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LARUE v. U.S.

April 3, 1997

CLYDE W. LARUE, MARK HILVETY, BEVERLY HILVETY, BRIAN L. HILVETY, TAMMY A. HILVETY, THOMAS L. MAGRO, VICKY MAGRO, DEBRA L. LARUE, DALE T. HEDBERG, PATRICIA A. HEDBERG, NEIL HILVETY, RUTH B. HILVETY, JEFFREY S. THORPE, RONALD E. EKISS, DELMAR VOLENTINE, LORI DAMHORST, MARK DAMHORST, DEBRA I. DAMHORST, ANDREW J. HORTENSTINE, PAMELA S. HORTENSTINE, JOHN F. KOESTER, MARCELLA K. KOESTER, RICH MCADAMS, RUSSELL W. CORRIGAN, KIMBERLY S. CORRIGAN, JEFFREY GIBBS, KIMBERLY KELLY, DAVID GIBBS, AND JEFF WHITE, PLAINTIFFS,
v.
UNITED STATES, UNITED STATES OF AMERICA, ITS COLLECTORS OF INTERNAL REVENUE TAX; JOHN WENDORFF, FORMER DISTRICT DIRECTOR; JOHN WENDORFF, INDIVIDUALLY; ROBERT W. BROCK, DISTRICT DIRECTOR; ROBERT W. BROCK, INDIVIDUALLY; ROBERT D. KREIGE, FORMER CHIEF, SPECIAL PROCEDURES FUNCTION; ROBERT D. KREIGE, INDIVIDUALLY; JIM DANIEL, CHIEF SPECIAL PROCEDURES FUNCTION; JIM DANIEL, INDIVIDUALLY; DANIEL L. BLACK, FORMER DISTRICT DIRECTOR; DANIEL L. BLACK, INDIVIDUALLY; H.A. WILLIAMSON, REVENUE OFFICER; H.A. WILLIAMSON, INDIVIDUALLY; SAM RANDAZZO, REVENUE OFFICER; SAM RANDAZZO, INDIVIDUALLY; JOHN FORD, GROUP MANAGER; JOHN FORD, INDIVIDUALLY; V.A. BOECKMAN, REVENUE OFFICER; V.A. BOECKMAN, INDIVIDUALLY; GEORGIA L. HOUSE, REVENUE OFFICER; GEORGIA L. HOUSE, INDIVIDUALLY; VALERIE ZEISSET, REVENUE OFFICER; VALERIE ZEISSET, INDIVIDUALLY; RALPH B. LOGAN, REVENUE OFFICER; RALPH B. LOGAN, INDIVIDUALLY; J.D. NOLAN, REVENUE OFFICER; J.D. NOLAN, INDIVIDUALLY; KATHRYN L. JEFFERS, SPECIAL AGENT; KATHRYN L. JEFFERS, INDIVIDUALLY; PATRICK CALHOUN, SPECIAL AGENT; PATRICK CALHOUN, INDIVIDUALLY; SUE RODERICK, SPECIAL AGENT; SUE RODERICK, INDIVIDUALLY; BERNARD J. COLEMAN, SPECIAL AGENT; BERNARD J. COLEMAN, INDIVIDUALLY; LARRY WIRT, SPECIAL AGENT; LARRY WIRT, WEST PAGE 960 INDIVIDUALLY; ROBERT JACOBS, SPECIAL AGENT; ROBERT JACOBS, INDIVIDUALLY; BILL MCCORMICK, SPECIAL AGENT; BILL MCCORMICK, INDIVIDUALLY; H. MATSON, SPECIAL AGENT; H. MATSON, INDIVIDUALLY; GARY BROWN, REVENUE OFFICER; GARY BROWN, INDIVIDUALLY; AND OTHER JOHN DOES TO BE NAMED, DEFENDANTS.



The opinion of the court was delivered by: Richard Mills, District Judge:

OPINION

Another frivolous tax protest case.

Rule 11 sanctions are again in order.

And the Court enjoins many of these plaintiffs from filing anything further in this Court until they have paid these and all previous sanctions.

I. BACKGROUND

This is the second tax protest lawsuit Clyde W. LaRue and his colleagues have filed in this Court within two years. The Court dismissed the first lawsuit as frivolous and imposed sanctions on the Plaintiffs under Federal Rule of Civil Procedure 11. Clyde W. LaRue appealed and the United States Court of Appeals sanctioned him for filing a frivolous appeal.

This lawsuit is brought by 29 individuals: Clyde W. LaRue, Mark Hilvety, Beverly Hilvety, Brian L. Hilvety, Tammy A. Hilvety, Thomas Magro, Vicky Magro, Debra L. LaRue, Dale T. Hedberg, Patricia A. Hedberg, Neil Hilvety, Ruth Hilvety, Jeffrey S. Thorpe, Ronald E. Ekis, Delmar Volentine, Andrew J. Hortenstine, Pamela S. Hortenstine, Jeffrey T. Gibbs, Kimberly Kelly, and Jeffrey H. White. Only Lori Damhorst, Mark Damhorst, Debra I. Damhorst, John E. Koester, Marcella K. Koester, Rich McAdams, Russell W. Corrigan, Kimberly Corrigan, David Gibbs did not participate in the first suit.

Plaintiffs make essentially the same claims in this lawsuit as they did in the lawsuit they filed in 1995. Specifically, Plaintiffs claim that they are exempt from federal income tax because the State of Illinois is not a "state" as defined by Congress in the Internal Revenue Code. Rather, they argue that Illinois is a member of the "union." Thus, according to their convoluted reasoning, since Illinois is not a state for federal income tax purposes, then they are "non-resident aliens" and exempt from federal income taxes. In a new twist, Plaintiffs also claim that they are the victims of involuntary servitude imposed in violation of the Thirteenth Amendment to the United States Constitution.

The United States filed a motion to dismiss this action. In its motion, the Government argued, on behalf of all Defendants, that this action is frivolous. The Government also asked the Court to sanction Plaintiffs and to enjoin them from filing further lawsuits in this Court until they have fully complied with all sanctions orders.

On the Government's motion, the Court dismissed this lawsuit because it is frivolous. The Court then ordered Plaintiffs to show cause why the Court should not sanction them for filing a frivolous lawsuit. The Court also reserved ruling on the Government's request for an injunction prohibiting Plaintiffs from filing further lawsuits in this Court.

Plaintiffs have now responded to the Court's show cause order. In their response, Plaintiffs argue that this suit is not frivolous because they have tried to comply with all the procedural prerequisites for bringing suit. Plaintiffs place great emphasis on the fact that their prior lawsuits were dismissed for procedural reasons and they believe they have remedied all procedural deficiencies. Plaintiffs, however, ignore the crucial fact that, procedural matters aside, their claim is that they are not subject to the federal income tax. In their previous case in this Court, both this Court and the Court of Appeals stated plainly that Plaintiffs claims that they were not subject to the income tax were frivolous. LaRue v. Collector of Internal Revenue, No. 95-2768, 96 F.3d 1450, 1996 WL 508567 (7th Cir. Sept. 3, 1996) ("LaRue's argument that he should be treated as a nonresident alien — one that is offered occasionally by tax protesters — is patently frivolous."); LaRue v. Collector of Internal Revenue, No. 95-3036, 1995 WL 479521 (C.D.Ill. June 21, 1995) (sanctioning Plaintiffs for filing a frivolous lawsuit). Faced with a second lawsuit within two years by the same group of tax protesters, the Court decided to dismiss this case on the ground that it was, at its core, a frivolous lawsuit. Plaintiffs do not address that issue in their response to the Court's Order to Show Cause.

II. RULE 11

Rule 11 of the Federal Rules of Civil Procedure provides that:

  (b) By presenting to the court (whether by signing,
  filing, submitting, or later advocating) a pleading,
  written motion, or other paper, an attorney or
  unrepresented party

  is certifying that to the best of the person's
  knowledge, information, and belief, ...

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