Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_07-cv-02187/USCOURTS-casd-3_07-cv-02187-2/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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3031845.1 

IN THE UNITED STATES DISTRICT COURT FOR THE

SOUTHERN DISTRICT OF CALIFORNIA

UNITED STATES OF AMERICA, )

)

Plaintiff, )

)

 v. ) Case No. 07-cv-2187-IEG-NLS

)

ROOSEVELT KYLE, individually or )

d/b/a CENTURY ONE RESORTS, LTD ) 

or CENTURY ONE ASSOCIATES; )

REBECCA TYREE a/k/a/ RUBEE TYREE ) 

or RUBY TYREE; ) 

COA FINANCIAL GROUP, LLC d/b/a COA ) ORDER GRANTING MOTION FOR

FINANCIAL NETWORK TRUST c/o T&N ) DEFAULT JUDGMENT 

FASHION; ) AGAINST COA FINANCIAL 

and ) GROUP, LLC AND EAGLE FINANCIAL 

EAGLE FINANCIAL SERVICES, LLC ) SERVICES, LLC

)

Defendants, )

)

ROOSEVELT KYLE, )

 )

 Third-Party Plaintiff )

 )

v. )

 )

JOHN R. MONROE, )

DOES 1 THROUGH 1000 )

 )

Third-Party Defendants. )

Case 3:07-cv-02187-IEG-NLS Document 43 Filed 07/11/08 Page 1 of 10
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Plaintiff United States filed its complaint for permanent injunction under sections 7402,

7407, and 7408 of the Internal Revenue Code (26 U.S.C. or I.R.C.) on November 15, 2007,

seeking to bar defendants COA Financial Group, LLC (“COA”) and Eagle Financial Services,

LLC (“Eagle”), from preparing income tax returns for others. COA and Eagle were properly

served and have failed to appear in this matter. Entry of default was made against them on

January 7, 2008 (Doc. Nos. 15 and 16). Having reviewed the record in this case, the Court

makes the following findings of fact and conclusions of law and enters this permanent injunction

against COA and Eagle.

Findings of Fact

1. This Court has jurisdiction over the parties and subject matter in this case. 

2. COA Financial Group, LLC, and Eagle Financial Services, LLC, in this judicial

district have engaged in conduct subject to penalty under I.R.C. §§ 6694, 6695, or 6701 and have

engaged in conduct that interferes with the proper administration of internal revenue laws.

3. Over the last eight years, Defendant Roosevelt Kyle has operated his tax

preparation business using several entities or names, including COA Financial Group, LLC, and

Eagle Financial Services, LLC. Kyle stopped personally signing returns in 2004, but Kyle still

interviews customers and prepares returns that are signed by others. He does this to thwart IRS

efforts to detect his illegal conduct.

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3031845.1 

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4. The following numbers of returns were filed under the Employer Identification

Numbers of COA and Eagle and under Kyle’s identification number:

Name of

Person/Entity

Number

Returns Filed

by Entity from

2000-2007: 

2000 2001 2002 2003 2004 2005 2006 2007*

Roosevelt Kyle 1572 1632 1864 136 12 2 1 5

Century One

Resorts

0 0 0 1451 2511 57 4 2

COA Financial

Network

Trust/COA

Financial Group,

LLC

0 0000 2527 34 7

Eagle Financial

Services, LLC

0 0 0 0 0 0 0 1136

* As of September 27, 2007

5. Defendant Eagle Financial Services, LLC, was formed in January 2007 and

Roosevelt Kyle is listed as its agent for service of process. Kyle reopened his tax preparation

business as Eagle Financial Services, LLC, in 2007 after he was released from prison. 

6. COA Financial Group, LLC, was formed in June 2004 and Roosevelt Kyle is its

agent for service of process. 

7. On average Kyle and his businesses prepared and filed approximately 1,500

returns per year since 2000.

8. Kyle most recently operated his business from 2414 Hoover Avenue, National

City, CA 91950, in the San Diego metropolitan area.

9. Kyle, COA and Eagle, prepare returns that unlawfully understate their customers’

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tax liabilities, most commonly by fabricating or inflating deductions on Schedule A, “Itemized

Deductions,” and Schedule C, “Profit or Loss from Business.”

10. COA and Eagle’s customers are generally wage earners who are not familiar with

internal revenue laws, rules and regulations.

11. COA and Eagle generate new business through word of mouth as they gain a

reputation for being able to generate larger tax refunds than other return preparers.

12. As a direct result of COA and Eagle’s fraudulent return preparation, their

customers have filed federal income tax returns understating their federal income tax liabilities

and claiming large income tax refunds to which they were not entitled.

IRS’s Investigation

13. As of September 26, 2007, the IRS has examined approximately 254 returns

prepared between 2002 and 2007 by Kyle and Tyree under the auspices of Century One

Associates, COA Financial Network, or Eagle Financial Services. 

14. Eagle Financial Services, LLC, is the most recent business name used by Kyle’s tax

preparation business. 

15. Of the examined returns, 82 were prepared by COA Financial Network and 15 were

prepared by Eagle Financial Services. The examinations revealed that all but approximately

eight of the 254 returns understated the customer’s tax liability. The IRS is continuing to

examine returns prepared by Kyle, Tyree, and Eagle Financial Services. 

16. Customers consented to the IRS’s adjustments on approximately 127 of the

examined returns. The total of the agreed tax understatements on those returns was $419,725

which was an average understatement of approximately $3,304 per return. 

17. The defendants, including COA and Eagle prepared the 254 examined returns for

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approximately 218 customers and 116 of those customers consented to the IRS’s adjustments to

their returns. 

18. In 2007 the IRS conducted an undercover investigation of Kyle and his tax

preparation business, which was operating as Eagle Financial Services, LLC. An IRS

undercover agent posed as a customer and paid Kyle to prepare a tax return. Kyle conducted the

tax preparation interview with the undercover agent, but the return was signed by Rebecca

Tyree, Kyle’s office manager and business associate. The return Kyle prepared for the

undercover agent fabricated employee business expenses and charitable deductions.

19. The estimated tax loss caused by the defendants’, including COA and Eagle,

misconduct between 2002 and 2007 is approximately $18 million. 

20. Kyle has known about the IRS’s investigations of his tax preparation business and

activities since at least 1987, but has repeatedly and continually engaged in improper and

enjoinable conduct. 

21. In 1987 the IRS assessed against Kyle two preparer penalties under 26 U.S.C. § 6694

for conduct occurring in 1983 and 1984, and in 1998 the IRS assessed against Kyle another

penalty under 26 U.S.C. § 6694 for negligently understating the tax liability of a customer on

return prepared in 1995. 

22. COA and Eagle willfully, intentionally, and/or recklessly understate their customers’

income tax liabilities by preparing returns that improperly contain fabricated or inflated

deductions on Schedules A and C.

Inflated or Bogus Schedule A Employee Business Expenses

23. COA and Eagle continually and repeatedly prepare federal income tax returns

claiming inflated or bogus Schedule A employee business expenses to offset customers’ Form

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W-2 wage income. Approximately 167 of the returns the IRS examined, including several

prepared by COA and Eagle, contained adjustments for inflated or unsubstantiated Schedule A

employee business expenses.

24. For example, in 2007 Kyle prepared under the business name Eagle Financial

Services a return for an undercover IRS agent who posed as a customer that fabricated over

$7,300 of unreimbursed employee business expenses, including over $1,900 of bogus laundry

and cleaning expenses. 

Inflated or Bogus Charitable Contributions

25. COA and Eagle continually and repeatedly prepare federal income tax returns

claiming inflated or bogus charitable contributions. Approximately 180 of the returns the IRS

examined, including several returns prepared by COA and Eagle, contained adjustments for

inflated or unsubstantiated charitable contributions deductions.

26. Kyle, acting through Eagle, fabricated charitable contribution deductions on the IRS

undercover agent’s 2006 return (prepared in 2007). The IRS undercover agent gave Kyle no

information to support a claim for charitable deductions, yet the undercover agent’s return

claimed a $2,000 contribution to the Girl Scouts and a $500 non-cash contribution to Goodwill.

27. Kyle, through Eagle, also inflated charitable contributions on the 2006 return he

prepared for the San Diego couple. This customer gave Kyle documentation of cash

contributions to the customer’s church. However, the customer’s return claimed a deduction for

cash charitable contributions exceeding the amount supported by the customer’s documentation

and contained fabricated non-cash contributions to Goodwill in the amount of $500. This

customer agreed with the IRS’s adjustments. 

Inflated or Bogus Schedule C Business Expenses 

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28. Kyle and his tax preparation business continually and repeatedly prepared federal

income tax returns claiming inflated or bogus Schedule C business expenses. 

29. Approximately 138 of the returns the IRS examined contained inflated or

unsubstantiated Schedule C business expenses. Approximately 19 of those returns were

prepared by COA. 

IV. HARM TO THE PUBLIC

30. The United States is substantially harmed because COA and Eagle have not

accurately reported their customers’ correct tax liabilities. The IRS estimates that the total tax

loss to the Treasury from the defendants’ misconduct (including COA and Eagle) as

approximately $18 million. 

31. COA and Eagle’s misconduct further harms the United States by requiring the IRS to

devote scarce resources to detecting the fraud and assessing and collecting lost tax revenues from

the defaulted defendant’s customers. Identifying and recovering all lost revenues may be

impossible. 

32. The harm to the Government will increase unless COA and Eagle are enjoined

because they would still be free to continue preparing false and fraudulent income tax returns for

customers. COA and Eagle continued to prepare returns in 2007.

33. In addition, COA and Eagle’s customers have been harmed because they have paid

COA and Eagle fees to prepare tax returns that understated their correct federal income tax

liabilities, thereby subjecting them to interest charges and possible civil and criminal sanctions. 

34. COA and Eagle’s misconduct also undermines public confidence in the federal tax

system and encourages widespread violations of the internal revenue laws.

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CONCLUSIONS OF LAW

35. Based upon the factual findings and evidence presented by the United States that

COA and Eagle have not opposed, the Court also finds that COA and Eagle have continually and

repeatedly engaged in conduct subject to penalty under I.R.C. §§ 6694 and 6695, and have

continually and repeatedly engaged in other fraudulent or deceptive conduct substantially

interfering with the administration of tax laws. The Court also finds that a narrower injunction

prohibiting only this specific misconduct would be insufficient.

36. Accordingly, the Court finds that COA and Eagle should be permanently enjoined

under I.R.C. § 7407.

37. The Court also finds that COA and Eagle have engaged in conduct in violation of

I.R.C. § 6701 and that injunctive relief is appropriate to prevent the recurrence of that conduct.

38. The Court further finds that COA and Eagle have engaged in conduct that

interferes with the enforcement of the internal revenue laws, and that the United States and the

public will suffer irreparable harm in the absence of a permanent injunction. The public interest

will be served by granting a permanent injunction.

39. Accordingly, the Court finds that COA and Eagle should be permanently enjoined

under I.R.C. § 7402(a).

ORDER

Based on the foregoing factual findings, and for good cause shown, the Court ORDERS

A. That pursuant to I.R.C. §§ 7402, 7407, and 7408, COA Financial Group, LLC, and

Eagle Financial Services, LLC, and their representatives, agents, servants, employees, attorneys,

independent contractors, and anyone in active concert or participation with them, are

permanently enjoined from directly or indirectly:

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(1) acting as an income-tax-return preparer and from engaging in conduct subject

to penalty under I.R.C. § 6701;

(2) engaging in conduct subject to penalty under I.R.C. §§ 6694 or 6695;

(3) engaging in other conduct that substantially interferes with the proper

administration and enforcement of the internal revenue laws;

(4) engaging in any other activity subject to penalty under the I.R.C.; and

(5) representing persons before the Internal Revenue Service.

B. That pursuant to I.R.C. § 7402 COA and Eagle are ORDERED to contact all persons

and entities for whom they prepared any federal-income-tax returns or other tax-related

documents after January 1, 2003, and inform those persons of the entry of the Court’s findings

concerning the falsity of representations COA and Eagle made on their customers’ tax returns,

and that a permanent injunction has been entered against them;

C. That pursuant to I.R.C. § 7402, COA and Eagle are ORDERED to turn over to

counsel for the United States a list of the names, addresses, e-mail addresses, phone numbers,

and Social Security numbers of all individuals or entities for whom the defendants prepared or

helped to prepare any tax-related documents, including claims for refund or tax returns since

January 1, 2003; 

D. That the United States is permitted to engage in post-judgment discovery to ensure

compliance with the permanent injunction; and

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E. That this Court shall retain jurisdiction over this action for the purpose of

implementing and enforcing this Order. 

IT IS SO ORDERED.

DATED: July 11, 2008

IRMA E. GONZALEZ, Chief Judge

United States District Court

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