I have written before several posts on the trial level saga at the trial level in United States v. Scharzbaum (S.D. Fla. Dkt # 18-cv-81147-BLOOM/Reinhart) an FBAR collection suit. See particularly District Court Muddles an FBAR Willful Penalty Case (Federal Tax Crimes Blog 3/21/20; 3/24/20), here. Basically, after trial, the district court entered an FBAR willful penalty judgment of $12,555,813. That judgment is now on appeal to the Eleventh Circuit and was recently argued. 11th Circ. Mulls If IRS Should Revisit $12.5M FBAR Penalty, 2020 (Law360 315-118) (no link, subscription required); the oral argument on 10/5/21 is on the Court’s web page here.
In United States v. Scharzbaum (S.D. Fla. Dkt # 18-cv-81147-BLOOM/Reinhart 10/26/12), GS hereand Cl here, the district court, sustaining the Magistrate Judge’s Report and Recommendation, held that the Government was entitled to an order granting repatriation of funds in offshore accounts in support of collection of the judgment. The Court supported the repatriation on the basis of the the Federal Debt Collection Procedures Act of 1990, 28 U.S.C. §§ 3001, et seq. (“FDCPA”) and the incorporation of the All Writs Act, 28 U.S.C. § 1651.
The reason the Government wanted an order of repatriation is that, according to the Government, Schwarzaum was placing or had placed assets outside the collection power of the U.S., so that repatriation was necessary to collect the judgment. Some interesting parts of the opinion are:
From Slip Op. 4 fn. 3
n3 In the Motion, the Government asserts that Schwarzbaum has taken steps to render himself judgment proof by selling his home in Palm Beach County, and moving to Switzerland, where he keeps over $49 million in three Swiss banks. Id. at 3-4. In addition, the Government details the efforts that it has undertaken to attempt to collect the Judgment. See id. at 3-6. Specifically, the Government sent Schwarzbaum demand letters, to which Schwarzbaum did not respond. Id. at 5. The Government also served Schwarzbaum with post-judgment discovery, through which it confirmed that he has no collection potential from assets in the United States, but $49 million in assets held in Switzerland that can be used to satisfy the Judgment. Id. at 5. The Government asserts that Schwarzbaum has taken steps to render himself judgment proof and “secreted” assets to Switzerland, but other than recently selling his house in Jupiter and moving back to Switzerland, the Government recognizes that “Schwarzbaum transferred the bulk of his liquid assets from the United States to . . . Switzerland” in October and November, 2009—years before the Complaint in this case was filed. Id. at 5 n.5.
From Slip Op. 11 fn. 3
n3 Nevertheless, to the extent that the Government is requesting that the repatriated funds be deposited in the form of an appeal bond or in the Court’s registry, the Court finds no basis to do so in the statute or case law. The Court will therefore permit Schwarzbaum to repatriate the funds into a United States bank account.