Emerging Money Corp et al v. USA
ORDER (see attached) denying 55 Plaintiffs' Motion for Partial Summary Judgment, granting 57 Defendant's Cross-Motion for Summary Judgment, and thus denying as moot 63 Defendant's Motion to Limit Plaintiffs' Damages and 74 Plaintiff's Motion for Status Conference. The Clerk of the Court is directed to close the file. Signed by Judge Charles S. Haight, Jr. on 04/14/2014. (Wang, S.)
UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
EMERGING MONEY CORP.,
SERVICES, LLC, and EMERGING
ACTUARIAL DESIGNS, LLC,
No. 3:09-cv-1502 (CSH)
APRIL 14, 2014
UNITED STATES OF AMERICA,
RULINGS ON CROSS-MOTIONS FOR SUMMARY JUDGMENT ON LIABILITY
AND ON DEFENDANT'S MOTION RELATING TO DAMAGES
HAIGHT, Senior District Judge:
At the times pertinent to this action, the Plaintiffs provided various financial services to
private individuals. Their suit against the Defendant United States of America (the Government)
alleges that the Internal Revenue Service (IRS) violated 26 U.S.C. § 6103 by disclosing to third
parties Plaintiffs' "return information" without Plaintiffs' consent, as required by the statutory
scheme. 26 U.S.C. § 7431 permits plaintiffs to recover damages when an officer of the United States
(here officers of the IRS) knowingly or negligently and without authority discloses returns or return
information in violation of Section 6103.
In an earlier opinion, reported at 873 F. Supp. 2d 451 (D. Conn. 2012) ("Emerging Money
I"), the Court granted in part and denied in part the Government's motion for summary judgment.
The parties have now filed additional motions for summary disposition. Plaintiffs move for partial
summary judgment on an issue of liability [Doc. 55]. The Government has filed two further motions
for summary judgment. The first of these motions [Doc. 57] seeks judgment dismissing Plaintiffs'
action. The second motion [Doc. 63], filed in contemplation that the first motion may fail, prays for
partial summary judgment limiting Plaintiffs' damages.
This Ruling resolves all three motions.
Emerging Money I, with which familiarity is assumed, sets forth in detail the facts and
circumstances of this case. They are recounted herein only to the extent necessary to explicate the
Court's resolution of the present motions.
Plaintiffs, Nevada or Delaware legal entities with principal places of business in Stamford,
Connecticut, marketed to potential investors a program called "Stock to Cash" or "the 90% loan
program." Some investors participated in the program. Agents in the regional IRS office determined
after investigation that the program was twice damned. In the words of Emerging Money I, the IRS
"concluded that these transactions were not in fact loans, but rather were sales of stock disguised as
loans, evading the capital gains tax. In addition, the IRS determined that the Stock to Cash program
was a Ponzi scheme, using money coming in from new investors to pay obligations to existing
investors." 873 F. Supp. 2d at 453.
Energized by these suspicions, the IRS obtained from Plaintiffs a list of clients who had
participated in Stock to Cash transactions, and sent to those clients ("the Recipients") model notice
letters asking the Recipients to file amended tax returns. The Recipients were given that unwelcome
request, the letters explained, because of "the IRS's position that the Stock to Cash transactions were
'sham transactions' (the 'sham-transaction assertion') and the assertion that these transactions were
'built into a Ponzi scheme' (the 'Ponzi-scheme assertion')." 873 F. Supp. 2d at 453. The notice letters
also advised the Recipients of the identity of Plaintiffs as possible "lenders" or administrators of the
Stock to Cash program, and that the IRS was conducting an investigation into the program.
The Plaintiffs, predictably displeased by the letters sent to their clients by the IRS, filed this
action against the Government alleging violation of 26 U.S.C. § 6103(a), which provides in pertinent
part: "Returns and return information shall be confidential, and except as authorized by this title –
(1) no officer or employee of the United States . . . shall disclose any return or return information
obtained by him in any manner in connection with his service as such an officer or employee or
otherwise under the provisions of this section."
The Government's first summary judgment motion was based on the proposition that all the
assertions in the IRS's letters to investors were covered by one or another of the several statutory
exceptions to this general rule against disclosure. In Emerging Money I, the Court granted summary
judgment to the Government "as to all disclosed information other than the assertion that the
purported loans in the Stock to Cash program were 'built into a Ponzi scheme.'" Summary judgment
was denied with respect to that assertion. 873 F. Supp. 2d at 460.
In view of the parties' contentions in the present motions, it is necessary to recite in some
detail the manner in which the Court in Emerging Money I considered the IRS-perceived Ponzi
scheme on the part of Plaintiffs. The Court first concluded that the Ponzi-scheme assertion in the
IRS letters to investors did not fit within the "own information" exception to § 6103(a)
confidentiality. The Government argued that "it was entitled to disclose the Information to the
Recipients because it was their own return information." 873 F. Supp. 2d at 455. The Court said
with respect to that exception:
Both the investigation and sham-transaction assertions explain to the
Recipients that transactions they had treated as "loans" were not
loans, and hence explained the tax adjustment and the request for
But the Ponzi-scheme assertion did not directly impact the
Recipients' tax liabilities. Their "loans" would have been considered
sales of stock whether or not the program was a Ponzi scheme. The
fact that the transactions were "shams" was enough to establish to the
Recipients that they were invalid, without a contractual reference to
a larger Ponzi scheme. . . . Defendant has not established that the
Ponzi-scheme assertion was the Recipients' own return information.
Id. at 456.1 For comparable reasons, the Court rejected the Government's contention that the IRS
Ponzi-scheme assertion fell within the "investigative purposes" exception. On that issue, the Court
The dispute between the parties about this exception comes down to
one issue: was it necessary for the IRS to disclose the Information to
carry out its investigations? This question is closely similar to that
of whether it was necessary for the IRS to disclose the Information to
inform the Recipients about the change in their tax liabilities. In
order to obtain the information it wanted from the Recipients,
especially in the form of amended tax returns, the IRS needed to
inform the Recipients about the identities of Plaintiffs, about the
investigation of the Stock to Cash program, and about its finding that
the "loans" were sham transactions. The IRS could not expect the
Recipients to file amended tax returns without telling them what
amendment to make and why. But Defendant has not explained why
the IRS, in order to obtain the information it was looking for, needed
to provide the Ponzi-scheme assertion. The "investigative purposes"
exception applies to the rest of the Information, but not to the Ponzischeme assertion.
Id. at 459.
Against this background, I consider the three pending motions.
I have emphasized the phrase "directly impact" as used in Emerging Money I because,
as demonstrated in text infra, the parties' briefs on the present motions confer a certain
prominence upon the phrase "directly impacts upon" or its companion phrase, "directly related
The Motions Concerning Liability
Two of the three pending motions have to do with issues of liability. I will consider those
two motions together.
Emerging Money I concluded with the direction to Plaintiffs that they file "a statement as to
whether they intend to pursue to trial the claim with respect to the 'Ponzi scheme' assertion, which
is now the only claim remaining in this action, and if so, a statement and explanation of the damages
they seek." 873 F. Supp. 2d at 460. Plaintiffs' counsel responded with a statement [Doc. 49]
declaring that Plaintiffs intended "to try the claim with respect to the 'Ponzi scheme' wrongful
disclosure," and that Plaintiffs planned "to establish and pursue statutory and actual damages
sustained as the result of the IRS's unauthorized disclosure and elect the greater of the two." Doc.
49 at 1-2. Depending on their ability to establish actual economic damages resulting from the
disclosures, and further litigation developments, Plaintiffs also recite in Doc. 49 at 4-7 their right to
claim punitive damages, costs, and attorneys' fees.
Thereafter, Plaintiffs filed a motion for partial summary judgment [Doc. 55]. The motion
refers to and summarizes the Court's conclusions in Emerging Money I, and prays that the Court now
enter summary judgment "in [Plaintiffs'] favor and find that the disclosure of the Ponzi scheme
assertion was a violation of Section 6103 of the Internal Revenue Code." Plaintiffs' Brief on Motion
[Doc. 55-1] at 5. Plaintiffs say in their brief at that if partial summary judgment is granted in this
respect, "[t]he remaining issues will be whether the wrongful disclosure resulted from a good faith,
but erroneous interpretation of Section 6103, exempting the United States from liability under I.R.C.
§ 7431, and damages." Id.
The Government responded to Plaintiffs' motion for partial summary judgment with three
submissions of its own, all filed on the same day. The first of these, Doc. 56, is a brief in opposition
to Plaintiffs' motion. The Government argues principally that Plaintiffs base their motion solely on
the fact that "the Court previously denied the United States' motion for summary judgment," which
"does not establish that the IRS violated § 6103, and it certainly does not entitle the Plaintiffs to
judgment as a matter of law." Doc. 56 at 2. The Government criticizes Plaintiffs by saying that "if
the Plaintiffs wanted the Court to rule in their favor, they should have cross-moved for summary
judgment. They did not." Id. The Government's second submission, Doc. 57, is a cross-motion for
summary judgment dismissing Plaintiffs' action. The Government says in that motion that in
Plaintiffs' Doc. 55, "the Plaintiffs moved to clarify that the June 2012 decision [Emerging Money I]
held that, as a matter of law, the Ponzi scheme assertion was a wrongful disclosure." Doc. 57 at 2
(emphasis added). The government says further: "In support of its motion, the United States answers
the Court's implicit call for an explanation why the Ponzi scheme statement was directly related to
the Recipients' own tax liability." Id. (emphasis added).
The quoted and emphasized characterizations by the Government in Doc. 57 are rather odd.
Plaintiffs' Doc. 55 is not a motion by them "to clarify" the Court's decision in Emerging Money I;
it is a motion by Plaintiffs for partial summary judgment under Rule 56, Fed. R. Civ. P., based upon
that decision. And I am entertained, but not persuaded, by the Government's telling me that while
I may have thought I was filing a opinion deciding issues, I was really issuing "an implicit call for
an explanation" and waiting for the Government's answer, which the Government has now furnished
in these recent submissions. That "implicit call for an explanation" Government counsel profess to
hear is in reality a manufactured vehicle for making a new argument based on the Code.
That argument appears in the Government's brief accompanying its renewed motion for
In this case, the Ponzi scheme assertion at issue did not merely
provide context to the other statements in the letters [from the IRS to
the Recipients]. That assertion was directly related to the Recipients'
tax liability, inter alia, alerting the Recipients to the possible
availability of a tax deduction that would impact their tax liability.
Doc. 57-1 at 8. That circumstance, the Government argues, brings the IRS's Ponzi scheme assertion
within the non-disclosure exception found in § 6103(e) of the Code, captioned "Disclosure to
persons having material interest." The Government's brief expands on that theory in its brief, Doc.
57-1 at 10:
But the Ponzi scheme assertion carried its own implications for the
Recipients' tax liabilities. Only the Ponzi scheme assertion relates to
additional deductions – e.g., theft loss – that the Recipients may be
entitled to claim. In this way, of all the statements in the letters, the
Ponzi scheme assertion is the most remote from the Plaintiffs' return
information, and most closely related to the Recipients' tax liability.
Thus, the Ponzi scheme assertion was authorized under § 6103(e).
If one accepts that theory, the Government is correct in contending that summary judgment should
issue against Plaintiffs dismissing their action. That is because the Court held in Emerging Money
I that all the other assertions in the IRS's letters to Recipients fell within one or another exception
to the statutory prohibition against disclosure.
Preliminarily, it may be noted that there is no substance to the Government's contention that
the Plaintiffs' present motion for partial summary judgment must fail because Plaintiffs should have
prayed for that relief in a cross-motion to the Government's initial motion. Rule 56(a) provides: "The
court shall grant summary judgment if the movant shows that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law." Whether a particular fact
is "material" depends upon the governing law; and the governing law must, of course, be taken into
account in determining whether the movant "is entitled to judgment as a matter of law." In the case
at bar, this Court's decision in Emerging Money I plays a significant part in declaring the governing
law; or, if it be thought unseemly for a district judge to characterize his or her opinion as "governing
law," it can at least be accorded the status of "law of the case" (until contrary appellate governing
law comes along). The Plaintiffs and their counsel cannot be fairly criticized for making their
motion for partial summary judgment after the Court's decision, rather than before it. Plaintiffs base
their motion on the Court's decision, which the Court perforce had to write first. Plaintiffs correctly
understand Emerging Money I to be a decision, as opposed to the Government, which professes a
belief that the Court was asking a question.
Accordingly I consider Plaintiffs' present motion on its merits. Plaintiffs contend in that
motion that the Court's decision Emerging Money I entitles them to a summary ruling that the IRS's
Ponzi scheme assertion violated § 6103(a), on its merits. The Government's opposition contends
that the assertion was authorized by § 6103(e). Unaccountably, the Government's present argument
in support of that proposition is materially different from any contention it made during the course
of its initial motion for summary judgment. Thus there is a certain irony in the Government's feeling
free to criticize Plaintiffs for the timing of their contentions, while holding in reserve (or
subsequently discerning) the contention the Government now makes, having been disappointed by
the Court's judgment in Emerging Money I. While counsel for Plaintiffs express understandable
irritation with the Government's litigation timing, it is preferable to consider the parties' contentions
on their merits, and I extend that preference to the Government's cross-motion as well.
The Government's brief, quoted supra, seems to identify the purpose and intended effect of
the IRS's Ponzi scheme assertion as "alerting the Recipients to the possible availability of a tax
deduction that would impact their tax liability." Doc. 57-1 at 8. That proclaimed purpose and effect
might come as something of a surprise to Revenue Agent Judith A. Steiner, the IRS officer in charge
of the underlying investigation into Plaintiffs, whose sworn declaration [Doc. 28-3] was submitted
by the Government in support of its initial summary judgment motion. As Emerging Money I points
out, 873 F. Supp. 2d at 453-454, a time came when the IRS deleted the Ponzi scheme assertion from
letters being sent to Recipients. Agent Steiner's declaration states that the reasons for the deletion
of the Ponzi assertion were the following:
[T]he Service did not feel that language was necessary to convince
the taxpayers that the "loans" they entered into were invalid and had
significant adverse tax consequences. Furthermore, the "Ponzi
scheme" reference was causing some issues because taxpayers felt
that they should be entitled to additional losses given that they were
"victims" of this scheme. Only later investors who did not receive the
value of their shares at the conclusion of the "loan" would be entitled
to any loss from the Ponzi scheme. The initial investors either
walked away from the "loan" at maturity (because the shares were
worth less than the loan balance) or did in fact receive the cash value
(or actual shares) at the conclusion of the "loan." For these reasons,
I removed the "Ponzi scheme" language in the letters.
Steiner Declaration [Doc. 28-3] at ¶ 26 (emphasis added). This language would seem to suggest that
contrary to the Government's present contention that the IRS included the Ponzi scheme assertion
in the letters to alert Recipients to a possible tax deduction, the IRS deleted the assertion from the
letters in order to refrain from alerting or encouraging Recipients to claim a possible deduction.
Whatever mysteries or uncertainties might arise from Agent Steiner's declaration, the
Government's present perceptions of what the Code authorizes IRS agents to disclose are clear
enough. The case for the Government begins with the observation that section 1603(a) of the
Internal Revenue Code, 26 U.S.C. § 1603(a), which Plaintiffs claim the IRS violated, provides that
returns and return information are confidential "except as authorized by this title." "Subsections (c)
through (o) of § 6103 set forth various exceptions to the general rule that returns and return
information are confidential and not to be disclosed." Church of Scientology of California v.
Internal Revenue Service, 484 U.S. 9, 15 (1987). In the case at bar, the Government relies upon an
exception found in § 6103(e), captioned "Disclosures to persons having material interest." The
instant case involves "return information" as that phrase is used in the statutory scheme. Both parties
agree that the assertions contained in the IRS's letters to Recipients comprise "return information."
In Emerging Money I, I had occasion to say: "Plaintiffs assert that the Information is Plaintiffs' 'return
information' and thus subject to Section 6103, and Defendant does not dispute that point"; however,
"Defendant argues that it was entitled to disclose the Information to the Recipients because it was
their own return information." 873 F. Supp. 2d at 454-455. What emerges from all this is the
common-sense proposition that in a complex world of commercial give and take, the same
declaration may constitute tax "return information" for more than one taxpayer. Here, two groups
of taxpayers were involved: the Plaintiffs, who were purportedly promoting a financial program, and
the Recipients of the IRS letters, who had participated in the Plaintiffs' program.
How can the Ponzi scheme assertion in the IRS letters reasonably be characterized as "return
information" in respect of the Recipients? To revisit Emerging Money I briefly: I said there that the
content of the IRS letters "was the Recipients' own return information if it consisted of facts that
directly impacted the Recipients' tax liabilities," and concluded that "the 'own information' exception
permitted the IRS to include in the Letters the identification of plaintiffs, the investigation assertion,
and the sham-transaction assertion, but did not cover the Ponzi-scheme assertion." 873 F. Supp. 2d
at 456, 457. In its present effort to salvage the Ponzi scheme assertion as included within the
Recipients' return information, the Government now points to the broad definition of the term "return
information" that appears in § 6103(b)(2). That subsection provides in pertinent part:
The term "return information" means –
(A) a taxpayer's identity, the nature, source or amount of his
income, . . . deductions, . . . tax liability, . . . or any other data . . .
with respect to the determination of the existence, or possible
existence, of liability (or the amount thereof) of any person under this
title for any tax, penalty, interest, fine, forfeiture, or other imposition,
With respect to the Recipients, that subsection leads the Government to other provisions in the Code,
which the Government's main brief accurately describes, Doc. 57-1 at 6: "Unlike other taxpayers,
victims of Ponzi schemes may be entitled to tax deductions under 26 U.S.C. § 165(a) and (c), which
provides income tax deductions for losses due to theft." Whether payments by a Ponzi scheme
perpetrator to a participant in the scheme constitute taxable income or a non-taxable return of
investment to the participant depends on the circumstances of the case; illustrative cases are
collected in Kooyers v. Commissioner of Internal Revenue, 2004 WL 2930978 (Tax Court Dec. 20,
2004), at *12-*13. The Government's argument in the case at bar is that given the provisions of
§ 165(a) and (c), the IRS's Ponzi scheme assertion in the IRS letters "was directly related to the
Recipients' tax liability, inter alia, alerting the Recipients to the possible availability of a tax
deduction that would impact their tax liability." Brief, Doc. 57-1, at 8. In consequence, the
argument concludes, the IRS's inclusion of the Ponzi scheme assertion in its letters to some
Recipients was an authorized disclosure of return information to the Recipients about the Recipients'
own tax liability.
If the Government's § 165 theory of disclosure authorization (expressly stated for the first
time in the present motion) depended upon a showing that IRS agents included Ponzi scheme
assertions in letters to Recipients with the specific intent of "alerting the Recipients to the possible
availability of a tax deduction," certain difficulties would arise. Agent Steiner's declaration, quoted
supra, would seem to say that the IRS deleted Ponzi scheme assertions from the later letters for the
overall purpose of concealing, not revealing, that possible availability. Moreover, the briefs for the
Government enhance the potential for confusion. The Government's reply brief [Doc. 59] at 9 makes
this criticism of Plaintiffs' opposing brief [Doc. 58]: "Plaintiffs claim that the United States argues
that the Ponzi scheme assertion was 'designed to inform the taxpayers that they may be entitled to
theft loss deductions. This is not accurate." Any charged inaccuracy in Plaintiffs' briefs is surely
mitigated by seemingly contrary arguments in the Government's earlier briefs, specifically: The
Ponzi scheme assertion "was directly related to the Recipients' tax liability, inter alia, alerting the
Recipients to the possible availability of a tax deduction that would impact tax liability." Main Brief
[Doc. 57-1] at 8; and "Section 6103 must be interpreted in a manner that permits the IRS to inform
participants in suspect tax shelters of the reasons for their tax liability." Reply Brief [Doc. 59] at 4.
These quotations can be read as acknowledgments by Government's counsel that Plaintiffs' counsel
understood the Government's argument perfectly well.
Counsel for Plaintiffs seize upon these factors. The brief for Plaintiffs [Doc. 58] at 1
criticizes the Government for seeking "to take a second bite at the apple" of demonstrating that "its
allegations of Plaintiffs' involvement in a Ponzi scheme were not a violation of Section 1603."
Counsel place an understandable emphasis upon Agent Steiner's declaration; Plaintiffs' brief says:
"There is no indication in Steiner's declaration, or in any exhibit provided by the government, that
the intent of the Ponzi scheme language was to notify taxpayers that they were entitled to a theft
loss." Id. at 6. On Plaintiffs' theory of the case, it is important for the Court to know "how the Ponzi
scheme allegation impacted each of the taxpayers who received the preliminary notices in this case."
Id. In aid of that theory, Plaintiffs request discovery "on the internal correspondence and documents
referencing the drafting of the preliminary notice and its subsequent removal in order to examine and
verify any unsupported excuse promulgated by the Defendant." "Such verification is necessary,"
Plaintiffs assert, "in order to sort through the Defendant's conflicting positions." Id. Plaintiffs'
principal contention is that the Ponzi scheme allegation "was not necessary to convey the availability
of a tax loss," a circumstance mandating the conclusion that "the Ponzi scheme assertion did not
directly impact the Recipients' federal tax liabilities, and do not constitute 'own return information'
subject to disclosure." Id. at 7.
There is considerable merit to Plaintiffs' criticisms of the manner in which the Government
structured and presented its several justifications for disclosure of the Ponzi scheme assertion to IRS
letter Recipients. However, the case does not depend upon whether the Government presented its
arguments artfully or with maximum clarity. The decisive question is whether the Government's
reading of the Code authorizes disclosure as a matter of law, thereby dispensing with any further
inquiry into surrounding factual circumstances. One may readily agree that the § 165 theft-deduction
concept could and should have been included by the Government in its first motion for summary
judgment. But the belated emergence of that concept in this renewed motion works no unfair
prejudice upon Plaintiffs in a case which turns solely upon a question of law, uncomplicated by
untimely assertions of disputed issues of fact.
While the question is closer than the Government would acknowledge, I conclude that it must
be answered in the Government's favor and the Plaintiffs' action dismissed. The Government has
now succeeded in connecting the dots built into a statute that is itself far from a model of clarity.
The § 6103(a) dot (authorizing exceptions to prohibition of disclosure of return information) leads
to the § 6103(e) dot (authorizing disclosure to persons having material interest), which leads back
to the § 6103(b)(2)(A) dot (broadly defining "return information"), which leads finally to § 165
(allowing a theft-loss deduction of the sort contemplated by § 6103(b)(2)(A)). That interconnection
of Code provisions is sufficient to establish that the Ponzi scheme assertion "directly impacted" the
Recipients' tax liabilities, in the sense I used that phrase in Emerging Money I (perhaps with a lack
of perfect clarity). The assertion had that impact because it called the Recipients' attention to a
potential lessening of their tax liabilities (if they were victims of a Ponzi scheme under certain
circumstances). Contrary to the Plaintiffs' contention, the Government, in order to justify disclosure
of a potential impact under this statutory scheme allowing disclosure, need not take a further step
down the timeline of events and prove that a particular Recipient-taxpayer actually incurred a
deductible Ponzi scheme loss. The Government is entitled to summary judgment if a proper reading
of the Code's disclosure provisions authorized this disclosure – whatever may or may not have
transpired thereafter. These provisions have that effect.
Given these statutory provisions for disclosure, Plaintiffs' claims that the IRS agents in this
case did not need to make the Ponzi scheme assertion to alert the Recipients to the possibility of a
tax deduction, a function performed adequately by other assertions in the letters, or that the agents
gratuitously threw in the Ponzi reference for improper reasons, do not in this Rule 56 setting raise
issues of material fact under the governing law. As a general proposition, under § 1603 of the Code
disclosure of return information is authorized or it is not. Whether a particular disclosure is
necessary to accomplish a particular purpose is not relevant to that issue. When Congress wished
to condition disclosure upon necessity, it did so; compare § 6103(k)(6) (authorizing disclosure by
IRS of return information "to the extent that such disclosure is necessary in obtaining information,
which is not otherwise reasonably available, with respect to the correct determination of tax . . . ")
(emphasis added). No required showing of necessity is implicated by the disclosures in this case.2
Nor am I persuaded that purposes or motives of the IRS agents in making the authorized
disclosure of return information in this case are an appropriate subject for judicial inquiry, overview
or supervision. Conceptually, one may perhaps envision a case where an IRS agent's motive in
making an otherwise authorized disclosure was so outrageous as to offend the spirit if not the letter
of the Code, with consequences to be determined if such a case is presented. But this is not such a
For these reasons, the Government's motion for summary judgment on liability will be
The Motion Concerning Damages
The Government has also filed a motion seeking to preclude or limit any award of damages
to Plaintiffs, should Plaintiffs prevail on the present liability motions. Since the Government will
be granted summary judgment on liability, and Plaintiffs' action will be dismissed with prejudice,
the Government's motion on damages will be denied as moot.
To the extent the Court's decision in Emerging Money I suggests that the IRS's
disclosure of the Ponzi scheme assertion was not authorized because it was not necessary to alert
letter Recipients to a possible tax deduction, the suggestion was improvidently made, for the
reasons stated in text, and the Court abandons it.
For the foregoing reasons, the motions in this case are disposed of as follows:
Plaintiffs' Motion for Partial Summary Judgment [Doc. 55] is DENIED.
Defendant's Cross-Motion for Summary Judgment [Doc. 57] is GRANTED.
Defendant's Motion to Limit Plaintiffs' Damages [Doc. 63] is DENIED AS MOOT.
In these circumstances, Plaintiffs' Complaint is DISMISSED WITH PREJUDICE. The Clerk
of the Court is directed to close the file.
It is SO ORDERED.
Dated: New Haven, Connecticut
April 14, 2014
/s/Charles S. Haight, Jr.
CHARLES S. HAIGHT, JR.
Senior United States District Judge
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