BRINSKELE v. USA

Filing 170

PUBLISHED OPINION. The Clerk is directed to enter judgment for the defendant upon receipt of a final calculation on the government's counterclaim. Signed by Judge Nancy B. Firestone. (sf)

B R I N S K E L E v. USA

D o c . 170

In the United States Court of Federal Claims
N o . 02-911T (Filed: August 25, 2009)

******************* EDWARD A. BRINSKELE, Plaintiff, v. T H E UNITED STATES, Defendant. *******************

* * * * * * * * * * * * *

2 6 U.S.C. § 6672; Responsible Party; W illf u ln e s s ; 26 U.S.C. § 4251; Excise T a x ; IRS Assessment - Presumption of C orrectness.

W illia m E. Taggart, Jr., Oakland, CA, for plaintiff. Benjamin C. King, Jr., U.S. Department of Justice, Washington, D.C., with whom w ere Acting Assistant Attorney General John A. DiCicco and Chief, Court of Federal C la im s Section Steven I. Frahm, for defendant. OPINION F I R E S T O N E , Judge. T h is case involves the December 21, 2001 Internal Revenue Service ("IRS") a ss e ss m e n t of the penalty provided by 26 U.S.C. § 6672 (1998), in the amount of $ 9 5 9 ,2 4 4 plus interest against the plaintiff, Edward A. Brinskele ("Mr. Brinskele" or " B rin s k e le " ). Mr. Brinskele's now-defunct company, MTC Telemanagement, Inc. (" M T C " ), was a reseller of long distance telephone service. It purchased long distance

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m in u tes in bulk at a discount from established carriers such as Sprint and MCI and resold th e m to its customers at a profit. The majority of MTC's customers were businesses that d id not place enough long distance calls to qualify for this bulk discount directly from the c a rrie rs . Throughout the case, the parties referred to the margin between the price at w h ic h MTC purchased the minutes and the higher price at which it resold them as the " m a r k u p ." The assessed amount represents the portion of estimated 26 U.S.C. § 4251 (1 9 9 8 ) ("Section 4251") telecommunication excise tax collected by MTC from its c u s to m e rs on the markup in 1992, 1993, and the first three quarters of 1994. 26 U.S.C. § 6672(a) ("Section 6672") provides in relevant part that "any person re q u ire d to collect, truthfully account for, and pay over any tax imposed by this title who w illf u lly fails to collect such tax, or truthfully account for and pay over such tax . . . [ sh a ll] be liable for a penalty equal to the total amount of the tax evaded, or not collected o r not accounted for and paid over." Mr. Brinskele paid $550 of the assessed penalty, re p re se n tin g the total Section 4251 tax liability for one of MTC's customers, and filed a re f u n d claim on the grounds that MTC had not collected any Section 4251 c o m m u n ica tio n excise tax from its customers on the markup, and that Mr. Brinskele th e re f o re did not willfully fail to pay over any Section 4251 excise tax for the quarters at is s u e . The IRS denied the claim, and Mr. Brinskele filed the pending lawsuit. The d e f en d a n t ("government" or "United States") counterclaimed for the balance of the a s s e s s m e n t.

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T h is is the second decision in this case. In the first decision, Brinskele v. United S ta te s, 73 Fed. Cl. 227 (2006) ("Brinskele I"), reconsideration denied, 2006 WL 5726105 (F e d . Cl. 2006) ("Brinskele II"), the court considered the impact of the IRS's May 25, 2 0 0 6 decision 1 not to apply the Section 4251 excise tax to the type of long distance s e rv ic e MTC provided. In Mr. Brinskele's motion for summary judgment, he contended th a t he could not be held liable to remit excise taxes which the IRS determined were no lo n g e r owed by his customers for the type of telephone services provided by MTC. Brinskele I, 73 Fed. Cl. at 228. The court denied Mr. Brinskele's motion and held that re g a rd le ss of whether MTC's customers owed the tax, MTC was required to hold the m o n ie s collected from them as federal excise tax "under color of law" as "tax in trust for th e United States under [26 U.S.C.] § 7501[ (1954)]" and remit them to the IRS. Id. at 2 3 4 . As explained in this court's earlier decision: A fte r careful consideration, the court agrees with the government that Mr. B rin s k e le remains potentially liable under [Section] 6672 irrespective of the a p p lic a b ility of [Section] 4251 to MTC's long distance services . . . . MTC c o lle c te d the federal excise tax from its customers under the "color of law" p u rs u a n t to [Section] 4251. . . . [B]ecause Mr. Brinskele concedes that at least a portion of the 3% "federal tax" MTC collected from its customers

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In its earlier opinion, the court noted:

On May 25, 2006, . . . the Department of Treasury and the IRS issued Notice 2006-50[, 2006-1 C.B. 1141]. In Notice 2006-50, the government announced that the IRS no longer contends that the phrase "distance and elapsed transmission time" in [Section] 4251 applies to long distance calls for which the charge is based only on the duration of the call. Brinskele I, 73 Fed. Cl. at 230. -3 -

in c l u d e d some of the excise tax under [Section] 4251, MTC was acting as a " c o llec tio n agent" under [Section] 7501. As such, MTC was obligated to h o ld the tax in trust for the United States under [Section] 7501. To interpret [ S e c tio n ] 6672 in a manner which would relieve MTC, and any responsible p e rso n s, of the obligation to remit to the government amounts erroneously c o lle c te d as taxes, as Mr. Brinskele proposes here, is fraught with problems. "Collection agents" are never authorized to collect and keep taxes for th e m s e lv e s . . . . MTC, and Mr. Brinskele (if he is found liable as a re sp o n s ib le person), were legally obligated to pay the tax to the government o n c e it was collected. Therefore, Mr. Brinskele is potentially liable as a resp o n sib le person under [Section] 6672 irrespective of whether MTC's lo n g distance services were actually subject to the federal excise tax under [ S e c tio n ] 4251. Id. (emphasis added throughout). The court ordered a trial on the issue of Mr. Brinskele's liability under Section 6672.2 A trial was held in San Francisco from April 13 to 15, 2009, at which the court heard testim o n y from eight witnesses and admitted sixty exhibits regarding Mr. Brinskele's p o te n tia l liability under Section 6672. Based on the evidence received at trial and for the re a s o n s set forth below, the court now RULES for the defendant as follows. I. B u r d e n of Proof B e f o r e turning to the court's findings and conclusions, the court will first address th e applicable burdens of proof in this Section 6672 "responsible person" case. When challenging a Section 6672 assessment, "[t]he taxpayer bears the burden of p ro v in g both that he was not a responsible person and that his failure to pay over the taxes w a s not willful." Stuart v. United States, 337 F.3d 31, 36 (1st Cir. 2003). To prevail, the

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Order Den. Def.'s Mot. Dismiss, Jul. 3, 2008. -4 -

taxp ayer must establish by a preponderance of the evidence that the government's im p o sitio n of the penalty against him is erroneous. Farkas v. United States, 57 Fed. Cl. 1 3 4 , 140 (2003), aff'd, 95 Fed. Appx. 355 (Fed. Cir. 2004). The taxpayer carries the b u rd e n of proof both for his tax refund claim and against the defendant's counterclaim. As the Farkas court explained, "because the government's counterclaim relies on the s a m e operative facts and legal conclusions as the plaintiff's claim, the taxpayer in effect ca rries the burden of proof both for his own claim and against the government's co u n terclaim ." Id. (citation omitted). In addition, the taxpayer has the burden of proving that the amount of liability d e te rm in e d by the IRS is erroneous.3 Ferguson v. United States, 484 F.3d 1068, 1077 (8 th Cir. 2007) ("Assessments under [Section] 6672 are ordinarily presumed to be c o rre c t."). See also Riley v. United States, 118 F.3d 1220, 1221 (8th Cir. 1997), cert. d e n ied , 523 U.S. 1020 (1998) ("A [S]ection 6672 assessment is presumed correct, and it is the individual's burden to show, in a refund action, that he or she was not a responsible p e rs o n or did not willfully fail to pay over the taxes." (citing Olsen v. United States, 952 F .2 d 236, 239 (8th Cir. 1991)). This assumption applies even if the assessment is based o n an estimate, "so long as the method for making the assessment is reasonable and

The court acknowledges that many of these cases were decided by United States circuit courts other than the Federal Circuit. However, as the Federal Circuit recently stated, "while not binding, the decisions of other regional circuits are persuasive authority and instructive." Bank of Guam v. United States, 2009 WL 2448503 at *4 (Fed. Cir. 2009) (citing Summit Tech. v. Nidek Co., 435 F.3d 1371, 1376 (Fed. Cir. 2006) ("[I]t is instructive to look to the law of other circuits.")). -5 -

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lo g ic a l." Ferguson, 484 F.3d at 1077. In order to overcome the presumption of c o rre c tn e ss , the taxpayer is "required to show not only that the assessment was incorrect b u t also to prove the correct amount." United States v. Sage, 412 F. Supp. 2d 406, 416 (S .D .N .Y . 2006). The only situation in which the presumption of correctness does not e x is t is where the taxpayer establishes that the IRS assessment was made "without any f o u n d a tio n whatsoever, or without some predicate supporting evidence." Ferguson, 484 F .3 d at 1077. To make such a showing, the taxpayer must establish that the IRS had no ra tio n a le whatsoever for its determination. Id.; Stuart, 337 F.3d at 35. However, a ta x p a ye r who does not maintain adequate books and records "may not complain of the in e v ita b le inaccuracies in assessment [that] their default occasions." Ferguson, 484 F.3d at 1078 (citing Caufield v. Comm'r, 33 F.3d 991, 993-94 (8th Cir. 1994) (quoting-in-turn D o d g e v. Comm'r, 981 F.2d 350, 353 (8th Cir. 1992) (quotation marks omitted), cert. d e n ie d , 510 U.S. 812 (1993))). "Where a taxpayer fails to keep such records, the g o v e rn m e n t, in attempting to establish a violation of the income tax law, may reconstruct a taxpayer's taxable base by any reasonable method." Stuart, 337 F.3d at 35. Therefore, w h e re the IRS estimates a tax liability because the taxpayer has failed to maintain a d e q u ate records, such as the case here, courts have uniformly rejected challenges to the p re su m p tio n of correctness associated with the IRS assessment. See, e.g., Ferguson, 484 F .3 d at 1078; Sage, 412 F. Supp. 2d at 416; Stuart, 337 F.3d at 35; Cook v. United States, 5 2 Fed. Cl. 62, 67 n.6 (2002).

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A p p lyin g these standards to the evidence presented, the court makes the following f in d in g s of fact and conclusions of law. II. MTC Collected a Three-Percent Charge Labeled "Federal Tax" from its C u sto m e r s but Failed to Remit to the IRS the Portion of the "Federal Tax" it C o lle c te d from its Customers on MTC's "Markup." A s noted above, this court held in its earlier opinion denying the plaintiff's motion f o r summary judgment that MTC had an obligation to pay over to the IRS any monies it c o lle c te d as federal tax "under the color of law." Brinskele I, 73 Fed. Cl. at 234 (citations o m itte d ); see also Brinskele II, 2006 WL 5726105 at *1-*2 (same). The court rejected M r. Brinskele's contention, which he has repeated in his post-trial briefs, that he cannot b e held secondarily liable under Section 6672 because the IRS ultimately determined that th e Section 4251 excise tax at issue in this case did not encompass the services provided b y MTC. See Brinskele I, 73 Fed. Cl. at 234. The court further explained that regardless o f whether or not the tax was properly assessed, as the entity responsible for collecting the tax, MTC could not keep the federal taxes it collected for itself, Mr. Brinskele's a ss e rtio n s to the contrary notwithstanding. Id. A t trial, Mr. Brinskele claimed that MTC never collected any federal excise tax in e x c es s of the amount of excise tax MTC owed to its service carriers and thus MTC never re ta in e d any "federal taxes" owed to the IRS. Accordingly, the first issues to be resolved a re whether MTC collected any federal taxes under the color of law and if so, whether it f a ile d to remit those taxes to the government.

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T o answer these questions, the court heard testimony from Mr. Brinskele, several o f MTC's former employees, and three accountants regarding MTC's billing practices. T h e undisputed testimony established that MTC was charged the Section 4251 excise tax b y its service providers, including Sprint and Allnet and that it remitted at least some of th e se charges to them. The disputed testimony centered on whether MTC collected, u n d e r the color of law, any federal excise tax on the margin between what MTC paid for th e se services and what it charged its customers. This spread will be referred to as the " m a rk u p ." M r. Brinskele testified that during the period in question, he believed that MTC w a s not liable for Section 4251 excise taxes because under the business model he had d e v e lo p e d , MTC was not a telephone services provider. See, e.g., Tr. 48:2 to 51:16, 8 2 :1 5 to 87:12, 105:8 to 107:8, 560:17 to 561:5, 563:11-14. According to Mr. Brinskele, o n ly MTC's carriers were telephone service "providers" and MTC was simply a te le p h o n e service "user." M r. Brinskele also testified that any federal excise tax included in the "federal tax" lin e item on MTC's customer bills represented only that customer's proportional share of th e excise tax MTC was charged by its carriers and not tax collected on the markup as w e ll. According to Mr. Brinskele, the rest of this three-percent charge represented other " f ed e ra lly regulated charges." Tr. 34:18-19. When asked how this amount was c a lc u la te d , he stated that "federal tax was an allocation of three percent on 100 percent of th e non-exempt customers that we billed." Tr. 35:3-5. Mr. Brinskele went on to explain -8-

th a t this item represented each customer's share of the "charges that we were billed by c a rrie rs and by Pacific Bell for any federally -- at the time I believe the only federally re g u la te d charges were FCC charges and federal excise tax." Tr. 35:20-23. He testified that the three-percent charge included both "FCC charges" and federal excise tax. Tr. 3 5 :2 4 to 36:1. When asked how three percent was chosen for this rate, he testified, " W e ll, my recollection is, is that we had determined that approximately two[-]thirds of M T C 's billing was subject to federal excise tax, so three percent of two[-]thirds was e q u iv a le n t to two percent of three-thirds. Or 100 percent of the . . . non-exempt billing." Tr. 36:4-10 (emphasis added). Mr. Brinskele's testimony that he believed in 1992, 1993 and the first three q u a rte rs of 1994 that MTC was not subject to any excise tax because MTC did not p ro v id e "phone services" and for this reason failed to remit federal excise taxes to the IRS w a s contradicted at trial. First, the evidence established that Mr. Brinskele was aware at le a st as early as 1992 that MTC needed to collect and remit excise taxes as a telephone s e rv ic e "reseller," which California and other states characterized as telephone service p ro v id e rs . In 1992, the California Public Utility Commission ("CPUC") notified MTC th a t it was subject to state excise tax as a telephone service reseller. MTC challenged the C P U C determination, and following a hearing before the CPUC at which Mr. Brinskele te stif ie d as MTC's president, the CPUC eventually held that MTC, as a telephone service re se lle r, owed California over $667,000 in excise taxes. DX 61, 62. MTC was also fined

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$ 2 0 ,0 0 0 for acting willfully outside the law.4 More specifically, the CPUC stated in its o p in io n : In reviewing the voluminous record of this proceeding, [CPUC] can not help b u t be struck by MTC's persistently defiant conduct throughout. We find the c o m p a n y's bold denial that it was operating as a reseller in the midst of p rof fe red copies of its blatant advertisement materials, its president's tes tim o n y and the MTC/Sprint agreement to be tantamount to an attempt to in te n tio n a lly mislead [CPUC] by false statement of fact . . . . The evidence d o e s not support the assertion that MTC's denial that it was a reseller was in g o o d faith. Consequently, [CPUC's] process has been abused and significant re so u rc e s have been wasted in the course of this proceeding. D X 61 at 750-51 (emphasis added throughout). T h e evidence further established that Mr. Brinskele identified MTC as a " p ro v id e r" of telephone services to the Public Utility Commissions in Washington state in D e c em b e r 1992, Oregon in September 1993, Texas in 1993, and Massachusetts in March 1994. Taken as a whole, these facts plainly establish, contrary to Mr. Brinskele's testim o n y, that MTC was a "provider" of telephone services and that MTC was therefore re q u ire d to collect the same federal and state excise taxes applicable to similar telephone s e rv ic e providers during the relevant tax quarters in this case. Second, as discussed below, the testimony and evidence presented by former MTC employees, accountants from two firms (Arthur Andersen, LLP, and Pisenti and Brinker)

CPUC fined MTC $10,000 for operating without a Certificate of Public Necessity, which was required for switchless resellers, and $10,000 for violating CPUC's rule against misleading CPUC or its staff. DX 61 at 752. -1 0 -

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th a t conducted audits of MTC, and the revenue agent who conducted the IRS audit of M T C persuasively established that MTC was collecting federal excise taxes on the m a rk u p MTC charged its customers, and that MTC did not remit the taxes it collected to th e IRS during the quarters at issue. As discussed below, the testimony of former MTC e m p lo ye e s Eugene McCord, Tim Jaeger, and Carl Hildebrandt established that the " f ed e ra l tax" MTC included on its bills to its customers constituted a three-percent charge o n the full price MTC charged its customers, including the portion that represented M T C 's markup. In addition, the testimony of Mr. Jaeger and Mr. McCord, together with th e testimony of the accountants from Pisenti and Brinker and Arthur Andersen, estab lish ed that the federal excise taxes that were collected by MTC on the markup were n e v e r remitted to the IRS for the quarters at issue. Carl Hildebrandt joined MTC as its director of management information systems in April 1989. He testified, in direct contradiction to Mr. Brinskele's testimony, that he u n d e rsto o d that the federal tax identified on MTC's bills included the portion attributable to MTC's markup. Mr. Hildebrandt explained that Mr. Brinskele authored MTC's billing s o f tw a re and that this software computed the federal, state and local taxes that MTC c o lle c te d from its customers. Tr. 442:20 to 444:16. This software was in place for the e n tir e ty of the period in question, although it was later replaced with an outside system. Tr. 444:16 to 445:3. Mr. McCord testified that shortly after he joined MTC as its director of operations in 1993, it became clear to him that MTC was collecting excise and sales taxes that it was -11-

n o t remitting to the proper government authorities. Mr. McCord testified that his c o n c e rn s about MTC's taxation policies were first aroused when he noticed that despite th e fact that state and local tax rates change frequently, MTC charged a steady rate for th e se taxes and did not account for these fluctuations. Tr. 388:18 to 389:4. This led him to investigate the company's federal excise tax situation and to discover that MTC was n o t remitting any taxes to the appropriate taxing authorities. Mr. McCord testified that he a n d Mr. Jaeger, who joined MTC in December of 1993 as its controller, held discussions w ith Mr. Brinskele in which Mr. McCord told Mr. Brinskele that he believed that MTC's ta x a tio n methods "had to be changed . . . the concept that taxation could impact your re v e n u e was, I guess, foreign to me, I'd never heard of -- it should be neutral to your re v e n u e recognition, and I absolutely remember having those discussions with Tim [ Ja e g er] and Ed [Brinskele]." Tr. 400:16-21. M r. McCord put his concerns in a memorandum that he sent to Mr. Brinskele on M a rc h 31, 1994, in which he explained that he did not know what to do with requests for re f u n d s from MTC customers who were tax exempt but who had nonetheless been billed ex cise taxes on the whole of their charges, including the MTC markup. DX 50. As Mr. M c C o rd explained, he did not know how to pay the refund because MTC was not r e m ittin g the taxes: In the past few weeks, MTC has received at least two requests for sizeable r e f u n d s of taxes paid to MTC due to our customers' tax exemption status. F u lf illm e n t of these refunds would not have any financial impact to MTC if s ta n d a rd industry taxation methods were in place. However, since MTC does -12-

n o t remit tax to any taxing authorities, which would allow us to deduct such r e f u n d s from future payments to these taxing authorities, there certainly is a f in a n c ia l impact to MTC. M y past experience in assessing sales taxes to a retail customer base strongly in d i c a t e s that there are constant fluctuations in sales and use tax rates. . . . [ B ]a se d on past experience, I know there are more fluctuations in tax rates than w e are reflecting in our tax tables. As a result of these concerns, and the fact that I have never been provided with an y formal documents indicating that any taxing authority concurs with MTC's c u rre n t taxation methods, I feel it is necessary to formally notify you that I do n o t concur with the taxation methods that any division of MTC 5 is currently e m p l o yin g . I would recommend that significant research and revisions be m a d e to both the procedures and the software utilized to assess taxes to our c u s to m e r base. I feel the potential liability to MTC is very significant. . . . Id . (emphasis added throughout). In regard to one of these refund requests, Mr. Jaeger tes tifie d that "the problem[ ] we ran into . . . is that we weren't remitting the tax on to a n yo n e , so there was no one we could credit it back from . . . ." Tr. 478:1-4. M r. Jaeger confirmed Mr. McCord's testimony. As stated above, Mr. Jaeger jo in e d MTC in December of 1993 as its controller. He testified that he and Mr. McCord, w h o joined MTC shortly before Mr. Jaeger, quickly realized that MTC's taxing policies " d id n 't make sense" and began to look into them. Tr. 462:22 to 463:5. He stated that M T C 's policies were not those typically followed at telecoms, where "you would bill your c u s to m e rs and you'd remit [taxes] on to the government agency you were collecting for. And we weren't, we were not doing that in the early stages." Tr. 464:14-19. He testified

As discussed below, MTC maintained a tight affiliation with several other telecommunications entities, many of which included "MTC" in their names. -1 3 -

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th a t he did not recall taxes being paid to any governmental authority at the time he joined M T C . Tr. 465:21-23. When asked if MTC's taxation methods were "revenue-neutral" d u rin g the period at issue, Mr. Jaeger responded, "Likely not." Tr. 465:2-5. T h e government introduced two memos written by Mr. Jaeger to Roger Sheppard,6 b o th of which were copied to Mr. Brinskele. The first, dated April 5, 1994, was intended to add Mr. Jaeger's concerns about MTC's taxation methods to those that Mr. McCord h a d raised in his March 31, 1994 memo. In his memo, Mr. Jaeger stated that "MTC is potentially liable for the incremental p o rtio n of taxes due on the MTC markup for all of the services." DX 51. Mr. Jaeger te stif ie d that he copied this memo to his personnel file so that there would be a record of h is having raised the subject and because he "didn't want to be retaliated against." Tr. 4 8 0 :2 5 to 481:16. W h e n Mr. Brinskele did not alter MTC's practices, Mr. Jaeger wrote a second m em o , dated June 20, 1994 and entitled "Recovery plan," in which he explained to Mr. B r in s k e l e that MTC's tax practices were very problematic. DX 52. The memo states: G e n tle m e n , I fear we are fiddling while Rome burns. This is the memo I s ta rte d before Memorial [D]ay, and you discouraged me from finishing. I feel th a t it now must be sent as the issues, although given some time for discussion, a re not getting solved and new problems continue to mount. . . . I am writing th is under the assumption that you value my input and would want to hear my o p in io n on the best way to move this company out of the cash flow, regulatory repo rtin g , financial statement preparation, billing, corporate identity confusion,

Roger Sheppard was a co-owner of MTC and served as its chief operating officer during the period in question. Tr. 62:13-14, 396:6-7. -1 4 -

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a n d general operational problems we are experiencing. We are sitting on many tim e bombs[,] several of which could devastate operations or impact our cash flo w to such an extent that we might not be able to recover. A s you have noticed from the myriad of memos I have written over the past tw o months[,] new problems have been identified regularly. I assume that you h ir e d me to locate these potential problems, attempt to quantify them, and d e v e lo p a strategy of either acceptance of the risk, after quantifying the a m o u n t , or solving the problem on, as a minimum, a going[-]forward basis. [ . . .] I have had to take hard stances with my employers before regarding what I was w illin g to represent as accurate to outside parties. I will, I am sure, be faced w ith these types of choices as long as I work in corporate America, but I had n ev er understood the need for a severance agreement before coming to work h e re . I am faced regularly with situations that I fear will lead to either my ter m in a tio n or the need to take a position [in] which one of the only a ltern a tiv e s to agreement on your part would be my resignation. . . . I want to m a k e this work for all of us, but sometimes feel that I am going down the path o f change alone. Id . (last emphasis in original). When asked at the trial whether his efforts as memorialized in this memo " c u lm in a te d in changing to a different system for keeping track of the tax rate changes [ o ]n October 1st of 1994 and changing the way that MTC was reporting for tax p u rp o s e s," Tr. 481:24 to 482:2, Mr. Jaeger answered, "Well, ultimately not enough c h a n g e d to allow me to stay with the company, so I voluntarily left . . . within a year or so o f this memo. So I was pushing for change faster than the company was willing to accept it . . . ." Tr. 482:3-7. T h e evidence introduced at trial established that MTC began to remit federal e x c is e taxes to the IRS in the last quarter of 1994, but there was no evidence introduced -15-

to show that MTC remitted to the IRS any of the monies it had been collecting as "federal ta x " prior to that quarter.7 Thomas Hakel, who was employed with MTC from April 1995 to May 1996 and served for part of that time as its chief operating officer, testified that w h ile MTC had begun to remit federal excise taxes in 1994, shortly before he joined the c o m p a n y, he was unable to inform the court of any efforts of MTC to remit the taxes it h a d collected earlier and kept. When asked whether MTC's tax issues "had been solved in . . . the last quarter of `94 and [whether] things were pretty much under control at that p o in t in time," Mr. Hakel answered: W e ll, they hadn't been solved. What I was pointing out was that . . . they put in systems to collect and remit taxes, based on forward billings from Q-3 or Q4 . . . of 1994. So, yes, in our mind, that was the best solution available to us . . . going forward, and we were obviously discussing whether or not there was a n y liability preceding that. T r. 508:10-19 (emphasis added).

In this connection, the court notes that when MTC finally began remitting the federal excise taxes collected on the markup to the IRS in the last quarter of 1994, nothing changed in MTC's billing practices from the bills it had sent its customers before then. Despite the fact that MTC acknowledged in that quarter that it was obliged to collect the tax based on the amount it charged its customers, the rate at which it billed its customers did not increase. This was observed in an IRS Form 886-A, "Explanation of Items," which was provided to MTC to explain the assessment. PX 19. Based upon its audit, the IRS noted: [B]etween the date of incorporation, January 1, 1989 to the end of 1994, MTC did not change the way it was doing business. MTC has always been billing its customers federal excise tax at 3%. However, it is noted that MTC began filing federal excise tax returns beginning the fourth quarter of 1994 . . . . However, based on all documents provided, MTC should have been filing returns since before 1991 as MTC was billing and collecting federal excise tax. PX 19 at 7 (emphasis added throughout). -1 6 -

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T h e government also presented the testimony of John Caldwell, who was an audit m a n a g er with Arthur Andersen during the relevant time frame. Mr. Caldwell testified th a t Arthur Andersen conducted reviews 8 of MTC's financial statements from May 1990 to October 1994.9 The government introduced into evidence a memorandum to file by M r. Caldwell memorializing a conference call he and others at Arthur Andersen held with M r. Brinskele, Mr. Sheppard and Mr. Jaeger. DX 45. The conference call concerned " th e collection and payment of federal excise taxes, state and local taxes, and surcharges f o r 911 service and deaf and disabled facilities" and referred to these collectively as " S a le s Taxes." DX 45 at 626. The memo stated: T h e collection and payment of Sales Taxes by MTC became an issue when we w e re unable to determine how the amounts billed to customers were being c a lcu late d . It appeared that MTC would remit to their carriers the amounts in c lu d e d on the carrier bills, which we believed to represent the net carrier e x p e n se to MTC and then charge Sales Taxes to their customers based upon th e "marked up" price which the customers are billed. This indicated that th e re was a spread between the basis upon which MTC remitted Sales Taxes to the carriers and the basis upon which they charged it to their customers. T h is spread is their gross margin or management fee. While the customers w e re told that they were being charged taxes on this spread, no taxes were ever re m itte d to any taxing authority related to the management fee. We became c o n c e rn e d that this might not be legal and that a significant liability for unpaid S a les Taxes might exist.

Mr. Caldwell testified that "[a] review is a standard of reporting that the accounting profession is accorded by professional standards to report based upon a level of work that is performed on the financial statements," and that a review "is substantially less in scope than a certified audit." Tr. 522:13-21. Although completed in 1994, Mr. Caldwell stated that this review covered only "the year ended December 31st, 1993." Tr. 523:3-6. -1 7 9

8

Id . (emphasis added throughout). At trial, Mr. Caldwell affirmed that this was discussed w ith Mr. Brinskele in the conference call.1 0 Tr. 524:16 to 526:9. N e x t, the government presented the testimony of Eileen Wheatman,1 1 who, while e m p l o ye d at Pisenti and Brinker, served as audit manager for an audit of MTC. Ms. W h e a tm a n testified that in the course of the audit, she became aware that MTC was " c o lle c tin g but not remitting" state and federal excise taxes. Tr. 423:7-19. In a memo f ro m Ms. Wheatman to the Pisenti and Brinker partner in charge of the account, entitled " M e m o on Engagement and Audit Risks," Ms. Wheatman wrote: I n the normal course of business, MTC has been collecting various states' ta x e s and federal excise taxes and [has] not been remitting them to the proper a u th o ritie s. [MTC] has attempted to calculate the federal excise tax for 1994; h o w e v e r, [MTC] has not been remitting the taxes since inception. The actual lia b ility for these taxes is unknown. (This changed during the last quarter of 1 9 9 4 [ ,] at which time they did remit the 1994 fourth quarter federal excise t a x [ .) ] D X 53 (emphasis added). The evidence also included a memo and related workpapers p re p a re d by Ms. Wheatman in which she estimated MTC's unpaid federal excise tax lia b ility for 1994 to be $487,463. DX 54; Tr. 429:4 to 431:17. The evidence showed that

Mr. Caldwell also testified that Arthur Andersen discussed with Mr. Brinskele its concerns about the failure of a related entity, Envoy, to remit federal excise tax. Tr. 528:10 to 529:8. Indeed, the evidence established that Arthur Andersen informed Mr. Brinskele of tax issues it found with regard to several entities related to MTC. The defendant introduced four 1994 memos from Arthur Andersen to Mr. Brinskele documenting these concerns. DX 41, 42, 43 & 46. At the time, Ms. Wheatman went by the name "Eileen Davis," which is the name that appears in the exhibits she prepared. -1 8 11

10

to calculate the amount of federal excise tax due, Ms. Wheatman subtracted the amount of f e d era l excise tax that MTC remitted to the carriers throughout the year and the amount M T C remitted directly to the IRS in the fourth quarter of 1994 from the amount of federal ex cise tax MTC billed its customers. Id. Ms. Wheatman's firm prepared MTC's f in a n c ia l statements for 1994 and included this amount, $487,463, as "[f]ederal excise tax p ayab le." 1 2 DX 55 (emphasis added). F in a lly, the government presented the testimony of Carol Reynolds, the IRS re v e n u e agent who conducted the IRS audit of MTC. She testified that MTC did not file a n y federal excise tax returns prior to the fourth quarter of 1994. On both the first and s e c o n d day of trial, Ms. Reynolds testified at length regarding the procedures and m e th o d o lo g y behind the IRS's determination and assessment of MTC's liability for u n p a id federal excise tax. For example, Ms. Reynolds testified that she examined the A rth u r Andersen reviews and Pisenti and Brinker audit referenced above, as well as the w o rk p a p e rs that accompanied those reviews. She also testified that she examined some c u s to m e r bills in assessing MTC's federal excise tax liability. When asked whether MTC c o lle c te d federal excise tax from its customers, Ms. Reynolds stated, "[b]ased upon the

It is noted that Mr. Brinskele maintains that he believed this item to "[r]epresent[ ] a reserve because at the time[,] Pisenti & Brinker did not know what federal excise - - what services MTC provided that federal excise tax might apply to," Tr. 71:4-6, and that it merely represented what "Pisenti & Brinker believed was a potential liability," Tr. 72:2-3. This testimony is belied by Ms. Wheatman's testimony to the contrary, as well as the content of the memo Ms. Wheatman wrote to her supervising partner. See DX 53. -1 9 -

12

s a m p le customer billings . . . MTC billed its customers and on the summary page of the b ill it said it was federal tax, yes." Tr. 292:9-13. Based on the overwhelming evidence presented at trial by MTC's former e m p lo ye e s and the three accountants, the court finds that Mr. Brinskele's testimony was n o t credible and that Mr. Brinskele failed to sustain his burden of showing that MTC n e v e r charged or collected the Section 4251 federal excise tax on its markup to its cu stom ers for the quarters at issue in this case. The evidence provided by MTC's e m p lo ye e s and accountants established that the "federal tax" MTC collected from its c u sto m e rs included the Section 4251 federal excise tax on MTC's markup over the a m o u n t MTC was charged by its carriers. The evidence further established that MTC n e v e r remitted to the IRS the amount of federal excise tax that it collected on its markup f o r the quarters at issue. III. Mr. Brinskele Was a "Responsible Person" for Purposes of Section 6672. A s stated above, Section 6672 provides in relevant part that "any person required to collect, truthfully account for, and pay over any tax imposed by this title who willfully f a ils to collect such tax, or truthfully account for and pay over such tax . . . [shall] be lia b le for a penalty equal to the total amount of the tax evaded, or not collected or not a c co u n te d for and paid over." 26 U.S.C. § 6672(a). The case law typically refers to the p e rso n required to "collect, truthfully account for, and pay over" the tax as a "responsible p e rs o n ." See, e.g., Jefferson v. United States, 546 F.3d 477, 479 (8th Cir. 2007); Bowlen

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v . United States, 956 F.2d 723, 726 (7th Cir. 1992); Feist v. United States, 607 F.2d 954, 9 6 0 (Ct. Cl. 1979). A n individual is considered a responsible person "if he retains sufficient control of c o rp o ra te finances that he can allocate corporate funds to pay the corporation's other d e b ts in preference to the corporation's . . . tax obligations." Jefferson, 546 F.3d at 480 (quoting Bowlen, 956 F.2d at 728 (internal quotation marks omitted)). "As a general p rop o sition it may be safely postulated that one who is the founder, chief stockholder, p re sid e n t, and member of the board of directors of a corporation . . . is rebuttably p re su m e d to be the person responsible under [Section 6672] . . . ." Feist, 607 F.2d at 960 ( q u o t in g McCarty v. United States, 437 F.2d 961, 967-68 (Ct. Cl. 1971)); see also J e f fe rs o n , 546 F.3d at 480-81 (holding an officer liable where that officer had "significant in v o lv e m e n t" in the corporation's financial affairs); Godfrey v. United States, 748 F.2d 1 5 6 8 , 1576 (Fed. Cir. 1984) ("[W]here a person has authority to sign the checks of the c o rp o ra tio n or to prevent their issuance by denying a necessary signature or where the p e rs o n controls the disbursement of the payroll or controls the voting stock of the co rpo ratio n he will generally be held `responsible.'" (internal citations omitted)).1 3

The court emphasizes that being a "responsible person" is not the same thing as being liable for the Section 6672 penalty; that is, a finding that someone is a responsible person is a separate finding from that of whether such person acted wilfully in not paying the tax. See Mazo v. United States, 591 F.2d 1151, 1156 (5th Cir. 1979) ("responsibility is a matter of status, duty and authority, not knowledge"). Thus, assessing liability under Section 6672 first requires a finding as to whether someone is a responsible person, and if so, next a finding as to whether that person acted willfully. Whether Mr. Brinskele acted willfully is addressed in Section IV, infra. -2 1 -

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A d d itio n a lly, "[t]here may be more than one responsible person." Stuart, 337 F.3d at 36 (citing Harrington v. United States, 504 F.2d 1306, 1312 (1st Cir. 1974) ("The term `p e rs o n ' is to be construed to include all those connected with a corporation so as to be re s p o n s ib le for the performance of the act in respect of which the violation has occurred. . . . [M]ore than one person may be liable.") (emphasis added throughout)). Thus, a f in d in g that others at MTC shared some responsibility would not preclude a finding that M r. Brinskele is a "responsible person" under Section 6672. The evidence established that Mr. Brinskele founded MTC in 1987 and from its f o u n d in g until July 1996, served as its chief executive officer. Tr. 28:11-17, 73:17-20, 3 9 6 :6, 396:14, 445:11, 469:1-7, 474:8-9. At all times material, he was also MTC's c o n tro llin g shareholder. Tr. 228:24 to 229:1. Further, there is no dispute that until the su m m er of 1994, when MTC switched to an automated check processing system, Mr. B rin s k e le signed many of MTC's checks.1 4 The government introduced into evidence a Mr. Jaeger testified that when he arrived at MTC in late 1993, he discovered that the company's finances were largely being run by Mr. Brinskele out of a series of checkbooks in his possession. Mr. Jaeger testified that "there really weren't books as you'd expect them to be. There were multiple legal entities that were involved, and it was really run out of a series of checkbooks." Tr. 466:5-8. As Mr. Jaeger explained: [O]ne of the first things I did was [to go] down and ask Arthur Andersen how they had done the prior year's financial filings when there were more than one legal entity . . . and they were mixing and mingling checkbooks from all different legal entities, I mean, it made no sense at all, the numbers that they were doing, based on all the different checkbooks that were out there at MTC that I was stumbling across, etc. [. . .] We would find checkbooks. Ed [Brinskele] had a number of checkbooks from -2 2 14

s ig n a tu re card for two MTC accounts opened at Wells Fargo Bank on August 10, 1993 th a t showed Mr. Brinskele to be a signatory on those accounts. DX 40. Also in evidence a re several checks drawn on one of these accounts as well as checks drawn on an MTC a c co u n t at another bank. Id. Mr. Brinskele testified that all of these checks bore either h is handwritten signature or his signature stamp. Tr. 239:14 to 240:24. Mr. Jaeger te stif ie d that after MTC began using the automated check processing system, the system w o u ld generate a list of all checks that were due which would then go to Mr. Brinskele or h is "backup," Mr. Sheppard, for approval before they were issued. Tr. 488:8 to 489:16. Additionally, Mr. Jaeger testified that "Ed [Brinskele] was involved in every memo and d e c is io n . . . [.] [Y]ou didn't make a move without Ed being involved." Tr. 469:14-16. Based on the foregoing evidence, the court finds that Mr. Brinskele was re sp o n s ib le for the financial decisions for MTC for purposes of Section 6672 during the p e rio d in question and therefore can be held liable for the IRS assessment if his actions a re found to have been "willful."

different banks around the [B]ay [A]rea in his office that he would write checks on[.] . . . [O]ne of the first things I did was [to have] all the bank statements start coming to me so I could start finding out just how [many] different cash accounts we had out there. . . . There were a . . . significant number [of accounts] that weren't accounted for by Arthur Andersen prior to that. Tr. 484:13 to 485:10 (emphasis added throughout). Mr. Brinskele later confirmed on re-direct that he did have a number of checkbooks. Tr. 556:4-8. -2 3 -

IV .

E d w a rd A. Brinskele Acted Willfully in Failing to Pay the Section 4251 Tax to th e IRS. In order to be liable under Section 6672, the responsible person must have acted

" w illf u lly" in not paying the taxes. 26 U.S.C. § 6672(a). Willfulness has been described b y the Federal Circuit as "a deliberate choice voluntarily, consciously, and intentionally m a d e to pay other creditors instead of paying the Government. Willful conduct may also in c lu d e a reckless disregard of an obvious and known risk that taxes might not be re m itte d ." Godfrey, 748 F.2d at 1577 (internal citations and quotation marks omitted). A re c k le ss disregard of a known risk is present where "the responsible person knew or sh o u ld have known of a risk that the taxes were not being paid, had a reasonable o p p o rtu n ity to discover and remedy the problem and yet failed to undertake reasonable e f fo rts to ensure payment." Farkas, 57 Fed. Cl. at 143 (quoting Cook, 52 Fed. Cl. at 70 (in te rn a l quotation marks and further citations omitted)); see also Whiteside v. United S ta te s , 26 Cl. Ct. 564, 573-74 (1992); Hammon v. United States, 21 Cl. Ct. 14, 27 (1990). The evidence established that Mr. Brinskele's behavior in this case was, at all tim e s , clearly willful. As discussed at length above, Mr. Brinskele knew that MTC, as a tele p h o n e service reseller, was considered to be a telephone service provider in California a n d several other states. Mr. Brinskele further knew from meetings and memoranda he re c e iv e d that MTC was collecting federal excise taxes on MTC's markup and that MTC w a s required to remit the federal excise tax it was collecting on its markup to the IRS for

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th e quarters at issue. The evidence further established that MTC did not begin to remit f e d e ra l excise taxes until the last quarter of 1994. While the court will not repeat here all of its findings from Section II and III, it is c le a r from the testimony of Mr. McCord and Mr. Jaeger that Mr. Brinskele was told that h e was legally obligated to collect federal excise taxes and was urged to start remitting fe d era l excise tax on the MTC markup. This evidence included memoranda to Mr. B rin sk e le from both of these witnesses, exhorting him, sometimes in dire tones, to begin p a yin g these taxes (e.g., "I fear that we are fiddling while Rome burns," DX 52 at 646). Mr. Caldwell also testified about how Arthur Andersen informed Mr. Brinskele of their c o n c ern s about MTC's failure to remit the federal excise taxes that MTC collected on the m a rk u p . Tr. 524:16 to 526:9. Yet despite the fact that Mr. Brinskele was involved in what h e himself termed a "constant dialogue" with others at MTC over the tax issue that in v o lv e d "lots of discussions," Tr. 178:15-20, Brinskele routinely elected to pay other c re d ito rs instead of paying the government. The uncontroverted evidence demonstrated th a t during this time, Mr. Brinskele regularly signed checks on behalf of MTC. Indeed, M r. Jaeger testified that until his arrival in late 1993, the company's finances were m a n a g ed through a number of checkbooks from "different banks around the [B]ay [A]rea" k ep t by Mr. Brinskele in his office. Tr. 485:1-6. Some of these payments were to Mr. B rin sk ele himself. For example, the evidence included a June 1994 memo from Mr. J a e g e r in which he takes issue with the fact that Mr. Brinskele "continue[s] to have [his]

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p e rs o n a l bills paid by MTC." DX 52 at 648. The evidence included records kept by Judy P ie ra tt, a third-party bookkeeper for MTC for 1992, which reflected $253,496.30 in 1992 " a cc o u n ts receivable distributions" to Mr. Brinskele. DX 39. Mr. Brinskele testified that in addition to receiving a salary "approximately between 50 and 200 thousand dollars," b e t w e e n 1992 and 1994, he also received a distributable share of the profits in these years, w h ich is commonly referred to as "K-1 income" after the IRS schedule on which it is re p o rte d . The defendant introduced Mr. Brinskele's Schedule K-1 from 1993 into e v id e n c e , which showed a $429,118 distribution from MTC.15 DX. 66. I n view of the foregoing, there can be no doubt that during 1992, 1993, and the first th re e quarters of 1994, Mr. Brinskele both knew of his obligation to remit the federal e x c is e tax collected on the markup and showed a reckless disregard of MTC's tax re s p o n s ib iliti e s by failing to remit these funds to the IRS when they were collected. The evidence further established that Mr. Brinskele can also be held liable for w illf u lly failing to act after MTC began remitting to the IRS the federal excise taxes it c o llec ted on its markup starting in the fourth quarter of 1994. In particular, Mr. Brinskele a c te d willfully when he failed to authorize MTC to go back and remit to the government th e federal excise taxes MTC had previously collected. Courts have consistently held that

In fact, the evidence strongly suggested that Mr. Brinskele consistently took MTC funds for his personal use. For example, Mr. Brinskele testified that he took a loan from MTC for the construction of his house, although he could not recall the amount, what year it was issued, whether he signed a promissory note and most importantly, whether he paid it back. Tr. 233:312. -2 6 -

15

a responsible person under Section 6672 who becomes aware that taxes went unpaid in p a st quarters in which he or she was a responsible person is under a duty to use all u n e n c u m b e re d funds available to the corporation to pay those back taxes or else such n o n p a ym e n t is deemed "willful." See Thosteson v. United States, 331 F.3d 1294, 1300-01 (1 1 th Cir. 2003) (citing Mazo, 591 F.2d at 1157 (holding responsible persons liable under S e c tio n 6672 for willful nonpayment where they discovered the corporation's liability only in a later quarter and yet still refused to pay)), cert. denied, 540 U.S. 1105 (2004); United S tate s v. Kim, 111 F.3d 1351, 1357 (7th Cir. 1997) ("[I]t is settled law that a responsible p e rs o n who becomes aware that taxes have gone unpaid in past quarters in which he was a ls o a responsible person, is under a duty to use all unencumbered funds available to the co rpo ratio n to pay those back taxes." (citation and internal quotation marks omitted)); H o n e y v. United States, 963 F.2d 1083, 1089 (8th Cir. 1992). The evidence established that MTC had sufficient funds to pay the back taxes at iss u e after the last quarter of 1994. In 1996, while Mr. Brinskele was still a responsible p e rs o n at MTC, MTC received a significant capital infusion from Yorkton Securities ( " Y o r k to n " ) . Mr. Hakel testified as follows: [ D e f en d a n t's Counsel:] Do you recall, prior to your leaving MTC, had Yorkton b e e n able to obtain any capital for them? [ M r. Hakel:] Capital had come in right around that time, I don't know the exact d a te . [ D e f e n d a n t's Counsel:] Do you recall the amount? [ M r. Hakel:] I believe, again I . . . did not look back, I believe ultimately the a m o u n t was about $20 million of convertible debentures.

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T r. 498:2-9 (emphasis added). Although Mr. Brinskele testified, "My recollection was th a t it was more like 10 [million]," Tr. 564:1-2, even this lower amount is far in excess of M T C s outstanding federal excise tax liability. This evidence is more than sufficient to s h o w that Mr. Brinskele acted willfully by failing to remit any of the back federal excise ta x e s that MTC had collected on the markup after MTC accepted responsibility for c o lle c tin g and remitting federal excise taxes in the last quarter of 1994. In sum, the court was presented with overwhelming evidence that established that M r. Brinskele acted willfully in failing to remit any of the excise taxes MTC had collected o n the markup at all times relevant, both before and after the start of the fourth quarter of 1994. V. T h e Plaintiff Has Not Met His Burden in Proving That the IRS Assessment Is F la w e d . The last issue to be resolved concerns the amount of the IRS assessment. "Assessments under [Section] 6672 are ordinarily presumed to be correct." Ferguson, 484 F .3 d at 1077 (citing Riley, 118 F.3d at 1221). "This presumption applies even if the a ss e ss m e n t is based on an estimate, so long as the method for making the assessment is re a s o n a b le and logical." Ferguson, 484 F.3d at 1077 (citing Dodge, 981 F.2d at 353). To re b u t this presumption of correctness, the taxpayer bears the burden to prove "not only that th e assessment was incorrect but also to prove the correct amount." Sage, 412 F. Supp. 2d a t 416. "Taxpayers who cannot produce adequate records may not complain of the in e v ita b le inaccuracies in assessment [that] their default occasions." Ferguson, 484 F.3d -28-

a t 1078 (quoting Caufield, 33 F.3d at 993-94 (quoting-in-turn Dodge, 981 F.2d at 353 (in terna l quotation marks omitted))). T h e government introduced into evidence thirteen exhibits documenting the work that Ms. Reynolds and others did in preparing the assessment, including Ms. Reynolds's d e ta ile d workpapers and reports. In one such report, Ms. Reynolds wrote: It should be noted that MTC's records prior to 1994 are "skimpy", in fact the p rio r accounting system . . . is not accessible. The company cannot locate any p rio r general ledger printouts. However, MTC can locate some of the monthly P r o f it and Loss Statements and Balance Sheets. . . . Customer bills for 1993 w e re requested. However, the company is unable to print these from their tape. I was able to locate some 1993 carrier invoices from third parties. These were re v ie w e d . . . . Customer bills for 1992 were also unavailable. However, some ca rrie r bills for US Sprint were obtained from third parties. These were r e v ie w e d . D X 6 at 34-35 (emphasis added throughout). S e v e ra l witnesses testified that MTC's financial records, including those pertaining to its tax situation, were inadequately kept. For example, Mr. Jaeger testified that when he joine d MTC, the accounting systems were "a mess," Tr. 484:4-6, that "there really weren't b o o k s as you'd expect them to be," Tr. 466:5-6, and that "there were multiple legal entities th a t were involved, and it was really run out of a series of checkbooks." Tr. 466:6-8. He a d d e d that "[t]he company did not have what I would call a formal general ledger when I a rriv e d ." Tr. 466:8-10. M r. Brinskele introduced no evidence and elicited no testimony to show that the IR S assessment was incorrect. Nor did he introduce any evidence or elicit any testimony to prove the correct amount. -29-

T h e court reiterates that the plaintiff bears the burden of proving both that the a s s e s s m e n t was incorrect and proving the correct amount. Sage, 412 F. Supp. 2d at 416. Given that the plaintiff has failed to provide any evidence to show that the assessment was in c o rre c t, nor has he attempted to refute the government's voluminous evidence and the e x te n siv e testimony of Ms. Reynolds supporting the validity of the assessment, the p la in tif f has failed to meet this burden. Accordingly, the court concludes as a matter of law that the IRS assessment was correct. V I. Edward A. Brinskele Is Liable for the Full Amount Determined by the IRS in its 2001 Assessment. F o r the above-stated reasons, the plaintiff's refund claim is DENIED and the g o v e r n m e n t 's counterclaim is GRANTED. Judgment shall await twenty days until the g o v e rn m e n t provides a final calculation on its counterclaim. Upon the filing of this c a lcu latio n , the Clerk shall enter judgment for the defendant on the counterclaim. Costs sh a ll be awarded to the defendant. I T IS SO ORDERED.

s /N a n c y B. Firestone NANCY B. FIRESTONE Judge

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