Free Motion for Authorization of Service 100+ Miles - District Court of Federal Claims - federal

Case 1:05-cv-00748-CCM

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS STOBIE CREEK INVESTMENTS LLC, JFW ENTERPRISES, INC., Tax Matters and Notice Partner, Plaintiff v. THE UNITED STATES OF AMERICA, Defendant. STOBIE CREEK INVESTMENTS LLC, by and through JFW INVESTMENTS LLC, Tax Matters and Notice Partner, Plaintiff v. THE UNITED STATES OF AMERICA, Defendant.
PLAINTIFFS' MOTION FOR ORDER AUTHORIZING SERVICE OF SUBPOENAS BEYOND GEOGRAPHICAL LIMIT SET FORTH IN RULE 45(b)(2)

Case No. 05-748T

Case No. 07-520 T Consolidated with 05-748T Judge Christine O.C. Miller

Plaintiffs, Stobie Creek Investments LLC ("Stobie Creek"), JFW Enterprises, Inc. and JFW Investments LLC, Tax Matters and Notice Partners, and Welles Asset Management, Inc., DKW Senior Enterprises, Inc., DKW Junior Enterprises, Inc., VJ Enterprises, Inc., JFW Enterprises, Inc., PCW Enterprises, Inc., CSW Asset Management, Inc., DKW Senior Investments LLC, DKW Junior Investments LLC, VJ Investments LLC, JFW Investments LLC, PCW Investments LLC, and CSW Investments LLC, as parties to this action (collectively the "Parties"), by and through their attorneys, pursuant to RCFC 45(b)(2), move this Court for authorization to serve subpoenas commanding each of the following people to attend and give testimony at the trial in this case in April:

Case 1:05-cv-00748-CCM

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William Chung Thomas Cotter Robert Floyd Lawrence Goldstein David Waterman In support of this motion, Plaintiff states that each of these individuals resides more than 100 miles from the designated location for trial--Chicago, Illinois. Furthermore, each of these witnesses has knowledge of facts pertinent to the issues to be resolved at trial. Their testimony is necessary for the presentation of Plaintiff's case and will assist the Court in developing a full understanding of the facts. The testimony of William Chung is relevant to show the business purpose of Stobie Creek in 2000 through the present and the expectation of profit from the digital options purchased in 2000. Mr. Chung was hired in 1999 to work with the asset custodians and other investment managers of North Channel in their management of Stobie Creek's funds. Mr. Chung also was responsible for monitoring foreign currency fluctuations in the spring of 2000. The testimony of Thomas Cotter and David Waterman is directly relevant to Plaintiff's claims of reasonable reliance on counsel, reasonable expectation of profit, and cooperation with the IRS during the audit of Stobie Creek. Thomas Cotter, of Shumaker, Loop and Kendrick, LLP, a large multi-state firm, established in 1925, will testify about the preparation and filing of Stobie Creek tax returns, Welles Family LLC and S-corporation returns for 2000. In addition, he has direct, first-hand knowledge about the research and analysis of Jenkens & Gilchrist tax opinion issued to Welles Family and Stobie Creek. He personally assisted the Welles family in cooperating with all IRS requests during the audit of Stobie Creek's 2000 tax year. David Waterman was a partner at Shumaker, Loop & Kendrick, LLP, a large multi-state firm,

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established in 1925, in 2000. Mr. Waterman had been the corporate attorney for Therma-Tru and had advised the Welles family for almost forty years. Mr. Waterman explained how the family could create additional wealth, leverage their portfolio, and save taxes using a strategy developed by Jenkens and Gilchrist. The testimony of Robert Floyd is directly relevant to the preparation and filing of Stobie Creek tax returns. Mr. Floyd, as the accountant for many of the Welles family members and Stobie Creek also retains records of and files tax returns on behalf of DKW Senior Investments, LLC; DKW Junior Investments, LLC; JFW Investments, LLC; CSW Investments, LLC; PCW Investments, LLC; and VJ Investments, LLC were formed under Delaware law (collectively the "Stobie Creek Member LLCs") and Welles Asset Management, Inc.; DKW Senior Enterprises, Inc.; DKW Junior Enterprises, Inc., JFW Enterprises, Inc.; CSW Asset Management, Inc.; PCW Enterprises, Inc.; and VJ Enterprises, Inc.. The testimony of Lawrence Goldstein is relevant to show the business purpose of Stobie Creek in 2000 through the present and to show reasonable reliance on counsel. Mr. Goldstein is the Chief Financial Officer of North Channel, a licensed attorney and certified public accountant. As the CFO of North Channel, he is aware of the function that both Stobie Creek and North Channel provide to the Welles family. He also investigated the proper reporting of the

transaction. Mr. Goldstein reviewed multiple draft tax opinions issued by Jenkens and Gilchrist, met with attorneys from Shumaker Loop and Kendrick, and worked with the Welles family accountant, Robert Floyd, to properly report the transaction. WHEREFORE, Plaintiff respectfully requests that the Court issue an order authorizing the issuance and service of subpoenas on the above-listed individuals.

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Dated: February 7, 2007 Respectfully Submitted SCHIFF HARDIN LLP

/s/ Robert E. Kolek Attorneys for Plaintiff Robert E. Kolek Matthew C. Crowl Thomas R. Wechter SCHIFF HARDIN LLP 6600 Sears Tower Chicago, IL 60606 Phone: 312-258-5500 Fax: 312-258-5600

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CERTIFICATE OF SERVICE I hereby certify that on the 7th of February, 2008, the undersigned counsel caused to be electronically filed Plaintiffs' Motion for an Order Authorizing Service of Subpoenas Beyond the Geographical Limit Set Forth in Rule 45(b)(2) using the CM/ECF system, which will send notification of such filing to the following named counsel of record: Stuart D. Gibson, Esq. Cory A. Johnson, Esq. Trial Attorney Tax Division U. S. Department of Justice P.O. Box 26 Ben Franklin Station Washington, D.C. 20044

/s/ Colleen M. Feeney

CH1\5389862.1

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