United States v. Melot (Katherine), et al

Mr. and Mrs. Melot owed millions of dollars in federal taxes. Billy Melot was serving time in federal prison for tax crimes. The debt led the United States to foreclose on the Melots’ real properties, and the Melots tried to stop the foreclosure. Sanctions were imposed because of the methods used by the Melots in relation to their attempts to stop the foreclosure: the district court regarded them as fraudulent. The disagreement began when the district court reduced the tax assessments to judgments and ordered the sale of the Melots’ real properties. That order prompted a motion to intervene by Steven Byers, who filed documents asserting liens on the property. The documents were mailed from the city where the Melots’ properties were located (Hobbs, New Mexico). The government suspected fraud and collaboration with the Melots, pointing out to the court that: (1) Byers lived in prison; (2) he could not own any liens because he was destitute; (3) the Melots never disclosed any liens; (4) Mrs. Melot had signed Byers’ name on the lien and motion to intervene; and (5) the New Mexico address listed for Byers was actually the home of Mrs. Melot’s friends. At the hearing on the motion to intervene, Byers moved to withdraw his motion for lack of proof. The court denied the motion to withdraw, and the government presented evidence tending to show that the Melots and Byers created a scheme to derail the foreclosure. Mrs. Melot refused to answer questions, invoking the Fifth Amendment privilege against self-incrimination. The magistrate judge certified criminal contempt by the Melots. More than a year later, the district court issued its order addressing the contempt certification with sanctions including removal of Mrs. Melots from the property, reimbursing the government's costs for the hearing, striking of the Melots' pending motions, and filing restrictions. The Melots argued on appeal to the Tenth Circuit that the district court violated the Fifth Amendment’s Due Process Clause by imposing sanctions without notice and an opportunity to be heard. The Tenth Circuit agreed, reversed and remanded. View "United States v. Melot (Katherine), et al" on Justia Law