Case: 1:03-cv-03904 Document #: 879 Filed: 04/01/15 Page 1 of 7 PageID #:16076

UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
FEDERAL TRADE COMMISSION,
Plaintiff,
v.
KEVIN TRUDEAU,
Defendant.

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Civil Action No. 03-C-3904

Honorable Robert W. Gettleman

DEFENDANT KEVIN TRUDEAUS MOTION TO COMPEL THE RECEIVER

TO FILE TAX RETURNS AND FILE A STATUS REPORT
Defendant Kevin Trudeau respectfully requests that this Court order the Receiver
to file Trudeaus personal tax returns as well as the corporate returns of the Trudeau
Entities. Trudeau further requests that the Court order the Receiver to file a report
describing the results of its forensic accounting. In support of this motion, Trudeau states
as follows:
I.

BACKGROUND
A.

The Receivership Order Places The Receiver In Control Of All Of

Trudeaus Assets And Enjoins Trudeau From Pledging Any Funds

On August 7, 2013, this Court entered an Order appointing Robb Evans &
Associates as Receiver over all of Trudeaus assets as well as the assets of the Trudeau
Entities. (D.E. 742.) The Order directed the Receiver to [m]arshall and hold Trudeaus
Assets (including without limitation, all personal Assets and all Assets of the Trudeau
Entities) (D.E. 742 at 8 (emphasis added).) 1 The Order further commanded the

The Trudeau Entities as defined in the Order include without limitation: 0913372 B.C. Ltd.; 0913376
B.C. Ltd.; Advantage Solutions Ltd.; Alliance Publishing Group, Inc.; APC Trading Limited; Direct
Response Associates, LLC; GIN USA Inc.; Global Information Network FDN; Global Sales Solutions
A.G.; International Pool Tour Inc.; K.T. Corporation Limited; KMT Fiduciary Trust; KT Capital
Corporation; KT Radio Network Inc.; Natural Cures, Inc.; Natural Cures Health Institute; Natural Cures
Holdings Inc.; NBT Trading Limited; N.T. Trading S.A.; Pool Licensing LLC; Sovereign Trust; The

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Receiver to [t]ake exclusive custody, control and possession of all Assets and
Documents of, or in the possession, custody, or under the control of, Trudeau and the
Trudeau Entities. (D.E. 742 at 8 (emphasis added).)
The Order also enjoined Trudeau from directly or indirectly transferring,
liquidating, converting, encumbering, pledging, loaning, selling, concealing, dissipating,
disbursing, assigning, spending, withdrawing, granting a lien or security interest in, or
otherwise disposing of any Assets, wherever located (D.E. 742 at 5.) In other words,
the Order placed the Receiver in exclusive control of all of Trudeaus assets and
corporate entities and prohibited Trudeau from transferring or pledging any of his assets
to any party anywhere in the world.
B.

The Receiver Refuses To File Trudeaus Tax Returns

On December 22, 2014, counsel for Trudeau asked the Receiver to identify all
steps the Receiver had taken with respect to the payment of taxes owed by Trudeau and
the Trudeau Entities (Ex. A.) On January 7, 2015, the Receiver responded that it had not
filed any tax returns on behalf of Trudeau or his wife. Id. The Receiver further indicated
that it had filed 2013 returns on behalf of 10 of the 29 Trudeau Entities. 2 That is, the
Receiver has not filed returns or taken any steps with respect to the tax obligations of 19
of the Trudeau Entities identified in the Order.
On January 13, 2015, counsel for Trudeau again wrote the Receiver to confirm
that it was refusing to file tax returns on behalf of Trudeau and the other 19 Trudeau
Whistle Blower, Inc.; TRUCOM, L.L.C.; Trudeau Approved Products Inc.; Trudeau Management Inc.;
TruStar Marketing Corporation; Trustar Productions, Incorporated; Website Solutions Switzerland GmbH;
and Website Solutions USA Inc.
2

Specifically, the Receiver indicated that it had filed 2013 returns for the entities Alliance Publishing, GIN
USA, Global Info Fund, IPT, KT Corp. Ltd., KT Radio, Natural Cures, TAP, Trustar, and Website
Solutions. The Receiver also indicated that it planned to file 2014 returns for these same entities. But to
date, the Receiver has provided no evidence that it has done so.

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Entities. (Ex. B.) On January 29, 2015, the Receiver responded that it had not filed any
returns other than those it previously identified. (Ex. C.) With respect to Trudeaus
personal income taxes, and despite Trudeaus counsels previous inquires, the Receiver
stated inexplicably that it has not received any specific request to pay any personal
income taxes that Mr. Trudeau may owe. Id.
On January 30, 2015, counsel for Trudeau again wrote the Receiver requesting
that the Receiver file returns on behalf of Trudeau and all of the Trudeau Entities. (Ex.
D.) On February 20, 2015, the Receiver wrote back, stating [t]he Receiver declines your
request to perform any tax preparation services for Mr. Trudeau. (Ex. E.) The Receiver
also subsequently forwarded a notice of overdue taxes for Trustar Global Media LTD
(Trustar) from the Internal Revenue Service which it is apparently refusing to pay.
(Ex. F).
C.

The Receiver Has Not Filed A Report Since July 7, 2014

The Order further requires the Receiver to file periodic reports to keep the
Court and Trudeau apprised of its activities. (D.E. 742 at 15.) From September 2013
through July 2014, the Receiver filed eight such reports. However, since its last report on
July 7, 2014, more than eight months have passed and the Receiver has not filed any
additional reports. Moreover, in the July 7, 2014 report, the Receiver indicated that its
forensic accounting was substantially completed and would be complete by the end of
July 2014. Despite the fact that its forensic accounting apparently concluded eight
months ago, the Receiver has not communicated the results of its accounting in a report
or otherwise.

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II.

ARGUMENT
A.

The Receiver Must File Trudeaus Personal Tax Returns

According to basic principles of tax and receivership law, when a receiver is in

control of an individuals assets, it is the receiver who is responsible for paying the
individuals taxes. See 29 U.S.C. 960(a)(Any officers and agents conducting any
business under authority of a United States court shall be subject to all federal, state and
local taxes applicable to such business to the same extent as if it were conducted by an
individual or corporation.); 3 SEC v. Kirkland, 2008 WL 4491528, *6 (M.D. Fla. Sept.
30, 2008) (ordering payment of taxes out of receivership estate and noting that counsel
for receiver testified that under general receivership law and 28 U.S.C. 960, he
understood that the Receiver was generally obligated to pay the taxes that accrued when
the property was within the receivership estate.); see also 26 C.F.R. 1.6012-3(b)(5) (A
receiver who stands in the place of an individual must make the return of income required
in respect of such individual.); Field Service Advice 1992-0622-3 (noting that Treasury
Regulation 1.6012-3(b)(5) clearly contemplates that when a receiver is in possession
of all of the individuals property the individual will generally be legally unable to make
a return and the receiver will stand in its place.).
Because the Order places the Receiver in control of all of Trudeaus assets, the
Receiver is legally obligated to pay Trudeaus taxes. See D.E. 742 at 8; 29 U.S.C.
960(a); 26 C.F.R. 1.6012-3(b)(5). This conclusion is all the more inescapable because
the Order freezes Trudeaus assets and prohibits him from transferring any funds to the
3

28 U.S.C. 959(b) further provides that a receiver appointed in any cause pending in any court of
the United States shall manage and operate the property in his possession as such trustee, receiver or
manager according to the requirements of the valid laws of the State in which such property is situated, in
the same manner that the owner or possessor thereof would be bound to do if in possession thereof.

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IRS to satisfy his tax debts. 4 (D.E. 742 at 5.) Thus, if the Receiver does not pay
Trudeaus taxes, Trudeau will be placed in a situation where he must either: (a) violate
his legal obligation to pay taxes; or (b) violate this courts Order enjoining him from
making any asset transfers to the IRS.

The only way for Trudeau to remain in

compliance with his duty to pay taxes and this Courts order is for the Receiver to fulfill
its legal obligation and pay Trudeaus taxes.
B.

The Receiver Must File Returns On Behalf Of All Of The Trudeau

Entities

A similar analysis applies with respect to a Receivers obligation to file corporate

returns. See 26 U.S.C. 6012(b)(3) (In a case where a receiver by order of a court of
competent jurisdiction, by operation of law or otherwise, has possession of or holds title
to all or substantially all the property or business of a corporation, whether or not such
property or business is being operated, such receiver, trustee, or assignee shall make the
return of income for such corporation in the same manner and form as corporations are
required to make such returns. ); see also 26 C.F.R. 1.6012-3(b)(4).
Apparently in partial recognition of its duty to file returns on behalf of the
Trudeau entities, the Receiver has filed 2013 returns on behalf of some, but not all, of
those entities. The Receiver has not provided any explanation for filing returns on behalf
of a subset of the Trudeau Entities. In any event, order to fulfill its legal obligations, the
Receiver must file returns on behalf of all of the so-called Trudeau Entities identified in
the order. 26 U.S.C. 6012(b)(3).

Indeed, when Trudeau attempted to affirmatively take steps to pay his taxes by hiring The Gordon Law
Group LTD as tax counsel, the FTC subpoenaed The Gordon Law Group LTD and convinced that firm to
return all legal fees they received. Without a means of being paid, The Gordon Law Group was unable to
assist Trudeau regarding his tax obligations.

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C.

The Receiver Should File A Status Report Updating The Court On Its
Forensic Accounting And Other Activities

As noted above, the Receiver has not provided any updates on its activities since
July 2014 even though its forensic accounting was supposed to conclude shortly
thereafter. Trudeau has a right to know the results of the Receivers investigation and
respectfully requests that this Court order the Receiver to file a report detailing the results
of its forensic accounting and/or any other activities it has engaged in since July 7, 2014.
III.

CONCLUSION
WHEREFORE, Trudeau, respectfully requests that this Court order the Receiver

to: (1) file Trudeaus personal tax returns and pay any outstanding taxes due; (2) file
corporate tax returns on behalf of all of the Trudeau Entities identified in the
Receivership Order and pay any outstanding taxes due, including but not limited to taxes
owed by Trustar; and (3) to immediately file a report informing the Court and Trudeau of
the results of its forensic accounting and any other activities it has engaged in since July
7, 2014.
Respectfully submitted,

By: /s/ Kimball Anderson

One of His Attorneys
Kimball R. Anderson
WINSTON & STRAWN
35 West Wacker Drive
Chicago, IL 60601
[email protected]
Attorney for Defendant

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CERTIFICATE OF SERVICE
I, Kimball R. Anderson, an attorney for Defendant Kevin Trudeau, hereby certify
that on this, the 1st day of April, 2015, I caused the above-described document to be filed
on the CM/ECF system of the United States District Court for the Northern District of
Illinois, which constitutes service of the same.

/s/ Kimball Anderson

Kimball R. Anderson
WINSTON & STRAWN
35 West Wacker Drive
Chicago, IL 60601
[email protected]
Attorney for Defendant

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UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
FEDERAL TRADE COMMISSION,
Plaintiff,
v.
KEVIN TRUDEAU,
Defendant.

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Civil Action No. 03-C-3904

Honorable Robert W. Gettleman

INDEX OF EXHIBITS TO DEFENDANT KEVIN TRUDEAUS MOTION TO

COMPEL THE RECEIVER TO FILE TAX RETURNS AND
FILE A STATUS REPORT

Exhibit

Description

December 22, 2014 Correspondence

January 7, 2015 Correspondence

January 13, 2015 Correspondence

January 29, 2015 Correspondence

January 30, 2015 Correspondence

February 20, 2015 Correspondence

IRS Notice of Overdue Taxes to Trustar

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UNITED STATES DISTRICT COURT

FOR THE Northern District of Illinois CM/ECF LIVE, Ver 6,1
Eastern Division
Federal Trade Commission
Plaintiff,
v.

Case No.: 1:03cv03904

Honorable Robert W. Gettleman

Kevin Trudeau, et al.

Defendant.

NOTIFICATION OF DOCKET ENTRY

This docket entry was made by the Clerk on Tuesday, April 7, 2015:
MINUTE entry before the Honorable Robert W. Gettleman: Motion hearing held
on 4/7/2015 regarding defendant's motion [879] to compel Receiver to file tax returns and
a status report. Response is due by 4/28/2015. Reply is due by 5/12/2015. Status hearing is
set for 5/21/2015 at 10:00 a.m. Mailed notice (gds )

ATTENTION: This notice is being sent pursuant to Rule 77(d) of the Federal Rules of
Civil Procedure or Rule 49(c) of the Federal Rules of Criminal Procedure. It was
generated by CM/ECF, the automated docketing system used to maintain the civil and
criminal dockets of this District. If a minute order or other document is enclosed, please
refer to it for additional information.
For scheduled events, motion practices, recent opinions and other information, visit our
web site at www.ilnd.uscourts.gov.

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