United States of America v. Stinson

Filing 98

ORDER denying 96 emergency motion to stay summary judgment proceedings. Signed by Magistrate Judge Thomas B. Smith on 4/11/2016. (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
The district judge has referred Defendant’s Emergency Motion for Stay of
Summary Judgment Proceedings Pending the Court’s Ruling on Defendant’s Motion to
Compel Plaintiff’s Production of Declarant Ricky Poole for Deposition, Motion to Abate
Time for Filing Reply, Motion to Extend Page Limit of Reply to Twenty, or, Alternatively,
Motion to Strike Declaration of Ricky Poole (Doc. 96) to me for disposition. The Court
and the parties are familiar with the background of the case:
This case involves Stinson’s alleged operation of a fraudulent
tax preparation business. Stinson’s involvement in tax
preparation began in 2010 as a manager for LBS Tax Services
Stores (“LBS Stores”), and Stinson later became a franchisee
of the LBS Stores. (Stinson Dep., June 26, 2015, (Doc. No.
55-2) 13:4-13:9; 16:20-17:21). Stinson owned the franchises
through his LLC (Jason Stinson LLC). (Nation Tax Services
Dep. (Doc. No. 55-4) at 13:23-15:16). In total, Stinson was a
franchisee of twelve LBS Stores located in four states. (Doc.
No. 55-3). In each of Stinson’s LBS Stores, a manager was
responsible for overseeing the tax return preparers. (Id. at
pp. 6-7). From 2010 to 2012, LBS Stores trained Stinson and
his managers. (Id. 55-3 at p. 3). Subsequently, in 2013, after
hearing negativity about LBS Stores, Stinson separated
himself from LBS by changing the name of Jason Stinson LLC
to Nation Tax Services and began operating his franchises
under that name. (Doc. No. 53-3 at pp. 6-7). Stinson
emphasizes that his business primarily targets and serves

“underprivileged, undereducated poor people.” (Doc. No. 57
at p. 17).
(Doc. 69, at 1-2).
The Government sought a preliminary injunction to prevent Stinson from
fraudulently preparing any more tax returns (Doc. 55). Stinson responded to the motion,
and the Court held a January 27, 2016 hearing on the issue (Docs. 56-57, 60). After due
consideration, the Court granted the motion and entered the injunction (Doc. 69). In its
Order the Court wrote:
The Court finds that consideration of the equitable factors
weighs in favor of a preliminary injunction. The Government
has presented enough evidence to show a pattern of false tax
returns sufficient to prove it is likely to succeed on the merits.
(See Doc. No. 55). Those false tax returns submitted to the
Court were prepared by at least twelve of Stinson’s tax return
preparers employed in four different states. Notably, the
falsely reported numbers are not merely oversight, or a
computational error, because the errors are repeated and the
amounts are significant. The Court finds it implausible that
this is due to plain human error.
The Court is most troubled that Stinson’s conduct has
continued even after the commencement of this lawsuit in
2014. The Government has provided over ten examples of
false tax returns prepared in 2015 for the 2014 tax year. (Id.
at pp. 5-6, 9). Thus, even in 2015, despite being on notice,
Stinson continued to prepare tax returns in the same manner
that caused the Government to initiate this lawsuit by falsely
claiming unreimbursed employee expenses, charitable
contributions, and business expenses for non-existent
businesses. (See, e.g., id., Ex. 11, Ex. 12, Ex. 17, Ex. 18, Ex.
30, Ex. 31). Stinson’s hired consultant, Hermen Cruz,
testified that, in 2014, he informed Stinson employees that
they cannot claim commuter miles as unreimbursed
employment expenses. (Hermen Cruz Dep., (Doc. No. 55-8)
51:3-53:10). Yet, Stinson continued to do so.
Stinson argues that the Government’s methodology is flawed
because it is not random. (Doc. No. 57 at pp. 11-12).
Stinson contends that the Government’s non-random sample
represents only those tax returns that the Government flagged
as potentially incorrect and cannot be used to make

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inferences about the whole population of tax returns prepared
by Stinson. (Id.) Yet, Stinson has not produced a single
accurate tax return nor has Stinson presented any evidence
that shows that the Government’s sample is merely an error
rather than intentional. In contrast, the Court is gravely
concerned about the vestiges of fraud present in the
Government’s evidence that shows a common pattern of
Stinson improperly preparing tax returns in similar ways for a
period spanning multiple years and in multiple states. Not
even a lawsuit was sufficient to prevent Stinson from
continuing to falsify tax returns in the same manner in 2015.
At the hearing, Stinson argued that the Government’s
depositions of Stinson’s customers are untrue and unreliable.
Stinson reasoned that the customers are motivated to lie
because they do not want to admit to a felony nor to providing
false numbers to a tax return preparer. However, Stinson
later argued that his customers would not receive an EITC or
file a proper tax return if not for the services he provides them.
If Stinson’s customers are knowledgeable enough to know
exactly which numbers to falsify and which responses to give to
their tax return preparer to receive a higher tax return, it defies
logic for them to pay Stinson to prepare their tax return.
Despite that there exists a potential bias, the Court finds no
persuasive reason to discount the sworn testimony of over
twenty customers. In any event, the same argument could be
made about the reliability of the testimony of Stinson’s tax
return preparers. Therefore, due to the egregious nature of
Stinson’s conduct, and the numerous examples of false tax
returns, the Court finds that the Government is likely to
succeed on the merits.
(Id., at 4-5).
Stinson has appealed the preliminary junction (Doc. 70), and requested a stay of
the injunction pending the outcome of the appeal (Doc. 71), which the Court denied (Doc.
73).
On February 12, 2016, Stinson filed a motion for the imposition of sanctions against
the Government and a motion for summary judgment (Docs. 76-77). Appended to each
motion was an emergency motion for oral argument (Docs. 78 and 79). The district judge
referred the motions for oral argument to me and I denied them (Doc. 80).

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The Case Management and Scheduling Order governing the case set a July 1,
2015 deadline for the filing of dispositive motions (Doc. 21 at 1). Stinson’s motion for
summary judgment was filed on February 12, 2016 (Doc. 77). The Government asked
the Court to strike Stinson’s summary judgment motion as untimely (Doc. 82), which the
Court declined to do (Doc. 92). The Government’s now filed response to Stinson’s
summary judgment motion includes the two page affidavit of Ricky Poole (Doc. 93-1).
Poole is a commissioned agent of the Internal Revenue Service who was assigned to
investigate Stinson (Id., ¶¶ 2-3). Poole’s duties included compiling and reviewing IRS
examination files, sometimes referred to as “audit files,” for customers who had their tax
returns prepared at Nation Tax Services tax preparation stores (Id., ¶ 5). Stinson has
already deposed Poole (Doc. 96 at 4). In his affidavit Poole states:
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, ¶¶ 6-8).
The Government has been producing the audit reports to Stinson on a rolling basis
(Doc. 96 at 4). Stinson has not received 26 of those audit reports (Id., ¶ 3). His reply to
the Government’s response in opposition to his motion for summary judgment is currently

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due on April 14, 2016 (Id., ¶ 2). On April 7, 2016, Stinson filed a motion to compel the
Government to produce Poole for a second deposition; to permit Stinson to file a 20 page
reply to the Government’s response to his motion for summary judgment; or alternatively,
that the Court strike Poole’s affidavit and footnote 14 from the Government’s response
(the “Discovery Motion”) (Doc. 95). The Government’s response to the Discovery Motion
is not due until April 22, 2016 (Doc. 96, ¶ 6). Stinson seeks an emergency stay of any
action by the Court on his motion for summary judgment until after the Court rules on the
Discovery Motion. He asserts that the Court’s decision on the Discovery Motion “will
affect the nature and scope of Defendant’s Reply to Plaintiff’s ‘Memorandum in
Opposition.’” (Doc. 96, ¶ 5).
The last time Stinson filed an emergency motion I explained that whenever a party
denominates a motion as an emergency the Court stops whatever it is doing and gives the
motion its full attention. I also explained that ordinarily, a true emergency does not exist
unless something that is irreplaceable is in jeopardy, physical violence is imminent, or a
child is about to be taken beyond the jurisdiction of the Court (Doc. 88). Despite this
explanation, Stinson has styled as an emergency, a motion that clearly does not bring any
emergency to the Court’s attention.
Stinson fails to explain how the 26 audit reports he has not seen impact the
Government’s opposition to his motion for summary judgment or his to-be-filed reply to
that opposition. He has also not explained why he delayed in filing this motion if in fact,
he is confronted by a true emergency. If Stinson’s motion for summary judgment is
denied (a legitimate possibility in light of the Court’s earlier finding that the Government is
likely to prevail on the merits), then he will still have the opportunity to present his case at
trial and, if necessary, on appeal to the Eleventh Circuit. At a more basic level, Stinson’s

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motion does not contain a memorandum of law in violation of M.D. FLA. Rule 3.01(a). For
these reasons, Stinson’s emergency motion is DENIED, and he is admonished to think
twice before designating future filings as emergencies.
DONE and ORDERED in Orlando, Florida on April 11, 2016.

Copies furnished to Counsel of Record

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