According to Law360 a Washington federal judge on October 6, 2017 declined to toss the U.S. government’s suit accusing a man of willfully failing to disclose foreign bank accounts, finding that the allegations could reasonably lead the court to infer that the man understood IRS reporting requirements.
In denying Jeffrey P. Pomerantz’s motion to dismiss the case, U.S. District Judge Marsha J. Pechman found that the government had alleged enough to allow the court “to draw the reasonable inference” that Pomerantz willfully failed to report his accounts with the Canada Imperial Bank of Commerce to the Internal Revenue Service in a Foreign Bank and Financial Accounts form. Judge Pechman noted that in an amended complaint, the government had contended that Pomerantz filed timely FBAR forms for the accounts a handful of times before he stopped reporting them.
“This allegation is sufficient to demonstrate that Mr. Pomerantz understood the reporting requirements regarding the CIBC accounts long before 2007, the first year that the government alleges Mr. Pomerantz willfully failed to report his income in these accounts,” Judge Pechman said.
The accounts at issue include two personal accounts Pomerantz opened in Canada with the CBIC and Swiss bank accounts held by an entity called Chafford Ltd., which the government claimed was a shell company Pomerantz used to hold his personal investments.
U.S. District Judge James L. Robart, who was overseeing the case before Judge Pechman, tossed the complaint in June. He found that the government did not sufficiently allege that Pomerantz acted “willfully” in his failure to file FBAR forms regarding his personal CBIC checking accounts or that Pomerantz was aware of the reporting requirements.
However, Judge Robart did find enough facts to support the contention that Pomerantz sought to evade reporting requirements by creating bank accounts for Chafford. Judge Robart also gave the government another chance to make a case regarding the CIBC accounts.
Judge Pechman on October 6, 2017 also said that in the government’s amended complaint, there are additional allegations, including ones regarding Pomerantz’s tax returns for the years at issue, which report some of the income from the CIBC accounts, but not “higher maximum” balances, that also support the inference that Pomerantz knew his conduct was unlawful.
“The government’s amended complaint therefore pleads sufficient factual content to allow the court to draw the reasonable inference that the defendant willfully failed to file FBAR forms for the CIBC accounts,” Judge Pechman said.
Pomerantz, who is pro se, had urged Judge Pechman to dismiss the amended complaint, in part because he argued that the court lacked personal jurisdiction over him. However, Judge Pechman found he had waived that defense because he did not bring it up earlier.
In addition, Pomerantz had contended that the government is barred from raising the same claims that it lodged in the original complaint.
However, Judge Pechman noted that the government “correctly argues” that the res judicata and collateral estoppel doctrines preclude relitigating issues that were covered in a final judgment, but a dismissal without prejudice does not qualify as one.
Pomerantz had also urged the court to strike from the amended complaint the government’s references to what he said was “an unrelated” case before the U.S. Tax Court.
However, Judge Pechman declined to remove those portions of the complaint, citing the government's argument that claimed that Pomerantz’s admissions in the Tax Court case of “fraudulent intent” in failing to report income generated by the accounts at issue is “certainly probative of [his] state of mind.”
The case is U.S. v. Pomerantz, case number 2:16-cv-00689, in the U.S. District Court for the Western District of Washington.
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