United States v. Rescino

Background

The United States brought the case to enforce an Internal Revenue Service summons served on Nicholas C. Rescino. The summons required Rescino to produce specified financial, tax, and other records and to appear for sworn testimony. After Rescino did not comply with the original summons, the court issued an order enforcing it and later approved several extensions and modifications of the compliance deadlines.

The court required Rescino to produce all responsive materials in his possession, custody, or control and to submit a signed declaration stating, under penalty of perjury, that he had produced all such materials after a diligent search. The government stated that Rescino had produced 336 pages but had not supplied the required declaration and that the production appeared incomplete. Rescino’s counsel disputed the government’s description of the production but conceded at the hearing that Rescino had not provided the declaration.

Rescino appeared for testimony by WebEx on February 17, 2021, but the testimony ended before the government completed its questioning. The government asserted that Rescino refused to answer some questions and that his counsel terminated the deposition. The government requested a contempt finding, a daily coercive fine, a possible bench warrant, an order requiring Rescino to finish the deposition, and reimbursement of deposition and motion-related costs and attorneys’ fees.

Legal standard

A court may use civil contempt to enforce compliance with its orders. The government had to prove by clear and convincing evidence that Rescino violated a court order, that the violation was more than minor or technical, and that his conduct did not result from a good-faith or reasonable interpretation of the orders. Civil contempt sanctions must include conditions allowing the person to end the contempt by complying. A court may also use a bench warrant and confinement when necessary to coerce compliance, but confinement must remain connected to that purpose rather than becoming punishment.

Court’s analysis and ruling

The court found all three contempt requirements satisfied. Rescino violated the enforcement orders because he did not submit the required declaration, and his production was therefore incomplete under the court’s orders. The court found that the noncompliance was more than minor because the government could not complete its enforcement efforts without the requested documents and certification. The court also found no evidence that Rescino’s conduct resulted from a good-faith or reasonable interpretation of the orders.

The court therefore found Rescino in civil contempt. He could end the contempt by submitting all documents demanded by the summons and the required declaration to the government by 5:00 p.m. on October 14, 2021, unless the parties jointly stipulated to an extension. The required records included specified tax forms and records concerning assets, liabilities, accounts, bank materials, property, investments, receivables, and insurance policies. The government also clarified that the production included Form 433-A, Form 433-B, W-2, and W-3 forms for all relevant periods.

If Rescino did not comply by the deadline, he would be subject to a $250-per-day fine payable to the United States District Court. The fines would accrue for 21 days after the end of the compliance period. If he still had not complied at the end of that period, the court would issue a bench warrant. The court stated that any resulting coercive confinement would end when Rescino submitted the materials or after five days, whichever came first, because confinement longer than five days would have no coercive effect.

The court ordered Rescino to complete his deposition, with at least seven days’ notice and no later than December 15, 2021, unless the parties agreed to an extension. The court did not find that ending the earlier deposition was itself contempt because the record did not clearly show that Rescino, rather than his counsel, was responsible. It warned that unilaterally ending the resumed deposition could violate the order and lead to additional contempt sanctions.

Judge Beth Labson Freeman denied the government’s request for deposition and motion-related costs and attorneys’ fees without prejudice. The court declined to impose those costs and fees at that time but stated that the government could request them based on future noncompliance.