The opinion of the court was delivered by: Trager, J
On November 7 and 8, 2005, a bench trial was conducted in order to determine facts relevant to three issues: (1) whether Jacob Evseroff ("Evseroff") transferred cash and property to the Jacob R. Evseroff Trust "the Trust" with the intent to hinder, delay or defraud the United States in tax collection in violation of N.Y. Debtor & Creditor Law § 276; (2) whether the transfers of cash and property to the Trust were constructively fraudulent under N.Y. Debtor & Creditor Law § 273; and (3) whether the Trust is a nominee or alter ego for Evseroff.
This case has a long history; some familiarity with the previous opinions is assumed. See United States v. Evseroff (Evseroff I), No. 00-CV-6029, 2001 WL 1571881 (Nov. 6, 2001, E.D.N.Y.) (reducing to judgment the judgment of the U.S. Tax Court); United States v. Evseroff (Evseroff II), No. 00-CV-6029, 2002 WL 1973196 (July 8, 2002, E.D.N.Y.) (allowing Evseroff to seek expert witness and allowing interest to accrue on default judgment); United States v. Evseroff (Evseroff III), No. 00-CV-6029, 2003 WL 22872522 (Sept. 30, 2003, E.D.N.Y.) (denying plaintiff's summary judgment motion for the claims which were the issue of this trial); see also Evseroff v. United States (Evseroff IV), No. 03-CV-0317, 2004 WL 3127981 (Sept. 22, 2004) (denying Evseroff's claim under the Taxpayers' Bill of Rights).
Evidence Undisputed at Summary Judgment Most of the background of the case was presented at summary judgment, was not in dispute then, and was not in dispute at trial. Unless otherwise noted, the facts below are taken from the summary judgment opinion.
Evseroff, a lawyer and former Assistant District Attorney in Kings County, participated in a series of tax shelters between 1978 and 1982 at the recommendation of John Serpico, an attorney and accountant. Evseroff (III), 2003 WL 22872522, at *1; Trial Transcript 32 ("Tr."). Evseroff claims that at the time he believed these shelters to be legitimate. Evseroff (III), 2003 WL 22872522, at *1. There is some basis for supporting his claim; Serpico eventually went to jail for his role with the tax shelters. This issue need not be resolved, however, because it is immaterial.
In December 1990, after an audit, Evseroff was informed by the Internal Revenue Service ("IRS") that he was deficient in his taxes for that time period. Id. at *1. The notice, dated December 6, 1990, indicated that he owed $211,173 in taxes; including penalties, he owed $227,282. Evseroff Dep. Ex. 1. A few weeks later, in January 1991, he received a more detailed document that included accrued interest, inaccurately estimated by Evseroff as $800,000. Tr. 31. This document was not submitted at trial, but the government did submit, and defendants stipulated to, calculations of the total interest for dates relevant to the case. See Stipulation re Pl's Ex. 10. As of December 6, 1990, the total amount due was actually $647,549.40. Id.
Approximately nine months later in September 19, 1991, Evseroff purchased a retirement property in Florida, which cost $230,000.*fn1 Evseroff Dep. Ex. 5. This property was later seized by the government. Tr. 188. However, at the time, Evseroff apparently believed that this property could not be seized for his tax debt. Id.
On January 9, 1992, the IRS sent Evseroff a notice of deficiency, also known as a "ninety-day letter," which stated that he had accrued more than $700,000 in tax liability. Evseroff Dep. 24, Ex. 3.*fn2 In the same month, Evseroff, who was 68-years old at the time, met with an attorney, Alfred Polizzotto, Sr., to inquire about creating a trust. Evseroff (III), 2003 WL 22872522, at *1. Evseroff no longer recalls whether this meeting was before or after receiving the ninety-day letter. Evseroff Dep. 93. Two months later, in March 1992, Evseroff filled out a questionnaire, sent by Polizzotto's son, Alfred Polizzotto III, who was actually preparing the trust; Evseroff did not reveal any of his tax difficulties. Evseroff (III), 2003 WL 22872522, at *1.
Shortly thereafter, in April 1992, Evseroff filed a petition with the United States Tax Court, challenging the assertions in the ninety-day letter. Id. at *2. Evseroff did not inform the attorneys setting up the Trust of this petition. Id.
The Trust was executed on June 3, 1992 by Evseroff, naming a family friend the trustee. Evseroff Dep. Ex. 5. In June 1992, he also deposited $220,000 of his personal funds into the Trust. As of June 1, 1992, Evseroff's total tax liability had accrued to $749,273.65. On October 8, 1992, Evseroff transferred his home at 155 Dover Street, Brooklyn, New York to the Trust. The stipulated amount of Evseroff's tax liability as of October 18, 1992 was $770,530.64.
The Tax Court did not enter the judgment against him until November 4, 1992. The judgment, not including interest, was for $209,113 in taxes and penalties. The remaining, nearly $560,000, is interest.
Relevant Facts at Trial At trial three areas of facts relevant to the issues at hand were developed: (1) Evseroff's intent in establishing the Trust;
(2) whether Evseroff was solvent and could repay his debts at the time he established the Trust; and (3) the amount of control Evseroff ...