Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_07-cv-04762/USCOURTS-cand-4_07-cv-04762-0/pdf.json

Nature of Suit Code: 870
Nature of Suit: Tax Suits
Cause of Action: 26:7402 IRS: Petition to Enforce IRS Summons

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IN THE UNITED STATES DISTRICT COURT FOR THE

NORTHERN DISTRICT OF CALIFORNIA

SAN FRANCISCO DIVISION

UNITED STATES OF AMERICA )

)

Plaintiff, )

)

v. ) Civil No. 03:07-cv-4762-PJH

)

CHARLES CATHCART et al. )

)

Defendants. )

ORDER

The United States has filed a complaint for permanent injunction in this matter against

defendant Derivium Capital, LLC. The United States and Kevin Campbell, the court appointed

Chapter 7 Bankruptcy Trustee for Derivium Capital, LLC, have entered into a Stipulation for

Permanent Injunction as follows:

Derivium Capital, LLC enters into this Final Judgment of Permanent Injunction

voluntarily, and waives entry of findings of fact and conclusions of law. Derivium Capital, LLC

also waives any right it may have to appeal from the Final Judgment of Permanent Injunction.

Derivium Capital, LLC, consents to entry of this Final Judgment of Permanent Injunction

without admitting the factual allegations in the Complaint. 

NOW, it is hereby ORDERED, ADJUDGED, AND DECREED that:

1. The Court has jurisdiction over this action pursuant to §§1340 and 1345 of Title 28 of

the United States Code, and §§ 7402 and 7408 of the Internal Revenue Code of 1986, as

amended; 

2. Derivium Capital, LLC, individually and doing business as any entity, and its agents,

and employees, are permanently enjoined from, directly or indirectly:

(a) Organizing, promoting, marketing, or selling any plan or arrangement, including

the 90% Loan scheme, that advises or assists taxpayers to attempt to violate the

internal revenue laws or unlawfully evade the assessment or collection of their

federal tax liabilities;

(b) Marketing the “90% Loan” scheme, that purports to enable customers to receive

valuable consideration in exchange for stock or other securities that is pledged by

Case 4:07-cv-04762-PJH Document 9 Filed 12/10/07 Page 1 of 2
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those customers, purportedly as collateral, without the need to pay tax on the gain

because the transaction is characterized as a loan;

(c) Advising customers that the 90% Loan scheme, which required participating

customers to relinquish (1) legal title, (2) the right to receive dividends, and (3)

any voting rights associated with the stock or securities in exchange for

reasonable consideration constitutes a bona fide loan, rather than a sale, for

federal tax purposes (the “90% Loan” scheme);

(d) Advising, assisting, or instructing customers that participating in the “90% Loan”

scheme enables customers to defer, postpone, or avoid paying capital gains or

other taxes associated with the sale of any stock or security transferred as part of

the scheme;

(e) Making false statements about the allowability of any deduction or credit, the

excludability of any income, or the securing of any tax benefit by the reason of

participating in any plan or arrangement, including the false statement that a

associated with the 90% Loan scheme (described in paragraphs (a)-(d), supra) can

reduce or eliminate one’s federal income tax liabilities;

(f) Engaging in conduct subject to penalty under IRC § 6700, i.e., by making or

furnishing, in connection with the organization or sale of a plan or arrangement, a

statement that Derivium Capital, LLC, knows or has reason to know to be false or

fraudulent as to any material matter under the federal tax laws; and

(g) Engaging in any other conduct that interferes with the administration or

enforcement of the internal revenue laws.

3. That The United States is permitted to engage in post-injunction discovery to ensure

compliance with the permanent injunction; and 

4. This Court shall retain jurisdiction over this action for purposes of implementing and

enforcing this Final Judgment of Permanent Injunction. 

SO ORDERED THIS __ day of __ 2007

___________________________

United States District Court Judge

10th day of December 2007

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORN

I

A

IT IS SO ORDERED

Judge Phyllis J. Hamilton

Case 4:07-cv-04762-PJH Document 9 Filed 12/10/07 Page 2 of 2