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United States of v. Kenneth J. Malinowski

December 8, 2011

UNITED STATES OF AMERICA, PLAINTIFF,
v.
KENNETH J. MALINOWSKI, ET AL., DEFENDANTS.



FINDINGS & RECOMMENDATIONS

On December 8, 2011, the court held a hearing on plaintiff's motion for default judgment against non-taxpayer defendants Boaz Foundation; Stan Hokenson as Trustee of Tierra Land Trust (also known as Tierra Trust); The Popular Society of Sovereign Ecclesia; and Citibank South Dakota, N.A. ("Citibank").*fn1 Adam Smart appeared for plaintiff. Kerry Franich appeared for defendant GMAC Mortgage Corporation. No other appearances were made. Upon review of the motion and the supporting documents, and good cause appearing, THE COURT FINDS AS FOLLOWS:

RELEVANT FACTUAL AND PROCEDURAL BACKGROUND

On November 9, 1995 and pursuant to a grant deed, Golden Bear Homes, a non-party to this action, conveyed 6037 White Court Ct., Citrus Heights, CA 95621 ("the subject property") to Kenneth and Patricia Malinowski, husband and wife, as joint tenants. Compl. at 2, ¶ 6. On January 5, 2000, the Malinowskis purported to convey the subject property pursuant to a quitclaim deed to "The Popular Society of Sovereign Ecclesia," of which Kenneth Malinowski identified himself as Patriarch. Id., ¶ 7. On October 6, 2000, Kenneth Malinowski, as Patriarch of "The Popular Society of Sovereign Ecclesia," purported to convey the subject property pursuant to a quitclaim deed from "The Popular Society of Sovereign Ecclesia" to Tierra Land Trust. Id. at 2-3, ¶ 8. On November 17, 2005, the Tierra Trust purported to convey the subject property pursuant to a quitclaim deed from the Tierra Trust to "The Boaz Foundation, Kenneth John Malinowski, a Non Profit Family Foundation." Id. at 3, ¶ 9.

On November 10, 2010, the United States filed this action seeking to reduce to judgment certain federal tax assessments made against defendants Kenneth and Patricia Malinowski, as well as to foreclose federal tax liens on the subject property. The complaint sets forth six claims for relief: (1) To reduce federal income tax assessments against the Malinowskis to judgment; (2) To reduce federal income tax assessments and civil penalty assessments against Kenneth Malinowski individually to judgment; (3) To reduce federal income tax assessments against Patricia Malinowski individually to judgment; (4) That the Boaz Foundation holds title to the subject property as nominee and/or alter-ego of the Malinowskis; (5) Fraudulent transfer of the subject property from the Malinowskis eventually leading to the Boaz Foundation; and (6) To foreclose federal tax liens against the subject property.

Pursuant to 26 U.S.C. § 7403(b), the United States named the non-taxpayer defendants in this action-Boaz Foundation, Stan Hokenson as Trustee of Tierra Land Trust, The Popular Society of Sovereign Ecclesia, Citibank, GMAC Mortgage Corporation, the State of California Franchise Tax Board and Sacramento County-as persons who may have liens upon or claim an interest in the subject property. Subsection (c) of the statute provides that after all parties have been duly notified of any such action brought under Section 7403, the court shall proceed to adjudicate all matters involved in any such action and finally determine the merits of all claims to and liens upon the property. 26 U.S.C. § 7403(c).

SERVICE OF DEFENDANTS IN DEFAULT

Stan Hokenson as Trustee of the Tierra Land Trust was served both by personal service and substituted service with a copy of the summons and complaint on June 13, 2011 and June 14, 2011. Doc. No. 10, Ex. E. On August 9, 2011, plaintiff requested entry of default as to Stan Hokenson. Doc. No. 17. On August 10, 2011, the Clerk of the Court entered default as to Stan Hokenson. Doc. No. 22.

Kenneth Malinowski accepted personal service of the summons and complaint on behalf of The Boaz Foundation on June 10, 2011. Doc. No. 10, Ex. C. On August 5, 2011, plaintiff requested entry of default as to the Boaz Foundation. Doc. No. 15. On August 8, 2011, the Clerk of the Court entered default as to the Boaz Foundation. Doc. No. 16.

Kenneth Malinowski accepted personal service of the summons and complaint on behalf of The Popular Society of Sovereign Ecclesia on June 10, 2011. Doc. No. 10, Ex. D. On August 5, 2011, plaintiff requested entry of default as to The Popular Society of Sovereign Ecclesia. Doc. No. 15. On August 8, 2011, the Clerk of the Court entered default as to The Popular Society of Sovereign Ecclesia. Doc. No. 16.

Citibank was personally served with a copy of the summons and complaint on August 19, 2011. Doc. No. 24. On September 12, 2011, plaintiff requested entry of default against Citibank. Doc. No. 28. On September 14, 2011, the Clerk of the Court entered default as to Citibank. Doc. No. 29.

On August 9, 2011, the Boaz Foundation and The Popular Society of Sovereign Ecclesia, through Kenneth Malinowski, filed"responses" in which they state that they have no equitable claim to the subject property. See Doc. Nos. 19-20.

DISCUSSION

Plaintiffs seek default judgment pursuant to either Federal Rule of Civil ...


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