United States District Court, D. Colorado
ORDER ON MOTIONS TO DISMISS INDICTMENT
William Martínez United States District Judge.
matter is before the Court on Defendants' Motion to
Dismiss as a Result of Claim and Issue Preclusion (ECF No.
147) and Motion to Dismiss-Judicial Estoppel (ECF No. 148),
both of which seek dismissal of all claims against both
Defendants. For the reasons explained below, both motions are
criminal charges in this case arise from the Defendants'
(the “Yureks”) alleged tax evasion and bankruptcy
fraud, committed in the context of communications with the
Internal Revenue Service (“IRS”) regarding their
tax liability, as well as in a subsequent bankruptcy
proceeding precipitated by that tax liability.
instant motions argue, based on three separate legal
doctrines, that the alleged misconduct or wrongdoing
underlying the present criminal charges against the Yureks
was already raised and resolved in their bankruptcy case, and
that as a result the subsequent criminal prosecution is
foreclosed. Accordingly, the Court's analysis begins by
setting out the relevant history of the bankruptcy
proceedings, followed by summarizing the present criminal
Yureks had unpaid federal income tax liabilities for 1999 and
2004. The IRS rejected their offers in compromise between
2006 and 2010. In 2009, the IRS conducted audits of the
Yureks and two business entities affiliated with them (Bolder
Venture Partners, or “BVP, ” and Veracity, LLC
(“Veracity”). The Yureks then filed a Chapter 7
bankruptcy petition on September 1, 2010. The principal
liabilities declared in their bankruptcy case were their tax
liabilities, then totaling $1, 266, 187 ($1, 185, 023 for
1999, and $81, 164 for 2004).
October 4, 2010, a Meeting of the Creditors was held in the
bankruptcy case, pursuant to 11 U.S.C. § 341(a). At that
meeting, a representative of the IRS questioned the Yureks
about certain matters, including: establishing that Daryl
Yurek was paid as the General Manager of Veracity (ECF No.
147-1 at 1); asking whether the Yureks had income from any
sources not listed in their bankruptcy petition (id.
at 2); establishing that their health insurance was provided
by their son's company, at no cost to them (id.
at 8); inquiring about “a loan account” provided
to the Yureks by Veracity (id. at 148-1); and asking
several questions regarding their claim that they continued
to live in a residence rented from one of their sons, despite
being $79, 200 in arrears on paying rent, a fact they
attributed to their son being “a patient
landlord” (see Id. at 2-3, 8).
February 10, 2011, the bankruptcy court entered a general
discharge pursuant to 11 U.S.C. § 727. (ECF No. 47-6.)
Boilerplate language accompanying the discharge recited that
as a general rule, and subject to exceptions, “[d]ebts
for most taxes” are commonly not discharged. (ECF No.
47-6 at 2.)
the discharge was entered, the Chapter 7 Trustee (the
“Trustee”) identified certain concerns. These
included: whether the Yureks had “made a false
oath” during the bankruptcy proceedings; whether assets
nominally owned by their son-particularly their
residence-were actually owned by the Yureks; the nature of
the loan(s) from Veracity; and concerns with the ownership or
transfer of stock in another affiliated company, ID Watchdog,
Inc. (“ID Watchdog”):
From the Trustee's investigation to date, it appears that
several areas of inquiry are necessary to determine whether
the Debtors made a false oath in connection with this case.
Specifically, the Debtor's statements and schedules and
their testimony at the § 341 meeting indicate that their
son Justin Yurek acquired an ownership interest in Veracity
Credit Consultants while in his early 20's, and acquired
real property at 1450 Wynkoop, Unit 6D, Denver, Colorado, for
$1, 300, 000 at age 27. The Debtors state they have no
ownership interest in either of these assets. The Debtors
testified that they rent the real property from Justin Yurek,
but were in arrears in the rent by some $79, 200.00. The
Trustee wishes to further investigate the history of the
ownership interests in Veracity Credit Consultants to
determine how the entity was capitalized and by whom, and to
investigate the source of the funds used to purchase and pay
encumbrances on the real property. The Debtors indicated in
their Schedule D that Veracity made a $500, 000 loan to them
secured by stock in ID Watchdog valued at $85, 000.
According to their Schedule B, the Debtors own an entity
known as Bolder Venture Partners, LLP, which in turn owns
stock in ID Watchdog. Daryl Yurek is the CEO of record of ID
Watchdog. ID Watchdog is currently registered with the
Colorado Secretary of State as a Cayman Islands corporation.
The Trustee wishes to investigate the Debtors'
relationship with ID Watchdog, the pledge of the ID Watchdog
stock to Veracity, and related matters.
(ECF No. 147-2 at 1-2.)
these concerns, the Trustee requested an extension of the
deadline to object to discharge of the Yureks' debts,
which the Court granted. (ECF No. 147-2.)Shortly before the
statute of limitations for the Trustee to bring an action to
recover would have run, the Trustee reached a settlement with
the Yureks as to certain disputes. (ECF No. 147-3.) The
settlement agreement specifically addressed two matters,
including (1) whether postpetition payments to the Debtors
from BVP “are income from personal services or
distributions on account of the Debtors' equity interest
and property of the bankruptcy estate, ” and (2)
whether the Yureks' transfer of shares of ID Watchdog to
their sons within two years of their bankruptcy petition,
“constitute[d] a preferential or fraudulent conveyance
avoidable and recoverable by the Trustee for the benefit of
the Debtors' bankruptcy estate pursuant to 11 U.S.C.
§§ 544, 547, 548 or 551.” (ECF Nos. 147-3,
settlement of these disputes, the Yureks agreed to pay the
Trustee $15, 000 cash “in full satisfaction of [the]
Trustee's claims to distributions to the Debtors from
[BVP] and to avoid and recover the ID Watchdog, Inc. stock or
the value thereof from [the Yureks' sons].” (ECF
No. 147-4 at 2, ¶ 2.) The agreement included a mutual
release of claims as between the Yureks, their sons, and the
Trustee; it explained that the settlement “represents a
compromise of disputed claims”; and it reserved that
“none of the parties admits liability to the
other.” (ECF No. 147-4 at 3.)
bankruptcy court approved the Yureks' settlement with the
Trustee, without objection from the IRS. According to the
Trustee's Final Report, the IRS was paid $12, 773.33 as a
creditor in the bankruptcy case. The bankruptcy case was
closed on October 25, 2013.
Indictment in this case was filed on October 7, 2015, not
quite two years after the bankruptcy case was closed. It
charges five counts of criminal conduct related to the
Defendants' tax liability, their communications with the
IRS, and their bankruptcy case. (See generally ECF
No. 1.) The Yureks are jointly charged (in Counts 1 and 2)
with tax evasion in violation of 26 U.S.C. § 7201, and
with filing a bankruptcy petition in furtherance of a scheme
to defraud, in violation of 18 U.S.C. § 157(1). In
addition, Mr. Yurek is charged with making a false statement
under oath in relation to a bankruptcy proceeding, in
violation of 18 U.S.C. § 152(2) (Count 3), and with
making false declarations under penalty of perjury in IRS
filings, in violation of 26 U.S.C. § 7206 (Counts 4 and
broad terms, the charge of tax evasion alleges that the
Yureks committed tax evasion by misrepresenting that they had
fewer assets and income available to satisfy their tax
liability than what they actually owned, and that they used
their son and their business entities to shield assets from
the IRS and the bankruptcy court, thus illegally evading
payment of their outstanding tax obligations. (See
generally ECF No. 1 ¶¶ 5-16.) One central
allegation is the claim that the Yureks purchased their
residence (a luxury loft in downtown Denver) in their
son's name, while continuing to live there. The
Government also charges that they at times directed their
business entities to pay the mortgage and condominium fees
for the loft (see Id. ¶¶ 16c.-h., n.), and
to pay certain other personal expenses (see ECF No.
14 at 4-5). Further, the Government charges that the Yureks
failed to disclose ID Watchdog ...