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United States of America v. Edward A. Scott Iii

March 29, 2011

UNITED STATES OF AMERICA, PLAINTIFF,
v.
EDWARD A. SCOTT III, LAURI E. SCOTT. ROBERT G. RIFFNER AND, HARRIS BANK BARRINGTON, N.A.
DEFENDANT.



The opinion of the court was delivered by: Judge Sharon Johnson Coleman

Magistrate Judge Sidney Schenkier

MEMORANDUM OPINION AND ORDER

Defendants, Edward A. Scott, Laurie Scott, and Robert Riffner, filed the instant motion seeking dismissal of the complaint as a discovery sanction under Rule 37. Defendants contend that AUSA Schifano, counsel for the IRS, willfully and in bad faith has never provided defendants with an accurate and exact quantification of the debt defendants allegedly owe.

The case is currently in a settlement posture before Magistrate Judge Schenkier. In early February, the government gave defendants 30 days to submit various pieces of sworn material to substantiate their inability to pay and then the government was going to require 30 days to consider the material. A settlement conference is scheduled for May 3, 2011.

Background

The instant case was filed on June 3, 2009, by the government (IRS) seeking to reduce tax liens to judgment and collect unpaid taxes from the defendants. Defendants answered the complaint and asserted affirmative defenses, primarily an inability to pay. Defendants did not assert any deficiency in the pleading.

According to the discovery schedule, Rule 26(a)(1) disclosures were due on December 12, 2009. AUSA Schifano, as counsel for the government, did not meet that deadline. On January 27, 2010, the Court (J. Pallmeyer) held a status hearing and entered the following order, in relevant part:

"On Plaintiff's oral motion and for good cause shown, time for service on Defendant Robert G. Riffner and Defendant Harris Bank Barrington, NA extended for additional 30 days. Within 14 days, Government will be expected to provide (a) relevant transcripts or other records reflecting the amount of tax allegedly owed, and (b) Rule 26(a)(1) disclosures." (Dkt. 19.)

Service on defendants Riffner and Harris Bank was initially due on February 10, 2010, and the government served them on February 25, 2010, within the 30 day extension granted by the court. However, the government did not provide transcripts of the amount owed until March 30, 2010. AUSA Schifano cited serious health issues and a calendaring mistake for the delay.

On March 18, 2010, defendant Riffner sought reconsideration of the court's decision to extend the time in which the government had to serve Riffner. On April 2, 2010, defendants filed the motion to dismiss currently under consideration. Judge Pallmeyer set concurrent briefing schedules on both motions and set a ruling date of April 30, 2010. On April 30, 2010, Judge Pallmeyer entered the following order:

"Motion hearing held. Defendants' motion to dismiss entered and continued.

Absent full disclosure by the government of the amounts it seeks to recover and an accounting for any payments, recovery from seized and assigned assets, and any other credits or set-offs, this case will be dismissed with prejudice. As the court remains satisfied that there was good cause for the brief extension sought by the government of time for service of process, Robert Riffner's motion for reconsideration is denied." (Dkt. 39.)

On May 21, 2010, AUSA Schifano filed a 156 page accounting. Judge Pallmeyer set a briefing schedule for responses to the accounting submitted by the government and then scheduled an evidentiary hearing on the matter due to a factual dispute about the government's compliance with the Court's April 30th order. The evidentiary hearing was scheduled for August 6, 2010. Just prior to the hearing, AUSA Schifano filed an emergency motion to continue the hearing to another date. He had taken seriously ill, stating in the motion that he was suffering from acute gastrointestinal bleeding, nausea and vomiting. (Dkt. 48.) On August 12, 2010, Stephen Lyons and Christina Bixby filed their appearances as substitute counsel for the government.

On August 25, 2010, the government provided a supplemental accounting of the amount allegedly owed by defendants. On August 26, 2010, the Court held a status ...


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