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United States v. Laketek

December 10, 2007

UNITED STATES OF AMERICA, PLAINTIFF,
v.
FRAN LAKETEK, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Milton I. Shadur Senior United States District Judge

MEMORANDUM OPINION AND ORDER

This action by the United States seeks two forms of relief:

1. a money judgment against Fran Laketek ("Laketek") based on an unpaid federal tax assessment attributable to the failure of Fran-Co Construction Company ("Fran-Co"), the corporation over which Laketek once presided, to remit to the government income taxes and Federal Insurance Contribution Act ("FICA") taxes that had been withheld from wages paid to its employees; and

2. a foreclosure judgment against real property located at 1980 Clover Drive, Inverness, Illinois, based on the federal tax lien attached to that real property by reason of the unpaid federal tax assessment.

At this juncture the United States has moved for summary judgment only as to the money judgment. For the reasons laid out below, this Court grants its motion.

Summary Judgment Standard

Every Rule 56 movant bears the burden of establishing the absence of any genuine issue of material fact (Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986)). For that purpose courts consider the evidentiary record in the light most favorable to nonmovants and draw all reasonable inferences in their favor (Lesch v. Crown Cork & Seal Co., 282 F.3d 467, 471 (7th Cir. 2002)). But to avoid summary judgment a non-movant "must produce more than a scintilla of evidence to support his position" that a genuine issue of material fact exists (Pugh v. City of Attica, 259 F.3d 619, 625 (7th Cir. 2001)) and "must set forth specific facts that demonstrate a genuine issue of triable fact" (id.). Ultimately, summary judgment is warranted only if a reasonable jury could not return a verdict for the non-movant (Anderson v. Liberty Lobby, Inc., 466 U.S. 242, 248 (1986)).

What follows is a summary of the facts viewed in the light most favorable to non-movant Laketek, but within the limitations created by the extent of her compliance (or noncompliance) with the strictures of LR 56.*fn1 And that obviates the need, in the evidentiary recital, to repeat "according to Laketek" or the like or to identify any conflicting account, though inclusion of the latter is sometimes called for as a purely informational matter.

Facts

For all four quarters of 1998 and the first two quarters of 1999, Fran-Co failed to remit to the government the income and FICA taxes that it withheld from wages paid to its employees (U.S. St. ¶15). As a result, on February 5, 2001 a delegate of the Secretary of the Treasury made an assessment against Laketek in the amount of $221,267.14 (id.). That was done pursuant to 26 U.S.C. §6672 ("Section 6672") (id.), a statute discussed in greater detail below.

Throughout the tax periods relevant to this litigation, Laketek was Fran-Co's president, sole shareholder and sole member of its Board of Directors.*fn2 Beginning in 1993 and continuing through all four quarters of 1998, Laketek was also the only Fran-Co employee who signed the corporation's Internal Revenue Service ("IRS") Forms 941, the federal employment tax returns that it filed quarterly (U.S. St. ¶¶7-8). In addition, from 1993 through 1999---on at least a weekly basis---Laketek signed all checks drawn on bank accounts held in Fran-Co's name (U.S. St. ¶¶9-10; L. Dep. 57, ll. 18-24 through 58, l. 1). On other occasions Laketek exercised control over Fran-Co's finances by refusing to sign checks drawn on the corporation's accounts that were brought to her for her signature (U.S. St. ¶11).

Toward the end of 1998 Laketek first learned that Fran-Co was delinquent in paying employment taxes to the IRS (U.S. St. ¶12). Despite that knowledge, from January through March 1999 Laketek continued to sign checks drawn on Fran-Co's bank account for purposes other than meeting the corporation's tax obligations (U.S. St. ¶13).*fn3 Those checks were brought to Laketek for her signature by Michael Palmieri ("Palmieri"), a Fran-Co employee who handled a number of the day-to-day responsibilities related to the corporation (L. St. ¶13). In particular, Palmieri served as the primary point of contact for Fran-Co customers (L. Add.St. ¶11; L. Ex. 10) and signed business records on behalf of the corporation (L. Add.St. ¶¶11-12). In addition, on at least one occasion Palmieri signed a contract on behalf of Fran-Co misidentifying himself as "President" of the corporation (L. St. ¶6; L. Add.St. ¶10; L. Ex. 1).*fn4

Perhaps most significantly from Laketek's point of view, Palmieri also played a large role in the management of Fran-Co's finances. As noted earlier, he alone prepared and brought checks to Laketek for her signature (Laketek permitted him to have sole access to Fran-Co's checkbook)(L. St. ¶¶9, 13; L. Add.St. ¶15). In addition, although Laketek was the only Fran-Co employee with proper signature authority on all Fran-Co bank accounts (U.S. St. ¶9), Palmieri was still able to remove funds from those accounts (L. St. ¶9). That was so continuing well through 1999 because officials at Northwest Community Bank, the only bank where FranCo accounts were maintained after April 1998,*fn5 acted only according to his instructions (L. Add.St. ¶¶16, 19, 22).*fn6

Indeed, Laketek did not take the opportunity to review Fran-Co's bank statements (L. Add.St. ...


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