Daccarett-Ghia v. C.I.R.

1995 WL 17204809 (D.C.Cir.)

For opinion see 70 F.3d 621

United States Court of Appeals,

District of Columbia Circuit.

Johnny DACCARETT-GHIA, Alieged Alter Ego or Nominee of Friko Corporation,

Appellant,

COMMISSIONER OF INTERNAI REVENUE, Appellee.

No. 95-1029.

April 14, 1995.

On Appeal from the United States Tax Court

Appellant's Brief on Behalf of Johnny Daccarett, Alleged Alter Ego of Friko Corporation

Isidoro Rodriguez C., Esq., Attorney for appellant, Law Office of Isidoro Rodriguez, PC, Calle 84 No. 56-51, Piso 2, Office 4, Barranquilla, Colombia, (011)5758-458273.

*ii TABLE OF CONTENTS

CERTIFICATE AS TO PARTIES, RULINGS, AND RELATED CASES ... i

TABLE OF AUTHORITIES ... iv

STATEMENT OF SUBJECT MATTER AND APPELLATE JURISDICTION ... 1

STATEMENT OF THE ISSUES ... 3

STATEMENT OF STANDARD OF REVIEW ... 3

STATEMENT OF THE CASE ... 3

A. Nature of The Case ... 3

B. Statement of Facts ... 3

SUMMARY OF ARGUMENT ... 8

ARGUMENT ... 9

I. THE TAX COURT ERRED IN APPLYING THE "FUGITIVE DISENTITLEMENT DOCTRINE" WHEN MR. DACCARETT CANNOT BE CONSIDERED A "FUGITIVE," AND WHEN THIS CIVIL TAX ACTION INITIATED BY THE UNITED STATES CANNOT BE CONSIDERED RELATED TO THE INDICTMENT IN NEW JERSEY ... 9

II. THE TAX COURT ERRED IN USING THE "FUGITIVE DISENTITLEMENT DOCTRINE" TO DENY MR. DACCARETT'S STATUTORY RIGHT TO CHALLENGE A DEFICIENCY ASSESSMENT, BECAUSE IT WOULD BE A VIOLATION OF HIS RIGHT TO DUE PROCESS UNDER THE FIFTH AMENDMENT TO THE CONSTITUTION ... 15

III. THE TAX COURT ERRED IN DISMISSING MR. DACCARETT'S PETITION BASED ON THE "FUGITIVE DISENTITLEMENT DOCTRINE" BECAUSE IT WOULD BE A FORFEITURE OF ESTATES PROHIBITED UNDER BOTH THE CONSTITUTION AND LAWS OF CONGRESS ... 18

IV. THE TAX COURT ERRED USING THE "FUGITIVE DISENTIT-LEMENT DOCTRINE" TO DISMISS MR. DACCARETT PETITION, BECAUSE THE DISMISSAL IS DISPROPORTIONATE AND EXCESSIVE PUNISHMENT IN VIOLATION OF THE EIGHTH AMENDMENT TO THE UNITED STATES CONSTITUTION ... 20

CONCLUSION ... 23

CERTIFICATE OF SERVICE ... I

*iii CERTIFICATE OF LENGTH OF BRIEF ... I

*iv TABLE OF AUTHORITIES

[FN2]

Cases:

*Austin v. United States, 113 S.Ct. 2801 (1993) ... 20

Commissioner v. Shapiro, 424 U.S. 614, 96 S.Ct. 1062, 47 L.Ed.2d 278 (1976) ... 16

Calero-Toledo v. Pearson Yacht Co., 416 U.S. 663 (1974) ... 18

County of Santa Clara v. Southern, Pac. R. Co., 118 U.S. 396, 6 S.Ct. 1132 (1886) ... 16

*Friko Corporation and Johnny Daccarett, alleged alter ego of Friko Corp. vs. Comissioner of Internal Revenue, 26 F.3d 1139 (D.C. 1994) ... 9

Gee v. State of Kansas, 912 F.2d 414 (10th Cir. 1990) ... 13

Johnny Daccarett-Ghia, Alleged Alter Ego or Nominee of Friko Corp. v. Commissioner, No. 22854-92, (Judge Julian I. Jacobs), entered December 6, 1994, pursuant to the Memorandum of Opinion entered December 5, 1994, T.D. Memo. 1994 594, 1994 RIA T.C. Memo. ¶ 94, 693 ... 10

*Katia Martinez et al vs. Dirk A Lamagno et al. 23 F, 3d 402 (4th Cir. 1994); Sup Ct. Petition No. 94-167, reversed and remanded ____ U.S. ____, 63 LW 4584 (June 14, 1995) ... 10

Mathews v. Diaz, 96 S.Ct. 1883 (1976) ... 15

Molinaro v. New Jersey, 396 U.S. 365 (1970) ... 11

*Jose Antonio Ortega-Rodriguez, Petitioner v. United States, 113 S.Ct. 1199, 122 L.Ed.2d 581 (1993) ... 12, 17

Russian. Volunteer Fleet v. United States, 51 S.Ct. 229 (1931) ... 16

United States v. Mittleider, 835 F.2d 769 (10th Cir. 1987) ... 13

*United States v. $40,877.59 in United States Currency 32 F.3d 1151 (7th Cir. 1994) ... 11, 12, 13, 17

Constitution, Statues, Rules, Regulations: Act of April 30, 1790, ch. 9, § 24, 1 State. 117 ... 18

*v Article III, § 3, cl. 2, of the Constitution ... 18

*Eighth Amendment of the Constitution ... 20, 21

*Fifth Amendment to the United States Constitution ... 15

Tax Reform Act, 26 U.S.C. 4F 7441 et seq. ... 9

26 U.S.C. 4F 7441 et seq. ... 9

Miscellaneous:

4 Commentaries on the Laws of England, William Blackstone, at 381, Legal Classic Lib. Ed. ... 18

Black's Law Dictionary, Sixth Edition ... 22

FN2. Authorities chiefly relied upon are marked with an asterisk.

*1 STATEMENT OF SUBJECT MATTER AND APPELLATE JURISDICTION

On September 24, 1992, based only on the Commissioner's unsupported use of the "nominee or alter ego doctrine," a Notice of Deficiency was issued assigning the assets of Friko Corporation to its Chief Operating Officer, Mr. Johnny Daccarett. (hereinafter "Mr. Daccarett"). These same assets and tax years were already previously assessed to Friko Corporation, and was/is the subject of a Petition filed on November 14, 1991, Friko Corporation v. Internal Revenue Service, U.S. Tax Court, Docket 26693-91.

*2 On October 13, 1992, Mr. Daccarett filed with the Tax Court a timely Petition seeking a redetermination of the deficiency notice.

Jurisdiction in the Tax Court was based on 26 U.S.C. § 6313(a) and S 7429(2)(B). On January 6, 1993, the Tax Court dismissed the Petition of Mr. Daccarett based on the "fugitive disentitlement doctrine." Thus the Tax Court denied independent "judicial" review of the self-serving allegations of the Executive Branch, and permitted the confiscation of Friko Corporation's assets.

On June 24, 1994, the United States Court of Appeals for the District of Columbia, vacated and remanded the action back to the United States Tax Court. Friko Corporation and Johnny Dacca-rett, alleged alter ego of Friko Corporation vs. Commissioner of Internal Revenue, (No. 93-1269), 26 F.3d 1139 (D.C. 1994).

On December 5, 1994, the United States Tax Court, again without taking any evidence to support the allegation that Mr. Daccarett was even a "fugitive," or that this tax litigation is related to any indictment, again dismissed the Petition of Mr. Daccarett based on the "fugitive disentitlement doctrine."

Since a final order has been issued regarding the Petition, this Court's jurisdiction is invoked pursuant to 26 U.S.C. § 7482(a)(1) and (3).

This jurisdiction statement is complete and correct.

*3 STATEMENT OF THE ISSUES

I. WHETHER THE TAX COURT ERRED IN USING THE "FUGITIVE DISENTITL-EMENT DOCTRINE," WITHOUT ANY EVIDENCE THAT MR. DACCARETT WAS A "FUGITIVE," AND THE ACTIONS HAVE "SOME CONNECTION?"

II. WHETHER MR. DACCARETT WAS DENIED DUE PROCESS BECAUSE THE TAX COURT DISMISSED HIS PETITION BASED ON THE "FUGITIVE DISENTITL-EMENT DOCTRINE?"

III. WHETHER THE TAX COURT'S DISMISSAL OF MR. DACCARETT'S PETITION WOULD BE A PROHIBITED "FORFEITURE OF ESTATES"?

IV. WHETHER THE TAX COURT'S PUNISHMENT IS DISPROPORTIONATE AND EXCESSIVE IN VIOLATION OF THE EIGHTH AMENDMENT TO THE UNITED STATES CONSTITUTION?

STATEMENT OF STANDARD OF REVIEW

The Tax Court's ruling is a conclusion of law subject to de novo review on all issues. See Young v. Commissioner, 926 F.2d 1083 (11th Cir. 1991).

STATEMENT OF THE CASE

A. Nature of The Case.

This action involves the seeking of appellate judicial review, of the Article I Legislative Tax Court's continued use of the "fugitive disentitlement doctrine," in complete disregard of this Court's remand order, so to again dismiss Mr. Daccarett's Petition for redetermination of a notice of deficiency.

B. Statement of Facts.

Mr. Daccarett, is a nonresident alien who at all time has been a citizen and resident of the Republic of Colombia. He is the Chief Operating Officer of Friko Corporation, which is organized under the laws of the Republic of Panama, with their offices in Barranquilla, Colombia.

*4 In Barranquilla, Colombia, in 1988, Mr. Daccarett as the President of Friko Corporation, authorized the issuance of a check from Friko Corporation's Merrill Lynch Investment Account in Panama, [FN3] for $41,000.00, as a short term loan to Dr. Luis Saad.

FN3. Friko Corporation is authorized under the laws of the Republic of

Panama to do business as a financial lending and investment house. A contract for investment management services was entered into in the Republic of Panama, between Friko Corpora tion and Merrill Lynch International & Co., office in Panama City, Panama. The payments for offerings were always made only in the Republic of Panama. No business was ever conducted in the United States.

Two years latter on February 7, 1990, United States v. Cardona. et al., Case No. 90-69 (AJL) ("N.J. Indictment"), was filed in the United States District Court for the District of New Jersey, indicting thirty defendants, including Friko Corporation, and Mr. Daccarett, as Friko Corporation's Chief Operating Officer, for alleged money laundering. [FN4]

FN4. The United States's theory of criminal liability is based only on: (i) the loan transaction of December 12, 1988, between Friko Corporation and Dr. Saad, which occurred before the alleged conspiracy began; (ii) two financial transactions by another Daccarett family corporation (Quasil) on the parallel currency market for $70,000.00 and another for $121,825.00, with Dr. Saad; and, (iii) that Mr. Daccarett is the President of both Friko Corporation and Quasil. There is no allegation that either Friko Corporation or Quasil, or Mr. Daccarett were aware of the activities of the

remaining defendants, including Dr. Saad, either with respect to alleged laundering of money in New Jersey or the receiving of any money from any alleged illegal drug dealing.

A civil forfeiture action was filed on March 29, 1990, somehow seizing the investment account maintained by Friko Corporation in the Republic of Panama. The civil complaint tracked the facts recited in the criminal complaint, United States of America v. Contents of Accounts Nos. 3034504504 and 144- 07143 at Merrill *5 Lynch (Friko Corporation), No. 90-1262 (Dist Ct. N.J., Barry, J.), 971 F.2d 974 (3rd Cir. 1992), remanded to Dist. Ct. ("N.J. Forfeiture Case"). in summary the forfeiture complaint:

a. alleged that Friko Corporation's long term brokerage account check for $41,000.00, was issued to Dr. Luis Saad on December 12, 1988, as part of a plan to facilitate the violation of the four money laundering statutes by Dr. Saad and others; and,

b. sought to forfeit Friko Corporation's long term brokerage account, containing over two million dollars, based on the alleged receipt of only two deposits totaling $191,825.00.

In the N.J. Forfeiture Case, Friko Corporation, a Daccarett family firm, filed a verified claim, signed by Mr. Daccarett as CEO. [FN5]

FN5. The Daccarett family are the majority share holders of Friko Corporation, other Friko Corporation share's are held by long term vested employees.

As a result of the N.J. Forfeiture Case, the United States filed a second civil forfeiture action in the Eastern District of New York against the two Daccarett family firms which had invested in the Friko Corporation account United States v. Johnny Daccarett et al., 801 F.Supp 984, 6 F.3rd 37 (2nd Cir. 1993), Sup. Ct. Cert. denied Docket No. 93-1020 ("N.Y. Forfeiture Action"). In August, 1990, Mr. Johnny Daccarett, and Organizacion J.D. Ltda. and Manufacturas J.D. Ltda., filed verified claims in the N.Y. Forfeiture Action.

In the N.J. Indictment Case, the indictment was dismissed against Friko Corporation on October 16, 1990. However, it *6 remained outstanding against Mr. Daccarett as its Chief Operating Officer.

In the N.J. Forfeiture Case, based only on the unsupported allegations the United States moved to strike the verified claim of Friko Corporation and to substitute Mr. Daccarett based on the "nominee or alter ego doctrine;" and then as a result of Mr. Daccarett's failure to appear in the criminal complaint, moved to dismiss and forfeit the funds belonging to Friko Corporation based on the "fugitive disentitlement doctrine."

On February 21, 1991, the N.Y. Forfeiture Action was dismissed as to Mr. Johnny Daccarett, due to there being no evidence of any res seized belonging personally to him.

In March, 1991, in the N.J. Forfeiture Case the District Court struked the verified claim of Friko Corporation, and authorized the forfeiture of its long term investment account, based only on the undocumented allegation of the existence of the "nominee or alter ego doctrine." Subsequently, the District Court refused to consider Friko Corporation timely FRCP Rule 60(b) motion. A notice of appeal was filed with the Third Circuit Court of Appeals.

On July 22, 1992, in the N.J. Forfeiture Action, the United States Court of Appeals for the Third Circuit: (i) ordered the case remanded to the District Court to consider the Rule 60(b) challenging the "alter ego or nominee" allegation; (ii) found that the New Jersey District Court lacked in rem jurisdiction to forfeit Friko Corporation investment account; and, (iii) found that since *7 Mr. Daccarett had not filed a verified claim, the "fugitive disentitlement doctrine" could not be used.

In the N.Y. Forfeiture Action, on August 5, 1992, Judge Jack B. Weinstein issued his final order finding:

"... in this case no credible evidence has been submitted demonstrating that [Mr. Daccarett] controls any claimant or that he will receive the benefit of proceeds returned to a claimant. Nor is there any evidence to suacest that Daccarett is flouting the judicial system in this forfeiture case.... It is the claimant corporations, Manufacturas J.D. and Organizacion J.D., which prevailed at trial--not Johnny Daccarett. The government has shown no persuasive reason to bar the corporate claimant from receiving their funds...." emphasis added 801 F.Supp. at 891 (1992).

On September 24, 1992, the Commissioner issued a notice of deficiency to Mr. Daccarett, as alleged Alter Ego or Nominee of Friko Corporation, based on the assigning of the same alleged income of Friko Corporation, which was and is the subject of a Petition which has been suspended by the Tax Court since November, 1991, Friko Corporation v. Internal Revenue Service, U.S. Tax Court, Docket 26693-91., in the following amounts:

Additions to the Tax-IRC

On October 13, 1992, Mr. Daccarett filed with the Tax Court a Petition (Tax Court Docket No. 22854-92), seeking review of "the deficiency assessment of September 24, 1992 (A-4).

On January 6, 1993,.the Tax Court dismissed the Petition of Mr. Daccarett challenging the deficiency assessment, based on *8 the "fugitive disentitlement doctrine"(A-8). A timely Notice of Appeal was filed with the Tax Court on April 2, 1993.

On June 24, 1994, this Court vacated and remanded the dismissal of Mr. Daccarett's Petition by the Tax Court based on the "fugitive disentitlement doctrine."

On December 5, 1994, without complying with this Court's mandate, the Tax Court held that Mr. Daccarett was a "fugitive" and the actions were related, thus reaffirmed its prior holding.

A timely Notice of Appeal was again filed with the Tax Court on December 26, 1994.

SUMMARY OF ARGUMENT

First, the Tax Court disregarded this Court's mandate in refusing to resolve the question of whether or not Mr. Daccarett is even a "fugitive.," and whether or not this tax action is related to the New Jersey indictment.

Second, as an Article I Court, the Tax Court cannot continue refusing to proceed with the consideration of the Petition filed by Mr. Daccarett, based on the "fugitive disentitlement doctrine" without violating Mr. Daccarett and Friko Corporation's right to due process under the Fifth Amendment.

Third, the Tax Court's decision to deny Mr. Daccarett (and Friko Corporation) the right to challenge the allegation of owing United States taxes, interest and penalties, and to affirm the imposing of a seizure of the assets of Friko Corporation, the Daccarett family business, as a punishment for Mr. Daccarett not coming to the United States is an excessive fine, and an illegal *9 forfeiture of estate of the Daccarett family businesses in violation of the Article III, § 3, cl. 2, and the Eighth Amendment of the Constitution.

ARGUMENT

In Friko Corporation and Johnny Daccarett, alleged alter ego of Friko Corp. vs. Commissioner of Internal Revenue, 26 F.3d 1139 (D.C. 1994), this Court vacated and remanded this action to the Tax Court for further consideration on the same issue now presented, stating that,

...Daccarett-Ghia's appeal raises serious questions regarding whether he is a fugitive in view of the alleged fact that he never resided in the United States and took no evasive action to avoid prosecution; and whether the doctrine applies when the fugitive is in effect defending against government action rather than using the courts affirmatively in an attempt 'to reap the benefit of the judicial process without subjecting himself to an adverse determination,' (citation omitted).... 26 F.3d 1139 at 1143 (D.C. 1994) (A-16).

The Tax Court, formerly officially the Board of Tax Appeals, was an independent agency of the executive branch, but was made an Article I Legislative court by the Tax Reform Act, 26 U.S.C. § 7441 et sea. Thus, because the Tax Court is not an Article III judicial court, to date there has been no independent judicial review provided of the Commissioner's tax assessment determination.

At the outset, the very fact that there has been no independent judicial review of the Executive Branch's allegation of *10 the application of the "nominee or alter ego" doctrine in either this tax action or the related in rem forfeiture action, this action must be reversed, because the Supreme Court recently held on June 14, 1995, that "... when a government official's determination of a fact or circumstance ... is dispositive of a court controversy, federal courts generally do not hold the determination unreviewable. Instead, federal judges traditionally proceed from the 'strong presumption that Congress intended judicial review.' " (citation omitted) Katia Martinez et al vs. Dirk A Lamaqno et al., 23 F. 3d 402 ( 4th Cir. 1994); reversed and remanded U.S. 63 LW 4584 at 4586(June 14, 1995).

In addition, to the above reason, this action must be reversed because the response to this Court's order by the Article I Legislative Tax Court, was to take no evidence to determine if Mr. Daccarett was a fugitive, but rather used the dicta from two unrelated civil forfeiture action where Mr. Daccarett was not a party (as well as where the Third Circuit Court of Appeals had already determined that since Mr. Daccarett had not filed a verified claim, the "fugitive disentitlement doctrine" could not be used), stating that "we see no need to consider whether petitioner fled the country in some literal sense." Johnny Daccarett-Ghia, Alleged Alter Ego or Nominee of Friko Corp. v. Commissioner, No. 22854-92, (Judge Julian I. Jacobs), entered December 6, 1994, pursuant to the Memorandum of Opinion entered December 5, 1994, TD. Memo. 1994 594, 1994 RIA T.C. Memo. 1 94, 693, located at A-30.

*11 Furthermore, the Article I Legislative Tax Court went on to state that "[w]e are not prepared to abandon the fugitive disentitlement doctrine on the theory that petitioner is really defending against government action," and thereby held that based on the Commissioner's mere allegations of tax deficiencies the action was related to the United States mere allegations of money laundering, Johnny Daccarett-Ghia at A-30.

The Article I Legislative Tax Court is in error on both issues and must be reversed.

As recently decided by the Seventh Circuit Court of Appeals, in United States v. $40.877.59 in United States Currency, 32 F.3d 1151 at 1156 (7th Cir. 1994), the use of the "fugitive disentitlement doctrine" is inappropriate in civil forfeiture, [FN6] because the United States Supreme Court in Jose Antonio Ortega-Rodriguez, Petitioner v. United States, 113 S.Ct. 1199, 122 L.Ed.2d 581 (1993) (hereinafter "Ortega-Rodriguez"), held that the use of "fugitive disentitlement doctrine," by appellate courts to dismiss an appeal of a criminal conviction of an escaped fugitive, based on *12 Molinaro v. New Jersey, 396 U.S. 365 (1970) [FN7], should not be extended.

FN6. Black's Law Dictionary, Sixth Edition, at p. 650, defines "forfeiture" as "[a] comprehensive term which means a divesture of specific property without compensation; it imposes a loss by taking away some preexisting valid right without compensation." Consequently, it is obvious that this tax action amounts to civil forfeiture.

FN7. In Molinaro at 366, the Supreme Court stated, "No persuasive reason exists why this Court should proceed to adjudicate the merits of a criminal case after the convicted defendant who has sought review escapes from the restrains placed upon him pursuant to the conviction. While such an escape does not strip the case of its character as an adjudicable case or controversy, we believe it disentitles the defendant to call upon the resources of the court for determination of his claim." (emphasis added).

The Seventh Circuit held, that the Supreme Court stated that,

Our review of rules adopted by the courts of appeals in their supervisory capacity is limited in scope, but it does demand that such rules represent reasoned exercise of the courts' authority. See Thomas v. An, 474 U.S. 140, 146-148 (1985). Accordingly, the justification we have advanced for allowing appellate courts to dismiss pending fugitive appeals assume some connection between a defendant's fugitive status and the appellate process sufficient to make an appellate sanction a reasonable response. [footnote omitted] .... Ortega-Rodriguez at p. 1205.

We cannot accept an expansion of this reasoning that would allow an appellate court to sanction by dismissal any conduct that exhibited disrespect for any aspect of the judicial system, even where such conduct has not connection to the course of appellate proceedings. ... Such a rule would sweep to broadly. ... Ortega-Rodriguez at 1207

In summary the Seventh Circuit held that the doctrine is valid when applied at the appellate level in the same case from which the defendant-appellant is a fugitive, but is inappropriate at the trail level because the trial court is rendering a judgment without considering any evidence. U.S. v. 40.877.59, 32 F.3d at 1156.

Specifically on the requirement that a court determine if one is a "fugitive," the Seventh Circuit held that the Supreme *13 Court decided in Stressheim v. Daily, 221 U.S. 280, 285, 31 S.Ct. 558, 560, 55 L.Ed. 735 (1911), that to be a fugitive, one must take a material step towards commission of the alleged crime while in the state and then absent himself from the state. If the crime is then completed while he is outside the state he would become a fugitive. U.S. v. 40.877.59, 32 F.3d at 1156. Furthermore, the Seventh Circuit held that to be a "fugitive," one must have fled the jurisdiction. U.S. v. 40,877.59, 32 F.3d at 1156. See United States v. Mittleider, 835 F.2d 769 (10th Cir. 1987), and Gee v. State of Kansas, 912 F.2d 414 (l0th Cir. 1990).

Regarding the issue of there "some connection, regarding the actions, the Seventh Circuit held that there must be evidence establishing some connection between the fugitive status of the litigant and the action before the court invoking the fugitive disentitlement doctrine. U.S. v. 40,877.59, 32 F.3d at 1155.

As the Seventh Circuit stated, and pertinent to the Tax Court's failure to comply with this Court's remand order,

When applying the doctrine in government initiated civil forfeiture actions, the real injustice is that the government is allowed to confiscate property on mere allegation. By simply alleging in the complaint that the claimant is a fugitive and the property is related to the alleged crime from which he fled, the government can bar the claimant from defending his property. At most, the government would be required to have a probable cause warrant issued ex Parte. Such a proceeding is inadequate and unreliable, and clearly an insufficient basis on which to justify forfeiture... Thus, With artful pleading, the government could confiscate all of the fugitive's property, indeed, even the property of some individuals who prove to be non-fugitive, all on mere allegation.

*14 This is particularly true when the property being sought to be forfeited belongs to a third party. See also United States v. $83,320 in U.S. Currency, 682 F.2d 573 at 576 (1982).

In its rush to rubber stamp the Executive Branch action, the Article I Legislative Tax Court refused to comply with this Court's order.

Thus to accept the Article I Legislative Tax Court's use of the "fugitive disentitlement doctrine," is to permit civil forfeiture under the Tax Code and penalize Friko Corporation because of Mr. Daccarett's failure to enter the United States to respond to an unrelated N.J. Indictment Case, and despite Mr. Daccarett having never been in the State of New Jersey, or having never taken any evasive action.

This tax action does not involve any one convicted of a crime, much less a fugitive or even a criminal appeal, but a challenge to the Executive Branch tax assessment on Mr. Daccarett, by the Executive Branch assigning the assets of Friko Corporation based on the 'nominee or alter ego doctrine.'

The Tax Court's holding that the Article I Legislative review of the Executive Branch will be denied Mr. Johnny Daccarett, as President of Friko Corporation, because he has not come to the State of New Jersey to answer an outstanding and unrelated indictment denies due process and equal protection, because based on the above a "fugitive" logically must denote an individual who was once in the jurisdiction and has left, and the actions are connected.

*15 This challenge to be assessed taxed via the use of the "nominee or alter ego doctrine" in no way can be viewed as related to the allegations in New Jersey. Also, here Mr. Daccarett cannot be considered a "fugitive" because:

?? Mr. Daccarett is a citizen of the Republic of Colombia and not a citizen of the United States;

?? Mr. Daccarett has taken no evasive action, and has appeared in related action, and his whereabouts have at all time been known to the United States;

?? Mr. Daccarett at all times has resided in Barranquilla, the Republic of Colombia;

?? Mr. Daccarett, being a nonresident alien never resided in the United States;

?? Mr, Daccarett has never been in the State of New Jersey, the jurisdiction in which the indictment was issued; and,

?? Mr. Daccarett never conducted business or acted within the State of New Jersey or even the United States. His issuance of a check on Friko Corporation's account was in Barranquilla, Colombia.

For these reasons no adverse inference can be drawn from Mr. Daccarett's failure to go to the United States after learning that the United States District Court for the District of New Jersey had issued an indictment against him. The Legislative Branch Tax Court and the Executive Branch's speculation aside, he still benefits from the presumption of innocence.

The Fifth Amendment protects every "person" including an alien, whether resident or nonresident, from the deprivation of life, liberty or property without due process of law. *16Mathews v. Diaz, 96 S.Ct. 1883 (1976). Furthermore, this right to due process and equal protection includes a corporation, whether resident or alien, Russian Volunteer Fleet v. United States, 51 S.Ct. 229 (1931) at 231. See also County of Santa Clara v. Southern Pac. R. Co., 118 U.S. 396, 6 S.Ct. 1132 (1886).

In Commissioner v. Shapiro, 424 U.S. 614, 630 n. 12, 96 S.Ct. 1062, 1072 n. 12, 47 L.Ed.2d 278 (1976), the Supreme Court held that due process requires "a post-seizure inquiry" into the basis for the assessment.

Thus both Mr. Daccarett, despite being a nonresident alien, and Friko Corporation, being a nonresident alien corporation, [FN8] have a right to due process and equal protection of the laws under the Fifth Amendment.

FN8. By denying Mr. Daccarett the right to challenge the deficiency assessment based on the allegation of being the nominee or alter ego of Friko Corporation, the Tax Court effectively has denied Friko Corporation's to its right to due process and equal protection of the laws, because even

when Friko Corporation prevails in its Petition, which has been stayed by the Tax Court for almost five years, Friko Corporation's property would have be subject to seizure and forfeited to satisfy Mr. Daccarett's assessment that was authorized by the Tax Court.

However, on December 6, 1994, without any evidence to establish that Mr. Daccarett was a fugitive, the United States Tax Court dismissed the timely filed Petition of Mr. Daccarett which sought a redetermination of the Deficiency Notice issued on September 24, 1992, based on the "fugitive disentitlement doctrine."

This challenged deficiency assessment was for the same years and amounts as that previously assessed against Friko *17 Corporation, and subsequently assessed against Mr. Daccarett by alleging that he was the "nominee or alter ego doctrine" of Friko Corporation.

Thus, the two deficiency assessments issued by the Executive Branch tax and penalize the assets of Friko Corporation twice.

Similar to the holding in United States v. $40.877.59, supra, the fact that a citizen and resident of another country has not availed himself of the United States judicial system to fight unrelated criminal allegations against him in his capacity as Chief Operating Officer of Friko Corporation, certainly cannot be permitted to deprive Mr. Daccarett, and Friko Corporation, of their right to seeking a post seizure judicial review as to the validity and reasonableness of the Government's allegation of his owing U.S. taxes based he being the "nominee or alter ego" of Friko Corporation.

In this action Mr. Daccarett, and effectively Friko Corporation, have been denied due process and equal protection of the laws based on the Tax Court's use of the "fugitive disentitlement doctrine", and based on the Supreme Court holding in Ortega-Rodriquez, and the Seventh Circuit holding in United States v. $40.877.59, supra, this case must be reversed and remanded to the Tax Court.

*18 III. THE TAX COURT ERRED IN DISMISSING MR. DACCARETT'S PETITION BASED ON THE "FUGITIVE DISENTITLEMENT DOCTRINE" BECAUSE IT WOULD BE A FORFEITURE OF ESTATES PROHIBITED UNDER BOTH THE CONSTITUTION AND LAWS OF CONGRESS.

Under common law there did exist a forfeiture based on the conviction of a felony or of treason. Such forfeiture was known as forfeiture of estate. [FN9]

FN9. "The convicted felon forfeited his chattels to the Crown and his lands escheated to the lord; the convicted traitor forfeited all of his property, real and personal, to the Crown." Calero-Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663 (1974)

However this common law forfeiture of estate or "corruption of blood," [FN10] was prohibited as a punishment for a convicted felon under both under Article III, § 3, cl. 2, of the Constitution, and by the First Congress. Act of April 30, 1790, ch. 9, § 24, 1 State. 117.

FN10. Vol. 4 Commentaries on the Laws of England, William Blackstone, at 381, Legal Classic Lib. Ed.,

Logically if a forfeiture of estate of a convicted felon is prohibited by law, a forfeiture of estate of one only accused of a violation of law, is equally prohibited.

Despite this prohibition, through the use of the "fugitive disentitlement doctrine" both the Executive Branch and the Legislative United States Tax Court, have achieved a forfeiture of estate as to the property of the Daccarett family, via the Tax Code because Mr. Daccarett, has not appeared in New Jersey to respond to an unrelated indictment. [FN11]

FN11. This despite the fact that the United States dismissed the criminal action against Friko Corporation, has failed to seek the rapid prosecution of the forfeiture action against Friko Corporation, and has not presented one iota of evidence to support its allegation that Friko Corporation is the alter egos of Mr. Johnny Daccarett.

*19 The undisputed facts are that Mr. Daccarett has been accused, but not convicted, of the offense of money laundering in violation of the laws' of the United States as a result of his loaning $40,000.00 in his capacity as CEO of Friko Corporation. The United States has seized and attempting to forfeit the assets of the Daccarett family, because Mr. Johnny Daccarett is unwilling to enter a foreign and hostile country to defend against unsupported accusations against him as CEO of Friko Corporation. [FN12]

FN12. If this same type of government activity was conducted by either Iran or Iraq, or any other foreign government there would be numerous official objections of the United States State Department. The United States would never accept the argument that the CEO of a U.S. firm should be considered a fugitive from justice because the CEO failed to contest in Iran or Iraq, criminal allegations resulting from his actions as CEO in the United States. The United States would never permit the government of Iraq and Iran to seize and forfeit the assets of the U.S. corporation based on the allegations against the CEO.

This Court cannot permit an Article I Legislative Tax Court to dismiss the tax litigation, challenging the reasonableness of the deficiency assessment issued by the Executive Branch, since this would amount to a forfeiture of estate of property belonging to the entire Daccarett family in Friko Corporation.

*20 IV. THE TAX COURT ERRED USING THE "FUGITIVE DISENTITLEMENT DOCTRINE" TO DISMISS MR. DACCARETT PETITION, BECAUSE THE DISMISSAL IS DISPROPORTIONATE AND EXCESSIVE PUNISHMENT IN VIOLATION OF THE EIGHTH AMENDMENT TO THE UNITED STATES CONSTITUTION.

The Tax Court has prevented any review of the Executive Branch's deficiency assessment, which alleges that Mr. Johnny Daccarett owes in taxes, interest and penalties of over $4 million dollars, based on the bear allegation that he is the nominee or alter ego of Friko Corporation. This is in addition to suspending the review of the United States allegation that Friko Corporation also owes for the same years the same taxes, interest and penalties the amount of another $4 million dollars.

Thus both the Executive Branch and the Legislative Tax Court have punished Friko Corporation, and Mr. Daccarett, because of his unwillingness to come to the United States to contest allegations in New Jersey.

Given that the punishment is to confiscate under the Tax code over $2.5 million dollars, and impose another $5.5 million dollars in interest and penalties, this is a violation of Mr. Daccarett and Friko Corporation rights under the Eighth Amendment of the Constitution.

The United States Supreme Court has recently held that the Eighth Amendment's "Excessive Fines Clause limits the Government's power to extract payments, whether in cash or in kind, as punishment for some offense." Austin v. United States, 113 S.Ct. 2801 (1993) (hereinafter "Austin").

*21 In Austin, a North Dakota man had lost his car-repair business and his mobile trailer after selling two grams of cocaine to an undercover agent. The Government had disputed the contention of the defendant, Richard Lyle Austin, that the seizure under a civil forfeiture law had violated the "excessive fines" clause.

The Government maintained that Federal laws that gave it the authority to take Mr. Austin's home and business were remedial because they were intended to permit the removal of tools of the drug trade. It also said the seizure was a proper way of repaying the Government for the expenses of law enforcement.

Justice Harry A. Blackman, who wrote the Court's unanimous opinion in the case, found that the Eighth Amendment applied to both civil and criminal proceedings and that the forfeiture laws had been intended at least to punish the property owner, and as such fell under the Eighth Amendment. Austin at 4812.

"The purpose of the Eighth Amendment, ... was to limit the government's power to punish. ... The Excessive Fines Clause limits the government's power to extract payment, whether in cash or in kind, 'as punishment' for some offense. (citation omitted) 'The notion of punishment, as we commonly understand it, cuts across the division between civil and the criminal law.' United States v. Halper, 490 U.S. 435, 477-448. ... 'It is commonly understood that civil proceedings may advance punitive and remedial goals, and conversely, that both punitive and remedial goals may be served by criminal penalties." Austin at 4813.

"In considering this question, we are mindful of the fact that sanctions frequently serve more than one purpose. We need not exclude the possibility that a forfeiture serves remedial purposes to conclude that it is subject to the limitations of the Excessive Fines Clause. We however, must determine that it can only be explained as serving in part to punish. We said in Halper that "a civil sanction that cannot fairly be said solely to serve a remedial purpose, but rather can only be explained as also serving either retributive or *22 deterrent purposes, is punishment, as we have come to under stand the term." (emphasis added) Austin 4813. [FN13]

FN13. Black's Law Dictionary, Sixth Edition, at p. 1294: "Remedial laws or statute. ... The underlying test to be applied in determining whether a statute is penal or remedial is whether it primarily seeks to impose an arbitrary, deterring punishment upon any who might commit a wrong against the public by a violation of the requirements of the statute, or whether the purpose is to measure and define the damages which may accrue to an

individual or class of individuals, as just and reasonable compensation for a possible loss having a causal connection with the breach of the legal obligation owing under the statute to such individual or class."

"Our cases also have recognized that statutory in rem forfeiture imposes punishment." Austin at 4814.

In the same contact as above, the Tax Court's dismissing based on the "fugitive disentitlement doctrine," results in a punishment against Mr. Daccarett and Friko Corporation is a violation of the Eight Amendment.

*23 CONCLUSION

Based on the above arguments, Mr. Johnny Daccarett respectfully requesting this Court to again vacate and reverse the Tax Court order of December 6, 1994, and remand the action for expedited consideration of the Petition on the merits. Also because of the history of this action attorney fees and cost should be awarded.