United States v. Planes

Full title: UNITED STATES of America, Plaintiff, v. William PLANES, et al., Defendants.

Court: United States District Court, M.D. Florida, Tampa Division

Date published: Feb 14, 2023

656 F. Supp. 3d 1302 (M.D. Fla. 2023)

Opinion

CASE NO. 8:18-cv-2726-SDM-TGW

2023-02-14

UNITED STATES of America, Plaintiff, v. William PLANES, et al., Defendants.

Amanda Joyce King, Daniel B. Causey, Rebecca Layne, Department of Justice | Tax Division, Washington, DC, John Paul Nasta, Jr., DOJ-Tax, Dallas, TX, for Plaintiff. Steven Nathan Tsangaris, Tsangaris Law Group, Tarpon Springs, FL, Michael P. Brundage, Brundage Law, P.A., Safety Harbor, FL, for Defendants William Planes, Regina Planes. Michael P. Brundage, Nicolaos Soulellis, Brundage Law, P.A., Safety Harbor, FL, Steven Nathan Tsangaris, Tsangaris Law Group, Tarpon Springs, FL, for Defendant William Planes. Michael P. Brundage, Nicolaos Soulellis, Brundage Law, P.A., Safety Harbor, FL, Richard Rodriguez, Barnett Bolt Kirkwood Long Koche & Foster, P.A., Tampa, FL, Steven Nathan Tsangaris, Tsangaris Law Group, Tarpon Springs, FL, for Defendants Regina M. Planes, Corklico LLC, 03-22-18 LLC, 2801 Corner Holdings LLC, 32801-15 Holdings LLC, 2801 Keystone LLC, Trinity Corner LLC, Quality Holdings of Florida Inc. Michael P. Brundage, Brundage Law, P.A., Safety Harbor, FL, Richard Rodriguez, Barnett Bolt Kirkwood Long Koche & Foster, P.A., Tampa, FL, Steven Nathan Tsangaris, Tsangaris Law Group, Tarpon Springs, FL, for Defendants Ana Planes, William Planes, II, Rhea Martinez, Langfred White, Coast to Coast Group, Inc. Richard Rodriguez, Barnett Bolt Kirkwood Long Koche & Foster, P.A., Tampa, FL, Samuel J. Rabin, Jr., Samuel J. Rabin, Jr., PA, Miami, FL, Steven Nathan Tsangaris, Tsangaris Law Group, Tarpon Springs, FL, for Defendants David Margulies, Michael Margulies.

STEVEN D. MERRYDAY, UNITED STATES DISTRICT JUDGE

Amanda Joyce King, Daniel B. Causey, Rebecca Layne, Department of Justice | Tax Division, Washington, DC, John Paul Nasta, Jr., DOJ-Tax, Dallas, TX, for Plaintiff.

Steven Nathan Tsangaris, Tsangaris Law Group, Tarpon Springs, FL, Michael P. Brundage, Brundage Law, P.A., Safety Harbor, FL, for Defendants William Planes, Regina Planes.

Michael P. Brundage, Nicolaos Soulellis, Brundage Law, P.A., Safety Harbor, FL, Steven Nathan Tsangaris, Tsangaris Law Group, Tarpon Springs, FL, for Defendant William Planes.

Michael P. Brundage, Nicolaos Soulellis, Brundage Law, P.A., Safety Harbor, FL, Richard Rodriguez, Barnett Bolt Kirkwood Long Koche & Foster, P.A., Tampa, FL, Steven Nathan Tsangaris, Tsangaris Law Group, Tarpon Springs, FL, for Defendants Regina M. Planes, Corklico LLC, 03-22-18 LLC, 2801 Corner Holdings LLC, 32801-15 Holdings LLC, 2801 Keystone LLC, Trinity Corner LLC, Quality Holdings of Florida Inc.

Michael P. Brundage, Brundage Law, P.A., Safety Harbor, FL, Richard Rodriguez, Barnett Bolt Kirkwood Long Koche & Foster, P.A., Tampa, FL, Steven Nathan Tsangaris, Tsangaris Law Group, Tarpon Springs, FL, for Defendants Ana Planes, William Planes, II, Rhea Martinez, Langfred White, Coast to Coast Group, Inc.

Richard Rodriguez, Barnett Bolt Kirkwood Long Koche & Foster, P.A., Tampa, FL, Samuel J. Rabin, Jr., Samuel J. Rabin, Jr., PA, Miami, FL, Steven Nathan Tsangaris, Tsangaris Law Group, Tarpon Springs, FL, for Defendants David Margulies, Michael Margulies.

ORDER

STEVEN D. MERRYDAY, UNITED STATES DISTRICT JUDGE

Despite amassing a $10 million tax delinquency for willfully failing to pay the employment taxes of at least eight businesses and despite vigorous collection effort by

the IRS, William Planes, a former CPA, maintains an affluent lifestyle that eludes almost all Americans. How that happened is quite a story; here's the short version:

In 2003, after failing to remit more than $1 million in employment taxes withheld by two hospitals, William Planes formed an irrevocable trust for himself and for his wife, Regina Planes. After forming the trusts, William Planes continued to amass employment tax liability, this time on behalf of a financial group, a school, a veterinary center, a construction company, and other businesses. As he confided to a principal employee, William Planes considered "faking Alzheimer's" to avoid tax liability. Instead, William Planes caused the trusts to acquire the membership interests of several LLCs, almost all of which were formed at the instance of William Planes. Parallel with his rampant accumulation of tax liability, William Planes began directing sizeable real property transactions through the LLCs. Although the IRS has assessed William Planes with tax penalties and seized the money in accounts under William Planes's name, the Planeses rely on income from the trust-owned LLCs to finance their lifestyle. In particular, the Planeses rely on a monthly mortgage payment from the sale of real property in Tarpon Springs, Florida.

Eventually, the Department of Justice began pursuing William Planes. In 2018, the United States claimed that as CEO of the construction company William Planes fraudulently transferred to Regina Planes more than $600,000 to escape collection by the IRS. After a bench trial in 2018, Judge Susan C. Bucklew determined that William Planes had "scheme[d] to defeat the collection of taxes," and she entered judgment for the United States. Barely three months after the fraudulent transfer judgment, William Planes — to ensure "that big bro don't come snooping around with another fraudulent conveyance issue" — orchestrated an action to quiet title of real property in favor of a trust-owned LLC that lacked formal connection to William Planes. Eventually, the trust-owned LLC sold the real property to a third party, and the monthly income from the sale serves as the Planeses' primary income.

In this action, the United States sues to reduce William Planes's tax liability to judgment; to declare the trusts and the LLCs the "alter ego" of William Planes; and to declare fraudulent certain transfers to the trusts and the LLCs. In the incipience of this action, William Planes brazenly defied a temporary restraining order by transferring 99% of the trust-owned LLCs' cash to a non-party entity for which William Planes serves as director and possesses signature authority. By the time the United States discovered the transfer, the money was gone. Thus, a preliminary injunction preserves the status quo by limiting transfers of the trusts and the LLCs.

An order grants summary judgment on William Planeses' liability for the employment taxes of the financial group, the school, the veterinary center, and the construction company but reserves for trial (A) William Planes's liability for the employment taxes of the two hospitals, (B) the trusts' and LLCs' liability as the "alter egos" of William Planes, and (C) the trusts' and LLCs' liability for fraudulent transfer. After a disappointing succession of continuances attending the withdrawal and retention of replacement counsel and the intrusion of, and the public and private consequences of, COVID-19, a bench trial finally occurred and the parties have submitted proposed findings of fact and conclusions of law. Based on my assessment of the witnesses' credibility, a careful review of the documentary evidence and trial transcripts, and scrutiny of the parties' proposed findings and legal argument, I

find the following facts by a solid preponderance of the evidence (by clear and convincing evidence, actually) and decide the following issues of law.¹ In other words, what follows is the long version of the Planeses' tortuous and frustrating story of evasion and deceit.

1 The record citation following each finding of fact serves as exemplary support—but not necessarily the exclusive support—for the finding. Rather, each finding of fact results from a review of the entirety of the record and an assessment of the witnesses' credibility.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

A. Employment Tax Liability

In Counts I and II, the United States claims that William Planes is liable for the unpaid employment taxes of two hospitals. Under the Internal Revenue Code, an employer must withhold from an employee's pay both the employee's federal income tax and Federal Insurance Contribution Act (FICA) tax. The employer holds these employment tax withholdings "in trust" for the United States and quarterly remits these withholdings to the IRS. Predictably, this money — held in an unsegregated trust for the United States — serves as "a tempting source of ready cash" for a distressed business. Slodov v. United States, 436 U.S. 238, 243, 98 S.Ct. 1778, 56 L.Ed.2d 251 (1978). But a person who allows the "trust fund" withholdings to satisfy creditors other than the IRS proceeds at their peril. Under 26 U.S.C. § 6672, any "responsible person" who has "willfully failed to perform a duty to collect, account for, or pay over federal employment taxes" is personally liable. Thosteson v. United States, 331 F.3d 1294, 1298-99 (11th Cir. 2003).

I. University Rehabilitation Hospital (Count I)

The IRS has assessed William Planes with employment tax liability for University Rehabilitation Hospital, which under William Planes's management incurred employment tax liability in the fourth quarter of 2000, each quarter of 2001, and the first quarter of 2002. (Doc. 376-36) The summary judgment order (Doc. 280) finds the absence of a genuine dispute of material fact about the procedural validity of, and the amount owed under, the University assessments.² At trial, the United States bore the burden to show by a preponderance of the evidence that William Planes (1) was responsible for remitting University's employment tax withholdings and (2) willfully failed to remit the withholdings.

2 The defendants contend that the United States was obligated to introduce the summary judgment order as evidence at trial. The contention is meritless. An order of the court is effective because it is an order of the court.

a. Responsibility

In September 1999, International Cooperative Consultants, Inc. (ICC), a Florida corporation, entered a management contract to oversee and manage the operations of University, a hospital located in Louisiana. William Planes was the CEO of ICC and Regina Planes was a shareholder. William Planes signed the management contract on behalf of ICC, and Robert Rayford, chairman of the governing body of University, signed the management contract on behalf of University. Rayford testified that he selected William Planes and ICC to manage the hospital because William Planes "walked the walk and talked the talk" and "bedazzled" Rayford with his "brilliance" in the "financial realm." (Tr. 307:6-23) Although occasionally amended and supplemented, the management contract remained in effect for each quarter during which University failed to remit withheld employment taxes. Under the management contract, ICC agreed to "[o]versee and manage the business of the Hospital with the full power to manage, oversee, and improve the Hospital to the utmost of Manager's ability and to do and perform all services, acts, and things connected thereby as are of a kind properly belonging to the management and operation of said Hospital[.]" (Doc. 376-3 at 6) Among other powers, the management contract specifies:

[The] Manager shall oversee the preparation and filing of all statements and returns required by the Internal Revenue Service, the Louisiana Department of Revenue and Taxation, or any other taxing authority having jurisdiction over PHNO or its operations ... [,]

[The] Manager shall be responsible for the establishment and oversight of an accounting and cost control system in the Hospital ... [,] [and]

The financial services to be provided by Manager shall include" the "[o]vers[ight] and review of all Federal, State, and/or local governmental tax reports" and "[r]eview and prioritization in cash applications.

(Doc. 376-3 at 7-12) Although the powers granted by the management contract remained "subject to the ultimate control and supervision of the governing body of the Hospital," the management contract empowered ICC to discharge its duties without pre-approval of the governing body. In exchange for assuming these and other responsibilities, the management contract awarded ICC a management fee of $37,500 per month and a year-end bonus. (Doc. 376-3 at 4-5)

In February 2000, William Planes and Rayford amended the management contract to empower ICC to appoint a hospital administrator and to increase ICC's monthly management fee from $37,500 to $50,000. (Doc. 376-4 at 2-3) William Planes selected Steve Pallos, an employee of ICC, to serve as the hospital administrator. Pallos served as the president of ICC and "answered" to William Planes, the CEO of ICC. (Tr. 284:12-18)

Under ICC's management contract with University, William Planes exercised extensive control over University's operations. William Planes had knowledge of, and authority over, material management decisions. In fact, a later addendum to the management contract recognizes his responsibility by requiring William Planes to "continue to be actively involved in the management of the Hospital." Rayford testified credibly that William Planes "ran" ICC and that under the management contract William Planes "handled everything" comprising the hospital's "day-to-day" operations. (Tr. 309-310) Similarly, William Planes and ICC were responsible for "paying the [hospital's] bills and collecting the [hospital's] receivables." (Tr. 314:21-315:2)

Also, Rayford testified credibly that William Planes and ICC oversaw payroll and that Rayford and the governing body "weren't included." (Tr. 317:4-13) Rather, Rayford testified credibly that William Planes was "guarded ... about [the governing body] knowing the intricacies of the business," that he withheld financial information from the governing body, and that he restricted the governing body's ability "to participate in anything related to payroll." (Tr. 315:4-15) William Planes withheld taxes from checks issued to University's employees, prepared University's employment tax returns, and oversaw the filing of University's employment tax returns. As Rayford testified, William

Planes "made decisions as to where the money went and what was done with it. He managed the checkbook." (Tr. 328:20-329:4)

In April 2001, after failing to remit more than a million dollars in employee withholding, University entered a revolving credit agreement — a "lockbox" arrangement — with ICC Business Credit, a wholly owned subsidiary of ICC for which William Planes served as the CEO. (Doc. 376-7 at 18-22) As security for the line of credit, University's receivables — principally payments from Medicare, Blue Cross Blue Shield, and others — were swept daily into ICC Business Credit's account, over which William Planes had signature authority and from which William Planes decided which of University's creditors to pay. Neither University nor the governing body had control over, or access to, the money in ICC Business Credit's lockbox.

Through ICC, William Planes controlled the payment of University's bills. Creditors of University, including relatives of Rayford, communicated directly with William Planes to authorize payments from University. Ron Roberts, a CPA retained by University and whose services were terminated by William Planes, testified credibly that after Roberts's termination William Planes and his staff prepared the checks, including payroll checks.

Eventually, University's governing body received from the IRS a delinquency notice, which prompted the governing body to convene an emergency meeting with William Planes and ICC. During an October 2021 meeting convened by the governing body, Rayford testified credibly that he instructed William Planes, "[T]he first thing that needs to be paid is the taxes, and then payroll, and then yourself, and the bills." (Tr. 320:10-321:12) Rayford testified credibly that in response William Planes "stood up and looked down at us and said, 'Don't you tell me what bills I'm going to pay and what I'm not going to pay. Don't you tell me how to run this hospital. I'll take my people and leave.'" (Tr. 321:8-10)

b. Willfulness

Although University was current on employment taxes when University and ICC entered the management contract, University's employment tax debt ballooned to more than $1.2 million under ICC and William Planes's management. William Planes testified that University was "running a constant rolling six-digit overdraft" and confronted a solvency crisis. Further, William Planes knew that University was failing to remit employment taxes and was paying creditors other than the IRS. Although the governing body retained the residual power to direct University's affairs, the management contract empowered William Planes to control University's day-today operations without approval of the governing body.

After determining that University's insolvency might jeopardize the monthly management fee, William Planes ensured that his companies, including ICC and ICC Business Credit, would receive payment before the IRS or any other creditor of University. Specifically, William Planes decided — unilaterally — that University was "in default" under the management contract, declared an acceleration of the management fee due over the life of the five-year contract, and terminated ICC's services under the management contract. Without consulting the governing body, William Planes withdrew from University's bank accounts more than $1.8 million, an amount exceeding University's employment tax arrearage, and transferred the money to ICC. Thus, William Planes exercised ICC's management powers of University

to prioritize payment to ICC instead of the IRS and other creditors.

After University ceased operating and at least until June 2007, ICC continued to hold in reserve the money daily swept into the lockbox. William Planes exercised control over the reserve money without consulting University's governing body. William Planes used the reserve money to pay fees incurred under ICC's management of University and to pay for a lawyer to "tr[y] and convince the IRS that ICC [and William Planes] was not liable for [University's payroll] taxes...." (Tr. 199:3-15) William Planes never used the reserve money or the accelerated management fee to pay University's employment taxes incurred under ICC and William Planes's management.

William Planes attributed University's financial distress and financial precariousness to the refusal of University's shareholders to infuse University with more capital. Also, William Planes testified that prioritizing his company's management fee over the IRS's tax liability was justified because he believed that Medicare was underpaying University.

c. Credibility

William Planes is not a credible witness. William Planes has repeatedly undertaken to frustrate his creditors by a history of nimble and bold but thoroughly devious improvisations. By disavowing any responsibility for University's failure to pay employment taxes accruing during his management and by simultaneously securing a $1.8 million payout for his company, William Planes repeats this pattern. When directing payments to creditors other than the IRS, William Planes knew he was accumulating tax liability and even informed his staff that he could "fake Alzheimer's" as a defense to his personal liability. (Tr. 643:21-23)

William Planes contradicted himself, his prior deposition testimony, and other evidence in the record. Throughout trial, William Planes was admonished for unresponsive, combative, and evasive answers; for offering answers before questions were completed; and for offering unresponsive and gratuitous narrative. William Planes's eagerness to exceed the scope of the question and to offer detailed but self-serving explanations about ancillary matters strongly suggests a conscious attempt to craft a false façade of candor that contrasts decisively with the fact of his evasive and unsatisfying answers about material issues. William Planes's demeanor, his combativeness, and his implausible disclaimer of any power to influence or control University's payment of employment taxes evoke William Planes's incredible attempt earlier to offer an innocent explanation for his brazen transfer of $160,000 promptly after his receiving notice of the temporary restraining order, which prohibited the transfer.

William Planes is decisively less credible than the witnesses with whom his testimony conflicts. Rayford, who selected William Planes and ICC, had direct knowledge of ICC and William Planes's management of University and testified credibly about William Planes's extensive control of University through ICC's management contract. Although Rayford testifies about events that occurred years ago, his testimony evidences both an earnest and successful effort to recall truthfully and accurately many facts and a readiness to concede his inability to remember others. Although Rayford is clearly antagonistic toward William Planes, Rayford's antagonism results from William Planes's accumulating tax liability on behalf of University, from William Planes's sudden declaration of default and termination of the management contract, and from William

Planes's accelerating the management fee — not from any motive to shift to William Planes the liability for University's employment taxes. In fact, the United States acknowledges that the statutory limitation for tax assessments against Rayford has expired. In any event, the credibility of Rayford's testimony decisively and unmistakably outweighs William Planes's contrived testimony, particularly William Planes's protestation that ICC exercised no meaningful control of University's finances.

Further, William Planes's self-serving testimony contradicts the plain terms of the management contract, which empowered ICC to "[o]versee and manage the business of the Hospital with the full power to manage, oversee, and improve the Hospital to the utmost of Manager's ability and to do and perform all services, acts, and things connected thereby as are of a kind properly belonging to the management and operation of said Hospital[.]" (Doc. 376-3 at 6) William Planes testified that the "management company doesn't write checks, doesn't pay bills, doesn't sign contracts." (Tr. 167:4-5) But Rayford testified credibly that William Planes "managed the checkbook" and administered University's finances. (Tr. 328:20-329:9) William Planes testified that ICC remained subject to, and controlled by, University's governing body. But Rayford testified credibly that William Planes was "guarded ... about [the governing body] knowing the intricacies of the business," withheld financial information from the governing body, and restricted the governing body's ability "to participate in anything related to payroll." (Tr. 315:4-15) And when Rayford resisted William Planes's management priority and instructed William Planes to satisfy University's delinquent employment taxes before paying himself, William Planes warned: "'Don't you tell me what bills I'm going to pay and what I'm not going to pay. Don't you tell me how to run this hospital. I'll take my people and leave.'" (Tr. 321:8-10)

William Planes claimed that he lacked the authority to hire or fire University employees, but after ICC assumed responsibility under the management contract, William Planes terminated the services of Roberts, University's CPA. No testimony or other evidence suggests that University directed William Planes to terminate Roberts. Also, William Planes — through ICC — was empowered to appoint University's administrator, who admittedly "answered" to William Planes.

Finally, William Planes testified that ICC lacked authority to prepare University's payroll tax returns, but in a deposition in a related action William Planes testified that under the management contract "we would prepare the tax reports for [the governing body's] signature and for their payment in a timely manner, and we did that." (Tr. 379:6-16) William Planes testified that he "misspoke" during that deposition and that William Planes and ICC only "overs[aw] the preparation of the tax reports up, either by [University's] staff or by outside CPAs, and we saw that they were filed." (Tr. 379:17-23) William Planes's explanation at trial for his conflicting deposition testimony in the related action is suspiciously convenient and unconvincing because, among other reasons, in this action William Planes is motivated to minimize his and ICC's involvement in University's failure to pay employment taxes. In sum, William Planes's testimony is not credible. Where the testimony conflicts, I have confidently credited the testimony of the other witnesses.

d. Liability

Under 26 U.S.C. § 6672, a "responsible person" who has "willfully failed to perform

a duty to collect, account for, or pay over federal employment taxes" is personally liable for the employment taxes. Thosteson v. United States, 331 F.3d 1294, 1298-99 (11th Cir. 2003). Liability requires (1) responsibility and (2) willfulness.

(1) William Planes's responsibility

Responsibility is a "matter of status, duty and authority, not knowledge." Thibodeau v. United States, 828 F.2d 1499, 1503 (11th Cir. 1987). "Indicia of responsibility include the holding of corporate office, control over financial affairs, the authority to disburse corporate funds, stock ownership, and the ability to hire and fire employees." Thibodeau, 828 F.2d at 1503. A person who assumes significant control over a business's finances, such as the power to influence the decision about which creditor to pay, is charged with responsibility for employment taxes. Commonwealth National Bank of Dallas v. United States, 665 F.2d 743, 757 (5th Cir. 1982). Responsibility requires "significant control" but not exclusive or primary control. Brounstein v. United States, 979 F.2d 952, 954 (3d Cir. 1992). The "essential question" is whether the person could influence the business's affairs "to avoid non-payment of the employment taxes." Scott v. United States, 825 F.3d 1275, 1279 (11th Cir. 2016).

Section 6672 "looks only to responsible persons, not to the most responsible person, for satisfaction." Tsouprake v. United States, 797 F. Supp. 962, 967 (S.D. Fla. 1992). Thus, a responsible person cannot escape liability for employment taxes by contending that some other person in the organization has greater control over the corporation's affairs and thus possesses a greater responsibility. In other words, "more than one person may be a responsible officer of the corporation under § 6672." Thibodeau, 828 F.2d at 1503. Finally, a responsible person cannot escape liability by contending that the organization's owner or principal directed a responsible person to pay creditors other than the United States. Scott v. United States, 825 F.3d 1275, 1280-81 (11th Cir. 2016). Because employment taxes are held in trust for the United States, a responsible person has no "obligation[] to obey instructions" of a superior to remit money to creditors other than the IRS. Roth v. United States, 779 F.2d 1567, 1572 (11th Cir. 1986).

The management contract empowered ICC to "do and perform all services ... properly belonging to the management and operation of" University. As a matter of fact, William Planes, as ICC's principal executive, exercised the power granted under the management contract. The other powers granted under the management contract — the power to appoint an administrator, to establish an accounting system, to prioritize payments and receivables — conferred further responsibility. Although residual management authority remained with the governing body, William Planes withheld financial information from University's governing body to erode the governing body's supervision and to insulate William Planes's management of University from review. William Planes rebuffed attempts by the governing body — in William Planes's words — to tell him "how to run this hospital." And William Planes's control of University's receivables and his direction of payments to creditors, including companies under his control, demonstrate that William Planes had "the final or significant word over which bills or creditors got paid." Commonwealth National Bank of Dallas, 665 F.2d at 757. William Planes is responsible for University's unpaid employment taxes accruing during ICC's management. (2) William Planes's willfulness

A responsible person acts "willfully" by knowing both that the business has failed to remit employment taxes and that the business has paid creditors other than the IRS. Thibodeau, 828 F.2d at 1503. A responsible person acts "willfully" even by permitting the business to pay employees instead of paying delinquent taxes. Brown v. United States, 439 Fed. Appx. 772, 776 (11th Cir. 2011). Further, a responsible person acts "willfully" by evidencing "a reckless disregard of a known or obvious risk that trust funds may not be remitted to the government." Thibodeau, 828 F.2d at 1505. A responsible person who later learns that the business has failed to remit employee withholdings in previous quarters is "under a duty to use all 'unencumbered funds' available to the corporation to pay those back taxes." Thosteson, 331 F.3d at 1301. This duty "extends not only to funds available to the corporation at the time the responsible person becomes aware but also to any unencumbered funds acquired thereafter." Thosteson, 331 F.3d at 1301.

A business's financial distress is irrelevant because "the government cannot be made an unwilling partner in a business experiencing financial difficulties." Thibodeau, 828 F.2d at 1506. Rather, the use of employee withholdings to finance a business "not only increases the risk that the corporation will be unable to remit the taxes when due, but constitutes flagrant violation of the law." Thibodeau, 828 F.2d at 1506. Even a reasonable expectation "that sufficient funds would be available at the end of the tax quarter does not make [a responsible person's] behavior any less willful." Thibodeau, 828 F.2d at 1505. Finally, even if financial distress results from the wrongful conduct of a third party, a responsible person acts "willfully" by attempting to maintain the solvency of the business instead of paying employment taxes. Brown, 439 Fed. Appx. at 776-77.

As a responsible person for University's employment taxes, William Planes willfully failed to remit the employment withholdings to the United States. Despite knowing that University incurred over a million dollars in tax liability during ICC's management, William Planes authorized payments to creditors other than the IRS, including payments to businesses under his control, such as ICC. William Planes disregarded specific instructions of University's chairman, Rayford, to remit withheld employment taxes before paying himself or any other creditor. Although William Planes contends that he expected University to receive a payout from Medicare and that he implored the governing body to contribute capital to maintain University's solvency, William Planes knowingly failed to satisfy delinquent employment taxes from University's receivables. But even if Medicare acted wrongfully by withholding payment, the wrongful conduct of a third party affords no defense to using available money to pay employment taxes. Brown, 439 Fed. Appx. at 776-77.

William Planes exercised complete control over the receivables, which were deposited daily into the sweep account and remained in ICC's accounts. But William Planes failed to use the money to pay the IRS. Rather, after determining that University was "clearly insolvent" and in default under the management contract, William Planes authorized payments exceeding $1.8 million to William Planes's businesses and to creditors other than the IRS even though William Planes knew that University had incurred over $1 million in employment tax liability under ICC's management.

Attempting to avoid liability, William Planes maintains that a finding of

willfulness is precluded because ICC Business Credit had a priority to the money daily swept into the lockbox. In limited circumstances, a responsible person does not act "willfully" if the money available to pay delinquent employment taxes is "encumbered." See, e.g., Thosteson, 331 F.3d at 1301 (requiring a responsible person to use all "'unencumbered funds' available to the corporation to pay ... back taxes."). But money is "encumbered" only if a statute or regulation — not a private contract — obligates the taxpayer to pay a creditor other than the IRS. Bell v. United States, 355 F.3d 387, 396 (6th Cir. 2004). In other words, a responsible person cannot escape liability by entering a private financing agreement that requires the taxpayer to transmit receivables into an account controlled by the lender. As Lee v. United States, 951 F. Supp. 79, 82 (W.D. Pa. 1997), persuasively applies this principle:

Whether a bank holding a lockbox agreement is a secured, unsecured creditor, or not a creditor at all, is irrelevant to the determination of who is a responsible person under the statute. With respect to the taxpayers' assertion that [First National Bank] "required" them to enter into the lockbox agreement, such was not the case. Even to the extent the taxpayers were required to enter into the agreement in order to keep HLH afloat, they could have chosen to stop operating the business. This may seem to be a harsh alternative; however, the duty to pay employment taxes that have been withheld is a statutory one, and cannot be delegated away by a financing agreement. As the government notes, to hold otherwise would force the government into becoming an unwilling partner in an enterprise of questionable finances at the whim of the taxpayers. Indeed, who knows how many floundering companies might choose the lockbox technique in order to attempt to keep operating if the law so allowed.

Similarly, Bell v. United States, 355 F.3d 387, 396 (6th Cir. 2004), persuasively reasons:

It is no excuse now to argue that encumbrances impeded Bell's ability to remit the trust fund taxes, as Bell could have shut down the company, suspended operations, filed for bankruptcy, applied for a bridge loan from another lender, or simply violated his contract with Bank One instead of failing to fulfill his tax debt. None of these options is attractive or enviable, but in the eyes of § 6672(a), they are the correct choices.

See also Kalb v. United States, 505 F.2d 506 (2d Cir. 1974); Bradshaw v. United States, 83 F.3d 1175, 1180-81 (10th Cir. 1995) ("[a] corporate officer may not escape liability as a 'responsible party' under [Section] 6672 by voluntarily entering into agreements which permit preferring other creditors to the government."); Rykoff v. United States, 40 F.3d 305, 308 (9th Cir. 1994) ("the fact that a bank exercises significant control over payments to creditors does not necessarily absolve the corporate officer of liability under [Section] 6672."); Gustin v. United States, 876 F.2d 485, 491-92 (5th Cir. 1989) ("One does not cease to be a responsible person merely by delegating that responsibility to others.")

While exercising power under the management contract, William Planes — on behalf of ICC Business Credit — entered a lockbox arrangement that daily swept University's receivables into ICC Business Credit's account under William Planes's control. In a manner more egregious than in Lee and Bell (in each of which a struggling business enters a lockbox arrangement with a financial institution), William Planes played both sides of the transaction:

as CEO of ICC Business Credit, William Planes ensured that University's receivables remained within his control, and as CEO of University's manager, William Planes ensured that ICC and other companies of his received payment instead of the IRS. William Planes acted "willfully," and the terms of a voluntary, private lending agreement afford no defense.

In sum, a heavy preponderance of the evidence (in fact, clear and convincing) evidence establishes the following. On behalf of ICC, William Planes accepted a monthly fee to manage University. Ultimately, William Planes decided that University's mounting payroll tax liability and other liabilities jeopardized University's ability both to remain solvent and to continue to pay ICC's monthly fee. Sensing opportunity, William Planes unilaterally declared University in default, accelerated the amount due for the life of ICC's management contract, transferred $1.8 million from University's coffers to ICC, and abandoned University to fend for itself. Under Section 6672, William Planes is a "responsible person" who "willfully" and opportunistically failed to pay University's employment taxes accruing in the fourth quarter of 2000, each quarter of 2001, and the first quarter of 2002.

II. Dixon Medical Center (Count III)

The IRS has assessed William Planes with employment tax liability for Dixon Medical Center, a wholly-owned subsidiary of ICC, which failed to pay employment taxes in the last three quarters of 2002 and the first three quarters of 2003. (Doc. 376-36) The order (Doc. 280) on summary judgment finds the absence of a genuine dispute of material fact about the procedural validity of, and the amount owed under, the Dixon assessments.³ At trial, the United States bore the burden to show by a preponderance of the evidence that William Planes (1) was responsible to remit Dixon's employment tax withholdings and (2) willfully failed to remit the withholdings.

3 The defendants contend that the United States was obligated to introduce the summary judgment order as evidence at trial. The contention is meritless. An order of the court is effective because it is an order of the court.

a. Responsibility

In 1999 or 2000, and while William Planes served as ICC's CEO, ICC acquired Dixon Medical Center as a wholly-owned subsidiary. Dixon operated a hospital in Denham Springs, Louisiana, and in Covington, Louisiana. Quality Holdings of Florida, an entity owned by Regina Planes but controlled by William Planes, purchased the Denham Springs and Covington properties and leased the properties to Dixon. When ICC acquired Dixon, William Planes retained Dixon's current administrator, Mark Pearson. Although Pearson served as Dixon's administrator during the first three quarters in which Dixon failed to remit employment taxes, Pearson answered to William Planes as the CEO of ICC. In fact, Deborah Noll, ICC's controller, testified credibly that William Planes told Noll that ICC's money was "my money, and I will direct it the way I want it to be." Noll testified credibly that she prepared weekly accounts of payable listings for Dixon Medical Center and that William Planes selected from those payable listings which of Dixon's expenses to pay.

In early 2003, William Planes fired Mark Pearson as administrator of Dixon and assumed responsibility for Dixon's day-to-day operations. However, even before Pearson's termination, William Planes exercised substantial control over Dixon. In fact, William Planes admitted to an IRS revenue officer that he was "ultimately

responsible" for Dixon's employment taxes but contended that he was "not sure who is actually supposed to be making the [federal tax deposits]." (Tr. 279:12-15) Nonetheless, Dixon failed to remit employment taxes. William Planes possessed signature authority on Dixon's accounts and signed Dixon's checks, which Noll testified "were not issued without [William Planes's] approval first." (Tr. 602:9-12) Under William Planes's control and supervision, Noll prepared payroll tax returns for Dixon. Noll testified that she was not "surprised" to learn that Dixon had failed to pay employment taxes because other subsidiaries controlled by William Planes, such as ICC, ICC Business Credit, and ICC Health Management had failed to pay employment taxes. (Tr. 660:5-9)

b. Willfulness

By at least the first quarter of 2003, William Planes knew that Dixon had failed to pay employment taxes and confronted other financial distress. Through ICC, William Planes authorized payment of Dixon's and other subsidiaries' debts before remitting employment taxes. Despite knowing that Dixon had failed to pay employment taxes, William Planes admitted that he paid creditors of Dixon other than the IRS. In fact, William Planes personally signed 180 checks exceeding $300,000 to other creditors while Dixon's tax debt ballooned. William Planes admitted that he continued to sign payroll checks for Dixon's employees while failing to pay Dixon's employment taxes. Ultimately, William Planes arranged for Quality Holdings to sell for $2.9 million the two hospital centers operated by Dixon. William Planes testified that he intended to apply the $2.9 million to satisfy Dixon's tax liability, but Dixon's employment taxes remained unpaid.

c. Credibility

Noll testified that William Planes exercised primary responsibility for Dixon's finances, and William Planes testified that Noll exercised primary responsibility for Dixon's finances. I find Noll decisively more credible than William Planes. Noll testified in a staid manner demonstrating an attentive adherence to the truth. Besides honestly and openly recounting her work under William Planes, Noll testified directly, forcefully, and without reservation that William Planes told Noll that he planned to "fake Alzheimer's" as a defense to his tax liability. Her testimony rings true. Noll has minimal incentive to exaggerate William Planes's control of Dixon or to shift blame to William Planes because, as the United States acknowledges, the statutory limitation has expired to assess Noll with tax penalties. Where William Planes's testimony conflicts with Noll's testimony, I credit Noll's testimony.

William Planes testified that "Deborah Noll's staff" prepared Dixon's payroll taxes (Tr. 522:19-20), but Noll testified that she reported directly to William Planes, who managed payroll for all ICC subsidiaries, including Dixon. (Tr. 617:5-8) Further, William Planes testified that he lacked any knowledge about Dixon's failure to pay employment taxes until early 2003. But this testimony — that the chief executive of ICC remained ignorant, quarter after quarter, of a principal subsidiary's delinquent tax bill — is plainly not credible, especially because William Planes had recently incurred more than $1 million in employment tax liability during his management of University. The balance of Noll's testimony demonstrates that William Planes actively managed and supervised ICC, ICC Health Management, and ICC Health Management's entities, including Dixon. William Planes testified that Noll was responsible — and not William

Planes — for Dixon's payroll because Noll signed payroll checks for Dixon. However, Noll testified credibly that she signed checks only as instructed by William Planes.

Finally, William Planes testifies that, after arranging for Quality Holdings to sell for $2.9 million the hospitals in which Dixon operated, he "directed" Noll "to go ahead and get the taxes all paid." (Tr. 293:15-17) Except for serving as an acknowledgement that William Planes was responsible for, and had the power to, ensure payment of Dixon's employment taxes (including the taxes accruing during Pearson's tenure as administrator), William Planes's testimony that he "directed" Noll to apply $2.9 million to Dixon's tax liability is not believable. No other item in evidence corroborates this claimed "direction." Rather, Noll testified credibly that William Planes never allocated the $2.9 million to Noll and never directed Noll to pay Dixon's employment taxes. Further, the balance of the testimony confirms that William Planes exercised paramount control over ICC and ICC's subsidiaries and affiliates. The likelihood that William Planes would delegate $2.9 million to a subordinate defies belief and contradicts his domineering but furtive style of management. In any event, Noll continued to work for William Planes until at least 2005, and the prospect of William Planes's retaining Noll to serve as controller of ICC — despite Noll's alleged defiance of a direction to apply the $2.9 million in sale proceeds to Dixon's outstanding tax liability — is unworthy of credence.

d. Liability

As CEO of ICC, William Planes admits that he actively managed Dixon's operations in 2003 after terminating Pearson as administrator, that he knew Dixon had failed to remit employment taxes, and that he knowingly paid creditors other than the IRS. Attempting to minimize his liability, William Planes contends that he is liable for taxes incurred after early 2003 only, when he fired Pearson and began managing the hospital's day-to-day operations. The balance of the testimony demonstrates that William Planes exercised decisive control over Dixon during Pearson's tenure, and William Planes remains liable for Dixon's pre-2003 employment tax liability in any event because William Planes willfully failed to use Dixon's available receivables to satisfy the delinquent taxes. See, e.g., Thosteson, 331 F.3d at 1301 ("Even if a 'responsible' person is unaware that withholding taxes have gone unpaid in past quarters, a responsible person who becomes aware that taxes have gone unpaid in past quarters in which he was also a responsible person, is under a duty to use all 'unencumbered funds' available to the corporation to pay those back taxes.") Further, William Planes admittedly received $2.9 million from the sale of the Dixon properties and understood his obligation to use the money to satisfy Dixon's employment tax liability. Nonetheless, the IRS remained unpaid. William Planes was a responsible person who willfully failed to pay Dixon's employment taxes in the last three quarters of 2002 and the first three quarters of 2003.

* * *

The United States is entitled to judgment on the tax assessments against William Planes for University (Count I) and for Dixon (Count III). In accord with the order (Doc. 280) on summary judgment, the United States is entitled to judgment on the assessments against William Planes for ICC Financial Group (Count V), for South Capital Construction (Count VI), for St. Nicholas Greek Orthodox Parochial School and St. Nicholas Orthodox Christian

School (Count VII), and for CVC Veterinary Centers (Count VIII).

B. Alter Ego Liability

Acknowledging that William Planes has no assets or money titled in his name, the United States sues to apply William Planes's tax liability to the William Planes 2003 Irrevocable Trust, the Regina M. Planes 2003 Irrevocable Trust, and several LLCs either owned by, or affiliated with, the trusts.

I. The trusts and the trust-owned LLCs (Count XVI and XVIII)

After William Planes incurred millions of dollars of tax liability on behalf of University, Dixon, and ICC, and after William Planes had declared University in default and transferred $1.8 million from University to ICC, William Planes formed the William Planes 2003 Irrevocable Trust and the Regina M. Planes 2003 Irrevocable Trust. At the time he formed the trusts, William Planes knew that University and Dixon had incurred more than a million dollars in tax liability, knew that he had directed payment to creditors other than the IRS, and knew that the IRS would likely pursue him for the unpaid employment taxes of University and Dixon. Although he testified that he formed the trusts because of his failing health and in order to benefit his descendants, William Planes formed the trusts with a principal purpose of establishing a shield between his enterprises and the IRS.

Under the trust formation documents, the William trust provides for the benefit of Regina Planes and the Regina trust provides for the benefit of William Planes. The formation document for each trust appoints Langfred White, a lawyer and longtime associate of William Planes, as the co-trustee and grants White (and any successor trustee) the "sole and exclusive discretion" to distribute trust assets for the benefit of William and Regina Planes. (Docs. 377-1 at 2, 377-2 at 2) Also, the formation documents appoint William Planes to serve as a co-trustee of the Regina trust and appoint Regina Planes to serve as a co-trustee of the William trust. However, the formation documents state that the "sole and exclusive discretion" over distributions remains with White and "under all circumstances not within the discretion or authority" of William or Regina Planes. The formation documents require White to distribute to William and Regina Planes any amount "as the trustee determines from time to time to be required for the health, support and education of [William and Regina Planes], and for the health, support and education of [the Planeses'] descendants...." Also, the formation documents require White to distribute "the net income and principal of the trust as my spouse or the descendant may demand in writing delivered to the trustee pursuant to the [beneficiary's] withdrawal rights...."

a. William Planes direction of the trusts' enterprises

Upon formation in 2003, William and Regina Planes funded the trusts to purchase life insurance policies. Although the trusts filed tax returns after formation, the trusts initially declined to file tax returns because the trusts purportedly failed to generate reportable income.⁴ However, after formation of the trusts and at the instance of William Planes, the trusts began forming LLCs to pursue investments in real property. The trusts and the LLCs have no employees and pay no wages.

4 Under 26 U.S.C. § 6012(a)(4), a trust must file a return only if the trust receives taxable income or receives gross income exceeding $600.

(Docs. 376-9 at 4, 19, 35) Until this action began, neither trust had a bank account. Currently, the trusts collectively own the membership interests of Corklico LLC, 03-22-18 LLC, 2801 Corner Holdings LLC, 32801-15 Holdings LLC, 2801 Keystone LLC, and Trinity Corner LLC. No person other than William Planes exercises any meaningful control over the operation of the LLCs and no person other than William Planes (and Regina Planes) benefits from the distributions and assets of the LLCs.

Corklico LLC

Soon after formation of the trusts and at the instance of William Planes, the trusts formed Corklico LLC to acquire an interest in an oil and gas venture and designated William Planes to serve as the manager of Corklico LLC. However, the acquisition failed, and William Planes has continually re-purposed Corklico LLC for other transactions and ventures to personally benefit William Planes. In December 2012 Corklico, LLC, received a wire of $250,000 from Commerce Design and Construction. After that transfer, William Planes disbursed the money to a personal bank account and on several occasions debited and withdrew from the account, including a $112,000 withdrawal on December 26, 2012. Although Corklico LLC received the money, William Planes affirmed in writing that the money was his. (Doc. 376-63 at 2) Each trust (that is, the William and the Regina trust) continues to own a 50% membership interest in Corklico LLC.

03-22-18 LLC

In 2007 and at the instance of William Planes, the trusts formed 03-22-18 LLC to purchase certain real property, extract construction sand from the property, and subdivide the property into residential lots. The trusts designated William Planes to serve as manager. However, the acquisition of the property failed, and 03-22-18 LLC remained dormant (but owned by the trusts). William Planes has continually re-purposed 03-22-18 LLC for other transactions and ventures for his personal benefit. Each trust continued to own a 50% membership interest in 03-22-18 LLC until the entity's dissolution after this action began.

Trinity Corner LLC

In 2010 or 2011, Corklico LLC acquired Trinity Corner LLC from Quality Holdings of Florida, which was owned by Regina Planes but controlled by William Planes. Trinity Corner LLC owned property on Keystone Road in Tarpon Springs, Florida. On the property, Trinity Corner LLC constructed a school by retaining South Capital Construction, among other contractors. Regina Planes owned South Capital Construction and William Planes served as the CEO. While serving as CEO, William Planes incurred on behalf of South Capital Construction more than $1 million in employment tax liability. The order (Doc. 280) on summary judgment finds that William Planes was a responsible person who willfully failed to pay the employment taxes of South Capital Construction.

On the Keystone property, William Planes operated the St. Nicholas Greek Orthodox Parochial School. William Planes served as the CEO of the school and from 2006 through 2013 incurred more than $500,000 in employment tax liability. The order (Doc. 280) on summary judgment finds that William Planes was a responsible person who willfully failed to remit the school's employment taxes.

2801 Keystone LLC

In 2014, Shumaker, Loop, & Kendrick, LLP, a law firm, obtained an attorney's fee judgment against Trinity Corner LLC, levied the judgment against the Keystone property, and formed 2801 Keystone LLC to acquire the property after a sheriff's sale. To disrupt the sheriff's auction of the

property, William Planes quitclaimed Trinity Corner LLC's interest to Corklico LLC. As explained in an e-mail between William Planes's counsel, "When Shumaker was coming after Bill [Planes] and levying on the [Keystone property] to enforce a fee judgment, Bill recorded a deed in lieu to completely f[**]ck up the title at the same time [Shumaker] was the high bidder at the auction. It was actually quite effective at screwing things up enough to buy time." (Doc. 376-56 at 1) After the quitclaim deed stalled the sheriff's sale and after extensive negotiations, the trusts — at the instance of William Planes — acquired the membership interest in 2801 Keystone LLC and the Keystone property. William Planes appointed Gene Santella, a longtime associate, as the nominal manager of 2801 Keystone LLC. (Tr. 393:19-394:7, 429:10-23) However, Santella has received no salary as a manager, has never rejected a transaction proposed by William Planes, and has never signed a check on behalf of 2801 Keystone LLC. No person other than William Planes in fact exercises the management powers of 2801 Keystone LLC.

In 2016, after William Planes frustrated the sheriff's sale by issuing a quitclaim deed to Corklico LLC, the IRS filed tax liens against Corklico LLC as William Planes's alter ego. In 2018, the United States obtained a judgment after William Planes fraudulently transferred more than $600,000 from South Capital Construction to evade collection of employment taxes. United States v. South Capital Construction, Inc., et al., 2018 WL 1305184, at *10 (M.D. Fla. Feb. 15, 2018), aff'd, 758 Fed. Appx. 676 (11th Cir. 2018). Judge Bucklew found that William Planes, anticipating that unpaid employment taxes rendered South Capital Construction insolvent, caused South Capital Construction to transfer hundreds of thousands of dollars to Regina Planes in exchange for phony services that she never rendered. Judge Bucklew concluded that William and Regina Planes had engaged in a "scheme to defeat the collection of federal taxes" through which William Planes "arranged for the payments so that he and Mrs. Planes could enrich themselves with funds that rightfully should have been used to satisfy the company's tax obligations."

After the fraudulent transfer judgment, William Planes desired to sell the Keystone property, titled under 2801 Keystone LLC. However, William Planes feared that both the "wild deed" used to frustrate the sheriff's sale and the federal tax liens against Corklico LLC might complicate the sale of the Keystone property. Rattled by the fraudulent transfer judgment, desiring to sell the Keystone property, and eager to thwart the tax lien against Corklico LLC, William Planes orchestrated a quiet title action between 2801 Keystone LLC and Trinity Corner LLC and Corklico LLC. Instead of causing Corklico LLC to issue a quitclaim deed to 2801 Keystone LLC, William Planes opted for a quiet title action to conceal William Planes's connection to 2801 Keystone LLC. As explained in an e-mail between two of William Planes's lawyers representing the respective LLCs in the quiet title action, "Bill [Planes] would rather quiet title than have a quitclaim deed from Corklico to anyone so that big bro don't come snooping around with another fraudulent conveyance issue."⁵ (Doc. 376-56)

5 Obviously, "big bro" is a euphemism for the IRS and the United States.

To expedite the quiet title action, counsel for William Planes prepared pleadings for each of the LLCs, including the nominally adverse LLCs in the quiet title action. As an e-mail from William Planes's counsel observes that William Planes's resorting

to a quiet title action "is actually legit for a change, or at least legit enough that you and I are clean." (Doc. 376-56) This illuminating e-mail about William Planes's disposition and motivation towards the LLCs, particularly 2801 Keystone LLC and the Keystone property, states:

When Shumaker was coming after him and levying on the school to enforce a fee judgment, Bill recorded a deed in lieu to completely f[**]k up the title at the same time [Shumaker] was the high bidder at the auction. It was actually quite effective at screwing things up enough to buy time.

So, shumaker filed a lawsuit which eventually got resolved/settled, which involved this Gary Blackwell guy taking the mortgage, and [Shumaker] got paid at closing. Best I can tell, Kimpton may have bufu'd a bit at the closing of the new loan, and didn't do something to clean up the title from the deed in lieu.

Planes is looking to sell or refi [the Keystone property], and the grantee on the bad deed in lieu is showing up on title as a co-owner with the real owner (successor to [Shumaker] that Bill acquired as part of the settlement with [Shumaker]). Corklico is the bad owner on the title. The basis to get them off the title via a quiet title is actually legit for a change, or at least legit enough that you and I are clean.

Whether a title company will write a policy on the transaction is another story, but that is not my problem..... except that now that I think about it, I'm probably not getting paid for any of this until a refi or sale closes..... but I digress.....

Bill would rather quiet title than have a quit claim deed from Corklico to anyone so that big bro don't come snooping around with another fraudulent conveyance issue.

So, I've prepared this complaint, and Kimpton is looking it over. I'm representing plaintiff 2801 Keystone, LLC, and you're representing co-defendants Trinity Town Center, LLC and Corklico, LLC — you're the registered agents for these LLCs — not sure if you knew that.

My plan was to prepare/file the complaint, prepare waivers of service, prepare answers for co-defendants, and a joint stip for entry of judgement quieting title in the name of 2801 Keystone only. You're basically having to read /s/ and file the defendants docs, and I'll do the rest. The only "thing" out there to determine is if Kimpton thinks this can be done by agreed order. Otherwise, I need to get time on a UMC and walk this down there.

Hopefully he gave you a little heads up on this. I don't want you to have to prepare anything — it's bad enough that I've infected you with this virus to begin with, which I honestly do have many regrets about..... sorry!

(Doc. 376-56)

Thus, three months after the fraudulent transfer judgment, William Planes arranged to quiet title in favor of 2801 Keystone LLC and declare void the "wild" quitclaim deed of the Keystone property from Trinity Corner LLC to Corklico LLC. Unsurprisingly, the United States, which had filed tax liens against Corklico LLC as William Planes's alter ego, was not notified about the quiet title action. William Planes's protestation that he did not instigate the quiet title action is not credible and is contradicted by the evidence, particularly e-mail correspondence confirming William Planes's quiet title action resulted from William Planes's direction and insistence. Soon after the quiet title action resolved ownership of the Keystone property in favor of 2801 Keystone LLC, William Planes began soliciting offers to sell the property. Although 2801 Keystone LLC held the title to the Keystone property and although the trusts collectively held the membership interests in 2801 Keystone LLC, William Planes presented himself as the owner to prospective buyers of the property and made all material decisions concerning the property. William Planes had no formal connection to 2801 Keystone LLC and appeared as neither a manager nor an authorized representative.

Gary Blackwell, a businessman in Palm Harbor who financed 2801 Keystone LLC's acquisition of the Keystone property, testified credibly that he understood that William Planes had authority to enter the transaction on 2801 Keystone LLC's behalf despite the lack of formal title. In arranging the financing, Blackwell negotiated with William Planes only and never negotiated with Santella, the nominal manager of 2801 Keystone LLC, in any material respect.

Esther Berry, the CEO of a local private school who had leased the Keystone property from William Planes in 2017, believed that William Planes owned the property. Although William Planes held no formal position or title in 2801 Keystone LLC, Berry testified that William Planes communicated with Berry directly about the Keystone property, led meetings about the transaction in William Planes's office, and negotiated the terms of the lease. William Planes never suggested that he needed authority or approval from another person to lease or sell the school.

After the private school terminated the lease, Solid Rock Community School became interested in purchasing the Keystone property. Although William Planes held no formal position or title in 2801 Keystone LLC, William Planes's counsel assured Solid Rock that William Planes "was essentially the principal of the entity and had authority to negotiate on its behalf." (Tr. 211:12-18, 224:12-23, 228:1-5) Santella, the listed manager of 2801 Keystone LLC, had no involvement in the negotiation. William Planes held the initial meeting with Solid Rock in his office, frequently communicated with Solid Rock without counsel, and dictated the terms of negotiations including the closing date. Chad Orsatti, general counsel for Solid Rock, testified that throughout negotiation William Planes declared that "if he didn't get his way, he was going to take his ball and go home." (Tr. 221:9-15) William Planes informed Solid Rock that he could terminate the deal on behalf of 2801 Keystone at any time. Ultimately, Solid Rock purchased the Keystone property from 2801 Keystone LLC. As part of the financing for the purchase, Solid Rock remits monthly mortgage payments to 2801 Keystone LLC. William Planes controls 2801 Keystone LLC's bank account. At present, the monthly payment from 2801 Keystone LLC serves as the primary means by which the Planeses' satisfy their living expenses.

William Planes maintains that he acted solely on behalf of Coast to Coast Group, a real estate company owned by Santella. The realities of the transaction and the testimony of the credible witnesses demonstrate that William Planes's attempt to pose as an agent of Coast to Coast Group is not credible. At the time of the transaction, the United States had secured judgment against Regina Planes because William Planes had fraudulently transferred assets from South Capital Construction to evade tax collection by the IRS. William Planes's eagerness to stop "big bro" from "snooping" around "his" property and 2801 Keystone LLC readily and persuasively

explains William Planes's eagerness to minimize any publicly discoverable association between himself and the sale of the Keystone property.

The credible testimony of William Planes's counterparties to the lease and to the sale of the Keystone property confirms that William Planes was the "principal" of 2801 Keystone LLC and as a matter of fact served as the primary driver of, and the exclusive beneficiary of, the sale of the property. No other person had the authority to negotiate the sale of Keystone property, no other person (except for Regina Planes) personally benefitted from the sale of the Keystone property, and the Planeses personally benefitted by concealing from the IRS William Planes's connection with the Keystone property. William Planes's attempt to publicly distance himself from the sale of the Keystone property, while simultaneously assuring all interested buyers of his authority to sell the property, confirms that William Planes concocted this ruse, as explained by counsel, to evade "big bro['s]" collection of his taxes.

32801-15 LLC and 2801 Corner LLC

In 2017 and at the instance of William Planes, the trusts formed 32801-15 LLC to acquire certain office buildings that were in foreclosure and owned by Quality Holdings. However, the lender refused to allow Quality Holdings to sell the office buildings to 32801-15 LLC, and Blackwell purchased the buildings from Quality Holdings. At the instance of William Planes, the trusts formed 2801 Corner Holdings LLC to manage the buildings for Blackwell in exchange for the right to lease the buildings and for an option to purchase the buildings.

b. The Planeses use of the trusts and LLCs

William Planes admits that he and Regina Planes use the bank accounts of the trust-owned LLCs to pay personal living expenses. Neither William nor Regina Planes maintains a personal bank account. Rather, William and Regina Planes incur personal expenses on credit cards, and William Planes pays the credit cards from the trust-owned LLCs' bank accounts. Also from the LLCs' bank accounts, William Planes writes checks and withdraws money to pay personal expenses.

William Planes has signature authority for the bank accounts of each LLC and routinely transfers money between the LLCs. William Planes admits that he and Regina Planes rely on the LLCs' accounts because the IRS seized the money in the Planeses' personal bank accounts in partial satisfaction of the Planeses' tax liability.

William Planes uses Corklico LLC to pay for a Mercedes Benz M-Class. Although Corklico LLC retains title to the Mercedes, William Planes "handled the transaction" and the Planeses drive the Mercedes for their personal use. William Planes used the leftover money from 32801-15 Holdings LLC's failed acquisition of the office buildings in Palm Harbor to pay for the Planeses' health expenses and a Land Rover Discovery. Although 32801-15 Holdings LLC retains title to the Land Rover, Regina Planes drives the Land Rover for her personal use.

William Planes uses the bank accounts of 2801 Keystone LLC to pay the Planeses' monthly residential mortgage, to pay for water, to pay for gas, and to pay for law maintenance. William Planes uses the bank accounts of 03-22-18 LLC to pay personal credit cards, to pay for lawn maintenance, to pay for electricity, and to pay for cable and internet. Neither William nor Regina Planes has held a bank account in their name for at least the four years preceding this action. By paying personal

expenses with money held in the accounts of the LLCs, William and Regina Planes have evaded IRS collection for years. William and Regina Planes do not report as income the amounts the LLCs pay towards personal expenses and do not pay federal income tax on any distributions.

In November 2018, an order (Doc. 6) in this action temporarily restrained the assets of the trusts and the LLCs. On at least two occasions, William Planes — without consulting the trustee — willfully defied the temporary restraining order and transferred money from the LLCs. On November 7, 2018, IRS Revenue Officer Bryan Morris served Regina Planes with the TRO in a conspicuous manner that obviously alerted Regina Planes to the nature of the document. Regina Planes accepted service for herself, William Planes, and Ana Planes, a beneficiary of the trusts. Regina Planes told William Planes about the TRO over the phone. Immediately after learning about the TRO, William Planes called his lawyers in succession but failed to reach either lawyer. Soon after, William Planes transferred $160,000 — nearly all the cash held collectively by the LLCs — to Coast to Coast Group. William Planes transferred to Coast to Coast Group $101,000 from 32801-15 Holdings LLC, $20,000 from 2801 Keystone LLC, and $39,000 from 2801 Corner Holdings LLC. After the transfers, William Planes informed neither White nor his lawyers. William Planes willfully and contemptuously defied the temporary restraining order to secrete assets from the LLCs and evade collection by the IRS and the United States.⁶

6 William Planes's repeated, brazen defiance of the TRO in this action and fraudulent transfer in the South Capital action illustrate William Planes's control over, and attitude towards, the separateness of the corporate entity. But even absent these illustrations, a solid preponderance of the evidence confirms each finding in this order.

In January 2019, William Planes again defied the temporary restraining order by pledging an option held by 2801 Corner Holdings LLC as collateral for a $75,000 loan. Also, the agreement increased the price to exercise the option by $80,000. William Planes did not obtain approval from White before defying the injunction or further encumbering the option held by 2801 Corner Holdings LLC.

c. White's trusteeship

At trial, White testified extensively about his duties as trustee and William Planes's authority to direct the business of, and distributions from, the trust-owned LLCs. White testified that for distributions from the trusts White has exclusive authority over distributions to William and Regina Planes. However, White testified that for distributions from the trust-owned LLCs William Planes is authorized to transact in a "general class of expenditures," including "normal ongoing business operations, normal ongoing contractual expenses and distributions for the health and support of [William] and Regina." (Tr. 397:13-20) As long as the distributions are within the "general class of expenditures," White maintains that he "d[oes]n't need to know, on a day-to-day basis," about the LLCs' payment of the Planeses' personal expenses or about the LLCs' daily business operations. (Tr. 397:13-20) Rather, White testified that these decisions were committed to the manager of the LLC, even if that manager happened to be William Planes and even if the distributions happened to benefit solely William and Regina Planes. William Planes has signature authority over each LLC's bank accounts, and William Planes does not ask White for pre-approval of the disbursements from the LLCs for the personal

benefit of the Planeses. White has never used his authority as trustee to veto a distribution to William or Regina Planes.

In early 2011, White resigned as trustee and performed no duty on behalf of the trusts. During White's resignation, White exercised no oversight over the trusts or the LLCs, reviewed no bank statements for the trusts or the LLCs, and approved no distribution from the trusts. William Planes procured no successor trustee. During White's resignation, William Planes disbursed money from the trust-owned LLCs for his personal benefit. In January 2014, White resumed serving as trustee but did not review the Planeses' distributions until August 2015 — a year and a half after he resumed serving as trustee. In August 2015, William Planes assured White that William Planes distributed no money from the trusts during White's resignation. But the next day, William Planes disclosed to White that, during White's resignation as trustee, Corklico LLC had received a wire of $250,000 from Commerce Design and Construction, a company owned by a third party who owed money to William Planes. Although Corklico LLC received the money, William Planes told White that the money was William Planes's money — not Corklico LLC's money. After the $250,000 wire, William Planes periodically disbursed money from Corklico LLC to pay the Planeses' personal expenses. In a single transaction, William Planes personally withdrew more than $100,000 from Corklico LLC.

In July 2017, White in his capacity as trustee and the Planeses in their capacities as individuals and as beneficiaries of the trusts entered a "funds distribution agreement" governing distributions from the trust-owned LLCs. Under the funds distribution agreement, the LLCs agreed to pay the Planeses' monthly residential mortgage; to pay for the Planeses' health insurance and other healthcare needs; to pay for utilities, repairs, and maintenance of the residential property; and to distribute money to the Planeses as needed for their monthly living expenses. The funds distribution agreement commits the LLCs to pay the Planeses $7,000 per month to finance their personal expenses.

Although the trusts disclosed no reportable income between 2004 and 2016 and filed no tax returns, the trusts in 2017 each received $26,911 in income from 2801 Corner Holdings. After this action began, White discovered the failure to file tax returns, "went ballistic," and retained a CPA to file the overdue returns. (Tr. 448:22-449:12)

d. Credibility

William Planeses' testimony about his purported adherence to the separateness of the trusts and LLCs is not credible. The evidence at trial established convincingly that William Planes abides by the corporate form when beneficial and convenient to him and disregards the corporate form when detrimental and inconvenient to him. I find the testimony of his counterparties to the transaction and the testimony of Noll about William Planes's use of the corporate form credible and decisively revealing.

e. Liability of the trusts and the trust-owned LLCs

The trial evidence demonstrates that, although White retains control over the trusts' membership interest in the LLCs, White has in fact delegated to William Planes both the day-to-day management of the LLCs (even the LLCs for which Santella is nominally listed as manager) and the ability to disburse money from the LLCs for the personal benefit of the Planeses. The United States claims that the trusts are subject to alter ego

liability. "Property held by an 'alter ego' of the taxpayer is subject to collection for the taxpayer's tax liability." Eckhardt v. United States, 463 Fed. Appx. 852, 855 (11th Cir. 2012) (per curiam) (citing G.M. Leasing Corp. v. United States, 429 U.S. 338, 350-51, 97 S.Ct. 619, 50 L.Ed.2d 530 (1977)). In the Eleventh Circuit, state law determines whether an entity is the alter ego of a taxpayer. Old W. Annuity & Life Ins. Co. v. Apollo Grp., 605 F.3d 856, 862 (11th Cir. 2010) (per curiam).

Under Florida law, an entity is a mere "alter ego" if (1) the defendant "dominated and controlled" the entity to the extent that the entity lacked an "independent existence," (2) the defendant used the "the corporate form ... fraudulently or for an improper purpose," and (3) the "the fraudulent or improper use" harmed the plaintiff. Gasparini v. Pordomingo, 972 So.2d 1053, 1055 (Fla. 3d DCA 2008) (per curiam). A decisive factor is whether the entity's money was used for an individual's benefit. Gasparini, 972 So.2d at 1055. An improper purpose includes hiding an asset from a creditor, violating a statutory obligation, or frustrating the collection of taxes. Gasparini, 972 So.2d at 1055; United States v. Peeler, 2016 WL 7668485, at *5 (M.D. Fla. July 13, 2016). Even if formed for a proper purpose, an entity used for an improper purpose is subject to alter ego liability. Eckhardt, 463 Fed. Appx. at 857.

Although alter ego liability typically applies the assets of a person to the debts of the alter ego entity, alter ego liability can apply the debts of the person to the assets of the alter ego entity. Estudios, Proyectos e Inversiones de Centro Am., S.A. (EPICA) v. Swiss Bank Corp. (Overseas) S.A., 507 So.2d 1119, 1120 (Fla. 3d DCA 1987) (per curiam). Alter ego liability applies even if the person lacks a formal title or formal status within the entity. See Walton v. Tomax Corp., 632 So.2d 178, 181 n.2 (Fla. 5th DCA 1994) ("It makes no difference that McGuire himself was not a shareholder of the corporation, because if a corporate officer who is in control of a corporation personally utilizes its assets for payment of personal obligations and generally treats the corporation as a sham, he can be liable on an alter ego theory.").

(1) Liability of the trusts

In post-trial papers, the United States contends that the extent of William Planes's control over the trust-owned LLCs and the extent of the trustee's delegation to William Planes subjects the trusts to alter ego liability and permits the United States to apply William Planes's liability to the trusts' assets, that is, the membership interests in the LLCs. The United States argues that under Florida law alter ego liability applies to trusts, including an irrevocable trust. The defendants respond that an irrevocable, discretionary trust is immune from alter ego liability under Florida law.

The Florida Trust Code, Chapter 736, Florida Statutes, establishes different types of trusts, including revocable, discretionary, spendthrift, and self-settled trusts. Under Section 736.0103(20), a revocable trust can be revoked or amended by the settlor "without the consent of the trustee or a person holding an adverse interest" to the settlor. Under Section 736.0602(1), a trust is irrevocable only if "the terms of [the] trust expressly provide that the trust is irrevocable." A settlor can modify, amend, or revoke the terms of an irrevocable trust only by judicial intervention or consent of all beneficiaries and the trustee. Under Section 736.0504, a trust is discretionary insofar as the trust grants the trustee the sole and exclusive discretion to distribute trust assets to a beneficiary. A self-settled trust is any trust in which the settlor is also a designated beneficiary of trust income or principal, and a third-party trust is any trust in which the settlor is not a beneficiary. Under Section 736.0502, a third-party trust (but not a self-settled trust) may include an enforceable "spendthrift provision," which prohibits a beneficiary's selling or assigning any portion of the beneficiary's interest in income or distributions from the trust. Because the Planeses have established trusts designating themselves as beneficiaries, appointing a trustee with the "sole and exclusive" discretion over distributions, and have expressly stated that the trusts are irrevocable, the William trust and the Regina trust are each a self-settled, irrevocable, discretionary trust.

A creditor's rights against a beneficiary or settlor depend on the type of trust. Evidencing a policy to afford the third-party trust greater protection, that is, a trust in which the settlor both benevolently conveys property in trust for the benefit of a third party and retains no personal interest in the property, the Florida Trust Code affords a creditor of a beneficiary of a third-party trust acutely limited means of recourse. If the third-party trust is discretionary, irrevocable, and contains a spendthrift provision, the Florida Trust Code permits the creditor to reach only those assets that the trustee in fact distributes to the beneficiary. The creditor cannot compel distributions and cannot attach the beneficiary's interest in the trust. On the other hand, the Florida Trust Code evidences a wariness about self-settled trusts, that is, a trust in which the settlor retains an interest as a beneficiary, because a self-settled trust is a foreseeable tool for abuse by a debtor eager to frustrate collection but retain the equitable rights to the debtor's property. The Florida Trust Code affords the creditor of a settlor-beneficiary elevated rights of collection, including the right to attach the settlor-beneficiary's interest in the trust, attach any distributions from the trust, and compel the trustee to distribute any assets the settlor-beneficiary has the right to demand.

Although the Florida Trust Code establishes a statutory remedy for the creditor of a trust beneficiary, the common law of Florida — like the common law of every state — affords an equitable remedy permitting a creditor to disregard a trust as the "alter ego" of a beneficiary and apply the creditor's claims to the corpus of the trust. To support application of alter ego liability to a Florida irrevocable trust, the United States relies on United States v. Lena, 2008 WL 2774375 (S.D. Fla. June 11, 2008) (Zloch, J.). In Lena, the United States sued to reduce the Lenas' tax assessments to judgment and to apply the judgment to an irrevocable trust. Lena begins by analyzing Shades Ridge Holding Co. v. United States, 888 F.2d 725 (11th Cir. 1989), which holds that alter ego liability applies to any corporation subject to the "active" and "substantial" control by the taxpayer.⁷ Although recognizing that the Eleventh Circuit has not addressed "whether the piercing-the-corporate-veil analysis should be imported into the context of trusts," Lena observes that two district courts in the Eleventh Circuit have applied Shades Ridge to trusts and that "other courts have looked past the legal form of entities in determining whether an

7 Shades Ridge, on which Lena relied, declined to address whether federal or state law governs the alter ego liability of a taxpayer because "the standards are so similar that the distinction is of little moment." Later, Old W. Annuity & Life Ins. Co. v. Apollo Grp., 605 F.3d 856 (11th Cir. 2010), holds the alter ego liability of a taxpayer is determined by state law.

entity is the taxpayer's alter ego." Lena, 2008 WL 2774375 at *5 (citing LiButti v. United States, 107 F.3d 110, 119 (2d Cir. 1997) (observing that "we must avoid an over-rigid preoccupation with questions of structure" in applying a taxpayer's liability to an alter ego)). Lena concludes, "Because the ultimate concern does not lie in the structure itself, but whether a person may hide behind a structure that is no more than the individual's alter ego, the Court finds there is no need to distinguish between a corporation and a trust." Lena, 2008 WL 2774375, at *5.

After establishing that alter ego liability applies to an irrevocable trust, Lena determines that the trustees "were mere figureheads that did not perform any duties on behalf of the Trust independent of Mr. Lena's control," that the Lenas routinely exercised "dominion and control" over trust assets without approval of the trustee, that the trust property solely benefitted the Lenas in their personal capacity, and that Mr. Lena controlled the trustee "such that he is a de facto trustee" and exceeded the power exercised by the trustee. Thus, in a circumstance remarkably similar to this action, Lena applies the assets of the irrevocable trust to the taxpayer's liability. Lena, 2008 WL 2774375, at *8.

The defendants contend that Lena failed to anticipate the trajectory of the Florida law of trusts and offer Miller v. Kresser, 34 So.3d 172 (Fla. 4th DCA 2010), for the proposition that alter ego liability is never applicable to an irrevocable, discretionary trust. In Miller, the settlor, Elizabeth Miller, established the James F. Miller irrevocable trust — a third-party trust — for the benefit of her son, James. Mrs. Miller appointed her other son, Jerry, as the sole trustee of the trust. Apparently trying to afford maximum protection against James's creditors, Mrs. Miller formed the trust as a third-party, irrevocable, discretionary, spendthrift trust. Upon formation, Mrs. Miller conveyed a one-third interest in property located in Islamorada, Florida, to the James trust. Also, Mrs. Miller conveyed a one-third interest in the property to a trust for the benefit of Jerry and retained the remaining one-third interest for herself. Miller, 34 So.3d at 173-75.

After the formation of the trust, a creditor obtained a $1 million judgment against James and began a supplementary proceeding to apply the trust's assets to the judgment. After a bench trial, the trial court found that Jerry had "completely turned over management of the trust's day-to-day operations to James"; that James "controlled all important decisions concerning the trust assets, including investment decisions"; that Jerry "never independently investigated these decisions"; and that Jerry "simply rubber-stamped James's decisions and 'serve[d] as the legal veneer to disguise [James's] exclusive dominion and control of the Trust assets.'" The trial court held that James's dominion and control over the trust both terminated the spendthrift provision and allowed the judgment creditor to reach the trust's assets as James's alter ego. Also, the trial court held that Jerry effectively "turned over to James all of the trust's assets," which resulted in a merger of the legal and equitable interests subjecting the assets to execution by the creditor. Miller, 34 So.3d at 172-74.

Although observing that Jerry's trusteeship constituted "perhaps the most egregious example of a trustee abdicating his responsibility to manage and distribute trust property," Miller reversed the trial court and held that under Florida law the trust document — not the action of a beneficiary or a trustee — determines a creditor's rights to reach a beneficiary's interest in a third-party, discretionary, irrevocable,

spendthrift trust. Miller begins by analyzing Section 736.0504, Florida Statutes, which states in pertinent part:

Whether or not a trust contains a spendthrift provision, if a trustee may make discretionary distributions to or for the benefit of a beneficiary, a creditor of the beneficiary, including a creditor as described in s. 736.0503(2), may not:

(a) Compel a distribution that is subject to the trustee's discretion; or

(b) Attach or otherwise reach the interest, if any, which the beneficiary might have as a result of the trustee's authority to make discretionary distributions to or for the benefit of the beneficiary.

Under this statute, Miller reasons that "a creditor may only reach those distributions the trustee chooses to make" and that a "creditor may not compel a distribution from the trustee or attach any interest in the trust before the trustee makes a distribution." Miller, 34 So.3d at 176. This rule "applies whether or not the trustee has abused his discretion in managing the trust."

Although acknowledging the beneficiary's extensive "dominion and control" over the trust, Miller holds that Florida law "requires that the focus must be on the terms of the trust and not the actions of the trustee or beneficiary." Miller, 34 So.3d at 176. Miller "finds no law in Florida suggesting that a beneficiary's creditors may reach trust assets in a discretionary trust simply because the trustee allows the beneficiary to exercise significant control over the trust. It is only when a beneficiary has received distributions from the trust, or has the express right to receive distributions from the trust, that the creditor may reach those distributions." Thus, "Until Jerry makes a distribution to James, [his] creditors may not satisfy James's debts through trust assets." Rather, "[i]t is the settlor's prerogative to choose the trustee she believes will best fulfill the conditions of the trust. In the case before us, it is not the role of the courts to evaluate how well the trustee is performing his duties. We are instead limited, by statute, to evaluating the express language of the trust to determine the extent of the beneficiary's control and the extent to which a creditor may reach trust assets. It is the legislature's function to carve out any exceptions to the protections afforded by discretionary and spendthrift trusts." Miller, 34 So.3d at 176.

Miller mystifies for a few reasons. First, Miller appears to conflate the statutory remedy available to a creditor under the Florida Trust Code with the equitable remedy available to remedy abuse of a legal fiction. The Florida Trust Code establishes certain rights for the creditor of a beneficiary regardless of any improper attempt by the beneficiary to abuse the legal fiction. In other words, the statutory remedy determines the rights of a creditor to recover from the innocent debtor-beneficiary who scrupulously abides by the separateness of the trust and the powers and capacity of the trustee. On the other hand, the equitable remedy serves to prevent an abuse of the form of the trust for an improper or illegal purpose. Although the statutory remedy available to a creditor under the Florida Trust Code might inform the circumstances in which a creditor can invoke the equitable remedy and disregard the separateness of a trust, the limitation on the statutory remedy of a creditor remains distinct from the equitable remedy. See Barineau v. Barineau, 662 So.2d 1008, 1009 (Fla. 1st DCA 1995) ("The equitable character of the [alter ego] remedy permits a court to look to the substance of the organization, and its decision is not controlled by the statutory framework under which the corporation was formed and operated."). And Florida

law has recognized the equitable remedy to disregard the corporateness of an entity for more than a century, Biscayne Realty & Ins. Co. v. Ostend Realty Co., 109 Fla. 1, 148 So. 560 (1933), and has routinely applied the remedy to trusts. See, e.g., 381651 Alberta, Ltd. v. 279298 Alberta, Ltd., 675 So.2d 1385 (Fla. 4th DCA 1996); United States v. Bahrs, 2006 WL 2507574, at *2-3 (N.D. Fla. Aug. 29, 2006); Lena, 2008 WL 2774375, at *5.

Second, although Miller broadly contends that no amount of control by the beneficiary or dereliction of duty by the trustee can serve to disregard a discretionary trust, Miller analyzed a (1) third-party, (2) irrevocable, (3) discretionary, (4) spendthrift trust — the trust awarded perhaps the greatest protections against creditors under the Florida Trust Code. Apparently of a benevolent disposition, Mrs. Miller irrevocably conveyed property in trust for her son and retained no interest in the trust for herself. The Florida Code of Trusts evidences an especial deference to these third-party irrevocable trusts. But for a self-settled trust, such as the Planeses' trusts, the Florida Code of Trusts evidences an acute unease about affording a debtor the tool both to evade anticipated creditors by conveying the property in trust and to retain control and enjoyment of the property.

Finally, Miller stands decisively athwart the historical and broader trend of applying alter ego liability to irrevocable trusts. See, e.g., Bash v. Williams, 2016 WL 1592445 (N.D. Ohio Apr. 20, 2016) (analyzing Miller, collecting cases, and observing that "nearly every court to have addressed the issue outside of Florida has concluded that alter ego liability should apply to trusts to the same it extent it applies to other legally created fictions.").

Although Miller might accurately state Florida law about a third-party trust in which the settlor retains no interest, no reason or authority suggests that Miller's holding extends to self-settled trusts, such as the Planeses' trusts, in which the prospect elevates sharply that a debtor will abuse the trust to evade a creditor. To the extent Miller defers only to the Florida Trust Code to determine whether an equitable remedy remains available to disregard a particular type of trust, the Florida Trust Code evidences an acute uneasiness about self-settled trusts and thus fails wholly to displace the traditionally available equitable remedy. Because the other decisions cited by the defendants, such as In re Eddy, 2015 WL 1585513 (Bankr. M.D. Fla. Apr. 3, 2015), fail to appreciate the differing protections afforded a third-party trust and a self-settled trust, the decisions are unpersuasive.

Because Miller fails to displace the equitable remedy to disregard a self-settled trust, the United States can disregard the Planeses trusts, which are nothing more than William Planes's alter ego and funded solely by the Planeses and with assets over which the Planeses exercise plenary control. As stated earlier, Under Florida law, an entity is a mere "alter ego" if (1) the defendant "dominated and controlled" the entity to the extent that the entity lacked an "independent existence," (2) the defendant used the "the corporate form ... fraudulently or for an improper purpose," and (3) the "the fraudulent or improper use" harmed the plaintiff. Gasparini v. Pordomingo, 972 So.2d 1053, 1055 (Fla. 3d DCA 2008) (per curiam). A decisive factor in the alter ego analysis is whether the entity's money was used for the defendant's benefit. Gasparini, 972 So.2d at 1055. An improper purpose includes hiding an asset from a creditor, violating a statutory obligation, and frustrating the collection of employment tax. Gasparini, 972 So.2d at 1055; United States v. Peeler,

2016 WL 7668485, at *5 (M.D. Fla. July 13, 2016). Even if not formed for an improper purpose, an entity used for an improper purpose is subject to alter ego liability.

i. Dominion and control

The trusts hold no assets other than the membership interests in the LLCs and had no bank accounts until after this action began. No person except William Planes exercises even marginal control over the distributions from the trusts, no person except William Planes authoritatively reviews expenditures from the trusts, and no person except William Planes finally directs the business of the trusts. Except for the ability to evade creditors, William Planes's use of the trust assets for his personal benefit is indistinguishable from a person's use of a private bank account for personal benefit. William Planes's extensive and exclusive use of the trusts and LLCs solely for his benefit and for the benefit of Regina Planes negates any separate identity between the Planeses and the trusts. During the three years in which the trustee purportedly resigned, William Planes controlled the entities and their assets to the same extent that he controlled the entities and their assets before the trustee's resignation and after the trustee resumed service.⁸ In business dealings, William Planes presents himself as the principal with authority over the trust-owned LLCs even in instances in which William Planes lacks a formal title or corporate role with the LLC. Particularly, William Planes demonstrated complete control of 2801 Keystone LLC despite attempts to conceal from the IRS his association with the LLC. William Planes controlled the LLCs to evade tax liens by the IRS, to willfully transfer nearly all the LLCs' cash in defiance of a temporary restraining order, and to encumber an option in violation of the temporary restraining order. (Doc. 376-56 at 1)

8 White's resignation as trustee presents an interesting issue about whether the trust "merged" and became terminable. "In order to sustain a trust entity, there must be a separation between the legal and equitable interests of the trust." Contella v. Contella, 559 So.2d 1217, 1218 (Fla. 5th DCA 1990) (citing Axtell v. Coons, 82 Fla. 158, 89 So. 419, 420 (1921)). If separation ceases, the legal and equitable interests merge, and the trust is terminable. Contella, 559 So.2d at 1218. However, "merger applies only when the legal and equitable interests are held by one person and are coextensive and commensurate —i.e., the legal estate and the equitable estate are the same." Contella at 1219. Although the United States argues—in effect— that William Planes served as the de fact discretionary trustee, the United States asserts no claim for merger and this order will not further linger over the matter.

In sum, the formation of the trusts and the consolidation of the LLCs' membership interests under the trusts have in no detectable manner defeated, diluted, or even confined William Planes's control over the entities and their assets, which he has repeatedly assured private buyers were "his." The formation of the trust and LLCs have served only as an attempt by William Planes to contrive a mechanism by which he might escape his tax liability and other creditors.

ii. Improper formation and improper use

William Planes formed the trusts for an improper purpose. When forming the trusts, William Planes knew that he had incurred millions of dollars in tax liability on behalf of University and Dixon, foresaw that the IRS would pursue him for University's and Dixon's tax liability (and the tax liability of other entities, such as ICC, ICC Business Credit, and ICC Health Management), and established the trusts to frustrate the collection of his

taxes. Even if William Planes foresaw incidental benefit from forming the trusts, such as providing for his wife, William Planes had the dominant purpose to form the trusts to establish a bulwark against a specific creditor: the IRS. Further, his reckless accumulation of tax liability after the formation of the trusts vividly corroborates his fraudulent intent in forming the trusts.

Also, William Planes perennially used the trusts for an improper purpose. William Planes channeled his enterprises through the trusts and the LLCs while knowingly accumulating millions of dollars in tax liability on behalf of businesses that he owned or operated, such as South Capital Construction, CVC Veterinary Centers, and the St. Nicholas Schools. William Planes's use of the entities "to evade payment of employment taxes" demonstrates an improper purpose. Eckhardt, 463 Fed. Appx. at 858. Further, to avoid paying the IRS William Planes avoids depositing in a personal bank account money owed to him and instead deposits the money in the accounts of the LLCs. By directing his enterprises through the trusts and the LLCs, William Planes has frustrated the IRS's collection efforts while ensuring that he maintains an affluent lifestyle.

iii. Harm to the United States

William Planes's use of the trusts harms the United States "by preventing the collection of outstanding employment tax liabilities," Eckhardt, 463 Fed. Appx. at 858, including income tax and judgment liabilities. William Planes admitted that the IRS had levied his bank accounts and knowingly directed his assets into the bank accounts of the LLCs to evade collection. Further, William Planes's willful defiance of the temporary restraining order has placed more than $240,000 beyond the reach of the United States.

(2) Liability of the trust-owned LLCs

The United States argues that each LLC is separately liable as William Planes's alter ego (and even if the trusts were not the alter ego of William Planes). No party disputes that under Florida law alter ego liability applies to an LLC. The United States establishes that each trust-owned LLC is the alter ego of William Planes.⁹

9 "The LLC is a business entity originally created to provide 'tax benefits akin to a partnership and limited liability akin to the corporate form.'" Olmstead v. F.T.C., 44 So.3d 76 (Fla. 2010) (Canady, J.) (quoting Elf Atochem North Am., Inc. v. Jaffari, 727 A.2d 286, 287 (Del. 1999)) (Veasy, C.J.). Under the Florida Revised Limited Liability Company Act, Chapter 605, Florida Statutes, a person with an ownership interest in the LLC is a "member" and has a right to share in the profits of the LLC. Although the members own an interest in the LLC, the members do not own the assets of the LLC. The LLC is a distinct entity with the power to own assets in its own right.

i. Dominion and control

William Planes dominates and controls each LLC to the extent that each LLC lacks an existence independent from him. Although William Planes does not serve as the manager for each LLC, William Planes selected Santella to serve as a manager who functions as a reliably submissive and dormant figurehead to conceal from the IRS William Planes's exclusive dominance of the LLCs. Santella never received payment to serve as manager, never initiated or furthered or rejected a transaction as manager, never reviewed bank statements as manager, and never issued checks as manager. William Planes exclusively managed and controlled the LLCs and no person other than William Planes acted in any capacity or to any extent as the manager of an LLC or a

member of an LLC. No person other than William Planes (and Regina Planes) benefits from the assets held by the LLCs, and no person other than William Planes exercises any meaningful control over the distribution of the LLCs and the daily management of the LLCs. After closing their personal bank accounts to avoid IRS levy, the Planeses rely on the assets of the LLCs to pay for their cost of living from the necessaries — food, shelter, transportation — to personal indulgences, such as payments on luxury automobiles, Christmas decorations, fine dining, and dance classes.

Although brazen, the Planeses' abuse of the corporate form is not singular. Applying a markedly similar test under Alabama law to a markedly similar circumstance, Mama's Enterprises, LLC v. United States, 883 F. Supp. 2d 1128 (N.D. Ala. 2012), observes:

The plaintiff entities were the alter-egos of Sherry and Christopher Roach, and plaintiffs have not presented any evidence to counter that showing. Christopher and Sherry Roach conducted their personal lives through the funds of the plaintiff entities, and did so for the purpose of avoiding their liabilities to the United States for unpaid taxes. Christopher does not, and, until recent months, Sherry did not possess a personal bank account because of their fear that the IRS would levy any funds deposited to such an account. Instead, Christopher and Sherry Roach regularly withdrew cash and wrote checks necessary to cover their living expenses from the bank account of Mama's Enterprises, LLC. Furthermore, Sherry Roach testified that she personally makes, or directs Christopher to make, all of the payments to employees and vendors necessary for the operations of the businesses. Plaintiffs have not presented any evidence that any individual other than Sherry Roach is a member of the plaintiff entities, much less that other individuals exercise control over the entities.

Like the Roaches, the Planeses treat the trust-owned LLCs, dominated and controlled by William Planes, as no more than a convenient contrivance by which to game and deflect their creditors and within which perpetually to channel and secure their otherwise vulnerable assets.

ii. Improper purpose

Besides channeling his business endeavors through the LLCs with the conscious intent to evade collection of his tax liability and besides using the bank accounts of the LLCs to satisfy his personal expenses, William Planes has repeatedly engaged in specific transactions under the guise of the LLCs with the specific intent to frustrate the United States and other creditors. During the Keystone transaction, William Planes used Trinity Corner LLC to issue a quitclaim deed to Corklico LLC with the avowed intent to "f[**]k up" title and to frustrate a lawful sheriff's sale and used 2801 Keystone LLC with the avowed intent to conceal from "big bro" his interest in 2801 Keystone LLC and the Keystone property. Similarly, after the IRS had already assessed William Planes with tax liability and levied on his personal accounts, William Planes used Corklico LLC's bank accounts to conceal from the IRS a $250,000 payment from a third party — a payment owed personally to William Planes. Further, William Planes — with a dizzying rapidity — transfers money between the accounts of the LLCs for his personal benefit. Finally, William Planes willfully defied the temporary restraining order by transferring 99% of the money collectively held by the LLCs in a gambit to evade collection of his tax liability. Although William Planes knowingly channeled his business enterprises through

the LLCs to evade a specific creditor, the IRS, these instances of brazen and audacious abuse of the corporate form strongly and broadly establish William Planes's impropriety.

iii. Harm to the United States

By channeling his business enterprise through the trust-owned LLCs, by concealing his assets from the IRS, by asserting the corporate formalities that benefit him and disregarding the corporate formalities hinder him, and by using corporate form to willfully defy orders of this court, William Planes delayed, impeded, and relentlessly undertook to evade and defeat the United States' ability to, and effort to, collect his egregiously delinquent tax liability.

II. Quality Holdings of Florida, Inc. (Count XX)

The United States claims that Quality Holdings, nominally owned by Regina Planes and not owned by the trusts, is an alter ego of William Planes.

a. William Planes's use of Quality Holdings

As part of his scheme to avoid IRS levy, William Planes uses Quality Holdings' accounts to pay for his expenses and Regina Planes's expenses. Although Regina Planes owns 100% of Quality Holdings, William Planes describes Quality Holdings as a "marital asset" that he shares with Regina Planes. (Doc. 376-63) William Planes used Quality Holdings to transfer money between the LLCs. William Planes used money from Quality Holdings to pay for personal expenses for himself and for Regina Planes, including auto insurance, garbage services, and Christmas decorations. William Planes uses Quality Holdings' bank accounts to cash his social security checks and to avoid IRS levy.

b. Credibility

William Planes's testimony that he respects the corporate separateness of Quality Holdings is not credible. In fact, no person other than William Planes exercises any control over Quality Holdings and no person other than William Planes (and Regina Planes) benefits from Quality Holdings. William Planes uses Quality Holdings solely for his benefit and to escape collection of his tax liability.

c. Liability of Quality Holdings

No party disputes that Florida law applies alter ego liability to a corporation. The United States demonstrates that Quality Holdings is an alter ego of William Planes.

i. Dominion and control

William Planes dominates and controls every aspect of Quality Holdings such that the entity lacks an existence independent from him. Although Regina Planes nominally owns Quality Holdings, she was unaware of her ownership and acknowledged that William Planes controlled the entity. Although Quality Holdings has served no business purpose since 2016, William Planes uses Quality Holdings's bank accounts to shield his assets from the IRS and pay the Planeses' personal expenses. (Doc. 376-40)

ii. Improper use

William Planes channels money, property, and assets through Quality Holdings to evade collection of his tax liability. By using Quality Holdings's bank accounts to pay for personal expenses, William Planes evades collection of his tax liability.

iii. Harm

By frustrating collection, William Planes has used Quality Holdings to the

detriment of the United States. William Planes's use of Quality Holdings frustrates the IRS's ability to apply William Planes's tax liability to the assets of which he has control.

* * *

Because the trusts, the trust-owned LLCs, and Quality Holdings are the alter egos of William Planes for the benefit of himself and Regina Planes, the United States is entitled to judgment on Counts XVI, XVIII, XX, XXI, and XVIII.

C. Fraudulent Transfer Liability (Counts XVII and XIX)

The United States claims that William Planes caused the fraudulent transfer of property into the trusts. Under the Florida Uniform Fraudulent Transfer Act (FUFTA), Chapter 726, Florida Statutes, a creditor's claim attaches to the fraudulently transferred property if the creditor establishes either actual fraud or constructive fraud. Wieczoreck v. H & H Builders, Inc., 475 So.2d 227, 228 (Fla. 1985). Under Section 726.105(1)(b), a transfer is actually fraudulent "as to present and future creditors" if the debtor "made the transfer" with the "actual intent to hinder, delay, or defraud any creditor of the debtor." The "actual intent" of the debtor is informed by, among other factors, whether the transfer was to an insider, whether the debtor retained control of the property after the transfer, whether the transfer was disclosed or concealed, whether the debtor was threatened with suit, whether the debtor was insolvent, and whether the transfer occurred shortly before or after a substantial debt was incurred. Under Section 726.105(b), a transfer is constructively fraudulent if the debtor provided no "reasonably equivalent" value in exchange for the assets transferred or if the debtor "[i]ntended to incur, or believed or reasonably should have believed that [the debtor] would incur, debts beyond [the debtor's] ability to pay as they became due."

The United States demonstrates that William Planes has fraudulently transferred assets into the LLCs and into the trusts to evade collection of his tax liability. In December 2012, after William Planes incurred enormous tax liability and after the IRS began levying against the Planeses' bank accounts, William Planes re-directed to Corklico LLC a $250,000 payment from a third party owing money to William Planes personally. As William Planes confirmed in writing, the money was William Planes's money — not Corklico LLC's money. (Doc. 376-63 at 2) From the transfer to Corklico LLC, William Planes paid for his personal expenses without exposing the money to IRS levy. In redirecting the money to Corklico LLC, William Planes had the actual intent to hinder, delay, and defraud the IRS. Further, the transfer was constructively fraudulent because William Planes was insolvent, owed millions of dollars in employment taxes, and received no value from Corklico LLC in exchange for the $250,000.

* * *

The United States is entitled to judgment on Count XVII and XIX for fraudulent transfer.

CONCLUSION

Neither the formation of the trusts nor the consolidation of the assets under title of the LLCs has in any material respect restricted, circumscribed, or limited William Planes's ability to do what he wants with what he asserts — in private moments or when it suits his purpose — are his assets. That is to say, William Planes treats the corporate form as if it does not exist. In accord with these findings of fact and conclusions of law, the order (Doc,

280) on summary judgment, and the pretrial order, the United States must propose a form of final judgment not later than FEBRUARY 28, 2023.

ORDERED in Tampa, Florida, on February 14, 2023.