MINDY P. NORMAN, Plaintiff-Appellant
UNITED STATES, Defendant-Appellee
from the United States Court of Federal Claims in No.
1:15-cv-00872-EJD, Senior Judge Edward J. Damich.
Schwartz Frome, Garden City, NY, argued for
Deborah K. Snyder, Tax Division, United States Department of
Justice, Washington, DC, argued for defendant-appellee. Also
represented by Geoffrey Klimas, Richard E. Zuckerman, Travis
A. Greaves, Gilbert Steven Rothenberg.
Prost, Chief Judge, Moore and Wallach, Circuit Judges.
P. Norman appeals a July 31, 2018 decision by the U.S. Court
of Federal Claims finding that: (a) Ms. Norman willfully
failed to file a Report of Foreign Bank and Financial
Accounts ("FBAR") in 2007; and (b) the Internal
Revenue Service ("IRS") properly assessed a penalty
of $803, 530 for this failure. For the reasons stated below,
Norman, a school teacher, opened a foreign bank account with
the Swiss bank UBS in 1999. More specifically, she opened a
"numbered account," which, unlike a "named
account," means income and asset statements for the
account list only the account number and not Ms. Norman's
name or address. From 2001 to 2008, her account balance
ranged between approximately $1.5 million and $2.5 million.
Norman was actively involved in managing and controlling her
account. For instance, she frequently spoke with Mr. Thomann,
her UBS representative, about the account, both in person and
over the phone. She gave UBS instructions detailing how to
invest her funds. For example, she signed a document
inhibiting UBS from investing in U.S. securities on her
behalf, which helped prevent disclosure of her account to the
IRS. She also withdrew funds from the account in 2002. She
received the withdrawal- which appears to have been either
for $10, 000 or $100, 000-in cash from Mr. Thomann. That the
withdrawal was received in cash again helped to prevent
disclosure of the foreign account to the IRS.
client contact records indicate that in April 2008, Ms.
Norman expressed surprise and displeasure when she was
informed of UBS's "new business model,
" which the Court of Federal Claims found
referred to UBS's business decision to "no longer
provide offshore banking" and to work "with the
U.S. Government to identify the names of U.S. clients who may
have engaged in tax fraud." See Norman, 138
Fed.Cl. at 194 (quoting statement by UBS representative Mark
Branson while testifying at a Senate Subcommittee hearing).
Just before UBS publicly announced this new business plan in
July 2008, Ms. Norman closed her account with UBS and
transferred her funds to another foreign bank.
31 U.S.C. § 5314(a), U.S. persons who have relationships
with foreign financial agencies are required to disclose such
relationships to the Treasury Department. This disclosure is
effectuated by filing a Report of Foreign Bank and Financial
Norman did not file a timely FBAR disclosing the existence of
her UBS account in any year, including in 2007, which is the
tax year at issue in this case. In addition, Ms. Norman
signed, under penalty of perjury, her 2007 tax return, which
falsely indicated that she had no interest in any foreign
bank account. She signed her tax return after her accountant
sent her a questionnaire specifically inquiring whether she
had an interest in any foreign bank accounts.
2008, Ms. Norman was referred to an accountant who filed
amended tax returns and late FBARs. The IRS subsequently
opened an audit of Ms. Norman. During this audit, Ms. Norman
made numerous false statements to the IRS. For instance, Ms.
Norman told the IRS, both during an interview and in a
letter, that she first learned of her foreign account in
2009. In the letter, she further stated that she "was
shocked to first hear about the existence of foreign
accounts" in her name. J.A. 133. After retaining
counsel, Ms. Norman sent the IRS a second letter "to
correct several misstatements." J.A. 145-47. In this
letter, she admitted that she had known for over a decade
that she had an "interest" in a foreign bank