Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-almd-2_14-cv-00361/USCOURTS-almd-2_14-cv-00361-0/pdf.json

Nature of Suit Code: 870
Nature of Suit: Tax Suits
Cause of Action: 26:7407 IRS Action to enjoin tax return preparers

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IN THE DISTRICT COURT OF THE UNITED STATES 

FOR THE MIDDLE DISTRICT OF ALABAMA 

NORTHERN DIVISION 

UNITED STATES OF AMERICA, ) 

 ) 

 Plaintiff, ) 

 ) 

 v. ) CASE NO. 2:14-cv-361-MHT-WC 

 ) 

 ) 

LAQUANDA O. GILMORE and L&G ) 

ASSOCIATES, LLC, ) 

 ) 

 Defendants. ) 

RECOMMENDATION OF THE MAGISTRATE JUDGE 

 Before the court is Plaintiff’s “Motion for Default Judgment of Permanent 

Injunction and Request for Hearing” (Doc. 56), “Emergency Motion for Order to Show 

Cause Why Default Judgment of Permanent Injunction Should Not be Entered and 

Request for a Hearing” (Doc. 45), “Motion for Default Judgment” (Doc. 36), and no 

fewer than six affidavits and declarations filed in support of said motions. The District 

Judge referred this case to the undersigned Magistrate Judge “for consideration and 

disposition or recommendation on all pretrial matters as may be appropriate.” Order 

(Doc. 28). Upon review of the motions for default judgment and accompanying 

affidavits and declarations, the undersigned finds that a hearing is not necessary and 

recommends that the motions for default judgment of permanent injunction be 

GRANTED and that default judgment of permanent injunction be entered against 

Defendants. 

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I. BACKGROUND 

A. The Complaint 

 Plaintiff brought this action for injunctive relief, pursuant to 26 U.S.C. §§ 7402, 

7407, and 7408, against Ms. Laquanda Gilmore (“Ms. Gilmore”) and L&g Associates, an 

Alabama limited liability company that, since 2011, has been owned by Ms. Gilmore as a 

tax preparation company. Compl. (Doc. 1) at 1-3. The complaint sought to 

enjoin the Defendants, and anyone in active concert or participation with 

them, from: 

a. acting as federal-tax-return preparers; 

b. requesting, assisting in, or directing the preparation or filing of federal 

tax returns, amended returns, or other related tax documents or forms 

for any person or entity other than herself (in the case of Laquanda 

Gilmore); 

c. owning, managing, controlling, or consulting with any tax returnpreparation business; 

d. engaging in any other activity subject to penalty under IRC § 6694, 

6701, or any other penalty provision in the IRC; and 

e. engaging in any conduct that substantially interferes with the proper 

administration and enforcement of the internal revenue laws. 

Compl. (Doc. 1) at 1-2. 

Plaintiff alleges that, “since 2009, Ms. Gilmore has continuously and routinely 

claimed bogus fuel-tax credits and earned-income tax credits on tax returns she prepared 

for her customers[,] . . . caus[ing] her customers to overstate their refund claims or 

otherwise underreport their income-tax liabilities.” Id. at 3. Further, since 2011, Ms. 

Gilmore has prepared said returns “in association with her own company, L&g 

Associates.” Id. Plaintiff alleges that this conduct “has harmed the United States by 

causing [Defendants’] customers to claim credits that they are ineligible to claim,” and 

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“[t]he IRS estimates that, [at the time the complaint was filed], the administrative cost of 

investigating Ms. Gilmore’s activities exceed[ed] $50,000.” Id.		

L&g Associates was served with the Complaint on May 27, 2014. Return Receipt 

Card (Doc. 3). After the summons was returned unexecuted at Ms. Gilmore’s address 

(see Doc. 4), a Waiver of Service was executed on June 14, 2014, by Ms. Gilmore’s first 

attorney.1

 Waiver of Service (Doc. 7). 

B. Defendants’ Failure to Meet their Discovery Obligations and Repeated 

Violations of Court Orders 

 The court first learned of Defendants’ failure to satisfy their discovery obligations 

on May 26, 2015, when Plaintiff moved to extend its time for discovery by sixty days 

based on Defendants’ “fail[ure] to produce numerous documents that are responsive to 

the United States’ document requests.” Mot. for Extension (Doc. 29) at 2. According to 

the Motion, when Plaintiff notified Defendants of the missing documents, Defendants 

“represented that they erroneously omitted . . . and that they will make those documents 

available for [Plaintiff] to review and copy.” Id. The court granted the motion for 

extension to the extent that the parties were allotted thirty additional days to conduct 

discovery. Order (Doc. 30) at 1. 

																																																								

1

 Defendants were first represented by Attorney Michael Franklin Braun. See Notice of Appearance 

(Docs. 5 & 6). That attorney moved to withdraw before he even filed an answer on behalf of Defendants, 

stating that “[t]he undersigned can no longer represent the Defendants for reasons that comport with the 

Alabama Rules of Professional Responsibility.” See Mot. to Withdraw as Attorney (Doc. 13) at 1. 

Nearly three months later, another attorney, Ms. Victoria Denise Relf, appeared on behalf of Defendants. 

See Notice of Appearance (Doc. 19). Ms. Relf filed answers to the complaint and attended the Rule 26 

scheduling meeting with Plaintiff’s counsel. However, just five months after entering her appearance, 

Ms. Relf also moved to withdraw, stating that Defendants had “terminated their attorney-client 

relationship with” Ms. Relf. See Mot. to Withdraw (Doc. 26) at 1. Recently, facing the threat of 

sanctions and default judgement, Defendants retained their third attorney. See Notice of Appearance 

(Doc. 60). 

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Three weeks later, on June 19, 2015, Plaintiff filed a Motion to Compel (Doc. 31), 

wherein Plaintiff reported as follows: 

8. On [May 13, 2015], Ms. Gilmore [who was not represented and 

had previously been unresponsive to emails and phone calls from Plaintiff’s 

counsel] told [Plaintiff’s] counsel that Defendants’ failure to produce 

responsive documents for the other tax years (2011– 2014) was due to 

inadvertence. Gilmore claimed that the remaining responsive documents 

were in boxes that would be available for [Plaintiff] to pick up by May 20. 

9. [Plaintiff] then moved for a 60-day extension of its time to take 

discovery. On May 27, the Court granted a 30-day extension, to June 29. 

10. Gilmore initially agreed to send the boxes to [Plaintiff] by FedEx 

(at [Plaintiff’s] expense), and [Plaintiff’s] counsel twice sent her prepaid 

FedEx labels for this purpose. Without explanation, Gilmore never sent the 

documents by Fed Ex. 

11. When it became apparent that Gilmore was refusing to send the 

documents by FedEx, [Plaintiff] arranged to have a private courier pick 

them up. After Gilmore delayed in responding to [Plaintiff’s] request to 

schedule a pick-up time, [Plaintiff] sent a private courier to her residence to 

retrieve the documents on June 12, 2015. The courier retrieved nine 

bankers boxes of documents, and those boxes arrived [at] [Plaintiff’s] 

counsel’s office on June 15, 2015. 

Defendants’ second failure to produce responsive documents 

12. The nine boxes produced on June 12 contained manila folders 

containing only what appear to be customer files for the 2010, 2011, and 

2013 tax years. Despite Defendants’ agreement to produce the responsive 

tax returns for those years, no tax returns [were] produced. And with 

respect to the 2014 tax year, no documents whatsoever were produced—

whether customer files or tax returns[.] 

Mot. to Compel (Doc. 31) at 3-4 (internal citations and footnotes omitted). 

The court granted the motion to compel and ordered Defendants to “on or before 

June 29, 2015, produce all documents responsive to [Plaintiff’s] request for production of 

documents, including all tax returns that Defendants prepared for the tax years 2011–

2014 which claimed an earned-income credit, a fuel-tax credit, or an educational-expense 

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credit.”2 Order (Doc. 33) at 1-2. Specifically, the court stated that “it appears to the 

court that Defendants may be engaging in obstructionist behavior in an attempt to avoid 

complying with their discovery obligations in this matter” and advised Defendants “that 

if they fail to comply with the terms of this order, the court will strongly consider the 

imposition of monetary sanctions.” Id. at 2 (emphasis in original). The court also 

granted Plaintiff’s second motion for extension of time to complete discovery (Doc. 32), 

allowing the parties sixty additional days to complete discovery based on Defendants’ 

failure to comply with their discovery obligations. Order (Doc. 34) at 1. 

 Less than two weeks later, on June 29, 2015, the court learned that Defendants’ 

failure to comply with their discovery obligations continued when Plaintiff filed a Motion 

for Sanctions against Ms. Gilmore for her failure to appear at her deposition. Mot. for 

Sanctions (Doc. 35) at 1-8. In that Motion, Plaintiff explained as follows: 

Gilmore’s deposition was noticed for June 24, 2015 

3. On May 28, 2015, the United States served Gilmore with a notice 

of deposition. The notice stated that the deposition would take place on 

June 24, 2015 at the United States’ Attorney’s office in Montgomery, 

Alabama. The United States served the notice on Gilmore by email and 

first-class mail. 

Gilmore knew of her obligation to appear 

4. On Thursday, June 18, 2015, undersigned counsel called Gilmore 

to confer about her failure to produce documents in response to a document 

request. Undersigned counsel also emailed Gilmore for the same purpose. 

Gilmore did not return the call or the email, so undersigned counsel filed a 

motion to compel. The Court granted that motion on June 22. 

5. On the afternoon of Monday, June 22, Gilmore called undersigned 

counsel. She indicated that she was calling in response to the message that 

undersigned counsel ha[d] left the previous week, and she asked to 

reschedule her deposition to July 1 or July 6. Undersigned counsel 

																																																								

2

 As discussed further below, Defendants did not comply with this Order. 

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informed Gilmore by both telephone and email that those dates were 

unworkable and that the deposition would go forward on June 24. Gilmore 

made no mention of her efforts to secure representation. 

6. At approximately 5:30 p.m. Eastern time on June 23, Gilmore left 

the undersigned a voicemail message requesting that her deposition be 

rescheduled. Gilmore stated that she was attempting to engage counsel. 

(Gilmore has thus far been represented by two attorneys; her first counsel, 

Michael Braun, withdrew by court order on July 10, 2014. Her second 

counsel, Victoria Relf, withdrew by court order on March 11, 2015.) 

7. Approximately 30 minutes after receiving Gilmore’s voicemail 

message, undersigned counsel returned Gilmore’s call, calling the number 

that Gilmore left (her home number). There was no answer, so undersigned 

counsel left a message informing Gilmore that he was en route to 

Montgomery (in fact he was on a layover in Charlotte, NC) and that he was 

unwilling to reschedule the deposition. 

8. Gilmore did not appear at the United States’ Attorney’s office on 

June 24. Undersigned counsel left a message on Gilmore’s home phone and 

attempted, without success, to reach her on her mobile number. Before the 

scheduled deposition time, Gilmore never informed undersigned counsel 

that she was unable to appear for her deposition. 

9. Undersigned counsel waited at the United States’ Attorney’s 

office until approximately 11:00 a.m., but Gilmore never appeared. 

Id. at 2-4 (internal citation omitted). 

 The next week, on July 8, 2015, Plaintiff filed its first Motion for Default 

Judgment (Doc. 36), based on Defendants’ violation of the court’s order compelling 

Defendants to produce documents, Ms. Gilmore’s failure to appear at her deposition, and 

Defendants’ “fail[ure] to respond to document requests that [Plaintiff] served on May 28, 

2015.” Mot. for Default (Doc. 36) at 1. Specifically, Plaintiff alleged that 

On June 22, 2015, the Court ordered Defendants to produce all 

documents responsive to the United States request for production of 

documents on or before June 29, 2015. . . . 

The undersigned counsel advised Gilmore of the Court’s June 22 

order by telephone conversation on June 22. On the same date, undersigned 

counsel also emailed a copy of the June 22 order to Gilmore. 

On June 22, 2015, Gilmore told undersigned counsel that she would 

send responsive documents for the 2013 and 2014 tax years to undersigned 

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counsel by Friday, June 26. Gilmore also said that the remaining responsive 

documents (that is, copies of tax returns for years 2011 and 2012) would be 

sent within ten days of June 22. 

Defendants have not produced copies of tax returns they prepared 

which claimed an earned-income credit, a fuel-tax credit, or an educational 

expense credit for any of the years covered by the Court’s June 22 order. 

Defendants have willfully violated other discovery obligations 

Gilmore’s failure to appear at her deposition: In addition to 

disregarding the Court’s June 22 order, Defendants have also disregarded 

other discovery obligations. For example, Gilmore failed to appear at her 

properly noticed June 24 deposition. The United States filed a motion 

seeking sanctions based on that failure on June 29, 2015. 

Defendants’ failure to respond to other document requests. 

Defendants have also failed to respond to a second set of document requests 

that the United States served on May 28, 2015. Those document requests 

sought information concerning fees that Defendants had been charging their 

customers. Responses were due on June 29, but none were provided. On 

Wednesday, July 1, undersigned counsel left a voicemail message on 

Gilmore’s home telephone to inquire about the status of the responses. As 

of the date of this filing (July 7) Gilmore has not responded to that 

voicemail message. 

Id. at 6-8 (internal citations omitted). Accordingly, Plaintiff requested the court, pursuant 

to Rule 37(b)(2)(A) of the Federal Rules of Civil Procedure, issue default judgment of 

permanent injunction against Defendants for their failure to comply with the court’s June 

22, 2015, order and their discovery obligations. Id. at 8.

 The court set the motion for sanctions and motion for default judgment for hearing 

and ordered Defendants to “on or before July 17, 2015, show cause as to why Plaintiff’s 

Motion for Sanctions (Doc. 35) and Motion for Entry of Default Judgment (Doc. 36) 

should not be granted.”3

 Order (Doc. 38) at 1. Additionally, the court ordered Ms. 

Gilmore to “appear for a deposition on August 6, 2015, at 9:30 a.m. at the United States 

																																																								

3

 As discussed further below, Defendants did not comply with this Order. 

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Attorney’s Office for the Middle District of Alabama, 131 Clayton Street, Montgomery, 

Alabama 36104.”4

 Id. at 1-2. Finally, the court warned as follows: 

Ms. Gilmore is warned that her failure to comply with this Order 

will result in the imposition of sanctions against her, which may include 

monetary sanctions and the recommendation of the undersigned that 

default judgment be entered against Defendants. 

Further, Ms. Gilmore’s failure to appear at the hearing ordered 

above may result in the issuance of a bench warrant for her arrest. 

 Id. at 2 (emphasis in original). 

Defendants failed to file any response to the court’s order to show cause. At the 

hearing held on July 22, 2015, Plaintiff’s counsel reviewed the lengthy history of 

Defendants failing to comply with their discovery obligations and the court’s prior order. 

See Mins. (Doc. 40). Ms. Gilmore claimed she had been unable to attend her deposition 

or comply with the court’s order based on some personal or marital issues she was 

experiencing. The court later issued two written orders to reflect the rulings made at the 

hearing. See Orders (Docs. 42 & 43). First, the court granted Plaintiff’s Motion for 

Sanctions (Doc. 35) based on Ms. Gilmore’s failure to show at her first properly noticed 

deposition, ordering as follows: 

It is, therefore 

ORDERED that the motion (Doc. 35) is GRANTED; as a sanction 

for her failure to appear for her properly noticed deposition, Ms. Gilmore 

shall reimburse the United States for the travel expenses and court-reporter 

fee that it incurred for the June 24 deposition of Ms. Gilmore. Further, it is 

ORDERED that Ms. Gilmore shall appear for her deposition on 

August 6, 201[5] at 9:30 a.m. at the United States Attorney’s Office, 

located at 131 Clayton Street, Montgomery, AL 36104, and at that time she 

																																																								

4

 As discussed further below, Ms. Gilmore did not comply with this Order. 

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shall deliver to counsel for the United States a certified check or a cashier’s 

check, payable to the United States Treasury in the amount of $1,919.42.5

Order (Doc. 42) at 1-2. Second, the court gave Defendants another chance to comply 

with the discovery orders prior to recommending default judgment and ordered as 

follows: 

[N]o later than 5:00 p.m. on July 24, 2015, Defendants shall deliver 

the following documents to Curtis Weidler, Trial Attorney, c/o Stephen 

Doyle, Chief, Civil Division, United States Attorney’s Office, 131 Clayton 

Street, Montgomery, AL 3610: 

1. copies of all federal income-tax returns that they prepared, 

filed, or assisted in the preparation or filing of for years 2011, 

2012, 2013, and 2014, for any customer that claimed a credit 

for fuel tax, earned income, or education expenses; 

2. copies all amended federal income-tax returns that they 

prepared, filed, or assisted in the preparation of in respect of 

an of the following tax years: 2011, 2012, 2013, or 2014. 

Further, it is 

ORDERED, that the Court will otherwise reserve its ruling on the 

Motion (Doc. 36) for default judgment of permanent injunction.6

Order (Doc. 43) at 1-2. The same day as the court’s issuance of these two written orders 

summarizing the rulings made at the hearing, Ms. Gilmore called the undersigned’s 

Chambers to report that the power to her office had been disconnected and would not be 

restored until Monday, July 27, 2015. See Order (Doc. 44) at 1. Accordingly, the court 

extended Defendants’ deadline to turn over the documents discussed above, and ordered 

that the documents be delivered by 5:00 p.m. on Monday, July 27, 2015.7

 Id. At that 

time, again, “Defendants [we]re warned that no further extensions will be granted 

																																																								

5

 As discussed further below, Ms. Gilmore did not comply with this Order. 

6

 As discussed further below, Defendants did not comply with this Order. 

7

 As discussed further below, Defendants did not comply with this Order. 

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absent good cause, and the failure to comply with this Order will result in the 

imposition of sanctions, which may include monetary sanctions and the 

recommendation of the undersigned that default judgment be entered against 

Defendants.” Id. at 2. 

 On July 31, 2015, one week following the issuance of the court’s orders for Ms. 

Gilmore to pay sanctions, attend a deposition, and turn over documents (Docs. 42, 43, & 

44), Plaintiff filed its second motion for default judgment, titled “Emergency Motion for 

Order to Show Cause why Default Judgment of Permanent Injunction Should Not be 

Entered and Request for a Hearing.” Mot. (Doc. 45) at 1-13. This motion, and 

supporting affidavits (Docs. 46, 47), notified the court that, despite the additional time 

allotted based on Ms. Gilmore’s representations regarding the lack of power at her office, 

Defendants had failed to produce the tax returns for years 2011-2014, in violation of the 

court’s July 24, 2015, order (Doc. 44). Id. at 1. In fact, this motion notified the court 

that Ms. Gilmore—who had been ordered to turn over documents by 5:00 p.m. on July 

27, 2015—delivered a flash drive to Plaintiff’s local office approximately twenty 

minutes prior to the deadline set by the court, and that jump drive contained no files at 

all.

8

 Id. at 7-8. Plaintiff requested the court set the matter for a hearing on August 6, 

2015, the date on which the court had already ordered Ms. Gilmore to attend her 

deposition. Id. at 2. 

																																																								

8

 Interestingly, Ms. Gilmore later represented to the court that the power at her office had not been 

reconnected, and that she had not thought of the idea of bringing her work computer to her home where 

she does have access to electrical power. See Mins. (Doc. 49). Accordingly, the court can draw no 

conclusion other than that Ms. Gilmore intentionally sought to deceive both the court and Plaintiff by 

delivering what she knew to be an empty jump drive. 

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 The court set the motion for a hearing to be held on August 6, 2015, and ordered 

Defendants to “bring to the hearing paper copies of all documents that are covered by 

the court’s July 24, 2015, Order (Doc. 44).” 9 Order (Doc. 48) at 1-2. Further, 

Defendants were again warned that their “failure to comply with any part of this Order 

will result in the imposition of sanctions against [Ms. Gilmore], which may include 

monetary sanctions and the recommendation of the undersigned that default judgment 

be entered against Defendants.” Id. (emphasis in original). 

 In summary, Defendants were to show up at the August 6 hearing having (1) paid 

the sanctions imposed against them, (2) attended Ms. Gilmore’s properly noticed 

deposition that morning as ordered by the court, and (3) brought paper copies of the tax 

returns previously sought by Plaintiff. 

At some point around this time, Ms. Gilmore again called the undersigned’s 

Chambers to request additional time to pay the sanctions issued against her for her failure 

to attend her first deposition. At that time, the undersigned’s staff made clear to Ms. 

Gilmore that any relief she seeks from the court must come in the form of a written 

motion properly filed with the Clerk of Court and placed on the record. On August 5, 

2015, 10 Ms. Gilmore 11 did file a “Motion for Extension of Time to Pay Deposition 

																																																								

9

 As discussed further below, Defendants did not comply with this Order. 

10 While the motion was hand filed on August 5, 2015, it was not placed on the docket until August 6, 

2015, after the hearing concluded. 

11 Ms. Gilmore purported to file the motion on behalf of herself and L&g Associates. See Mot. (Doc. 51). 

However, as Ms. Gilmore has previously been told, “artificial entities, such as an LLC, cannot appear pro 

se and cannot be represented by someone who is not a licensed attorney.” Udoinyion v. Guardian Sec., 

440 F. App’x 731, 735 (11th Cir. 2011); see Order (Doc. 18). 

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Costs,” wherein Ms. Gilmore claimed to have made “her best efforts” to fulfill her 

obligations in this case, to have “shown a willingness to be forthcoming with the Court in 

the past,” and to have “attempted in good faith to comply [with the court’s order].” Mot. 

for Extension (Doc. 51) at 1-2. 

 On August 6, 2015, the court held the hearing on Plaintiff’s second motion for 

default (Doc. 45). At the hearing, the court learned that Ms. Gilmore had not paid the 

sanctions previously assessed against her, had not shown for her deposition, and had not 

brought any paper documents to be turned over to Plaintiff. However, Defendants had 

retained new counsel, Mr. Alfred Norris, who attended the hearing. At the hearing, the 

undersigned summarized Defendants’ repeated misconduct, as set forth above. Mr. 

Norris explained that Ms. Gilmore was in the middle of a divorce that was negatively 

affecting her professionally, financially, and emotionally, which was why Ms. Gilmore 

had been uncooperative through the pendency of this case. Finding instead that Ms. 

Gilmore’s misconduct throughout this case was both willful and in bad faith, the court 

ordered Defendants to produce copies of tax returns for the years 2011-2014 by the close 

of business that day,12 and Mr. Norris assured the court that he would go with Ms. 

Gilmore to her office to retrieve the files from the computer. Based on Ms. Gilmore’s 

representations that she still had no power at her office, Mr. Norris even offered to take 

the computer from Ms. Gilmore’s office to his own for a power source if that was 

necessary, and at the conclusion of the hearing, Mr. Norris represented to the court that 

he would notify the court of his efforts to produce the missing documents, whether or not 

																																																								

12 As discussed further below, Defendants did not comply with this Order.

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those efforts were successful. Despite his promises, the court never heard from Mr. 

Norris again. 

 Following the hearing, the court issued a written order finding that “Defendants 

have willfully and intentionally attempted to evade their discovery obligations in this 

case.” Order (Doc. 57) at 2. Further, the court found “that Ms. Gilmore has willfully and 

intentionally violated at least five of this court’s orders.” Id. Accordingly, the court 

ordered13 (1) sanctions against Defendants in the amount of $1,500 for violations of the 

court’s prior orders; and (2) sanctions against Defendants in the amount of $1,120 to 

reimburse Plaintiff for the costs associated with the second deposition at which Ms. 

Gilmore failed to appear. Order (Doc. 57) at 2-3. The order also granted in part 

Defendants’ prior motion for extension of time to pay the first deposition costs, making 

all sanctions due on August 14, 2015. Id. 

Plaintiff again notified the court of problems with Defendants when it filed its 

third Motion for Default Judgment (Doc. 56), asserting that Defendants failed to comply 

with the court’s August 6th Order that the tax return documents be produced by close of 

business that day. Plaintiff claimed that, “[o]n the morning of August 7, 2015, Ms. 

Gilmore delivered a flash drive . . . to the United States Attorney’s Office for the Middle 

District of Alabama,” but that “[u]pon inspection of the flash drive,” Plaintiff learned 

that, while it did contain some documents, it did not contain any tax returns. Mot. (Doc. 

56) at 2. 

																																																								

13 As discussed further below, Defendants did not comply with this Order. 

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On August 17, 2015, Plaintiff notified the court that, although August 14 had 

come and gone, Defendants had not paid the sanctions ordered in the court’s August 12, 

2015, Order. Dec. (Doc. 59) at 1. Defendants also failed to pay the ordered sanctions to 

the court by August 14. In fact, to date, Defendants have not paid any sanctions imposed 

against them. 

Citing the continued misconduct by Defendants, Plaintiff has also filed a Motion 

for Contempt (Doc. 66) and a Motion for Sanctions (Doc. 67).14

II. DISCUSSION

A. Plaintiff is entitled to Default Judgment 

Pursuant to Federal Rule of Civil Procedure 37(b)(2)(A), Plaintiff seeks an order 

striking Defendants’ answers and granting it default judgment that permanently bars 

Defendants from preparing tax returns for others. Pl.’s Mot. (Doc. 56) at 8, 17. Rule 37 

authorizes the court to impose any just sanction against a party that violates an order to 

provide or permit discovery. Fed. R. Civ. P. 37(b)(2)(A). The rule’s specific list of 

possible sanctions includes an order “striking pleadings in whole or in part” or an order 

“rendering a default judgment against the disobedient party.” Fed. R. Civ. P. 

37(b)(2)(A)(iii), (vi). “‘[D]istrict courts enjoy substantial discretion in deciding whether 

and how to impose sanctions under Rule 37.’” J.B. Hunt Transp., Inc. v. S & D Transp., 

Inc., 589 F. App’x 930, 933 (11th Cir. 2014) (quoting Chudasama, 123 F.3d at 1366). 

																																																								

14 As addressed below, the undersigned recommends these motions, and any others that may remain 

pending, be denied as moot after the entry of default judgment and permanent injunction against 

Defendants. 

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We previously have stated that, although Rule 37 confers upon 

district court judges broad discretion to fashion appropriate sanctions for 

the violation of discovery orders, see Malautea v. Suzuki Motor Co., 987 

F.2d 1536, 1542 (11th Cir. 1993), this discretion is not unbridled. Wouters 

v. Martin County, 9 F.3d 924, 933 (11th Cir. 1993). The decision to dismiss 

a claim or enter default judgment “ought to be a last resort—ordered only if 

noncompliance with discovery orders is due to willful or bad faith disregard 

for those orders.” Cox v. American Cast Iron Pipe Co., 784 F.2d 1546, 

1556 (11th Cir. 1986). 

United States v. Certain Real Prop. Located at Route 1, Bryant, Ala., 126 F.3d 1314, 

1317 (11th Cir. 1997). Rule 37 does not, however, “require the vain gesture of first 

imposing [other] ineffective lesser sanctions.” Malautea v. Suzuki Motor Co., 987 F.2d 

1536, 1544 (11th Cir. 1993). 

The severe sanction of default judgment is appropriate in this case because 

Defendants conduct has clearly been willful and in bad faith. Defendants willfully chose 

not to meaningfully cooperate in discovery, not to comply with court orders, and not to 

participate in this litigation with any consistency. If not evidenced by the sheer number 

of times Defendants have utterly failed to do as the court ordered, their bad faith is 

certainly evidenced by Ms. Gilmore’s inability to keep straight the excuses she has 

presented to the court. As just one example, the court would point to when Ms. Gilmore 

sought an extension of time to provide a jump drive of documents to Plaintiff because the 

power at her office had been disconnected and would not be reconnected for a few 

additional days. See Order (Doc. 44) at 1. Yet, on the final date of the extended time, 

Ms. Gilmore turned over an entirely blank jump drive to Plaintiff. See Affs. (Docs. 46 & 

47). At one point, Plaintiff asserted that she had “attempted in good faith to comply by 

putting the requested files on a flash drive” and that the blank jump drive was “due to a 

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good faith error and without her knowledge.” Mot. for Extension (Doc. 51) at 2. 

However, Ms. Gilmore came into court days later and represented (1) that the power was 

still shut off at her office and (2) that she had never thought of the idea of taking her 

office computer to her home or another location with power to access the files. If both of 

Ms. Gilmore’s assertions to the court at the hearing were true, then Ms. Gilmore must 

have intentionally and willfully turned over a jump drive to Plaintiff knowing it was 

blank in spite of the court’s July 24th order (Doc. 44) that she provide Plaintiff with 

discovery documents. 

Additionally, it is abundantly clear that a less drastic sanction will not suffice to 

ensure Defendants comply with the courts orders or the judicial process. In fact, as is 

thoroughly set forth above, the court has already attempted to urge Defendants’ 

compliance through less drastic sanctions. Defendants’ repeated defiance, refusal to 

comply with court orders, and refusal to pay the financial sanctions previously imposed 

as a lesser sanction are evidence of the futility of imposing lesser sanctions. 

Accordingly, the undersigned finds that striking Defendants’ answers and granting 

default judgment are the most appropriate sanctions in this case and recommends that the 

motions seeking default judgment be granted. 

B. Plaintiff is entitled to a Permanent Injunction 

Because the complaint in this case seeks a permanent injunction, this court is 

bound by the provision of Rule 65 of the Federal Rules of Civil Procedure. Rule 65(d) 

requires that “[e]very order granting an injunction” must “state the reasons why it 

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issued,” “state its terms specifically,” and “describe in reasonable detail . . . the act or acts 

restrained or required.” 

Because this injunction will result from default judgment, it is important to note 

that “[a] defaulted defendant is deemed to ‘admit[] the plaintiff’s well-pleaded allegations 

of fact.’” United States v. Ruetz, 334 F. App’x 294, 295 (11th Cir. 2009) (quoting 

Nishimatsu Constr. Co., Ltd. v. Houston Nat’l Bank, 515 F.2d 1200, 1206 (5th Cir. 

1975)); see also Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir.1981) (en 

banc) (adopting as binding precedent all of the decisions of the former Fifth Circuit 

handed down prior to October 1, 1981). 

In this case, Plaintiff seeks a default judgment for permanent injunction pursuant 

to 26 U.S.C. §§ 7402(a), 7407, and 7408. The court will consider each separately below. 

First, for the court to issue an injunction pursuant to § 7407, 

three prerequisites must be met: first, the defendant must be a tax preparer; 

second, the conduct complained of must fall within one of the four areas of 

proscribed conduct, § 7407(b)(1)[, including that a tax return preparer 

understates a taxpayer’s liability]; and third, the court must find that an 

injunction is “appropriate to prevent the recurrence” of the proscribed 

conduct, § 7407(b)(2). 

United States v. Ernst & Whinney, 735 F.2d 1296, 1303 (11th Cir. 1984). 

 Here, Plaintiff pleaded that “[Ms.] Gilmore is a tax-return preparer,” and “since 

2011, Ms. Gilmore has prepared [tax] returns in association with her own company, L&g 

Associates.” Compl. (Doc. 1) at 2-3. Additionally, Plaintiff pleaded, “Ms. Gilmore has 

continuously and routinely claimed bogus fuel-tax credits and earned-income tax credits 

on tax returns she prepared for her customers. By doing this, Ms. Gilmore causes her 

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customers to overstate their refund claims or otherwise underreport their income-tax 

liabilities.” Id. at 3. Deeming these well-pleaded facts as true, the court finds that an 

injunction is appropriate to prevent the recurrence of Defendants understating taxpayer’s 

liability on tax returns because, in large part, there is simply nothing before the court to 

indicate that Defendants have any interest in abiding by the IRS laws or preparing honest 

tax returns, just as Defendants have no interest in abiding by orders of this court. 

Section 7408 authorizes a district court to enjoin any person from engaging in 

specified conduct, including that subject to penalty under § 6701, if injunctive relief is 

appropriate to prevent recurrence of that conduct. 26 U.S.C. § 7408(b)-(c). Section 6701 

prohibits any person from aiding or assisting in, procuring, or advising with respect to, 

the preparation or presentation of a tax return, affidavit, claim, or any other document, 

knowing (or having reason to believe) that such portion will be used in connection with 

any material matter arising under the internal revenue laws, and knowing that such 

portion, if used, will result in an understatement of the tax liability of another person. 26 

U.S.C. § 6701(a)(1)-(3). 

Here, Plaintiff pleaded, “Ms. Gilmore has prepared tax returns that she knew 

contained improper deductions and credits and that she knew would understate her 

customer’s tax liabilities,” which is conduct subject to penalty under § 6701. Compl. 

(Doc 1) at 15-16. Deeming these well-pleaded facts as true, the undersigned finds that 

injunctive relief is appropriate to prevent the recurrence of that conduct, as Defendants 

will likely continue to engage in such conduct absent an injunction. 

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Section 7402 authorizes a district court to issue injunctions “as may be necessary 

or appropriate for the enforcement of the internal revenue laws.” 26 U.S.C. § 7402(a). 

For an injunction under § 7402(a), the Eleventh Circuit requires a showing that (1) it is 

likely that Plaintiff will suffer irreparable injury if Defendants’ conduct continues; (2) 

remedies available at law, such as monetary damages, are inadequate to compensate for 

that injury; (3) it is unlikely that Defendants will be harmed by the injunction; and (4) an 

injunction will serve the public interest. Ernst & Whinney, 735 F.2d at 1301 (“[T]he 

decision to issue an injunction under § 7402(a) is governed by the traditional factors 

shaping the district court’s use of the equitable remedy.”); see eBay Inc. v. 

MercExchange, L.L.C., 547 U.S. 388, 391 (2006) (listing the traditional factors); see also

United States v. Demesmin, No. 6:14-CV-1537-ORL-22, 2015 WL 737056, at *4 (M.D. 

Fla. Jan. 15, 2015). 

Here, Plaintiff pleaded that, if Defendants are “not enjoined from engaging in 

fraudulent and deceptive conduct, [Plaintiff] will suffer irreparable injury by wrongfully 

providing federal income-tax refunds to individuals who are not entitled to receive them” 

and that Defendants “will not suffer irreparable harm because the injunction sought will 

merely enjoin [Defendants] from engaging in illegal conduct.” Compl. (Doc. 1) at 16-17. 

Additionally, monetary damages would not be an adequate remedy at law. This is 

evidenced, in part, by Defendants failure to pay monetary sanctions previously ordered 

by the court. Lastly, Plaintiff pleaded that “enjoining [Defendants] is in the public 

interest because an injunction, backed by the Court’s contempt powers if needed, will 

stop [Defendants’] illegal conduct and the harm she causes the United States.” Id. at 17. 

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Accordingly, deeming these well-pleaded facts as true, the undersigned finds that all four 

factors considered weigh in favor of injunctive relief, which is necessary and appropriate 

for the enforcement of the internal revenue laws and to prevent the recurrence of 

Defendants’ illegal conduct. 

III. CONCLUSION

 For the reasons stated above, it is the RECOMMENDATION of the Magistrate 

Judge 

(1) that the “United States’ Motion for Default Judgment of Permanent 

Injunction and Request for Hearing” (Doc. 56), “Emergency Motion for Order to Show 

Cause Why Default Judgment of Permanent Injunction Should Not be Entered and 

Request for a Hearing” (Doc. 45), and “Motion for Default Judgment” (Doc. 36) be 

GRANTED; 

(2) that default judgment be entered against Defendants; 

(3) that pursuant to 26 U.S.C. §§ 7402(a), 7407, and 7408, a permanent 

injunction be entered against Defendants, enjoining the Defendants, and anyone in active 

concert or participation with them, from: 

a. acting as federal-tax-return preparers; 

b. requesting, assisting in, or directing the preparation or filing of 

federal tax returns, amended returns, or other related tax documents 

or forms for any person or entity other than herself (in the case of 

Laquanda Gilmore); 

c. owning, managing, controlling, or consulting with any tax returnpreparation business; 

d. engaging in any other activity subject to penalty under IRC § 6694, 

6701, or any other penalty provision in the IRC; and 

e. engaging in any conduct that substantially interferes with the proper 

administration and enforcement of the internal revenue laws. 

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(4) that all pending motions, including the Motion for Contempt (Doc. 66) and 

Motion for Sanctions (Doc. 67), be DENIED as moot based on the default judgment and 

permanent injunction. 

 It is further

ORDERED that the parties are DIRECTED to file any objections to the said 

Recommendation on or before October 9, 2015. A party must specifically identify the 

factual findings and legal conclusions in the Recommendation to which objection is 

made; frivolous, conclusive, or general objections will not be considered. Failure to file 

written objections to the Magistrate Judge’s findings and recommendations in accordance 

with the provisions of 28 U.S.C. § 636(b)(1) shall bar a party from a de novo

determination by the District Court of legal and factual issues covered in the 

Recommendation and waives the right of the party to challenge on appeal the district 

court’s order based on unobjected-to factual and legal conclusions accepted or adopted by 

the District Court except upon grounds of plain error or manifest injustice. Nettles v. 

Wainwright, 677 F.2d 404 (5th Cir. 1982); 11th Cir. R. 3-1; see Stein v. Lanning 

Securities, Inc., 667 F.2d 33 (11th Cir. 1982); see also Bonner v. City of Prichard, 661 

F.2d 1206 (11th Cir. 1981) (en banc). The parties are advised that this Recommendation 

is not a final order of the court and, therefore, it is not appealable. 

Done this 25th day of September, 2015. 

 /s/ Wallace Capel, Jr. 

 WALLACE CAPEL, JR. 

 UNITED STATES MAGISTRATE JUDGE

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