United States District Court, N.D. California
For United States of America, Plaintiff: Jeremy N Hendon, LEAD ATTORNEY, United States Department of Justice, Tax Division, Washington, DC; Thomas Moore, Thomas M. Newman, LEAD ATTORNEYS, United States Attorney's Office, San Francisco, CA.
John C Hom, Defendant, Pro se, San Rafael, CA.
ORDER GRANTING SUMMARY JUDGMENT
WILLIAM ALSUP, UNITED STATES DISTRICT JUDGE.
In this action involving the Bank Secrecy Act, the government moves for summary judgment. The motion is Granted.
The following facts are uncontested. During 2006, pro se defendant John Hom gambled online through internet accounts with PokerStars.com and PartyPoker.com (Hendon Decl., Exh. 5 at 1-2). In 2007, defendant continued to gamble online through his PokerStars account (Hendon Decl., Exh. 5 at 2). Both poker websites allowed defendant to deposit money or make withdrawals.
Defendant used his account at FirePay.com, an online financial organization that receives, holds, and pays funds on behalf of its customers, to fund his online PokerStars and PartyPoker accounts. He deposited money into his FirePay account via his domestic Wells Fargo bank account or other online financial institutions, such as Western Union. In 2006, FirePay ceased allowing United States customers to transfer funds from their FirePay accounts to offshore internet gambling sites, so defendant used Western Union and other online financial institutions to transfer money from his Wells Fargo bank account to his online poker accounts (Hom Dep. at 38, 40, 45-46, 75, 110, 116, 121-24). Defendant admits that at some points in both 2006 and 2007, the aggregate amount of funds in his FirePay, PokerStars, and PartyPoker accounts exceeded $10,000 in United States currency (Hendon Decl., Exh. 5 at 4).
After the Internal Revenue Service detected discrepancies in defendant's federal income tax returns for 2006 and 2007, it opened a Foreign Bank and Financial Accounts Report (" FBAR" ) examination (Hendon Decl., Exh. 15). Individuals must file an FBAR with respect to foreign financial accounts exceeding $10,000 maintained during the previous year by June 30. 31 C.F.R. 103.27(c). Defendant did not file his 2006 or 2007 FBARs until June 26, 2010 (Hendon Decl., Exh. 5, at 4). Moreover, his submitted FBAR for 2006 did not include his FirePay account (Hom Dep. at 138).
On September 20, 2011, the IRS assessed defendant with civil penalties under 31 U.S.C. 5321(a)(5) for his non-willful failure to submit FBARs, as required by 31 U.S.C. 5314, regarding his interest in his FirePay, PokerStars, and PartyPoker accounts. The IRS assessed a $30,000 penalty for 2006, which included a $10,000 penalty for each of the three accounts, and a $10,000 penalty for 2007 based solely on defendant's PokerStars account (Hendon Decl., Exh. 5, at 5). Interest and penalties continue to accrue until paid in full pursuant to 31 U.S.C. 3717. This order follows full briefing and oral argument. The Court has tried to appoint a free lawyer for defendant -- but no one would take the case.