Attorney Suspended From Practicing Before IRS

STEPHEN A. WHITLOCK
DIRECTOR,
OFFICE OF PROFESSIONAL
RESPONSIBILITY,
Complainant
v.
WILFRED I. AKA,
Respondent

UNITED STATES OF AMERICA
THE DEPARTMENT OF THE TREASURY
WASHINGTON, D.C.

HON. PARLEN L. MCKENNA,
Presiding

ORDER GRANTING COMPLAINANT'S MOTION FOR DECISION BY DEFAULT AND DENYING RESPONDENT'S MOTION FOR LEAVE TO FILE FIRST AMENDED ANSWER TO IRS COMPLAINT

The Internal Revenue Service, Office of Professional Responsibility (Complainant) initiated this administrative proceeding by issuing a Complaint against Mr. Wilfred I. Aka (Respondent) pursuant to 31 C.F.R. Part 10 and 31 U.S.C. § 330. The Complaint sought to suspend Respondent from practice before the Internal Revenue Service for thirty-six (36) months for alleged disreputable conduct. Specifically, Complainant alleges Respondent engaged in disreputable conduct based upon his disbarment from practice as an attorney before the United States Tax Court.

Complainant now moves for a Decision by Default (Default Motion), arguing that Respondent did not file a timely Answer. Respondent opposes the Default Motion and moves for leave to file an Answer that complies with the relevant regulations. (Motion for Leave). After a thorough review of the pleadings, motions, and supporting documentation, I find that Respondent has not complied with the clearly established regulations concerning the content and timeliness of his Answer and has therefore defaulted. Respondent's Motion for Leave is DENIED; and, Complainant's Default Motion is GRANTED. As such, the factual allegations contained in the Complaint are deemed admitted and Respondent is hereby SUSPENDED from practice before the IRS for THIRTY-SIX (36) MONTHS.

MOTIONS

1. Complainant's Default Motion

Complainant argues that Respondent was properly served with the Complaint on October 28, 2016 and his Answer was therefore due on or before November 28, 2016. Further, Complainant contends that Respondent's December 2, 2016 Response to IRS Complaint (Response) was not a valid Answer because it did not comply with the regulations. Specifically, he did not admit or deny each allegation of the Complaint, did not contain a statement of facts, and did not provide a statement averring that the statements in the Answer are true and correct and are subject to perjury penalties. See 31 C.F.R. §§ 10.64(b) and (e).Complainant therefore concludes that Respondent is in default and, as such, has admitted the allegations of the Complaint.Complainant contends that the requested thirty-six (36) month suspension from practice before the IRS is appropriate and supported by prior IRS case law.

In opposition to the Default Motion, Respondent argues that his Response was timely and that it met the requirements of 31 C.F.R. § 10.64(c). Respondent attempts to demonstrate that various portions of his Response can be interpreted as either admitting or denying the allegations of the Complaint. Respondent further argues that including the phrase “respectfully submitted” above the signature line “means the same” as “under penalty of perjury.” Respondent alternatively argues that his December 7, 2016 First Amended Response to the IRS Complaint meets the requirements of 31 C.F.R. § 10.64 and should therefore be admitted as his Answer. Finally, Respondent argues that a default judgment is not appropriate because there is no prejudice to Complainant to allow the case to proceed and the case law Complainant relies upon is not analogous to the present situation.

2. Respondent's Motion for Leave

Respondent argues I should grant his Motion for Leave because 1) such motions should be freely granted to have the claim determined on the merits; 2) Complainant will not be unfairly prejudiced by allowing the amended Answer; and 3) Respondent's failure to timely file his Answer and conform to the requirements of 31 C.F.R. § 10.64 was caused by Respondent's oversight, inadvertence and neglect because he is pro se and inexperienced in disbarment/suspension matters.

Complainant opposes Respondent's Motion for Leave arguing that Respondent has not stated good cause for his failure to file a timely and conforming Answer. Complainant further argues that all Respondent's arguments are predicated on the false assertion that his December 2, 2016 Response was a timely filed pleading.As such, Respondent's Motion for Leave is not seeking to amend a previous timely, but substantively deficient pleading.Rather, Respondent is attempting to get a post hoc extension after his time to file an Answer expired.

ANALYSIS OF THE PARTIES' MOTIONS

Pursuant to 31 C.F.R. § 10.64(a), “[t]he respondent's answer must be filed with the Administrative Law Judge, and served on the Internal Revenue Service, within the time specified in the Complaint unless, on request or application of the respondent, the time is extended by the Administrative Law Judge.” Further, “[t]he answer must be written and contain a statement of facts that constitute the respondent's grounds of defense. General denials are not permitted. The respondent must specifically admit or deny each allegation set forth in the complaint, except that the respondent may state that the respondent is without sufficient information to admit or deny a specific allegation.” 31 C.F.R. § 10.64(b). The regulations also provide that “[t]he answer must be signed by the respondent . . . and must include a statement directly above the signature acknowledging that the statements made in the answer are true and correct and that knowing and willful false statements may be punishable under 18 U.S.C. 1001.” 31 C.F.R. § 10.64(e). Further, “[f]ailure to file an answer within the time prescribed (or within the time for answer as extended by the Administrative Law Judge), constitutes an admission of the allegations of the complaint and a waiver of hearing, and the Administrative Law Judge may make the decision by default without a hearing or further procedure.” 31 C.F.R. § 10.64(d).

On October 28, 2016, Complainant filed and served the Complaint in this matter. The Complaint clearly sets forth that Respondent's answer must be filed with the Administrative Law Judge and a copy served on OPR within thirty (30) calendar days from date of service of the complaint. See Complaint at p. 2. Thirty (30) calendar days from October 28 is November 27. November 27, 2016 fell on a Sunday, meaning Respondent's answer was due no later than November 28, 2016. Respondent did not submit a response until December 2, 2016. See Response to IRS Complaint.

In his Motion for Leave, Respondent states “[t]he original answer was due on December 2, 2016.” See Motion for Leave at p.2. In the December 6, 2016 prehearing teleconference Respondent stated he received the Complaint on November 3 or 4, 2016. See Exhibit 2 to Complainant's Motion for a Decision by Default (Declaration of Timothy E. Heinlein at ¶ 4). Respondent mistakenly argues that if he received the Complaint on November 3 or 4th, “the due date of the Response/Answer would be December 4, 2016, plus a mailing period of 3 days.” See Respondent's Opposition to IRS Complainant's Motion for a Decision by Default at p. 3. Respondent goes on to argue that because December 4 fell on a weekend, the actual due date would be December 5, 2016, plus a 3 day mailing period. Thus, Respondent argues that the actual due date for his Answer is December 8, 2016. Id.

Respondent mistakenly relies on the Federal Rules of Civil Procedure which are not applicable to these proceedings. IRS disciplinary actions are governed by Title 31 C.F.R. Part 10, Subpart D. See 31 C.F.R. § 10.0 (subpart D of this part contains the rules applicable to disciplinary proceedings). The rules set forth in 31 C.F.R. Part 10, Subpart D do not provide additional time to respond after service by mail.

As stated above, the Complaint set forth that Respondent must file his Answer with the Administrative Law Judge and serve same upon Complainant within 30 days of the date of service of the Complaint. See Complaint at p.2 (emphasis added). Respondent conflates receiving the Complaint with the date of service. Relevant regulations establish that “[w]here service is by certified mail, the return post office receipt duly signed by the respondent will be proof of service” and “[s]ervice [by first class mail] will be considered complete upon mailing, provided the complaint is addressed to the respondent at the respondent's last known address. . . .” 31 C.F.R. § 10.63 (a)(2)(i) and (ii) (brackets added). Complainant sent the Complaint via certified mail and first class mail to Respondent at two different addresses including to Respondent's last known address of record with the IRS. See Complaint at ¶ 3; Certificate of Service attached to the Complaint; see also Exhibit 2 to Complainant's Motion for a Decision by Default (Declaration of Timothy E. Heinlein at ¶ 2). As such, Complainant properly served the Complaint and Respondent's Answer was due on or before November 28, 2016. Respondent failed to file a timely Answer.

Further, Complainant is correct that Respondent's December 2, 2016 Response did not comply with the regulatory requirements for an Answer found in 31 C.F.R. §§ 10.64 (b) and (e). Respondent's argument that the substance of his Response admits or denies most of the allegations in the Complaint is not persuasive. Respondent's claim that inserting the phrase “respectfully submitted” is substantially similar to a sworn statement under penalty of perjury is similarly not persuasive. Respondent's explanation that he signed his Response in the same manner as Complainant signed the Complaint is absurd. Respondent had the affirmative duty to include the required language in his Answer; Complainant has no such duty. Also, Respondent's claim during the prehearing conference that his Response should be read as a general denial is not compelling and does not satisfy the requirements for a proper Answer as general denials are prohibited by the regulations. See 31 C.F.R. § 10.64(b). The regulations state that Respondent “must” conform his Answer to the regulations. As such, I find that Respondent's Response to the Complaint was not compliant with the relevant applicable regulations and therefore is not considered an Answer.

Respondent's lack of good cause for failing to file a timely Answer is troubling as is his excuse that he is pro se and inexperienced. Respondent is an attorney and, as such, reading regulations and filing an Answer are tasks which any attorney should be able to accomplish. Respondent needs no special experience in disbarment proceedings to admit or deny the factual allegations set forth in the Complaint. Additionally, Respondent does not explain what “oversight, inadvertence, or excusable neglect” caused his failure to file a timely Answer. As such, I cannot agree that his failure to timely file an Answer was excused or justified.

Finally, because Respondent did not file an Answer, his Motion for Leave must be denied. Respondent asserts that motions such as his should be freely granted. Respondent's argument improperly rests on the factual fallacy that he filed a timely pleading. The factual situation of this case is different because Respondent did not file a timely Answer. Further, this is not simply a case where Respondent 's request to amend a pleading would cause delay. Respondent has failed to follow the established regulations regarding the timeliness and substance of his Answer. Respondent's failure to file his Answer in time has clearly established consequences. Therefore, Respondent's Motion for Leave is DENIED. Respondent is in default and this case is subject to the rules established in 31 C.F.R. § 10.64(d). As such, Complainant's Motion for Decision by Default is hereby GRANTED.

SANCTION

1. Evidentiary Standard and Standard of Proof

The applicable evidentiary standard provides that the rules of evidence prevailing in a court of law and equity are not controlling, but the judge may exclude evidence that is irrelevant, immaterial, or unduly repetitions. See 31 C.F.R. § 10.73(a).

The standard of proof differs depending on the nature of the sanction. If the sanction is censure or a suspension of less than six months' duration, the judge applies the preponderance of the evidence standard. See 31 C.F.R. § 10.76(b). In contrast, for a monetary penalty, disbarment, or suspension of six months' or longer, the judge applies the clear and convincing standard. Id. The clear and convincing standard has been defined “as evidence of such weight that it produces in the mind of the trier of fact a firm belief or conviction, without hesitancy, as to the truth of the allegations sought to be established, and, as well, as evidence that proves the facts at issue to be highly probable.” Jimenez v. Daimler Chrysler Corp., 269 F.3d 439, 450 (4th Cir. 2001) (internal quotation marks, citations omitted); see also Addington v. Texas, 441 U.S. 418 (1979) (explaining that clear and convincing evidence is an intermediate standard somewhere between proof by a preponderance of the evidence and proof beyond a reasonable doubt).

Here the Complainant seeks to suspend Respondent for thirty-six (36) months and is therefore governed by the clear and convincing standard.

2. Findings of Fact

Pursuant to 31 C.F.R. § 10.64(d), Respondent's failure to file a timely Answer results in an admission of the allegations of the complaint and a waiver of hearing. The following findings of fact were proposed by Complainant and are hereby set forth below. These proposed findings of fact mirror the allegations in the Complaint and are therefore deemed admitted by virtue of Respondent's failure to file a timely Answer. After a thorough review, they are accepted and incorporated herein.

ANALYSIS

Having found the above proposed findings of fact deemed admitted, I further find that Complainant's proposed thirty-six (36) month suspension from practice before the IRS is reasonable. Respondent's admitted actions as set forth in the Complaint unquestionably constitute disreputable conduct pursuant to 31 C.F.R. § 10.51, and reflect adversely on Respondent's fitness to practice before the IRS and represent others before that agency. As set forth in Complainant's Default Motion, Respondent's disbarment from practice as an attorney before the Tax Court is a serious matter that could warrant a stricter sanction including indefinite suspension or disbarment. See Dir., Office of Professional Responsibility v. Bohn, Complaint No. 2012-00002 (Decision Granting Motion for Summary Adjudication in Part; Order Imposing Sanction of Disbarment), December 7, 2012; see also Dir., Office of Professional Responsibility v, Ross, Complaint No. 2011-01 (Order Granting Complainant's Motion for Summary Judgment), June 7, 2011.

ULTIMATE FINDINGS OF FACT AND CONCLUSIONS OF LAW

1. At all relevant times, Respondent engaged in practice before the IRS and is subject to the disciplinary authority of the OPR Director under the rules and regulations contained in 31 C.F.R. Part 10.

2, Respondent's failure to file an Answer on or before November 28, 2016 constitutes an admission of the allegations of the complaint and a waiver of hearing pursuant to 31 C.F.R. § 10.64(d).

3. Respondent's disbarment from practice before the United States Tax Court constitutes incompetence and disreputable conduct pursuant to 31 C.F.R. § 10.51 generally, and a violation of § 10.51 (a)(l 0) (Rev. 6-2014) more particularly, for which Respondent may be censured, suspended or disbarred from practice before the IRS.

4. Complainant has proven by clear and convincing evidence Respondent's above described conduct warrants Respondent's suspension from practice before the IRS in light of all the relevant facts and circumstances.

WHEREFORE:

ORDER

IT IS HEREBY ORDERED that Respondent's Motion for Leave to File First Amended Answer to IRS Complaint is DENIED.

IT IS HEREBY FURTHER ORDERED that Complainant's Motion for Decision by Default is GRANTED.

IT IS HEREBY FURTHER ORDERED that pursuant to 31 C.F.R. § 10.64(d), the allegations of the Complaint are ADMITTED.

IT IS HEREBY FURTHER ORDERED that Respondent, Wilfred I. Aka, is SUSPENDED from practice before the IRS for THIRTY-SIX (36) MONTHS. Any reinstatement of Respondent thereafter is conditioned upon the provisions contained in 31 C.F.R. §§ 10.79 (relating to the effect of suspension) and 10.81 (relating to petitions for reinstatement) (Rev. 6-2014).

PLEASE TAKE NOTICE THAT this Decision and Order may be appealed pursuant to 31 C.F.R. § 10.77, summarized below.

Hon. ParlenL. McKenna
Administrative Law Judge

Dated: February 10,2017 at Alameda CA

Pursuant to 31 C.F.R. § 10.77, this Decision may be appealed to the Secretary of the Treasury within thirty (30) days from the date of service of this Decision on the parties. The Notice of Appeal must be filed in duplicate with the Director, Officer of Professional Responsibility, 1111 Constitution Ave. NW, SE: OPR 7238IR, Washington D.C. 20224, and shall include a brief that states the party's exceptions to this Decision and supporting reasons for any exceptions.