United States of America v. Hall et al

Filing 11

ORDER granting 9 Motion for Default Judgment. Signed by Judge Kristi K. DuBose on 12/30/2013. Copy of Order mailed to Brian L. Hall and Brenda R. Hall as directed. (sdb)

IN
 THE
 UNITED
 STATES
 DISTRICT
 COURT

FOR
 THE
 SOUTHERN
 DISTRICT
 OF
 ALABAMA

SOUTHERN
 DIVISION

UNITED
 STATES
 OF
 AMERICA,

Plaintiff,

v.

BRIAN
 L.
 HALL
 and

BRENDA
 R.
 HALL,

Defendants.

)

)

)

)

)

)

)

)

)

)

CIVIL
 ACTION
 NO.
 13-­‐326-­‐KD-­‐N

ORDER

This
 action
 is
 before
 the
 Court
 on
 the
 motion
 for
 default
 judgment,
 exhibits
 and

memorandum
 in
 support
 filed
 by
 the
 United
 States.
 (Docs.
 9,
 10)

 Upon
 consideration
 and
 for

the
 reasons
 set
 forth
 herein,
 the
 motion
 is
 GRANTED.

I.
 Background

The
 United
 States
 filed
 its
 complaint
 against
 the
 defendants
 Brian
 L.
 Hall
 and
 Brenda

R.
 Hall.
 (Doc.
 1)

 In
 Count
 One,
 the
 United
 States
 alleges
 that
 Brian
 Hall
 owes

 $4,770,245.43

for
 unpaid
 trust
 fund
 recovery
 penalties,
 plus
 interest
 in
 the
 amount
 of
 $2,813,453.79,
 for
 a

total
 of
 $7,583,699.22,1
 assessed
 against
 him
 as
 a
 responsible
 officer
 for
 several

corporations.
 (Doc.
 1)
 The
 United
 States
 alleges
 that
 in
 various
 taxable
 quarters
 during
 1999,

2001
 and
 2002,
 Brian
 Hall
 willfully
 failed
 to
 collect,
 truthfully
 account
 for,
 and
 pay
 over
 to

the
 Internal
 Revenue
 Service
 (IRS)
 the
 payroll
 taxes
 withheld
 from
 employees
 that
 Express

Payroll
 PEO,
 Inc.
 and
 its
 successors,
 MesaStaff
 and
 Saguaro
 Services,
 Inc.,
 leased
 to

customers
 under
 employee
 leasing
 contracts.

 The
 United
 States
 alleges
 that
 Brian
 Hall
 failed

1

 At
 the
 time
 of
 filing
 the
 motion
 for
 default
 judgment,
 this
 amount
 had
 increased
 to

$7,659,664.91
 due
 to
 the
 accrual
 of
 interest
 (doc.
 9-­‐1).

to
 remit
 to
 the
 IRS,
 the
 employment
 and
 income
 taxes
 withheld
 from
 employees
 of
 his

corporation
 Trico
 Services,
 Inc.
 in
 September
 2003
 and
 for
 employees
 of
 Matchtech,
 Inc.,
 a

corporation
 he
 acquired
 in
 2007,
 for
 various
 taxable
 quarters
 in
 2008,
 2009,
 and
 2010.

 The

United
 States
 alleges
 that
 Brian
 Hall
 with
 knowledge
 that
 the
 employment
 taxes
 were
 not

paid,
 used
 the
 trust
 fund
 taxes
 to
 pay
 personal
 expenses,
 pay
 other
 corporate
 expenses,
 pay

corporate
 vendors,
 creditors
 and
 employees,
 and
 to
 finance
 other
 business
 interests.

In
 Count
 Two,
 the
 United
 States
 alleges
 that
 Brenda
 Hall
 owes
 $393,131.41,
 plus

interest
 in
 the
 amount
 of
 $19,733.49,
 for
 a
 total
 of
 $412,864.90,2
 assessed
 against
 her
 as
 a

responsible
 officer
 for
 Matchtech,
 Inc.

 The
 United
 States
 alleges
 that
 Brenda
 Hall
 willfully

failed
 to
 collect,
 truthfully
 account
 for,
 and
 pay
 over
 to
 the
 IRS
 the
 federal
 income
 tax
 and

employment
 taxes
 withheld
 from
 employees
 of
 Matchtech,
 Inc.

In
 Count
 Three,
 the
 United
 States
 alleges
 that
 Brian
 Hall
 failed
 to
 file
 his
 personal

income
 tax
 return
 for
 the
 years
 of
 2004,
 2006,
 2007
 and
 2009.

 The
 United
 States
 alleges

that
 an
 assessment
 for
 taxes,
 penalties
 and
 interest
 in
 the
 total
 amount
 of
 $11,453.103
 has

been
 assessed
 against
 him.

II.
 Notice
 of
 default
 to
 Brian
 L.
 Hall
 and
 Brenda
 R.
 Hall

The
 Halls
 were
 initially
 served
 with
 the
 summons
 and
 complaint
 on
 July
 27,
 2013.

(Docs.
 1,
 5,
 6)
 They
 filed
 a
 motion
 for
 extension
 of
 time
 to
 answer
 or
 respond
 stating
 that

they
 needed
 additional
 time
 to
 obtain
 an
 attorney.

 (Doc.
 3)

 The
 motion
 was
 granted.
 (Doc.

2
 At
 the
 time
 of
 filing
 the
 motion
 for
 default
 judgment,
 this
 amount
 had
 increased
 to

$416,917.93
 due
 to
 the
 accrual
 of
 interest
 (doc.
 9-­‐1).

3

 At
 the
 time
 of
 filing
 the
 motion
 for
 default
 judgment,
 this
 amount
 had
 increased
 to

$11,567.25
 due
 to
 the
 accrual
 of
 interest
 (doc.
 9-­‐1).

2

4)

 However,
 no
 attorney
 appeared
 on
 behalf
 of
 the
 Halls
 and
 they
 did
 not
 file
 an
 answer
 or

any
 other
 responsive
 pleading.

The
 United
 States
 then
 filed
 an
 application
 for
 entry
 of
 default
 and
 the
 certificate
 of

service
 indicates
 that
 a
 copy
 of
 the
 application
 was
 sent
 to
 the
 Halls
 at
 their
 address
 in
 Grand

Bay,
 Alabama.

 (Doc.
 7)

 The
 Clerk
 entered
 default.
 (Doc.
 8)
 The
 docket
 indicates
 that
 a
 copy

of
 the
 Clerk’s
 Entry
 of
 Default
 was
 mailed
 to
 the
 Halls.
 (Staff
 notes).

 The
 United
 States
 then

filed
 its
 motion
 for
 default
 judgment,
 exhibits,
 and
 memorandum
 in
 support.

 (Docs.
 9,
 10)

The
 certificates
 of
 service
 on
 the
 motion
 and
 the
 memorandum
 indicate
 that
 copies
 were

mailed
 to
 the
 Halls
 at
 their
 address
 in
 Grand
 Bay,
 Alabama.
 (Doc.
 9)

 Also,
 the
 proposed

Default
 Judgment
 indicates
 that
 a
 copy
 was
 sent
 to
 the
 Halls.
 (Doc.
 9-­‐5)

 Thus,
 the
 Court
 finds

that
 the
 Halls
 have
 received
 sufficient
 notice
 of
 the
 proceedings
 against
 them.

III.
 Subject
 matter
 jurisdiction

This
 action
 is
 brought
 by
 the
 United
 States
 to
 recover
 unpaid
 trust
 fund
 recovery

penalties
 assessed
 against
 Brian
 and
 Brenda
 Hall
 and
 for
 unpaid
 personal
 income
 taxes
 and

penalties
 assessed
 against
 Brian
 Hall.

 Title
 28
 U.S.C.
 §
 1340
 provides
 that
 the
 “district

courts
 shall
 have
 original
 jurisdiction
 of
 any
 civil
 action
 arising
 under
 any
 Act
 of
 Congress

providing
 for
 internal
 revenue
 .
 .
 .”

 Also,
 28
 U.S.C.
 §
 1345
 grants
 original
 jurisdiction
 to
 the

district
 courts
 “of
 all
 civil
 actions,
 suits
 or
 proceedings
 commence
 by
 the
 United
 States
 .
 .
 .
 “

Additionally,
 26
 U.S.C.
 §
 7402
 provides
 that
 the
 district
 courts
 shall
 have
 jurisdiction
 over

civil
 actions
 for
 the
 enforcement
 of
 the
 internal
 revenue
 laws.

 Therefore,
 the
 Court
 has

subject
 matter
 jurisdiction
 over
 this
 action.

IV.
 Venue

3

The
 United
 States
 alleges
 that
 venue
 is
 proper
 because
 the
 liabilities
 accrued
 while

Brian
 and
 Brenda
 Hall
 resided
 in
 Mobile
 County,
 Alabama.

 Their
 motion
 to
 extend
 time
 to

answer
 indicates
 that
 they
 reside
 in
 Grand
 Bay,
 Alabama,
 which
 is
 in
 Mobile
 County,

Alabama.

 Therefore,
 venue
 as
 alleged
 is
 proper
 in
 this
 district
 court.

V.
 Personal
 jurisdiction

The
 United
 States
 alleges
 that
 the
 Halls
 are
 residents
 of
 Mobile
 County,
 Alabama,
 and

the
 address
 on
 their
 motion
 to
 extend
 time
 confirms
 their
 residence
 in
 Mobile
 County,

Alabama.

 The
 Halls
 were
 served
 with
 the
 summons
 and
 complaint
 by
 a
 private
 process

server.

 (Doc.
 5,
 6)

 On
 the
 return
 of
 service,
 the
 process
 server
 stated
 that
 he
 left
 the

summons
 at
 their
 residence
 or
 their
 usual
 place
 of
 abode
 with
 their
 daughter,
 a
 person
 of

suitable
 age
 and
 discretion
 who
 also
 resides
 there.
 (Doc.
 5,
 6)

Rule
 4(e)
 of
 the
 Federal
 Rules
 of
 Civil
 Procedure
 provides
 for
 serving
 individuals

within
 a
 judicial
 district
 of
 the
 United
 States.

 In
 relevant
 part,
 Rule
 4(e)(2)(B)
 states
 that
 an

individual
 may
 be
 served
 by
 “leaving
 a
 copy
 of
 [the
 summons
 and
 complaint]
 at
 the

individual’s
 dwelling
 or
 usual
 place
 of
 abode
 with
 someone
 of
 suitable
 age
 and
 discretion

who
 resides
 there[.]”
 Fed.
 R.
 Civ.
 P.
 4(e)(2)(B)

 Also,
 the
 Halls’
 receipt
 of
 the
 summons
 and

complaint
 is
 confirmed
 by
 their
 subsequent
 motion
 to
 extend
 the
 time
 to
 answer
 or
 respond

to
 the
 complaint.
 (Doc.
 3)

 Additionally,
 the
 United
 States
 has
 certified
 that
 the
 Halls
 are
 not

infants
 nor
 incompetents,
 and
 that
 the
 United
 States
 does
 not
 possess
 any
 information
 to

indicate
 that
 they
 are
 currently
 on
 active
 military
 duty.
 (Doc.
 7)

 Therefore,
 the
 Court
 has

personal
 jurisdiction
 over
 the
 Halls.

VI.
 Statement
 of
 the
 law

4

Generally,
 in
 the
 Eleventh
 Circuit,
 “there
 is
 a
 strong
 policy
 of
 determining
 cases
 on

their
 merits
 and
 we
 therefore
 view
 defaults
 with
 disfavor.”
 In
 re
 Worldwide
 Web
 Systems,

Inc.,
 328
 F.3d
 1291,
 1295
 (11th
 Cir.2003).

 Thus,
 “there
 must
 be
 strict
 compliance
 with
 the

legal
 prerequisites
 establishing
 the
 court’s
 power
 to
 render”
 the
 default
 judgment.
 Varnes
 v.

Local
 91,
 Glass
 Bottle
 Blowers
 Ass‘n,
 674
 F.2d
 1365,
 1369
 (11th
 Cir.1982).

 Overall,
 the

district
 court
 “has
 the
 authority
 to
 enter
 default
 judgment
 for
 failure
 to
 prosecute
 ...
 or
 to

comply
 with
 its
 orders
 or
 rules
 of
 procedure.”
 Wahl
 v.
 McIver,
 773
 F.2d
 1169,
 1174
 (11th
 Cir.

1985).

Rule
 55
 of
 the
 Federal
 Rules
 of
 Civil
 Procedure
 provides
 that
 the
 Clerk
 of
 Court
 shall

enter
 default
 if
 a
 party
 fails
 to
 plead
 or
 otherwise
 defend
 an
 action
 brought
 against
 it.
 Fed.
 R.

Civ.
 P.
 55(a).

 If
 a
 defendant
 has
 been
 defaulted
 for
 failure
 to
 appear,
 plead
 or
 otherwise

defend,
 then
 upon
 request
 by
 the
 plaintiff,
 the
 Clerk
 shall
 enter
 judgment
 for
 the
 amount

sought
 if
 it
 is
 “for
 a
 sum
 certain
 or
 for
 a
 sum
 which
 can
 by
 computation
 be
 made
 certain.”

Fed.
 R.
 Civ.
 P.
 55(b)(1).

 Otherwise,
 the
 party
 entitled
 to
 default
 judgment
 must
 apply
 to
 the

district
 court.
 Fed.
 R.
 Civ.
 P.
 55(b)(2).

The
 Court
 of
 Appeals
 for
 the
 Eleventh
 Circuit
 has
 held
 that
 although
 “a
 default
 is
 not

treated
 as
 an
 absolute
 confession
 by
 the
 defendant
 of
 his
 liability
 and
 of
 the
 plaintiff's
 right

to
 recover,
 a
 defaulted
 defendant
 is
 deemed
 to
 admit
 the
 plaintiff's
 well-­‐pleaded
 allegations

of
 fact.

 The
 defendant,
 however,
 is
 not
 held
 to
 admit
 facts
 that
 are
 not
 well-­‐pleaded
 or
 to

admit
 conclusions
 of
 law.”
 Tyco
 Fire
 &
 Sec.,
 LLC
 v.
 Alcocer,
 218
 Fed.
 Appx.
 860,
 863
 (11th
 Cir.

2007)
 (per
 curiam)
 (citations
 and
 internal
 quotations
 omitted).

 Moreover,
 “before
 entering

a
 default
 judgment
 for
 damages,
 the
 district
 court
 must
 ensure
 that
 the
 well-­‐pleaded

allegations
 of
 the
 complaint
 ...
 actually
 state
 a
 cause
 of
 action
 and
 that
 there
 is
 a
 substantive,

5

sufficient
 basis
 in
 the
 pleadings
 for
 the
 particular
 relief
 sought.”
 Id.
 (emphasis
 omitted);

Nishimatsu
 Costr.
 Co.
 v.
 Houston
 Nat'l
 Bank,
 515
 F.2d
 1200,
 1206
 (5th
 Cir.
 1975)
 (on
 motion

for
 default
 judgment,
 the
 Court
 must
 determine
 whether
 there
 is
 a
 sufficient
 factual
 basis
 in

the
 complaint
 upon
 which
 a
 judgment
 may
 be
 entered).

 Therefore,
 the
 United
 States
 must

establish
 a
 “prima
 facie
 liability
 case”
 against
 the
 Halls.

 Pitts
 ex
 rel.
 Pitts
 v.
 Seneca
 Sports,
 Inc.,

321
 F.
 Supp.
 2d
 1353,
 1357
 (S.D.
 Ga.
 2004)
 (citations
 omitted).

When
 assessing
 default
 judgment
 damages,
 the
 Court
 has
 “an
 obligation
 to
 assure

that
 there
 is
 a
 legitimate
 basis
 for
 any
 damage
 award
 it
 enters.”
 Anheuser
 Busch,
 Inc.
 v.

Philpot,
 317
 F.3d
 1264,
 1266
 (11th
 Cir.
 2007).
 Overall,
 a
 “default
 judgment
 must
 not
 differ
 in

kind
 from,
 or
 exceed
 in
 amount,
 what
 is
 demanded
 in
 the
 pleadings.”
 Fed.
 R.
 Civ.
 P.
 54(c).

Also,
 the
 district
 court
 may
 hold
 a
 hearing
 to
 enter
 or
 effectuate
 a
 judgment
 if
 the

court
 needs
 to
 “(A)
 conduct
 an
 accounting;
 (B)
 determine
 the
 amount
 of
 damages;
 (C)

establish
 the
 truth
 of
 any
 allegation
 by
 evidence;
 or
 (D)
 investigate
 any
 other
 matter.”
 Fed.
 R.

Civ.
 P.
 55(b)(2).

 However,
 a
 hearing
 is
 not
 necessary
 because
 the
 United
 States
 seeks
 a
 sum

certain
 that
 is
 capable
 of
 a
 mathematical
 calculation
 and
 there
 is
 sufficient
 evidence
 before

the
 Court
 in
 support
 thereof;
 specifically,
 the
 Declaration
 of
 Katherine
 Young,
 an
 Advisor

with
 the
 Small
 Business
 Self-­‐Employed
 Division
 of
 the
 IRS
 and
 the
 exhibits
 attached
 which

establish
 the
 unpaid
 trust
 fund
 penalties
 plus
 interest
 as
 of
 the
 date
 of
 filing
 the
 motion
 for

default
 judgment;
 and
 the
 certified
 transcripts
 of
 the
 Halls’
 official
 IRS
 records
 (Docs.
 9-­‐1,
 9-­‐
2,
 9-­‐3,
 9-­‐4).

 Securities
 and
 Exchange
 Commission
 v.
 Smyth,
 420
 F.3d
 1225,
 1231-­‐1232
 (11th

Cir.
 2005)
 (“Judgment
 of
 default
 awarding
 cash
 damages
 could
 not
 properly
 be
 entered

without
 a
 hearing
 unless
 the
 amount
 claimed
 is
 a
 liquidated
 sum
 or
 one
 capable
 of

mathematical
 calculation)
 (internal
 quotes
 and
 citations
 omitted);
 Id.
 at
 n.13
 (noting
 that
 an

6

“evidentiary
 hearing
 is
 not
 a
 per
 se
 requirement;
 indeed,
 Rule
 55(b)(2)
 speaks
 of
 evidentiary

hearings
 in
 a
 permissive
 tone.
 .
 .
 .
 We
 have
 held
 that
 no
 such
 hearing
 is
 required
 where
 all

essential
 evidence
 is
 already
 of
 record.”).

VII.
 Facts
 deemed
 admitted
 by
 the
 default

Upon
 entry
 of
 default,
 the
 well-­‐pleaded
 allegations
 of
 the
 complaint
 are
 taken
 as
 true.

See
 Fed.
 R.
 Civ.
 P.
 8(b)(6)
 (“An
 allegation
 .
 .
 .
 is
 admitted
 if
 a
 responsive
 pleading
 is
 required

and
 the
 allegation
 is
 not
 denied.”);
 Tyco
 Fire
 &
 Sec.,
 LLC,
 218
 Fed.
 Appx.
 at
 863
 (stating
 that

only
 the
 well-­‐plead
 factual
 allegations
 are
 deemed
 admitted
 as
 true
 upon
 default).

 The

Court
 finds
 the
 following
 facts
 are
 well-­‐plead
 and
 therefore,
 deemed
 admitted
 by
 the
 default.

Trust
 fund
 recovery
 penalties
 were
 assessed
 against
 Brian
 Hall
 as
 a
 responsible

officer
 of
 Express
 Payroll
 PEO,
 Inc.,
 (for
 the
 four
 taxable
 quarters
 3/31/99
 -­‐
 12/31/99);

Saguaro
 Services,
 Inc.,
 (for
 taxable
 quarters
 3/31/01,
 6/30/01
 and
 6/30/02-­‐12/31/02);

Trico
 Services,
 Inc.,
 (9/30/2003)
 and
 Matchtech,
 Inc.,
 (12/31/08,
 3/31/09,
 6/30/09
 and

6/30/2010).

 For
 each
 of
 these
 periods
 and
 companies,
 Brian
 Hall
 was
 a
 person
 required
 to

collect,
 truthfully
 account
 for,
 and/or
 pay
 over
 the
 federal
 income
 and
 employment
 taxes

withheld
 from
 employees.
 (Doc.
 1,
 at
 ¶¶
 8
 &
 19)

For
 Express
 Payroll,
 Brian
 Hall
 was
 a
 co-­‐owner,
 president,
 director,
 and
 resident

agent.

 As
 such,
 Hall
 had
 control
 over
 Express
 Payroll’s
 financial
 affairs,
 had
 the
 ability
 to

disperse
 corporate
 funds,
 routinely
 signed
 corporate
 checks
 paying
 expenses
 other
 than
 the

accumulating
 employment
 tax
 liabilities,
 and
 controlled
 the
 business.
 (Doc.
 1
 at
 ¶¶
 9-­‐10)

After
 Express
 Payroll
 accrued
 significant
 payroll
 tax
 liabilities
 in
 1999,
 Brian
 Hall

transferred
 the
 employee
 leasing
 operations
 to
 other
 corporations
 he
 controlled,
 specifically

Mesastaff
 and
 later
 Saguaro
 Services.
 (Doc.
 1
 at
 ¶
 11)

7

As
 a
 successor
 entity
 of
 Express
 Payroll
 and
 Mesastaff,
 Saguaro
 Services
 employed

and
 leased
 the
 same
 individuals
 to
 the
 same
 customers
 as
 the
 other
 two
 companies.
 For
 all

taxable
 periods
 from
 2001
 through
 2002,
 Brian
 Hall
 was
 an
 owner,
 director,
 officer,
 and

registered
 agent
 of
 Saguaro
 Services.
 As
 such,
 Hall
 controlled
 its
 financial
 affairs,
 had
 the

ability
 to
 disperse
 corporate
 funds,
 routinely
 signed
 corporate
 checks,
 signed
 Form
 941

(Employer’s
 Quarterly
 Federal
 Tax
 Return)
 tax
 returns,
 otherwise
 controlled
 the
 business,

and
 also
 signed
 Saguaro
 Services’
 voluntary
 bankruptcy
 petition.
 See
 In
 re
 Saguaro
 Services,
Inc., Bankruptcy No. 02-16512 (Bank. S. D. Ala.). (Doc. 1, at ¶ 13)

During
 the
 four
 tax
 periods
 in
 19994
 and
 the
 years
 thereafter,
 Brian
 Hall
 failed
 to
 fully

pay
 the
 payroll
 taxes
 withheld
 from
 the
 employees
 his
 companies
 leased
 to
 customers
 under

employee
 leasing
 arrangements.
 Instead,
 Hall
 used
 these
 funds
 to
 pay
 personal
 expenses,

pay
 other
 vendors
 and
 creditors
 and
 finance
 his
 other
 business
 interests.
 (Doc.
 1
 at
 ¶
 14)

During
 2002
 and
 2003,
 Brian
 Hall
 was
 Trico’s
 co-­‐owner,
 vice
 president,
 and
 an

officer.

 Brian
 Hall
 controlled
 Trico’s
 financial
 affairs,
 had
 the
 ability
 to
 disperse
 corporate

funds,
 routinely
 signed
 corporate
 checks
 paying
 expenses
 other
 than
 the
 accruing
 tax

liabilities
 and
 otherwise
 controlled
 the
 business.
 In
 this
 capacity,
 Hall
 authorized
 the

payment
 of
 thousands
 of
 dollars
 to
 himself,
 and
 failed
 to
 authorize,
 or
 make,
 payments
 to
 the

IRS
 for
 the
 employment
 and
 income
 taxes
 withheld
 from
 its
 employees.
 (Doc.
 1
 at
 ¶¶
 15-­‐16)

After
 Trico,
 Brian
 Hall
 became
 the
 CEO
 and
 a
 director
 for
 Matchtech.

 Brian
 Hall

controlled
 Matchtech’s
 financial
 affairs,
 directed
 the
 disbursement
 of
 corporate
 funds
 and

the
 payment
 of
 its
 creditors,
 employees
 and
 vendors
 from
 the
 time
 he
 acquired
 the
 company

4

 The
 United
 States
 explains
 that
 although
 more
 than
 ten
 years
 have
 lapsed
 since
 this

assessment,
 Brian
 Hall
 submitted
 an
 offer-­‐in-­‐compromise
 in
 2003
 that
 extended
 the
 statute

of
 limitations
 (See
 Doc.
 1,
 ¶
 23,
 p.
 6-­‐7).

8

through
 at
 least
 mid-­‐2010.
 He
 authorized
 these
 payments
 at
 a
 time
 when
 he
 knew,
 or
 should

have
 known,
 that
 Matchtech
 failed
 to
 remit
 to
 the
 IRS
 employment
 and
 income
 taxes

withheld
 from
 its
 employees.
 (Doc.
 1
 at
 ¶¶
 17-­‐18)

During
 all
 of
 the
 periods
 referenced
 above,
 Brian
 Hall
 willfully
 failed
 to
 collect,

truthfully
 account
 for
 and/or
 pay
 over
 the
 federal
 tax
 income
 and
 employment
 taxes

withheld
 from
 the
 employees
 of
 his
 companies.
 Instead,
 at
 a
 time
 when
 he
 knew
 or
 should

have
 known
 that
 those
 employment
 taxes
 were
 not
 being
 paid,
 He
 directed
 his
 companies
 to

pay
 other
 liabilities,
 including
 personal
 expenses.

 In
 addition,
 Brian
 Hall
 failed
 to
 exercise

his
 authority
 to
 ensure
 that
 withheld
 employment
 taxes
 were
 paid
 to
 the
 United
 States.
 (Doc.

1
 at
 ¶20)

Pursuant
 to
 26
 U.S.C.
 §§
 6671
 and
 6672,
 for
 the
 taxable
 quarters
 and
 in
 the
 amounts

listed
 in
 paragraph
 21
 of
 the
 Complaint,
 a
 delegate
 of
 the
 Secretary
 of
 the
 Treasury
 assessed

trust
 fund
 recovery
 penalties
 against
 Brian
 Hall
 for
 the
 unpaid
 federal
 income
 and

employment
 taxes
 withheld
 from
 his
 companies’
 employees.
 (Doc.
 1
 at
 ¶
 21);
 see
 also
 Forms

4340
 certifying
 to
 the
 trust
 fund
 recovery
 penalty
 assessments
 against
 Hall
 (Doc.
 9-­‐2)

Following
 the
 assessments,
 the
 IRS
 provided
 notice
 and
 demand
 for
 payment
 of
 the

assessments
 described
 in
 paragraph
 21
 of
 the
 complaint
 on
 Brian
 Hall;
 however,
 he
 has

failed
 to
 pay
 the
 amount
 owed.
 As
 a
 result,
 as
 of
 June
 1,
 2013
 when
 the
 complaint
 was
 filed

Hall
 owed
 the
 United
 States
 for
 these
 outstanding
 trust
 fund
 recovery
 penalties
 in
 the

amount
 of
 $7,583,699.22,
 plus
 interest
 that
 continued
 to
 accrue
 after
 that
 date.

 (Doc.
 1
 at
 ¶

22)

Brenda
 Hall
 is
 married
 to
 Brian
 Hall.

 For
 Matchtech,
 during
 the
 periods
 ending

December
 31,
 2008,
 March
 31
 and
 June
 30,
 2009,
 and
 June
 30,
 2010,
 Brenda
 Hall
 was
 (i)
 the

9

Vice
 President
 of
 Operations
 and
 an
 Officer,
 (ii)
 had
 the
 ability
 to
 control
 its
 financial
 affairs

and
 disperse
 corporate
 funds,
 (iii)
 routinely
 signed
 corporate
 checks
 at
 a
 time
 when
 she

knew
 or
 should
 have
 known
 that
 the
 employment
 taxes
 were
 not
 being
 paid,
 (iv)
 signed
 a

Form
 941
 tax
 return,
 and
 (v)
 directed
 the
 disbursement
 of
 corporate
 funds
 and
 the
 payment

of
 its
 creditors,
 employees
 and
 vendors.
 As
 such,
 during
 the
 periods
 at
 issue,
 Brenda
 Hall
 was

a
 person
 required
 to
 collect,
 truthfully
 account
 for,
 and/or
 pay
 over
 the
 federal
 income
 and

employment
 taxes
 withheld
 from
 Matchtech.

 (Doc.
 1
 at
 ¶¶
 24-­‐26)

Brenda
 Hall
 willfully
 failed
 to
 collect,
 truthfully
 account
 for
 and/or
 pay
 over
 the

federal
 tax
 income
 and
 employment
 taxes
 withheld
 from
 Matchtech’s
 employees.
 Brenda

Hall
 signed
 checks
 or
 directed
 others
 to
 sign
 company
 checks
 to
 pay
 her
 personal
 expenses,

fund
 Brian
 Hall’s
 business
 interests,
 and
 pay
 other
 corporate
 debts
 at
 a
 time
 she
 knew,
 or

should
 have
 known,
 that
 Matchtech’s
 employment
 tax
 liabilities
 went
 unpaid.

 (Doc.
 1
 at
 ¶

27)

Pursuant
 to
 26
 U.S.C.
 §§
 6671
 and
 6672,
 for
 the
 taxable
 quarters
 and
 in
 the
 amounts

listed
 in
 paragraph
 28
 of
 the
 Complaint,
 a
 delegate
 of
 the
 Secretary
 of
 the
 Treasury
 assessed

trust
 fund
 recovery
 penalties
 against
 Brenda
 Hall
 for
 the
 unpaid
 federal
 income
 and

employment
 taxes
 withheld
 from
 Matchtech’s
 employees.
 (Doc.
 1
 at
 ¶
 28);
 see
 also
 Forms

4340
 certifying
 to
 the
 trust
 fund
 recovery
 penalty
 assessments
 against
 Hall
 (Doc.
 9-­‐4)

Following
 the
 assessments,
 the
 IRS
 provided
 notice
 and
 demand
 for
 payment
 of
 the

assessments
 described
 in
 paragraph
 28
 of
 the
 complaint
 on
 Brenda
 Hall;
 however,
 she
 has

failed
 to
 pay
 the
 amount
 owed.
 As
 a
 result,
 as
 of
 June
 1,
 2013
 when
 the
 complaint
 was
 filed,

Brenda
 Hall
 owed
 the
 United
 States
 for
 these
 outstanding
 trust
 fund
 recovery
 penalties
 in

the
 amount
 of
 $412,864.90,
 plus
 statutory
 interest
 accruing
 after
 that
 date.
 (Doc.
 1
 at
 ¶
 29)

10

For
 the
 years
 2004
 and
 2006,
 Brian
 Hall
 failed
 to
 file
 his
 personal
 income
 tax
 returns.

The
 IRS
 conducted
 an
 examination
 of
 his
 liabilities
 for
 those
 years,
 and
 calculated
 the
 income

tax
 owed.
 After
 issuing
 a
 notice
 of
 deficiency,
 a
 delegate
 of
 the
 Secretary
 of
 Treasury
 made

assessments
 for
 tax,
 penalties
 and
 interest
 against
 Brian
 Hall
 for
 the
 income
 tax
 liabilities

owed
 on
 the
 dates
 and
 in
 the
 amounts
 indicated
 in
 paragraph
 31
 of
 the
 Complaint.
 (Doc.
 1
 at

¶
 31);
 see
 also
 Forms
 4340
 certifying
 the
 assessments
 (Doc.
 9-­‐3)

For tax years 2007 and 2008, on the dates and in the amounts indicated in paragraph 32 of
the Complaint, a delegate of the Secretary of the Treasury made assessments against Brian Hall for
unpaid federal income taxes, including penalties and interest, gave notice of the assessments, and
made demand for payment thereon. (Doc. 1 at ¶ 32); see also Forms 4340 certifying to the federal
income tax liability assessments. (Doc. 9-3)

Despite
 the
 notices
 of
 the
 assessments
 and
 the
 demands
 for
 payment,
 Brian
 Hall
 has

failed
 to
 pay
 the
 assessments
 described
 in
 paragraphs
 31
 and
 32
 of
 the
 complaint.

 As
 of
 June

1,
 2013
 when
 the
 complaint
 was
 filed,
 he
 owed
 the
 United
 States
 his
 outstanding
 2004,
 2006,

2007
 and
 2009
 federal
 income
 taxes
 in
 the
 amount
 of
 $11,453.10,
 plus
 statutory
 additions

and
 interest
 accruing
 after
 that
 date.

 (Doc.
 1
 at
 ¶
 33)

VIII.
 Analysis

Pursuant
 to
 the
 Internal
 Revenue
 Code,
 employers
 are
 required
 to
 withhold
 income

taxes
 and
 Federal
 Insurance
 Contribution
 Act
 (FICA)
 taxes
 from
 the
 employee’s
 wages
 when

those
 wages
 are
 paid.
 See
 26
 U.S.C.
 §
 3102(a)
 (The
 tax
 imposed
 by
 [the
 Federal
 Insurance

Contributions
 Act]
 shall
 be
 collected
 by
 the
 employer
 of
 the
 taxpayer,
 by
 deducting
 the

amount
 of
 the
 tax
 from
 the
 wages
 as
 and
 when
 paid.”);
 26
 U.S.C.
 §
 3402(a)(1)
 (“Except
 as

otherwise
 provided
 in
 this
 section,
 every
 employer
 making
 payment
 of
 wages
 shall
 deduct

11

and
 withhold
 upon
 such
 wages
 a
 tax
 determined
 in
 accordance
 with
 tables
 or
 computational

procedures
 prescribed
 by
 the
 Secretary.
 “)

 The
 funds
 withheld
 and
 collected
 are
 generally

referred
 to
 as
 trust
 fund
 taxes
 and
 “shall
 be
 held
 to
 be
 a
 special
 fund
 in
 trust
 for
 the
 United

States.”

 26
 U.S.C.
 §
 7501.

 These
 funds
 are
 for
 the
 exclusive
 use
 of
 the
 United
 States
 and
 may

not
 be
 used
 to
 pay
 the
 employer’s
 business
 expense
 or
 for
 any
 other
 purpose.
 See
 26
 U.S.C.
 §§

3102(b),
 3403
 &
 7501(a).

A
 willful
 failure
 to
 collect
 the
 trust
 fund
 taxes
 or
 truthfully
 account
 for
 and
 pay
 over

the
 tax
 results
 in
 personal
 liability
 on
 the
 part
 of
 the
 person
 responsible
 for
 collecting,

accounting
 and
 paying
 over
 the
 tax
 to
 the
 United
 States.

 Thosteson
 v.
 United
 States,
 331
 F.3d

1294,
 1299
 (11th
 Cir.
 2003)
 (citing
 Williams
 v.
 United
 States,
 931
 F.2d
 805,
 810,
 reh’g

granted
 and
 opinion
 suppl.,
 939
 F.2d
 915
 (11th
 Cir.
 1991)).

 Title
 26
 U.S.C.
 §
 6672(a)

provides
 in
 relevant
 part
 as
 follows:

Any
 person
 required
 to
 collect,
 truthfully
 account
 for,
 and
 pay
 over
 any
 tax

imposed
 by
 this
 title
 who
 willfully
 fails
 to
 collect
 such
 tax,
 or
 truthfully

account
 for
 and
 pay
 over
 such
 tax,
 or
 willfully
 attempts
 in
 any
 manner
 to

evade
 or
 defeat
 any
 such
 tax
 or
 the
 payment
 thereof,
 shall,
 in
 addition
 to

other
 penalties
 provided
 by
 law,
 be
 liable
 to
 a
 penalty
 equal
 to
 the
 total

amount
 of
 the
 tax
 evaded,
 or
 not
 collected,
 or
 not
 accounted
 for
 and
 paid

over.

26
 U.S.C.
 §
 6672(a).

The
 “responsible
 person”
 is
 one
 who
 must
 either
 collect,
 account
 for,
 or
 pay
 over
 the

taxes.
 Slodov
 v.
 United
 States,
 436
 U.S.
 238,
 249,
 98
 S.
 Ct.
 1778,
 1786
 (1978)(a
 “responsible

person”
 is
 one
 who
 has
 a
 duty
 to
 perform
 at
 least
 one
 of
 the
 three
 functions
 listed
 under
 §

6672).

 In
 order
 to
 establish
 liability
 for
 the
 trust
 fund
 penalties,
 the
 United
 States
 must

show
 that
 there
 is
 “(1)
 a
 responsible
 person
 (2)
 who
 has
 willfully
 failed
 to
 perform
 a
 duty
 .
 .
 .

to
 pay
 over
 federal
 employment
 taxes.”

 Brown
 v.
 United
 States,
 439
 F.
 App'x
 772,
 776
 (11th

12

Cir.
 2011)
 (quoting
 Thosteson,
 331
 F.3d
 at
 1298).

 Also,
 a
 corporation
 or
 business
 may
 have

more
 than
 “one
 responsible
 person
 within
 the
 meaning
 of
 section
 6672”
 and
 “the
 courts

have
 interpreted
 rather
 broadly
 who
 will
 constitute
 a
 ‘responsible
 person’”.

 Williams,
 931
 F.

2d
 at
 810,
 n.7.

 “Indicia
 of
 responsibility
 include
 the
 holding
 of
 corporate
 office,
 control
 over

financial
 affairs,
 the
 authority
 to
 disburse
 corporate
 funds,
 stock
 ownership,
 and
 the
 ability

to
 hire
 and
 fire
 employees.”
 Id.
 at
 810
 (quoting
 George
 v.
 United
 States,
 819
 F.2d
 1008,
 1011

(11th
 Cir.1987)).

A.
 Brian
 Hall
 and
 Brenda
 Hall

The
 Court
 finds
 that
 the
 well-­‐pleaded
 allegations
 of
 the
 complaint
 which
 are
 deemed

admitted
 by
 the
 default,
 state
 a
 viable
 cause
 of
 action
 against
 the
 Halls
 as
 the
 responsible

persons
 for
 the
 various
 corporations
 and
 form
 a
 substantive
 and
 sufficient
 basis
 in
 the

pleadings
 to
 find
 them
 liable
 to
 the
 United
 States
 for
 the
 relief
 sought;
 specifically
 a
 default

judgment
 for
 damages
 for
 the
 unpaid
 trust
 fund
 recovery
 penalties
 plus
 interest.

 Tyco
 Fire
 &

Sec.,
 LLC,
 218
 Fed.
 Appx.
 at
 863.

 Brian
 Hall
 and
 Brenda
 Hall’s
 corporate
 positions
 and
 duties

are
 set
 forth
 herein.
 See
 Section
 VII.

 Based
 on
 their
 overall
 control
 of
 the
 financial
 affairs
 of

the
 corporations,
 their
 respective
 check-­‐signing
 authority,
 and
 their
 signatures
 upon
 certain

IRS
 Form
 941
 (Employer’s
 Quarterly
 Federal
 Tax
 Return),
 the
 Court
 finds
 that
 they
 were

“responsible
 persons”
 within
 the
 meaning
 of
 the
 statute.

Since
 the
 United
 States
 has
 met
 its
 burden
 to
 establish
 that
 the
 Halls
 are
 “responsible

persons”
 under
 §
 6672],
 the
 burden
 shifts
 to
 them
 “to
 disprove
 willfulness.”
 Malloy
 v.
 United

States,
 17
 F.3d
 329,
 331
 (11th
 Cir.
 1994)
 (citing
 Williams,
 931
 F.
 2d
 at
 809-­‐810).

 Willfulness,

in
 this
 context,
 has
 been
 defined
 as
 the
 “voluntary,
 intentional
 violation
 of
 a
 known
 legal

duty.”

 Williams,
 931
 F.
 2d.
 at
 810
 (citing
 Cheek
 v.
 United
 States,
 498
 U.S.
 192,
 –––,
 111
 S.
 Ct.

13

604,
 610
 (1991)).

 In
 this
 circuit,
 the
 “willfulness
 requirement
 is
 satisfied
 ‘if
 the
 responsible

person
 has
 knowledge
 of
 payments
 to
 other
 creditors
 after
 [s]he
 becomes
 aware
 of
 the

failure
 to
 remit
 the
 withheld
 taxes.’”

 Brown
 v.
 United
 States,
 439
 Fed.Appx.
 772,
 776
 (11th

Cir.
 2011)
 (Citing
 Thosteson,
 331
 F.3d
 at
 1300).

 “There
 is
 no
 requirement
 that
 willfulness
 of

the
 responsible
 person
 include
 a
 fraudulent
 or
 other
 bad
 motive.”
 Id.

The
 undisputed
 facts
 establish
 that
 Brian
 Hall
 failed
 to
 pay
 to
 the
 IRS
 the
 federal
 taxes

withheld
 from
 the
 employees
 of
 Express
 Payroll
 PEO,
 Inc.,
 (for
 the
 four
 taxable
 quarters

3/31/99
 -­‐
 12/31/99);
 Saguaro
 Services,
 Inc.,
 (for
 taxable
 quarters
 3/31/01,
 6/30/01
 and

6/30/02-­‐12/31/02);
 Trico
 Services,
 Inc.,
 (9/30/2003)
 and
 Matchtech,
 Inc.,
 (12/31/08,

3/31/09,
 6/30/09
 and
 6/30/2010),
 which
 resulted
 in
 the
 assessment
 of
 trust
 fund
 recovery

penalties
 against
 him.

 The
 undisputed
 facts
 also
 establish
 that
 at
 a
 time
 when
 he
 controlled

the
 corporations
 and
 knew
 or
 should
 have
 known
 that
 those
 federal
 employment
 taxes
 were

not
 being
 paid,
 Hall
 directed
 his
 companies
 to
 pay
 other
 liabilities,
 including
 personal

expenses
 and
 failed
 to
 exercise
 his
 authority
 to
 ensure
 that
 withheld
 employment
 taxes
 were

paid
 to
 the
 United
 States.

 See
 Section
 VII.

 Therefore,
 the
 Court
 finds
 that
 Brian
 Hall
 has

failed
 to
 disprove
 the
 United
 States’
 allegations
 that
 he
 acted
 willfully.

The
 undisputed
 facts
 establish
 that
 Brenda
 Hall
 failed
 to
 pay
 to
 the
 IRS
 the
 federal

taxes
 withheld
 from
 the
 employees
 of
 Matchtech.
 (12/31/08.
 3/31/09,
 6/30/09
 and

6/30/2010),
 which
 resulted
 in
 the
 assessment
 of
 trust
 fund
 recovery
 penalties
 against
 her.

The
 undisputed
 facts
 also
 establish
 that
 Brenda
 Hall
 signed
 checks
 or
 directed
 others
 to
 sign

company
 checks
 to
 pay
 her
 personal
 expenses,
 fund
 Brian
 Hall’s
 business
 interests,
 and
 pay

other
 corporate
 debts
 at
 a
 time
 she
 knew,
 or
 should
 have
 known,
 that
 Matchtech’s

employment
 tax
 liabilities
 were
 not
 paid
 to
 the
 IRS.

 See
 Section
 VII.

 Therefore,
 the
 Court

14

finds
 that
 Brenda
 Hall
 has
 failed
 to
 disprove
 the
 United
 States’
 allegations
 that
 she
 acted

willfully.

As
 to
 damages,
 Young’s
 Declaration
 and
 exhibits,
 and
 the
 Certifications
 by
 an
 IRS

officer
 as
 to
 the
 amounts
 due
 to
 the
 IRS

 (docs.
 9-­‐1,
 9-­‐2,
 9-­‐4)
 provide
 a
 sufficient
 evidentiary

basis
 for
 an
 award
 of
 damages
 in
 favor
 of
 the
 United
 States.

 Moreover,
 there
 is
 a

presumption
 that
 a
 federal
 tax
 assessment
 issued
 by
 the
 IRS
 is
 valid.
 United
 States
 v.
 Chila,

871
 F.2d
 1015,
 1017–18
 (11th
 Cir.
 1989)
 (finding
 that
 certified
 documents
 presented
 by
 the

United
 States
 in
 support
 of
 the
 assessment
 provided
 the
 necessary
 statutory
 and
 regulatory

information
 –
 “identification
 of
 the
 taxpayer,
 the
 character
 of
 the
 liability
 assesses,
 the

taxable
 period,
 and
 the
 date
 and
 amount
 of
 the
 assessment”);
 Welch
 v.
 Helvering,
 290
 U.S.

111,
 115
 (1933).

 Accordingly,
 damages
 are
 assessed
 against
 Brian
 Hall
 in
 the
 amount
 of

$7,659,664.91
 plus
 statutory
 interest
 accruing
 thereon
 and
 damages
 are
 assessed
 against

Brenda
 Hall
 in
 the
 amount
 of
 $416,917.93
 plus
 statutory
 interest
 accruing
 thereon
 (doc.
 9-­‐1,

Young’s
 Declaration,
 p.
 2-­‐5,
 summary
 of
 assessed
 tax
 liabilities
 with
 interest
 accrued
 through

the
 date
 of
 filing
 the
 motion
 for
 default
 judgment)
 as
 set
 forth
 in
 the
 separate
 Judgment

entered
 contemporaneously
 herewith.

B.
 Brian
 Hall’s
 personal
 income
 tax

The
 Court
 finds
 that
 the
 well-­‐pleaded
 allegations
 of
 the
 complaint
 which
 are
 deemed

admitted
 by
 the
 default,
 state
 a
 viable
 cause
 of
 action
 against
 Brian
 Hall
 and
 form
 a

substantive
 and
 sufficient
 basis
 in
 the
 pleadings
 to
 entitle
 the
 United
 States
 to
 the
 relief

sought;
 specifically
 a
 default
 judgment
 for
 damages
 for
 the
 unpaid
 personal
 income
 taxes

plus
 penalties
 and
 interest.

 Tyco
 Fire
 &
 Sec.,
 LLC,
 218
 Fed.
 Appx.
 at
 863.

 The
 undisputed

evidence
 establishes
 that
 at
 the
 time
 the
 complaint
 was
 filed
 on
 June
 1,
 2013,
 Brian
 Hall
 had

15

failed
 to
 pay
 his
 person
 income
 taxes
 for
 the
 years
 2004,
 2006,
 2007
 and
 2009,
 and
 owed
 the

United
 States
 a
 total
 of
 $11,453.10
 for
 taxes,
 penalties
 and
 interest.

 (Doc.
 9-­‐1,
 p.
 3-­‐4,
 Young

Declaration;
 doc.
 9-­‐3
 Forms
 4340
 certifying
 the
 assessments)
 At
 the
 time
 of
 filing
 the
 motion

for
 default
 judgment,
 the
 total
 had
 increased
 to
 $11,567.25
 (Id.).

 The
 well-­‐plead
 factual

allegations
 by
 the
 United
 States
 that
 it
 assessed
 the
 unpaid
 income
 taxes,
 penalties
 and

interest,
 notified
 Brian
 Hall
 of
 the
 assessment,
 and
 that
 he
 failed
 to
 pay
 are
 deemed
 admitted

as
 true
 by
 his
 default.

 Thus
 he
 has
 failed
 to
 dispute
 the
 validity
 of
 the
 assessment
 or
 his

liability
 to
 the
 IRS.

 See
 Chila,
 871
 F.2d
 at1017–18
 (presumption
 of
 validity
 of
 IRS

assessments
 supported
 by
 certified
 documents).

 Accordingly,
 damages
 are
 assessed
 against

Brian
 Hall
 in
 the
 amount
 of
 $11,
 567.25,
 plus
 statutory
 interest
 accruing
 thereon.

IX.

 Conclusion

For
 the
 foregoing
 reasons,
 the
 United
 States’
 motion
 for
 default
 judgment
 is

GRANTED
 as
 set
 forth
 herein.

Default
 judgment
 shall
 be
 entered
 by
 separate
 document
 in
 accordance
 with
 Rule

58(a)
 of
 the
 Federal
 Rules
 of
 Civil
 Procedure.

The
 Clerk
 is
 directed
 to
 mail
 a
 copy
 of
 this
 order
 to
 Brian
 L.
 Hall
 and
 Brenda
 R.
 Hall
 at

their
 address
 of
 record.

Done
 and
 ordered
 the
 30th
 day
 of
 December
 2013.

s/
 Kristi
 K.
 DuBose

KRISTI
 K.
 DuBOSE

UNITED
 STATES
 DISTRICT
 JUDGE

16