United States of America v. Baker et al

Filing 34

Judge Richard G. Stearns: MEMORANDUM & ORDER entered denying 22 Motion for Partial Summary Judgment. The clerk is directed to set the case for trial on the issues identified by the court in the Memorandum & Order. (RGS, law1)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
CIVIL ACTION NO. 13-cv-11078-RGS
UNITED STATES OF AMERICA
v.
SCOTT G. BAKER AND ROBYN BAKER
MEMORANDUM AND ORDER ON PLAINTIFF UNITED STATES OF
AMERICA’S MOTION FOR SUMMARY JUDGMENT
September 30, 2014
STEARNS, J.
The United States filed this Complaint on May 1, 2013, seeking a
monetary judgment against defendant Scott Baker for $4.4 million in
unpaid federal income taxes assessed by the Internal Revenue Service (IRS)
in 2009 and 2010. The United States also sought to enforce related tax
liens against real property located at 667 Main Street, Hingham,
Massachusetts (the Hingham Property), and sought a judgment against
defendant Robyn Baker, individually and as trustee of the C&S Realty Trust
and the S&R Realty Trust, for tortious conversion of encumbered assets.
The individual claim against Scott Baker is stayed, pending resolution
of his bankruptcy petition (Case No. 13-13618 (Bankr. D. Mass), filed in
June of 2013), but the claims against the real property (and against Robyn
1

Baker) are not subject to the bankruptcy stay as the affected assets are not
part of Scott Baker’s bankruptcy estate.1 The United States now moves for
summary judgment on the non-stayed claims.
BACKGROUND
The IRS has assessed Scott Baker more than $4 million in unpaid
income tax liabilities (consisting of $2,476,526 in tax assessments for
income tax years 1997-2002, and $1,960,924 in accrued penalties and
interest as of May 1, 2013).2 Baker is a self-employed construction manager
who currently earns over $80,000 per year. He was previously involved
(beginning in 1997) in the construction of various Planet Fitness gyms as

1 On September 12, 2013, Scott Baker filed an adversary complaint
against the United States seeking a declaration from the Bankruptcy Court
that the tax liens filed by the United States do not attach to the Hingham
Property (or to certain real estate parcels in New Hampshire, or to the Scott
Baker Family Trust). See Adv. Proc. No. 13-01358 (Bankr. D. Mass.)
(hereinafter “Adv. Proc.”). The Bankruptcy Court, noting that it likely
lacked jurisdiction because Scott Baker had disclaimed any interest in these
assets, entered an order of abstention and dismissal with regard to the
affected counts. Adv. Proc., Dkt. #12. Count I of Scott Baker’s adversary
complaint, which involves the dischargeability of his tax debts in
bankruptcy, is still pending before the Bankruptcy Court.
In September of 2003, Scott Baker amended his 1997-2002 income
tax returns to carryback the remainder of a $2.9 million loss that he
generated from participating in a subsequently disallowed tax shelter.
Baker’s unpaid taxes for those years were not assessed by the IRS until
2009 and 2010; thus, the 10-year statute of limitations on collection of
these tax liabilities has yet to run.
2

2

part of his business. Robyn Baker (née Robyn Gauthier) is Scott Baker’s exwife.

(The couple married on December 12, 1998, and they have two

teenage children. They divorced in 2008). They filed joint income tax
returns for tax years 1999, 2000, and 2001.3 They filed separate income tax
returns for tax year 2002.
2001 Tax Return
In October of 2002, the Bakers jointly filed their 2001 federal income
tax return, reporting an Adjusted Gross Income (AGI) of over $1 million.
The Bakers were taxed on roughly a quarter of that income, significantly
less than what would have been due, because of reported “paper” losses
that reduced their taxable income from $1,114,449 to $289,688. The losses
were generated by a “Son-of-Boss”4 tax shelter scheme.5

3 In February of 2000, the Bakers purchased two parcels of land in
West Campton, New Hampshire. These parcels are the subject of a
separate case brought by the United States against the Bakers in the district
of New Hampshire. See Case No. 13-cv-213-PB (D. N.H.).
For an explanation of the Son-of-Boss (Bond Options Sales
Strategy) tax shelters, see Fid. Int’l Currency Advisor A Fund, LLC ex rel.
Tax Matters Partner v. United States, 661 F.3d 667 (1st Cir. 2011) (Boudin,
J.).
4

This fact is not disputed, and both Bakers signed the couple’s 2001
tax return. However, Robyn Baker disputes that she participated in the
Son-of-Boss scheme, claiming that “[Scott] Baker made the ‘Son of Boss’ on
his own.” Dkt. #30-7 ¶ 4. This is not a material dispute, because the
artificial losses listed on the original jointly-filed 2001 return are no longer
3

5

2002 Tax Return
In December of 2002, Scott Baker, together with a college friend, sold
eight Planet Fitness gyms to Bally Fitness for approximately $15 million.
Scott Baker received roughly $4,600,000 in Bally Fitness stock, which he
eventually sold for $3.4 million. See Adv. Proc., Compl. ¶ 5. As noted, Scott
and Robyn Baker filed separate tax returns for tax year 2002. Scott Baker,
resorting to a second abusive tax shelter to avoid income tax on the gains
from the Planet Fitness sale, reported a negative $2.5 million in income on
his 2002 return, which he filed on September 23, 2003. He thus claimed a
tax refund of $42,655 for income taxes he had already paid that year, and
then amended the couple’s joint 1997-2001 tax returns to claim (and
receive) additional refunds by carrying-back the uncredited portion of the
2002 losses. As a result, the IRS refunded the Bakers roughly all of the tax
amounts they had paid for these earlier years. Scott Baker deposited the

at issue. The Bakers resolved the IRS claims related to the 2001 Son-ofBoss tax shelter in December of 2004, pursuant to a Global Settlement
Initiative. See Adv. Proc., Dkt. #41-4 (Closing Agreement between IRS and
Bakers signed December 6, 2004). The 2001 tax liabilities at issue in this
case are related to the disallowance of the tax shelter losses that Scott Baker
reported on his 2002 return, which he carried back to tax years 1997-2001.
These taxes were assessed only against Scott Baker. See Dkt. #22-7 (IRS
Transcripts, noting on the 1997, 1998, 1999, 2000, and 2001 transcripts
“separate assessments” independent of the original jointly-filed returns).
4

Planet Fitness sale proceeds and the tax refunds into an account in the
name of the “Scott Baker Family Trust.”
The Scott Baker Family Trust
On June 30, 2003, Scott Baker established and became the settlor of
the “Scott Baker Family Trust,” a Cayman Island Trust, with a Royal Bank
of Canada account in the Cayman Islands. Baker granted himself a onethird beneficial interest in the Trust. The remaining beneficial interests
were divided among Robyn Baker and the Bakers’ minor children. Scott
Baker created the Trust for the purpose of engaging in the tax sheltering
transaction used in his 2002 return to offset the $3.4 million gain. See Adv.
Proc., Compl. ¶ 7. The entire corpus of the Trust was invested in a fund
called “IMA.” According to Robyn Baker, at some point in late 2005, the
Bakers learned that the investment in IMA was essentially worthless, as it
proved to be a Ponzi scheme. See C&S Trustee Dep., 40:1-10.
IRS Examines Scott Baker’s 2002 Return
and Related Carrybacks
On December 6, 2004, the Bakers signed an agreement with the IRS,
pursuant to a Global Settlement Initiative, resolving the claims arising from
the use of the 2001 Son-of-Boss tax shelter. See Adv. Proc., Dkt. #41-4. On
August 22, 2005, the Bakers purchased the Hingham Property as tenants
by the entirety for $1,622,500. Also in August of 2005, the IRS opened an
5

examination of Scott Baker’s (individually filed) 2002 tax return.6 While
Scott Baker initially elected to participate in a second IRS Global
Settlement Initiative, agreeing to pay $1.2 million, he was ultimately
removed from the program at some point after the IRS requested disclosure
of his assets in 2007, because of a professed inability to pay the promised
amount.7

6 The IRS did not record an assessment against Scott Baker for the
disallowed 2002 tax-shelter losses (and the accompanying carrybacks) until
May 14, 2009. An additional assessment was made on May 20, 2010. By
the time the IRS recorded the assessment, the Bakers had transferred the
Hingham Property to a realty trust and subsequently agreed to a division of
property as part of a Separation Agreement (that the United States
contends was a sham). The Separation Agreement purported to transfer
Scott Baker’s half-interest in the Hingham Property to Robyn Baker.
Scott Baker insists that he intended to repatriate the $3.4 million
invested with IMA to satisfy his debt to the IRS, but afterwards learned that
the IMA money had vanished. The timeframe in which the Bakers learned
of the Ponzi scheme and Scott Baker undertook the Global Settlement
Initiative is unclear. The Scott Baker Family Trust eventually received a
$202,000 creditor’s distribution from IMA’s bankruptcy estate, but the
entire sum went to Robyn Baker, who had been named as the new Trustee
in the interim. She testified that she invested the entire $202,000 into a
company named Design Decisions owned by her friend Leslie Smith. Smith
hired Scott Baker to do construction on a home being built by Design
Decisions, and when the home was sold, Robyn Baker received a return on
the “portion that I invested.” Robyn Baker Dep. (hereinafter “RB Dep.”),
47:19. Robyn Baker further stated that she reinvested the money with
Design Decisions “[s]o that Scott could remain employed, have a job, be
able to work, and hopefully earn more money on the money I gave her.” Id.
at 48:5-9. She also testified that she used $84,000 of the money to pay the
attorneys who have done work for her and Scott. Id. at 42:2-43:6 and
48:22-49:2.
6

7

The IRS Requests Disclosure of Assets, and the Bakers
Transfer the Hingham Property to a Realty Trust
In early February of 2007, the IRS requested that Scott Baker
complete a Form 433-A, by March 1, 2007, listing all of his assets. It is
undisputed that the Bakers were then aware of the probability of a looming
multi-million dollar tax assessment. On February 22, 2007, the Bakers
established the S&R Realty Trust, with Robyn Baker as Trustee. They then
transferred the title to the Hingham Property, by way of a quitclaim deed,
to the new Trust. That same day, before the transfer was recorded, the
Bakers remortgaged the Hingham Property, naming Scott Baker as the sole
mortgagor.
Also on February 22, 2007, the Bakers established a second realty
trust, the C&S Realty Trust. (S&R stands for Scott and Robyn, and C&S
stands for the first letters of the first names of the Bakers’ minor children).
Robyn Baker was also the sole trustee for C&S Trust. The beneficiaries of
the C&S Realty Trust were at least the Baker’s two minor children (neither
party attached the schedule of beneficiaries, while Robyn Baker, the Trustee
of the S&R and C&S Realty Trusts was unclear in her deposition as to
whether she was also a beneficiary of the S&R or C&S Realty Trusts). The
Bakers then transferred a property located at 253 Humarock Beach Road in
Scituate, Massachusetts (Humarock Property) into the C&S Trust.
7

Robyn Baker (who was deposed at least three times in this case (once
in her personal capacity, once in her capacity as the Trustee of the S&R
trust, and once in her capacity as the Trustee of the C&S Trust), testified
that the S&R Realty Trust had no other purpose than holding title to the
Hingham Property, which was the Trust’s only asset, S&R Trustee Dep.,
14:4-15, and that the C&S Realty Trust was formed “to protect a beach
house at 253 Humarock Beach Road from any potential construction people
that may have had an issue with Scott.” C&S Dep., 9:1-6. She also testified
that Scott Baker did not receive any consideration for transferring his half
interests in property into Trusts for which only Robyn was a Trustee, and
for which he was not a beneficiary. See S&R Dep., 16:17-18:3.8

8 Shortly after transferring the Humarock Property to the C&S Trust,
it was sold, yielding proceeds of roughly $433,000. Robyn Baker testified
that she initiated the sale of the Humarock beach house and deposited the
proceeds ($433,000) into the South Shore Bank account of the C&S Realty
Trust (for which she held sole signatory authority). She also testified that
the C&S Trust had no other activity or purpose than to receive the proceeds
from the sale of the beach house. A few months later, $300,000 was
withdrawn from the account and used to pay down an equity line of credit
extended by Rockland Trust. RB Dep., 21:16-22:2. Robyn Baker separately
testified that she used the funds from the account for her personal
expenses, such as living expenses, paying off credit cards, and for her
children’s activities. See C&S Dep., 17:15-22 (noting that she “used [these
funds] to live off of”). According to Robyn Baker, the South Shore Bank
account (and the C&S Realty Trust) no longer exist. C&S Dep., 18:9-17.
8

Robyn Baker was aware that Scott Baker had an outstanding federal
tax liability,9 and while she was concerned about the IRS tax debt at the
time the S&R and C&S Trusts were created, she does not believe that the
Trusts were established to avoid that debt. Robyn Baker also testified that
another reason that she and Scott Baker placed these properties in trust
was because they were “contemplating separating and dividing assets.”
C&S Dep., 9:6-7.
On March 5, 2007, the Bakers recorded the deeds transferring the
Hingham Property to the S&R Realty Trust and transferring the Humarock
Property to the C&S Realty Trust. On March 6, 2007, the Bakers completed
and signed the IRS Form 433-A. The Bakers listed the Hingham Property
and the Humarock Property under the “real estate” section of the Form.
See Dkt. #22-34.
In January of 2008, shortly before the Bakers filed for divorce, a
$258,801 payment was made from the C&S Realty Trust account to
IndyMac Bank to pay down the mortgage on the Hingham Property.

9 Robyn Baker has alleged that, at the time of the transfer of the
properties to the Trusts, she was under the impression that she also had an
outstanding tax liability.
9

Divorce Decree/Settlement Agreement
On January 11, 2008, the Bakers filed for divorce. One day prior, on
January 10, 2008, the Bakers signed a Separation Agreement that was later
incorporated into the divorce judgment. See Dkt. #40-3 at 5-14. The
Agreement stated that “irreconcilable differences [had] arisen and continue
to exist between the parties with no chance of reconciliation since March 1,
2007,” and that the Agreement was made “in order to settle all claims of the
parties and all other matters which should be settled in view of the pending
complaint for divorce.” Id. at 5. The Agreement provided that the Bakers
would retain joint physical and legal custody of their children. See id. at 5-6
(“The parties agree to consult with each other concerning the daily living
needs and schedule of the children.”). Article II of the Agreement, titled
“Financial Arrangements,” contained various provisions regarding health
insurance and other expenses, while explicitly noting that the Agreement
obligated neither party to pay child support or alimony Id. at 6.
Article III of the Agreement, titled “Real Estate,” divided the Bakers’
various property holdings. It gave Robyn Baker the sole ownership of the
Hingham Property, while noting that the property “is presently held by S &
R Realty Trust for the benefit of the minor children,” as well as two parcels
of land in New Hampshire. Article III further required that Scott Baker
assume the Hingham Property mortgage and make all monthly payments
10

(while waiving “all rights in the Marital Home”). Notwithstanding, the
Agreement gave Scott Baker permission to reside on the Hingham Property,
while Robyn Baker was to be responsible for utility payments and routine
repairs.10

Scott Baker also assumed the “marital credit card debt,” all

liabilities for his business, and received sole ownership of his business
ventures,11 while “[Robyn] agree[d] to help [Scott] be successful in any
business ventures he may wish to pursue.” Id. at 11. Lynn Erickson, the
attorney who drafted the Separation Agreement, ostensibly acted as Robyn
Baker’s lawyer, but without her avowed knowledge. RB Dep., 59:16.
On February 28, 2008, the Probate Court entered a judgment
incorporating the Separation Agreement and giving it “the full force and
effect of an order of this Court.” Dkt. #30-3 at 2. The divorce became final

10 The Bakers agreed to “share equally” the cost of any capital

improvements to the home exceeding $500. Other provisions of the
divorce included the division of vehicles (a 2005 Chevy Tahoe, two
motorcycles, and a boat to Robyn Baker, and a “Chevy pickup truck,
Construction trailers, Kabota tractor and contents of shed” to Scott Baker),
the division of a “Rockland Trust joint bank account” (to be split equally),
and “any monies stolen from the parties” (to Robyn Baker). Id. at 10.
Scott Baker claims that at the time of the divorce, his business
ventures were worth approximately $1 million. Robyn Baker testified that
on the eve of the divorce, “Scott was trying to sell [the Scarsdale Planet
Fitness location] to the owner of Planet Fitness and it had a value of
$250,000.” RB Dep., 33:15-18. On November 4, 2009, Scott signed
another IRS Form 433A, under penalties of perjury, reporting that his
business interests had a monetary value of zero dollars. See Dkt. #22-18.
11

11

on May 29, 2008.12 Since the entry of the divorce decree, Scott Baker has
paid the monthly $6,200 mortgage on the Hingham Property. Most of the
household bills, including the gas and electrical utilities, are in his name.
The current equity in the Hingham Property is approximately $300,000.
DISCUSSION
Summary judgment is appropriate when “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.” Fed. R. Civ. P. 56(a).

“Even in

cases where elusive concepts such as motive or intent are at issue, summary

12 According to the United States, the Bakers’ divorce was a sham

concocted to fraudulently transfer property under the guise of a marital
division of assets. In addition to the circumstances surrounding the
Separation Agreement (and several of its out-of-the-ordinary provisions),
the United States bases its contention that the divorce was a sham on
statements made by the Bakers in deposition, in correspondence, and on
social media. For example, on June 3, 2008, Scott Baker submitted a
request for a mortgage modification to IndyMac Bank describing himself as
follows: “I was the owner of a business and sold the business to Bally Total
Fitness and retired with my wife and two kids.” Dkt #22-3. On May 11,
2009, a press release announcing Robyn Baker’s new position as a
“relationship consultant” at a company called “The Right One” identified
her as “resid[ing] in Hingham with her husband and two children.” Dkt.
#22-12. As of January 7, 2010, Robyn Baker on her business website,
betterspaces.net, stated that she was the owner and operator of “Better
Spaces” and described herself as follows: “My name is Robyn Baker and I
live with my husband and two children in Hingham, Massachusetts. . . . My
husband is a builder . . . .” Dkt. #22-4. Finally, at a deposition, Scott
testified that he never told his children that he and Robyn Baker are
divorced and he does not know if they know. See Scott Baker Dep., 57:1222.
12

judgment may be appropriate if the nonmoving party rests merely upon
conclusory

allegations,

improbable

inferences,

and

unsupported

speculation.” Medina-Munoz v. R.J. Reynolds Tobacco Co., 896 F.2d 5, 8
(1st Cir. 1990). However, the non-moving party is given the benefit of all
favorable inferences, Oliver v. Digital Equip. Corp., 846 F.2d 103, 105 (1st
Cir. 1988), and “when the facts support plausible but conflicting inferences
on a pivotal issue in the case, the judge may not choose between those
inferences at the summary judgment stage." Coyne v. Taber Partners I, 53
F.3d 454, 460 (1st Cir. 1995).
The United States alleges that the IRS tax liens relating to the 2009
and 2010 assessments attach to the Hingham Property. It seeks a forced
sale to collect the proceeds, or any portion, that are subject to the tax lien.
The Bakers allege (in separate oppositions) that Robyn Baker holds title to
the Hingham Property free and clear of any tax liens because the property
does not constitute “property or rights to property” attributable to Scott
Baker (because the transfer of the property to Robyn Baker preceded the
attachment of any tax liens on property of Scott Baker).

Scott Baker’s

counsel also suggested at oral argument that this case might well be mooted
by the Bankruptcy Court’s determination on dischargeability, which is still
pending.
13

Relevance of Dischargeability Adversary Proceeding
Scott Baker alleges that the United States’ motion “fails because Mr.
Baker’s tax debt to the United States is dischargeable and should be
discharged,” Dkt. #29 at 2. While this court takes no position on the
dischargeability of Scott Baker’s tax debt under 11 U.S.C. § 523(a)(1)(C), it
is important to note that a bankruptcy discharge would have no legal effect
on the United States’ lien enforcement counts against the Hingham
Property and/or Robyn Baker. See 11 U.S.C. § 524(e) (“[D]ischarge of a
debt of the debtor does not affect the liability of any other entity on, or the
property of any other entity for, such debt.”); see also In re Witkowski, 176
B.R. 114 (Bankr. D. Mass. 1994) (same). This is not only because the
Bankruptcy Court explicitly abstained from adjudicating these matters,
noting that they were not “property of the estate,” but also because “a
discharge extinguishes only ‘the personal liability of the debtor.’” Johnson
v. Home State Bank, 501 U.S. 78, 83 (1991), quoting 11 U.S.C. § 524(a)(1)
(emphasis in original); see also id. at 84 (noting that the Bankruptcy Code,
at section 522(c)(2), codified the rule of Long v. Bullard, 117 U.S. 617
(1886), and thus “a bankruptcy discharge extinguishes only one mode of
enforcing a claim-namely, an action against the debtor in personam – while
leaving intact another – namely, an action against the debtor in rem.”);
14

Dewsnup v. Timm, 502 U.S. 410 (1992) (noting that “a lien on real property
pass[es] through bankruptcy unaffected”).

While it remains to be

determined whether and to what extent the United States’ tax liens
attached to the Hingham Property, that determination would neither be
“moot” nor “void” as a result of a bankruptcy discharge.
Fraudulent Conveyance
The United States seeks first to establish that the transfer of the
Hingham Property to Robyn Baker was fraudulent and should be set aside.
“State law creates legal interests and rights,” even though federal law “must
prevail no matter what name is given to [an] interest or right by state law.”
Morgan v. Comm’r, 309 U.S. 78, 80-81 (1940). Thus the inquiry begins
with the Massachusetts Uniform Fraudulent Transfer Act (UFTA). The
UFTA, Mass. Gen. Laws ch. 109A, § 5 (emphasis added), states:
(a) A transfer made or obligation incurred by a debtor is
fraudulent as to a creditor, whether the creditor’s claim arose
before or after the transfer was made or the obligation was
incurred, if the debtor made the transfer or incurred the
obligation:
(1) with actual intent to hinder, delay or defraud any
creditor of the debtor; or
(2) without receiving a reasonably equivalent value in
exchange for the transfer or obligation, and the debtor . . .
intended to incur, or believed or reasonably should have
believed that he would incur, debts beyond his ability to pay as
they became due.
15

The First Circuit has acknowledged “that ‘it is often impracticable, on
direct evidence, to demonstrate an actual intent to hinder, delay or defraud
creditors.’

Thus, courts frequently infer fraudulent intent from the

circumstances surrounding a transfer, placing particular emphasis on
certain indicia or badges of fraud.” F.D.I.C. v. Anchor Props., 13 F.3d 27,
32 (1st Cir. 1994) (internal citations omitted). Moreover, the phrase “to
hinder, delay, or defraud” is to be read in its natural disjunctive sense.
Thus, proof of an “intent to defraud is not [always] necessary, but rather an
intent to hinder or delay is sufficient for a finding of liability.” Davis v.
United States, 869 F. Supp. 49, 52 (D. Mass. 1994), citing Joseph P.
Manning Co. v. Shinopoulous, 317 Mass. 97, 99 (1944). In fashioning
remedies under the UFTA, a court must also be sensitive to the strong
Massachusetts public policy of protecting the interests of a nondebtor
spouse. Bakwin v. Mardirosian, 467 Mass. 631, 638 (2014).
It is impossible to view the convoluted and tax-convenient shuffling
of the Bakers’ assets with anything but a healthy dose of skepticism. The
United States has come forward with evidence from which a fact-finder
could infer that the transfer of Scott Baker’s half-interest in the Hingham
Property was fraudulent or that Robyn Baker holds title to the property as a

16

nominee for Scott Baker.13 Aside from any inference of an intent to hinder
or delay creditors, it is undisputed that in 2007, when Scott Baker
transferred the Hingham Property to the S&R Trust and assumed the new
mortgage, both he and Robyn Baker knew that a ruinous tax assessment
was likely imminent. It is also undisputed that Scott Baker transferred his
interest in the Hingham Property to the Trust for no tangible consideration.
If the United States was simply seeking to set aside this first transfer of the
Hingham Property in its entirety to the S&R Realty Trust as a fraudulent
conveyance, the issue might well be resolved on summary judgment.14 It is
beyond peradventure that “a settlor cannot place property in trust for his

13 One need only compare the undisputed facts of this case to the socalled “badges of fraud” enumerated in Mass. Gen. Laws ch. 109A, §
5(b)(1)-(11), to appreciate how powerful is the inference of fraud that a jury
might draw.
See, e.g., Anchor Props., 13 F.3d at 32 (noting that “[C]ourts
frequently infer fraudulent intent, “placing particular emphasis on certain
indicia or badges of fraud[,] . . . the more common [of which] are: “(1)
actual or threatened litigation against the debtor; (2) a purported transfer
of all or substantially all of the debtor’s property; (3) insolvency or other
unmanageable indebtedness on the part of the debtor; (4) a special
relationship between the debtor and the transferee; and (5) retention by the
debtor of the property involved in the putative transfer.”) (internal citations
omitted). Both Bakers have admitted that the purpose of the first transfer
was to protect the Hingham Property from Scott Baker’s creditors and that
Scott Baker retained control of the property as if no such transfer had
occurred.
14

17

own benefit and keep it beyond the reach of creditors.” United States v.
Murray, 217 F.3d 59, 65 (1st Cir. 2000) (internal citation omitted).
The second transfer, the surrender of Scott Baker’s half-interest in the
Hingham Property to Robyn Baker pursuant to the Separation Agreement,
is more problematic. Although the second transfer boasts many of the
badges of fraud in its own right,15 Robyn Baker maintains that she gave
adequate consideration for her husband’s half-interest at the time of the
divorce, namely by giving up any right to Scott Baker’s interest in the last of
his Planet Fitness gyms.16

Because a material dispute of fact exists

regarding the actual value of Scott Baker’s business interests at the time the
Separation Agreement was adopted by the Probate Court, the entry of
summary judgment under § 5(a)(1) or § 5(a)(2) is precluded.17 While it is

15 The United States notes that, “through this [S]eparation
[A]greement, Scott Baker was stripped of all assets while remaining
personally liable for the approximate $875,000 mortgage on the personal
residence.” Pl.’s Mem. at 8. The transfer was also between two family
members, and conducted at a time when Scott Baker knew he was facing a
large tax liability that he would be unable to pay.
Scott Baker testified that his business ventures, including the gym,
were worth approximately $1 million at the time of the divorce and that he
owned 50 percent of the gym. Baker testified that after the divorce he
brought in two “money partners” who cheated him, rendering the gym
ultimately worthless.
16

The United States argues that the dispute is not “genuine” because
neither of the Bakers has produced documentary evidence substantiating
18

17

true, as the government notes, that a “fraudulent intent . . . may be inferred
from the facts and circumstances of a particular case,” Davis, 869 F. Supp.
at 52, citing Citizens Bank & Trust Co. v. Rockingham Trailer Sales, Inc.,
351 Mass. 457 (1966), this rule is pertinent to a finder-of-fact, and not a
court sitting in brevis review.18
The Nominee Theory
In the alternative, the United States alleges that Robyn Baker holds
the Hingham Property as Scott Baker’s nominee, and that there was, in
reality, no conveyance effectuated at all, because Scott Baker still exercises
control over the property and derives a benefit from it. The United States is

the value of Scott Baker’s businesses. The argument misapprehends the
moving party’s burden of proof on a motion for summary judgment.
Further, even if the court did draw an inference of fraudulent intent
as a matter of law on the part of Scott Baker (given that he valued these
assets at zero dollars in a later declaration to the IRS), the court would also
have to find that Robyn Baker did not participate in the transfer in goodfaith or did not give “reasonably equivalent value” in exchange. See Mass.
Gen. Laws ch. 9A, §9(a) (a transfer under §5(a)(1) made with actual intent
to defraud is “not voidable . . . against a person who took in good-faith and
for a reasonably equivalent value. . . .”). Cf. Alford v. Thibault, 83 Mass,.
App. Ct. 822, 828 (2013) (“A transfer, even if made with intent to defraud,
is not deemed fraudulent in fact unless there has been a resulting
diminution of the assets available to the creditor.”). The United States
asserts that Robyn Baker could not have taken the Hingham Property in
good faith as she was aware of the tax liabilities and was no “innocent
lamb.” Pl.’s Mem. at 20. The court does not find that these unadorned
assertions sufficient to dispose of the material disputes of fact on summary
judgment.
19

18

permitted to collect a taxpayer’s unpaid tax liabilities from property in the
possession of a nominee because the taxpayer’s continued domination and
control over property is powerful evidence that there was “in truth and fact
[] no transfer at all.” Higgins v. Smith, 308 U.S. 473, 357-358 (1940); see
also G.M. Leasing Corp. v. United States, 429 U.S. 338, 350 (1977) (“If
petitioner was [taxpayer’s] alter ego, it had no countervailing effect for
purposes of his federal income tax . . . [and the IRS] could properly regard
petitioner’s assets as [taxpayer’s] property subject to the lien under §
6321.”). For the same reason that the court is unable to enter summary
judgment on the bona fides of the second transfer, it is similarly unable to
enter a brevis judgment on this theory as well.19
The Lien Tracing Theory
The United States offers a third theory to justify enforcement of the
lien that focuses solely on assets allegedly transferred subsequent to the
first tax assessment date in May of 2009 (which was after the Bakers’
divorce agreement and corresponding property transfer).

When an

assessment is recorded against a “person liable to pay any tax” who
“neglects or refuses to pay the same after demand,” a lien arises in favor of

19 Robyn Baker also alleges that she lives in, benefits from, and makes
financial decisions regarding the Hingham Property. The United States has
not come forward with enough concrete evidence to rebut these assertions
as a matter of law.
20

the United States against “all property and rights to property, whether real
or personal, belonging to such person.” 26 U.S.C. § 6321. Once the lien
attaches to the taxpayer’s property, it stays with the property, even if the
property is transferred or converted. See, e.g., United States v. Bess, 357
U.S. 51, 57 (1958) (“The transfer of property subsequent to the attachment
of the lien does not affect the lien, for ‘it is of the very nature and essence of
a lien, that no matter into whose hands the property goes, it passes cum
onere.’”) (internal citation omitted).
Thus, to the extent it is possible to “trace” the lien, that is, to follow
the trail of the taxpayer’s property to subsequently acquired substitute
assets or proceeds, the lien attaches to the after-acquired property and may
be enforced against the property no matter whose hands it is in. See, e.g.,
In re Callahan, 442 B.R. 1, 7 (D. Mass. 2010), quoting Phelps v. United
States, 421 U.S. 330, 334-335 (1975) (“Once a tax lien attaches to property,
‘[t]he lien reattaches to the thing and to whatever is substituted for it. . . .
The owner and the lien holder, whose claims have been wrongfully
displaced, may follow the proceeds wherever they can distinctly trace
them.”) (emphasis in original).
The United States alleges that, since the date of the initial assessment,
the Hingham Property has been paid for and maintained by assets and
21

earnings under the control of Scott Baker, thereby rendering the property
subject to the tax lien to the extent such earnings and assets subject can be
traced. Scott Baker used approximately $6,200 per month of his personal
funds (which, after May 14, 2009, were subject to the tax liens arising from
assessment) to make mortgage and property tax payments on the Hingham
Property. Robyn Baker does not dispute this, noting that the mortgage has
been paid from Scott Baker’s personal funds “for as long as she can
remember.” RB Dep., 8:14-9:5. The United States argues that, even if the
conveyances are not set aside (on the nominee or fraudulent conveyance
theories), the United States has the right to enforce the federal tax liens on
the Hingham Property to the extent it can trace Scott Baker’s personal
property to the maintenance of the mortgage on the property.
It is unlikely that the disputes of fact the Bakers have alleged with
regard to the fraudulent conveyance and nominee theories would be
relevant to defeat summary judgment on the lien tracing theory.20 Unlike
an attempt to enforce a lien on property allegedly fraudulently conveyed
prior to attachment to a lien, an attempt to enforce a lien on property that
was transferred or conveyed after a section 6321 lien attached, entails no
factual inquiry into matters of intent or state of mind (and is also

20 Neither defendant addressed the United States’ lien-tracing theory
in opposing summary judgment.
22

definitively a matter of federal, not state, law). See Bess, 357 U.S. at 57
(noting that “state law is inoperative to prevent the attachment of liens
created by federal statutes in favor of the United States”); see also Don
King Prods., Inc. v. Thomas, 945 F.3d 529 (2d Cir. 1991) (“Only those
persons specifically listed in the statute are entitled to priority over
unrecorded federal tax liens.”).
The obstacle to summary judgment on this theory, however, is the
fact that the mortgage payments on the Hingham Property are being made
by Scott Baker pursuant to a divorce decree entered by the Probate Court
(which adopted the Bakers’ prior Separation Agreement). While “it is not
debatable that a tax lien imposed by a law of Congress, cannot, without the
consent of Congress, be displaced by later liens imposed by authority of any
state law or judicial decision,” State of Mich. v. United States, 317 U.S. 338,
340 (1943), the divorce decree was entered prior to the assessments that
gave rise to the liens at issue. The United States has not addressed the
implications of this fact, and thus, any entry of summary judgment on this
theory would be premature on the record now before the court.21

21 The court also notes that the alleged equity traceable to
encumbered funds ($378,000) appears to have been miscalculated the
United States in its Memorandum. First, the amount was calculated using
an assessment date of March 14, 2009 (the certified transcripts attached by
the United States to its motion reflect that the first assessment was not
23

Tortious Conversion
Finally, the United States seeks summary judgment on its claim
against Robyn Baker personally for the tortious conversion of assets subject
to a federal tax lien, for the amount of Scott Baker’s property that she has
appropriated for her own use in “derogation, diminution, and destruction
of the superior interests of the United States.” Compl. ¶ 49. The court
cannot grant summary judgment on this count without making
inappropriate determinations of disputed facts, including issues of
credibility.22
ORDER
For the foregoing reasons, the motion of the United States for
summary judgment is DENIED. The Clerk is directed to set the case for
trial on the issues identified by the court in this decision.
SO ORDERED.
/s/ Richard G. Stearns
_
UNITED STATES DISTRICT JUDGE

made until May 14, 2009). See Dkt. #22-7 at 26. Second, the parties
represent that there is approximately $300,000 of equity currently in the
Hingham property, so it cannot credibly be the view of the United States
that the entirety of the $378,000 is traceable to equity in the property.
The United States seeks a judgment of $1,157,000 against Robyn
Baker on the tortious conversion count, but this sum has been calculated by
the United States, at least in part, by assuming facts that are in dispute, as
detailed above.
24

22