Pissed off taxpayer puts out press release

[Demosthenes]

Three IRS Employees and US Attorney Sued for $9 Million Tax Fraud
Written by Michael Henry

CHICAGO, Mar 28, 2007 -- /prbuzz/ --- High-profile United States Attorney Patrick Fitzgerald's office is defending three employees of the Internal Revenue Service (IRS) and U.S. Attorney Lynne Murphy for their part in a purported $9 million tax fraud. They have been sued in the Northern District of Illinois for allegedly fabricating and falsifying IRS tax records.

According to the suit, one Michael Henry purchased $8 million of stock in American Metrocomm Communications, by paying $2 million cash and giving the company a non-recourse note in the amount of $6 million. Under current tax law, and as upheld in the landmark case of Crane v. Commissioner, 331 U.S. 1, 67 S.Ct. 1047(1947), a non-recourse debt is treated as a recourse debt for tax purposes. However, according to the suit Ms. Murphy (following the orders of her supervisor Michael J. Kearns and Eileen J. O'Connor, the Assistant Attorney General) instructed the IRS employees to ignore this ruling, as well as Commissioner v. Tufts, 461 U.S. 300(1983), and enter fraudulent information into the IRS computers showing Henry earning, instead of owing, $6 million. This caused the IRS system to erroneously create a deficiency notice for insufficient tax payments in excess of $9 million.

Henry has sued the United States Department of Justice, the IRS and all individuals involved, for fabricating and falsifying this deficiency notice and for ignoring the Supreme Court rulings. Based on the evidence that the IRS claims it has in its possession Goldman Sachs, Cisco Systems and Henry Paulsen along with the IRS and the U.S. Government withheld records and evidence in the Delaware bankruptcy filing of American Metrocomm Corporation. Henry is claiming civil damages for legal malpractice, bankruptcy fraud and damages against the government and its individual employees for creating and falsifying government tax records and for withholding documents from the bankruptcy court.

However, Ms. Murphy maintains that a U.S. attorney can commit fraud and ignore Supreme Court rulings while working for the U.S. Government, because the U.S. Government and its employees are immune to lawsuits under so-called “sovereign immunity.” In the meantime, Ms. Murphy continues to work on tax-related cases.

The Honorable David Coar has been assigned the case (06-C7087). Any questions can be addressed to Michael Henry at 312-560-5291.

SOURCE Michael F. Henry -

[Demosthenes]

His amended complaint is 81 pages, he's representing himself, and he's already pissing off the judge by sending him faxes.

United States District Court
Northern District of Illinois - CM/ECF LIVE, Ver 3.0 (Chicago)
CIVIL DOCKET FOR CASE #: 1:06-cv-07087

Henry v. United States of America et al
Assigned to: Honorable David H. Coar
Cause: 26:7426 IRS: Wrongful Levy for Taxes
Date Filed: 12/22/2006
Jury Demand: Both
Nature of Suit: 870 Tax Suit: Taxes
Jurisdiction: U.S. Government Defendant
Plaintiff
Michael Henry represented by Michael Henry
13233 Bundoran Court
Orland Park, IL 60462
(312) 560-5291
PRO SE


V.

Defendant
United States of America represented by AUSA
United States Attorney's Office (NDIL)
219 South Dearborn Street
Suite 500
Chicago, IL 60604
(312) 353-5300
ATTORNEY TO BE NOTICED

Samuel D Brooks
United States Attorney's Office (NDIL)
219 South Dearborn Street
Suite 500
Chicago, IL 60604
(312) 353-5300
ATTORNEY TO BE NOTICED

Defendant
Internal Revenue Service

Defendant
Henry Paulsen represented by AUSA
(See above for address)
ATTORNEY TO BE NOTICED

Defendant
Mark Everson represented by AUSA
(See above for address)
ATTORNEY TO BE NOTICED

Defendant
Debbie Arceneaux

Defendant
United States Department of Justice represented by AUSA
(See above for address)
ATTORNEY TO BE NOTICED

Defendant
Lynne Murphy

Defendant
Cherry Elder

Defendant
C. Hill

Defendant
Elizabeth Hennessey

Defendant
Lathan and Watkins

Defendant
Douglas Bacon

Defendant
Blank Rome, LLP

Defendant
Young, Conaway, Stargatt


Date Filed # Docket Text
12/22/2006 1 COMPLAINT filed by Michael Henry; Jury Demand.(hp, ) (Entered: 12/26/2006)
12/22/2006 2 CIVIL Cover Sheet (hp, ) (Entered: 12/26/2006)
12/22/2006 3 PRO SE Appearance by Plaintiff Michael Henry (hp, ) (Entered: 12/26/2006)
12/22/2006 5 SUMMONS Issued as to Defendant United States of America (hp, ) (Entered: 12/26/2006)
12/26/2006 6 SUMMONS Issued as to Debbie Arceneaux, United States Department of Justice, Lynne Murphy, Cherry Elder, C. Hill, United States of America, Internal Revenue Service, Henry Paulsen, Mark Everson, U.S. Attorney, and U.S. Attorney General (hp, ) (Entered: 12/26/2006)
12/26/2006 7 SUMMONS Returned Executed by Michael Henry as to United States of America served on 12/22/2006, answer due 2/20/2007 (hp, ) (Entered: 12/28/2006)
01/05/2007 8 SUMMONS Returned Executed as to Internal Revenue Service served on 12/26/2006, answer due 2/26/2007. (gej, ) (Entered: 01/09/2007)
01/05/2007 9 SUMMONS Returned Executed as to Cherry Elder served on 12/26/2006, answer due 2/26/2007. (gej, ) (Entered: 01/09/2007)
01/05/2007 10 SUMMONS Returned Executed as to C. Hill served on 12/26/2006, answer due 2/26/2007. (gej, ) (Entered: 01/09/2007)
01/05/2007 11 SUMMONS Returned Executed as to Mark Everson served on 12/26/2006, answer due 2/26/2007. (gej, ) (Entered: 01/09/2007)
01/05/2007 12 SUMMONS Returned Executed as to Debbie Arceneaux served on 12/26/2006, answer due 2/26/2007. (gej, ) (Entered: 01/09/2007)
01/10/2007 13 DESIGNATION of Samuel D Brooks as U.S. Attorney for Defendant United States of America (Brooks, Samuel) (Entered: 01/10/2007)
01/11/2007 14 SUMMONS Returned Executed by Michael Henry as to defendant Lynne Murphy on 12/26/2006, answer due 1/16/2007. (hp, ) (Entered: 01/16/2007)
01/11/2007 15 SUMMONS Returned Executed by Michael Henry as to defendant Henry Paulsen on 12/26/2006, answer due 1/16/2007. (hp, ) (Entered: 01/16/2007)
01/11/2007 16 SUMMONS Returned Executed by Michael Henry as to United States Department of Justice served on 12/26/2006, answer due 2/26/2007 (hp, ) (Entered: 01/16/2007)
01/23/2007 17 SUMMONS Returned Executed served as to defendant Debbie Arceneaux in her individaul capacity on 1/16/2007 (hp, ) (Entered: 01/25/2007)
01/23/2007 18 SUMMONS Returned Executed as to defendant Lynne Murphy in her individaul capacity on 1/14/2007 (hp, ) (Entered: 01/25/2007)
02/07/2007 19 SUMMONS Returned Executed as to Cherry Elder on 1/25/07 (eav, ) (Entered: 02/09/2007)
02/07/2007 20 REQUEST by Plaintiff Michael Henry For Entry of Default against individual defendants Lynne Murphy and Debbie Arceneaux re 17 18 (hp, ) (Entered: 02/12/2007)
02/07/2007 21 AFFIDAVIT of Michael Henry in support of request for entry of default re20 (hp, ) (Entered: 02/12/2007)
02/15/2007 22 MINUTE entry before Judge David H. Coar :Set/reset hearingsStatus hearing set for 3/8/2007 at 09:00 AM.Mailed notice (pm, ) (Entered: 02/15/2007)
02/15/2007 23 REQUEST For Entry of Default by Plaintiff Michael Henry against individual defendant Cherry Elder (hp, ) (Entered: 02/20/2007)
02/15/2007 24 AFFIDAVIT of Plaintiff Michael Henry in support of request for entry of default 23 (hp, ) (Entered: 02/20/2007)
02/22/2007 25 MOTION by Defendants Debbie Arceneaux, United States Department of Justice, Lynne Murphy, Cherry Elder, C. Hill, United States of America, Internal Revenue Service, Henry Paulsen, Mark Everson for extension of time by All Defendants Who Have Been Properly Served, To Have Until March 26, 2007, to served responsive pleading (Attachments: # 1 Exhibit Brief in Support of Motion# 2 Notice of Filing Notice of Presentment)(Cole, Thomas) (Entered: 02/22/2007)
02/23/2007 26 MOTION by Plaintiff Michael Henry for Recusal of the United States Department of Justice - Tax Division from acting as the IRS's Attorneys and the Recusal of the United States Department of Jusitice for defending the Indivdual defendants Lynne Murphy, Debbie Arceneaux, C., Hill and Cherry Elder (Exhibits) (Document not scanned.) (hp, ) (Entered: 02/26/2007)
02/23/2007 27 NOTICE of Motion by Michael Henry for presentment of motion for Recusal 26 before Honorable David H. Coar on 3/8/2007 at 09:00 AM. (hp, ) (Entered: 02/26/2007)
02/27/2007 28 MOTION by Plaintiff Michael Henry to strike motions, enter default judgment against United States of America and sanctions against Attorney Thomas P. Cole (hp, ) (Entered: 02/27/2007)
02/27/2007 29 NOTICE of Hearing by Michael Henry for presentment of motion to strike, motion for default judgment, motion for sanctions 28 before Honorable David H. Coar on 3/8/2007 at 09:00 AM. (hp, ) (Entered: 02/27/2007)
02/27/2007 30 AFFIDAVIT of Michael Henry in support of its motion to strike, enter default judgments and for sanctions against Attorney Thomas P. Cole 28 (hp, ) (Entered: 02/27/2007)
02/27/2007 31 MEMORANDUM by Michael Henry in support of his motion to strike, enter default judgment, sanctions against Thomas P. Cole 28 (hp, ) (Entered: 02/27/2007)
02/27/2007 32 REQUEST by Plaintiff Michael Henry for entry of default judgment against defendants United States of America and The Internal Revenue Service (hp, ) (Entered: 02/28/2007)
02/27/2007 33 AFFIDAVIT by Plaintiff in Support of his request for entry of default re 32 (hp, ) (Entered: 02/28/2007)
03/08/2007 34 MINUTE entry before Judge David H. Coar :Status hearing held on 3/8/2007. Motion hearing held on 3/8/2007. Plaintiffs request 32 for default is denied. Plaintiffs Motion 26 For Recusal (Motion to Dismiss) is Denied. Plaintiffs Motion 28 to Strike, for default and sanctions is denied. United States Motion 25 to allow all defendants who have been properly served an enlargement of time to 3/26/2007 to respond to complaint is granted. Rule 16(b) Scheduling Conference set for April 18, 2007 at 9:00 a.m. Report of Parties Planning Conference pursuant to Rule 26(f) and Proposed scheduling order pursuant to Rule 16(b) to be filed by 4/11/2007 and submitted to chambers. (Forms of report of planning conference and proposed scheduling order are available on the Courts web page or in chambers). Mailed notice (pm, ) (Entered: 03/08/2007)
03/23/2007 39 AMENDED Complaint by Michael Henry against Elizabeth Hennessey, Lathan and Watkins, Douglas Bacon, Blank Rome, LLP, Young, Conaway, Stargatt, Debbie Arceneaux, United States Department of Justice, Lynne Murphy, Cherry Elder, C. Hill, United States of America, Internal Revenue Service, Henry Paulsen, Mark Everson (hp, ) (Entered: 03/28/2007)
03/26/2007 35 MOTION by Defendants Debbie Arceneaux, United States Department of Justice, Lynne Murphy, Cherry Elder, C. Hill, United States of America, Internal Revenue Service, Henry Paulsen, Mark Everson, Plaintiff Michael Henry to dismiss with Supporting Brief and declarations of Arceneaux, Elder, Hill, and Murphy (Attachments: # 1 # 2 # 3 # 4 # 5)(Cole, Thomas) (Entered: 03/26/2007)
03/26/2007 36 NOTICE of Motion by Thomas P. Cole for presentment of motion to dismiss, 35 before Honorable David H. Coar on 4/4/2007 at 09:00 AM. (Cole, Thomas) (Entered: 03/26/2007)
03/27/2007 37 MOTION by Defendants Debbie Arceneaux, United States Department of Justice, Lynne Murphy, Cherry Elder, C. Hill, United States of America, Internal Revenue Service, Henry Paulsen, Mark Everson to continue April 18, 2007 Scheduling Conference (Cole, Thomas) (Entered: 03/27/2007)
03/27/2007 38 Defendants' NOTICE of Motion by Thomas P. Cole for presentment of motion to continue, 37 before Honorable David H. Coar on 4/4/2007 at 09:00 AM. (Cole, Thomas) (Entered: 03/27/2007)
03/28/2007 40 MINUTE entry before Judge David H. Coar : Mr. Henry has chosen to fax copies of letters and other documents to my office fax. He is hereby ordered to cease this practice immediately. It is not appropriate to communicate with the Court in this manner. If he requests relief for any appropriate reason, he should do so by filing a motion.Mailed notice (rbf, ) (Entered: 03/29/2007)

[wserra]

Henry is pro se (surprise, surprise) and his complaint is 68 pages (amended complaint is 81). Henry moved to "recuse" DOJ from representing the IRS and the individual agents, which motion the clerk's office refused to scan as "too voluminous" ("too dumb" should be an option, but apparently isn't) after scanning a 68-page complaint. He tried to default the individuals after 20 days (per FRCP 12(a)(3)(B) they have 60 days to answer). He moved to strike the answer and impose sanctions on the lawyer who opposed the defaults because he doesn't have immunity (I think a lot of people fit that category).

Judge Coar orally denied all of these at a conference. The last docket entry, from yesterday:

Mr. Henry has chosen to fax copies of letters and other documents to my office fax. He is hereby ordered to cease this practice immediately. It is not appropriate to communicate with the Court in this manner. If he requests relief for any appropriate reason, he should do so by filing a motion.
/s/David H. Coar, District Judge

I think I might have omitted the last sentence.

Edit: Demo beat me by seven minutes. But I explain stuff (in my own metier).

[webhick]

03/28/2007 40 MINUTE entry before Judge David H. Coar : Mr. Henry has chosen to fax copies of letters and other documents to my office fax. He is hereby ordered to cease this practice immediately. It is not appropriate to communicate with the Court in this manner. If he requests relief for any appropriate reason, he should do so by filing a motion.Mailed notice (rbf, ) (Entered: 03/29/2007)

[/quote]

Great! Is anyone else thinking that he's going to try to get the judge removed from the case because the judge is no longer impartial after scolding him? Or that the judge is not qualified to say what is and is not appropriate methods to communicate with the court?

[Demosthenes]

I would only consider him a p*ssed-off, hosed, investor and angry tax-crank.

Not exactly. Mr. Henry was the CEO of the now belly up American Metrocomm.

[Imalawman]

I love the press release - written by Mr. Henry, about Mr. Henry and lists the source as Mr. Henry. nice.

[Demosthenes]

The 81 page amended complaint:

http://www.cheatingfrenzy.com/henry39.pdf

[LPC]

I did some background research once before on Henry, because he's come up before (not sure why or when).

As near as I can figure, he was brought in to be the CEO of a telecommunications company, and then discovered "cash flow problems," so he was asked to put up $2MM of his own money for $4MM of stock, with a non-recourse promissory note for the unpaid $2MM. It didn't do any good, because the company goes bankrupt and he's out the $2MM.

And somehow during the bankruptcy, he became personally liable for $50MM owed Cisco Systems for some switching circuits.

And then the IRS decided to audit his income tax returns and ignore the $2MM nonrecourse promissory note, giving him $2MM in income when the stock was issued to him. (This position is questionable, but I don't blame the IRS for taking it, because I'm not sure that a company's security interest in its own stock has any legal or economic significance.)

I'm not sure if this guy is dumb or unlucky or both, but he's got reason to be angry with a lot of people, and it seems to have pushed him over the edge.

[grixit]

Yeah, it sounds as if he really has a case and is doing his darndest to lose it.

[notorial dissent]

My question, is that if the company was really in that bad a shape, was the stock he bought even worth $2MM let alone $4MM at the time he purchased it? It seems a little odd that it would collapse that fast, rather I think the stock price was artificially inflated, either out of ineptness, or deceit, because I find it hard to believe he would have just given them $2MM for the fun of it, if they were in that bad a shape. I do think he would have been better off to have loaned them the money secured by company stock or whatever, and then claimed it back as stock if the company was sound. Either way, there is more to this I think, and I do think in this case the IRS is over reaching.

I also agree with Grixit that he is doing his best to lose here.

[jwthomas]

Well - the guy is a bit heavy handed - but he did just win a Trial in Louisiana against the IRS. And as far as trying to piss the Judge off - I think that was his goal. A friend of mine works in the Court up their and his filing Friday April 5, 2007 has the entire system in an uproar. The USDOJ Tax Attorney
used ECF to make filings - to stop discovery. But nobody ever enrolled as the Attorney in the Case.

Henry sent the letters to complain to the Judge about it! He then made a filing that somehow got lost.

Well on Friday he hit them up with a monster motion. The Attorney Thomas Cole applied to be the Attorney PRO HAC VICE. Normally a formality. But this guy did not do it before he made multiple motions in the Court.

Henry filed a motion for sanctions and denial of PRO HAC VICE- Cole is not licensed to practice law in the State of Illinois.

[jwthomas]

So he is right this guy made motions and was practicing law wihout a license in the State of Illinois because he was not admitted Pro Hac Vice.

He asked for a default judgment becuse the Government never answered the complaint. A non licensed Attorney can not file
an answer.

On top of all that he asked for sanctions against Patrick Fitzgerald the US Attorney and another Illinois US Attorney for failure to supervise Attorney Cole and helping him to Practice law without a license. And told the Chief Judge of the Misconduct and the Chief Judge of the 7th Circuit.

[LPC]

Well - the guy is a bit heavy handed - but he did just win a Trial in Louisiana against the IRS.

You claim Henry "won" in Louisiana, and yet Henry filed a motion for a new trial (which the government opposed) after the jury verdict was entered. That's strange behavior by the winner (and loser).

A friend of mine works in the Court up their and his filing Friday April 5, 2007 has the entire system in an uproar. The USDOJ Tax Attorney
used ECF to make filings - to stop discovery. But nobody ever enrolled as the Attorney in the Case.

And yet the docket clearly shows Thomas P. Cole as an attorney of record.

Henry sent the letters to complain to the Judge about it!

Which the judge has told him to stop doing.

He then made a filing that somehow got lost.

Well on Friday he hit them up with a monster motion. The Attorney Thomas Cole applied to be the Attorney PRO HAC VICE.

There is nothing like that on the docket as of 4/4. There is a notice of appearance by Cole entered on 3/30, but nothing about an application pro hac vice.

Henry filed a motion for sanctions and denial of PRO HAC VICE- Cole is not licensed to practice law in the State of Illinois.

A federal statute allows attorneys of the Department of Justice to act in any court of the United States. See 28 U.S.C. 515. Normally, local rules exempt attorneys from the DoJ from pro hac vice requirements, but N.D. Illinois Local Rule 83.12 appears to conflict with 28 U.S.C. 515, because read literally the local rule allows the Attorney General to appear personally, but not attorneys for the Attorney General.

The odds of a district court judge not allowing a lawyer from the Department of Justice to represent interests of the United States are, needless to say, very slim.

[jwthomas]

In Louisiana it seems they are arguing over various issues on the amount but 125,000 to 350,000 refund plus interest seems like a win to me.

Like I told you the Court filing was on Friday - the guy is Pro Se that means the Court has to scan it - take them a couple of days. This came form a friend in the Court.


Cole applied Pro Hac Vice on the 30th but made filings before that according to the record. These occured 2-22-2007, 3-26-2007 and 3-27-2007 and he did not apply to represent the IRS and the people till 3-30-2007.

If it wasn't an issue then why did he make the Pro Hac Vice filing if he was not required to and how can he represent people without being enrolled as counsel?

[wserra]

In Louisiana it seems they are arguing over various issues on the amount but 125,000 to 350,000 refund plus interest

Looking like $125K but, as you say, they are still going back and forth, and the Court is clearly losing patience.

seems like a win to me.

Oh, really? When he originally sued for $800K, and litigated through five years and 300 docket entries? How much do you think his lawyers' fees will be? You saw that he tried to get an award for them, but gave up, right? How much of the $125K (or even $300K) do you think he'll keep?

Moreover, as Dan pointed out, he moved for a new trial. In other words, he wanted to throw the verdict in the garbage and start the trial over. Parties who feel they won usually don't do that.

Like I told you the Court filing was on Friday - the guy is Pro Se that means the Court has to scan it - take them a couple of days.

Didn't he already move for sanctions against Cole and lose?

[jwthomas]

I can only read the docket - Their is a filing where the Attorney lays claim to 1/3 of the Judgment in Orleans Parish Court.

And don't shoot the messenger - I just looked this up because of my friend at the court. But the filings she told me about started appearing today.

And I saw no motions for sanctions on the docket till this new one. He did file a motion to recuse cole.

But strangely the missing docket and filings he was complaining about got posted today - with a date of April 30 received by the Court with a hearing date set for April 4, 2007.

So Something strange is going on in Chicago.

[LPC]

And I saw no motions for sanctions on the docket till this new one. He did file a motion to recuse cole.

But strangely the missing docket and filings he was complaining about got posted today - with a date of April 30 received by the Court with a hearing date set for April 4, 2007.

So Something strange is going on in Chicago.

What is strange is that you can't read.

The on-line PACER docket clearly shows that:

1. Henry filed for sanctions against Cole on 2/27, Dockets #28-31, which was denied by a minute entry on 3/8, Docket #34.

2. Cole entered filed an appearance on 3/30, Docket #41, not an application for admission pro hac vice.

3. Henry's motion for sanctions against Cole et al. was filed on 4/6, Docket #40-51, entered on 4/9, and is before Judge Coar on 4/30 at 9:00 am.

Meanwhile, Cole has filed a motion to dismiss the complaints against his clients (which are the IRS and the employees of the IRS, but not the USA, which is the proper defendant), Docket #55+56, which is to be before Judge Coar on 4/19.

[LPC]

I looked at Henry's motion for sanctions, and it's way off base, of course.

1. The motion to deny Cole's application pro hac vice (which doesn't exist) is premised on a violation of Illinois's criminal unauthorized practice of law statute, because Cole is not licensed by the Supreme Court of Illinois. (Needless to say, the district court's grant of pro hac vice isn't going to do Cole any good if he can still be prosecuted for practicing law without the consent of the state supreme court.)

2. The motion for sanctions against Fitzgerald and Brooks, the US Attorney and AUSA, is based on violations of Illinois Rules of Professional Conduct 3.1 ("A lawyer shall not bring or defend a proceeding, or assert or controvert an issue therein, unless there is a basis for doing so that is not frivolous, which includes a good-faith argument for an extension, modification or reversal of existing law.") and 5.1 ("Responsibilities of a Partner or Supervisory Lawyer "). So Henry believes that Brooks has taken frivolous positions, and Fitzgerald has failed to supervise Brooks.

I don't know what the judge is going to do about Local Rule 83.12, but these motions won't take long to dispose of.

[LPC]

A friend of mine works in the Court up their and his filing Friday April 5, 2007 has the entire system in an uproar.

Uncontrollable laughter can have that effect.

[jwthomas]

I am only reading it - just working my way thru school - What I do not understand is how did Cole file anything before he was enrolled as counsel?

Don't you have to file an appearance - even on a limited basis to challenge jurisdiction before making a filing in Federal Court?

Thats my confusion and interest. How did he file something on 2/22/2007, 3/26/2007 and 3/27/2007 if he was not enrolled as counsel until 3/30/2007.

And how did something get accepted by the Court on 3/30/2007 for a hearing on April 4, 2007 -docket numbers 52 and 53 but not get entered until April 9,2007?


I am just trying to figure out things and the class I have on FRCP is killing me - and working full time does not help.