Having taken the actions he had taken up to that point, which was to do what he had done all along, nothing. I would suspect that the IRS, rightly, considered whatever had been left in the house as abandoned and theirs to dispose of as they saw fit. I can't see any particular reason to feel even the least bit of sympathy for him, as he has brought all of his multitudinous troubles down on himself, all by his own hand.