United States v. Gorokhovsky

575 F.Supp.3d 1050

UNITED STATES of America, Plaintiff,

v.Vladimir M GOROKHOVSKY, et al., Defendants.

Case No. 18-cv-0590-bhl

United States District Court, E.D. Wisconsin.

Signed December 10, 2021

Gretchen E. Nygaard, United States Department of Justice, Washington, DC, for Plaintiff.

Larissa Ocheretner, Brown Deer, WI, Pro Se.

Vladimir M. Gorokhovsky, Gorokhovsky Law Office LLC, Mequon, WI, for Defendant Gorokhovsky Imports and Investment Group (G.I.I.G.) LLC.

Robert M. Piette, Gray & Associates LLP, New Berlin, WI, for Defendant Wells Fargo Bank NA.

Daniel J. Miske, Ketajh Brown, Husch Blackwell LLP, Milwaukee, WI, for Defendant Cherrywood Village Condominium Association Inc.

AMENDED ORDER GRANTING SUMMARY JUDGMENT

BRETT H. LUDWIG, United States District Judge

In January 2019, the United States filed this action, seeking to reduce federal tax assessments to judgment and foreclose tax liens against Defendant Vladimir Gorokhovsky's real estate. For nearly three years, Gorokhovsky has hamstrung the proceedings through meritless motions, excessive malingering, and bad faith excuses. That ends today. The government has moved for summary judgment, and, because there is no legitimate dispute over the assessment of the taxes owed or the propriety of the tax liens, the motion will be granted.

FACTUAL BACKGROUND¹

Between 2003 and 2014, a delegate of the Secretary of the Treasury timely assessed Vladimir Gorokhovsky for outstanding federal income tax liabilities for nine different tax years (2003, 2004, 2006, 2007, 2008, 2010, 2011, 2013, and 2014). (ECF No. 153 at 3-6.) These assessments were based on deficiencies in his reported Form 1040 statements. (Id. ) For three additional tax years (2012, 2015, and 2016), Gorokhovsky was subject to additional assessments based on his failure to pay his reported tax liabilities. (Id. at 7.) Gorokhovsky tried to challenge the assessments for five of these years (2003, 2004, 2006, 2007, and 2008), but the U.S. Tax Court rejected his challenges on each occasion. (Id. at 2-4.) Consequently, as of September 30, 2020, his personal outstanding federal income tax balance, less credits and penalties discharged in bankruptcy, totaled $425,115.43. (Id. at 8.)

To collect on these liabilities, the IRS filed notices of federal tax liens on three different real estate parcels located in Illinois and Wisconsin. It successfully foreclosed its lien against Gorokhovsky's property on Huron Street in Chicago, Illinois (the Huron Property) while this lawsuit was pending. (Id. at 21); (ECF No. 155-32) (entering default judgment in favor of the United States and against Gorokhovsky). Thus, as of September 30, 2020, and after accounting for the foreclosure proceeds, the outstanding balance, including interest, subject to the two remaining liens totaled $538,749.37. (ECF No. 153 at 10.)

These remaining liens were filed against real estate parcels located in Wisconsin—one at 10910 N. Hedgewood Lane, Mequon, Wisconsin (the Mequon Property), the other at 4275 W. Cherrywood Lane, Brown Deer, Wisconsin (the Brown Deer Property). (Id. at 15, 19.) Gorokhovsky does not currently hold title to either property, but there is more to the story.

The Mequon Property is held in the name of Gorokhovsky's ex-wife, Larissa Ocheretner. (Id. at 12.) Title was transferred to her by warranty deed on July 28, 2005, just months before the two were married. (Id. at 11.) When the couple later divorced in February 2011, Gorokhovsky was awarded all right, title, and interest in the Mequon Property. (Id. ) The divorce decree obligated him to prepare a quitclaim deed for Ocheretner to sign to effectuate the property's transfer, but he never did. (Id. at 12.) The Mequon Property appears to be Gorokhovsky's personal residence. (Id. at 13.) From at least 2008 to 2017, he listed it as his home address on his personal federal income tax returns. (Id. ) At times, he pays the mortgage on the property with funds from his law firm bank account. (Id. at 15.) During his 2017 bankruptcy, he stated, under penalty of perjury, that he owned the property in fee simple. (Id. at 13-14.) During a requested Rule 34 inspection, Gorokhovsky provided access to the property, which contained his personal items as well as a bedroom he referred to as "his." (Id. at 14.)

Title to the Brown Deer Property is held by Gorokhovsky Imports and Investment Group (GIIG), a defunct limited liability company owned and controlled by Gorokhovsky. (Id. at 17.) Gorokhovsky purchased the Brown Deer Property in October 1997. (Id. at 16.) In May 2005, by quitclaim deed and for no consideration, Gorokhovsky transferred title to the Brown Deer Property to GIIG. (Id. ) Gorokhovsky was GIIG's sole officer, director, principle, owner, employee, and registered agent. (Id. ) GIIG was administratively dissolved in 2014. (Id. at 17.) Gorokhovsky's 2011 divorce decree awarded him all right, title, and interest in the Brown Deer Property. (Id. ) Despite the award and GIIG's dissolution, the property remains titled in GIIG's name. (Id. ) Since at least 2005, Gorokhovsky or an immediate family member has occupied and paid all expenses associated with the Brown Deer Property. (Id. at 17-18.) During his 2017 bankruptcy, Gorokhovsky swore, under penalty of perjury, that he owned the Brown Deer Property in fee simple. (Id. at 18.) During a Rule 34 inspection of the property, Gorokhovsky provided access and collected the mail, and the home was filled with his personal belongings. (Id. at 19.) Gorokhovsky also conceded that his five pet cats lived at both the Mequon and Brown Deer Properties. (Id. )

On September 8, 2017, Gorokhovsky filed a chapter 7 bankruptcy petition with the U.S. Bankruptcy Court for the Eastern District of Wisconsin. (Id. at 10.) On June 20, 2018, he received a discharge. (Id. at 11.)

SUMMARY JUDGMENT STANDARD

"Summary Judgment is appropriate where the admissible evidence reveals no genuine issue of any material fact." Sweatt v. Union Pac. R. Co. , 796 F.3d 701, 707 (7th Cir. 2015) (citing Fed. R. Civ. P. 56(c) ). Material facts are those under the applicable substantive law that "might affect the outcome of the suit." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). An issue of "material fact is ‘genuine’ ... if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. If the parties assert different views of the facts, the Court must view the record in the light most favorable to the nonmoving party. E.E.O.C. v. Sears, Roebuck & Co. , 233 F.3d 432, 437 (7th Cir. 2000). "Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no ‘genuine issue for trial.’ " Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (quoting First Nat'l Bank of Ariz. v. Cities Serv. Co. , 391 U.S. 253, 289, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968) ).

ANALYSIS

The government moves for summary judgment on three counts of its complaint. The first count seeks to reduce its federal tax assessments to judgment. The second and third counts seek to foreclose federal tax liens against the Mequon and Brown Deer Properties and declare that Larissa Ocheretner and GIIG hold those properties as Gorokhovsky's nominees. The record contains no genuine issues of material fact, so the Court will grant Plaintiff's motion on each count.

I. The Undisputed Facts Establish that Gorokhovsky's Outstanding Federal Income Tax Liabilities Total $425,115.43, Plus Statutory Interest.

To reduce its federal tax assessments to judgment, the United States must show that those tax assessments were valid and correct and not discharged through Gorokhovsky's 2017 bankruptcy. Because Gorokhovsky has not come forward with evidence sufficient to rebut the presumption that the government assessments were correct, and the record shows a substantial portion of his tax debt survived his bankruptcy, summary judgment will be granted.

A. The Federal Tax Assessments Against Gorokhovsky Are Presumed Valid.

"It is well established in the tax law that an assessment is entitled to a legal presumption of correctness." United States v. Fior D'Italia, Inc. , 536 U.S. 238, 242, 122 S.Ct. 2117, 153 L.Ed.2d 280 (2002). "Once the United States has come forward with evidence that federal tax assessments have been made and that balances are due with respect to those assessments, there is prima facie proof that taxes are owing." United States v. Troyer , No. 91-3560, 1992 WL 382378, at *5 (7th Cir. Dec. 16, 1992). At that point, "[t]he taxpayer has the burden to show an assessment is incorrect." Avco Delta Corp. Canada Ltd. v. United States , 540 F.2d 258, 262 (7th Cir. 1976).

The United States has carried its burden by submitting certified Form 4340 statements for each tax year at issue. (ECF No. 156, Exs. 1-12.) A certified Form 4340 is evidence of valid assessment and proper notice. See Troyer , 1992 WL 382378, at *5 (finding 4340 statements "suffice to warrant a presumption of the validity of the IRS's assessments"); United States v. McCarville , No. 01-C-787, 2003 WL 22327931, at *7 (E.D. Wis. Aug. 21, 2003) ("[Form 4340 statements] carry a presumption of validity and are sufficient evidence to show that assessments were made against a taxpayer, in accordance with statutory and regulatory requirements."). According to the government's sworn declarations, the total balance due on Gorokhovsky's assessments, as of September 30, 2020, is $425,115.43. (ECF No. 153 at 8.) This sum includes interest and statutory additions and also accounts for payments and credits, including the proceeds of the foreclosure on the Illinois property. (Id. )

Gorokhovsky has not submitted evidence or legal authority to challenge the validity of the Form 4340 statements. Much of this failure is the consequence of his misconduct in discovery. Despite a December 20, 2019 discovery order, Gorokhovsky refused to...