A Real Life Monty Brewster: Can You Spend $30 Million To Escape From the IRS?

Author: Dan Stroh, Associate Member, University of Cincinnati Law Review

A current circuit split poses an imperative question: Can a hypothetical multi-millionaire, like Monty Brewster, spend his millions frivolously without fear of a tax penalty following him through bankruptcy?[1] The United States Bankruptcy Code generally allows debtors to discharge all debts arising prior to filing of bankruptcy.[2] One exception to this general rule prohibits a debtor from discharging any tax debt “with respect to which the debtor made a fraudulent return or willfully attempted in any manner to evade or defeat such tax.”[3] However, the Ninth and Tenth Circuits disagree on the debtor’s degree of culpability required to deny a discharge of indebtedness under this exception.[4] In In re Vaughn and Hawkins v. Franchise Tax Bd .of California, both debtors utilized tax shelters that were later disallowed.  Due to excessive spending in the timeframe prior to assessment of the tax penalties, both debtors were unable to pay their tax penalties.[5] In Vaughn, the Tenth Circuit held that a debtor need only to spend excessively while aware of a potentially significant tax burden in order to establish the level of culpability needed to find that the debtor attempted to evade the tax. [6] In a conflicting opinion, the Ninth Circuit in Hawkins found that a debtor must spend excessively with specific intent to deplete personal wealth to a level where the impending tax burden cannot be paid.[7]

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“Admitting Privileges” Requirements for Abortion Providers Possibly Up for Review by the Supreme Court

Author: Rebecca Dussich, Associate Member, University of Cincinnati Law Review

Since the Supreme Court’s decision granting women the constitutionally protected right to seek and obtain abortions in Roe v. Wade,[1] various individuals, organizations, and government bodies have pushed back against the ruling through legislation and additional lawsuits. Although many of these attempts have been successful, a recent Fifth Circuit decision, Currier v. Jackson Women’s Health Organization, may signal an impending shift in the battle to maintain access to reproductive rights across the country.[2] Although the decision in this case is explicitly narrow, affirmance by the Supreme Court could establish a standard in which laws that totally eliminate all clinics within the borders of a state violate Roe by abdicating a state’s constitutional responsibilities to another, neighboring state.[3] By reinforcing constitutional rights that have been weakened over time, such a change could represent a tremendous leap forward for women’s rights across the country. The Court is expected to decide on the appellant’s petition for certiorari soon and should review and affirm the lower court decision, affirming once again that reproductive care is not merely a convenience but a constitutionally protected right. Continue reading

Defining “Public Disclosure” Under The False Claims Act: How Loud Must The Whistle Be Blown?

Author: Collin L. Ryan, Associate Member, University of Cincinnati Law Review

The term “whistleblower,” in general, refers to someone who informs on another’s illegal activities. The False Claims Act (FCA), for example, is one of several federal statutes that encourage individuals to disclose to the government their knowledge of another’s illegal activities, i.e., to blow the proverbial whistle.[1] Under the FCA, private individuals can receive large sums of money for blowing the whistle on fraud committed against the government. But once a whistle is blown, the FCA’s “public disclosure bar” prevents subsequent whistleblowers from obtaining rewards for the previously-disclosed fraud.[2] The issue, therefore, is in what manner must the whistle be blown in order for the FCA’s public disclosure bar to go into effect. For a majority of circuit courts that have addressed the issue, the public disclosure bar is not triggered unless the whistle is blown loud enough for the general public to hear it.[3] The Seventh Circuit, however, holds the whistle needs to be blown only loud enough for it to reach the ears of “a competent government official,” regardless of whether the public hears it.[4] Because the Seventh Circuit’s interpretation aligns more with the purpose of the FCA’s whistleblowing provision, it is more persuasive and should be followed by other courts.

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Federal Circuit Contradicts Itself in Playdom Service Mark Ruling

Author: Jon Siderits, Associate Member, University of Cincinnati Law Review

On March 2, 2015, the United States Court of Appeals for the Federal Circuit affirmed the Trademark Trial and Appeal Board’s (TTAB) decision to cancel David Couture’s registration on the mark PLAYDOM.[1] The Federal Circuit found that Couture, who applied to register the mark on May 30, 2008, failed to sufficiently use the mark in commerce to qualify for a trademark registration.[2] The decision is controversial due to the Federal Circuit’s failure to follow established precedent regarding what constitutes “use” in commerce and its creation of a new distinction between the “use” required for service marks and marks for goods. The decision ignored the Federal Circuit’s own guidance from its previous encounter with the issue, which supported a ruling in favor of Couture, and instead concluded that the “actual provision” of services is required before a service mark may be registered.[3]

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Planting Innovation: A Look into Plant Patent Protection and the Deficiencies of the Plant Protection Act and Plant Variety Protection Act

Author: Ashley J. (Clever) Earle, Contributing Member, University of Cincinnati Law Review

When thinking about patent protection, most individuals likely picture what patent attorneys describe as a “widget”—a physical, mechanical invention. Patent protection however, covers a much broader spectrum of inventions. It may seem natural to grant patents to protect new innovations such as chemical compounds, technological advances, or ornamental designs, but most people would not automatically include plants in the categories of protectable technologies. Plant patent protection is an unassuming, but integral part of the incentives of creativity protected by intellectual property law; however, obtaining plant protection can be very onerous and unnecessarily technical.

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Bankruptcy Discharges: Why Courts Should Discharge the Civil Contempt Standard for “Refusals”

Author: Stephen Doyle, Associate Member, University of Cincinnati Law Review

Because of the Great Recession beginning around 2008, the number of bankruptcy filings increased by nearly 150% between 2008 and 2010, before leveling off in recent years.[1] With the increased caseload on bankruptcy courts came increased confusion about some of the Bankruptcy Code’s provisions. Recently, courts have split over the requisite level of intent when a debtor “refuses” to comply with an aspect of the case as the term applies to revocation of a discharge of debt.[2] The Fourth, Ninth, Tenth, and Eleventh Circuit Courts of Appeal have held that the party seeking revocation of a discharge must demonstrate willful or intentional misconduct on behalf of the debtor,[3] while all but one of the bankruptcy courts in the Sixth Circuit have held that the standard mirrors that of civil contempt.[4] The former application—the willfulness standard—is more appropriate to such refusals given the purpose of the Bankruptcy Code and the meaning of the word “refuse.”

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Ohio’s School Voucher Program; Are Lawmakers Establishing a Religion or Just Doing Their Jobs?

Author: Matt Huffman, Associate Member, University of Cincinnati Law Review

In 2014, Americans rated “education” as a top area of concern and as one of the most important problems facing the country.[1] Education is a social, political, and economic issue, and quality education is viewed as critical for both individual and societal success. While the U.S. spends more per student than most countries, this spending has not translated into better results.[2], [3] These underwhelming results have led to widespread debate on how to “fix” the education system in the United States. Ohio was one of the first states to tackle the issues of high costs and poor performance. With the initial implementation of its Cleveland public schools voucher program in 1995, Ohio offered students in failing school districts the opportunity to attend any private school.[4] This program has since expanded into a number of different forms and is now available to all students in Ohio who meet the designated criteria of their respective programs. A substantial number of vouchers have been used for students to attend private, Catholic schools.[5] Since the implementation of voucher programs, the use of public dollars to fund education at religious schools has caused significant debate. This transfer of state money from public schools to religious schools via the voucher program has led to debate about whether the program is an impermissible mixing of church and state under the U.S. Constitution. This article first argues that Ohio’s voucher program is not an impermissible mixing of church and state, and, moreover, that religious schools must be included in any voucher program under the Free Exercise Clause. The article then analyzes Ohio’s own constitution and the socio-political impact of vouchers in determining whether Ohio lawmakers should actually be compelled to pass laws to provide educational opportunities for students at all schools, including private, religiously affiliated schools.

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Narrow Definitions: The Courts’ Resistance to the ADA Amendments Act

Author: Brynn Stylinski Associate Member University of Cincinnati Law Review

The Americans with Disabilities Act (ADA) was passed in 1990 to protect individuals with disabilities from discrimination by private employers, among other entities.[1] Title I of the ADA prohibits employers from discriminating against “a qualified individual on the basis of disability in regard to” the hiring, firing, and other aspects of employment.[2] In the years following the enactment of the ADA, courts narrowly interpreted the ADA’s definition of disability, making it extremely difficult for plaintiffs to bring a successful suit.[3] In 2008, Congress passed the ADA Amendments Act (ADAAA) which explicitly repudiated the courts’ narrow interpretation of disability.[4] The ADAAA redefined key terms of the ADA and instructed courts to interpret the terms broadly in order to expand the protections of the ADA to more individuals.[5] Despite the ADAAA’s repudiation of the narrow interpretation of disability, many courts have continued to interpret the statute narrowly.[6] This continued, explicitly unintended interpretation has resulted in a lack of protection for the intended beneficiaries of the ADA. This improper interpretation is exemplified by the recent case of Ortega v. South Colorado Clinic, P.C. In this case, the United States District Court for the District of Colorado narrowly interpreted the definition of “disability” and excluded a condition that arguably satisfied the ADA’s broad standards.[7] The courts have limited the scope of the ADA despite clear congressional intent, and continuing this trend will lead to the severe abrogation of protective legislation.

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Robbing Peter to Pay Paul: Irving Picard’s Quest to Repay Bernie Madoff’s Victims

Author: Dan Stroh, Associate Member, University of Cincinnati Law Review

Charles Ponzi did not intend to have his name become synonymous with financial fraud; he intended to get rich quickly. While he was not the first to perpetrate such a scheme, Ponzi’s name is attached to a type of fraud in which a fund pays its first investors with the money contributed by later investors—a Ponzi scheme. In 2008, Bernie Madoff was discovered to have been running a Ponzi scheme with investments estimated at $17.5 billion[1] and claimed returns in excess of $65 billion.[2] While Ponzi’s name is still mentioned frequently, many people now view Madoff as the face of Ponzi schemes due to his decades-long run as a famous investment professional all while never actually investing client funds.

When Madoff’s scheme unraveled, Irving Picard was assigned as trustee for Bernard L. Madoff Investment Securities LLC under the Securities Investor Protection Act (SIPA) and was given the task of attempting to recover as much money as possible to repay the initial investments of Madoff clients.[3] Six years later, the victims of Madoff’s fraud are still seeking repayment of their initial investments.[4] Picard has successfully recovered approximately 60% of the stolen assets to distribute to victims, but he continues to seek more.[5] Recently, the Second Circuit placed a major obstacle in his path when it determined that investors who withdrew more from their accounts than they initially invested were protected by the stockbroker defense in § 546(e) of the Bankruptcy Code.[6] Picard argued that these investors profited from Madoff’s scheme and whether they knew of the scheme or not, the profits they enjoyed should be shared by all of the defrauded investors.[7] On March 17, 2015 he filed a petition for certiorari with the Supreme Court, which has the potential to increase the amount of recovered assets by at least $2 billion and possibly up to $4 billion. With the holders of these funds currently protected by the “stockbroker defense” under the Second Circuit’s ruling,[8] Picard hopes that the Supreme Court will take the case and rule that this defense should only apply when actual securities are involved, not fictitious ones as is the case with Ponzi schemes. While some see the efforts of Picard as simply robbing Peter to pay Paul,[9] the return of these funds would allow for all defrauded investors to be treated equally and fairly without conveying benefits on those who were lucky enough to withdraw their money from Madoff’s Ponzi scheme first.

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Unwarranted Amendments: Criminal Procedure Rule 41 Alteration Goes Too Far

Author: Jon Kelly, Associate Member, University of Cincinnati Law Review

The state of modern technology has created many challenges for the existing legal framework.[1] The Committee on Rules of Practice and Procedure of the Judicial Conference of the United States (Advisory Committee) is currently deliberating two proposed changes to the search and seizure requirements of Federal Rule of Criminal Procedure 41. The changes, if enacted, would allow courts to issue search warrants permitting the remote access, search, and seizure of electronic data when the location of the targeted computer or server is not identifiable. The Department of Justice (DOJ) has argued that these changes only address jurisdictional issues created by anonymous computer attacks.[2] However, Google is among those arguing against the amendments, claiming that the new rule would threaten Fourth Amendment protections and that the issue is better left to Congress.[3] Google’s concerns are valid; the amendments to Rule 41 give little assurance that warrants authorized under the new rule would remain limited. The amendments threaten Fourth Amendment protections and compromise diplomacy with foreign nations without offering any safeguards to assuage these concerns. Therefore, the amendments should be rejected and the issue left to Congress, where there can be a more rigorous discussion of the merits and the addition of proper safeguards should the rule be approved.

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