Free Petition - District Court of California - California

Case 3:08-cv-04128-PJH

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STANLEY E. KEEN Regional Solicitor ROBERT M. LEWIS, JR. Counsel for ERISA DANE L. STEFFENSON GA Bar No. 677780 Trial Attorney Office of the Solicitor UNITED STATES DEPARTMENT OF LABOR 61 Forsyth St., Room 7T10 Atlanta, Georgia 30303 Telephone (404) 302-5435 Fax (404) 302-5438 Email: [email protected] Attorneys for Petitioner, United States Department of Labor UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA OAKLAND DIVISION ) ) ) ) Petitioner, ) ) v. ) ) MATTHEW J. DONNELLY d/b/a/ The ) BUSINESS APPRAISAL INSTITUTE, ) ) Respondents. ) ) ELAINE L. CHAO, Secretary of Labor, UNITED STATES DEPARTMENT OF LABOR, Case No.

SECRETARY'S PETITION TO ENFORCE ADMINISTRATIVE SUBPOENA DUCES TECUM

COMES NOW Petitioner ELAINE L. CHAO, Secretary of Labor, United States Department of Labor ("the Secretary"), and petitions the Court to compel Respondents Matt Donnelly and The Business Appraisal Institute ("Respondents") to produce documentary evidence and in support of her Petition asserts: JURISDICTION 1. This Petition is brought to compel Respondents to

comply with an Administrative Subpoena Duces Tecum issued by the

Secretary's Petition to Enforce Administrative Subpoena

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Regional Director of the Atlanta Regional Office of the Employment Benefits Security Administration ("EBSA") of the United States Department of Labor in an investigation conducted pursuant to section 504 of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1134. 2. This Court has subject matter jurisdiction over this

Petition pursuant to Sections 9 and 10 of the Federal Trade Commission Act, 15 U.S.C. §§ 49 and 50, as made applicable to ERISA by Sections 504(c) and 502(e)(1) of ERISA, 29 U.S.C. §§ 1134(c) and 1132(e)(1). VENUE AND INTRADISTRICT ASSIGNMENT 3. Respondent Matthew J. Donnelly ("Donnelly") is a

California resident residing at 180 2nd Street, Suite 419, Oakland, California 94607. Donnelly owns and conducts business

as The Business Appraisal Institute ("BAI") pursuant to a Fictitious Business Name filed with the County of San Francisco on April 1, 2003. BAI has a mailing address in San Francisco,

but the work Donnelly performs as BAI is performed at his residence in Oakland. Affidavit of Investigator Jennifer Del

Nero In Support of Petition to Enforce Administrative Subpoenas Duces Tecum ("JDN Aff.") at ¶ 4. jurisdiction of this Court. 4. Respondents have been at all pertinent times a service Both addresses are within the

provider to the Bruister & Associates Employee Stock Ownership Plan (the "ESOP"), Bruister & Associates Eligible Individual Account Plan (the "EIAP")(collectively, the "Plans"), and numerous other ERISA-governed plans. As service providers,

Secretary's Petition to Enforce Administrative Subpoena

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Respondents provided valuations of closely-held companies to determine a value of the company's stock that was to be sold to an ERISA-governed plan such as an Employee Stock Ownership Plan ("ESOP"). 5. JDN Aff. ¶¶ 3, 6 and 7. Venue lies in the Northern District of California

pursuant to ERISA § 502(e)(2), 29 U.S.C. § 1132(e)(2), as Respondents have and continue to conduct business in this judicial district. 6. The documents sought by the Administrative Subpoena

Duces Tecum are believed to be located at Donnelly's residence at 180 2nd Street, Suite 419, Oakland, California 94607. Aff. ¶ 8. JDN

As the Administrative Subpoena Duces Tecum seeks

documents that were created as a result of work performed in Oakland, California, and the documents responsive to the Subpoena are located in Oakland, California, this case should be assigned to the Oakland District pursuant to L.R. 3-2(c). THE INVESTIGATION AND SUBPOENA 7. At all times relevant hereto, the Secretary, through

the Atlanta Regional Office of EBSA, has been conducting an investigation of the Plans, including service providers and others related to the Plans, under ERISA § 504(a), 29 U.S.C. § 1134(a), to determine whether any person has violated or is about to violate any provision of Title I of ERISA or any regulation or order promulgated thereunder. 8. JDN Aff. at ¶ 2.

In the course of its investigation, EBSA determined

that obtaining certain information from Respondents was essential to determine whether any ERISA violations occurred in

Secretary's Petition to Enforce Administrative Subpoena

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connection with the services provided by Respondents. 3-7. 9.

Id. at ¶¶

On March 13, 2008, R.C. Marshall, Atlanta Regional

Director of EBSA, pursuant to authority vested by ERISA § 504(c), 29 U.S.C. § 1134(c), issued the Administrative Subpoena Duces Tecum ("Subpoena") directed to Respondents. Id. at ¶ 9.

A true and correct copy of the Subpoena is attached as Exhibit A to the Del Nero Affidavit. 10. EBSA served the Subpoena on Respondent by U.S.

Certified Mail, return receipt requested, on March 20, 2008. Id. 11. The Subpoena required Respondent to produce the

responsive documents by March 28, 2008.

JDN Aff., Exh. A.

RESPONDENTS' FAILURE TO COMPLY WITH THE SUBPOENA 12. On March 24, 2008, Respondents' attorney, Larry

Israel, sent a fax acknowledging his clients' receipt of the Subpoena, objections and and answered stating the that Subpoena by asserting had no various

Respondents

responsive

documents other than those that had already been produced or to which the objections applied. JDN Aff. at ¶ 10. A true and

accurate copy of the fax is attached as Exhibit B to the Del Nero Affidavit. 13. Respondents claimed they have no documents responsive

to paragraph 1 of the Subpoena asking for documents showing fees charged or received by Respondents. Exh. B. JDN Aff., Exh. A at ¶ 1 and

However, Respondents have, at a minimum, a bank account

with bank statements showing deposits, tax returns, 1099s and

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electronic data stored in a Quickbook system, all of which would be responsive to the Subpoena. 14. JDN Aff. at ¶ 8.

Under a prior subpoena, Respondents produced most

documents responsive to paragraph 2 of the Subpoena, but have acknowledged that they have not done a thorough search and that additional documents likely exist. 15. JDN Aff., Exh. B.

Respondents asserted baseless objections to paragraphs Respondents have not objected to JDN Aff., Exh. B.

3-4 and 8-9 of the Subpoena.

paragraphs 5-7 of the Subpoena. 16.

To date, Respondents have provided no documents

responsive to paragraphs 1 or 3-9 of the Subpoena. JDN Aff. at ¶ 11. 17. Undersigned counsel has had two telephone

conversations with Respondents' counsel in a good faith effort to obtain Respondents' cooperation in providing the subpoenaed documents including an offer to review the documents as kept in the ordinary course of business to minimize Respondents' effort in complying. But, Respondents' counsel has continued to assert Thus,

Respondents' unwillingness to comply with the Subpoena.

the undersigned indicated to Respondents' counsel that the Secretary intended to proceed with enforcement of the Subpoena. 18. Despite counsel's efforts to obtain Respondents' full

compliance with the Subpoena, Respondents have failed to produce any documents responsive to paragraphs 1 and 3-9 of the Subpoena.

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PRAYER FOR RELIEF WHEREFORE, the Petitioner prays that this Court enter an Order requiring Respondents to appear on a date certain to show cause, if any there be, why it should not appear before the designated EBSA representative at such time and place as the Secretary or the Court may set, then and there to produce such designated documents and records as required by the Subpoena; and that the Petitioner have such other and further relief as may be necessary and appropriate.

August 28, 2008

GREGORY F. JACOB Solicitor of Labor STANLEY E. KEEN Regional Solicitor ROBERT M. LEWIS, JR. Counsel for ERISA By: DANE L. STEFFENSON Trial Attorney Attorneys for Petitioner U.S. Department of Labor

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CERTIFICATE OF SERVICE I am a citizen of the United States of America and am over eighteen years of age. My business address is 61 Forsyth St. On April 28, 2008, I served the

Room 7T10, Atlanta, GA 30303.

SECRETARY'S PETITION TO ENFORCE ADMINISTRATIVE SUBPOENA DUCES TECUM, MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PETITION TO ENFORCE ADMINISTRATIVE SUBPOENA DUCES TECUM, AFFIDAVIT IN SUPPORT OF PETITION TO COMPEL RESPONDENTS TO PRODUCE DOCUMENTARY EVIDENCE, PROPOSED ORDER TO SHOW CAUSE, and MOTION FOR EXPEDITED HEARING on Respondents and Respondents' counsel, who stated he was authorized to accept service, by mailing in a sealed government envelope with postage thereon via United States mail addressed to: Law Office of Larry Israel & Assoc. Attn: Larry Israel 4454 Deer Ridge Road Blackhawk, CA 94506 Matthew J. Donnelly 180 2nd St., Apt. 419 Oakland, CA 94607 The Business Appraisal Institute Attn: Matthew J. Donnelly 41 Sutter Street, Sutie 1675 San Francisco, CA 94104 There is mail service between the place of mailing and the place so addressed. Executed: August 28, 2008 By: DANE L. STEFFENSON Trial Attorney

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