In the

United States Court of Appeals

For the Seventh Circuit ____________________ 

No. 20-1306 

SAMUEL WEGBREIT and ELIZABETH J. WEGBREIT, 

Petitioners-Appellants, 

v.

COMMISSIONER OF INTERNAL REVENUE, 

Respondent-Appellee. 

____________________ 

Appeal from the United States Tax Court. 

No. 7109-13 — Mary Ann Cohen, Judge. 

____________________ 

ARGUED DECEMBER 7, 2020 — DECEMBER 29, 2021 

____________________ 

Before SYKES, Chief Judge, and BRENNAN and ST. EVE,

Circuit Judges. 

SYKES, Chief Judge. Samuel and Elizabeth Wegbreit 

sheltered several million dollars of income in a life-insurance

policy held by a sham trust. The IRS caught on to the 

Wegbreits’ scheme and issued a deficiency notice showing 

that they owed millions in back taxes. The Wegbreits 

challenged the notice in the tax court. After discovery 

revealed a series of suspicious documents and transactions 

relating to the Wegbreits’ finances, the IRS added civil fraud 
2 No. 20-1306 

allegations. The tax court agreed with the IRS, finding that 

the Wegbreits underreported their income by nearly $15 

million and engaged in a pattern of conduct intended to 

defraud the government.

We affirm. The Wegbreits’ rambling brief spans 78 pages 

yet somehow develops only two coherent arguments

remotely related to the tax court’s decision. And those two 

arguments are baseless: the Wegbreits stipulated them away 

in the tax court. We therefore order John E. Rogers, the 

Wegbreits’ attorney, to show cause why he should not be 

sanctioned under Rule 38 for filing this frivolous appeal.

I. Background

Samuel Wegbreit founded and served as an executive of 

Oak Ridge, LLC, a financial-services company. In 2003 as his 

interest in Oak Ridge gained value, Samuel worked with

Thomas Agresti, his attorney, to reduce his tax liability. 

Agresti proposed that Samuel transfer his Oak Ridge interest 

to a trust benefitting his wife, Elizabeth, and the couple’s 

children. With Agresti as trustee, the trust would in turn 

convey the Oak Ridge interest to an offshore insurance 

company as an initial premium for a life-insurance policy

benefitting the trust. Samuel agreed to Agresti’s scheme 

without conducting any research or seeking independent 

legal advice.

The record includes three versions of the Samuel 

Wegbreit Trust Fund agreement, with suspicious differences

between them. Most notably, two of the agreements identify

only $18,750 in cash as initial trust assets, but the third also 

lists an insurance policy issued by Acadia Life Ltd.—a policy 

that was not issued by Acadia until 2004, the year after the 
No. 20-1306 3 

trust was formed. Another oddity is worth mentioning. One 

of the documents declares that it is restating the trust agreement dated January 25, 2002, over a year before Samuel even 

met with Agresti. No one could produce the purported 2002 

agreement, nor could the Wegbreits explain why there were 

multiple trust agreements, the discrepancies between them, 

or which was operative.

Agresti, acting as trustee, acquired a variable lifeinsurance policy from Threshold Alliance, Ltd.1 Although 

nominally based in the Cook Islands, Threshold shares a 

United States office with Agresti’s law firm. The policy lists 

its issuance date as January 25, 2002—the same day the 

mysterious 2002 trust agreement was supposedly executed—and states that coverage does not start until the first

premium is paid. As the initial premium payment, Samuel 

transferred his Oak Ridge interest to the trust, which it in 

turn conveyed to Threshold. Threshold’s supposed policy 

administrator, however, denies signing the transfer documents and ever working for the company. 

In 2004 Agresti swapped the Threshold policy for the one 

issued by Bermuda-based Acadia Life Ltd. At the time of the 

exchange, over 80% of the Threshold policy’s value consisted 

of Samuel’s Oak Ridge interest. The remainder was comprised of interests in shell companies organized and run by 

Agresti and his associates. 

1 Variable life-insurance policies split premiums between a cash account 

and an investment account, and thus provide an investment vehicle. See 

generally Norem v. Lincoln Benefit Life Co., 737 F.3d 1145, 1147 (7th Cir. 

2013).
4 No. 20-1306 

The Wegbreits leveraged the insurance policies for their 

personal benefit in two ways. First, the shell companies

made expensive purchases, including show horses and 

several Florida condominiums, on the Wegbreits’ behalf. 

Second, the Wegbreits regularly requested policy loans from 

Acadia on behalf of the family trust, which would in turn 

deposit the money into a bank account in Samuel’s name. 

Between 2004 and 2008, the Wegbreits received over 

$3 million in policy loans, none of which they reported as 

taxable income.

The biggest payoff came when Acadia, at Samuel’s 

direction, sold his Oak Ridge interest to an investment firm 

for $11.3 million. Although the purchase agreement was 

finalized in 2004, the Wegbreits stipulated in the tax court 

that the sale occurred in January 2005, and the record shows 

that the money changed hands later that month. Because the 

proceeds were wired directly to Agresti, who passed them

on to Acadia, the Wegbreits did not report any taxable 

income from the sale.

After a 2008 audit, the IRS determined that the trust 

income and Acadia policy gains, including those from the 

Oak Ridge sale, were taxable to the Wegbreits. In total they 

underreported their income from 2005 to 2009 by nearly 

$15 million. The Wegbreits disputed the IRS’s conclusion in 

the tax court. After discovery revealed the suspicious 

documents related to the trust and life-insurance policies, 

the Commissioner of Internal Revenue amended his answer 

to assert civil fraud penalties.

After trial the tax court found that Samuel never 

effectively transferred his Oak Ridge interest to the trust. 

The rest of the tax scheme collapsed from there. Without the 
No. 20-1306 5 

Oak Ridge interest, the trust never paid the initial premium 

for the Threshold policy—a condition to its issuance—and

Agresti could not exchange the invalid Threshold policy for 

the Acadia policy. The judge additionally found that the 

trust was a sham lacking economic substance and thus 

should be disregarded for tax purposes. With the trust and 

insurance policies out of the way, the judge agreed with the 

Commissioner’s assessment of the Wegbreits’ tax liability. 

She also imposed fraud penalties, noting that the record

displayed several indications of fraud, including false and 

misleading documents and failure to cooperate with tax 

authorities. 

II. Discussion

We review the tax court’s legal conclusions de novo and 

its factual findings for clear error. Cole v. Comm’r, 637 F.3d 

767, 773 (7th Cir. 2011). We also presume that the Commissioner’s assessment of a tax deficiency is correct. Id. To shift 

the burden to the Commissioner, the taxpayer must show 

that the assessment “lacks a rational foundation or is arbitrary and excessive.” Id. (quotation marks omitted).

Although “[t]he purpose of an appeal is to evaluate the 

reasoning and result reached by the” court below, Jaworski v. 

Master Hand Contractors, Inc., 882 F.3d 686, 690 (7th 

Cir. 2018), the Wegbreits raise a bevy of legal topics wholly 

irrelevant to the tax court’s decision, from statutorydiversification rules for life-insurance portfolios to the 

grantor-trust doctrine. When they do address germane

issues, their brief flagrantly violates Rule 28’s requirement to 

support each argument “with citations to the authorities and 

parts of the record on which [they rely].” FED. R. APP. P.

28(a)(8)(A). As just a sample, the brief cites a 489-page 
6 No. 20-1306 

insurance treatise—all of it—in support of a single proposition and the “entire record” in support of another. Notwithstanding this general incoherence, we can discern two 

contested issues on which the Wegbreits’ brief satisfies the 

bare minimum of Rule 28: the date of the sale of Samuel’s 

Oak Ridge shares, and the Commissioner’s compliance with 

26 U.S.C. § 6751 in seeking fraud penalties. The balance of 

the Wegbreits’ conclusory arguments are waived. See, e.g., 

Cole, 637 F.3d at 773. 

A. Oak Ridge Sale Date

The Internal Revenue Code states that “[t]he amount of 

any item of gross income shall be included in the gross 

income for the taxable year in which received by the taxpayer,” unless the taxpayer’s accounting method permits otherwise. 26 U.S.C. § 451(a). The Wegbreits maintain that the 

Commissioner is barred by the statute of limitations from 

assessing any back taxes based on 2004 income, see id. 

§ 6501(a), and that because the Oak Ridge sale was consummated in 2004, the proceeds are taxable income for 2004. 

The flaws in this argument are numerous. Most 

obviously, the Wegbreits stipulated below that the sale 

occurred on January 1, 2005. They ask us to release them 

from this stipulation, but they never made such a request to 

the tax court. That’s a waiver. See Soo Line R.R. Co. v. 

Consolidated Rail Corp., 965 F.3d 596, 601 (7th Cir. 2020). 

Moreover, their request to undo the stipulation consists of an 

utterly undeveloped assertion that the date of a sale is a legal 

conclusion that cannot be conceded. That’s a double waiver. 

See Shipley v. Chi. Bd. of Election Comm’rs, 947 F.3d 1056, 1063 

(7th Cir. 2020) (undeveloped, cursory arguments are 

waived). And the assertion is wrong: The date of a sale is a 
No. 20-1306 7 

question of fact (or at least a mixed question of fact and law), 

Williams v. Comm’r, 1 F.3d 502, 505 (7th Cir. 1993), and thus 

fair game for stipulation, TAX CT. R. 91(a) (permitting 

stipulation of a fact or an application of law to a fact).

In any event, the Wegbreits’ argument is factually baseless because the evidence unambiguously shows, and the 

Wegbreits concede, that the funds were received in January 

2005. In a single conclusory sentence, the Wegbreits assert 

that Acadia is an “accrual base” taxpayer permitted to report 

the sale proceeds as 2004 income, see 26 U.S.C. § 451(b)(1)(A), 

but this unsupported, cursory argument is waived too, 

Shipley, 947 F.3d at 1063. In yet another woeful failure to 

grapple with the tax court’s decision, the Wegbreits also do 

not explain why Acadia’s accounting method matters since 

the judge found that the Acadia policy was never valid and 

the trust purportedly holding the policy was a sham.

B. Compliance with § 6751 

With a few exceptions, the IRS may not assess any 

penalty “unless the initial determination of such assessment 

is personally approved (in writing) by the immediate 

supervisor of the individual making such determination or 

such higher level official as the Secretary may designate.” 

§ 6751(b)(1). The Wegbreits insist that we must vacate the tax 

court’s fraud penalty because the Commissioner did not 

comply with § 6751. 

As with the Oak Ridge sale date, the Wegbreits’ 

stipulations in the tax court foreclose this argument. They 

agreed both to the factual basis for the Commissioner’s 

compliance with § 6751 and to the ultimate conclusion: The 

Commissioner “complied with the written approval 
8 No. 20-1306 

requirement under ... § 6751(b)(1).” Their attempts to skirt 

this unequivocal stipulation are perfunctory and raised for 

the first time on appeal. Either constitutes a waiver. Soo Line, 

965 F.3d at 601. 

C. Sanctions

Rule 38 permits us to impose sanctions for frivolous 

appeals. FED. R. APP. P. 38. The presumptive sanction for a 

frivolous tax appeal is $5,000. Veal-Hill v. Comm’r, 976 F.3d 

775 (7th Cir. 2020) (per curiam). “An appeal is frivolous if 

the appellant’s claims are cursory, totally undeveloped, or 

reassert a previously rejected version of the facts. An appeal 

is also frivolous if it presents arguments that are so 

insubstantial that they are guaranteed to lose.” McCurry v. 

Kenco Logistics Servs., LLC, 942 F.3d 783, 791 (7th Cir. 2019)

(citations omitted). This appeal fits both standards. 

The Wegbreits’ brief, signed by attorney John E. Rogers, 

is woefully deficient. The bulk of its 78 pages consists of 

rambling, unsupported assertions, most of which do not 

bear any relationship to the reasoning in the tax court’s 

decision. As we’ve explained, the only two discernable, 

arguably relevant arguments are sure losers, stipulated away 

without excuse and frivolous to boot. On top of these glaring 

shortcomings, the Wegbriets accuse the IRS’s attorneys of 

threatening and intimidating them to settle the case, yet they 

offer no evidence for such a serious allegation. This baseless 

accusation is irresponsible and entirely inappropriate for a 

lawyer admitted to practice before this court. 

We have cautioned Rogers before about the 

consequences of bringing frivolous appeals, Sugarloaf Fund, 

LLC v. Comm’r, 953 F.3d 439, 441 (7th Cir. 2020), but that 
No. 20-1306 9 

warning apparently went unheeded. We therefore order 

Rogers to show cause within 14 days why he should not be 

sanctioned for bringing this utterly frivolous appeal in 

violation of Rule 38 of the Federal Rules of Appellate 

Procedure. We also direct the Clerk of Court to forward this 

opinion to the Illinois Attorney Registration and 

Disciplinary Commission for any action it deems 

appropriate.

AFFIRMED; ORDER TO SHOW CAUSE ISSUED