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United States v. Shaheen

June 12, 1971

UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,
v.
THOMAS A. SHAHEEN, DEFENDANT-APPELLANT



Kiley, Pell and Stevens, Circuit Judges.

Author: Stevens

STEVENS, Circuit Judge.

This is an appeal from an order denying a motion to quash a writ ne exeat republica. The writ issued pursuant to 26 U.S.C. § 7402(a)*fn1 in an action filed by the United States to collect alleged income tax deficiencies of $452,534.89. As the principal action is still pending in the district court, the appeal is from an interlocutory order. The Government does not question our appellate jurisdiction. Since the extraordinary writ entered by the district court is in the nature of an injunction, we are satisfied that we have jurisdiction of the appeal pursuant to 28 U.S.C. § 1292(a).*fn2

By its terms the writ restrains appellant "from departing out of the jurisdiction of this Court until further order of this Court, and requiring him to give security in the amount of $450,000." The writ was originally construed by the Government and by the district court to require imprisonment of appellant since he was unable to post a $450,000 bond. On emergency application, we found that the record did not warrant the confinement of appellant either in prison or within the Northern District of Illinois, and ordered his release from custody without prejudice to the continuing restraint of the writ against his departure from the United States. We now conclude that the writ must be vacated.

I.

The writ was entered on the ex parte application of the Government. The supporting affidavits established the following facts.

Appellant is an American citizen who formerly resided in Chevy Chase, Maryland. For several months prior to August 1970, the Internal Revenue Service had been investigating the accuracy of his tax returns for the years 1966 and 1967; appellant had commenced litigation tending to impede that investigation, and certain negotiations between his counsel and the Service had taken place.

On August 3, 1970, appellant sold his residence for a price of $190,000. About two weeks later his household goods were shipped, in the name of a third party, to a destination in London, England. The furnishings belonging to his daughter and her husband were also shipped to London in late August. On August 28, 1970, appellant borrowed $80,000 secured by a conveyance of his interest in real estate adjacent to his former residence.

On September 4, 1970, appellant, accompanied by his wife and daughter, traveled by air from Boston to London. On September 8, 1970, appellant's counsel conferred with the District Director of Internal Revenue in Boston. Apparently the Government then learned of appellant's departure.

On September 14, 1970, the Government made a jeopardy assessment against appellant in the amount of $151,104.40. On March 19, 1971, an additional jeopardy assessment of $301,430.49 was made. All administrative methods of collecting the asserted tax liability of appellant were exhausted with the result that only $4,139.28 had been collected. Credit for this amount had been allowed in making the jeopardy assessments which, therefore, aggregated $452,534.89, plus interest, when this action was commenced on April 1, 1971.

Certain assets of appellant were held in trust by his attorneys, but they failed and refused to surrender such property in response to notices of levy and a final demand on behalf of the Treasury. Apart from the trust, the Government was unaware of any assets belonging to the taxpayer located in the United States. It levied on appellant's household goods while they were on the high seas, but appellant's son-in-law recovered the goods in an action brought in the English courts.

On April 1, 1971, appellant was present within the Northern District of Illinois for the purpose of attending a bail hearing in connection with a criminal charge pending against him in that court. The District Director of Internal Revenue for Baltimore, Maryland, based on the facts set forth above, concluded that appellant would depart quickly from the United States if not restrained, and that if appellant were allowed to depart, the tax claims against him would be wholly lost.

Neither appellant nor his counsel was present in court, or had received prior notice of the ...


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