United States District Court, D. Maryland, Southern Division
MEMORANDUM OPINION AND ORDER
W. Grimm United States District Judge
Internal Revenue Service filed a petition to enforce an
administrative summons it served on Sharon Santoso (a.k.a.
Isarina Ali and Le le Ling). Pet., ECF No. 1. I previously
determined that (a) the IRS had made a prima facie showing of
its entitlement to have the petition enforced, and (b)
Santoso had submitted sufficient evidence of non-possession
of the documents the IRS seeks to warrant an evidentiary
hearing to permit her to meet her burden of proof on this
affirmative defense. Mem. Op., ECF No. 38. That hearing took
place on October 31, 2018. Following it, I permitted limited
briefing on the narrow issue of whether Santoso has met her
burden of showing that she took reasonable steps to comply
with the summons and to locate and obtain documents, and
whether she has met her burden of proof on her affirmative
defense of non- possession. After considering the testimony
at the hearing and reviewing the filings,  I find that
Santoso has met her burden in both respects.
asks me to enforce the summons as to three categories of
documents: (1) ownership of entities and structures, (2)
non-taxable sources of income, and (3) professionals.
Pet'r's Br. Supp. Pet. 2-3, ECF No. 57. Having
already determined that the IRS has made out a prima facie
showing that it is entitled to enforcement of the summons,
the burden shifts to the respondent to “challenge the
summons on any appropriate ground.” United States
v. Rockwell Int'l, 897 F.2d 1255, 1262 (3d Cir.
1990) (quoting United States v. Powell, 379 U.S. 48,
58 (1964)). Non-possession is a recognized affirmative
defense to enforcement of an IRS documents summons.
United States v. Gippetti, 248 Fed.Appx. 382, 385-86
(3d Cir. 2007) (citing United States v. Rylander,
460 U.S. 752, 757 (1983)); United States v. Huckaby,
776 F.2d 564, 567 (5th Cir. 1985) (citing United States
v. Barth, 745 F.2d 184, 187 (2d Cir. 1984)). To succeed
on this affirmative defense, a respondent must put forward
more than conclusory or self-serving claims of non-possession
and must demonstrate not only that she does not possess the
documents, but also that she has taken reasonable steps to
obtain them if they are within her control. See LaRue v.
United States, No. 3:15-cv-00705-HZ, 2015 WL 9809798, at
*3 (D. Or. Dec. 22, 2015) (citing FTC v. Publ'g
Clearing House, Inc., 104 F.3d 1168, 1171 (9th Cir.
1997); United States v. Seetapun, 750 F.2d 601, 605
(7th Cir. 1984)).
record before me, I find that Santoso has provided credible
evidence that she is not in possession of the summoned
documents. Not only has Santoso submitted two declarations
swearing to this, Santoso Decls., Resp't's Exs. RX 7
& 8,  at the evidentiary hearing, she stated the
same under oath, see generally 10/31/2018 Hr'g
Tr. 29:9-33:12, ECF No. 59.
further find that Santoso has made more than a “pro
forma” effort to obtain records that she does not
actually possess or made more than a cursory search for them.
See LaRue, 2015 WL 9809798, at *3 (citing
Seetapun, 750 F.2d at 605). Santoso obtained
statements from her banks, bills from hospitals, and tuition
records from her children's high schools and colleges.
10/31/2018 Hr'g Tr. 28:5-22. She also reviewed her
emails, which span a decade, for documents that might be
responsive to the summons. Id. at 31:22-32:3.
also authorized her attorney, Andrew Feldman, to conduct a
review of her emails, id. at 32:4-6, and contact
individuals listed in the summons, including Ronald Walla and
his attorneys, id. at 33:17-34:5. Although Feldman
asked Walla's attorneys to “impress upon [their]
client the importance of having someone take . . . steps to
get . . . records and information for [Santoso], ” the
response was that Walla would “not be able to provide
any of the requested information” and did “not
want to get involved.” Blank Rome Email,
Resp't's Reply Ex. C, ECF No. 58-1 at 27. Feldman
also reached out to the Romeis Foundation, an entity not
listed in the summons but identified by the IRS as a trust
set up to benefit Santoso's sister, Melina Ali.
10/31/2018 Hr'g Tr. 34:2-15, 88:19-22; 134:3-10. After
conducting a “diligent review of the records, ”
the organization confirmed that it had no documents that
mentioned, identified, or listed Santoso (or her former name,
Isarina Ali). Romeis Found. Confirm., Resp't's Ex. RX
10. Feldman then reached out to the law firm of Maples and
Cadler, which appears to have been involved in preparing
documents related to entities that may have been set up for
Santoso, even though the entities were not included in the
summons. See generally Maples and Cadler Email,
Resp't's Mem. Supp. Non-Poss. Def. Ex. A, ECF No.
54-1. After receiving no response, Feldman followed up a week
later asking a series of questions related to Santoso and her
relationship, if any, to various Cayman Islands entities.
Id. at 24.
also gave Feldman permission to reach out to LGT Bank in Hong
Kong (which acquired ABN/AMRO Management Services) to obtain
documents related to wire transfers made to Santoso through
ABN/AMRO Management Services. LGT Bank Email,
Resp't's Reply Ex. B, ECF No. 58-1 at 7-26. LGT Bank,
however, could not provide any records because Santoso was
only the beneficiary of the transfers and did not maintain
any accounts with ABN/AMRO Management Services. Id.
in an attempt to obtain information to guide her search,
Santoso, through Feldman, submitted FOIA requests to the IRS.
10/31/2018 Hr'g Tr. 175:6-19, 178:6-18; FOIA Letters,
Resp't's Exs. RX 16 & 17. The requests, however,
were denied. FOIA Letters, Resp't's Exs. RX 17 at 1
n.1 & 18.
the evidence outlined above, the IRS responds with two
arguments: (1) Santoso has not produced all summoned records
within her constructive control, and (2) she has failed to
conduct a diligent search. Pet'r's Br. Supp.
Pet. 11-17. As to the first argument, the IRS
contends that Santoso has not produced documents related to
her Sampoerna Tobacco shares, entities and trusts set up for
her benefit, and her financial or other professional
advisors. Id. at 11-15. The testimony and exhibits
at the evidentiary hearing demonstrate, however, that Santoso
authorized Feldman to make inquiries on her behalf to
determine whether she owned shares of stock in Sampoerna
Tobacco. 10/31/2018 Hr'g Tr. 39:4-16; Sampoerna Email,
Resp't's Ex. RX 11. Once a Sampoerna representative
confirmed that she did, Feldman requested “all
Sampoerna documents and/or records which may relate to or
mention [Santoso].” Sampoerna Email, Resp't's
Ex. RX 11. The Sampoerna representative then sent Feldman a
list of documents needed before the release of any records,
some of which are inapplicable to Santoso. See
Sampoerna Email, Resp't's Reply Ex. A, ECF No. 58-1
at 1-6; Sampoerna Email, Resp't's Status Report Ex.
A, ECF No. 61-1. Despite this, Feldman has followed up to
inquire about the possibility of obtaining records without
all of the necessary paperwork. See Resp't's
Status Report ¶ 6, ECF No. 61.
the records related to entities the IRS believes were set up
for Santoso's benefit, Santoso testified that she neither
possesses nor controls any records related to Spring Deer
Investments, PT-5288 trust, Romeis Foundation, or Country
Haven Limited. 10/31/2018 Hr'g Tr. 44:22-25 (Spring Deer
Investments), 57:18-58:4 (PT-5288 trust), 29:9-12 (Romeis
Foundation), 45:6-9 (Country Haven Limited). Moreover,
contrary to the IRS's assertion that there is no evidence
of Santoso or Feldman “actually exercis[ing]” his
authority to obtain records related to these entities, as
noted above, Feldman reached out to Maples and Calder to
understand the relationship between Country Haven Limited,
PT-5288 trust, Tyler Limited, Buchanan Limited, and Brennan
Limited. Maples and Cadler Email, Resp't's Mem. Supp.
Non-Poss. Def. Ex. A, ECF No. 54-1 at 24. He attached to his
email documents referencing the entities listed on page 13 of
the IRS's brief including Cititrust (Cayman) Limited,
Cititrust (Switzerland) Limited, Madeleine Investments S.A.,
Hitchcock Investments S.A., and Donat Investments S.A.
Id. at 20- 21.
to United States v. Lui, No. 16-cv-00969-JST, 2017
WL 3232578 (N.D. Cal. July 31, 2017), the IRS argues that
Santoso has not offered any evidence that she lacks a
“continued right to information from or regarding . . .
entities” that may have been included in her
mother's estate. Pet'r's Br. Supp. Pet. 13-14. In
Lui, the taxpayer distributed his assets to his
siblings prior to the IRS issuing its document summons.
Lui, 2017 WL 3232578, at *4. The court ultimately
found that the taxpayer had no enforceable legal right to
obtain the summoned records because he submitted, among other
evidence, advisory letters from law firms within the relevant
foreign jurisdictions explaining that as a non-beneficial
owner, he had no legal right to compel production of the
documents. Id. at *4-5. Here, Santoso testified that
she did not inherit anything from her late mother's
estate, 10/31/2018 Hr'g Tr. 73:16-74:16, which would
suggest that she does not have a right to obtain records from
entities that formed part of the estate. Moreover, as noted
above, Feldman contacted Maples and Cadler, which may have
been involved in preparing Santoso's mother's estate
documents, and asked questions about the entities in which
the IRS seems interested. See generally Maples and
Cadler Email, Resp't's Mem. Supp. Non-Poss. Def. Ex.
A, ECF No. 54-1. He never received a response.
documents related to Santoso's financial or other
professional advisors, the IRS asserts that Santoso has in
her constructive control records related to ABN/AMRO
Management Services, the individuals who traded her Sampoerna
shares, Maples and Calder, and the entities listed in the
IRS's Hearing Exhibit 10. Pet'r's Br. Supp. Pet.
14-15. As discussed above, Feldman requested records from the
successor of ABN/AMRO Management Services to no avail,
see LBT Bank Email, Resp't's Reply Ex. B,
ECF No. 58-1 at 7-26; reached out to Maples and Calder for
information about the entities referenced in the IRS's
Hearing Exhibit 10 but never received a response, see
generally Maples and Cadler Email, Resp't's Mem.
Supp. Non-Poss. Def. Ex. A, ECF No. 54-1; and asked Ronald
Walla for information about the same entities but he declined
to provide any, see Blank Rome Email,
Resp't's Reply Ex. C, ECF No. 58-1 at 27-28.
Moreover, Feldman is currently making ongoing efforts to
obtain documents related to Santoso's Sampoerna Tobacco
shares. See Resp't's Status Report ¶ 6,
ECF No. 61-1. Given these unsuccessful (yet sincere)
attempts, it is far from clear that Santoso has constructive
control over these documents.
also contends that Santoso has failed to conduct a diligent
search. Pet'r's Br. Supp. Pet. 16-17. It argues that
she has “refused to engage” and “found an
excuse for not taking any action.” Id. While
there may always be additional steps that could be taken, the
actions taken by Santoso and her attorney, as described
above, can hardly be considered inaction. Moreover, although
there is a relative dearth of authority regarding what a
taxpayer must do to show that she has taken “all
reasonable steps” to identify and obtain documents,
what has been established is that she must make more than a
pro forma demand and cursory search for records.
See LaRue, 2015 WL 9809798, at *3 (citing
Seetapun, 750 F.2d at 605). The actions taken by
Santoso and Feldman are certainly more than that.