United States of America v. Stinson

Filing 117

ORDER denying 95 Motion to Compel deposition of Ricky Poole, to extend page limit, to abate, and to strike. Signed by Magistrate Judge Thomas B. Smith on 5/13/2016. (Smith, Thomas)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION
UNITED STATES OF AMERICA,
Plaintiff,
v.

Case No: 6:14-cv-1534-Orl-22TBS

JASON P. STINSON,
Defendant.
ORDER
This case comes before the Court on Defendant’s Motion to Compel Plaintiff to
Produce Declarant Ricky Poole for Deposition, to Extend Reply Page Limit to Twenty,
and to Abate Time in which to File Reply, or, Alternatively, to Strike Declaration of Ricky
Poole and Footnote 14 of Plaintiff’s Memorandum in Opposition to Defendant’s Motion for
Summary Judgment (Doc. 95).
Plaintiff alleges that Defendant individually, and through his wholly owned tax
preparation business, engaged in a pervasive fraud by making, and/or directing and
encouraging others to make, false claims on customers’ tax returns (Doc. 1, ¶¶ 6-7).
Plaintiff seeks injunctive and other relief pursuant to §§ 7402, 7407 and 7408 of the
Internal Revenue Code (Id.).
Approximately three months after the case was filed, Plaintiff moved for a
preliminary injunction against Defendant (Doc. 55). The Court held a hearing on the
matter and after considering the evidence and argument presented by the parties,
entered its Order enjoining Defendant from preparing, or aiding and assisting others in
the preparation of federal tax returns (Doc. 69). In its Order, the Court said “[t]he

Government has presented enough evidence to show a pattern of false tax returns
sufficient to prove it is likely to succeed on the merits.” (Id., at 4).
In its initial disclosures, Plaintiff identified Internal Revenue Service agent Ricky
Poole as the person who “investigated Stinson and his businesses’ preparation of tax
returns.” (Doc. 104-2 at 5). Plaintiff also disclosed that the documents in its possession
included “IRS examination records of some of the customers of … stores owned or
operated by Stinson.” (Id., at 6). In discovery, Defendant requested “[c]opies of any
and all IRS audit and/or investigative files regarding JASON P. STINSON, individually
and d/b/a LBS TAX SERVICS and/or NATION TAX SERVICS, LLC (Doc. 104-1, ¶ 8).
On June 12, 2015, Plaintiff produced 8,851 pages of documents containing records
related to customer audits (Id., ¶ 9). At the time, Plaintiff told Defendant it had additional
audit files to produce and that it would supplement its production as ongoing
examinations of Defendant’s customers were identified and received (Doc. 104-3, ¶ 1).
On June 22, 2015, Plaintiff produced 2,859 additional pages of documents related to
customer audits (Doc. 104-1, ¶ 10).
Defendant deposed Poole on June 25, 2015 (Doc. 94). Poole testified that
approximately 130 audits had been conducted at the time of the deposition, and that the
audit results were important to him (Doc. 104 at 5). Still, Defendant did not ask Poole
any questions about the audit results, individually or collectively, or any questions about
the audit files in his possession (Doc. 104 at 5).
After discovery was closed and the deadline to file dispositive motions had
expired, the Court permitted Defendant to file a motion for summary judgment based on
the holding in Carlson v. United States, 754 F.3d 1223 (11th Cir. 2014) (Docs. 77, 92).
Plaintiff’s response to the motion includes Poole’s declaration in which he says:

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5. As the Revenue Agent assigned to this investigation of
Stinson, my duties in the ordinary course of business
included compiling and reviewing the IRS examination
files, sometimes referred to as audit files, of customers who
had their tax returns prepared at Nation Tax Services tax
return preparation stores.
6. As of March 31, 2016, the IRS has completed
examinations of 241 tax returns for tax years 2011, 2012,
and 2013, for 154 customers whose tax returns were
prepared at Nation Tax Services tax return preparation
stores.
7. Of these 241 examined returns, 234 required adjustments
to the amount of tax reported. Of the 234 that required
adjustments, 230 resulted in a tax deficiency. The total tax
deficiency for these tax returns was $1,107,222, for an
average tax deficiency per return (including the seven with no
adjustments and the four that did not result in a tax
deficiency) of $4,594.28.
8. Of the 154 customers whose returns were examined ,
seven of the customers had returns that identified Jason
Stinson as the preparer. All seven had tax deficiencies.
(Doc. 93-1).
After reading Poole’s declaration, Defendant asked Plaintiff to produce him for a
second deposition and Plaintiff refused (Doc. 95, ¶ 3). Now, Defendant is moving the
Court to compel Plaintiff to make Poole available for another deposition (Id.). As
grounds he argues that when Poole was deposed, Plaintiff had not produced at least 26
of the audit files, that Defendant was unable to depose Poole on matters that occurred
after the deposition, and that after repeatedly claiming that the audit files have little or no
probative value, Plaintiff now relies on them to defend against the summary judgment
motion. Defendant also argues that Poole’s reference to audit files is inadmissible
hearsay (Id.).
Plaintiff filed a response to the motion to compel, and Defendant sought leave of
Court to file a reply (Docs. 104, 106). The Court granted the motion, and authorized

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Defendant to file a reply limited to addressing new matters asserted in Plaintiff’s response
(Doc. 107). The Court limited the reply to 10 pages (Id.). Defendant has disregarded
the Court’s Order and filed a reply that is 160 pages long, including 149 pages of exhibits,
which largely repeats and expands upon arguments made in his motion to compel (Doc.
110). So as not to reward Defendant’s untimely attempt to improve upon his motion to
compel, the Court has largely disregarded the reply.
This case is governed by the district judge’s Case Management and Scheduling
Order (“CMSO”) (Doc. 77). Federal Rule of Civil Procedure 16(b)(4) provides that once
a scheduling order is entered, the “schedule may be modified only for good cause and
with the judge’s consent.” Pursuant to the CMSO, discovery has been closed for
approximately 10 months. “Consequently, reopening discovery would require a showing
of good cause.”

U.S. ex rel. Pogue v. Diabetes Treatment Ctrs. of Am., 576 F. Supp. 2d

128, 133 (D.D.C. 2008). In Sosa v. Airprint Sys., Inc., 133 F.3d 1417 (11th Cir. 1998), the
court said the “good cause standard precludes modification unless the schedule cannot
‘be met despite the diligence of the party seeking the extension.’” Id., at 1414 (quoting
FED. R. CIV. P. 16 advisory committee's note). The Eleventh Circuit also quoted Johnson
v. Mammoth Recreations, Inc., 975 F.2d 604, 609 (9th Cir. 1992) where that court said
“[i]f [a] party was not diligent, the [good cause] inquiry should end.” “A finding of lack of
diligence on the part of the party seeking modification ends the good cause inquiry[.]”
Lord v. Fairway Elec. Corp., 223 F. Supp. 2d 1270, 1277 (M.D. Fla. 2002).
“Courts generally disfavor repeat depositions.’” Ast v. BNSF Ry. Co., No. 09-2519EFM-DWB, 2011 WL 5080256, at *1-2 (D. Kan. Oct. 25, 2011) (internal citations omitted).
In deciding whether to allow a second deposition, courts apply the standard for limiting
discovery set out in FED. R. CIV. P. 26(b)(2). See, Arugu v. City of Plantation, No. 09-

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61618-CIV, 2010 WL 2609394, at *3 (S.D. Fla. June 27, 2010). The court considers
whether the requested discovery is cumulative or duplicative, or can better be obtained
from some other source; whether the party seeking discovery has had ample opportunity
to obtain the information pursuant to prior discovery in the action; and whether the burden
or expense of the proposed discovery outweighs its likely benefit. Id.; FED. R. CIV. P.
26(b)(2).
Defendant has not described what particular facts he now seeks from Poole, or
how he would use those facts to rebut Plaintiff’s arguments in opposition to the motion for
summary judgment. Defendant also did not take advantage of the opportunity he had to
depose the auditors who performed the audits (Id., at 12).
Defendant had the majority of the audit files when he deposed Poole (Doc. 110 at
5). Despite Poole’s testimony that the audits are “important,” Defendant failed to ask any
questions about them. Now, he cannot carry his burden to show that he could not meet
the discovery scheduled in the CMSO despite due diligence. The Court will not compel a
second deposition of Poole simply because his declaration refers to audit results, the
majority of which he could have been questioned about when he was deposed. In a
similar case this Court wrote:
The Court is unpersuaded that it should reopen discovery so
that Plaintiff can question a 30(b)(6) witness about the
contents of batch sheets, where, as here, Plaintiff failed to ask
any questions about the contents of batch sheets at the earlier
30(b)(60 deposition. The Court will not allow Plaintiff to
address these issues for the first time—months after the close
of discovery—because some batch sheets (which apparently
do not significantly vary in form or content) were produced
after discovery.
RES Dev. Corp. v. Momentive Performance Materials, Inc., No. 5:09-cv-491-Oc-32TBS,
2012 WL 3244527, at *1 (M.D. Fla. Aug. 7, 2012).

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Poole’s declaration covers the period through March 31, 2016, which is roughly 9
months after his deposition. Defendant argues that he should be given a second
deposition because he could not ask Poole questions about things that did not occur until
after the first deposition was taken. If Defendant had deposed Poole, or the auditors,
concerning the audits that had been produced, and could show, based on that discovery,
that further inquiry is necessary and appropriate, the Court’s view of the situation might
be different. Instead, it appears that Defendant only became interested in discovering
information about the audit files after the Poole declaration was filed. Most of that
information could have been obtained from Poole (or the auditors) before discovery
closed. The Court will not permit a second deposition for Defendant to obtain
information that was available to him prior to the discovery cutoff, and which may, had it
been uncovered, have provided the grounds for a second deposition.
Defendant argues that Plaintiff should not be allowed to rely on the audit files after
asserting that they are of little or no probative value. This argument appears to be about
the Carlson decision. Carlson holds that the Government must prove its case under
I.R.C. § 6701 by clear and convincing evidence. 754 F.3d at 1224. In Carlson, the
Government relied exclusively on evidence that auditors had identified deductions the
taxpayers could not substantiate. The Eleventh Circuit said the auditors’ conclusions,
without more evidence, were insufficient to prove that Carlson actually knew the returns
she prepared understated the correct tax. Id., at 1230. It remains to be seen whether
Plaintiff will offer the audit files as evidence at trial and if it does, whether the Court will
admit them.
Defendant asserts that Poole’s reference to audit files is inadmissible hearsay.
Poole did not perform the audits, he has no personal knowledge of them except that he

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has reviewed them, and Plaintiff did not designate Poole as an expert witness.
Defendant also argues that the audits were prepared in anticipation of litigation, are not
records of regularly conducted business activity, and Poole is no the custodian of the
audit files. Plaintiff counters that Poole’s declaration is merely a summary of voluminous
audit files, which is admissible under FED. R. EVID. 1006. Rule 1006 requires the
proponent of the evidence to “make the originals or duplicates available for examination
or copying, or both, by other parties at a reasonable time and place.” Id. Plaintiff
argues that it has done this by producing the audit files to Defendant. The Court is not
convinced. Poole’s declaration extracts specific information from the audit files which is
not the same thing as summarizing them. If the Court found that Poole’s declaration was
an appropriate summary, then an expert witness would not be required to provide this
evidence. F.T.C. v. Washington Data Res., No. 8:09-cv-2309-T-23TBM, 2011 WL
2669661, at *3 (M.D. Fla. July 7, 2011).
Plaintiff also argues that Poole’s declaration is admissible because, as an internal
revenue agent assigned to the case, he is competent to summarize the contents of the
records maintained by IRS in the ordinary course of its business. Plaintiff’s argument
depends in part, upon whether the audit files were made in the ordinary course of the IRS’
business. The IRS’ mission includes enforcing the Internal Revenue Code, and
investigating potential violations of the Code. Audits are one way in which the IRS fulfills
its mission. Therefore, the Court fails to understand how it can be said that the audits
were not made in the ordinary course of the IRS’ business. Perhaps there is legal
authority to the contrary, but if it exists, it has not been cited to the Court in connection
with this motion.

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For all of these reasons, Defendant’s motion to compel, his motion to extend page
limit, his motion to abate, and his motion to strike are DENIED.
DONE and ORDERED in Orlando, Florida on May 13, 2016.

Copies furnished to Counsel of Record

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