According to Law360, A Michigan doctor fighting accusations that he failed to report his foreign bank accounts will stay in jail, as a federal court declined to release him when he didn't comply with an order to deposit over $1 million to cover the judgment against him in U.S. v. Kelly, case number 2:21-cv-12570
, in the U.S. District Court for the Eastern District of Michigan
.However, the court will allow James Kelly Jr. to file a brief on the issue of his release from custody and will allow the federal government to respond, according to an order from U.S. District Judge Gershwin A. Drain. Kelly is in jail after the court ruled he was in contempt for failing to comply with a January order to deposit $1.1 million into a bank to cover the penalty for failing to file reports of foreign bank and financial accounts.
The case is back in district court after the Sixth Circuit found in February that Kelly clearly met the standard for willful failure to file FBARs.
The court granted the U.S. government's request for summary judgment against Kelly in May, ruling he had deliberately concealed assets he maintained at Finter Bank in Switzerland without filing the required foreign bank and financial account reports from 2013 to 2015. The court issued an order in October that instructed Kelly to deposit assets in a Michigan bank sufficient to satisfy the outstanding debt of $1.1 million.
The government also filed a motion to garnish Kelly's financial accounts at Huntington National Bank.
Have an FBAR Penalty Problem?
Contact the Tax Lawyers at Marini& Associates, P.A.
for a FREE Tax Consultation at:
Mich. Doctor Denied Release From Contempt In FBAR Fight
ReplyDeleteJames J. Kelly a Michigan doctor will stay jailed for civil contempt after a federal judge found Tuesday that he failed to back up claims that he cannot pay his more than $1 million in foreign bank account reporting penalties due to a bank's bankruptcy and his criminal history.
James J. Kelly has not met his burden to show that his compliance with a court order to repatriate enough foreign overseas assets to pay off his $1.1 million tax debt is impossible, district Judge Gershwin A. Drain said in an order. Kelly made two claims — that the bankruptcy of the Lichtenstein bank holding his assets is keeping him from liquidating his securities, and that his criminal background prevents him from opening a domestic brokerage account — in an appeal this month to be released from the order.
James J. Kelly will be released from U.S. custody after a Michigan federal court lifted on July 23, 2024 an order of civil contempt against him for failure to pay about $1 million in foreign account reporting penalties.
ReplyDeleteJames J. Kelly, a former anesthesiology specialist, has taken sufficient steps to comply with an order to repatriate $1.1 million, though there is more he must do to avoid being found in contempt again, U.S. District Judge Gershwin A. Drain said in an order. The $1.1 million represented penalties and interest for his failure to file reports of foreign bank accounts.
Among the court's stipulations of Kelly's release are requirements to report any transfer of his overseas assets within 48 hours as well as biweekly status reports on his Lichtenstein bank's bankruptcy proceedings, claims and any distributions made by the bank.
He also owes a $20,000 civil contempt fine, the court said.
If Kelly violates any terms of the order, he may again be found in civil contempt and could possibly face criminal contempt sanctions, the court said.
In an emergency motion last week seeking his release, Kelly said he had submitted instructions to Deloitte, the liquidator for his bankrupt Lichtenstein bank, to liquidate and repatriate his foreign securities. The government said it did not oppose the motion.
Under the terms of his incarceration, which was ordered in January, Kelly was not to be released until he repatriated the $1.1 million.
Kelly's previous request to be freed from his incarceration was denied in May after the court ruled that he had failed to support his claims that he couldn't pay his penalties due to his bank's bankruptcy.