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United States v. Kyle

February 23, 2008

UNITED STATES OF AMERICA, PLAINTIFF,
v.
ROOSEVELT KYLE, INDIVIDUALLY OR D/B/A CENTURY ONE RESORTS, LTD OR CENTURY ONE ASSOCIATES; REBECCA TYREE A/K/A/ RUBEE TYREE UNITED STATES' OR RUBY TYREE; COA FINANCIAL GROUP, LLC D/B/A COA AGAINST FINANCIAL NETWORK TRUST C/O T&N ROOSEVELT KYLE FASHION; EAGLE FINANCIAL SERVICES, LLC DEFENDANTS,
ROOSEVELT KYLE, THIRD-PARTY PLAINTIFF
v.
JOHN R. MONROE, THIRD-PARTY DEFENDANTS.



The opinion of the court was delivered by: Irma E. Gonzalez, Chief Judge United States District Court

ORDER GRANTING MOTION FOR PRELIMINARY INJUNCTION DOES 1 THROUGH 1000

Upon motion by Plaintiff, the United States of America, the Court makes the following findings of fact and conclusions of law and enters this preliminary injunction.

Standards for Preliminary Injunction

In order to obtain a preliminary injunction prohibiting Roosevelt Kyle from acting as an income tax return preparer pursuant to 26 U.S.C. (Internal Revenue Code, I.R.C., or the "Code") § 7407, the United States must show a likelihood of success on the merits that (1) Kyle engaged in conduct subject to penalty under Code §§ 6694 or 6695 or engaged in fraudulent or deceptive conduct that substantially interfered with the proper administration of internal revenue laws; (2) injunctive relief is appropriate to prevent the recurrence of such conduct; and (3) Kyle continually or repeatedly engaged in conduct described in (1) above and a more limited injunction of such conduct would not be sufficient to prevent interference with the proper administration of internal revenue laws.

In order to obtain a preliminary injunction pursuant to Code § 7408 the United States must show a likelihood of success on the merits that the (1) Kyle engaged in conduct subject to penalty under Code § 6701; and (2) injunctive relief is appropriate to prevent the recurrence of such conduct.

In order to obtain a preliminary injunction pursuant to Code § 7402, the United States must show a likelihood of success on the merits that an injunction is necessary or appropriate for the enforcement of the internal revenue laws.

Findings of Fact

1. Kyle resides in San Diego, California, in this judicial district and does business in this judicial district.

2. Kyle has prepared tax returns for others for compensation since 1983, with the exception of 2006 when he was incarcerated in federal prison for willfully failing to file federal income tax returns.

3. Over the last eight years, Kyle has operated his tax preparation business using several entities or names, including Century One Resorts, COA Financial Group, LLC, and Eagle Financial Services, LLC. Kyle stopped personally signing returns in 2004, but Kyle still interviews customers and prepares returns that are signed by others. He does this to thwart IRS efforts to detect his illegal conduct.

4. The following numbers of returns were filed under the Employer Identification Numbers of the entities listed in paragraph 3 above and under Kyle's identification number:

Name of Person/EntityNumber Returns Filed by Entity from 2000-2007:         20002001200220032004200520062007* Roosevelt Kyle15721632186413612215 Century One-0--0--0-145125115742 Resorts COA Financial Network Trust/COA Financial Group, LLC-0--0--0--0--0-2527347 Eagle Financial Services, LLC-0--0--0--0--0--0--0-1136

* As of September 27, 2007

Kyle's Tax Preparation Business

5. On average Kyle and his businesses prepared and filed approximately 1,500 returns per year since 2000.

6. Kyle most recently operated his business from 2414 Hoover Avenue, National City, CA 91950, in the San Diego metropolitan area.

7. Kyle, individually and through the named entities, prepares federal income tax returns that unlawfully understate his customers' tax liabilities, most commonly by fabricating or inflating deductions on IRS Form 1040 Schedule A, "Itemized Deductions," and Schedule C, "Profit or Loss from Business."

8. As a direct result of Kyle's fraudulent return preparation, his customers' filed federal income tax returns understate their federal income tax liabilities and claim large income tax refunds to which they were not entitled.

IRS's Investigation

9. As of September 26, 2007, the IRS has examined over 200 returns prepared between 2002 and 2007 by Kyle individually and under the auspices of Century One Associates, COA Financial Network, or Eagle Financial Services. The examinations revealed that all but approximately eight of the returns understated the customer's tax liability.

10. Customers consented to the IRS's adjustments on approximately 127 of the examined returns. The total of the agreed tax understatements on those returns was $419,725 which was an average understatement of approximately $3,304 per return.

11. In 2007 the IRS conducted an undercover investigation of Kyle and his tax preparation business, which he operated as Eagle Financial Services, LLC. An IRS undercover agent posed as a customer and paid Kyle to prepare a tax return. Kyle conducted the tax preparation interview with the undercover agent, but the return was signed by Rebecca Tyree, Kyle's office manager and business associate. The return Kyle prepared for the undercover agent fabricated employee business expenses and charitable deductions.

12. The estimated tax loss caused by Kyle's misconduct between 2002 and 2007 is approximately $18 million.

13. Kyle has known about the IRS's investigations of his tax preparation business and activities since at least 1987, but has repeatedly and continually engaged in improper and enjoinable conduct.

14. In 1987 the IRS assessed against Kyle two preparer penalties under 26 U.S.C. ยง 6694 for conduct ...


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