U.S. v. Coney

Summarized by Gregory Hesse , Hunton Andrews Kurth LLP
13 years 7 months ago

Citation:

U. S. v. Coney, Case No. 11-30387(5th Cir. July 24, 2012)

Tag(s):

Ruling:

The chapter 7 discharge that was issued in favor of the defendants did not discharge their tax obligations because the debtors' conduct violated Sec. 523(a)(1)(C)("A discharge under Section 727 . . .does not discharge an individual debtor from any debt . . .for a tax. . . with repsect to which the debtor . . . willfully attempted in any manner to evade or defeat such tax. . . .").

Procedural context:

This is an appeal from a judgment of the United States District Court for the Eastern District of Louisiana in favor of the government.

Facts:

Curtis Coney was a lawyer that primarily represented personal injury plaintiffs. While filing accurate tax returns for the period of 1996 through 2001, Curtis and Barbara Coney failed to pay over $1.6M in income taxes. During the relevant years, Curtis Coney instructed his employees to make large volumes of cash withdrawels in excess of $2.1M in order to make illegal kickbacks to "runners" who referred cases to his practice. Curtis Coney further instructed his employees to not make any withdrawels in excess of $10,000 so as not to trigger the regulations requiring financial institutions to report the withdrawels to the IRS. Subsequently, a federal grand jury was empaneled to investigate possible criminal behavior on the part of various parties, including Curtis Coney. A legal assistant was subpoenaed to testify before the grand jury, but prior to testifying, Curtis and Barbara Coney met with the legal assistant in order to urge her to testify falsely to the grand jury. Ultimately, Curtis Coney was indicted and pled guilty to ten counts structuring financial transactions in violation of 31 USC Sec. 5324 and one count of obstruction of justice for trying to influence grand jury testimony. Barbara Coney was indicted and pled guilty to one count of obstruction of justice. The Coney's filed for bankruptcy and obtained a discharge. Afterwards, the IRS sued the Coney's to collect the unpaid taxes. The Coney's argued that the debts were discharged. The District Court held that the unpaid taxes were not dischaged because the actions by the Coney's in structuring the cash payments such that they were not detected by the IRS and for obstructing justice by trying to influence grand jury testimony was a willful attempt to to evade or defeat the taxes in violation of Sec. 523(a)(1)(C). The Fifth Circuit affirmed.

Judge(s):

Garza, Dennis and Higginson

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