Biogenesis Church Inc. v. United States of America

Filing 33

Judge Denise J. Casper: ORDER entered. MEMORANDUM AND ORDER - The Court ALLOWS Defendant's motion for summary judgment, D. 22.(Hourihan, Lisa)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
__________________________________________
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BIOGENESIS CHURCH, INC.,
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Plaintiff,
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v.
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Civil Action No. 16-11628
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UNITED STATES OF AMERICA,
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Defendant.
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__________________________________________)
MEMORANDUM AND ORDER
CASPER, J.
I.

November 13, 2017

Introduction
Plaintiff Biogenesis Church, Inc. (“Biogenesis Church”) has filed this lawsuit against

Defendant the United States of America (the “United States”) alleging a wrongful levy and seeking
declaratory and injunctive relief, as well as damages under 26 U.S.C. § 7426(a)(1) and (b)(2).
D. 1. The United States has moved for summary judgment on Count II of the complaint.1 D. 22.
For the reasons stated below, the Court ALLOWS the motion.
II.

Standard of Review
The Court grants summary judgment where there is no genuine dispute as to any material

fact and the undisputed facts demonstrate that the moving party is entitled to judgment as a matter
of law. Fed. R. Civ. P. 56(a). “A fact is material if it carries with it the potential to affect the

1

The parties previously had previously settled Count I, making Count II the only remaining claim
in this case. D. 23 at 3.
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outcome of the suit under the applicable law.” Santiago–Ramos v. Centennial P.R. Wireless Corp.,
217 F.3d 46, 52 (1st Cir. 2000) (quoting Sanchez v. Alvarado, 101 F.3d 223, 227 (1st Cir. 1996)).
The movant bears the burden of demonstrating the absence of a genuine issue of material fact.
Carmona v. Toledo, 215 F.3d 124, 132 (1st Cir. 2000); see Celotex Corp. v. Catrett, 477 U.S. 317,
323 (1986). If the movant meets its burden, the non-moving party may not rest on the allegations
or denials in her pleadings, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986), but “must,
with respect to each issue on which she would bear the burden of proof at trial, demonstrate that a
trier of fact could reasonably resolve that issue in her favor.” Borges ex rel. S.M.B.W. v. Serrano–
Isern, 605 F.3d 1, 5 (1st Cir. 2010). “As a general rule, that requires the production of evidence
that is ‘significant[ly] probative.’” Id. (quoting Anderson, 477 U.S. at 249) (alteration in original).
The Court “view[s] the record in the light most favorable to the nonmovant, drawing reasonable
inferences in his favor.” Noonan v. Staples, Inc., 556 F.3d 20, 25 (1st Cir. 2009).
III.

Factual Background
The following facts are taken from the parties’ Rule 56.1 statements and accompanying

documents and are undisputed unless otherwise noted. Daniel H. George, Jr. (“George”) is a selftaught chemist who has created his own health supplements. D. 29, ¶ 1.2 On April 3, 2003, George
was indicted on four counts of tax evasion for tax years 1996-1999 and four counts of using a false
social security number. D. 29, ¶ 3. George was found guilty on all four counts of tax evasion. D.
29, ¶ 4.

2

The parties did not file separate statements of material facts and responses thereto, but instead
included them in their respective memoranda of law, D. 23; D. 29. The Court hereinafter cites to
Biogenesis Church’s response to the United States’ statement of material facts, D. 29, when
referencing the undisputed material facts.
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A.

The Biogenesis Foundation

On May 14, 2003, George established the Biogenesis Foundation, Inc. (“Biogenesis
Foundation”). D. 29, ¶ 8. George was the sole incorporator and, as of its 2016 annual report, was
still listed as the president, treasurer, clerk, and director of the Biogenesis Foundation. D. 29, ¶¶
8, 13. George was also the only person with signatory authority for the Biogenesis Foundation’s
checking account. D. 29, ¶ 15. George transferred $7.7 million3 of his own money into a
Biogenesis Foundation bank account, for which George received no consideration (the “2003
transfer”). D. 29, ¶¶ 9-10. After the 2003 transfer, George did not own any assets except for a
house at 1 Warren Court, Rockport, Massachusetts (the “Warren Court property”), which in 2016
had a tax value of $281,900 and social security disability payments he has received since 1976.
D. 29, ¶ 11. The Biogenesis Foundation’s address was the Warren Court property. D. 29, ¶ 14.
George has control over Biogenesis Foundation’s funds and responsibility for distributing
them. D. 29, ¶ 40. While operating the Biogenesis Foundation, George paid his own legal fees
out of funds held in its bank account. D. 29, ¶ 16. Between 2003 and 2008, Biogenesis Foundation
spent $1,504,564 on George’s legal fees. Id. In 2008, George also used funds from the Biogenesis
Foundation account to pay for improvements to the Warren Court property, structured as a loan to
George with a balance of $218,205, as well as utility bills and property taxes. D. 29, ¶¶ 17-18.
B.

IRS Begins Civil Tax Assessment of George

After George was released from prison in 2007, and while he was on supervised release in
2010, the United States alleged that George violated the terms of his supervised release due to a
failure to pay the fine that was a part of his sentence and his continuing lack of cooperation with

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The United States expressed some uncertainty as to this amount, but Biogenesis Church appears
to confirm that figure in its brief. See D. 29, ¶¶ 9, 12; id. at 24.
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the IRS. D. 29, ¶¶ 19-20. On November 4, 2010, George’s counsel stated at a supervised release
revocation hearing that the IRS was reviewing George’s tax records to issue an assessment. D. 29,
¶ 21. On October 10, 2012, the IRS issued a statutory notice of deficiency (the “Notice of
Deficiency”) to George, informing him that the IRS had determined that he owed $2,165,892 for
tax years 1995-2002, and $1,624,419 in tax penalties. D. 29, ¶ 23.
C.

The Biogenesis Church

On June 20, 2012, George founded Biogenesis Church as the sole incorporator. D. 29, ¶
25. George is Biogenesis Church’s president and its business address is the Warren Court property.
D. 29, ¶¶ 26-27. On October 11, 2012, George transferred $7,559,861.16 from Biogenesis
Foundation’s account to a new Biogenesis Church account, for which there was no consideration
(the “2012 transfer”). D. 29, ¶¶ 28-29. Except for $10 remaining in its account, after the 2012
transfer, Biogenesis Foundation had no property and essentially ceased operations as Biogenesis
Church took over, in George’s own words, “the exact same work.” D. 29, ¶¶ 30-31. George has
control over Biogenesis Church’s funds and responsibility for distributing them. D. 29, ¶ 40.
George is the only signatory for Biogenesis Church’s bank account. D. 29, ¶ 38. George used
funds from the Biogenesis Church account to make payments on behalf of the Biogenesis
Foundation. D. 29, ¶ 32. Biogenesis Church, similarly to Biogenesis Foundation, paid utility bills
for the Warren Court property owned by George and does not pay rent for using the house. D. 29,
¶¶ 41-43.
D.

IRS Issues Levy to Biogenesis Church

George challenged the Notice of Deficiency in the tax court and, after a trial, the court
upheld the assessment. D. 29, ¶¶ 33-34. George paid for his legal fees in the tax case out of
Biogenesis Foundation and Biogenesis Church accounts from 2014-2015. D. 29, ¶ 37. On June

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27, 2016, the IRS issued a notice of levy to East Boston Savings Bank, attaching funds held in
Biogenesis Church’s name, for George’s 1995-2002 tax liability. D. 29, ¶¶ 44-45. The parties
agree that the IRS received $7.8 million, and that as of September 12, 2016, George’s tax liability
was $8,082,607.24. D. 29, ¶¶ 44, 46.
IV.

Procedural History
Biogenesis Church instituted this action on August 10, 2016. D. 1. The parties proceeded

with discovery. The United States has now moved for summary judgment. D. 22. The Court
heard the parties on the pending motion and took it under advisement. D. 32.
V.

Discussion
A.

Elements/Burden of Proof

There appears to be no First Circuit precedent establishing the burden of proof in a
wrongful levy case. The Court therefore adopts the burden-shifting approach applied by other
circuits: (1) the plaintiff must show that the IRS filed a levy against property in which the plaintiff
has some interest; (2) the burden then shifts to the United States to prove a nexus between the
property and the taxpayer4; and (3) the burden then shifts back to the plaintiff, who must show that
the levy was wrongful, e.g., that the levied property did not belong to the taxpayer. See Oxford
Capital Corp. v. United States, 211 F.3d 280, 283 (5th Cir. 2000); LiButti v. United States, 107
F.3d 110, 113 (2d Cir. 1997); Sec. Counselors, Inc. v. United States, 860 F.2d 867, 869–70 (8th
Cir. 1988); PBV, Inc. v. Rossotti, 178 F.3d 1295 (6th Cir. 1999) (unpublished opinion). To
establish a nexus, the United States “may assert fraudulent conveyance as a defense in a wrongful

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Biogenesis Church argues that when the burden shifts, the United States must show the nexus
between the property and the taxpayer by substantial evidence, rather than a preponderance of the
evidence. For the reasons stated further in this Memorandum and Order, the Court concludes that
the United States has met its burden in establishing a nexus, whether the burden of proof is by
substantial evidence or a preponderance of the evidence.
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levy action.” Towe Antique Ford Found. v. IRS, 791 F. Supp. 1450, 1457 (D. Mont. 1992), aff’d,
999 F.2d 1387 (9th Cir. 1993); see Hatchett v. United States, 330 F.3d 875, 886 (6th Cir. 2003)
(unpublished opinion) (collecting cases). Biogenesis Church’s interest in the property is conceded.
D. 23 at 12. The IRS may also assert a defense to a wrongful levy claim by showing a fraudulent
nominee relationship with the taxpayer. See Berkshire Bank v. Town of Ludlow, Mass., 708 F.3d
249, 251–53 (1st Cir. 2013); Dalton v. Commissioner, 682 F.3d 149, 157 (1st Cir. 2012). The
United States asserts both theories. Therefore, the burden shifts to the United States to establish a
nexus through a fraudulent transfer or fraudulent nominee relationship; and if that burden is met,
it shifts back to Biogenesis Church to show that in spite of the nexus, the levy was wrongful.
B.

The United States Has Established a Nexus and Biogenesis Has Not Shown
the Levy Was Wrongful____________________________________________

The United States argues that the transfers by Biogenesis Foundation to Biogenesis Church,
effectuated by George, were constructively fraudulent. Massachusetts law has codified the
Uniform Fraudulent Transfer Act (“UFTA”), Mass. Gen. L. c. 109A, which provides two similar
bases upon which a transfer can be constructively fraudulent.
1.

The 2003 Transfer Was Constructively Fraudulent

Under § 5(a) of Chapter 109A, in relevant part, “[a] transfer made or obligation incurred
by a debtor is [constructively] 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 . . . (2) without receiving a reasonably equivalent value in exchange for the
transfer or obligation, and the debtor . . . (ii) intended to incur, or believed or reasonably should
have believed that he would incur, debts beyond his ability to pay as they became due.” Mass.
Gen. L. c. 109A, § 5(a). Section 5(a)(2) “applies when the debtor has an unreasonably small
amount of remaining assets or an intent or reasonable belief that ‘the transfer would render [him]
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insolvent.’” Brennan v. Ferreira, No. 16-cv-12536-WGY, 2017 WL 1754762, at *3 (D. Mass.
May 2, 2017) (quoting Silica Tech, L.L.C. v. J–Fiber, GmbH, No. 06-10293-WGY, 2009 WL
2579432, at *17 (D. Mass. Aug. 19, 2009)).
Section 6(a), in contrast, only applies to a creditor “whose claim arose before the transfer
was made or obligation was incurred,” but similarly defines transfers or obligations as fraudulent
if “incurred . . . without receiving a reasonably equivalent value in exchange for the transfer or
obligation and the debtor was insolvent at that time or the debtor became insolvent as a result of
the transfer or obligation.” Mass. Gen. L. c. 109A, § 6(a). Section 6(a) does not require a showing
of the debtor’s objectively reasonable belief with respect to his insolvency.
The parties do not dispute that the 2003 transfer occurred, D. 29, ¶ 9, nor that there was no
consideration for the 2003 transfer, id., ¶ 10. The United States argues that when George made
the 2003 transfer, he was insolvent, or for purposes of § 5(a)(2) reasonably should have believed
he would be insolvent because of his preexisting tax liability from his 1995-2002 taxes. The
United States further contends that George had notice of liabilities he would not be able to pay
after his indictment for tax evasion.
In opposition, Biogenesis Church makes two arguments under § 5(a)(2). First, Biogenesis
Church contends that the United States must show that George had knowledge, established by an
assessment, that he owed the tax liability. In other words, Biogenesis Church argues that the
United States must show that George was aware of the fact and nature of his insolvency due to the
tax liability for the 2003 transfer to have been constructively fraudulent and because his civil tax
liability was not assessed until 2012, the 2003 transfer was not constructively fraudulent.
This issue precludes summary judgment as to § 5(a)(2). “Whether a tax liability was
reasonably foreseeable falls within the province of the trier of fact.” Frank Sawyer Tr. of May

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1992 v. Commissioner, 712 F.3d 597, 609 (1st Cir. 2013) (internal quotation marks omitted)
(quoting United States v. Rocky Mountain Holdings, Inc., 782 F. Supp. 2d 106, 121 (E.D. Pa.
2011)). While in Frank Sawyer Tr. of May 1992, 712 F.3d at 599, the taxes had not yet become
due, id., for purposes of the reasonable foreseeability requirement the timing of the tax liability is
not a distinguishing factor, since § 5(a) does not distinguish between “whether the creditor’s claim
arose before or after the transfer was made or the obligation was incurred,” Mass. Gen. L. c. 109A,
§ 5(a).
Section 6(a) however, the United States’ alternative basis for summary judgment, does not
require a showing of intent or objectively reasonable belief of insolvency to make a transfer
constructively fraudulent. Biogenesis Church argues that § 6(a) cannot apply, because the IRS
was not a creditor of George before the 2003 transfer, because it did not complete its tax assessment
until 2012. This argument is unavailing. “[T]ax liabilities, though unassessed, are deemed
obligations due and owing at the close of the taxable year.” Edelson v. Commissioner, 829 F.2d
828, 834 (9th Cir. 1987); see 26 U.S.C. § 6151(a); Holywell Corp. v. Smith, 503 U.S. 47, 52
(1992); United States v. Siceloff, 451 F. App'x 183, 186 (3d Cir. 2011); United States v. Sarubin,
507 F.3d 811, 814 (4th Cir. 2007); United States v. Payne, 978 F.2d 1177, 1179 (10th Cir. 1992);
United States v. Russell, 998 F.2d 1001 (1st Cir. 1993) (unpublished opinion). The IRS, therefore,
was George’s creditor for tax years 1995-2002 as of each subsequent April 15, see Payne, 978
F.2d at 1179, the latest of those being April 15, 2003, prior to the 2003 transfer. The United States
has satisfied this element of § 6(a).
The United States has also established that there is no genuine issue of material fact that
by executing the 2003 transfer, George “was insolvent at that time or [] became insolvent as a
result of the transfer or obligation.” Mass. Gen. L. c. 109A, § 6(a). While Biogenesis Church

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argues there is a question of fact as to whether George’s ownership of the Warren Court property
would have satisfied his tax liabilities, preventing the Court from determining that George was
insolvent due to the 2003 transfer at summary judgment, this argument fails. At the time of the
2003 transfer, the Warren Court property was George’s only remaining asset, which in 2016 had
a tax value of $281,900. D. 29, ¶ 11. George’s tax liability as of April 15, 2003, before penalties
and interest, for 1995-2002 was $2,165,892. D. 29, ¶ 23; D. 23-21 at 1. Furthermore, by April
15, 2003, George had been indicted for tax evasion accusing him of concealing upwards of
$800,000 in taxable income for the years 1995-1999 alone, D. 23-3 at 2, which would have resulted
in a tax liability, before interest and penalties, of $284,729, D. 30-1, ¶ 9. Biogenesis Church does
not point to any specific, admissible facts in support of its argument, instead suggesting some
uncertainty about the property’s value.

Rather, its assertions are “conclusory and wholly

unsupported.” 4 MVR, LLC v. Warren W. Hill Constr. Co., Inc., No. 12-cv-10674-DJC, 2016
WL 4775451, at *14 (D. Mass. Sept. 13, 2016). Furthermore, Biogenesis Church’s argument is
“contradicted by the substantial evidence in the record demonstrating . . . insolvency.” Id. As the
United States points out, the Warren Court property, George’s only asset at the time of the 2003
transfer, D. 29, ¶ 11, received “improvements” costing $218,205 in or around 2008, when the
Biogenesis Foundation declared this amount as a loan to George in its 2008 tax return, id., ¶ 17.
To the extent the record suggests any possibility for variation in the Warren Court property’s value,
it suggests that the house would be worth more, and not less, in 2016 than it was worth in 2003.
D. 28-7 at 94-95. For all of these reasons, the 2003 transfer was constructively fraudulent.
2.

Biogenesis Church Was a Subsequent Transferee of the 2003 Transfer

George offers a broad swath of evidence from his prior trial before the tax court, in which
the court found that the Biogenesis Foundation and Biogenesis Church were George’s alter egos,

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D. 29 at 36. He argues that this holding is limited to the Biogenesis Foundation and Biogenesis
Church’s activities before 2003, and that the bases for the tax court’s decision have been rectified,
making the entities no longer George’s alter egos.
This argument is not persuasive. Even if the Court were to credit Biogenesis Church’s
argument that it now operates by the necessary corporate formalities, Massachusetts law does not
require the United States to show independently that both the 2003 and 2012 transfers were
constructively fraudulent. Rather, the United States argues, in line with Massachusetts law, that it
must show that the 2003 transfer from George to the Biogenesis Foundation was constructively
fraudulent, and that the 2012 transfer from the Biogenesis Foundation to Biogenesis Church was
a transfer to a “subsequent transferee,” against whom creditors are entitled to relief so long as the
subsequent transferee was not “a good faith transferee or obligee who took for value or from any
subsequent transferee or obligee.” Mass. Gen. L. c. 109A, § 9(b)(2). In other words, so long as
the United States shows Biogenesis Church did not receive the 2012 transfer in good faith, for
value, or from an initial subsequent transferee, it was entitled to recover, in this instance by levy,
the money held by Biogenesis Church on the basis of the initial 2003 transfer. See Bakwin v.
Mardirosian, 467 Mass. 631, 646 (2014) (affirming judgment against subsequent transferee on the
basis of jury verdict that defendant did not “receive[] transfer of the brokerage account either in
good faith or for value”).
When determining whether a subsequent transferee received the transfer in good faith,
courts have looked to whether evidence in the record indicates that the subsequent transferee had
“actual or constructive knowledge” of the nature of the transfer. Frank Sawyer Tr. of May 1992
v. Commissioner, 107 T.C.M. (CCH) 1316 (T.C.), opinion supplemented on reconsideration, 107
T.C.M. (CCH) 1621 (T.C. 2014); see McBirney v. Paine Furniture Co., No. 960031, 2003 WL

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21094555, at *18–19 (Mass. Super. Mar. 31, 2003). The Court concludes that the record is replete
with evidence, not rebutted with any specific facts by Biogenesis Church, that it was not a good
faith subsequent transferee. George incorporated Biogenesis Church on June 20, 2012. D. 29, ¶
25. From at least 2010 until October 10, 2012, the IRS had been conducting a civil tax assessment
of George after he was released from prison. D. 29, ¶¶ 19-23. Having formed Biogenesis Church
on June 20, 2012, id., ¶ 25, on October 11, 2012, George executed the 2012 transfer from
Biogenesis Foundation to Biogenesis Church, id., ¶ 28. The 2012 transfer was not made for
reasonably equivalent value. In fact, it was made for no value. Id., ¶ 29.
Furthermore, Biogenesis Foundation essentially ceased operating when Biogenesis Church
was incorporated and Biogenesis Church does not dispute that it is “basically the same
organization” as Biogenesis Foundation doing “the exact same work.” Id., ¶ 31. George was listed
as every corporate officer of Biogenesis Foundation, id., ¶ 13, and is listed as Biogenesis Church’s
president, id., ¶ 27. “The general rule under Massachusetts law is that the knowledge of directors,
officers and agents acquired in the course of official duties is imputed to the corporation.”
McBirney, 2003 WL 21094555, at *18 (internal quotation marks omitted) (quoting Nat’l Credit
Union Admin. v. Ticor Title Ins. Co., 873 F. Supp. 718, 726 (D. Mass. 1995)). Considering the
lack of any consideration for the 2012 transfer, imputing George’s knowledge of his own
indictment and conviction for tax evasion and an ongoing civil tax assessment to both Biogenesis
Foundation and Biogenesis Church, as well as his knowledge that the 2003 transfer had rendered
him insolvent, and George’s payment of his criminal and civil legal fees from both organizations,
the record shows that Biogenesis Church could not have accepted the 2012 transfer in good faith
and it has pointed to no facts in the record that raise a genuine issue of disputed fact as to this
matter. The United States has shown that Biogenesis Church was a subsequent transferee of a

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constructively fraudulent transfer and has thus shown a nexus between George and Biogenesis
Church. Furthermore, for the same reasons laid out above, Biogenesis Church has not met its
burden in rebutting the United States’ arguments by showing that the levy was wrongful because
the property did not belong to George. Accordingly, Biogenesis Church’s wrongful levy claim
cannot be sustained as a matter of law.
C.

Biogenesis Church as Fraudulent Nominee

The United States argues in the alternative that Biogenesis Church held the levied funds as
George’s fraudulent nominee. The First Circuit has adopted an eight-factor test for courts to
determine whether a nominee relationship exists: “[1] the lack of consideration paid by the
titleholder; [2] a close relationship between the taxpayer and the titleholder; [3] the control
exercised over the property by the taxpayer while title is held by another; [4] the use and enjoyment
by the taxpayer of the property titled to another; [5] lack of interference in taxpayer's use of
property by the titleholder; [6] the use of property or funds titled to another to pay the taxpayer's
personal expenses; [7] whether the taxpayer exercises dominion and control over the property, or
treats it as if it belongs to him; [8] whether title was placed in the record owner's name as a result
of or in anticipation of the taxpayer's liability.” Berkshire Bank, 708 F.3d at 252–53 (quoting
In re Callahan, 442 B.R. 1, 6 n.5 (D. Mass. 2010)).
Biogenesis Church asserts that the United States has not shown that the levied assets are
“subject to a man’s unfettered command and that he is free to enjoy at his own option.” Miedaner
v. Commissioner, 81 T.C. 272, 280 (1983). At a minimum, this case is inapposite. In Miedaner,
the petitioner was challenging the application of assets held by the church he had founded to his
personal tax liability where the Tax Court found that the church operated as his alter ego. Whether
this is the correct test to be applied in determining whether an entity is the alter ego of a taxpayer,

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“the merits of the tax assessment are not subject to attack” as part of a wrongful levy claim brought
by a third party. 26 U.S.C. § 7426(c); Middlesex Sav. Bank v. Johnson, 777 F. Supp. 1024, 1030
(D. Mass. 1991). The Court considers this concept under the rubric of the third Berkshire Bank
factor, but no one factor considered under this test is determinative in assessing whether Biogenesis
Church is merely George’s nominee. Rather, “courts focus on the totality of the circumstances
without regarding any single factor as the sine qua non of a nominee relationship.” Berkshire
Bank, 708 F.3d at 253 (quoting Dalton, 682 F.3d at 158).
Biogenesis Church further contends, without factual support, that the Berkshire Bank
factors do not support a finding that it was George’s nominee. As to the first factor, Biogenesis
Church attempts again to argue that lack of consideration was because no liability yet existed. As
explained above, this argument is unpersuasive because, as discussed above, tax liability accrues
from the date the taxes became due. As to the second factor, Biogenesis Church contends that
George’s consideration-less transfer was in fact a charitable contribution to an organization at
which he “worked.”
Biogenesis Church has not raised any genuine issue of disputed fact with respect to any of
the Berkshire Bank factors. There was no consideration for the 2012 transfer. D. 29, ¶ 28. George,
as the only signatory for the Biogenesis Church account, D. 29, ¶ 38, with responsibilities to
manage and disburse its funds, D. 29, ¶ 40, had control and/or dominion over the property, and
further did not face any interference. George did not just work at Biogenesis Church. He is its
founder, president and sole financial signatory, which other courts have considered indicative of a
nominee relationship. See Nassar Family Irrevocable Tr. v. United States, 13 Civ. 5680, 13 Civ.
8174, 2016 WL 5793737, at *11-12 (S.D.N.Y. Sept. 30, 2016); United States v. N. States Invs.,
Inc., 670 F. Supp. 2d 778, 789 (N.D. Ill. 2009). George used and enjoyed the property, including

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for personal expenses including his legal fees, D. 29, ¶ 37, and utility bills, D. 29, ¶¶ 41-43.
Whether other individuals participate in Biogenesis Church’s non-financial activities and
operations, as Biogenesis Church stressed at the motion hearing, does not alter the Court’s
determination that a nominee relationship exists due to George’s unfettered control over its
finances and benefit in the form of rent and utility bills for his personal home. See, e.g., The Colby
B. Found. v. United States, No. Civ. 96-3073-CO, 1997 WL 1046002, at *21 (D. Or. Oct. 22,
1997), aff'd sub nom. Colby B. Found. v. United States, 166 F.3d 1217 (9th Cir. 1999). Finally,
while there are reasonable inferences to be drawn in the United States’ favor as to the final factor,
fundamentally a question of intent, any uncertainty in the record about George’s intent in making
the 2012 transfer is outweighed by consideration of the other factors that weigh, upon an
undisputed record regarding same, in the United States’ favor, that Biogenesis Church was
George’s fraudulent nominee.
D.

Remedy

The UFTA permits a creditor who has established a fraudulent transfer to recover a
judgment valued by either “the value of the asset transferred . . . or the amount necessary to satisfy
the creditor’s claim, whichever is less.” Mass. Gen. L. c. 109A, § 9(b). The 2003 transfer was
less than George owed the IRS at the time of the levy. Thus, the judgment the IRS would have
obtained in a fraudulent transfer claim, and accordingly the extent of its fraudulent transfer defense
against Biogenesis Church’s wrongful levy claim, is measured by the value of the 2003 transfer –
$7.7 million. With respect to the additional $100,000 the IRS levied, the United States argues it
should be entitled to “adjustment as the equities may require” of the fraudulent transfer amount of
$7.7 million. Mass. Gen. L. c. 109A, § 9(c). The Court concludes that the equities weigh in favor
of the United States. First, in balancing the equities, the Court may consider the absence of any

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statutory affirmative defense asserted by the transferee. Bakwin, 467 Mass. at 651–52 (2014).
Biogenesis Church does not raise any of the UFTA’s three statutory defenses to a fraudulent
transfer claim. Mass. Gen. L. c. 109A, § 9(f). Furthermore, George’s conduct in refusing to pay
his tax liability has caused the United States to deploy resources into criminal and civil
investigations, assessments and litigation, vindicated in establishing George’s liability at every
turn, over the course of more than twenty years from the earliest accrual dates until the levy was
executed in 2016. Even still, George’s tax liability will remain partially unsatisfied. Biogenesis
Church has not identified any equitable concern outweighing the burden imposed on the United
States in recovering this amount. Accordingly, the United States can retain the entire levied
amount as equity requires.
VI.

Conclusion
For the foregoing reasons, the Court ALLOWS Defendants’ motion for summary

judgment, D. 22.
So Ordered.
/s/ Denise J. Casper
United States District Judge

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