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United States v. Wanland

United States District Court, E.D. California

June 6, 2014

UNITED STATES OF AMERICA, Plaintiff,
v.
DONALD M. WANLAND, JR., Defendant.

FINDINGS AND RECOMMENDATIONS

KENDALL J. NEWMAN, Magistrate Judge.

INTRODUCTION

Presently pending before the court is defendant Donald M. Wanland, Jr.'s ("defendant") motion to dismiss or stay the action, which was originally filed on February 27, 2014. (ECF No. 17.) On March 3, 2014, the action was referred to the undersigned pursuant to Local Rule 302(c)(21). (ECF No. 18.) Because defendant was incarcerated and no hearing on the motion was scheduled, the court issued a minute order on March 4, 2014, requiring plaintiff United States of America ("United States") to file a response to defendant's motion no later than April 3, 2014. (ECF No. 19.) Defendant was permitted to file a reply brief no later than April 17, 2014, whereupon the motion was to be submitted on the papers and without oral argument pursuant to Local Rule 230(g). (Id.) Thereafter, on April 3, 2014, the United States filed an opposition to defendant's motion. (ECF No. 20.) Although the April 17, 2014 deadline has long since passed, defendant did not file a reply brief or request an extension to file a reply brief.[1]

After considering the parties' written briefing, the court's record, and the applicable law, the court recommends that defendant's motion to dismiss or stay the action be denied.

BACKGROUND

The United States commenced the instant action on November 13, 2013, seeking a determination that, pursuant to 11 U.S.C. § 523(a)(1)(C), assessments for defendant's federal tax liabilities for certain tax years were not discharged in bankruptcy, as well as seeking to reduce such tax assessments to judgment. (See generally Complaint, ECF No. 1 ["Compl."].) The United States essentially alleges that defendant was assessed as owing taxes of approximately $1, 260, 040.60 for the tax years of 1996, 1997, 1998, 2000, 2001, 2002, and 2003; that he was aware of his duty to pay such taxes; but that he "willfully attempted to evade or defeat payment of his federal tax liabilities" and "voluntarily, consciously, and intentionally concealed his assets from, and/or placed his assets out of the reach of, the United States." (Compl. ¶¶ 6, 11-17.)

According to the United States, defendant operated a successful law practice and lived an extravagant lifestyle with luxury cars and large expenditures on hotels and resorts, but nonetheless refused to sell his assets to satisfy tax liabilities, failed to honor IRS levies issued to his law firm and another of his partnerships, paid other creditors instead of the United States, used nominee bank accounts in the name of a partnership for personal banking, and concealed nominee accounts from his accountants and the IRS when submitting sworn Collection Information Statements. (Compl. ¶¶ 14-17.) The complaint indicates that defendant was ultimately convicted of 28 criminal counts, "including Attempt to Evade and Defeat the Payment of Tax (1 count), the Removal, Deposit, and Concealment of Property Subject to Levy (24 counts), and Willful Failure to File Income Tax Returns (3 counts). See United States of America v. Donald M. Wanland, Jr., Case no. 2:09-cr-008-LKK (ED Cal.)." ( Id. ¶ 18.) The court's records confirm that defendant was convicted by a jury of the above-mentioned counts on September 26, 2013, that defendant was sentenced to a term of imprisonment on March 25, 2014, that judgment in the criminal case was entered on March 28, 2014, and that a notice of appeal was filed on April 7, 2014. See United States of America v. Donald M. Wanland, Jr., 2:09-cr-8-LKK, ECF Nos. 263, 266, 301-03.[2]

The operative complaint further states that defendant had filed a petition for relief under Chapter 11 of the Bankruptcy Code on March 27, 2007, and that defendant's bankruptcy case was later converted to a Chapter 7 case on October 16, 2007. (Compl. ¶ 8.) According to the United States, on June 18, 2007, the IRS filed a timely proof of claim in the amount of $1, 538, 702.47 in the bankruptcy action, which was amended on August 26, 2008, and which included the liabilities at issue in this case. ( Id. ¶ 9.) Defendant apparently received a discharge on June 8, 2011, and the bankruptcy case was closed on June 13, 2011. ( Id. ¶ 10.)

After defendant received several extensions to respond to the United States' complaint in this action, defendant ultimately filed the instant motion to dismiss or stay the action.

DISCUSSION

Motion to Stay the Action

Defendant's motion to dismiss or stay the action, filed on February 27, 2014, requests the court to stay the action pending the final outcome of defendant's criminal case. However, as noted above, judgment in defendant's criminal case was subsequently entered on March 28, 2014, essentially rendering defendant's request moot. United States of America v. Donald M. Wanland, Jr., 2:09-cr-8-LKK, ECF No. 302.

To the extent that defendant contends that this civil action should be stayed until his appeal of the criminal action to the Ninth Circuit has been resolved, that argument is unpersuasive. As the Ninth Circuit has explained:

The Constitution does not ordinarily require a stay of civil proceedings pending the outcome of criminal proceedings... In the absence of substantial prejudice to the rights of the parties involved, simultaneous parallel civil and criminal proceedings are unobjectionable under our jurisprudence... Nevertheless, a court may decide in its ...

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