19-1253-cv
Schulz v. United States of America
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED
BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1.
WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY
MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE
NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY
OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated Term of the United States Court of Appeals for the Second Circuit, held at the
Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York on the
18th day of December, two thousand twenty.
Present: ROSEMARY S. POOLER,
RICHARD C. WESLEY,
SUSAN L. CARNEY,
Circuit Judges.
_____________________________________________________
ROBERT L. SCHULZ,
Plaintiff-Counter-Defendant-Appellant,
v. 19-1253-cv
UNITED STATES OF AMERICA,
Defendant-Counter-Claimant-Appellee. 1
_____________________________________________________
Appearing for Appellant: Robert Schulz, pro se, Queensbury, N.Y.
Appearing for Appellee: Karen G. Gregory, Tax Division, Department of Justice (Bruce R.
Ellisen, Richard E. Zuckerman, Principal Deputy Assistant
Attorney General, on the brief)
Antoinette T. Bacon, Acting United States Attorney for the
Northern District of New York, Syracuse, N.Y.
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The Clerk of Court is directed to amend the caption as above.
Appeal from a judgment of the United States District Court for the Northern District of
New York (Sannes, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND
DECREED that the judgment of the district court is AFFIRMED.
Robert Schulz appeals from the March 27, 2019 judgment of the United States District
Court for the Northern District of New York (Sannes, J.) granting the government summary
judgment and imposing a penalty of $4,430 on Schulz for operating an abusive tax shelter in
violation of 26 U.S.C. § 6700. In 2007, the district court imposed a permanent injunction on
Schulz and two nonprofit entities of his creation, We the People Foundation for
Constitutional Education, Inc. and We the People Congress, Inc. (collectively “WTP”), barring
them from distributing documents designed to convince companies and workers that the income
tax is fraudulent. We assume the parties’ familiarity with the underlying facts, procedural
history, and specification of issues for review.
We review a grant of summary judgment de novo, construing the evidence in the light
most favorable to the non-moving parties and drawing all reasonable inferences in their favor.
See Sotomayor v. City of N.Y., 713 F.3d 163, 164 (2d Cir. 2013). “A dispute regarding a material
fact is genuine if the evidence is such that a reasonable jury could return a verdict for the
nonmoving party.” Redd v. Wright, 597 F.3d 532, 536 (2d Cir. 2010) (internal quotation marks
omitted).
We affirm for substantially the reasons set out in the district court’s well-reasoned
decision.
The district court properly determined that WTP was an alter ego of Schulz for liability purposes.
Because the issue pertains to “the internal affairs of corporations—for profit or not-for profit—”
the question of whether WTP was an alter ego is decided “in accordance with the law of the
place of incorporation,” in this case New York. United States v. Funds Held in the Name or for
the Benefit of Wetterer, 210 F.3d 96, 106 (2d Cir. 2000).
In determining whether a corporation qualifies as an alter ego, courts consider such
factors as “the absence of the formalities and paraphernalia that are part and parcel of the
corporate existence” such as “election of directors,” the use of “common office space” with the
alleged dominating person, “the amount of business discretion” the corporation displayed
independent of the dominating person, and “the payment or guarantee of debts of the dominated
corporation” by the dominator. Wm. Passalacqua Builders, Inc. v. Resnick Developers S., Inc.,
933 F.2d 131, 139 (2d Cir. 1991). Moreover, “the intermingling of corporate and personal
funds,” the “siphoning of corporate funds” by the alleged dominator, and the “nonfunctioning of
other officers and directors” also point to a corporation being an alter ego. William Wrigley Jr.
Co. v. Waters, 890 F.2d 594, 600-01 (2d Cir. 1989).
Schulz argues that the board of directors retained control over WTP, such that it was not
an alter ego. The record evidence shows, however, that Schulz served as the president, chief
executive officer, and chairman of WTP, and exercised total control over the composition and
functions of the nominal board of directors. Regarding common office space, WTP’s sole
physical location was Schulz’s home, in which he and his wife were the sole people managing
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the corporation. Schulz reported that WTP had no employees, although his wife worked as a
volunteer. Despite the presence of a board, Schulz was by all accounts the only person directing
WTP’s affairs and drafting its message, personally writing and publishing all of its petitions and
public statements and serving as the self-proclaimed “voice of the organization.”
Moreover, Schulz’s activities with WTP displayed the same “intermingling of corporate
and personal funds” associated with an alter ego. Wrigley Jr. Co., 890 F.2d at 600. Schulz used
his personal credit cards to pay for WTP’s expenses, and WTP’s willingness to pay for Schulz’s
bills—including his personal legal expenses—shows that “funds [were] put in and taken out of
the corporation for personal rather than corporate purposes” in the manner indicative of an alter
ego. Wm. Passalacqua, 933 F.2d at 139. Considering the degree of Schulz’s involvement in
managing and coordinating WTP, his sole control over its message, and the intermingling of his
own money with that of WTP, the district court correctly granted summary judgment to the
government.
We have considered the remainder of Schulz’s arguments and find them to be without
merit. Accordingly, the order of the district court hereby is AFFIRMED.
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk
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