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United States v. L & L International, Inc.

United States District Court, S.D. Texas, Houston Division

January 13, 2020

L & L INTERNATIONAL, INC. and NA LI, Defendants.


          Lee H. Rosenthal Chief United States District Judge

         The government seeks to collect taxes due for almost 20 years. Why has the case taken so long? In large part because the defendants have had, and taken, many opportunities to submit or identify additional summary judgment evidence to support their claim that they owe no taxes, penalties, or interest. Despite those opportunities, the undisputed competent record evidence establishes that: (1) Na Lin is indebted to the United States Internal Revenue Service for $1, 420, 041.54 for unpaid income taxes for the year 2000, with penalties and interest; (2) L & L International, Inc. is the alter ego of Na Li, entitling the United States to enforce its tax liens against both Na Li and L & L International, Inc. for payment of Na Li's tax debt, and to liquidate any property owned by or titled to L & L International, Inc. or Na Li to apply toward payment of the income tax Na Li owes; and (3) Na Li and L & L International, Inc. must repatriate any funds that belonged to Na Li or L & L International, Inc. that Na Li or her father, Bin Li, transferred to the Bank of China or another foreign bank account, which are impressed with federal tax liens, and Na Li and L & L International, Inc. must turn over those funds to the United States for payment toward Na Li's $1.4 million federal income tax debt for the tax year 2000.

         The reasons for these rulings are set out in detail below.

         I. Background

         A. The Summary Judgment Evidence

         The record includes the following exhibits submitted by the United States:

1. Certificate of official record for Na Li's form 1040 for the tax period ending December 31, 2000.
2. A declaration by IRS Revenue Officer Anubhav “Anu” Bagga, with attachments, establishing that Na Li did not file a tax return for tax year 2000, triggering an IRS audit and the filing of a substitute income tax return for that year assessing a tax liability of over $1.4 million.
3. A deposition of Jacob Thomas, prior record owner of Bag Republic, LLC, which employed and paid Na Li in 2009 and 2010.
4. A deposition of Na Li taken on December 3, 2018.
5. Certificate of formation for L & L International, Inc. by its agent, JingMin Lu, filed on January 10, 2011.
6. Chase checking account summary for Na Li for April 2016 to May 2016.
7. The deposition of Bin Li, Na Li's father.
8. A deposition of Na Li taken on January 23, 2018.
9. Assumed name certificate for L & L International, Inc. to conduct business under the name of Bag Republic International, filed on January 13, 2011.

(Docket Entry No. 39).

         Na Li and L & L International, Inc. have submitted affidavits from:

1. Julian Chang, a broker associate with a real estate company who, around the year 2000, was a financial consultant for a stock trading company where JingXia Lu, Na Li's mother, traded stocks.
2. Mimi Tan, a neighbor of JingXia Lu, who also traded stocks at the same stock trading company.
3. TieChun Li, the brother-in-law of JingXia Lu, who had an account at the brokering house where JingXia Lu traded stocks.

(Docket Entry No. 43-1).

         This summary judgment evidence is considered against the applicable legal standards.

         B. The Legal Standards

         1. Summary Judgment

         “Summary judgment is appropriate only if ‘there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.'” Vann v. City of Southaven, 884 F.3d 307, 309 (5th Cir. 2018) (per curiam) (quoting Hanks v. Rogers, 853 F.3d 738, 743 (5th Cir. 2017)). “A genuine dispute of material fact exists when ‘the evidence is such that a reasonable jury could return a verdict for the nonmoving party.'” Burell v. Prudential Ins. Co. of Am., 820 F.3d 132, 136 (5th Cir. 2016) (quoting Savant v. APM Terminals, 776 F.3d 285, 288 (5th Cir. 2014)). “The moving party ‘always bears the initial responsibility of informing the district court of the basis for its motion[.]'” Brandon v. Sage Corp., 808 F.3d 266, 269-70 (5th Cir. 2015) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)).

         “Where the non-movant bears the burden of proof at trial, ‘the movant may merely point to the absence of evidence and thereby shift to the non-movant the burden of demonstrating by competent summary judgment proof that there is an issue of material fact warranting trial.'” Nola Spice Designs, L.L.C. v. Haydel Enters., Inc., 783 F.3d 527, 536 (5th Cir. 2015) (quoting Transamerica Ins. Co. v. Avenell, 66 F.3d 715, 718-19 (5th Cir. 1995) (per curiam)). While the party moving for summary judgment must demonstrate the absence of a genuine issue of material fact, it does not need to disprove the opposing party's case. Coastal Agric. Supply, Inc. v. JP Morgan Chase Bank, N.A., 759 F.3d 498, 505 (5th Cir. 2014). A fact is material if “its resolution could affect the outcome of the action.” Burrell v. Dr. Pepper/Seven Up Bottling Grp., Inc., 482 F.3d 408, 411 (5th Cir. 2007). “If the moving party fails to meet [its] initial burden, the motion must be denied, regardless of the nonmovant's response.” Pioneer Expl., L.L.C. v. Steadfast Ins. Co., 767 F.3d 503, 511 (5th Cir. 2014) (quoting Kee v. City of Rowlett, 247 F.3d 206, 210 (5th Cir. 2001)). In deciding a motion for summary judgment, the court resolves all reasonable inferences in favor of the nonmoving party. City and Cty. of San Francisco v. Sheehan, 135 S.Ct. 1765, 1769 (2015).

         2. ...

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