Trudeau Civil Case Document 879 and Exhibits Trudeau Motion to Compel Receiver to File Tax Returns...

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION FEDERAL TRADE COMMISSION, ) Plaintiff, ) ) v. ) Civil Action No. 03-C-3904 ) KEVIN TRUDEAU, ) Honorable Robert W. Gettleman Defendant. )

DEFENDANT KEVIN TRUDEAU’S MOTION TO COMPEL THE RECEIVER TO FILE TAX RETURNS AND FILE A STATUS REPORT

Defendant Kevin Trudeau respectfully requests that this Court order the Receiver

to file Trudeau’s personal tax returns as well as the corporate returns of the Trudeau

Entities. Trudeau further requests that the Court order the Receiver to file a report

describing the results of its forensic accounting. In support of this motion, Trudeau states

as follows:

I. BACKGROUND

A. The Receivership Order Places The Receiver In Control Of All Of Trudeau’s Assets And Enjoins Trudeau From Pledging Any Funds

On August 7, 2013, this Court entered an Order appointing Robb Evans &

Associates as Receiver over all of Trudeau’s assets as well as the assets of the Trudeau

Entities. (D.E. 742.) The Order directed the Receiver to “[m]arshall and hold Trudeau’s

Assets (including without limitation, all personal Assets and all Assets of the Trudeau

Entities)…” (D.E. 742 at 8 (emphasis added).)1 The Order further commanded the

1 The Trudeau Entities as defined in the Order include without limitation: 0913372 B.C. Ltd.; 0913376 B.C. Ltd.; Advantage Solutions Ltd.; Alliance Publishing Group, Inc.; APC Trading Limited; Direct Response Associates, LLC; GIN USA Inc.; Global Information Network FDN; Global Sales Solutions A.G.; International Pool Tour Inc.; K.T. Corporation Limited; KMT Fiduciary Trust; KT Capital Corporation; KT Radio Network Inc.; Natural Cures, Inc.; Natural Cures Health Institute; Natural Cures Holdings Inc.; NBT Trading Limited; N.T. Trading S.A.; Pool Licensing LLC; Sovereign Trust; The

Case: 1:03-cv-03904 Document #: 879 Filed: 04/01/15 of 7 PageID #:16076

GIN Network Truth (the smart group)

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Receiver to “[t]ake exclusive custody, control and possession of all Assets and

Documents of, or in the possession, custody, or under the control of, Trudeau and the

Trudeau Entities.” (D.E. 742 at 8 (emphasis added).)

The Order also enjoined Trudeau “from directly or indirectly transferring,

liquidating, converting, encumbering, pledging, loaning, selling, concealing, dissipating,

disbursing, assigning, spending, withdrawing, granting a lien or security interest in, or

otherwise disposing of any Assets, wherever located…” (D.E. 742 at 5.) In other words,

the Order placed the Receiver in exclusive control of all of Trudeau’s assets and

corporate entities and prohibited Trudeau from transferring or pledging any of his assets

to any party anywhere in the world.

B. The Receiver Refuses To File Trudeau’s Tax Returns

On December 22, 2014, counsel for Trudeau asked the Receiver to identify all

steps the Receiver had taken with respect to the payment of taxes owed by Trudeau and

the Trudeau Entities (Ex. A.) On January 7, 2015, the Receiver responded that it had not

filed any tax returns on behalf of Trudeau or his wife. Id. The Receiver further indicated

that it had filed 2013 returns on behalf of 10 of the 29 Trudeau Entities.2 That is, the

Receiver has not filed returns or taken any steps with respect to the tax obligations of 19

of the Trudeau Entities identified in the Order.

On January 13, 2015, counsel for Trudeau again wrote the Receiver to confirm

that it was refusing to file tax returns on behalf of Trudeau and the other 19 Trudeau Whistle Blower, Inc.; TRUCOM, L.L.C.; Trudeau Approved Products Inc.; Trudeau Management Inc.; TruStar Marketing Corporation; Trustar Productions, Incorporated; Website Solutions Switzerland GmbH; and Website Solutions USA Inc. 2 Specifically, the Receiver indicated that it had filed 2013 returns for the entities Alliance Publishing, GIN USA, Global Info Fund, IPT, KT Corp. Ltd., KT Radio, Natural Cures, TAP, Trustar, and Website Solutions. The Receiver also indicated that it planned to file 2014 returns for these same entities. But to date, the Receiver has provided no evidence that it has done so.



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Entities. (Ex. B.) On January 29, 2015, the Receiver responded that it had not filed any

returns other than those it previously identified. (Ex. C.) With respect to Trudeau’s

personal income taxes, and despite Trudeau’s counsel’s previous inquires, the Receiver

stated inexplicably that it “has not received any specific request to pay any personal

income taxes that Mr. Trudeau may owe.” Id.

On January 30, 2015, counsel for Trudeau again wrote the Receiver requesting

that the Receiver file returns on behalf of Trudeau and all of the Trudeau Entities. (Ex.

D.) On February 20, 2015, the Receiver wrote back, stating “[t]he Receiver declines your

request to perform any tax preparation services for Mr. Trudeau.” (Ex. E.) The Receiver

also subsequently forwarded a notice of overdue taxes for Trustar Global Media LTD

(“Trustar”) from the Internal Revenue Service which it is apparently refusing to pay.

(Ex. F).

C. The Receiver Has Not Filed A Report Since July 7, 2014

The Order further requires the Receiver to file “periodic reports” to keep the

Court and Trudeau apprised of its activities. (D.E. 742 at 15.) From September 2013

through July 2014, the Receiver filed eight such reports. However, since its last report on

July 7, 2014, more than eight months have passed and the Receiver has not filed any

additional reports. Moreover, in the July 7, 2014 report, the Receiver indicated that its

forensic accounting was “substantially completed” and would be complete by the end of

July 2014. Despite the fact that its forensic accounting apparently concluded eight

months ago, the Receiver has not communicated the results of its accounting in a report

or otherwise.



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II. ARGUMENT

A. The Receiver Must File Trudeau’s Personal Tax Returns

According to basic principles of tax and receivership law, when a receiver is in

control of an individual’s assets, it is the receiver who is responsible for paying the

individual’s taxes. See 29 U.S.C. § 960(a)(“Any officers and agents conducting any

business under authority of a United States court shall be subject to all federal, state and

local taxes applicable to such business to the same extent as if it were conducted by an

individual or corporation.”);3 SEC v. Kirkland, 2008 WL 4491528, *6 (M.D. Fla. Sept.

30, 2008) (ordering payment of taxes out of receivership estate and noting that counsel

for receiver testified that “under general receivership law and 28 U.S.C. § 960, he

understood that the Receiver was generally obligated to pay the taxes that accrued when

the property was within the receivership estate.”); see also 26 C.F.R. 1.6012-3(b)(5) (“A

receiver who stands in the place of an individual must make the return of income required

in respect of such individual.”); Field Service Advice 1992-0622-3 (noting that Treasury

Regulation § 1.6012-3(b)(5) “clearly contemplates that when a receiver is in possession

of all of the individual’s property the individual will generally be legally unable to make

a return and the receiver will stand in its place.”).

Because the Order places the Receiver in control of all of Trudeau’s assets, the

Receiver is legally obligated to pay Trudeau’s taxes. See D.E. 742 at 8; 29 U.S.C.

§ 960(a); 26 C.F.R. 1.6012-3(b)(5). This conclusion is all the more inescapable because

the Order freezes Trudeau’s assets and prohibits him from transferring any funds to the

3 28 U.S.C. § 959(b) further provides that “a… receiver… appointed in any cause pending in any court of the United States… shall manage and operate the property in his possession as such trustee, receiver or manager according to the requirements of the valid laws of the State in which such property is situated, in the same manner that the owner or possessor thereof would be bound to do if in possession thereof.”



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IRS to satisfy his tax debts.4 (D.E. 742 at 5.) Thus, if the Receiver does not pay

Trudeau’s taxes, Trudeau will be placed in a situation where he must either: (a) violate

his legal obligation to pay taxes; or (b) violate this court’s Order enjoining him from

making any asset transfers to the IRS. The only way for Trudeau to remain in

compliance with his duty to pay taxes and this Court’s order is for the Receiver to fulfill

its legal obligation and pay Trudeau’s taxes.

B. The Receiver Must File Returns On Behalf Of All Of The Trudeau Entities

A similar analysis applies with respect to a Receiver’s obligation to file corporate

returns. See 26 U.S.C. § 6012(b)(3) (“In a case where a receiver… by order of a court of

competent jurisdiction, by operation of law or otherwise, has possession of or holds title

to all or substantially all the property or business of a corporation, whether or not such

property or business is being operated, such receiver, trustee, or assignee shall make the

return of income for such corporation in the same manner and form as corporations are

required to make such returns.” ); see also 26 C.F.R. 1.6012-3(b)(4).

Apparently in partial recognition of its duty to file returns on behalf of the

Trudeau entities, the Receiver has filed 2013 returns on behalf of some, but not all, of

those entities. The Receiver has not provided any explanation for filing returns on behalf

of a subset of the Trudeau Entities. In any event, order to fulfill its legal obligations, the

Receiver must file returns on behalf of all of the so-called Trudeau Entities identified in

the order. 26 U.S.C. § 6012(b)(3).

4 Indeed, when Trudeau attempted to affirmatively take steps to pay his taxes by hiring The Gordon Law Group LTD as tax counsel, the FTC subpoenaed The Gordon Law Group LTD and convinced that firm to return all legal fees they received. Without a means of being paid, The Gordon Law Group was unable to assist Trudeau regarding his tax obligations.



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C. The Receiver Should File A Status Report Updating The Court On Its Forensic Accounting And Other Activities

As noted above, the Receiver has not provided any updates on its activities since

July 2014 even though its forensic accounting was supposed to conclude shortly

thereafter. Trudeau has a right to know the results of the Receiver’s investigation and

respectfully requests that this Court order the Receiver to file a report detailing the results

of its forensic accounting and/or any other activities it has engaged in since July 7, 2014.

III. CONCLUSION

WHEREFORE, Trudeau, respectfully requests that this Court order the Receiver

to: (1) file Trudeau’s personal tax returns and pay any outstanding taxes due; (2) file

corporate tax returns on behalf of all of the Trudeau Entities identified in the

Receivership Order and pay any outstanding taxes due, including but not limited to taxes

owed by Trustar; and (3) to immediately file a report informing the Court and Trudeau of

the results of its forensic accounting and any other activities it has engaged in since July

7, 2014.

Respectfully submitted,

By: /s/ Kimball Anderson One of His Attorneys Kimball R. Anderson WINSTON & STRAWN 35 West Wacker Drive Chicago, IL 60601 [email protected] Attorney for Defendant



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CERTIFICATE OF SERVICE

I, Kimball R. Anderson, an attorney for Defendant Kevin Trudeau, hereby certify

that on this, the 1st day of April, 2015, I caused the above-described document to be filed

on the CM/ECF system of the United States District Court for the Northern District of

Illinois, which constitutes service of the same.

/s/ Kimball Anderson

Kimball R. Anderson WINSTON & STRAWN 35 West Wacker Drive Chicago, IL 60601 [email protected]

Attorney for Defendant



UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

FEDERAL TRADE COMMISSION, )

Plaintiff, )

)

v. ) Civil Action No. 03-C-3904

)

KEVIN TRUDEAU, ) Honorable Robert W. Gettleman

Defendant. )

INDEX OF EXHIBITS TO DEFENDANT KEVIN TRUDEAU’S MOTION TO

COMPEL THE RECEIVER TO FILE TAX RETURNS AND

FILE A STATUS REPORT

Exhibit Description

A December 22, 2014 Correspondence

B January 7, 2015 Correspondence

C January 13, 2015 Correspondence

D January 29, 2015 Correspondence

E January 30, 2015 Correspondence

F February 20, 2015 Correspondence

G IRS Notice of Overdue Taxes to Trustar

Case: 1:03-cv-03904 Document #: 879-1 Filed: 04/01/15 Page 1 of 22 PageID #:16083


UNITED STATES DISTRICT COURTFOR THE Northern District of Illinois − CM/ECF LIVE, Ver 6,1

Eastern Division

Federal Trade CommissionPlaintiff,

v. Case No.: 1:03−cv−03904Honorable Robert W. Gettleman

Kevin Trudeau, et al.Defendant.

NOTIFICATION OF DOCKET ENTRY

This docket entry was made by the Clerk on Tuesday, April 7, 2015:

MINUTE entry before the Honorable Robert W. Gettleman: Motion hearing heldon 4/7/2015 regarding defendant's motion [879] to compel Receiver to file tax returns anda status report. Response is due by 4/28/2015. Reply is due by 5/12/2015. Status hearing isset for 5/21/2015 at 10:00 a.m. Mailed notice (gds )

ATTENTION: This notice is being sent pursuant to Rule 77(d) of the Federal Rules ofCivil Procedure or Rule 49(c) of the Federal Rules of Criminal Procedure. It wasgenerated by CM/ECF, the automated docketing system used to maintain the civil andcriminal dockets of this District. If a minute order or other document is enclosed, pleaserefer to it for additional information.

For scheduled events, motion practices, recent opinions and other information, visit ourweb site at www.ilnd.uscourts.gov.

Case: 1:03-cv-03904 Document #: 881 Filed: 04/07/15 Page 1 of 1 PageID #:16107


Trudeau Civil Case Document 879 and Exhibits Trudeau Motion to Compel Receiver to File Tax Returns...

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