Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_11-cv-00141/USCOURTS-casd-3_11-cv-00141-0/pdf.json

Nature of Suit Code: 871
Nature of Suit: IRS 3rd Party Suits 26 USC 7609 (U.S. plaintiff)
Cause of Action: 26:7402 IRS: Petition to Enforce IRS Summons

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

UNITED STATES OF AMERICA,

Petitioner,

v.

CHRISTOPHER GEHRISCH, Chief

 Executive Officer of Proteus Dimensional

Technologies, Inc.,

Respondent. ____________________________________

UNITED STATES OF AMERICA,

Petitioner,

v.

MATTHEW GEHRISCH, Chief

Financial Officer of Proteus Dimensional 

Technologies, Inc.,

Respondent.

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Case No. 11cv0141-IEG(BLM)

Order Denying Without Prejudice Motion for

Contempt Sanctions [Doc. 14]; Requiring

Respondent to Turn Over Copies of Documents

Case No. 11cv0143-IEG(BLM)

Order Denying Without Prejudice Motion for

Contempt Sanctions [Doc. 13]; Denying

Respondent Matthew Gehrisch’s Motion to

Dismiss [Doc. 20]; Requiring Respondent to

Turn Over Copies of Documents

The government moves the Court for an order of contempt against Christopher and Matthew

Gehrisch based upon their failure to comply with the Court’s April 5, 2011 order enforcing IRS

summonses issued to them. Christopher Gehrisch filed a “response” to the government’s motion

[Case 11cv141, Doc. 19], and Matthew Gehrisch moved the Court to dismiss the contempt motion

Case 3:11-cv-00141-IEG-BLM Document 21 Filed 09/23/11 Page 1 of 4
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1/

In support of their opposition to the contempt motion, the Gehrisches lodged two CDs

containing the audio of the two initial meetings between Revenue Agent Lucia and the Gehrisches

on August 12 and 13, 2010, as well as the meeting on April 25, 2011, which the Court has reviewed.

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[Case 11cv143, Doc. 201/]. The government filed a reply, and Matthew Gehrisch filed a sur-reply. 

A hearing was held before Chief Judge Irma E. Gonzalez on September 21, 2011. Christopher and

Matthew Gehrisch appeared on their own behalf. Assistant United States Attorney Raven Norris

appeared, along with Revenue Agent Mark Lucia. For the reasons explained more fully below, the

Court DENIES the government’s motion without prejudice, and DENIES Matthew Gehrisch’s

motion to dismiss the contempt proceeding.

Background

By orders filed on April 5, 2011, the Court granted the IRS’s motion to enforce IRS

summonses issued to Christopher and Matthew Gehrisch in furtherance of its investigation of the

income tax liability of Proteus Dimensional Technologies (“Proteus”) for the tax year 2008. 

Christopher Gehrisch is the Chief Executive Officer of Proteus, and Matthew Gehrisch is the Chief

Financial Officer of Proteus. The orders required Christopher and Matthew Gehrisch to appear

before Revenue Agent Mark Lucia on April 25, 2011, at the offices of Proteus, to “produce the

documents and give testimony as directed in the summons.” 

On April 25, 2011, Christopher and Matthew Gehrisch gave testimony and allowed

Revenue Agent Lucia to “examine” and “review” the documents listed in the summonses. Revenue

Agent Lucia was not able to complete his review of the documents, and therefore sought to take

copies back to his office. The Gehrisches, however, refused to allow Revenue Agent Lucia to take

the documents from the Proteus offices, arguing the summonses only required them to “produce for

examination” the documents. They argued the summons and order did not require them to provide

copies of the documents to Revenue Agent Lucia to take out of the Proteus offices. Revenue Agent

Lucia made arrangements to return to Proteus to complete his review on May 4 and 11, 2011. 

When he returned to the Proteus office on May 4, however, the Gehrisches told him they would not

permit any further review because they had fully complied with the subpoena and the Court’s order.

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2/

The Court rejects the Gehrisches’ other arguments in opposition to the contempt motion. To

the extent the Gehrisches seek to rely upon the Right to Financial Privacy Act, 12 U.S.C. § 3405,

the Court notes such section does not apply to IRS summonses. 12 U.S.C. § 3413(c) (“[n]othing in

this chapter prohibits the disclosure of financial records in accordance with procedures authorized

by Title 26.”); Lidas, Inc. v. United States, 238 F.3d 1076, 1083 (9th Cir. 2001). In addition,

Revenue Agent Lucia properly served the motion for contempt sanctions. As set forth in the Court’s

(continued...)

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The government filed the current motion for contempt sanctions on July 12, 2011. Although

the Gehrisches thereafter offered to allow Revenue Agent Lucia limited additional time at their

offices to review the documents, Revenue Agent Lucia declined.

Discussion

Before the Court can find Christopher and/or Matthew Gehrisch in contempt, the

government must demonstrate:

“(1) that [respondent] violated the court order, (2) beyond substantial compliance,

(3) not based on a good faith and reasonable interpretation of the order, (4) by clear

and convincing evidence.”

United States v. Bright, 596 F.3d 683, 694 (9th Cir. 2010) (quoting Labor/Cmty. Strategy Ctr. v. Los

Angeles Co. Metro. Transp. Auth., 564 F.3d 1115, 1123 (9th Cir. 2009)). If the government

establishes a prima facie case of contempt, the Gehrisches may avoid sanctions “by demonstrating a

present inability to comply with the enforcement order.” Id. at 696 (citing United States v.

Drollinger, 80 F.3d 389, 393 (9th Cir. 1996). 

The purpose of civil contempt is coercive or compensatory. Koninklijke Philips Electronics

N.V. v. KXD Technology, Inc., 539 F.3d 1039, 1042 (9th Cir. 2008). Courts have the power to

impose a conditional period of imprisonment for the purpose of coercing an individual to obey its

validly entered order. Uphaus v. Wyman, 360 U.S. 72, 81 (1959). Courts may also impose a

monetary sanction either for purposes of coercing compliance or to compensate the moving party

for its costs in attaining the contempt finding. General Signal Corp. v. Donallco, Inc., 787 F.2d

1376, 1380 (9th Cir. 1986). 

Here, the Court finds the Gerisches have technically not violated the Court’s April 5, 2011

order. As they point out in opposition to the government’s motion2/

, the order required the

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2/

(...continued)

July 19, 2011 order to show cause on the government’s contempt motion, “any agent of the Internal

Revenue Service” is authorized to effect service.

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Gehrisches to produce documents pursuant to the summons, which seeks the documents “for

examination.” The order does not specifically state the Gehrisches must give copies to Revenue

Agent Lucia to take back to his office. In addition, the order requires the Gehrisches to produce the

documents to Revenue Agent Lucia on April 25, 2011. It does not require them to do anything on

any other date. Therefore, the Gehrisches have substantially complied with the technical letter of

the Court’s order, and the Court DENIES the government’s motion for contempt sanctions.

Nonetheless, the IRS is entitled to pursue its investigation of the of the income tax liability

of Proteus Dimensional Technologies (“Proteus”) for the tax year 2008, and is entitled to

enforcement of its summonses to Christopher and Matthew Gehrisch. Therefore, the Court

concludes the Gehrisches must provide copies of the documents to Revenue Agent Lucia to review,

at his office, and to cooperate and provide additional documents and/or testimony to Revenue

Agent Lucia in a timely manner if requested.

Conclusion

For the reasons set forth herein, the Court DENIES the government’s motion for contempt

sanctions. The Court hereby orders Christopher Gehrisch, Chief Executive Officer of Proteus

Dimensional Technologies, Inc., and Matthew Gehrisch, Chief Financial Officer of Proteus

Dimensional Technologies, Inc., to deliver copies of all of the documents responsive to the IRS

summonses to Revenue Officer Lucia, at his office in San Marcos, by Monday, September 26, 2011,

and leave those documents at the IRS office with Revenue Agent Lucia. In addition, if Revenue

Agent Lucia needs additional documents or oral testimony based upon his review of the documents,

the Gehrisches are ordered to provide the documents or testimony in a timely manner.

IT IS SO ORDERED.

DATED: September 23, 2011

IRMA E. GONZALEZ, Chief Judge

United States District Court

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