Back again come Michael Shamrock & Victoria Bigg, Docket No. 28725-11, filed 1/30/15.

Mike & Vic lost in Tax Court, ran to Seventh Circuit, which overturned the loss, and sent Mike & Vic back to Judge Chiechi, who ordered an evidentiary hearing, because IRS asked for one. Mike & Vic wanted Judge Chichi to toss the case altogether.

See my blogpost “I Missed This One”, 12/24/14.

Mike & Vic aren’t happy, so they move for Judge Chiechi to recuse herself from their case.

That’s a heavy-duty diss, and Ch J Michael B. (“Iron Mike”) Thornton isn’t having any.

“It is obvious to the Court that petitioners consider the January 15, 2015 order with which they do not agree as a ruling that is adverse to them. The January 15, 2015 order was not based on any extrajudicial information. That order was based upon a deliberative process of determining what the Court should do on remand from the Court of Appeals in order to comply with that Court’s order, judgment, and mandate. As part of that deliberative process, the Court issued an order dated November 25, 2014 (November 25, 2014 order). In that order, the Court ordered the parties to file a status report in which they were to indicate what they believed the Court should do on remand from the Court of Appeals in order to comply with the order and the judgment of that Court.” Order, at p. 1.

Briefly, “Adverse rulings of the Court are not indications of bias or grounds for disqualification of a judge.” Order, at p. 2. (Citations omitted).

But what evidence is necessary? No one contends that the phony who sold Mike & Vic down the river while claiming to be a lawyer and a CPA, was in fact either a lawyer or a CPA. Or that the phony didn’t lie to IRS as well as to Mike & Vic.

The issue isn’t inadequate representation of counsel. That’s only for criminal matters. The issue is fraud, namely and to wit, that the stipulation Mike & Vic entered into was procured by fraud. And IRS was likewise defrauded in accepting the stipulation.

Applying basic contract law to stipulations, as has been reiterated often enough, isn’t necessarily on the table here.

This was a pre-trial stipulation, as Seventh Circuit emphasized: “The Commissioner likened the petitioners’ stipulations to ‘settlement agreements’ that are ‘governed by general principals of contract law.’ But the petitioners signed pretrial stipulations, which did not reflect the computation of the deficiency and penalties or purport to resolve conclusively the petitioners’ liability. See Lovenguth v. C.I.R., 93 T.C.M. (CCH) 1040, at *3–*4 (2007) (distinguishing stipulations under Rule 91 from ‘settlement stipulations’ and stating that Rule 91 ‘allows us to consider factors that might not be sufficient to upset a contract’).” Shamrock, Case No. 14-1916, at p. 3.

“The Commissioner makes much of the fact that the petitioners did not have a right to effective assistance of a lawyer in their civil tax case. As we understand the Commissioner’s argument, a taxpayer should be bound by any stipulation induced by his representative’s deceit so long as the Commissioner was unaware of the fraud. That contention simply refuses to accept that stipulations must be set aside when ‘justice requires,’ and does not resolve whether these petitioners have articulated a valid reason to set aside the stipulation….. Even though the petitioners had no right to an effective lawyer, the petitioners and even the Commissioner’s counsel all believed they were dealing with an attorney authorized to represent taxpayers before the IRS and the Tax Court. The Commissioner minimizes that deception, but the Tax Court should have evaluated whether it provided good cause to set aside the petitioners’ stipulations.” Shamrock, Case No. 14-1916, at p. 3-4. (Emphasis by the Court) (Citations omitted).

The issue was a deduction. The phony induced Mike & Vic to stipulate pre-trial they were only entitled to half. When the phony ducked out because he couldn’t try the case, his successor, a USTCP, found good argument that Mike & Vic were entitled to all.

I’m still looking for the evidentiary question here. Is IRS claiming they knew the phony was a phony, or that Mike & Vic knew he was a phony? Is IRS claiming that Mike & Vic didn’t rely on the phony’s advice? Or would have settled anyway?

What is the disputed material fact here?

And exactly how is IRS prejudiced? Let them try the case.

Enough already.