United States v. Isac Schwarzbaum
U.S. Court of Appeals for the Eleventh Circuit
United States v. Isac Schwarzbaum, 114 F.4th 1319 (11th Cir. 2024)
United States v. Isac Schwarzbaum
Opinion
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[PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
No. 22-14058
____________________
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
ISAC SCHWARZBAUM,
Defendant-Appellant.
____________________
Appeal from the United States District Court
for the Southern District of Florida
D.C. Docket No. 9:18-cv-81147-BB
____________________
Before JORDAN, LAGOA, and MARCUS, Circuit Judges.
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2 Opinion of the Court 22-14058
MARCUS, Circuit Judge:
Isac Schwarzbaum is a wealthy naturalized citizen of the
United States. He was born in Germany and holds significant
wealth in numerous bank accounts in Switzerland and Costa Rica.
The U.S. tax regime required Schwarzbaum to report any foreign
bank accounts to the Internal Revenue Service (the “IRS”) using a
form known as the FBAR. Although Schwarzbaum had read the
FBAR filing instructions and engaged accountants to assist with his
filings, he failed to report his foreign bank accounts to the IRS for
years 2007–2009.
After a bench trial, the district court found that Schwarz-
baum violated the FBAR statutes recklessly, thus satisfying the stat-
utes’ “willful” requirement for a higher penalty. The district court
also found that the IRS had violated the FBAR statute in calculating
the penalty because the IRS had used the wrong base numbers in
calculating the statutory maximum. Rather than remanding to the
IRS, however, the district court set aside the penalty and performed
its own penalty calculation.
This is the second time this matter has been before our
Court. In United States v. Schwarzbaum, 24 F.4th 1355 (11th Cir.
2022) (“Schwarzbaum I”), a panel of our Court upheld the district
court’s finding that Schwarzbaum’s reckless failure to file FBAR re-
ports satisfied the statute’s “willfulness” requirement. The panel
also held that the district court had erred by performing its own
calculation of the penalty and, therefore, vacated the district court’s
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judgment and remanded with instructions to remand further to the
IRS for a correct penalty calculation.
The IRS recalculated the penalty, reaching a higher -- and,
this time, correct -- penalty, and the Government again moved for
enforcement in the district court. At the Government’s request,
the district court retained jurisdiction over the case following its
remand to the IRS and entered the same penalty as it had before
remand. Schwarzbaum again appealed to this Court.
This case presents essentially two categories of questions.
The first set are procedural questions asking whether the district
court can enforce the IRS’s recalculated penalties. These questions
are easily answered: (1) the United States, as plaintiff in a civil case,
has the discretion to seek a lower penalty amount than the IRS as-
sessed; (2) the Eleventh Circuit in Schwarzbaum I already disposed
of and rejected Schwarzbaum’s statute-of-limitations argument;
and (3) the district court did not err by retaining jurisdiction during
a remand to the IRS that was, in essence, an interlocutory order.
More difficult is the fundamental question of whether FBAR
penalties are fines within the meaning of the Eighth Amendment’s
Excessive Fines Clause. This is a matter of first impression for this
Court. The only other circuit court to have addressed the question,
the First Circuit, recently held that the Eighth Amendment’s Exces-
sive Fines Clause does not apply to FBAR penalties.
After careful consideration of the historical development of
the Excessive Fines Clause and the FBAR’s text, structure, and his-
tory, we decline to follow the First Circuit. Rather, we hold that
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4 Opinion of the Court 22-14058
FBAR penalties are in substantial measure punitive in nature.
Therefore, under controlling Supreme Court precedent, they are
subject to review under the Eighth Amendment’s Excessive Fines
Clause. And in this case, examining the penalties assessed against
Schwarzbaum account by account as we must, we identify
$100,000 in penalties levied against one account in each of the years
2007–2009, for a total of $300,000, that are grossly disproportionate
to the offense of concealing that account, and are therefore in vio-
lation of the Excessive Fines Clause. We also hold, however, that
the other penalties levied against the remaining accounts did not
violate the Excessive Fines Clause because the penalties assessed
against them were not grossly disproportionate to Schwarzbaum’s
willful concealment of tens of millions of dollars in overseas ac-
counts.
We therefore strike the $300,000 in assessed penalties from
the judgment, uphold the remaining penalties, and remand this
case to the district court for the entry of a judgment in the amount
of $12,255,813, plus the calculation of late fees and interest.
I.
A.
The Bank Secrecy Act of 1970 required, among other things,
the Secretary of the Treasury to promulgate regulations requiring
United States citizens to report any “transaction” or “relation” with
a “foreign financial agency.” 31 U.S.C. § 5314(a). Consequently,
the Secretary of the Treasury created the Report of Foreign Bank
and Financial Accounts form, known as the FBAR. See 31 C.F.R.
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§ 1010.350. Each American citizen with interests in or authority
over any foreign bank account with a balance exceeding $10,000
must file an annual FBAR with the IRS identifying and describing
that account. See id. §§ 1010.306(c), 1010.350(a).
The IRS has been delegated the authority to impose civil
penalties on any person who violates the FBAR statute. See 31
U.S.C. § 5321(a)(5)(A) (granting penalty authority to the Secretary
of the Treasury); 31 C.F.R. § 1010.810(g) (delegating to the IRS the
authority to “assess and collect civil penalties under 31 U.S.C.
[§] 5321”). Under the penalty statute adopted by Congress, the IRS
“may assess a civil penalty . . . at any time before the end of the 6-
year period beginning on the date of the transaction with respect
to which the penalty is assessed.” 31 U.S.C. § 5321(b)(1). For each
tax year, covered persons must file their FBAR forms by June 30 of
the following year. See 31 C.F.R. § 1010.306(c).
The maximum civil penalty for a willful violation of the
FBAR reporting requirements is:
[T]he greater of . . . $100,000, or . . . in the case of a
violation involving a failure to report the existence of
an account or any identifying information required to
be provided with respect to an account, [fifty percent
of ] the balance in the account at the time of the vio-
lation.
31 U.S.C. § 5321(a)(5)(C)(i), (D)(ii).
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B.
Schwarzbaum was born in Germany in 1955. He has since
lived in Germany, Spain, Costa Rica, Switzerland, and the United
States, and he speaks English in addition to several other languages.
Schwarzbaum became a legal permanent resident of the United
States in 1995, and a United States citizen in 2000. From 1993 to
2010, he split his time between Costa Rica, Switzerland -- where his
parents lived -- and the United States. In September 2010, Schwarz-
baum moved to Switzerland and lived there full time until he re-
turned to the United States in 2016.
Schwarzbaum’s father was very successful in the textile and
real estate industries in Germany, and Schwarzbaum’s assets are
derived from his father’s gifts and bequests. In 2001, Schwarz-
baum’s father transferred an existing Swiss bank account into his
son’s name. Thereafter, Schwarzbaum’s father continued to gift
Schwarzbaum large sums of money until his death in 2009. After
the death of Schwarzbaum’s father, the money continued to be
managed by bankers based upon the father’s instructions, and
Schwarzbaum never directed how the money should be invested
or disagreed with any recommendations made by the bankers.
Between tax years 2006 and 2009, Schwarzbaum had an in-
terest in eleven Swiss bank accounts and two Costa Rican bank ac-
counts. The district court found that Schwarzbaum maintained
these accounts because they were in places outside of the United
States where he resided, not with the intention of evading United
States tax reporting requirements. However, as an American
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citizen, Schwarzbaum was nevertheless plainly subject to the
FBAR reporting requirements for these foreign bank accounts. See
31 U.S.C. § 5314(a).
Schwarzbaum used certified public accountants (“CPAs”) to
prepare his tax returns in the United States. Although Schwarz-
baum disclosed his foreign accounts and gifts to his CPAs, he was
advised (incorrectly) that he had no duty to report these assets be-
cause they were maintained outside of the United States. Schwarz-
baum’s CPAs at various times filed incomplete FBARs or failed to
file FBARs at all.
In 2008, however, Schwarzbaum opted to self-prepare and
file an FBAR for the 2007 tax year. On this FBAR, Schwarzbaum
disclosed only a single Scotiabank account: the same one he had
disclosed on his 2006 FBAR (which had been prepared by a CPA).
Schwarzbaum later testified that he had reviewed the instructions
on the form to the best of his abilities. Schwarzbaum did not file
any FBAR for 2008 until December 2011. For tax year 2009,
Schwarzbaum again self-prepared an FBAR and disclosed a single
Swiss account and two Scotiabank accounts, although he main-
tained many other undisclosed foreign bank accounts.
At some point in 2010, Schwarzbaum became aware that he
was in violation of the FBAR requirements. In 2010, Schwarzbaum
disclosed his financial holdings through the IRS’s Offshore Volun-
tary Disclosure Initiative (the “OVDI program”), including seven-
teen Swiss bank accounts and four Costa Rican bank accounts for
the years 2003 to 2010. Ultimately, however, Schwarzbaum chose
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to opt out of the OVDI program, and his case was referred to the
IRS for investigation.
Following the investigation, the IRS determined that
Schwarzbaum willfully violated the FBAR reporting requirements
for the 2006–2009 tax years. Consistent with the statute, the pen-
alty for each tax year for each unreported bank account was the
greater of $100,000 or fifty percent of the account balance “at the
time of the violation.” 31 U.S.C. § 5321(a)(5)(C), (D)(ii). The time
of each FBAR violation was the reporting date: June 30 of the year
after the tax year being reported. See 31 C.F.R. § 1010.306(c). How-
ever, in calculating the FBAR penalties, the IRS erroneously used
the highest aggregate balance for each account for each year -- as
was reported by Schwarzbaum on his OVDI worksheet -- instead
of determining the balance in each account as of June 30 of each
following year, as was required by the statute. Using the wrong
base numbers, the IRS arrived at an initial aggregate penalty in the
amount of $35.4 million dollars. The IRS determined that this
number was excessive and mitigated the penalty by taking the pen-
alties for the highest year and spreading the aggregate penalty for
that year across all of the years, thus arriving at an aggregate pen-
alty of $13,729,591.
Schwarzbaum appealed the IRS’s proposed penalties to the
IRS appeals office, which sustained and timely assessed the penal-
ties in September 2016. The assessments were timely despite the
six-year statute of limitations because, in 2015, “the parties exe-
cuted a tolling agreement that extended the time period for the IRS
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to assess Schwarzbaum’s penalties through December 2016.”
Schwarzbaum I, 24 F.4th at 1360 n.4.
C.
Schwarzbaum failed to pay the penalties, and, in August
2018, the United States brought this action in the Southern District
of Florida under 31 U.S.C. § 5321(b)(2) to collect them. See
Schwarzbaum I, 24 F.4th at 1361. In March 2020, after conducting a
five-day bench trial, the district court issued an opinion concluding
that Schwarzbaum had willfully violated the FBAR reporting re-
quirements in 2007, 2008, and again in 2009, but not in 2006. The
district court found that Schwarzbaum did not knowingly violate
the FBAR reporting requirements, but that he did so with “willful
blindness” or “recklessness” because, after reading the FBAR in-
structions and self-preparing his own FBAR in 2007, he “was aware,
or should have been aware, of a high probability of tax liability with
respect to his unreported accounts.”
The district court also concluded that the IRS miscalculated
Schwarzbaum’s FBAR penalties when it used the incorrect base
amounts for each bank account and held that the penalties were
therefore not consonant with the law under the Administrative
Procedure Act (“APA”). Instead of remanding to the IRS, however,
the district court then entered judgment for $12,907,952 based
upon its own recalculation of the penalties. The district court also
rejected Schwarzbaum’s argument that the penalties were subject
to review under the Eighth Amendment Excessive Fines Clause.
Subsequently, the Government filed a motion for an amended
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judgment of $12,555,813, which was the penalty amount the IRS
had originally assessed against Schwarzbaum for tax years 2007
through 2009. The Government noted that it did not seek a judg-
ment for more than the amount of the assessed penalties requested
in its complaint. The district court granted the Government’s mo-
tion and amended the final judgment accordingly.
On appeal, a panel of this Court affirmed both the finding of
willfulness and the district court’s conclusion that the penalties
were not in accordance with the FBAR statute because the IRS had
used the wrong base numbers in its calculation. Schwarzbaum I, 24
F.4th at 1358. However, the panel also found that “the district
court further erred by calculating and imposing new penalties in-
stead of remanding to the agency, as required by the APA.” Id. We
held that the IRS’s error was not harmless because -- without pre-
suming to guess what the IRS would do -- the possibility that the
IRS may reach a lower result when recalculating penalties in ac-
cordance with the statute was enough to justify remand. Id. at
1366. Finally, the panel rejected Schwarzbaum’s argument that re-
mand to the IRS would be futile because the IRS would be time-
barred on remand by the statute of limitations from recalculating
his FBAR penalties. Id. at 1367. The Court observed that it was
not aware of any authority standing for the proposition that “on
remand from judicial review under the APA, an agency could be
time-barred from re-evaluating its original actions.” Id. The panel
emphasized that “[t]he remand we now direct is not for the IRS to
issue new penalties, but for it to recalculate the penalties it has al-
ready assessed.” Id. Because the panel directed a remand for
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recalculation of the penalties, it did not reach Schwarzbaum’s Ex-
cessive Fines Clause argument. Id. at 1358 n.1.
While awaiting the issuance of the mandate, the Govern-
ment moved the district court to retain jurisdiction after remand to
the IRS for recalculation of the penalties. The district court granted
the motion over Schwarzbaum’s objections and then remanded
the penalties to the IRS for recalculation. The district court subse-
quently denied Schwarzbaum’s Motion for Reconsideration of the
Order Retaining Jurisdiction.
The IRS recalculated the penalties to correct the error in the
original calculation and returned a corrected aggregate penalty in
the amount of $13,521,328, approximately 7.7% higher than the
original penalty. The Government then moved the district court
to enter judgment against Schwarzbaum but asked that the district
court forgo the difference in the revised penalty and limit judgment
to the original penalty amount of $12,555,813 -- plus interest and
failure-to-pay penalties -- asked for in the Government’s complaint.
The district court granted the Government’s motion and entered
judgment accordingly.
This timely appeal followed.
II.
The most significant issue we face is Schwarzbaum’s Eighth
Amendment Excessive Fines Clause claim. Specifically, he says
that the multi-million-dollar judgment sought by the Government
violates the Excessive Fines Clause. Accordingly, we address this
argument first.
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A.
The question of whether FBAR penalties are “fines” falling
within the meaning of the Eighth Amendment’s Excessive Fines
Clause is a matter of first impression in this Court. We review first
the history of the Excessive Fines Clause and its interpretation in
the federal courts. We then turn to the meaning of the FBAR pen-
alty itself, as it relates to the Clause. We conclude that FBAR pen-
alties are “fines” within the meaning of the Excessive Fines Clause.
1.
The Eighth Amendment provides that “[e]xcessive bail shall
not be required, nor excessive fines imposed, nor cruel and unusual
punishments inflicted.” U.S. Const. amend. VIII.
The history of the Excessive Fines Clause is well docu-
mented. “The text was taken, almost verbatim, from a provision
of the Virginia Declaration of Rights of 1776, which in turn derived
from the English Bill of Rights of 1689.” Ingraham v. Wright, 430
U.S. 651, 664 (1977). The English Bill of Rights “was intended to
curb the excesses of English judges under the reign of James II.” Id.
The Clause meant to address “excessive and partisan” fines levied
by the King’s judges against the King’s enemies during the Stuarts’
reign. Browning-Ferris Indus. of Vt., Inc. v. Kelco Disposal, Inc., 492
U.S. 257, 267 (1989) (citation omitted). These fines could be so
steep that, by the 1680s, “some opponents of the King were forced
to remain in prison because they could not pay the huge monetary
penalties that had been assessed. The group which drew up the
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1689 Bill of Rights had firsthand experience; several had been sub-
jected to heavy fines by the King’s bench.” Id. (citation omitted).
The English Bill of Rights’ prohibition against excessive fines
was itself the codification of a centuries-long English tradition pro-
hibiting disproportionate fines. See Timbs v. Indiana, 586 U.S. 146,
160 (2019) (Thomas, J., concurring).
The Charter of Liberties of Henry I, issued in 1101,
stated that “[i]f any of my barons or men shall have
committed an offence he shall not give security to the
extent of forfeiture of his money, as he did in the time
of my father, or of my brother, but according to the
measure of the offence so shall he pay . . . .”
Id. (quoting Sources of English Legal and Constitutional History 50
¶ 8 (M. Evans & R. Jack eds. 1984)). A little over 100 years later,
the Magna Carta expanded on this principle by stating that:
A free man shall be amerced for a small fault only ac-
cording to the measure thereof, and for a great crime
according to its magnitude, saving his position; and in
like manner, a merchant saving his trade, and a villein
saving his tillage, if they should fall under Our mercy.
Id. (quoting Magna Carta, ch. 20 (1215), in A. Howard, Magna
Carta: Text & Commentary 42 (rev. ed. 1998)). This tradition was
very important. “One historian posits that, due to the prevalence
of amercements and their use in increasing the English treasury,
‘[v]ery likely there was no clause in Magna Carta more grateful to
the mass of the people than that about amercements.’” Id. at 161
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(quoting Pleas of the Crown for the County of Gloucester xxxiv (F.
Maitland ed. 1884)).
When the text from the English Bill of Rights was borrowed
by the Founders, then, it reflected their pronounced fear of the “im-
position of torture and other cruel punishments not only by judges
acting beyond their lawful authority, but also by legislatures en-
gaged in making the laws by which judicial authority would be
measured.” Ingraham, 430 U.S. at 665. By the time of the First Con-
gress, “at least eight of the original States which ratified the Consti-
tution had some equivalent of the Excessive Fines Clause in their
respective Declarations of Rights or State Constitutions.” Brown-
ing-Ferris, 492 U.S. at 264. Thus, because “the matter was not a
likely source of controversy or extensive discussion,” the Clause
received little attention in the First Congress, and “Congress did
not discuss what was meant by the term ‘fines,’ or whether the pro-
hibition had any application in the civil context.” Id. at 264–65.
2.
The outer limits of the Excessive Fines Clause developed
slowly in our federal courts. The Supreme Court considered the
Clause for the first time in Browning-Ferris Industries of Vermont, Inc.
v. Kelco Disposal, Inc., 492 U.S. 257 (1989). See Austin v. United States,
509 U.S. 602, 606 (1993) (“We have had occasion to consider this
Clause only once before.” (referencing Browning-Ferris, 492 U.S. at
264)). In Browning-Ferris, the Supreme Court considered whether
the Clause’s ambit encompassed private civil actions and held that
the “Excessive Fines Clause does not apply to awards of punitive
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damages in cases between private parties.” 492 U.S. at 260. In so
holding, the Court emphasized that the “concerns in applying the
Eighth Amendment have been with criminal process and with di-
rect actions initiated by government to inflict punishment.” Id.
But the Court declined to hold that “the Excessive Fines Clause ap-
plies just to criminal cases.” Id. at 263.
The question of whether the Excessive Fines Clause applies
to civil cases was squarely presented to the Court, however, in Aus-
tin v. United States, 509 U.S. 602 (1993). There, the Court concluded
that because the Excessive Fines Clause “limits the government’s
power to extract payments, whether in cash or in kind, ‘as punish-
ment for some offense,’” the question is not whether a given fine is
“civil or criminal, but rather whether it is punishment.” Id. at 609–
10 (quoting Browning-Ferris, 492 U.S. at 265). Consequently, the
Supreme Court held that, in order to escape the command of the
Excessive Fines Clause, a penalty must “fairly be said solely to serve
a remedial purpose.” Id.at 610 (quoting United States v. Halper,490 U.S. 435, 448
(1989)). 1 A penalty can be considered “remedial,” the
1 Halper was a double jeopardy case. 490 U.S. at 436. It was subse-
quently abrogated by Hudson v. United States, 522 U.S. 93 (1997). Writing again
in the double jeopardy context, the Hudson Court held that Halper’s “‘solely’
remedial (i.e., entirely nondeterrent)” test was too broad because “all civil pen-
alties have some deterrent effect.” Id. at 102. The Government argues that
Hudson also abrogated the “solely remedial” test in Austin, which was quoting
Halper but writing in the Eighth Amendment context. The district court ac-
cepted this argument. Although the district court acknowledged -- as it must
-- that “the FBAR penalty provision undoubtedly promotes deterrence,” it
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Court further held, if it “removes dangerous or illegal items from
society” or serves to compensate the government for a loss or the
costs of enforcing the law. Id. at 621. Notably, however, if the
penalty in any way serves “either retributive or deterrent purposes,
[it] is punishment,” and thus subject to the Excessive Fines Clause.
Id. at 610.
The Supreme Court expanded on this principle in United
States v. Bajakajian, 524 U.S. 321 (1998). In Bajakajian, the respond-
ent, upon leaving the United States, failed to report that he was
carrying currency in excess of $10,000 to a customs inspector. Id.
at 324–25. The Government then sought civil forfeiture of the en-
tire $357,144 carried by the respondent. Id. at 325. The Supreme
Court held this forfeiture was subject to the Excessive Fines Clause
because the forfeiture of the unreported currency “serve[d] no
nevertheless rejected application of the Eighth Amendment on the ground
that the FBAR penalty had an “additional alternative” remedial purpose, and
concluded that FBAR penalties are thus not subject to review under the Ex-
cessive Fines Clause. But this is where the district court erred: Austin’s “solely
remedial” test remains good law in the Eighth Amendment context. Hudson
itself stated, in abrogating Halper, that “some of the ills at which Halper was
directed are addressed by other constitutional provisions,” and then cited Aus-
tin as standing for the Eighth Amendment’s protection against excessive civil
fines. Id. at 102-03. Moreover, since Hudson was decided, the Supreme Court
has reaffirmed the solely remedial test in the Eighth Amendment Excessive
Fines context. See United States v. Bajakajian, 524 U.S. 321, 329 & n.4, 331 n.6
(1998); Kokesh v. SEC, 581 U.S. 455, 466–67 (2017). Therefore, binding prece-
dent is clear that Austin’s solely remedial test remains good law in the Exces-
sive Fines context, even if that test no longer applies in the double jeopardy
context.
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remedial purpose, [wa]s designed to punish the offender, and can-
not be imposed upon innocent owners.” Id. at 332. In so doing,
the Court distinguished older cases where the monetary penalty
was purely remedial in nature or where the forfeiture was purely
in rem because of “the fiction that the action was directed against
‘guilty property,’ rather than against the offender himself.” Id. at
330. The “early monetary forfeiture[]” cases, the Court reasoned,
served “the remedial purpose of reimbursing the Government for
the losses accruing from the evasion of customs duties,” and were
“thus no different in purpose and effect than the in rem forfeitures
of the goods to whose value they were proportioned.” Id. at 342–
43.
In particular, the Court in Bajakajian distinguished its hold-
ing from its opinion in One Lot Emerald Cut Stones & One Ring v.
United States, 409 U.S. 232 (1972) (per curiam). In Emerald Cut
Stones, the Court, writing about Fifth Amendment double jeop-
ardy, held that a tariff forfeiture provision was entirely remedial in
nature, and thus non-punitive, because it “provide[d] a reasonable
form of liquidated damages for violation of the inspection provi-
sions and serve[d] to reimburse the Government for investigation
and enforcement expenses.” Id. at 237. Distinguishing Emerald Cut
Stones, the Court in Bajakajian wrote that “[t]he additional fact that
such a remedial forfeiture also ‘serves to reimburse the Govern-
ment for investigation and enforcement expenses,’ is essentially
meaningless, because even a clearly punitive criminal fine or forfei-
ture could be said in some measure to reimburse for criminal en-
forcement and investigation.” Bajakajian, 524 U.S. at 343 n.19
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(quoting Emerald Cut Stones, 409 U.S. at 237). Instead, the Court
explained that the critical question remained whether the penalty
“is designed to punish the offender” and thus serves as “punish-
ment even in part.” Id. at 332, 331 n.6. If so, the penalty is subject
to the Eighth Amendment Excessive Fines Clause. Id. at 331 n.6;
see also id. at 329 n.4 (“We do not suggest that merely because the
forfeiture of respondent's currency in this case would not serve a
remedial purpose, other forfeitures may be classified as nonpuni-
tive (and thus not ‘fines’) if they serve some remedial purpose as
well as being punishment for an offense. Even if the Government
were correct in claiming that the forfeiture of respondent's cur-
rency is remedial in some way, the forfeiture would still be punitive
in part. . . . This is sufficient to bring the forfeiture within the pur-
view of the Excessive Fines Clause.”).
Most recently, in Kokesh v. SEC, 581 U.S. 455 (2017), the Su-
preme Court said again, albeit in dicta, that a “modern statutory
forfeiture is a ‘fine’ for Eighth Amendment purposes if it constitutes
punishment even in part.” Id.at 467 (quoting Bajakajian,524 U.S. at 331
n.6).
3.
We turn, then, to the purpose of the FBAR penalty. We
begin, as we must, with the text of the statute itself. See Ross v.
Blake, 578 U.S. 632, 638 (2016). This analysis leads us to the conclu-
sion that the purpose of the FBAR penalty is -- at least in part --
punishment.
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As we have said, the maximum penalty for a willful failure
to report a foreign bank account is “[t]he greater of . . . $100,000”
or fifty percent of “the balance in the account at the time of the
violation.” 31 U.S.C. § 5321(a)(5)(C)(i), (D)(ii). The Government
argues that the purpose of this penalty is not to deter, but to rem-
edy the Government’s investigation and enforcement expenses as-
sociated with violations of the FBAR statute. But the text of the
statute mandates that the penalty is calculated “irrespective of the
magnitude of the financial injury to the United States, if any.” Yates
v. Pinellas Hematology & Oncology, P.A., 21 F.4th 1288, 1308 (11th
Cir. 2021). The Government can impose a $1,000,000 penalty on a
$2,000,000 account regardless of whether the Government spent a
million dollars investigating the case or whether it spent nothing at
all, or any number in between. Indeed, in this very case, there’s
not the slightest indication from the Government how much time
or money it expended in investigating each of Schwarzbaum’s ac-
counts. The Government has not made any argument that the in-
vestigation’s expenditures amounted to the millions of dollars it
seeks in penalties on some of the accounts. Instead, as we discuss
later in detail, see infra Part II.B.2, the Government simply assessed
a penalty on each account for the maximum amount permitted un-
der the statute in every instance. We have previously explained in
the context of applying the Excessive Fines Clause to civil forfeiture
that “[w]here the value of forfeited property bears no relationship
to the government’s costs, an inquiry into whether the forfeiture is
remedial is not necessary; it is almost certain that a portion of the
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20 Opinion of the Court 22-14058
forfeited property will constitute punishment.” United States v.
Dean, 87 F.3d 1212, 1213 (11th Cir. 1996).
Additionally, the design of the statute itself makes clear that
the severity of the penalty is tied directly to culpability. FBAR pen-
alties are capped at $10,000 for a non-willful violation, 31 U.S.C.
§ 5321(a)(5)(B)(i), but increase to the greater of $100,000 or fifty
percent of the account balance at the time of the violation for a
willful violation, id. § 5321(a)(5)(C)(i). A willful violation of the
FBAR statute thus has a ceiling limited only by the size of the vio-
lator’s bank account, regardless of the corresponding tax liability or
the time or cost spent by the Government remediating the prob-
lem. 2 The willfulness mens rea, for which this high penalty is re-
served, is identical to that found in the FBAR statute’s criminal pen-
alties. See 31 U.S.C. § 5322(a)–(b); see also Ratzlaf v. United States,
510 U.S. 135, 143 (1994) (noting that a “term appearing in several
places in a statutory text is generally read the same way each time
it appears”). In other words, this civil penalty only applies to those
with a culpable mindset equivalent to that of a criminal under the
same statute. Significantly, provisions that focus on the culpability
2 This potential punishment thus contrasts with the non-punitive tax
penalties the Government describes as analogous. Although the Government
states that the federal courts of appeals, following Helvering v. Mitchell, 303 U.S.
391 (1938), have “routinely held that even very substantial civil tax penalties -
- such as the penalty for civil fraud” -- are not fines, the statutory maximum
penalty for civil fraud is seventy-five percent of the tax not paid as a result of
the fraud. 26 U.S.C. § 6663(a). In contrast, Schwarzbaum was assessed an
FBAR penalty for 2007 equal to 3,264% of his tax deficiency.
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22-14058 Opinion of the Court 21
of the defendant make a statutory penalty “look more like punish-
ment, not less.” Austin, 509 U.S. at 619.
Furthermore, as we’ve seen, the FBAR penalty for willful vi-
olations is steep. Because the penalty is imposed each year and can
constitute fifty percent of the account balance on the date of the
violation, FBAR penalties imposed for willful violations over a se-
ries of years could consume an account of any size in its entirety in
just two years. 3 We are aware of no comparable civil penalty in
any other statute and none has been cited to us. Moreover, we are
not the first to find the FBAR penalty severe: The Taxpayer Advo-
cate Service, an independent organization within the IRS itself, re-
cently stated that “[t]he maximum FBAR penalty is among the
harshest civil penalties the government may impose.” Nat’l Tax-
payer Advocate, 2022 Purple Book 77 (Dec. 31, 2021),
3 The account would not be wiped out after two years, of course, if the
IRS imposed a separate fifty percent penalty at the end of each applicable year,
because then the account would only be halved, then halved again the next
year, and still again in each year thereafter. But when the IRS imposes multi-
ple penalties at one time after a series of years -- as happened in this case -- the
statute does not command the IRS to penalize the first year, reduce the ac-
count accordingly, and then penalize again. Instead, the statute requires the
IRS to calculate a fifty percent maximum penalty based on the June 30 balance
for each year. See 31 U.S.C. § 5321(a)(5)(C), (D)(ii);31 C.F.R. § 1010.306
(c).
So, if the account balance was $100,000 on June 30 of year one, and $100,000
again on June 30 of year two, then in year three the IRS could impose a $50,000
penalty for both year one and year two, for an aggregate penalty of $100,000,
thus wiping out the account entirely.
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22 Opinion of the Court 22-14058
https://www.taxpayeradvocate.irs.gov/wp-content/up-
loads/2022/01/ARC21_PurpleBook_04_ReformPenInts_38.pdf.
So severe a penalty, applied only to those with a criminal
mens rea, clearly bears the hallmarks of punishment.
We could stop there, but there is more. If there were any
remaining question about the punitive nature of the FBAR penalty
after reading the statute itself, Congress has told us that the very
design and purpose of the FBAR penalties is to deter.
When Congress adopted the Bank Secrecy Law in 1970, the
penalties for willful violations could be imposed only on financial
institutions themselves and were capped at $1,000. Bittner v. United
States, 598 U.S. 85, 98(2023) (citing Pub. L. 91–508, § 125(a),84 Stat. 1117
); The Drug Money Seizure Act and the Bank Secrecy Act Amend-
ments: Hearing on S. 571 and S. 2306 Before the S. Comm. on Banking,
Hous., & Urb. Affs., 99th Cong. 139 (1986) (hereinafter “1986 Senate
Hearing”) (response to written questions of Sen. Alfonse D’Amato
from James Knapp and Brian Sun). In 1986, Congress expanded the
penalties to apply directly to individuals on a per-account basis and
raised the cap for willful reporting violations to the balance of the
account at the time of the violation (not to exceed $100,000) or
$25,000, whichever was greater. Pub. L. 99–570, § 1357(c), 100 Stat.
3207; see also Bittner,598 U.S. at 98
. Written testimony at the Sen-
ate hearing for the bill indicated that the new “penalty should im-
prove compliance by individuals with the reporting requirement.”
1986 Senate Hearing at 123 (response to written questions of Sen.
Alfonse D’Amato from Francis A. Keating).
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22-14058 Opinion of the Court 23
But despite the Senate’s confidence that this penalty would
inspire greater compliance with the FBAR reporting requirements,
compliance remained elusive. Indeed, in 2002, the Secretary of the
Treasury reported to Congress that it was possible that fewer than
twenty percent of United States citizens who were required to
comply with the FBAR filing requirements actually did so. See
Sec’y of the Treasury, A Report to Congress in Accordance with §361(b)
of the USA PARIOT Act 6 (2002) (“It is difficult to determine with any
accuracy how many taxpayers are failing to file required FBARs in
any calendar year. . . . [T]he approximate rate of compliance with
the FBAR filing requirements based on this information could be
less than 20 percent.”).
Congress acted accordingly. In 2004, Congress adopted the
current penalty scheme for willful violations: the penalty for a will-
ful violation is $100,000 or fifty percent of the account balance at
the time of the violation, for each account, whichever is greater.
Pub. L. 108–357, § 821(a), 118 Stat. 1586. Citing to the Secretary of
the Treasury’s 2002 report, the Joint Committee on Taxation ex-
pressed concern with the lack of compliance with the “vitally im-
portant” FBAR reporting requirements. Staff of Joint Comm. on
Tax’n, 108th Cong., General Explanation of Tax Legislation Enacted in
the 108th Congress, pt. 17, § VII, 2005 WL 5783636, at *34 (Comm.
Print 2005). Explaining the “reasons for change” to the FBAR pen-
alties, the Committee wrote that “Congress believed that increas-
ing the prior-law penalty for willful noncompliance with this re-
quirement . . . will improve the reporting of foreign financial
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24 Opinion of the Court 22-14058
accounts.” Id. That is, the purpose of the new penalties was to
deter violations of the reporting requirement.
Indeed, until recently, the IRS itself appears to have consid-
ered the purpose of the FBAR penalty to be deterrence, not reme-
dial in nature. At the time when the original penalties were im-
posed against Schwarzbaum, the Internal Revenue Manual --
which is publicly available on the IRS website -- stated that “[p]en-
alties should be determined to promote compliance with the FBAR
reporting and recordkeeping requirements.” IRM 4.26.16.6 (Nov.
6, 2015). 4 Deterrence, in other words. And the Supreme Court has
been crystal clear that, at least for the purposes of the Eighth
Amendment, deterrence is punitive in nature. Bajakajian, 524 U.S.
at 329; see also Austin,509 U.S. at 620
(noting that legislative history
characterizing a proposed forfeiture provision as a “powerful de-
terrent” “confirm[ed] the punitive nature of these provisions” (ci-
tation omitted)); Tyler v. Hennepin County, 598 U.S. 631, 649–50
(2023) (Gorsuch, J., concurring) (“Economic penalties imposed to
deter willful noncompliance with the law are fines by any other
name. And the Constitution has something to say about them:
They cannot be excessive.”).
No matter how you cut it, it’s apparent that this statute is
designed to inflict punishment at least in part. Whether we look at
the text and structure of the statute -- which inflicts substantial pen-
alties on those with a criminal mens rea, unconnected to the
4 This language was removed from the Manual in the revisions dated
June 24, 2021. See IRM 4.26.16.5. (June 24, 2021).
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22-14058 Opinion of the Court 25
government’s costs and expenses -- or at the deterrent reasons Con-
gress has articulated for creating the penalty scheme, by every rea-
sonable measure, the FBAR penalty has a powerful punitive pur-
pose. We hold, therefore, that the FBAR penalty is a fine subject
to the Eighth Amendment’s Excessive Fines Clause.
4.
One of our sister Circuits has already grappled with this
question. In United States v. Toth, 33 F.4th 1 (1st Cir. 2022), the First
Circuit heard a similar case and concluded that FBAR penalties are
not subject to the Eighth Amendment Excessive Fines Clause. We
remain unpersuaded.
In Toth, the First Circuit considered whether a $2 million
penalty for willful failure to file an FBAR violated the Excessive
Fines Clause. See id. at 15. The First Circuit looked to civil forfei-
ture under early customs laws and to civil tax penalties, which the
Supreme Court held to be non-punitive for double jeopardy pur-
poses in Helvering v. Mitchell, 303 U.S. 391 (1938). Toth, 33 F.4th at
16–17. The First Circuit reasoned that the FBAR penalty similarly
reimbursed the United States for the generalized harm stemming
from the concealment of money it is entitled to, including the dif-
ficulty for law enforcement to investigate these accounts, all of
which can be far greater than the simple value of the money the
Government was entitled to in the first place. Id. at 17–18.
But Helvering is not binding in this case. Helvering was a dou-
ble jeopardy case applying a standard -- whether the penalty was
“intended as punishment,” 303 U.S. at 398–99 -- that is no longer
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26 Opinion of the Court 22-14058
applicable in the Excessive Fines context. Following Austin and
Hudson v. United States, 522 U.S. 93 (1997), the Supreme Court’s
double jeopardy jurisprudence regarding what constitutes “punish-
ment” diverged sharply from its Excessive Fines jurisprudence: alt-
hough a penalty need not be “solely remedial” to escape the scope
of the double jeopardy clause, this is not the case in the Excessive
Fines context. Compare Hudson, 522 U.S. at 102, with Bajakajian,524 U.S. 321
, 329 & n.4; see also supra note 1. The issue with the First
Circuit’s opinion in Toth, as we see it, is that it fails to circumnavi-
gate the problem that even if the FBAR penalty has some remedial
purpose, the test in the Excessive Fines context remains whether
the purpose of the penalty is solely compensatory. For the reasons
we have already explained, it is not. As Justice Gorsuch put it, dis-
senting from the denial of certiorari in Toth:
This decision is difficult to reconcile with our prece-
dents . . . . The government did not calculate [the
FBAR] penalty with reference to any losses or ex-
penses it had incurred. The government imposed its
penalty to punish [the appellant] and, in that way, de-
ter others. Even supposing, however, that [the appel-
lant’s] penalty bore both punitive and compensatory
purposes, it would still merit constitutional review.
Under our cases a fine that serves even “in part to pun-
ish” is subject to analysis under the Excessive Fines
Clause.
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22-14058 Opinion of the Court 27
Toth v. United States, 143 S. Ct. 552, 553 (2023) (Mem.) (Gorsuch, J.,
dissenting from denial of certiorari) (quoting Austin, 509 U.S. at
610). 5
We respectfully decline to “repeat [Toth’s] mistakes.” Id.
B.
Having determined that the FBAR penalties fall within the
scope of the Eighth Amendment, the second question we must an-
swer is whether the FBAR penalties are excessive as applied to
Schwarzbaum himself. It is not difficult to imagine hypothetical
scenarios in which an FBAR penalty demanded by the IRS can be
characterized clearly as a constitutional or unconstitutional sanc-
tion. “But the question whether a fine is constitutionally excessive
calls for the application of a constitutional standard to the facts of a
particular case, and in this context de novo review of that question
is appropriate,” Bajakajian, 524 U.S. at 336 n.10, because “analysis
of Excessive Fines claims is a pure question of law,” United States v.
10380 SW 28th Street, 214 F.3d 1291, 1293 (11th Cir. 2000) (per cu-
riam). Schwarzbaum has not made any facial challenge on the
5 The First Circuit’s analysis in Toth is also distinguishable from ours be-
cause it is grounded on different circuit precedent. Much of the First Circuit’s
analysis focused on the circuit’s own case, McNichols v. Commissioner of Internal
Revenue, 13 F.3d 432 (1st Cir. 1993). See Toth, 33 F.4th at 18–19 (“Toth develops
no argument as to why we should depart from McNichols on this score.”). In
McNichols, the First Circuit limited Austin to forfeitures under 21 U.S.C.
§§ 881(a)(4) and (a)(7). McNichols,13 F.3d at 434
. Our Circuit has no such
precedent. To the contrary, we have read Austin as broadly applicable. See,
e.g., Yates, 21 F.4th at 1308 (applying Austin to non-intervened qui tam actions).
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28 Opinion of the Court 22-14058
FBAR penalty scheme as a whole -- we therefore have no occasion
to question the constitutionality of a fifty percent fine on a theoret-
ical account of any size triggering the FBAR statutory regime. The
only question before us today is whether the fines imposed on
Schwarzbaum’s accounts are excessive as to Schwarzbaum. And
so we engage in a careful investigation of the FBAR penalties as-
sessed against Schwarzbaum’s accounts, one by one.
1.
“The touchstone of the constitutional inquiry under the Ex-
cessive Fines Clause is the principle of proportionality: The amount
of the forfeiture must bear some relationship to the gravity of the
offense that it is designed to punish.” Bajakajian, 524 U.S. at 334.
A fine will violate the Clause if it is “grossly disproportional to the
gravity of a defendant’s offense.” Id. “Translating the gravity of a
crime [or offense] into monetary terms -- such that it can be pro-
portioned to the value of [a fine] -- is not a simple task.” United
States v. 817 N.E. 29th Drive, 175 F.3d 1304, 1309 (11th Cir. 1999).
Nevertheless, we have previously identified three non-exhaustive
factors to consider when undertaking an Excessive Fines Clause
analysis: “(i) whether the defendant is in the class of persons at
whom the statute was principally directed; (ii) how the imposed
penalties compare to other penalties authorized by the legislature;
and (iii) the harm caused by the defendant.” Yates, 21 F.4th at 1314
(citing United States v. Chaplin’s, Inc., 646 F.3d 846, 851 (11th Cir.
2011)).
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22-14058 Opinion of the Court 29
At the outset, Schwarzbaum suggests that our excessive
fines analysis should focus on the total aggregated fine. But this
approach cannot be reconciled with the FBAR reporting regime.
Rather, we must proceed carefully on an account-by-account basis
precisely because the statutory regime characterizes each failure to
report a bank account as a violation in and of itself. Section 5321
of Title 31 of the United States Code specifically authorizes penal-
ties “in the case of a violation involving a failure to report the ex-
istence of an account” -- not a single aggregated violation for the
failure to submit an FBAR form reporting any number of accounts
in a given year. See also Bittner, 598 U.S. at 94 (noting that § 5321
“does tailor penalties to accounts” in “cases that involve willful vi-
olations,” such as this one, in contrast to cases that “involve only
nonwillful violations”).
Moreover, Schwarzbaum’s preferred approach is incon-
sistent with how we have approached this issue in an analogous
circumstance. There, our Court held that when penalties accrue
on a violation-by-violation basis, courts should examine each pen-
alty in proportion to each violation, rather than the cumulative to-
tal. See Moustakis v. City of Fort Lauderdale, 338 Fed. App’x 820, 822
(11th Cir. 2009) (per curiam) (analyzing the excessiveness of a $150-
per-day fine for each day that a house was not in compliance with
local codes, rather than the cumulative fine of $700,000 created by
the failure to bring the house into compliance each day for fourteen
years). Although we are not bound by Moustakis, we agree with its
approach.
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30 Opinion of the Court 22-14058
2.
Because the analysis must proceed on an account-by-ac-
count basis in each year, we begin by providing a chart summariz-
ing the different accounts and the different penalties the Govern-
ment seeks to impose on each of those accounts.
Bank Maximum June 30 Maximum
Account Balance Balance ($) Statutory
(Prior Penalty ($)
Calendar
Year) ($)
2007
Aargauische 15,809 11,872 100,00
UBS 6308 1,988,799 8,615,602 4,307,801
UBS 9250 15,022,514 (5,571) 100,000
UMB 672,185 Unknown 100,000
Scotiabank Unknown Unknown 100,000
de Costa Rica
0588
2008
Aargauische 13,487 10,601 100,000
Bank Linth 2,605,399 Unknown 100,000
BSI 3,880,596 Unknown 100,000
Clariden Leu 3,712,704 4,106,132 2,053,066
Raiffeisen 3,101,437 3,137,728 1,568,864
St. Galler 3,353,964 Unknown 100,000
UBS 6308 8,615,602 Closed 100,000
UBS 9250 15,630,205 Closed 100,000
UMB 672,185 Unknown 100,000
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22-14058 Opinion of the Court 31
Scotiabank Unknown Unknown 100,000
de Costa Rica
0588
Scotiabank Unknown Unknown 100,000
de Costa Rica
1472
2009
Aargauische 15,758 9,966 100,000
Banca Arner 3,096,278 3,078,492 1,539,246
Bank Linth 2,955,271 Unknown 100,000
BSI 4,311,494 Unknown 100,000
Clariden Leu 4,374,222 4,504,702 2,252,351
Raiffeisen 3,139,508 Closed 100,000
St. Galler 4,267,212 Unknown 100,000
The penalty levied against the Aargauische account is con-
stitutionally excessive in all three years at issue. Begin with the
2007 Aargauische account. The account never exceeded $16,000,
and on June 30 -- the day the account was assessed -- the balance
was only $11,872. However, under the statutory framework, the
Government sought to impose a penalty of $100,000 for this undis-
closed account. A $100,000 penalty for an account holding com-
paratively small amounts of currency strikes us as being “grossly
disproportional to the gravity of the defendant’s offense,” Ba-
jakajian, 524 U.S. at 337, namely, attempting to conceal from the
IRS an account worth approximately $16,000 or less. A fine that is
over eight times the amount in the account on the day of the
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32 Opinion of the Court 22-14058
assessment, and over six times the greatest amount ever held in the
account, constitutes an excessive penalty.
Similarly, take the Aargauische account in 2008. Again, the
account never exceeded $14,000, and when assessed on June 30, it
contained $10,601. Again, however, Schwarzbaum was fined
$100,000 for this account -- reflecting an amount over seven times
as great as the maximum account balance, and over nine times the
amount in the account on the assessment date. And again, just as
with the 2007 Aargauische account, a penalty that is more than
seven times as great as the maximum ever held in the account --
and nine times the amount held in the account on June 30 -- is
“grossly disproportional” to Schwarzbaum’s willful failure to dis-
close his foreign account containing less than $14,000. Id.
Finally, an examination of Schwarzbaum’s Aargauische ac-
count in 2009 reveals the same problem. As in prior years, this ac-
count contained a small balance. It never exceeded $16,000, and
when assessed, it contained only $9,966. Schwarzbaum was again
fined $100,000 for this account, reflecting an amount more than six
times the maximum amount in the account, and ten times the
amount in the account on the assessment date. Just as with the
Aargauische account in prior years, this, too, is “grossly dispropor-
tional” to the culpability at issue -- attempting to conceal, at most,
roughly $16,000 from the IRS. Id.
The Government resists, asserting at oral argument that the
$100,000 penalty for an account never holding more than $16,000
is not excessive “[b]ecause Congress specifically set these penalties
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22-14058 Opinion of the Court 33
for the maximum to be the greater of one hundred thousand [dol-
lars] or fifty percent of the account balance,” so this Court must
“give[] substantial deference to Congress’s determinations.” While
it’s true that we begin our analysis with a “strong presumption”
that the penalties Congress has created are constitutional, Chap-
lin’s, Inc., 646 F.3d at 852, that presumption has its limits. We can-
not ignore the command of the Eighth Amendment’s Excessive
Fines Clause. Here, the Aargauische account across three years re-
flects an attempt by the Government to collect a $100,000 fine for
each of the three violations, each of which involved an account
never exceeding $16,000. Section 5321 of Title 31 of the United
States Code dictates only the maximum penalty to be imposed on
each account. Nothing forbade the Government from assessing a
penalty proportionated to the nature and extent of the violation on
the Aargauische account in each year. Instead, however, the Gov-
ernment sought the statutory maximum of $100,000 each time.
There is little doubt in our mind that each of these penalties is
grossly disproportionate, and therefore the $300,000 the Govern-
ment seeks to fine Schwarzbaum for his Aargauische account is
constitutionally excessive.
The penalties assessed on the remainder of the accounts,
however, raise no proportionality problems.
We begin by looking at the eight bank accounts with an un-
known balance on June 30 but with a known maximum balance:
the UMB account in 2007, the Bank Linth, BSI, St. Galler, and UMB
accounts in 2008, and the Bank Linth, BSI, and St. Galler accounts
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34 Opinion of the Court 22-14058
in 2009. The Government seeks to fine Schwarzbaum the default
statutory maximum of $100,000 for his willful failure to disclose
each of these accounts. For each of these accounts, the balance on
June 30 is simply “unknown.” However, this does not necessarily
hamstring a proportionality analysis comparing the amount of cur-
rency in the account to the $100,000 penalty. Although the June 30
balance is used to calculate the penalty, 31 U.S.C.
§ 5321(a)(1)(5)(D)(ii), the duty to report the account is triggered not
by the June 30 balance, but by the maximum amount in the ac-
count during the prior tax year, 31 C.F.R. § 1010.306(c). Thus, we
can infer that the harm Congress sought to ameliorate was not as-
sociated with the balance of the bank account on June 30, but ra-
ther the amount concealed in the account during the reported tax
year. As the maximum balance concealed in the bank account dur-
ing the tax year increases, so does the gravity of failing to report
that account to the IRS by June 30 of the following year. The Su-
preme Court has instructed us that, when conducting a proportion-
ality analysis for the Excessive Fines Clause, it is the gravity of the
offense itself to which the fine must be proportional. Bajakajian,
524 U.S. at 334. Therefore, although the FBAR penalty is calculated
based on the June 30 reporting date, the conduct it must be propor-
tional to is the concealment of funds found in each bank account
the previous year.
Here, an examination of these accounts yields the observa-
tion that the account with lowest maximum balance during the
preceding year (UMB in both 2007 and 2008) held $672,185 in each
year. The $100,000 penalty assessed against that account is not
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22-14058 Opinion of the Court 35
“grossly disproportionate” to the offense of attempting to conceal
nearly seven times the amount of the fine. See Bajakajian, 524 U.S.
at 337. The maximum account balances only go up from there.
The next smallest bank account for which the June 30 balance is
unknown but the maximum balance was known is Bank Linth in
2008, which held a maximum amount of $2,605,399 -- fully twenty-
six times the penalty for concealing the account. And at the high
end of the “unknown” bank accounts, the BSI account in 2009 held
a maximum of over $4.3 million -- forty-three times the penalty the
Government seeks. There is nothing disproportionate about a
$100,000 fine for the willful concealment of accounts of those mag-
nitudes.
Moving onto the accounts which were open for some por-
tion of the tax year but closed by the June 30 reporting date -- UBS
6308 and UBS 9250 in 2008, and Raiffeisen in 2009 -- the proportion-
ality analyses yield the same conclusions for the same reasons.
Again, although the balance in each of these accounts on June 30
was effectively $0 (because each of the accounts were closed), the
duty to report was triggered by the maximum amount in each ac-
count the previous year. In 2008, UBS 6308 and UBS 9250 held at
various points throughout the year $8,615,602 and $15,630,205, re-
spectively. In other words, although each of these bank accounts
were closed at the time of the June 30 reporting date, the $100,000
penalty sought by the Government for each of these accounts is
more than proportional to the offense of concealing an amount 86
times and 156 times the amount of the fine, respectively. Similarly,
in 2009, although the Raiffeisen bank account was closed on the
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36 Opinion of the Court 22-14058
reporting date, the $100,000 penalty sought by the Government is
only about three percent of the $3,139,508 maximum value con-
cealed in the account the previous year. These are simply not the
types of penalties that run afoul of the Eighth Amendment Exces-
sive Fines Clause.
The Government also seeks to impose a penalty of $100,000
for each of the Scotiabank accounts held by Schwarzbaum in 2007
and 2008. Both the maximum amount held in the accounts and the
amounts held in each of these accounts on June 30 are listed as be-
ing “unknown.” While it is theoretically possible to make an ex-
cessive fines argument concerning each of these accounts, because
it is possible that the $100,000 fine for each account could be dis-
proportionate, we do not know how much money was in either of
these accounts at any time during calendar years 2007 and 2008. It
is Schwarzbaum’s burden to establish that each of these penalties
violates the Eighth Amendment Excessive Fines Clause. See Helling
v. McKinney, 509 U.S. 25, 35 (1993) (noting that a plaintiff must
prove the “objective elements necessary to prove an Eighth
Amendment violation”). In order for us to conduct a proportion-
ality analysis, we would have to know more than we are told. But
Schwarzbaum has told us nothing about these accounts. In fact,
Schwarzbaum has not made any argument that the $100,000 pen-
alties imposed by the Government on these accounts specifically
are excessive and therefore violate the Eighth Amendment. Since
he has not claimed nor proven that the $100,000 penalties concern-
ing the Scotiabank accounts specifically are excessive, the fines as-
sessed against each of them survive.
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22-14058 Opinion of the Court 37
The penalties assessed against the remaining six bank ac-
counts -- UBS 6308 and UBS 9250 in 2007, Raiffeisen in 2008, Clari-
den Leu in 2008 and 2009, and Banca Arner in 2009 -- are also not
disproportionate. No doubt, the penalties imposed by the Govern-
ment on five these of these bank accounts -- all but UBS 9250 6 --are
substantially larger than the $100,000 penalties we have discussed
up until this point: here, the Government assessed a penalty against
each of these accounts equal to fifty percent of the account balance
on June 30. But each of these bank accounts also held millions of
dollars – in some instances, many millions of dollars – that
Schwarzbaum willfully failed to disclose to the United States.
We begin our consideration of these penalties with the
“strong presumption” that the penalties Congress has created are
constitutional. Chaplin’s, Inc., 646 F.3d at 852. “[J]udgments about
the appropriate punishment for an offense belong in the first in-
stance to the legislature,” Bajakajian, 524 U.S. at 336, because “Con-
gress, as a representative body, can distill the monetary value soci-
ety places on harmful conduct,” Chaplin’s, Inc., 646 F.3d at 852.
We also note at the outset that Congress’s decision to create
a penalty that is proportionally tied to the amount in the account
is not irrational -- indeed, the principle that greater harm yields a
6 The sixth bank account, UBS 9250 in 2007, is different. There, the
Government assessed a $100,000 penalty even though the account balance on
June 30 was negative $5,571. Although penalizing a negative account may
seem odd at first blush, the account held over $15 million in the prior year. A
$100,000 penalty is not grossly disproportionate to the willful failure to dis-
close more than 150 times that amount.
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38 Opinion of the Court 22-14058
greater penalty is reflected throughout our legal system. See, e.g.,
U.S. Sent’g Guidelines Manual § 2B1.1 (U.S. Sent’g Comm’n 2023)
(increasing the guideline offense level for larceny, embezzlement,
theft, fraud, property damage, and forgery based upon the mone-
tary value of the loss involved); 21 U.S.C. § 841(b)(1) (proportion-
ing the statutory penalty for controlled substance distribution to
the amount distributed). The very fact that Congress based the
willful FBAR penalty on the account balance and not the tax loss
reflects the judgment that, like fraud or theft, the harm Congress
seeks to ameliorate increases with the size of the amount hidden
from the Government.
Furthermore, Congress’s choice to tie the size of the penalty
to the size of the account is particularly rational where, as here, a
fundamental purpose of the penalty is deterrence. As we have fre-
quently observed, “[g]eneral deterrence is more apt, not less apt, in
white collar crime cases,” because “‘economic and fraud-based
crimes are more rational, cool and calculated than sudden crimes
of passion or opportunity,’ which makes them ‘prime candidates
for general deterrence.’” United States v. Howard, 28 F.4th 180, 209
(11th Cir. 2022) (quoting United States v. Kuhlman, 711 F.3d 1321,
1329(11th Cir. 2013)); see also United States v. Brown,880 F.3d 399, 405
(7th Cir. 2018) (agreeing with the “widely accepted principle”
that white collar crimes are “prime candidates for general deter-
rence” (citation omitted)). Because white collar criminals “often
calculate the financial gain and risk of loss . . . white collar crime
therefore can be affected and reduced with serious punishment.”
United States v. Martin, 455 F.3d 1227, 1240 (11th Cir. 2006). Or, to
USCA11 Case: 22-14058 Document: 35-1 Date Filed: 08/30/2024 Page: 39 of 53
22-14058 Opinion of the Court 39
put it the other way, if Congress had not tied the FBAR penalty to
the amount in the account, defendants would be increasingly in-
centivized not to comply with the reporting requirements as the
amounts in the concealed accounts (and thus the harm to the gov-
ernment) grew larger, because the advantage from concealing the
account would increasingly outweigh the potential risk of loss
when the account is discovered.
With these presumptions and principles in mind, we con-
sider the factors that our Court has enumerated to determine ex-
cessiveness: “(i) whether the defendant is in the class of persons at
whom the statute was principally directed; (ii) how the imposed
penalties compare to other penalties authorized by the legislature;
and (iii) the harm caused by the defendant” in this case. Yates, 21
F.4th at 1314. Going account by account, we are not persuaded
that any of the remaining fines -- even those taking fifty percent of
an account in a given year -- are excessive as applied to Schwarz-
baum in this case.
First, there is no question the FBAR penalties are concerned
with defendants precisely like Schwarzbaum. The purpose of the
Bank Secrecy Act is to require “U.S. citizens and others to report
their ‘transaction[s]’ and ‘relationship[s]’ with ‘foreign financial
agenc[ies]’ to the IRS.” Schwarzbaum I, 24 F.4th at 1359(quoting31 U.S.C. § 5314
). “Schwarzbaum is a wealthy, naturalized U.S. citi-
zen” who “held interests in foreign bank accounts in Switzerland
and Costa Rica.” Id. Schwarzbaum is “not in the same position as
the defendant in Bajakajian, who, by not reporting the removal of
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40 Opinion of the Court 22-14058
legal currency from the United States, was subject to forfeiture un-
der a statute principally targeted at money launderers, drug traf-
fickers, or tax evaders.” Yates, 21 F.4th at 1315.
Moreover, Congress specifically reserved the severe penal-
ties that Schwarzbaum is subject to only for those who “willfully”
violated the statute. 31 U.S.C. § 5321(a)(5)(C). This requisite mens
rea is identical to that found in the FBAR statute’s criminal penal-
ties. See 31 U.S.C. § 5322(a)–(b); see also Ratzlaf,510 U.S. at 143
(“A
term appearing in several places in a statutory text is generally read
the same way each time it appears.”). In other words, this civil
penalty applies only to those with a culpable mindset equivalent to
that of a criminal under the same statute. This Court already held
that Schwarzbaum satisfied the “willful” mens rea in the civil FBAR
context through reckless conduct. Schwarzbaum I, 24 F.4th at 1358.
Therefore, Schwarzbaum is not an innocent victim: he is only sub-
ject to the fifty percent penalty because he recklessly disregarded
the law which required him to report foreign bank accounts.
Schwarzbaum’s own willful blindness is what placed him “squarely
in the [FBAR statute’s] crosshairs.” Yates, 21 F.4th at 1315.
Second, we compare the fines to other sanctions authorized
by Congress. Id. Here, Congress authorized the Government to
pursue criminal sanctions; the Government merely chose not to do
so in this case. As described above, the mens rea for the FBAR stat-
ute’s criminal penalties is willfulness, the same as the FBAR’s
heightened civil penalties, see 31 U.S.C. §§ 5321, 5322, and Schwarz-
baum satisfied that mens rea. The FBAR statute’s criminal penalties
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22-14058 Opinion of the Court 41
provide a fine of up to $250,000 and five years’ imprisonment for
each willful FBAR violation,7 in addition to civil penalties. See 31
U.S.C. § 5322(a). Although the criminal fine pales in comparison
to the civil penalty assessed for the five accounts for which the Gov-
ernment assessed a penalty of fifty percent of the balance, it is tell-
ing that Congress also authorized a criminal penalty of five years’
imprisonment for each of the three years Schwarzbaum failed to
file. Id. That Congress authorized “five years’ imprisonment for
willfully violating the statutory reporting requirement . . . suggests
that it did not view the reporting offense as a trivial one.” Ba-
jakajian, 524 U.S. at 339 n.14.
Third, and finally, we consider the harm caused by the de-
fendant. Yates, 21 F.4th at 1314. Congress considered the harm of
unreported foreign bank accounts to be very serious. In passing
the Bank Secrecy Act, Congress emphasized that the use of
“[s]ecret foreign bank accounts” has
permitted proliferation of ‘white collar’ crime; ha[s]
served as the financial underpinning of organized
criminal operations in the United States; have been
utilized by Americans to evade income taxes, conceal
assets illegally and purchase gold; have allowed Amer-
icans and others to avoid the law and regulations gov-
erning securities and exchanges; have served as essen-
tial ingredients in frauds including schemes to de-
fraud the United States; have served as the ultimate
7 In the context of the FBAR’s criminal statute, these penalties accrue
on a per-report, not per-account basis. Bittner, 598 U.S. at 103.
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42 Opinion of the Court 22-14058
depository of black market proceeds . . .; and have
served as the cleansing agent for ‘hot[’] or illegally ob-
tained monies.
H.R. Rep. No. 91-975, at 4397 (1970). Indeed, Congress stated that
“[t]he debilitating effects of the use of these secret institutions on
Americans and the American economy are vast.” Id.
Congress reiterated these concerns when it raised the FBAR
penalties in 2004, stating that “improving compliance with [the
FBAR] reporting requirement is vitally important to sound tax ad-
ministration.” S. Rep. No. 108-192, at 108 (2003). Even more re-
cently, in March 2023, the Senate Finance Committee recom-
mended that the IRS “increase oversight and enforcement of FBAR
violations, focusing on violations by high-net worth individuals.”
Credit Suisse’s Role in U.S. Tax Evasion Schemes: A Democratic Staff In-
vestigation 37 (Mar. 29, 2023), https://www.finance.sen-
ate.gov/download/sfc-credit-suisse-report-final-32923.
Turning now to the five accounts where the Government
assessed a fifty percent penalty, we see that in 2007, the UBS 6308
bank account held $8,615,602 on June 30, and the Government as-
sessed a penalty of half that amount: $4,307,801. The Government
also claimed half of the June 30 account balance for Clariden Leu
and Raiffeisen in 2008 (penalties of $2,053,066 and $1,568,864, re-
spectively) and Banca Arner and Clariden Leu in 2009 (penalties of
$1,539,246 and $2,252,351, respectively).
USCA11 Case: 22-14058 Document: 35-1 Date Filed: 08/30/2024 Page: 43 of 53
22-14058 Opinion of the Court 43
The Government has thus assessed a substantial penalty as
to each of these five accounts.8 But, as we have said, we are not
considering the constitutionality of any hypothetical fifty percent
penalty applied year after year -- we have no trouble imagining sit-
uations where such a penalty would be clearly excessive. Rather,
we consider only whether the penalties here are grossly dispropor-
tionate as applied to Schwarzbaum, looking at each penalty on
each account in each year. And, for the reasons we described as we
proceeded through the three factors our Court has enumerated for
judging excessiveness, we cannot say that the fifty percent penalties
are grossly disproportionate in this case to the serious offenses of
willfully concealing foreign bank accounts containing many mil-
lions of dollars. Congress sought to deter precisely the harm for
which Schwarzbaum is culpable, Congress considered that harm to
be a very serious one, and Congress’s method of deterring that
harm is rational. Although the fifty percent penalties assessed
against the five accounts are substantial, they are not violative of
the Excessive Fines Clause.
Finally, even if we were to consider the aggregate penalty of
$12,555,813 entered against Schwarzbaum -- notwithstanding that
the statutory language focuses singularly on each “account” -- the
aggregate penalty is not grossly disproportionate to Schwarz-
baum’s willful years-long concealment of tens of millions of dollars
8 Indeed, in the case of the Clariden Leu bank account, the fifty percent
penalty assessed for each of the years 2008 and 2009 wiped out the four-mil-
lion-dollar account entirely.
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44 Opinion of the Court 22-14058
in many overseas bank accounts found in two separate countries.
See Yates, 21 F.4th at 1314 (“[W]e address the parties’ debate on
whether we should consider the amount of the fine cumulatively
or per-violation. Our answer is that in this case it does not matter.
Seeing a judgment of $1.179 million based on $755.54 in actual
damages may raise an eyebrow. But whatever optics inure to Pi-
nellas’ benefit by that comparison, they are negated when one re-
alizes that this total is the result of Pinellas’ repeated (214) instances
of fraud against the United States.”); see also Moustakis, 338 F. App’x
at 822 (noting that when a cumulative fine is made up of constitu-
tionally proportionate penalties, the cumulative fine “is, literally,
directly proportionate to the offense”). Moreover, although the
penalty calculated against each account was the statutory maxi-
mum, the Government then lowered the cumulative total it seeks
to fine Schwarzbaum. The presumption of constitutionality is par-
ticularly strong when the specific penalty sought by the Govern-
ment is less than the statutory maximum. See Yates, 21 F.4th at
1314; Chaplin’s, Inc.,646 F.3d at 852
.
3.
To sum up: The aggregated maximum statutory penalty is
$13,521,328. The only constitutional problem we can discern with
that total penalty is that it included $300,000 in penalties associated
with the Aargauische account in each of 2007, 2008, and 2009,
which we hold violates the Excessive Fines Clause. Had the district
court’s judgment been for the full $13,521,328, the solution would
be simple: we would simply sever the unconstitutional amount
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22-14058 Opinion of the Court 45
from the total judgment, reduce the total judgment by $300,000,
and remand to the district court for calculation of late fees and in-
terest.
But there is a wrinkle. On a motion from the Government,
the district court reduced the penalty and entered judgment against
Schwarzbaum for $12,555,813. While the unconstitutional
$300,000 from the Aargauische account is clearly a portion of the
total $13,521,328, it’s impossible to decipher to what extent, if any,
that $300,000 is included in the lesser judgment of $12,555,813, be-
cause neither the district court nor the Government offered any
guidance on how the various individual penalties were reduced to
reach the new aggregate number. In other words, without greater
guidance from the Government, we are unable to reduce the sum
of $12,555,813 into its component parts, locate the portion of this
judgment, if any, reflecting the fines assessed on the Aargauische
account, and appropriately excise this amount from the final judg-
ment. Therefore, to sanitize the final judgment from any constitu-
tional violation, we order the district court to reduce the judgment
of $12,555,813 by $300,000.
We therefore remand for the district court to enter a judg-
ment in the amount of $12,255,813, plus the calculation of late fees
and interest.
III.
Finally, we briefly address Schwarzbaum’s remaining proce-
dural challenges. We review a district court’s decisions on agency
action under the APA de novo. Schwarzbaum I, 24 F.4th at 1363. If
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46 Opinion of the Court 22-14058
necessary, the underlying agency action is reviewed under the
standards set forth in the APA, whereby the reviewing court shall
“‘hold unlawful and set aside agency action’ that is ‘arbitrary, capri-
cious, an abuse of discretion, or otherwise not in accordance with
law.’” Id.at 1363–64 (quoting5 U.S.C. § 706
(2)(A)). And, of course,
following a bench trial, we review the district court’s conclusions
of law de novo, but its factual findings only for clear error. Crystal
Ent. & Filmworks, Inc. v. Jurado, 643 F.3d 1313, 1319 (11th Cir. 2011).
A.
Schwarzbaum first suggests that the district court erred by
awarding penalty amounts in the judgment identical to those re-
jected by the district court and the Eleventh Circuit. Schwarzbaum
argues that the Eleventh Circuit already held that those penalty as-
sessments were “arbitrary and capricious” in Schwarzbaum I be-
cause they were unconnected to his account balances as of the June
30 reporting date for each tax year. Because the district court’s
judgment enforced a penalty for the same amount, the reasoning
goes, these penalties “are no less arbitrary and capricious this time
around” and should be vacated because they are not based on the
IRS’s new calculations.
But Schwarzbaum has misunderstood our Court’s holding
in Schwarzbaum I. In Schwarzbaum I, the panel at no point said that
the original penalty calculations by the IRS were arbitrary or capri-
cious. Instead, we held that the IRS’s original FBAR penalty calcu-
lations were “not in accordance with law” precisely because “the
IRS mistakenly calculated Schwarzbaum’s statutory maximum
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22-14058 Opinion of the Court 47
penalties using his foreign accounts’ highest annual balances rather
than their June 30 balances.” Schwarzbaum I, 24 F.4th at 1365. The
Eleventh Circuit remanded the case to the IRS “in order to allow
the IRS to fix the mistake.” Id.
Schwarzbaum’s argument misidentifies the fundamental
harm in the IRS’s original calculation. This Court rejected the Gov-
ernment’s argument that the IRS’s calculation error was harmless
because Schwarzbaum was potentially prejudiced. At the time of
Schwarzbaum I, no one knew whether the penalty calculated by the
IRS was too high because the base numbers were wrong. Id. at
1366. Because the panel could not presume to guess what the IRS
might do on remand, the fact that the IRS might reach a different,
lower penalty amount was sufficient reason to remand the calcula-
tion to the agency. Id.
Contrary to Schwarzbaum’s argument that “[t]o hold that
the previously rejected amount is now acceptable would expressly
conflict with this Court’s prior ruling that the defective penalty as-
sessments were not harmless error,” the prejudice to Schwarz-
baum that we expressed concern about in Schwarzbaum I is no
longer present. The IRS recalculated the penalties to correct the
error in the original calculus and returned a corrected penalty of
$13,521,328, approximately 7.7% higher than the original penalty.
Neither party disputes at this stage that the IRS’s new calculations
are correct. Since we now know for certain the “correct” penalty
amount, which is higher than the amount originally enforced,
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48 Opinion of the Court 22-14058
there is no potential that Schwarzbaum is being penalized for too
high an amount.
Schwarzbaum also argues that the prejudice he faces is that,
were the Government forced to file an amended complaint to seek
the full penalty as recalculated by the IRS, the Government would
have to “defend[] a new assessment of a properly calculated penalty
it knows is time-barred.” However, this argument is meritless for
two reasons: (1) Schwarzbaum is already making the exact same
statute-of-limitations argument before this Court at present, so he
is hardly deprived of his opportunity to do so; and (2) as we discuss
infra, this argument fails on the merits anyway.
The remaining question, then, is whether the Government
can properly seek a penalty that is lower than the one assessed by
the IRS. Schwarzbaum has identified no authority that requires the
Government, in its capacity as a plaintiff in enforcement litigation,
to pursue a money judgment for the full amount of an assessed
penalty, and we are aware of none. To the same extent, however,
the Government identifies no authority which permits it to forgo
part of a correctly determined penalty in the interest of litigation
expediency. However, this proposition is analogous to the rule
that a private plaintiff may always seek less in money judgment
than he may otherwise be entitled to, particularly as a litigation
strategy decision. See, e.g., Burns v. Windsor Ins. Co., 31 F.3d 1092,
1095 (11th Cir. 1994) (“[P]laintiff is . . . the master of his own
claim.”); St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 294
(1938) (holding that the plaintiff “may resort to the expedient of
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22-14058 Opinion of the Court 49
suing for less than the jurisdictional amount . . . though he would
be justly entitled to more”).
Because there is no dispute that the recalculated penalty by
the IRS was done correctly, there is no prejudice to Schwarzbaum,
and there is no reason the Government cannot seek a money judg-
ment for an amount less than the full penalty it is entitled to, the
district court did not err by entering a judgment enforcing a penalty
amount identical to that of the judgment prior to remand.
B.
Schwarzbaum also claims that the district court’s judgment
violates the FBAR statute of limitations. Schwarzbaum says that
when this case was remanded to the IRS for recalculation of the
penalties following Schwarzbaum I, the original assessments --
which included the erroneous penalty calculations -- were neces-
sarily vacated because the assessment cannot exist without an un-
derlying calculation. Schwarzbaum reasons that any recalculation
by the IRS therefore must have been a new assessment made out-
side of the six-year statute of limitations. But our Court explicitly
decided this issue in the Government’s favor in Schwarzbaum I, 24
F.4th at 1367, and Schwarzbaum is barred from relitigating the ar-
gument.
“Under the ‘law of the case’ doctrine, the findings of fact and
conclusions of law by an appellate court are generally binding in all
subsequent proceedings in the same case in the trial court or on a
later appeal.” This That & the Other Gift & Tobacco, Inc. v. Cobb
County, 439 F.3d 1275, 1283 (11th Cir. 2006) (quoting Heathcoat v.
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50 Opinion of the Court 22-14058
Potts, 905 F.2d 367, 370 (11th Cir. 1990)). The doctrine not only
precludes subsequent appellate courts from revisiting issues that
were explicitly decided in a prior appeal, but also all matters de-
cided “by necessary implication.” Id. The law of the case doctrine
can be overcome if, but only if: “(1) since the prior decision, ‘new
and substantially different evidence is produced, or there has been
a change in the controlling authority’; or (2) ‘the prior decision was
clearly erroneous and would result in a manifest injustice.’” Id.
(quoting Oladeinde v. City of Birmingham, 230 F.3d 1275, 1288 (11th
Cir. 2000)).
In this case, a panel of our Court has already addressed the
statute of limitations argument that Schwarzbaum now seeks to
relitigate. Before the Court in Schwarzbaum I, “Schwarzbaum ar-
gue[d] that remand to the IRS [was] unnecessary -- and that [the
Eleventh Circuit] should instead direct a judgment in his favor --
because the IRS would be time-barred on remand from recalculat-
ing his FBAR penalties.” Schwarzbaum I, 24 F.4th at 1367. But the
panel rejected this argument, stating that Schwarzbaum “cites no
authority standing for the proposition that, on remand from judi-
cial review under the APA, an agency could be time-barred from
re-evaluating its original actions,” and added that “[w]e are aware
of none.” Id. The panel emphasized that the remand would not
raise a statute of limitations issue because “[t]he remand we now
direct is not for the IRS to issue new penalties, but for it to recalcu-
late the penalties it has already assessed.” Id. The Eleventh Circuit
directly decided the statute of limitations arguments that Schwarz-
baum raises again, and the law of the case doctrine applies. There
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22-14058 Opinion of the Court 51
has been no change in the controlling authority, no substantially
different evidence has been produced, and there’s no indication
that the prior decision was clearly erroneous and that it would re-
sult in a manifest injustice.
In short, Schwarzbaum is barred from making his statute of
limitations argument anew by the law of the case doctrine.
C.
Finally, Schwarzbaum claims that “once [the Eleventh Cir-
cuit’s] mandate issued instructing the district court to remand the
matter to the IRS, the district court’s work was done and the dis-
trict court should have closed this case.” Schwarzbaum is incor-
rect; the district court’s order retaining jurisdiction over the case
following remand was altogether consistent with Eleventh Circuit
precedent.
In Taylor v. Heckler, 778 F.2d 674 (11th Cir. 1985), the appel-
lant sought district court review of a decision of the Secretary of
Health and Human Services denying him certain benefits. Id. at
675. The district court concluded that the Secretary’s decision was
not adequately supported and remanded the case to the Secretary
for further proceedings. Id. The Secretary then awarded benefits
and the district court later dismissed the case. Id. Addressing the
question of when a final judgment, if any, had been entered, this
Court wrote that “[t]his circuit treats all remand orders to the Sec-
retary [of Health and Human Services] as interlocutory orders, not
as final judgments.” Id. at 677 (emphasis in original). The Taylor
Court further elaborated: “Because this circuit considers a remand
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52 Opinion of the Court 22-14058
order an interlocutory order, it follows by operation of law that the
district court retains jurisdiction of the case until the proceedings
on remand have been concluded. To terminate its jurisdiction, the
district court must subsequently enter a dispositive order of some
sort . . . .” Id. at 677 n.2.
Although the Taylor Court was writing about the power of
the Secretary of Health and Human Services, we have applied the
same logic to the Federal Highway Administration in Druid Hills
Civic Ass’n v. Federal Highway Administration, 833 F.2d 1545 (11th
Cir. 1987). In the first of two appeals, this Court remanded a case
involving the environmental impact of a highway project to the
district court for further remand to the Secretary of Transportation
to make adequate findings. Id. at 1547. Following remand, the
Federal Highway Administration made additional findings and the
case returned to the district court, which entered summary judg-
ment based upon a record developed entirely on remand which
“did not include any part of the record developed in the original
administrative proceedings.” Id. at 1548. Before this Court a sec-
ond time, the appellant argued that the district court lacked juris-
diction to entertain the motion for summary judgment because the
district court’s judgment adopting the Eleventh Circuit’s remand
order constituted a final judgment that terminated litigation. Id.
Upholding the district court’s exercise of jurisdiction, however, this
Court wrote that “[t]he only distinction between Taylor and this
case is that the district court remanded the case to the Secretary of
Transportation because the Eleventh Circuit ordered it to do so.
This is a distinction without a difference. Hence, the district court
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22-14058 Opinion of the Court 53
retained jurisdiction.” Id. at 1549. The Druid Hills Court also ob-
served that when “the purpose of a remand order is to continue
litigation rather than terminate it, such orders cannot reasonably
be construed as terminating litigation on the issues remanded.” Id.
Our matter is analogous to Druid Hills. In both cases, a panel
of this Court remanded the case to the district court for further re-
mand to the administrative agency -- in the case of Druid Hills, to
make additional findings, and here, to recalculate the penalty. In
this case, the IRS recalculated the penalty and returned the correct
penalty calculation to the district court. Just like in Druid Hills, this
Court’s remand to the agency was not intended to terminate litiga-
tion, but to further it. Indeed, the rejection of Schwarzbaum’s ar-
gument on the futility of remand makes no sense unless the panel
presumed that further litigation would occur after the recalculation
of the assessed penalty. See Schwarzbaum I, 24 F.4th at 1367.
The district court did not err by retaining jurisdiction.
We therefore AFFIRM in part and REVERSE in part, and
REMAND with instructions to enter a judgment in the amount of
$12,255,813, and to calculate the amount of late fees and interest.
AFFIRMED IN PART, REVERSED IN PART, AND RE-
MANDED.
Reference
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- 2 cases
- Status
- Published