1 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

UNITED STATES OF AMERICA, Plaintiff,

v. Civil Action No. 15-2148 (JEB) NANCY E. KELLEY-HUNTER, Individually and as Representative of Estate of Burt Hunter,
Defendant.

MEMORANDUM OPINION In an effort to hide assets be yond the long arm of the taxman, some people occasionally maintain secret foreign bank accounts. When such banks pass al ong this information to the Internal Revenue Service, however , the gambit appears less wise . The United States here has sued Nancy E. Kelley-Hunter − i ndividually and as the represent ative of the estate of her late husband, Burt Hunter − for her wi llful failure to disclose a ba nk account in Switzerland worth about $3.4 million. In such a circumstance, the Government may assess a civil penalty of up to 50% of a taxpayer’s interest i n such account. Having already o btained a default judgment against the estate for $857,625, whi ch represents half of Burt Hunter’s 50% share in the account, the Government now moves for summary judgment for the same amou nt from Kelley-Hunter individually. As the United S tates has sufficiently demonstrat ed its entitlement to the sum sought – and she has filed no oppositi on − the Court will grant its request. I. Background Given that Defendant has not oppos ed the Government’s Motion, the Court may treat as true the facts set forth in Pla intiff’s Statement of Undisputed Material Facts. See Fed. R. Civ. P.2 56(e)(2). Before doing so, however, it ensures that each fact is properly supported by record evidence. See Winston & Strawn, LLP v. McLean, 843 F.3d 503, 5 05 (D.C. Cir. 2016). Kelley-Hunter married Burt H unter in 1997, and the two moved to France the following year. See ECF No. 25-5 (Statement of Undisputed Material Facts ), ¶ 3. In approximately 2006, they transferred money to an acc ount at UBS, a Swiss financial- services entity. Id., ¶ 5. KelleyHunter exercised control over the account, meeting with the UBS account representative a couple of times a year; communicati ng with him by phone and fax, inclu ding when she desired to pay a bill from the account; and possessing authority to direct inves tments from the account. Id., ¶¶ 8- 11. The account was nominally held in the name of Towers Inter national, Inc., but this did not affect Kelley-Hunter’s abilit y to control its assets. Id., ¶¶ 17-18. In fact, UBS possessed a form giving her power of attorney a nd granting her authority over th e account. Id., ¶ 32. Kelley-Hunter personally prepar ed the couple’s returns for tax years 2003-07. Id., ¶ 21. Although she indicated an interest in another foreign account i n the earlier of those years, she did not do so for the UBS account f or the 2007 return. Id., ¶¶ 21- 23. This was so even though she had knowledge of the operation of the account at this time and had even received an email from the account representa tive indicating that “dividends between [ June 13, 2006] and [December 7, 2007] were €46,817EUR.” Id., ¶ 24 (al teration in original). W hen she received a letter from UBS in February 2009 that the ba nk had disclosed t he existence of her account to the IRS, she subsequently filed a document with the Service mentioning the a ccount and listing its value as $3.8m. Id., ¶¶ 27-28. The value at the end of 2007, however, was approximately $3.4 million. Id., ¶ 36. The Government brought this act ion in 2015 to recover the civi l penalties it believed were due. It originally sued bot h Kelley-Hunter and Hunter ind ividually, but when he died in3 January 2016, the Government substi tuted his estate as a party for him. See ECF No. 5 (Motion for Substitution) at 1. The case proceeded through lengthy and at times contentious discovery, in part delayed by Defendant’s resid ing in France. Ultimately, th e Government successfully obtained a default judgment agai nst Burt Hunter’s estate in the amount of $857,625. See ECF No. 20. Kelley-Hunter, meanwhile , was refusing to respond to C ourt Orders regarding discovery, and her counsel ultimat ely withdrew. See Minute Ord ers of August 17 and September 26, 2017. The Government subsequently moved for summary judgme nt against her, and she never responded, despite the Cour t’s specifically instructing h er to do so or risk entry of judgment against her. See ECF No. 26 (Order).
II. Standard of Review Summary judgment is wa rranted if “the movant shows that there i s no genuine dispute as to any material fact and the mova nt is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a); see also Anderson v. L iberty Lobby, Inc., 477 U.S. 242, 247-48 (1986); Holcomb v. Powell, 433 F.3d 889, 895 (D.C. Cir. 2006). A fact is “materia l” if it is capable of affecting the substantive outcome of the l itigation. See Liberty Lobby, 477 U.S. at 248; Holcomb, 433 F.3d at 895. A dispute is “genuine” if the evidence is such that a rea sonable jury could return a verdict for the nonmoving party. See Liberty Lobby, 477 U.S. at 248; H olcomb, 433 F.3d at 895. “A party asserting that a fact cannot be or is genuinely disputed must support the assertion” by “citing to particular parts of mat erials in the record” or “sho wing that the materials cited do not establish the absence or prese nce of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.” Fed. R. Civ. P. 56(c )(1).4 III. Analysis Under 31 U.S.C. § 5314(a), a taxpayer must “file reports . . . when the . . . person makes a transaction or maintains a rel ation for any person with a forei gn financial agency.” That means that anyone “having a financial i nterest in, or signature or ot her authority over, a bank, securities or other financial account [ over $10,000] in a foreign country shall report suc h relationship . . . for each year in which such rela tionship exists.” 31 C.F.R. §§ 1010.350(a), 1010.306(c). Taxpayers do so via Form 1040, Sche dule B, which di rects them t o Form TD F 90-22.1, which in turn provides instructions f or reporting such financial inte rest. See United States v. McBride, 908 F. Supp. 2d 1186, 1200 n.2 (D. Utah 2012). Willful failure to do so may result in penalties equal to 50% of the value of the undisclosed account. See 31 U .S.C. § 5321(a)(5)(C)(i). The Government, accordingly, may prevail by satisfying the fol lowing elements: (1) Kelley-Hunter was a U.S. citi zen (or other qualified person) at the time of her filing; (2) she had a financial interest in or signatory authority over the account at issue; (3) the account balance exceeded $10,000; (4) the account was in a foreign country; (5) she failed to disclose the account; (6) the failure was willf ul; and (7) the amount of the proposed penalty is proper. McBride, 908 F. Supp. 2d at 1201. There can be little doubt that th e Government has checked all of the above boxes. First, Kelley-Hunter was a U.S. citize n at the relevant time. See ECF No. 10 (Answer), ¶ 3. Second, as the Background sets forth, she ha d a clear interest in the a ccount. Third, the balance of $3.4m easily exceeds the $10,000 threshold. Fourth, the UBS account was maintained in Geneva, Switzerland. Fifth, she has adm itted that she did not disclose the UBS account in her return for tax year 2007. See SUMF, ¶ 23.5 The sixth element is willfulness, which at times can prove cha llenging to establish, but not here. To begin, Kelley-Hunter did file previo us returns th at mentioned foreign accounts, so she clearly knew of the requi rement. In addition, she sent ema ils to her accountant, Peter Kent, that display a consciousness of guilt, including references to the IRS being “s o far behind us with the UBS junk, that they won’t cat ch up with [her husband Burt] in his lifetime and I’ll be on my way to Tahiti.” Id., ¶ 46. In any event, willful blindness or reckless disregar d satisfies the required mental state, and Kelley- Hunter certainly acted with a t least that degree of intent. McBride, 908 F. Supp. 2d at 1205 (citi ng Global-Tech Applicanes , Inc. v. SEBSA, 563 U.S. 754, 766 (2011)). Finally, as to the seventh ele ment, the amount of 25% of the a dmitted value of the

account – i.e. , half of her half of the total – is certainly a proper sum.
IV. Conclusion The Court, accordingly, will issue a contemporaneous Order gra nting summary judgment in favor of the Government and awarding $857,625 in civil penal ties.

/s/ James E. Boasberg JAMES E. BOASBERG United States District Judge Date: December 12, 2017