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United States v. Sanders

United States District Court, Seventh Circuit

August 29, 2013

UNITED STATES OF AMERICA, Plaintiff,
v.
FRANKIE L. SANDERS, et al., Defendants.

ORDER

DONALD G. WILKERSON, United States Magistrate Judge

Now pending before the Court is Plaintiff’s, United States of America’s, Motion to Compel Discovery filed on June 28, 2013 (Doc. 58). This motion pertains to Defendant Frankie Sanders, in his individual capacity, and in his capacity as trustee of both Y & K Leasing Trust Triple S. Family Trust. Defendant’s Response to the Motion to Compel and Objection to a Court Order directing him to respond (Doc. 59) was filed on July 15, 2013 (Doc. 61). Plaintiff filed a Reply Brief Regarding Motion to Compel on July 30, 2013 (Doc. 62). For the reasons set forth below, Plaintiff’s Motion to Compel Discovery is GRANTED.

Procedural History

This case has a long and tortured procedural history. The Plaintiff first filed suit against these defendants on October 11, 2011. On November 26, 2011, Defendant Sanders filed a motion to dismiss for failure to state a claim (Doc. 6). On December 6, 2011 the Court set a schedule in this case with a presumptive trial month of January 2013. On January 19, 2012, after two extensions were granted by the Court, Plaintiff filed a Memorandum in Opposition to the Motion to Dismiss (Doc. 12). On January 31, 2012 this Court entered an Order Regarding Discovery (Doc. 19) which governs the production of discovery in this case.

On August 3, 2012, Plaintiff filed an initial Motion to Compel Discovery (Doc. 21). On August 14, 2012 Defendant filed a Response in Opposition to Plaintiff’s Motion to Compel Discovery (Doc.23). The Court took the Motion to Compel under advisement and issued an Order to Show Cause to Defendant Sanders (Doc. 24). On September 17, 2012, Defendants Motion to Dismiss (Doc. 6) was denied. On September 27, 2012 the Court held a hearing on the order to show cause and ordered Defendant Sanders to respond to Plaintiff’s Request to Produce Set II by October 9, 2012 (Doc. 32).

On December 12, 2012, Defendant’s attorney, Jerold W. Barringer, was terminated from this action (Doc. 35). The Court notified Defendant Sanders that he could have new counsel enter or proceed pro se and ordered him to notify the Court by January 2, 2013 of his intention. Defendant Sanders did not notify the Court by the deadline and, on January 7, 2013, the Court entered an order, ordering Defendant Sanders to show cause why such notification had not been made. On January 25, 2013, the Court construed Defendant Sanders response to its show cause order as notification of his intent to proceed pro se.[1]

On June 28, 2013, Plaintiff filed the instant motion to compel discovery. The motion is fully briefed and before the court.

Discussion

Factual background

Reggie Sanders is a 67-year-old resident of the Ramsey, Illinois. For many years he did not file or pay income tax. The IRS has been investigating Mr. Sanders for many years. Its investigation revealed that Mr. Sanders was a wealthy farmer with substantial income. The IRS alleges that Mr. Sanders operates two farms, a 160 acre farm in Fayette County, Illinois and the other a 215 acre farm in Montgomery County, Illinois.

Land records identify the owner of the Fayette County farm as the Triple S Family Trust and identify the owner of the Montgomery County farm as the Y&K Leasing Trust. The IRS alleges that these trusts are illusory. The IRS filed the instant action to reduce to judgment the income tax liabilities previously assessed against defendant Sanders for the years 1991 through 1997. The IRS also is seeking to enforce the liens associated with Sanders tax liabilities against the Fayette farm and the Montgomery farm under I.R.C. §7403. The IRS alleges that the original tax liabilities from 1991 through 1997 of $96, 000 have accumulated penalties and interest and increased to a balance of over $400, 000. The IRS alleges that Sanders has made no payment toward his tax liabilities for the years 1991 to 1997. Prior to this lawsuit, Sanders refused to disclose his financial records during the IRS audit. The discovery in this case is similar to the discovery sought by the IRS during the agency audit.

Discovery in Dispute

In his answer to the complaint Sanders denied that he owed the tax assessments for the years 1991 through 1997. He also denied that he was the owner Fayette farm and the Montgomery farm. As a result, the United States served discovery to determine the factual basis of Mr. Sanders’ denial.

‚óŹ United States served REQUEST TO PRODUCE SET I on March 26, 2012 asking for financial records pertaining to the Fayette and Montgomery County Farms for the years 1991 to 1997. Additionally, the United States served REQUEST TO PRODUCE SET II and REQUEST TO PRODUCE SET III requesting trust documents and financial records for ...

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