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United States v. Phoenix Fuel Corp.

United States District Court, D. Wyoming

October 18, 2012

UNITED STATES of America, Plaintiff,

Page 1207

Mark A. Klaassen, U.S. Attorney's Office, Cheyenne, WY, Rickey Watson, Department of Justice, Washington, DC, for Plaintiff.



This matter is before the Court on Plaintiff's motion for summary judgment. With this motion, Plaintiff, United States of America (" United States" ), seeks summary judgment as to two of the various Defendants in this case, Charter America, Inc. (" Charter" ) and Charles Little (" Little" ). [1] The United States argues these two Defendants are responsible for federal

Page 1208

corporate income tax liabilities totaling $756,742.86, plus statutory additions and interest. In support of its motion, the United States asserts (1) Charter is responsible for the liabilities as a shareholder who received distributions from a liquidating corporation, and (2) Little is responsible because those distributions were approved by him in violation of Wyoming law. In addition, the United States claims the transfers to Charter were fraudulent as to the United States. Based on the pleadings and supporting evidence before it, the Court finds genuine disputes exist as to various material facts., Thus, the United States' motion for summary judgment is DENIED.


The United States brought this lawsuit to reduce to judgment federal income tax assessments against Phoenix Fuel Corporation (" PFC" ), an aviation fuel distribution company formerly operating out of Sheridan, Wyoming. PFC was originally incorporated in Texas, but filed Articles of Domestication with the Wyoming Secretary of State on March 17, 1998. The federal tax liabilities at issue arose as a result of PFC's sale of certain assets to another entity, Phoenix Fuel LLC, in late 2005. During this period, Defendant Charles Little served as both a director and as Chief Financial Officer of PFC. Defendant Thomas Perkins served as PFC's President.

Over the course of several transactions from 2001 to 2005, Charter Aviation, Inc. (" Charter" ) became PFC's primary shareholder.[2] At the time, Charter and PFC shared common leadership. In addition to his positions with PFC, Mr. Little served as Charter's Chief Financial Officer. Charter was wholly owned by another Defendant in this case, Anthony Romeo. Mr. Romeo was also a director of PFC.

In the fall of 2005, Mr. Romeo met with a third party named Robert Lyle, who expressed an interest in purchasing Charter's interest in PFC. The parties disagree as to the specifics of the resulting agreement between Mr. Romeo and Mr. Lyle. According to the United States, the men agreed to accomplish the transfer of Charter's ownership interest in PFC through a purchase of all of PFC's assets by a company to be formed by Lyle (ultimately, Phoenix Fuel LLC). These proceeds would in turn be used to redeem Charter's stock holdings in PFC. Defendants Charter and Little, however, claim they were ignorant of the plans regarding the particular mechanism by which Mr. Lyle would purchase Charter's PFC shares.

Regardless, in December of 2005, Charter executed a stock redemption agreement for its ownership interest in PFC. Under the terms of this agreement, PFC agreed to redeem Charter's shares for the sum of $1,120,000.00. Around this time, the only other PFC shareholder, Defendant Tradewind (owned by Defendant Perkins), had transferred all but one of its shares to Charter, pursuant to a request from Mr. Lyle's representatives. Accordingly, at the time PFC redeemed Charter's shares, the company held 2,499 of the 2,500 issued shares of common stock in PFC. The stock redemption agreement also provided PFC would purchase a contract between Charter and the Department of Defense for $280,000.00. [3] The

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closing on the redemption of Charter's PFC shares pursuant to the parties' stock redemption agreement took place on or around December 30, 2005. Just prior, Mr. Romeo and Mr. Little resigned as directors of PFC.

Meanwhile, one or more of the various Defendants in this case approved the aforementioned asset purchase agreement with Mr. Lyle.[4] In light of this agreement, Mr. Lyle's new entity, Phoenix Fuel LLC, purchased all of PFC's assets for $1,400,000.00. The parties disagree as to whether the transfer under the asset purchase agreement occurred contemporaneously with the stock redemption agreement or afterwards. The timing was undoubtedly close because, as Defendants Charter and Little admit, Phoenix Fuel LLC took over PFC's business on December 30, 2005. Thereafter, PFC incurred federal corporate income tax liabilities for the tax period ending June 30, 2006, as a result of the sale of its assets to Phoenix Fuel LLC.

While the parties disagree as to the exact amount of taxes owed in this case, it is generally uncontested that PFC incurred significant liabilities, which remain unpaid. According to the most recent assessment by the United States, the outstanding income tax liabilities of PFC, including certain penalties and assessed interest, is $759.742.86.

Standard of Review

" The Court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a); Mata v. Anderson,635 F.3d 1250, 1252 (10th Cir.2011). In determining whether summary judgment is appropriate, the Court views the evidence and draws all reasonable inference there from in the light most ...

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