IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF OHIO

EASTERN DIVISION

United States of America, :

Plaintiff, :

v. : Case No. 2:12-cv-1034

John D. Allen, individually and : JUDGE GEORGE C. SMITH

doing business as Magistrate Judge Kemp

Allen & Associates, :

Defendants. 

OPINION AND ORDER

This matter is before the Court on a renewed motion for

sanctions filed by Plaintiff the United States of America. (Doc.

39). For the following reasons, the motion will be granted, and

a default will be entered as to Mr. Allen’s liability.

I. Background

Over one year ago, on June 25, 2013, the United States filed

a motion to compel Mr. Allen to respond to its first set of

interrogatories and requests for production of documents, first

set of requests for admission, and second set of interrogatories.

(Doc. 20). The Court granted the motion and ordered Mr. Allen to

provide the requested discovery to the United States within

fourteen days. (Doc. 24). The Court also warned Mr. Allen that

Rule 37(b)(2)(A) authorizes the imposition of sanctions,

including granting a default judgment, if a party fails to obey

an order to provide or permit discovery.

On December 17, 2013, the United States filed a motion for

sanctions against Mr. Allen based on his failure to comply with

this Court’s order compelling him to respond to interrogatories

and requests for production of documents. (Doc. 34). In that

motion, the United States asserted that Mr. Allen had not

provided the requested discovery despite multiple requests and

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this Court’s order. Consequently, the United States sought an

entry of default against Mr. Allen as a sanction. Mr. Allen did

not file an opposition to that motion for sanctions.

In its Opinion and Order on the motion for sanctions issued

on March 5, 2014 (Doc. 35), the Court first considered the

document requests numbered 1 through 7. The Court found that, in

response to Mr. Allen’s claim that he had no responsive

documents, the United States failed to satisfy its burden of

demonstrating that the requested documents indeed existed and

were being improperly withheld. Consequently, the Court did not

award sanctions for Mr. Allen’s failure to produce documents in

response to those requests.

As to the document requests numbered 8 and 9, the Court

found that Mr. Allen’s objections to those requests were

untimely. The Court noted, however, that even if the objections

were timely, Mr. Allen could not withhold production of

responsive documents based upon those objections. Consequently,

the Court ordered Mr. Allen to produce any documents responsive

to those requests within twenty-eight days of the issuance of the

Opinion and Order.

Next, the Court found that Mr. Allen failed to make timely

objections to the interrogatories. The Court noted again,

however, that even if it were to consider Mr. Allen’s objections

on their merits, it would overrule them. Accordingly, the Court

ordered Mr. Allen to provide the interrogatory responses within

twenty-eight days of the issuance of the Opinion and Order. For

purposes of reference, the Court notes that it ordered Mr. Allen

to produce adequate discovery responses to the following

interrogatories:

1. Identify all Customers for whom you or Allen &

Associates filed, prepared, and/or signed Form 1040

federal income tax returns or Form 1040X amended federal

income tax returns and for whom you or Allen & Associated

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[sic] advised or assisted with the preparation of Form

1040 federal income tax returns or Form 1040X amended

federal income tax returns, from January 1, 2006 to the

present. For each Customer, identify: the name of the

person who filed, prepared, and/or signed the federal tax

return, whether it was you, your employee, an employee of

Allen & Associates, or the Customer; the address,

telephone number, and social security number or employer

identification number of the individual or entity; and

the tax year of the federal tax return(s).

2. Identify all Customers for whom you or Allen &

Associates prepared and/or filed, or advised or assisted

with the preparation and/or filing of, Forms 4852, Forms

1099-R, Forms W-2, or Forms W-4 with the IRS from January

1, 2006 to the present. For each Customer, identify: 

the name of person who filed, prepared, and/or signed the

Form 4852, Form 1099-R, Form W-2, or Form W-4, whether it

was you, your employee, or an employee of Allen &

Associates, or the Customer; the address, telephone

number, and social security number or employer

identification number of the individual or entity; and

the tax year of the Form 4852, Form 1099-R, Form W-2, or

Form W-4.

3. Identify all individuals or entities to whom or to

which you or Allen & Associates marketed, promoted, or

sold the tax arrangements described in the Complaint and

identified as “Scheme 1: Tax Returns Reporting ‘None’ for

Income and Tax,” “Scheme 2: Tax Returns Reporting Bogus

Itemized Deductions to Offset Income,” and “Scheme 3:

Frivolous Amended Tax Returns Claiming That Wages Are

Non-Taxable,” since January 1, 2006, whether or not they

participated in the tax arrangement or whether or not you

or Allen & Associates filed, prepared, and/or signed

federal tax returns. For each individual or entity,

identify: which arrangement you or Allen & Associates

marketed, promoted, or sold to the individual or entity;

when you or Allen & Associates marketed, promoted, or

sold the program, product, or arrangement to the

individual or entity; the documents provided to the

individual or entity; the name of the person who

marketed, promoted, or sold the arrangement, product, or

arrangement [sic]; and the address, telephone number,

[sic] and the name, address, phone number, and email

address of the individuals or entities to whom you or

Allen & Associates marketed, promoted, or sold the

program, product, or arrangement.

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4. Identify all of your employees and employees of Allen

& Associates from January 1, 2006 to the present. 

Include their name, home address, telephone, position(s)

at Allen & Associates, duties performed for you or in

their position(s) at Allen & Associates, and dates of

employment for you or at Allen & Associates.

5. Identify all partners, shareholders, managers, and/or

directors of Allen & Associates from January 1, 2006 to

the present. Include their name, home address,

telephone, position(s) at Allen & Associates and dates

each person held such position.

6. Identify your most recent employer(s), including the

positions that you have held since January 1, 2006, and

your duties in each position.

7. Describe in detail the ownership and managerial

structure of Allen & Associates, including all positions

that you have held at Allen & Associates, and the duties

and responsibilities for each position you have held. 

Include the dates that you held each position and, if you

oversaw employees in any position, the names and

positions of the employees acting under your authority.

8. Describe how you and/or Allen & Associates were

compensated for filing, preparation, and/or signing of

federal tax returns for Customers from January 1, 2006 to

the present. For each Customer for whom you and/or Allen

& Associates filed, prepared, signed, and/or advised or

assisted with the preparation of federal tax returns

since January 1, 2006, your answer should include the

amount of payment received, a description of the services

provided for such payment, how you calculated such

payment, and when the individual or entity made the

payment.

9. Identify any and all steps you have taken to determine

whether the federal tax returns filed, prepared, signed

by you or Allen & Associates, and tax returns which you

or Allen & Associates advised or assisted with the

preparation of, described in interrogatory number 1

above, are lawful, including the name of any publication 

you have consulted, the specific relevant information or

opinions contained in the publication, the identity of

any person with whom you have conferred, the specific

information or opinions provided by that person, any job

titles held by that person, and the basis of that

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person’s knowledge.

10. Describe in detail how you learned to prepare returns

utilizing tax arrangements described in the Complaint and 

identified as “Scheme 1: Tax Returns Reporting ‘None’ for

Income Tax,” “Scheme 2: Tax Returns Reporting Bogus

Itemized Deductions to Offset Income,” and “Scheme 3:

Frivolous Amended Tax Returns Claiming That Wages Are

Non-Taxable,” including identifying the individuals,

entities, publications, software, promotional materials, 

or other tax law or tax preparation material you

consulted.

11. Identify by date, type of communication, location (if

it occurred in person), and name and contact information 

of the Customer on whose behalf you were communicating,

all instances in which you have communicated with any IRS

employee relating to your and/or Allen & Associates’s

preparing, filing, and/or signing of federal tax returns,

and your advising and assisting with the preparation of

federal tax returns, since January 1, 2006.

12. Please describe in detail all education or training

you have received on the subject of federal income

taxation.

* * *

1. If you deny any of the United States’ First Set of

Requests for Admission to John Allen, for each denial and

with supporting facts the basis for your denial. 

Based on the foregoing, the Court denied the motion for

sanctions to the extent that it sought a default judgment, but

granted it to the extent that it sought further responses to

discovery. 

In response to this Court’s order, Mr. Allen filed a

document entitled “Defendant’s Discovery Responses.” That

document provides the following:

As to Plaintiff’s interrogatories, Mr. Allen has not ever

“filed, prepared and/or signed” any federal income tax

forms for anyone. Such forms simply do not exist!

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Mr. Allen has not ever promoted any “tax schemes” as

alleged by Plaintiff. Such “tax schemes” simply do not

exist!

The only thing Mr. Allen has done, which is not illegal

and has been accepted by the IRS, is agreed to be the

power of attorney for 2 or 3 of his friends in order to

help them with their tax matters to the best of Mr.

Allen’s ability.

(Doc. 37 at 1). In addition, Mr. Allen states that all of his

legal materials had been confiscated and, consequently, he is

unable to send his responses to the government’s counsel. 

Finally, Mr. Allen “prays that this will end the malicious and

unfounded harassment and intimidation being inflicted by

Plaintiff and its attorneys.” Id.

In response to Mr. Allen’s claim that all of his legal

materials had been confiscated, the United States filed “a notice

of mailing documents” on March 31, 2014. (Doc. 38). In that

notice, the United States stated that it mailed the following

documents to Mr. Allen: (1) the United States’ First Set of

Interrogatories and Requests for Production of Documents; (2) the

United States’ Second Set of Interrogatories; (3) Mr. Allen’s

responses to the interrogatories and requests for production of

documents; and (4) the Court’s March 5, 2014 Opinion and Order. 

 On May 8, 2014, the United States filed its renewed motion

for sanctions. The United States again seeks the entry of a

default judgment against Mr. Allen based upon his failure to

comply with the second order requiring him to respond adequately

to its interrogatories. Mr. Allen has not responded to the

renewed motion.

II. Discussion

This Court set forth the legal standard relevant to a motion

for sanctions in its previous Opinion and Order. Stated again

for purposes of reference, Fed.R.Civ.P. 37(b) authorizes

sanctions for a party’s failure to obey an order requiring

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discovery. The strongest sanction available to address discovery

abuses is the entry of a default judgment against a defendant or

an order of dismissal against a plaintiff. See Quinn v. Kennedy,

2008 WL 4145445,*1 (W.D. Mich. Aug. 20, 2008), citing Grange Mut.

Cas. Co. v. Mack, 270 F. App’x 372, 376 (6th Cir. 2008). In the

Sixth Circuit, courts are to consider four factors including “(1)

whether the party’s failure to cooperate in discovery is due to

willfulness, bad faith, or fault; (2) whether the adversary was

prejudiced by the party’s failure to cooperate in discovery; (3)

whether the party was warned that failure to cooperate could lead

to the sanction; and (4) whether less drastic sanctions were

first imposed or considered.” Id., citing Freeland v. Amigo, 103

F.3d 1271, 1277 (6th Cir. 1997).

Here, all four factors weigh heavily in favor of the entry

of a default as to Mr. Allen’s liability. Turning to the first

factor, Mr. Allen has repeatedly violated this Court’s discovery

orders and failed to provide adequate responses to the discovery. 

As this Court observed in its March 5, 2014 Opinion and Order,

Mr. Allen has continuously refused to participate meaningfully in

discovery from the outset of this litigation. This Court

reiterates that, although Mr. Allen is acting without counsel,

this does not excuse him from producing discovery. See In re

Family Resorts of Am., Inc., 1992 WL 174539, *3 (6th Cir. July

24, 1992). Further, this Court has not been presented with any

argument or evidence suggesting that Mr. Allen is unable to

comply with the discovery requests. Simply stated, Mr. Allen has

provided no legitimate basis for his failure to comply. Because

Mr. Allen’s continued course of conduct can only be characterized

as wilful, the Court finds that the first factor weighs heavily

in favor of the entry of a default as to Mr. Allen’s liability. 

Second, the United States has suffered prejudice. More

specifically, Mr. Allen’s failure to provide adequate responses

to the requested discovery has deprived the United States of

information that would allow it to pursue its claims. For

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example, the United States notes that it has been deprived of the

information “necessary to identify Allen’s customers, who likely

have information relevant to Allen’s activities alleged in the

complaint.” (Doc. 39 at 3). For these reasons, the Court finds

that the second factor also weighs heavily in favor of the entry

of a default as to Mr. Allen’s liability. 

Third, this Court has warned Mr. Allen twice that his

failure to cooperate could result in sanctions, including the

entry of a default judgment against him. Mr. Allen has

nevertheless failed to comply with this Court’s orders. 

Consequently, the third factor also weighs heavily in favor of

the entry of a default as to Mr. Allen’s liability. 

Finally, this Court has considered and imposed less drastic

sanctions, and Mr. Allen has continued his failure to comply. It

has been over a year since the United States first filed a motion

with respect to Mr. Allen’s refusal to participate in the

discovery process. At this juncture, it is logical to conclude

that any further order to compel Mr. Allen to participate would

be fruitless. 

Based on the foregoing, the Court will grant the renewed

motion for sanctions. This Court is mindful that the entry of a 

default is a strong sanction that should be utilized only in

extreme cases. However, under these circumstances, the Court

finds that the appropriate sanction is to strike Mr. Allen’s

answer and enter a default as to liability. Accordingly, the

well-pleaded factual allegations of the complaint pertaining to

liability will be taken as true. See Microsoft Corp. v. Computer

Care Ctr., 2008 WL 4179653, *6 (E.D.N.Y. Sept. 10, 2008). 

Whether the facts in the complaint indeed are well-pleaded or

support the entry of a judgment for injunctive and other relief

is a separate matter for the consideration by the District Judge. 

See id. That issue may be preserved by way of a motion for

judgment on the complaint.

III. Conclusion

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Based upon the foregoing, the renewed motion for sanctions

filed by the United States (Doc. 39) is granted. Pursuant to

Fed.R.Civ.P. 37(b)(2)(A), a default is entered as to Mr. Allen’s

liability. Consequently, the complaint in this case stands as

undisputed, and the answer shall be stricken. Whether the facts

in the complaint are well-pleaded or support the entry of a

judgment for injunctive and other relief is a separate matter for

the consideration by the District Judge.

IV. Motion for Reconsideration

Any party may, within fourteen days after this Order is

filed, file and serve on the opposing party a motion for

reconsideration by a District Judge. 28 U.S.C. §636(b)(1)(A),

Rule 72(a), Fed. R. Civ. P.; Eastern Division Order No. 91-3, pt.

I., F., 5. The motion must specifically designate the order or

part in question and the basis for any objection. Responses to

objections are due fourteen days after objections are filed and

replies by the objecting party are due seven days thereafter. 

The District Judge, upon consideration of the motion, shall set

aside any part of this Order found to be clearly erroneous or

contrary to law.

This order is in full force and effect, notwithstanding the

filing of any objections, unless stayed by the Magistrate Judge

or District Judge. S.D. Ohio L.R. 72.3.

/s/ Terence P. Kemp 

United States Magistrate Judge

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