District Court Rejects Transferee's Claim of Lack of Personal Jurisdiction for FBAR Willful Penalty Suit (3/12/24)

In United States v. Wolin (E.D. N.Y. No. 1:17-CV-02927 Dkt 137 Memo & Order 2/26/24), CL here and GS here, the Court denied the motion to dismiss the Government’s FBAR willful penalty collection suit for lack of jurisdiction over the defendant Greenberg, a recipient of an alleged fraudulent transfer from the person liable for the FBAR penalty. Greenberg’s motion for summary judgment alleged lack of personal jurisdiction. (The CL Docket Entries are here.)

Essentially, although Greenberg was a resident of Israel, she maintained sufficient contacts with New York to support jurisdiction. The Court summarized those contacts as follows (Slip op. 6-8):

          As noted previously, Defendants Wiesel and Greenberg are both daughters of Ziegel and Defendant Wolin is Ziegel’s granddaughter. (FAC ¶¶ 38-39.) Although Defendant Wiesel still lives in New York (FAC ¶ 6), Plaintiff acknowledges that throughout the relevant time period, Defendant Greenberg has lived in Israel. (FAC ¶ 7.) Nevertheless, Plaintiff asserts that Defendant Greenberg maintains sufficient contacts with the State of New York to be subject to personal jurisdiction. (Id.) Plaintiff first contends that Defendant Greenberg is a U.S. citizen and exercises the many benefits and privileges of U.S. citizenship, including by voting in the last two presidential elections. (Id.) Plaintiff further contends that Defendant Greenberg maintains an active New York voter registration in connection to which she listed a Queens, New York address as her residence. (Id.) Plaintiff also alleges that Defendant Greenberg filed federal income tax returns and New York state tax returns for each year during the 2015 — 2019 period. (Id.) Defendant Greenberg is alleged to have made nine visits to the state of New York between January 1, 2014 and December 31, 2019, some of which lasted several months. (Id.) Plaintiff asserts that Defendant Greenberg is the co-owner of residential real property in Queens, New York, that was previously owned by her deceased father, Ziegel, and in connection to which she commenced and is engaged in two lawsuits in New York state courts in Queens County.n2 (Id.) Defendant Greenberg also commenced four additional lawsuits in New York state court, Kings County, which relate to disputes with Defendant Wiesel regarding real properties and business entities previously owned by Ziegel and Ziegel’s estate generally, in which Defendant Greenberg claims an interest. Defendant Greenberg commenced a Queens County Surrogate Court proceeding relating to Ziegel’s estate wherein Defendant Greenberg moved to compel production of Ziegel’s last will and testament and petitioned for letters testamentary in a probate proceeding involving Ziegel’s estate. (Id.) Finally, Plaintiff alleges that Defendant Greenberg is the sole or partial owner of eight personal bank accounts at HSBC in New York and that Greenberg has an ownership interest in at least two New York limited liability companies. (Id.)
   n2 The real property located at 135-41 78th Drive, Flushing, New York 11267 (the "Queens Property") is co-owned by Defendants Greenberg and Wiesel and was originally owned by Ziegel. (ECF No. 131-3, Ptf. Opp. Ex. C, "N.Y. Sup. Ct. Queens Cnty. 712033-2015 Compl." ¶ 7.) In 2006, Ziegel executed a "Life Estate Deed" designating his daughters, Defendants Greenberg and Wiesel, as the beneficiaries of the ownership interest in the Queens Property, in equal shares. (N.Y. Sup. Ct. Queens Cnty. 712033-2015 Compl. ¶ 8.) Upon Ziegel’s death in 2014, the ownership interest in the Queens Property transferred to Defendants Greenberg and Wiesel and has since been the subject of multiple lawsuits, including at least two in Queens County, which were commenced by Greenberg against Wiesel in New York Supreme Court. See e.g., (ECF No. 131-2, Ptf. Opp. Ex. B, "N.Y. Sup. Ct. Queens Cnty. 705219-2018 Compl."; N.Y. Sup. Ct. Queens Cnty. 712033-2015 Compl.).

The Court examined New York law and Due Process Law to find sufficient basis for personal jurisdiction.  (Slip Op. 19-49.)

Added 2/12/24 @ 9:00 pm:

One other thing that I thought noteworthy from the opinion is the following description from an earlier opinion (Slip op. 9-11)”

          Wiesel’s third argument for dismissal centered on her assertion that a fraudulent conveyance required "a volitional act on the part of the conveyor or recipient(s)" such that the death of a person cannot constitute a fraudulent transfer or conveyance under federal or state law. (Sep. 28, 2020 M&O at 6.) The Court noted that "[d]espite Wiesel’s insistence that fraudulent conveyance requires ‘action’ on the part of the conveyor or recipients to distribute assets, New York law is clear that both fraudulent transfer and fraudulent conveyance can occur upon death." (Sep. 28, 2020 M&O at 15.) The Court further held that under federal law, "Ziegel’s interests in [the] Assadah [Trust] and the [UBS] Account were involuntarily transferred to the Daughters, as contingent co-beneficiaries, upon Ziegel’s death . . . [and that] [t]his transfer of [ ] assets fits squarely within" the definition of 28 U.S.C. §§3301(6), 3304(a). (Sep. 28, 2020 M&O at 14-15.)

          As a corollary to her third argument, Wiesel argued that because the Second Amended Complaint did not allege that Defendants ever received a distribution from the Assadah Trust or UBS Account, Plaintiff failed to state a claim for unjust enrichment under New York law. (Sep. 28, 2020 M&O at 6.) The Court rejected this argument as well, pointing to case law that clearly establishes a claim for unjust enrichment may allege "that one party has parted with money or a benefit that has been received by another at the expense of the first party." (Sep. 28, 2020 M&O at 16-17). Because the Second Amended Complaint adequately alleged "that Wiesel and Greenberg did receive ‘something of value’ — Ziegel’s beneficial interest in the Assadah [T]rust . . . the United States has stated a claim for unjust enrichment." (Sep. 28, 2020 M&O at 17) (internal citation omitted).

          Accordingly, Wiesel’s motion to dismiss was denied in its entirety by Judge Mauskopf on September 28, 2020. (Sep. 28, 2020 M&O.) On October 29, 2020, Wiesel filed a notice of appeal with respect to Judge Mauskopf’s Memorandum and Order denying Wiesel’s motion to dismiss, but subsequently withdrew the appeal on December 14, 2020. Two weeks later, Defendant Greenberg filed a motion to dismiss for lack of personal jurisdiction pursuant to Fed. R. Civ. P. 12(b)(2). (ECF No. 73.)