Audio Investments v. Robertson

ORDER

HERLONG, District Judge.

This matter is before the court with the Report and Recommendation of the United States Magistrate Judge, made in accordance with 28 U.S.C. § 636(b) and Local Rule 73.02 DSC.1 Several motions are pending in the case. On January 25, 2002, United States Magistrate Judge George C. Kosko issued a Report and Recommendation which recommends, inter alia, granting the United States of America’s (“Government”) motion for summary judgment. After receiving extensions on the time to file objections, Roger Davenport (“Davenport”), proceeding pro se, filed a multitude of objections, most of which are untimely. Audio Investments, an Irrevocable Trust (“Audio Investments”), also filed objections. The Government responded to Davenport’s and to Audio Investments’s objections. After a de novo review of the case, the court grants the Government’s motion for summary judgment.

I. Factual and Procedural Background

This dispute centers around Davenport’s failure to pay federal income taxes and the Internal Revenue Service’s (“IRS”) subsequent seizure of his house. On July 22, 1985, Davenport and his wife, Marie Davenport, purchased lakefront property in Saluda County, South Carolina for $22,000.00 (“Saluda Property”). (Gov’t M. Summ. J. Ex. 8.) During the years 1993 through 1996, the Saluda Property purportedly changed hands several times. Davenport executed two deeds attempting to transfer his interest in the Saluda Property to his daughter, Faith Davenport, for $10.00. (Id. Ex. 9, 11.) On March 28, *5581994, Margaret Davenport attempted to transfer her interest in the Saluda Property to Faith Davenport, also for $10.00. (Id. Ex. 10.) On June 10, 1996, Faith Davenport attempted to transfer her interest in the Saluda Property to Audio Investments. (Id. Ex. 12.)

Davenport failed to file federal income taxes for the years 1991 through 1993, despite earning an adjusted gross income of over $100,000.00 in 1991 and 1992, and over $50,000.00 in 1993. (Id., Ex. 1, 2 at ¶ 2.) On February 13, 1995, the IRS made an assessment of $33,534.00 in taxes plus $3,245.04 in interest for unpaid taxes due for 1991. (Id. Ex. 1.) On July 3, 1995, the IRS made an assessment of $34,111.00 in taxes plus $8,020.41 in interest for taxes due in 1992. (Id.) On February 12, 1996, the IRS made an assessment of $11,338.00 in taxes plus $2,467.03 in interest for taxes due in 1993. (Id.)

On March 21, 1996, and April 10, 1996, the IRS filed notices of federal tax liens for the tax years 1991, 1992, and 1993 in Saluda County against Davenport. (Id. Ex. 3, 4.) On August 26, 1996, the IRS issued notices of its intent to levy to Davenport. (Id. Ex. 19, 20.) On October 24, 1997, the IRS filed a notice of federal tax hen in Saluda County against Audio Investments, as the alter ego of Roger Orme Davenport. (Id. Ex. 7.) On February 9, 1998, the IRS levied on the assets owned by Davenport. (Id. Ex. 21.) Finally, on March 16, 1998, the IRS seized the Saluda Property. (Id. Ex. 2.)

Following the seizure of the Saluda Property, the IRS issued notices of sale. (Id. Ex. 22-27.) On May 29,1998, the IRS sold the property to Dewey L. Robertson, Sr. (“Robertson”) for $110,000.00. (Id. Ex. 31.) The IRS issued Robertson a deed on December 7,1998. (Id. Ex. 2.)

Audio Investments originally filed this case in state court against Robertson as an action to quiet title. Robertson filed an amended answer and a third-party complaint naming Davenport and the Government as third-party defendants. On September 13, 2000, the Government removed the case. Currently pending before the court are the following motions: (1) Audio Investments’ motion to certify a question of law to the South Carolina Supreme Court; (2) Audio Investments’ motion to deny the claim of privilege as to a memo to counsel; (3) Audio Investments’ motion for partial summary judgment; (4) the Government’s motion for summary judgment, and in the alternative, to dismiss for lack of jurisdiction; and (5) Davenport’s motion to remand.

II. Discussion of the Law

A. Summary Judgment Standard

Summary judgment is appropriate only “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c). Rule 56(c) mandates entry of summary judgment “against a party who fails to make a showing sufficient to establish the existence of an element essential to that party’s case.” Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

In deciding whether there is a genuine issue of material fact, the evidence of the non-moving party is to be believed and all justifiable inferences must be drawn in his favor. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). However, “[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are *559irrelevant or unnecessary will not be counted.” Id. at 248, 106 S.Ct. 2505. Moreover, “[w]hen a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of the adverse party’s pleading, but the adverse party’s response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial.” Fed.R.Civ.P. 56(e).

B. The Government’s Motion for Summary Judgment

In its motion for summary judgment, the Government asks the court to determine whether the IRS properly seized the Saluda Property and whether Robertson holds legal title to the Saluda Property. To decide this question, the court must resolve two main issues. First, the court must decide whether persons or entities other than Davenport held any real interest in the Saluda Property. Second, the court must determine whether the IRS complied with the applicable law in seizing the Saluda property.

1. Fraudulent Conveyances

The Government contends that Davenport’s conveyances of the Saluda Property were fraudulent and that Audio Investments is simply his alter ego. Audio Investments and Davenport contend that the IRS wrongfully seized the Saluda Property to satisfy Davenport’s tax obligations because Davenport had no interest in the property — the Saluda Property belonged to Audio Investments.

Assuming it exists at all, .Audio Investments is a curious creature. On June 19, 1992, a “Contract and Declaration of Trust” was filed in Maricopa County, Arizona. (Gov’t M. Summ. J, Ex. 14.) The front page of the document states, “This Declaration of a Pure Trust Organization Authorizes Its Trustees to Operate Under the Name of AUDIO INVESTMENTS.” (Id.) The document designates John Michael Crim of Bernalillo County, New Mexico as the “Creator” of the trust and P.R. Houtz, also of Bernalillo County, as the trust’s “Exchangor.” (Id.) Ray A. Young and Steven E. Duke, both of Ber-nalillo County, are listed as the “First Trustee” and “Second Trustee,” respectively. The “Successor Trustee” is Dana T. Houtz. (Id.)

Audio Investments purportedly held title to the Saluda Property through a series of conveyances by members of the Davenport family. Each of these conveyances was made for nominal consideration— $10.00. Davenport testified that he owns no assets and does not keep a bank account in his own name. (Davenport Depo. at 30.) Davenport initiated the transactions eventually leading to Audio Investments’ possession of the Saluda Property on September 23, 1993, by executing the first deed to his daughter. (Gov’t M. Summ. J. Ex. 9.) By that time, Davenport certainly was on notice that he failed to pay his income taxes. (Davenport Depo. at 35.) Therefore, these transfers rendered Davenport insolvent at a time when he also was indebted to the United States for unpaid income taxes.

Under South Carolina law, such a conveyance is a'nullity. South Carolina’s Statute of Elizabeth, which invalidates fraudulent conveyances such as those made by Davenport, states:

Every gift, grant, alienation, bargain, transfer, and conveyance of lands ... by writing or otherwise ... made to or for any intent or purpose to delay, hinder, or defraud creditors and others of their just and lawful actions, suits, debts, accounts, damages, penalties, and forfeitures must be deemed and taken (only as against that person or persons, his -or *560their heirs, successors, executors, administrators and assigns, and every one of them whose actions, suits, debts, accounts, damages, penalties, and forfeitures by guileful, covinous, or fraudulent devices and practices are, must, or might be in any ways disturbed, hindered, delayed, or defrauded) to be clearly and utterly void, frustrate and of no effect, any pretense, color, feigned consideration, expressing of use, or any other matter or thing to the contrary notwithstanding.

S.C.Code Ann. § 27-23-10(A).2

South Carolina law first distinguishes between existing creditors and subsequent creditors. See Mathis v. Burton, 319 S.C. 261, 460 S.E.2d 406, 408 (1995). Because Davenport’s debt accrued during the years he failed to pay his taxes, even though the precise amount of his debt had not been computed to a precise figure, the court finds that there can be no question that the IRS was an existing creditor at the time Davenport transferred his property.

South Carolina then distinguishes between transfers made without valuable consideration versus transfers made for valuable, but grossly inadequate consideration. See Royal Z Lanes, Inc. v. Collins Holding Corp., 337 S.C. 592, 524 S.E.2d 621, 622 (1999). If a transfer was made for grossly inadequate consideration, “a transfer may be set aside as a fraudulent conveyance only if there is an actual intent to defraud creditors imputable to the grantee.” Id. “A transfer made without valuable consideration, however, may be set aside even without an actual intent to defraud.” Id. (emphasis in the original). “Under § 27-23-10, a transfer made without valuable consideration will be set aside as a fraudulent conveyance if the grantor was indebted to the plaintiff at the time of the transfer and the grantor failed to retain sufficient property to pay his debt to the plaintiff, not merely at the time of transfer, but at the time the plaintiff seeks to collect.” Future Group II v. Nationsbank, 324 S.C. 89, 478 S.E.2d 45, 48 (1996). Under this test, there is no genuine issue of material fact and the court finds that Davenport’s conveyance of the Saluda Property was fraudulent under section 27-23-10 and is therefore void.

Furthermore, the court finds that no genuine issue of material fact exists concerning the nature of Audio Investments. Audio Investments is a sham used by Davenport in an attempt to conceal assets from the IRS. Davenport’s son and daughter, John and Faith Davenport, are the “managers” of the trust. (John Davenport, as Fed.R.Civ.P. 30(b)(6) designee of Audio Investments, Depo. at 11.) Audio Investments has no beneficiaries. (John Davenport Depo. at 29, 81.) While the trust document states that it holds property for the benefit of “certificate holders,” it also states that the “Trust Organization” shall own both legal and equitable title to all property acquired. (Gov’t M. Summ. J. Ex. 14.) The “certificate holders” do not have equitable title to the trust corpus. (John Davenport Depo. at 86.) Nor does there appear to be any purpose behind the trust except the holding of the Saluda Property. (John Davenport Depo. at 22, 25, 79-83.) John Davenport gave the following definition of a “pure trust” such as Audio Investments:

Pure Trust is not created under any statutory authority, it does not have any adhesion contracts with federal or state government. It operates under common law as guaranteed by the Constitution of the United States of America for the *561states. It enjoys the rights that a person enjoys as guaranteed under the Constitution of the United States of America and the fifty states.

(John Davenport Depo. at 25-26.) Also, according to John Davenport’s definition, a “pure trust” does not have federal tax obligations. (John Davenport Depo. at 26.)

Without a beneficiary or a purpose, Audio Investments is not a trust under either Arizona or South Carolina law. See Golleher v. Horton, 148 Ariz. 537, 715 P.2d 1225, 1231 (1985) (“The essential elements of a trust are a competent settlor and a trustee, clear and unequivocal intent to create a trust, ascertainable trust res, and sufficiently identifiable beneficiaries.”); Williams v. Wilson, 341 S.C. 136, 533 S.E.2d 593, 596 (2000) (“For a trust to exist certain elements must be present, including a declaration creating the trust, a trust res, and designated beneficiaries”).3

Furthermore, the operation of Audio Investments shows that it is a nullity. John Davenport stated that Audio Investments’ purpose was “asset protection.” (John Davenport Depo. at 11, 22.) Even though he is the “manager” for the trust, John Davenport does not have signatory authority on the trust’s bank account. (John Davenport Depo. at 15-16.) John Davenport testified that Audio Investments owns the Saluda Property as a rental property, and that his parents rent the property from the trust. (John Davenport Depo. at 65-68.) However, the lease states that the rent is either $800 per month or forty hours per week of sweat equity. (Gov’t M. Summ. J. Ex. 16.) Davenport has never paid the rent in monetary form and supposedly kept a log of the work he did on the property for review by the trust. (John Davenport Depo. at 68.) Based on these facts, the court finds that there is no genuine issue of material fact and the court finds that Audio Investments is a non-entity and is simply the alter ego of Roger Davenport.

2. Seizure of the Saluda Property by the IRS

The court finds that there is no genuine issue of material fact and the IRS complied with the procedures necessary to seize the Saluda Property for Davenport’s failure to pay income taxes. As recounted above, supra part I, the Certificate of Assessments and Payments submitted by the Government shows that the proper procedures were followed.

It is undisputed that Roger Davenport did not file income tax returns for 1991, 1992, or 1993. (Roger Davenport Depo. at 35.) The Certificate of Assessments and Payments shows the dates on which substitute returns were generated, assessments were made and noticed, and the date the liens were noticed. (Gov’t M. Summ. J. Ex. 1.); See United States v. Dixon, 672 F.Supp. 503, 506 (M.D.Ala. 1987) (stating that Certificate of Assessments and Payments is presumptive proof of a valid assessment). The presumption of official regularity also applies to the IRS’s mailing of a notice of deficiency to Davenport, especially considering the absence of any clear proof to the contrary. See id. at 506-07. Notices of levy were sent to Davenport. (Gov’t M. Summ. J. Ex. 19-21; Roger Davenport Depo. at 42, 53.) In fact, Roger Davenport admits that he received notices from the IRS “on a regular basis.” (Roger Davenport Depo. *562at 45.) The Certificate of Assessments and Payments, in addition to Davenport’s testimony that he received notices from the IRS, is sufficient to show that the IRS properly issued Davenport notice of his federal tax liability and the IRS’s intent to seize his property. See Dixon, 672 F.Supp. at 506, (Carol Blount Depo. at 62-64.) Davenport’s argument that the IRS was required to send notices to Audio Investments is irrelevant because, as stated earlier, Audio Investments is merely a sham. Furthermore, the documents submitted by the Government show that IRS followed proper procedures in the sale of the Saluda Property. (Gov’t M. Summ. J. Ex. 22-32.)

Nor is the seizure of Margaret Davenport’s alleged half-interest in the property relevant here. First, Margaret Davenport is not a party to this litigation. Second, the Internal Revenue Code provides an action for wrongful levy. See 26 U.S.C. § 7426(a)(1). Margaret Davenport failed to bring such an action within the nine-month statute of limitations. See 26 U.S.C. 6532(c)(1). The same analysis applies to any contention that Faith Davenport retains an interest in the property. Therefore, the court finds that there is no genuine issue of material fact that the IRS rightfully seized and sold the Saluda Property and that title to the Saluda Property passed to Robertson when the IRS sold it to him on December 7, 1998.

C. Other Pending Motions

The court has reviewed the remaining pending motions filed by Davenport and Audio Investments. After review, and in light of its ruling on the Government’s motion for summary judgment, the court finds these motions wholly without merit. Therefore, these motions are denied.

Therefore, it is

ORDERED that the Government’s motion for summary judgment is granted. It is further

ORDERED that Audio Investments and Davenport’s motions are denied.

IT IS SO ORDERED.

NOTICE OF RIGHT TO APPEAL

Petitioner is hereby notified that he has the right to appeal this order within sixty days from the date hereof, pursuant to Rules 3 and 4 of the Federal Rules of Appellate Procedure.

SUMMARY JUDGMENT IN A CIVIL CASE

Decision by the Court. This action came to hearing before the court. The court having adopted the report and recommendation of the magistrate judge granting the defendants’ motion for summary judgment,

IT IS ORDERED AND ADJUDGED that summary judgment is hereby entered as to the defendant United States of America.

Report and Recommendation

KOSKO, United States Magistrate Judge.

The above-captioned case is before the undersigned United States Magistrate Judge for a Report and Recommendation. The above-captioned case originated as a quiet title action in the Court of Common Pleas for Saluda County (Case No. 99-CP-41-125).

The seeds of this civil action were sown by Roger 0. Davenport, for the record amply demonstrates that Roger 0. Davenport initiated on September 23, 1993, the first step in a series of fraudulent transfers to conceal assets from the Internal Revenue Service (hereinafter the “Service”), and attempted to place assets beyond the reach of federal taxation au*563thorities. The above-captioned case is illustrative of consequences (whether intended or unintended) resulting from the activities of self-deluded tax protesters.1

Roger 0. Davenport is proceeding pro se and has been apprised of dispositive motion procedure. Roseboro v. Garrison, 528 F.2d 309, 310 (4th Cir.l975)(district court must advise a plaintiff confronted by a dispositive motion from an adverse party of his or her right to file counter-affidavits or other responsive material, and be alerted to the fact that his or her failure to so respond might result in the entry of summary judgment against him or .her).

The relevant history of the above-captioned case can be redacted into several events (or, as it were, “causes and effects”). The events cover approximately a fifteen-year period:

July 22,1985 Roger and Margaret Davenport purchase property for $22,000, and _deed is properly recorded. See Government’s Exhibit 8._
April 15,1992 Roger Davenport fails to file Federal Income Tax Return for _Calendar Year 1991_
June 19,1992 Audio Investments “Trust” filed in Maricopa County, Arizona. See _Government’s Exhibit 14._
April 15,1993 Roger Davenport fails to file Federal Income Tax Return for _Calendar Year 1992_
September 23, 1993 Roger Davenport, purportedly, executes transfer of his interest in property to Faith Davenport (his daughter) for Ten Dollars ($10). See Government’s Exhibit 9.
*564October 18,1993 Pursuant to 26 U.S.C. (I.R.C.) § 6020(b), the Service prepares _Substitute Return for Calendar Year 1992 for Roger Davenport
March 28,1994 Margaret Davenport, purportedly, executes transfer of her interest in property to Faith Davenport (her daughter) for Ten Dollars _($10). See Government’s Exhibit 10._
April 11,1994 Pursuant to 26 U.S.C. (I.R.C.) § 6020(b), the Service prepares ___Substitute Return for Calendar Year 1991 for Roger Davenport
April 15,1994 Roger Davenport fails to file Federal Income Tax Return for __ Calendar Year 1993_
February 13,1995 Service makes assessment against Roger Davenport for unpaid _Calendar Year 1991 federal income taxes of $33,534._
June 19,1995 Pursuant to 26 U.S.C. (I.R.C.) § 6020(b), the Service prepares _Substitute Return for Calendar Year 1993 for Roger Davenport
July 3,1995 Service makes assessment against Roger Davenport for unpaid _Calendar Year 1992 federal income taxes of $34,111_
October 23,1995 Notice of Federal Tax Liens against Roger Davenport for 1991 and _1992 Federal Income Taxes filed in Lexington County_
February 12,1996 Service makes assessment against Roger Davenport for unpaid ___Calendar Year 1993 federal income taxes of $11,338._
March 21,1996 Notices of Federal Tax Liens against Roger Davenport for 1993 Federal Income Taxes filed in Saluda County and in Lexington _County_
April 10,1996 Notice of Federal Tax Liens against Roger Davenport for 1991 and _1992 Federal Income Taxes filed in Saluda County_
June 10,1996 Faith Davenport, purportedly, executes deed transferring property _to Audio Investments for $10_
1996_Notices of Intention to Levy for 1991, 1992, and 1993 taxes issued
October 27,1997 Notice of Federal Tax Lien filed against Audio Investments for _Roger Davenport’s 1991, 1992, and 1993 federal income taxes
February 9,1998 Service levies against assets of Roger Davenport_
March 16,1998 Service seizes property (mailing address of Route 2, Box 340-D, _Leesville, South Carolina 29070)_
April-May, 1998_Notices of Sale of property issued_
May 29,1998_Service sells property to Dewey L. Robertson, Sr. for $110,000._
May 29,1998 Six-month period for redemption of property commences under 26 _U.S.C. (I.R.C.) § 6338(a) commences_
November 30,1998 Six-month period for redemption of property expires (because _November 29,1998 fell on a Sunday)_
December 7,1998 Service issues deed for property to Dewey L. Robertson, Sr.
December 21,1998 Deed from Service to Dewey Robertson, Sr., is recorded at Deed _Book 427, page 332-335,_
December 30,1998 Addendum (“Additional Page”) to Deed from Service to Dewey _Robertson, Sr„ recorded_
September 23, 1999 Audio Investments, through counsel, Orin G. Briggs, issues sum-_mons to Dewey L. Robertson in quiet title action_
October 4,1999 Audio Investments, through counsel, Orin G. Briggs, formally files quiet title action in Court of Common Pleas for Saluda County _(Case No. 99-CP-41-125)_
October 7,1999 Audio Investments, through counsel, Orin G. Briggs, files summons _in Clerk of Court for Saluda County_
November 4,1999 Dewey Robertson, through counsel, James O. Spence, files amended answer with affirmative defenses
*565August or September, 2000
Counsel for Dewey Robertson formally files motion to add United States of America, by the through the Internal Revenue Service Roger Davenport as parties to state court action_
September 13, 2000 United States removes case to federal court

It can be inferred from the history of this case that, between 1985 and 1991, Roger O. Davenport got himself, as it were, “mixed up” with tax protester organizations or persons. In a manner similar to what often befalls persons who become addicted to gambling, alcoholic beverages, or illegal drugs, Roger Davenport commenced a series of fraudulent acts that resulted in the loss of his home.

Various motions and cross motions have been filed by the parties. Currently pending before the court are: Roger Davenport’s motion to remand action to state court (Document No. 19); Audio Investments’ Motion to Remand to State Court (Document No. 16); Audio Investments’ Motion to Certify Question (Document No. 56); Audio Investments’ Motion to Deny Claim of Privilege (Document No. 58); Audio Investments’ Motion for Partial Summary Judgment (Document No. 70); the Motion for Summary Judgment or, in alternative, Motion to Dismiss filed by the United States (Document No. 76).2

*566The United States cites South Carolina case law on what is commonly known as the Statute of Elizabeth, § 27-23-10, South Carolina Code of Laws. The law is called the Statute of Elizabeth because the original version of the law enacted in England (now part of the United Kingdom of Great Britain and Northern Ireland) was enacted during the reign of Queen Elizabeth I. At the relevant times in this ease (ie., prior to the General Assembly’s 1997 amendments), South Carolina’s Statute of Elizabeth provided:

§ 27-23-10. Conveyances to defraud creditors are void.
Every feoffment, gift, grant, alienation, bargain and conveyance of lands, tenements or hereditaments, goods and chattels, or of any of them, or of any lease, rent, commons or other profit or charge out of the same, by writing or otherwise, and every bond, suit, judgment and execution which may be had or made to or for any intent or purpose to delay, hinder or defraud creditors and others of their just and lawful actions, suits, debts, accounts, damages, penalties and forfeitures shall be deemed and taken (only as against that person or persons, his or their heirs, successors, executors, administrators and assigns, and every of them, whose actions, suits, debts, accounts, damages, penalties and forfeitures by such guileful, covinous or fraudulent devices and practices, as is aforesaid, are, shall or might be in any ways disturbed, hindered, delayed or defrauded) to be clearly and utterly void, frustrate and of no effect, any pretense, color, feigned consideration, expressing of use, or any other matter or thing to the contrary notwithstanding.
HISTORY: 1962 Code § 57-301; 1952 Code § 57-301; 1942 Code § 8696; 1932 Code § 8696; Civ. C. ’22 § 5218; Civ. C. 12 § 3455; Civ. C. ’02 § 2369; G.S. 1786; R.S. 1888; 1712(2) 697.

Section 27-23-10, South Carolina Code of Laws.

*567In 1712, the colonial Legislature of the Province of South Carolina determined which English statutes would be in effect in South Carolina. The various laws enacted by the colonial Legislature of South Carolina are commonly referred to as the Reception Acts. Hence, the “history” section of the Statute of Elizabeth reveals that South Carolina had a “pristine” version of the Statute of Elizabeth during the relevant times in this case.3

It is readily apparent that Roger Davenport’s real estate transactions were sufficiently structured to call into question the Service’s contention that Audio Investments is the alter ego of Roger Davenport. In other words, since Roger Davenport was not the “settlor” of the trust establishing Audio Investments in Arizona, it, facially, would be more difficult for the Service to assert that Audio Investments is Roger Davenport’s alter ago. Even so, the documentary evidence in the above-captioned case reveals that Audio Investments, though formally established by persons other than Roger Davenport or his immediate family, was an entity or conduit *568used by Roger Davenport in his effort to conceal assets from the Service to avoid paying lawfully imposed federal income taxes.

The scheme used by Roger Davenport might well be characterized as an ill-fated attempt to create a domestic or homespun version of a “Dahlstrom-type” trust over property located in South Carolina. United States v. Dahlstrom, 713 F.2d 1423 (9th Cir.1983)(defendants charged and convicted for violating I.R.C. Section 7206(2) for their role in promoting abusive tax shelters; convictions reversed on appeal), cert. denied, 466 U.S. 980, 104 S.Ct. 2363, 80 L.Ed.2d 835 (1984).

Dahlstrom was a criminal case, not a civil case. Moreover, Dahlstrom is not binding in the Fourth Judicial Circuit. Decisions of Circuit Courts of Appeals are not binding outside their own circuits. See Virginia Society for Human Life, Inc. v. Federal Election Commission, 263 F.3d 379 (4th Cir.2001)(refusing to extend invalidation of FEC regulation outside the Fourth Judicial Circuit, and noting that intercircuit conflicts do not freeze the development of the law and give the Supreme Court of the United States the “benefit of decisions from several courts of appeals”).

The United States correctly points out that the Service is not bound by the taxpayer’s characterization of the transaction, and cites Higgins v. Smith, 308 U.S. 473, 477, 60 S.Ct. 355, 84 L.Ed. 406 (1940). Both the Tax Court of the United States and “Article III” courts have held, in cases over the past twenty years, that pure trusts and family trusts are sham transactions. See, e.g., William L. Comer Family Equity Trust v. United States, 732 F.Supp. 755 (E.D.Mich.1990), affirmed, William L. Comer Family Equity Pure Trust v. Internal Revenue Service, 966 F.2d 1455 (6th Cir.1992), cert. denied, William Comer Equity Pure Trust v. Internal Revenue Service, 506 U.S. 1023, 113 S.Ct. 661, 121 L.Ed.2d 586 (1992); and Estate of Yeoham v. Commissioner, 1986 T.C.Memo 1986-431, 1986 WL 21641 (1986)(“Labels, semantic technicalities, and formal documents do not necessarily control the tax consequences of a given transaction. Instead, we must be concerned with the economic realities and not the form employed by the parties.”), affirmed, 826 F.2d 11 (5th Cir.1987)[Table]; Zmuda v. Commissioner, 79 T.C. 714, 1982 WL 11177 (1982), affirmed, 731 F.2d 1417 (9th Cir.1984); and Professional Services v. Commissioner, 79 T.C. 888, 1982 WL 11195 (1982). See also Joel C. Dobris, Changes in the Role and the Form of the Trust at the New Millennium, or, We Don’t Have to Think of England Anymore, 62 Albany L.Rev. 543 (1998)(“There are also the tax protesters with their wacky trusts. * * * it is tempting to say that some people believe that the only thing a trust cannot do is cure disease.”); and Christopher S. Jackson, The Inane Gospel of Tax Protest: Resist Rendering unto Caesar-Whatever His Demands, 32 Gonzaga L.Rev. 291 (1996-1997). Cf. Twyne’s Case, 76 Eng. Rep. 809, 813 (K.B. 1601)(noting that there was a “trust between the parties, for the (debtor) possessed all, and used them as his proper goods, and fraud is always ap-parelled [sic ] and clad with a trust, and a trust is the cover of fraud”), which is quoted in Mary Jo Newborn Wiggins, A Statute of Disbelief?: Clashing Ethical Imperatives in Fraudulent Transfer Law, 48 S.C. L.Rev. 771, n. 104 (Spring 1997).

Although the various transactions initiated by Roger Davenport will not protect his tax protester activities in a civil action, Roger Davenport does have one consolation: it appears that the six-year limitations period for a criminal case, such as under 18 U.S.C. § 871 (conspiracy to de-

*569fraud the United States) or other statutes, against him has expired. 26 U.S.C. § 6501. I.e., Roger Davenport will not go to prison for his fraudulent conveyance in 1993.4

The United States correctly points out that, aside from the original purchase of the property in 1985, none of the Davenport family transactions concerning the property have documentary stamps. Bona fide real estate transactions, such as deeds, must be recorded in the Register of Deeds (formerly called the Register of Mesne Conveyance)5 for the particular county.

One point of the United States is well taken: the lack of documentary stamps on the 1993, 1994, and 1996 conveyances. At the time the fraudulent conveyances were made, South Carolina had an extensive documentary or stamp tax. See “old” § 12-21-310 and “old” § 12-21-380, South Carolina Code of Laws (1992 version of South Carolina Code of Laws).6

Many of the documentary taxes were repealed in 1996 and replaced with a “recording fee” based on the value of the property. See South Carolina Department of Revenue Information Letter No. 97-17 (August 14,1997), reported at 1997 WEST-LAW® 900869; South Carolina Revenue Procedure 97-3 (February 24, 1997), reported at 1997 WESTLAW® 895303; and South Carolina Department of Revenue Information Letter No. 96-18 (August 19, 1996), reported at 1996 WESTLAW® 942502, at *41-*42.

The documentary evidence before the court confirms the Service’s contention *570that the 1993 and 1994 conveyances from Roger Davenport and Margaret Davenport to Faith Davenport fall within the scope of the so-called Statute of Elizabeth. The Statute of Elizabeth in South Carolina is not limited to judgment creditors and no court judgment is needed to invoke it. Lebovitz v. Mudd, 293 S.C. 49, 358 S.E.2d 698 (1987), which is cited in Future Group, II v. Nationsbank, 324 S.C. 89, 478 S.E.2d 45, 50 (1996).

It can be judicially noticed that individual federal income tax returns for Calendar Year 1991 were due on Wednesday, April 15, 1992, unless an extension of time was sought. Roger Davenport did not file an individual federal income tax return for 1991 and did not seek an extension of time by filing a request for extension of time on or before April 15, 1992. Hence, on April 16, 1992, the Service became a creditor of Roger 0. Davenport. In other words, the Service became a creditor of Roger Davenport at 12:01 A.M. on April 16, 1992 with respect to his 1991 federal income taxes.

At this point is appropriate to digress, slightly, and discuss footnote 1 of the Response of the United States (Document No. 79) to Plaintiffs Motion for Partial Summary Judgment. Mr. Marc J. Korab, the Attorney for the Tax Division of the United States Department of Justice, was obviously attempting to address the concerns expressed by the undersigned in pri- or orders as to whether Roger and Margaret Davenport filed “joint” returns or “married filing separate” returns. After the United States’ briefs were filed, this court became aware that no federal income returns had been filed for Calendar Years 1991, 1992, and 1993 by Margaret Davenport or Roger Davenport.7

A joint return must include all income, exemptions, and deductions of both spouses. Generally, both spouses are jointly and severally liable for the tax due on a joint return. Treasury Regulation § 1.6013 — 4(b).

Margaret Davenport’s failure to file federal income tax returns for 1991-1993, irrespective of whether she was required to do so, means that she cannot avail herself of various “innocent spouse” provisions, whose time and financial provisions are triggered by the filing of a return. See “old” 26 U.S.C. (I.R.C.) § 6013, which was later superannuated.by the 1998 Restructuring and Reform Act (“RRA”). Moreover, a married individual taxpayer (whether a tax protester or a person involved in a legitimate tax dispute with the Service) would, justifiably, cry “foul” if the Service were to calculate income taxes due on the basis of a “married filing separately” status. See, e.g., Shea v. Commissioner, 112 T.C. 183, 1999 WL 177471 (1999), nonacq., 2000-441.R.B. 429.8

*571The record before the court shows that Margaret and Roger Davenport have been married at all relevant times in this case and have lived together as married persons on the property in question. In light of the profound difference in the tax rates between “married filing jointly” and “married filing separately” during the tax years in question and continuing to the present day, the Service is probably correct in saying that “married filing jointly” is the correct filing status.9

Longstanding South Carolina case law on the Statute of Elizabeth provides that voluntary conveyances to family members will receive close scrutiny. The late Honorable Randall T. Bell, Judge of the South Carolina Court of Appeals, in an opinion upheld a trial court’s finding that a conveyance from a debtor to another family member violated the Statute of Elizabeth:

First Citizens Bank commenced this action to set aside a voluntary conveyance from Joe W. Scofield, Jr., to his mother, Venita McCue Scofield. The Bank alleged the conveyance was to prevent it from collecting a judgment against Scofield for an unpaid indebtedness. The circuit court entered a decree setting aside the conveyance. The Sco-fields appeal. We affirm.
In January 1977, Scofield executed a promissory note to the Bank to cover certain business indebtedness. The note was renewed in January 1978. Scofield defaulted on the note in June 1979.
In August 1978, prior to his default on the note, Scofield conveyed his residence in Mount Pleasant to his mother. The mother paid nothing for the property. After the conveyance, Scofield continued to reside on the property and to pay the mortgage and taxes on it. He pays no rent to his mother. The mother continues to reside at her own home on James Island. She testified she knew nothing about the conveyance until it was completed.
The Bank obtained a judgment on the note in May 1980. In August 1980 an execution was issued on the judgment. The execution was returned nulla bona by the sheriff of Charleston County. Thereafter the Bank commenced this action to have the conveyance set aside.
We hold the conveyance from Scofield to his mother was void under the Statute of Elizabeth, now codified as Section 27-23-10, Code of Laws of South Carolina, 1976. One who is in debt cannot make a voluntary conveyance which will prevail against existing debts. Cordery v. Zealy, 1831 WL 1518, 18 S.C.L. (2 Bail.) 205 (1831); Richardson v. Rhodus, 1866 WL 2325, 48 S.C.L. (14 Rich.) 95 (1866). If the debt was in existence at the time of the conveyance, it is immaterial that it had not yet been reduced to judgment. Matthews v. Montgomery, 193 S.C. 118, 7 S.E.2d 841 (1940). A voluntary conveyance which has the effect of defeating the'rights of existing creditors is not saved from the operation of the statute *572by reciting a consideration of five dollars and “love and affection.” See Farmers’ Bank v. Bradham, 129 S.C. 270, 123 S.E. 835 (1924); Coleman v. Daniel, 261 S.C. 198,199 S.E.2d 74 (1973).
The decree of the circuit court is AFFIRMED.

. The recommendation has no presumptive weight, and the responsibility for making a final determination remains with the United States District Court. See Mathews v. Weber, 423 U.S. 261, 270, 96 S.Ct. 549, 46 L.Ed.2d 483 (1976). The court is charged with making a de novo determination of those portions of the Report and Recommendation to which specific objection is made. The court may accept, reject, or modify, in whole or in part, the recommendation made by the magistrate judge or recommit the matter with instructions. 28 U.S.C. § 636(b)(1).

. The quoted passage is the current version of this statute. Section 27-23-10 was altered in 1997, but the statute’s effect and operation have not changed.

. The court also notes the decisions of other courts dealing skeptically with “pure trusts.” See, e.g., Bracken v. Earl, 40 S.W.3d 499 (Tenn.Ct.App.2000); Barmes v. Commissioner, 81 T.C.M. (CCH) 1825, 2001 WL 732879 (2001); Neve v. Commissioner, 1981 WL 10827 (1981).

. See James Edward Maulé, Instant Replay, Weak Teams, and Disputed Calls: An Empirical Study of Alleged Tax Court Judge Bias, 66 Tenn. L.Rev. 351 (Winter 1999), where the study concluded that tax protesters tended to rely, to their detriment, on discredited arguments before the United States Tax Court:

* * * [E]xamination of the issues provides a rational, coherent, and sensible explanation for the overwhelming rate of IRS success. Essentially, to return to the sporting metaphors, trying to use these issues to evaluate the referee's impartiality is much like blaming the umpires of a pro-am softball series for the lopsided margins of victory posted by the almost undefeated professionals. Simply put, on these issues, the taxpayers are almost always out of their league. They take positions in direct conflict with the statute or regulations, they fail to introduce evidence, they fail to appear, they rely on boilerplate tax protester cliches, and they otherwise manifest a lack of understanding or comprehension of the demands of litigation.
Even though there was virtually no difference between the regular and memorandum decisions in terms of bias opportunity, there is a noticeable difference between the taxpayers’ 3% success rate in memorandum opinions and 24% success rate in regular opinions. The surprise is not so much the 3% rate but the 24% rate. There are several possible explanations for the difference, but the most striking is the ever-increasing number of pro se taxpayer litigants, * * * particularly in cases that are the subject of a memorandum opinion. Ninth-inning heroics can be expected from some of the taxpayer attorneys arguing issues destined for resolution in a regular opinion but are hardly expected from pro se taxpayers, whose tax training and knowledge of legal processes pales in comparison both to the professionally educated Chief Counsel attorney representing the IRS and to the similarly educated, and probably more experienced, attorney representing taxpayers with genuinely pursued disputes. * * * The judges attempt to assist pro se taxpayers because the absence of trained attorneys prevents some issues of first impression from being adequately argued and briefed. Many of the pro se taxpayers, however, either reject the help, as is the case with protesters, ® * * or insist on proceeding in their own way despite the judge's suggestions. In contrast, the IRS does not, and has no reason to, engage in a practice of failing to appear in court, pursuing hopeless cases, and ignoring legal precedent.

. Roger Davenport may be relying on literature and tactics recommended by militias, "sovereign'' groups, and tax-protester groups. See Tanya Telfair Sharpe, The Identity Christian Movement: Ideology of Domestic Terrorism, 30 Journal of Black Studies Issue 4 (March 1, 2000)("Identity Christian organizations promote their causes with a variety of literature and other media strategies. The Jubilee, published by Paul Hall, is the country's leading Identity periodical. The American’s Bulletin is another popular source for Identity rhetoric and is produced by Robert Kelly of Medford, Oregon. There are many other books, tracts, and audio- and videotapes that provide followers with reinforcement for their beliefs (False Patriots, 1996).”), reprinted at 2000 WESTLAW® 12727206. See also, e.g., Michael Fechter, Church Tied to Anti-Government Organizations, Tampa Tribune, March 28, 1998 ("The American’s Bulletin is 'very much within the patriot movement in a big way. It is full of New World Order conspiracy theories,' said Mark Potok, editor of the Intelligence Report. The report is published by the Southern Poverty Law Center as a monitor on militant right-wing political groups.”), reprinted at 1998 WESTLAW® 2770097.

It is not clear from the secondary literature how the "Identity Christian” organizations and tax protester organizations are linked. The link between two such groups may be oxymoronic. See Mary Jo Newborn Wiggins, A Statute of Disbelief ?; Clashing Ethical Imperatives in Fraudulent Transfer Law, 48

S.C.L.Rev. 771 (Spring 1997)("A person could heed Romans 13:6-7 wherein the Apostle Paul states, 'For because of this you also pay taxes, for they are God's ministers attending continually to this very thing. Render therefore to all their due, customs to whom customs,. fear to whom fear, honor to. whom honor.”'). See also 3000 Quotations from Matthew Henry (Compilor: William T. Summers; © 1982 Fleming H. Revell, Grand Rapids, Michigan), quoting the seventeenth-eighteenth century Bible commentator, Matthew Henry (1644-1714), on Romans 13: “What we have we have as stewards; others have an interest in it, and must have their dues. * * * Render to all their dues; and that readily and cheerfully, not tarrying till you are by law compelled to it.”

The use of a hyphen or colon (the punctuation mark) in names is typical of tax-protester and militia groups. Unfortunately, many such groups have their own websites and are establishing their own purported courts. In fact, the Supreme Court of South Carolina cautioned state employees and officials to be on the lookout for "documents” purportedly issued by such entities. See Nash v. McIntosh, 328 S.C. 76, 492 S.E.2d 75 (1997):

Petitioner has filed a petition with this Court seeking a writ of mandamus to compel the clerk of the circuit court to accept a document for filing. This document, which was issued by the Superior Court of the District of Columbia, allows a "judgment” issued by "Our One Supreme Court, Com*566mon Law Venue, Original and Exclusive Jurisdiction” in Franklin, North Carolina, to be filed as a foreign judgment in the District of Columbia, and indicates that the judgment of "Our One Supreme Court” is entitled to the same force and effect as a judgment issued in the District of Columbia. Petitioner argues that this State must accept this document for filing under the full faith and credit clause of the United States Constitution. U.S. CONST, art. IV, § 1.
On October 6, 1997, the Superior Court of the District of Columbia issued an order vacating the filing of the judgment of "Our One Supreme Court” nunc pro tunc to the date of its filing with that court. The Superior Court found that the judgment of "Our One Supreme Court” is not entitled to full faith and credit under either the Constitution of the United States or the law of the District of Columbia. [FN1] This renders petitioner’s request for a writ of mandamus moot and the petition is denied.
[FN1. "Our One Supreme Court” is a body established by persons who are apparently dissatisfied with the legitimate judicial systems in this country. These persons believe that they have the authority to create their own courts.]
This view is, of course, preposterous since a court can only be created by the sovereign power of a state or the federal government. 21 CJ.S. Courts § 93 (1990). Accordingly, the actions and judgments of "Our One Supreme Court” and other similar bodies are a complete and utter nullity, and have no force or effect. In light of this, this Court has previously directed the clerks of court in this State not to accept any judgments or other documents which have been issued by "Our One Supreme Court.” We take this opportunity to reemphasize this point.

Nash v. McIntosh, 492 S.E.2d at 76.

The United States Attorney for the District of South Carolina has removed another civil action concerning Roger Davenport to federal court. See pleadings in Roger-Orme Davenport v. Federal Tax Lien, et al., Civil Action No. 3:02-0183-20BG, which was removed to federal court on January 18, 2002.

. The General Assembly of the State of South Carolina revised the Statute of Elizabeth in 1997 to address the growing problem of fraudulent conveyances made to avoid the payment of court-ordered child support. The Statute of Elizabeth in South Carolina currently reads as follows:

§ 27-23-10. Conveyances to defraud creditors; transfers of income and property to avoid paying child support.
(A) Every gift, grant, alienation, bargain, transfer, and conveyance of lands, tenements, or hereditaments, goods and chattels or any of them, or of any lease, rent, commons, or other profit or charge out of the same, by writing or otherwise, and every bond, suit, judgment, and execution which may be had or made to or for any intent or purpose to delay, hinder, or defraud creditors and others of their just and lawful actions, suits, debts, accounts, damages, penalties, and forfeitures must be deemed and taken (only as against that person or persons, his or their heirs, successors, executors, administrators and assigns, and every one of them whose actions, suits, debts, accounts, damages, penalties, and forfeitures by guileful, covinous, or fraudulent devices and practices are, must, or might be in any ways disturbed, hindered, delayed, or defrauded) to be clearly and utterly void, frustrate and of no effect, any pretense, color, feigned consideration, expressing of use, or any other matter or thing to the contrary notwithstanding.
(B) A showing of two or more of the following creates a rebuttable presumption that a child support debtor intended to transfer income or property to avoid payment to a child support creditor:
(1) a close relationship between the transferor and transferee;
(2) the debtor retained possession or control of the property transferred after the transfer;
(3) the transfer or obligation was not disclosed or was concealed;
(4) before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit;
(5) the transfer was substantially all of the debtor’s assets;
(6) the debtor absconded;
(7) the debtor removed or concealed assets;
(8) the value of the consideration received by the debtor was not reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred;
(9) the debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred;
(10) the transfer occurred shortly before or after a substantial debt was incurred; and
(11) there was a departure from the usual method of business.
HISTORY: 1962 Code § 57-301; 1952 Code § 57-301; 1942 Code § 8696; 1932 Code § 8696; Civ. C. '22 § 5218; Civ. C. ’12 § 3455; Civ. C. '02 § 2369; G.S. 1786; R.S. 1888; 1712(2) 697.
HISTORY: Amended by 1997 Act No. 71, § 40, eff June 10, 1997.

Section 27-23-10, South Carolina Code of Laws (as amended). The “old” Statute of Elizabeth has been recodified as Section 27-23-10(A) and the new child support measure has been codified as Section 27-23-10(B).

. Even so, it can be judicially noticed that the United States has criminally prosecuted tax protesters who have filed fraudulent liens against federal officials and employees. See United States v. Bostian, 59 F.3d 474, 476-480 (4th Cir.1995), cert, denied, Bostian v. United States, 516 U.S. 1121, 116 S.Ct. 929, 133 L.Ed.2d 857 (1996); and United States v. Ma-cElvain, 858 F.Supp. 1096, 1100 (M.D.Ala.1994)("The filing of such frivolous documents imposes irreparable harm on the individuals and entities that are the victims of the liens.”), affirmed, 68 F.3d 486 (11th Cir.1995). The rationale of the tax protester cases indicates that United States District Courts must be vigilant in preventing the filing of fraudulent liens and other documents by tax protesters. See United States v. Reeves, 782 F.2d 1323 (5th Cir.), cert. denied, Reeves v. United States, 479 U.S. 837, 107 S.Ct. 136, 93 L.Ed.2d 79 (1986).

. The General Assembly of the State of South Carolina in 1997 changed the title of a Register of Mesne Conveyance to Register of Deeds. 1997 S.C. Acts 34 (effective January 1, 1998).

. The record before the court and the briefs filed by the parties do not disclose why no documentary stamps are on the 1993, 1994, and 1996 deeds. The 1992 amendments to § 12-21-380 set a documentary tax at the rate of $1.30 for each $500 in consideration. See the South Carolina Tax Commission’s Changes in Tax Laws (IL-92-25), reported at 1992 WESTLAW® 367376.

The undersigned, however, cannot rule out the possibility that the Office of the (then) Register of Mesne Conveyance for Saluda County failed to comply with "old” § 12-21-440, South Carolina Code of Laws (1991 version of 1976 Code). Although the prior version of the South Carolina Code of Laws contained a financial "penalty” provision for a failure by a Register of Mesne Conveyance to require payment of the documentary tax, see "old” § 12-21-450, there is no indication that the law has ever enforced or even cited. In other words, "old” § 12-21-450 may have been an unutilized statute. For a better example of an unutilized or underutilized statute, cf. § 10-11-10, South Carolina Code of Laws:

§ 10-11-10. Walking on roof of State House.
It shall be unlawful for any person, without the permission of the State Budget and Control Board or a member of that Board, to enter upon or walk upon the roof of the State House. Any person violating the provisions of this section shall be punished by a fine of not more than one hundred dollars or imprisoned for not more than thirty days on the public works of Richland County for each offense.

. Yet, it must be noted that Government’s Exhibit 1 (to Document No. 79), a computer-generated printout of IRS information (dated September 24, 2001) lists Roger Davenport's filing status for 1991, 1992, and 1993 as the following: " * WILING STATUS: MARRIED FILING SEPARATE^]” The double asterisk appears to refer to another notation: " * * PER RETURN AS AD JUSTED [.]”

. In light of Margaret Davenport’s conveyance of March 28, 1994, it is unlikely that she would be entitled to "innocent spouse” relief. See R.D. Bokum v. Commissioner, 1990 WL 17262 (U.S.Tax Ct., Feb. 28, 1991)(knowledge of facts of transaction prohibits innocent spouse relief), affirmed on other grounds, 992 F.2d 1132 (11th Cir.1993). Since South Carolina is not a community property state and Margaret Davenport did not file a tax return under the filing status of "married filing separately,” "old” 26 U.S.C. § 66(c) would not have been available to Margaret Davenport.

If a husband and wife file as married filing separately, each is liable only for the lax due on his or her own return. See Edith Stokby v. Commissioner, 1956 WL 725 (Tax Ct.1956), acq., 1957-1 C.B. 5 and 1957-2 C.B. 7. If, in future tax years, a truly innocent spouse *571wishes to protect himself or herself from the consequences of a spouse's tax protester activities, the innocent spouse should file a tax return under the filing status of "married filing separately.”

In hindsight, it probably would have been better for Margaret Davenport not to have made the conveyance of March 28, 1994, to Faith Davenport. But for that transaction, the Service might have been required to compensate Margaret Davénport under 26 U.S.C. § 7403.

. Indeed, the lax rate differences between "married filing jointly” and "married filing separately” are so great that, as a practical matter, the "married filing separately” filing status is usually employed by spouses who are actually separated (but not legally separated) and who are not "on speaking terms” with one another.