Daniel H. George, Jr., DAB CR5299 (2019)

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DECISION

Pursuant to section 1129(a)(1) of the Social Security Act (the Act) (42 U.S.C. § 1320a-8(a)(1)) a civil money penalty (CMP) of $100,000 and an assessment of $94,802 are imposed against Respondent, Daniel H. George, Jr. Respondent failed to report and withheld information regarding his resources from May 2011 through January 2017, a total of 69 months, during which period his resources made him ineligible to receive Supplemental Security Income (SSI).

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I. Background

On July 15, 2017, Respondent timely requested a hearing by an administrative law judge (ALJ) pursuant to 20 C.F.R. § 498.202.2  Respondent requests ALJ review based on the May 18, 2017 notice of the Social Security Administration (SSA) Inspector General (IG) that proposes imposition of a CMP of $100,000 and an assessment in lieu of damages in the amount of $94,802 pursuant to section 1129 of the Act (42 U.S.C. § 1320a-8). SSA Exhibit (Ex.) 33.

The request for hearing was received at the Civil Remedies Division (CRD) of the Departmental Appeals Board (DAB) and assigned to me for hearing and decision on July 25, 2017. On August 22, 2017, I convened a telephonic prehearing conference to discuss and establish the schedule for development of this case for hearing and decision. The substance of the prehearing conference is set forth in my Scheduling Order dated August 23, 2017. This case was stayed for a period at the parties’ request. The case was further delayed by a discovery dispute and the filing of a motion for summary judgment. On October 5, 2018, I entered a ruling denying Respondent’s motion for summary judgment; an order resolving the discovery dispute; an order re-establishing the schedule for case development; and an order imposing a sanction upon Respondent.3

On November 20, 2018, the IG filed proposed SSA exhibits (SSA Exs.) 1 through 41, and his exhibit and witness lists. On December 14, 2018, the parties filed a joint status report in which they waived an oral hearing and requested decision upon the documentary evidence and briefs. On December 18, 2018, I accepted the waiver of oral hearing, and set a schedule for filing briefs and proposed findings of fact and conclusions of law. The IG filed his brief (SSA Br.) and proposed findings of fact and conclusions of law on January 31, 2019. Respondent also filed his brief (R. Br.) on January 31, 2019. The IG filed his reply brief (SSA Reply) on March 1, 2019, and Respondent filed his reply (R. Reply) on March 2, 2019.

Respondent has not objected to my consideration of SSA Exs. 1 through 41, and they are admitted and considered as evidence. Respondent did not offer any exhibits.

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II. Discussion

A. Applicable Law

Pursuant to title II of the Act, an individual who has worked in jobs covered by Social Security for the required period of time, who has a medical condition that meets the definition of a disability under the Act, and who is unable to work for a year or more because of the disability, may be entitled to monthly cash disability benefits. 20 C.F.R. §§ 404.315-404.374. Pursuant to title XVI of the Act, certain eligible individuals are entitled to the payment of SSI on a needs basis. To be eligible for SSI payments, a person must meet U.S. residency requirements and must be: (1) 65 years of age or older; (2) blind; or (3) disabled. Disability under both programs is determined based on the existence of one or more impairments that will result in death or that prevent an individual from doing his or her past work or other work that exists in substantial numbers in the economy for at least one year. 20 C.F.R. §§ 416.202, 416.905, 416.960. Additionally, a person must have limited income and resources to be eligible for SSI. 20 C.F.R. §§ 416.202(c) and (d), 416.1100-.1182, 416.1201-.1266. All assets, except those listed in 20 C.F.R. § 416.1210, are considered resources when determining whether an individual has “limited” resources. The income and resources of a spouse or other individuals in a household are also subject to being considered. 20 C.F.R. §§ 416.1201-.1204; 416.1802.

Section 1129(a)(1) of the Act authorizes the imposition of a CMP or an assessment against:

(a)(1) Any person . . . who –

(A) makes, or causes to be made, a statement or representation of a material fact, for use in determining any initial or continuing right to or the amount of monthly insurance benefits under title II or benefits or payments under title VIII or XVI, that the person knows or should know is false or misleading,

(B) makes such a statement or representation for such use with knowing disregard for the truth, or

(C) omits from a statement or representation for such use, or otherwise withholds disclosure of, a fact which the person knows or should know is material to the determination of any initial or continuing right to or the amount of monthly insurance benefits under title II or benefits or payments under title VIII or XVI, if the person knows, or should know, that

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the statement or representation with such omission is false or misleading or that the withholding of such disclosure is misleading . . . . 

The Commissioner of the SSA (Commissioner) has delegated authority to impose CMPs and assessments to the IG as authorized by section 1129(i) of the Act. 20 C.F.R. § 498.102. A material fact is a fact that the Commissioner may consider in evaluating whether an applicant is entitled to benefits or payments under titles II, VIII, or XVI of the Act. Act § 1129(a)(2); 20 C.F.R. § 498.101. Individuals who commit a violation described by section 1129(a) of the Act are subject to a CMP, the amount of which varies over time, for each false or misleading statement or representation of material fact or failure to disclose a material fact. Violators are also subject to an assessment in lieu of damages, of not more than twice the amount of the benefits or payments made as a result of the statements, representations, or omissions. Act § 1129(a)(1). In determining the amount of a CMP, the IG must consider: (1) the nature of the false or misleading statements, representations, or omissions, and circumstances under which they occurred; (2) the degree of culpability of the person committing the offense; (3) the person’s history of prior offenses; (4) the person’s financial condition; and (5) such other matters as justice requires. Act § 1129(c); 20 C.F.R. § 498.106(a).

The Commissioner may not initiate a proceeding to decide whether to impose a CMP or assessment based on an alleged violation more than six years after the date the violation allegedly occurred. Act § 1129(b)(1). Pursuant to delegated authority of the Secretary, the IG may initiate a proceeding in accordance with 20 C.F.R. § 498.109(a) within six years of the date on which a violation was committed. 20 C.F.R. § 498.132(b). Pursuant to 20 C.F.R. § 498.109(a), the IG initiates the action by sending the Respondent notice of the intent to take the action. Section 1129(b)(2) specifies that the Commissioner shall not decide to impose a CMP or assessment against a person until that person is given written notice and an opportunity for the determination to be made on the record after a hearing at which the person is allowed to participate. The Commissioner has provided by regulations at 20 C.F.R. pt. 498 that a person against whom a CMP is proposed by the IG may request a hearing before an ALJ of the DAB. The ALJ has jurisdiction to determine whether the person should be found liable for a CMP and/or an assessment and the amount of each. 20 C.F.R. §§ 498.215(a) and 498.220. The person requesting the hearing, the Respondent, has the burden of going forward and the burden of persuasion with respect to any affirmative defenses and any mitigating circumstances. 20 C.F.R. § 498.215(b)(1). The IG has the burden of going forward as well as the burden of persuasion with respect to all other issues. 20 C.F.R. § 498.215(b)(2). The burdens of persuasion are to be judged by a preponderance of the evidence. 20 C.F.R. § 498.215(c).

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B. Issues

Whether there is a basis for the imposition of a CMP and assessment pursuant to section 1129(a)(1) of the Act.

Whether the CMP and assessment proposed by the IG are appropriate considering the factors specified by section 1129(c) of the Act and 20 C.F.R. § 498.106(a).

C. Findings of Fact, Conclusions of Law, and Analysis

My conclusions of law are set forth in bold followed by the statement of pertinent facts and my analysis. I have carefully considered all the evidence and the arguments of both parties, although not all may be specifically discussed in this decision. I discuss the credible evidence given the greatest weight in my decision-making.4  I also discuss any evidence that I find is not credible or worthy of weight. The fact that evidence is not specifically discussed should not be considered sufficient to rebut the presumption that I considered all the evidence and assigned such weight or probative value to the credible evidence that I determined appropriate within my discretion as an ALJ. There is no requirement for me to discuss the weight given every piece of evidence considered in this case, nor would it be consistent with notions of judicial economy to do so.

1. The period of limitations established by section 1129(b)(1) of the Act prohibits consideration of alleged violations in this case that may have occurred prior to May 18, 2011, six years prior to the IG’s May 18, 2017 notice of the intent to impose a CMP and assessment.

a. Allegations Not Barred by the Six-Year Limit

The Act is clear that the Commissioner may not initiate a proceeding to decide whether to impose a CMP or assessment based on an alleged violation more than six years after the date the violation allegedly occurred. Act § 1129(b)(1). The regulation that delegates authority to the IG provides that the IG may initiate a proceeding to impose a CMP or assessment in accordance with 20 C.F.R. § 498.109(a) within six years of the date on which a violation was committed. 20 C.F.R. § 498.132(b).

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The IG notified Respondent by letter dated February 7, 2017, that he was considering imposing a CMP and an assessment. SSA Ex. 32. However, that notice did not satisfy the content requirements of 20 C.F.R. § 498.109(a). The IG notified Respondent by letter dated May 18, 2017, that the IG proposed to impose a CMP of $100,000 and an assessment in lieu of damages of $94,802 pursuant to section 1129 of the Act. SSA Ex. 33. The May 18, 2017 notice met the requirements of 20 C.F.R. § 498.109(a). Therefore, for purposes of the statute of limitations established by section 1129(b)(1) and 20 C.F.R. § 498.132(b), any violations by Respondent may be the basis for a CMP or assessment if they occurred within the six years preceding May 18, 2017. The statute of limitations bars in this case imposition of a CMP or assessment for a violation that occurred prior to May 18, 2011.

The May 18, 2017 IG notice stated “[t]his proposal is based upon an OIG investigation that revealed you failed to report your resources to SSA while you were receiving” SSI payments. SSA Ex. 33 at 1. However, subsequently the IG notice states the IG investigation revealed that Respondent worked as a chemist creating and selling supplements, work for which he received income; and the income was deposited in the accounts of two corporations of which Respondent served as president, Biogenesis Foundation, Inc. and Biogenesis Church, Inc. The IG then stated that Respondent “failed to report . . . work activity, resources and income to SSA,” resulting in wrongful receipt of SSI payments from May 2007 to January 2017. SSA Ex. 33 at 1. The IG alleges Respondent wrongfully received $47,401 during the period of May 2011 to January 2017, when Respondent’s SSI payments were terminated. SSA Ex. 33 at 1. The IG alleges among the aggravating and mitigating circumstances:

(i.) Respondent made false statements and misrepresentations in his application for SSI payments dated April 13, 2007, in which he falsely stated that he did not have resources other than a savings account at Rockport National Bank;

(ii.) Respondent stated in his SSI application that he did not receive any type of income;

(iii.) On June 1, 2007, Respondent completed a Disability Report – Adult, Form SSA-3368, in which he falsely stated he had never worked;

(iv.) Respondent did not accurately report his resources in order to receive and continue to receive SSI payments, despite receiving notice of his reporting responsibilities in letters from SSA dated November 27, 2011, November 25,

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2012, December 1, 2013, November 30, 2014, and November 27, 2016; and

(v.) Respondent had a history of prior offenses related to Social Security programs, including an overpayment of $81,466 in title II Disability Insurance Benefits (DIB), based on having engaged in disqualifying substantial gainful activity.

SSA Ex. 33 at 1-2. The IG advised Respondent that he could have proposed a maximum CMP of $557,796 based on a CMP of $8,084 for 69 separate violations. However, the IG elected to propose a CMP of $100,000 but a maximum assessment of $94,802, twice the $47,401 of SSI payments Respondent actually received during the preceding six-year period of the statute of limitations. SSA Ex. 33 at 2.

Before me, the IG argues for the imposition of the $100,000 CMP and an assessment of $94,802. SSA Br. at 1. SSA incorrectly characterizes the issue as whether the evidence shows that between about May 2007 and January 2017, Respondent made false statements, misrepresentations, or omissions of material fact by failing to report financial resources and income. SSA Br. at 1-2. Due to the application of the six-year period of limitations, the pertinent period is May 18, 2011, six years prior to the IG’s notice, through January 2017, which was the last month Respondent received a SSI payment. SSA alleges as aggravating and mitigating factors that Respondent failed to report financial resources, income, and work activity. The specific allegations are:

(i.) Respondent filed an initial application for SSI disability payments on April 13, 2007, in which he stated that he had a bank account at Rockport National with $100 in it, he had no other resources, and he received no income.

(ii.) In a Work History Report dated June 11, 2007, Respondent reported some work in the 1960s and 1970s but he could not recall details and otherwise left the report blank.

(iii.) Respondent failed to report that he was president, treasurer, clerk, and director of Biogenesis Foundation, Inc. as early as 2003.

(iv.) Respondent failed to report he owned a $4 million business certificate of deposit when he filed his SSI application in 2007.

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(v.) Respondent failed to report that he opened a business certificate of deposit with an initial deposit of more than $7 million after he was awarded SSI.

(vi.) Respondent failed to report that he incorporated Biogenesis Church, Inc. on June 20, 2012.

(vii.) Respondent failed to report that he had a checking account in his name and Biogenesis Foundation, Inc. and a second checking account in his name and the name of Biogenesis Church, Inc. 

(viii.) Between about February 2011 and March 2016, Respondent received wire transfers in his accounts with Biogenesis Foundation, Inc. and Biogenesis Church, Inc. in the amounts of $182,340 and $381,255, respectively.

SSA Br. at 6-7.

The allegations in the May 18, 2017 IG notice and in the IG’s briefs before me are imprecise, as they do not specifically identify what conduct of Respondent, not time-barred by the six-year period of limitations, is the basis for imposing a CMP and assessment. The IG also does not address whether it is appropriate for me to consider as aggravating, conduct that would otherwise be time-barred. It is necessary to resolve both issues before proceeding further.

As previously discussed, the statute of limitations bars in this case the imposition of a CMP or assessment for a violation that occurred prior to May 18, 2011. Respondent applied for SSI payments in April 2007 and he completed a work activity report in June 2007. SSA alleges that Respondent provided false or misleading information or omitted information that was material at the time of his application for SSI. Violations related to information in forms completed and other misstatements or omissions that were false and misleading committed in the application process are time-barred because they occurred long before May 18, 2011, and those violations may not be the basis for a CMP or assessment. Further, Respondent’s failure to report various transactions with Biogenesis Foundation, Inc. and Biogenesis Church, Inc. that occurred before May 18, 2011, are similarly time-barred as a basis for imposing a CMP and assessment. The IG assertion in the May 18, 2017 notice that Respondent failed to report resources and income, and wrongfully received SSI payments from May 2007 to January 2017, may be accurate regarding the wrongful receipt of SSI payments. However, the statement may be misleading if interpreted to be a basis for the imposition of a CMP because any violations prior to May 18, 2011, are time-barred.

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The IG may impose a CMP and assessment against a person the IG determines has made or caused to be made a representation of material fact for determining initial or continuing entitlement to benefits, knowing the statement or representation was false, or where the IG determined the person acted with knowing disregard for the truth. The IG may also impose a CMP and assessment against one who omitted from a statement or representation or otherwise withheld disclosure of, a material fact the person knew or should have known was material and the person knew or should have known that the omission or withholding was false or misleading. 20 C.F.R. § 498.102(a). However, the Act and regulations limit the IG’s discretion to imposing a CMP or assessment based on violations that occurred during the six years preceding the date on which the IG notifies a person of the intent to impose the CMP or assessment. Act § 1129(b)(1); 20 C.F.R. § 498.132(b).

Pursuant to 20 C.F.R. § 498.106(a), in determining the amount of the CMP and assessments, it is permissible to consider the nature and circumstances of the statements, representations, or actions that are the basis for the CMP or assessment under 20 C.F.R. § 498.102(a) or (b), the degree of culpability of the person who committed the violations, the history of prior offenses, the financial condition of the person who committed the offenses, and such other matters as justice requires. Although violations that are time-barred may not be the basis for imposing a CMP or assessment, 20 C.F.R. § 498.217(f) provides:

(f)(1) Evidence of crimes, wrongs or acts other than those at issue in the instant case is admissible in order to show motive, opportunity, intent, knowledge, preparation, identity, lack of mistake, or existence of a scheme.

(2) Such evidence is admissible regardless of whether the crimes, wrongs or acts occurred during the statute of limitations period applicable to the acts which constitute the basis for liability in the case, and regardless of whether they were referenced in the IG’s notice sent in accordance with § 498.109.

Therefore, in determining the appropriateness of a CMP and assessment, I am not limited to considering crimes, wrongs, or acts that occurred during the six-year period preceding the IG notice.5

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I conclude that the IG may only impose a CMP or assessment based on violations that are not outside the six-year period of limitations. The six-year period began on May 18, 2011, in this case, six years prior to the date of the IG notice initiating this proceeding. I must determine which of the IG’s allegations of violations are not time-barred and may be the basis for a CMP and assessment. Only violations between May 18, 2011 and May 18, 2017 are not time-barred.

The IG does not allege in his notice dated May 18, 2017 (SSA Ex. 33) and does not allege in briefing before me that during the period May 18, 2011 to May 18, 2017, Respondent made or caused to be made any statements or representations of material fact in any forms or reports. Accordingly, section 1129(a)(1)(A) and (B) and 20 C.F.R. § 498.102(a)(1) and (2) are not applicable in this case.

Pursuant to section 1129(a)(1)(C) of the Act and 20 C.F.R. § 498.102(a)(3), Respondent’s withholding or failure to report a material fact he knew or should have known was material to determining whether or not he continued to be entitled to SSI payments, and where Respondent knew or should have known that the withholding was false or misleading as to continued entitlement, is a basis for imposing a CMP or assessment.

Based on the evidence, Respondent’s failures to report his relationship to and activities with Biogenesis Foundation, Inc. and Biogenesis Church, Inc. during the 69-month period he received SSI payments from May 18, 2011 through January 2017, are potential bases for the imposition of a CMP and assessment and are not time-barred. Therefore, it is necessary to examine in detail Respondent’s relationship and activities in connection with Biogenesis Foundation, Inc. and Biogenesis Church, Inc. from May 18, 2011 through January 2017.6

b. Facts

Special Agent (SA) Kyle Zgraggen provided a declaration. SSA Ex. 40. Respondent waived the right to cross-examine SA Zgraggen by waiving his right to appear at a

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hearing. SA Zgraggen explained that on April 12, 2012, the IG received a complaint from the U.S. Attorney, District of Massachusetts that Respondent was concealing income and resources from SSA. SA Zgraggen confirmed Respondent was receiving SSI monthly disability benefits. SA Zgraggen found no evidence that Respondent reported any work or employment history to SSA while receiving SSI benefits. SA Zgraggen stated he checked the records of the Commonwealth of Massachusetts, Secretary of State; he determined Biogenesis Foundation, Inc. was incorporated in 2003 (SSA Ex. 1), and Biogenesis Church, Inc. was incorporated on June 20, 2012 (SSA Ex. 15); and both corporations listed Respondent as their president. SSA Ex. 40 at 1-3. SA Zgraggen obtained bank records from East Boston Savings Bank on December 28, 2016. He reviewed records for a business certificate of deposit in the name of “Biogenesis Foundation, Inc., Daniel H. George, 1 Warren Court, Rockport, MA.” The certificate of deposit was opened in June 2004 and continued until it was closed and a bank check was issued to the Biogenesis Foundation in the amount of $7,559,361.16 on October 11, 2012. SSA Ex. 40 at 4 ¶ 10. SA Zgraggen also reviewed records related to a second business certificate of deposit in the name of “Biogenesis Church, Inc., Daniel H. George, 1 Warren Court, Rockport, MA” that was opened about October 11, 2012, with an initial deposit of $7,559,361.16. On September 7, 2016, the certificate of deposit had a balance of $7,804,549.98. The certificate of deposit was closed and a bank check was issued for $7,719,049.98 to the Internal Revenue Service (IRS). SA Zgraggen does not mention what happened with the remaining $85,500. SSA Ex. 40 at 4 ¶ 11. SA Zgraggen examined bank records for a business checking account in the names of Biogenesis Foundation, Inc. and Daniel H. George, 1 Warren Court, Rockport, MA, that received wire transfers totaling about $182,340 from about February 28, 2011 to April 11, 2013. SA Zgraggen noted that the monthly balance of the account frequently exceeded $2,000. SSA Ex. 40 at 5 ¶ 12. SA Zgraggen reviewed records of a business checking account in the names of Biogenesis Church, Inc. and Daniel H. George, 1 Warren Court, Rockport, MA, which from about December 4, 2012 to March 29, 2016, received wire transfers totaling approximately $381,255. SA Zgraggen noted most months all deposited funds were withdrawn. SSA Ex. 40 at 5 ¶ 13. SA Zgraggen reported his findings to SSA Program Expert John Donovan. Respondent’s SSI benefits terminated with the January 2017 payment. SSA Ex. 40 at 5 ¶¶ 14, 19. SA Zgraggen’s testimony is credible and weighty.

The IG placed in evidence various bank statements from Mt. Washington Bank (predecessor to East Boston Savings Bank). The statements list Biogenesis Foundation, Inc. and Daniel H. George and the address 1 Warren Court, Rockport, MA as follows:

BIOGENESIS FOUNDATION INC

DANIEL H GEORGE

1 WARREN CT

ROCKPORT MA 01966-1625

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SSA Ex. 36. There is no dispute that 1 Warren Court is Respondent’s mailing address. Departmental Appeals Board Electronic Filing System (DAB E-File) #12, #14, #18.7  The statements cover the period December 16, 2010 through July 15, 2016. The following table sets forth account balances for months during the pertinent six-year period. SSA Ex. 36.

STATEMENT PERIOD	AVERAGE DAILY BALANCE
5/16/2011 TO 6/15/11	$64,416.88
6/16/2011 TO 7/15/2011	$81,259.92
7/16/2011 TO 8/15/2011	$62,217.05
9/16/2011 TO 10/15/2011	$116,120.89
10/16/2011 TO 11/15/2011	$123,712.98
11/16/2011 TO 12/15/2011	$152,889.87
NO STATEMENT 12/16/2011 TO 1/15/2012
1/16/2012 TO 2/15/2012	$128,950.08
3/16/2012 TO 4/15/2012	$78,026.23
4/16/2012 TO 5/15/2012	$100,034.05
NO STATEMENT 5/16/2012 TO 6/15/2012
6/16/2012 TO 7/15/2012	$116,189.55
NO STATEMENT 7/16/2012 TO 8/15/2012
8/16/2012 TO 9/15/2012	$144,793.10
NO STATEMENT 9/16/2012 TO 10/15/2012
10/16/2012 TO 11/15/2012	$148,772.18
NO STATEMENT 11/16/12 TO 12/15/2012
12/16/2012 TO 1/15/2013	$150,781.31
1/16/2013 TO 2/15/2013	$169,768.37
NO STATEMENT 2/16/2013 TO 3/15/2013
3/16/2013 TO 4/15/2013	$142,029.22
NO STATEMENTS 4/16/2013 TO 6/15/2013
6/16/2013 TO 7/15/2013	$148,246.64
NO STATEMENTS 7/16/2013 TO 12/15/2013
12/16/2013 TO 1/15/2014	$12.79
NO STATEMENTS 1/16/2014 TO 6/15/2014

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STATEMENT PERIOD	AVERAGE DAILY BALANCE
6/16/2014 TO 7/15/2014	$2,419.70
NO STATEMENTS 7/16/2014 TO 12/15/2014
12/16/2014 TO 1/15/2015	$2,563.49
NO STATEMENTS 1/16/2015 TO 6/15/2015
6/16/2015 TO 7/15/2015	$1.79
NO STATEMENTS 7/16/2015 TO 12/15/2015
12/16/2015 TO 1/15/2016	$1.80
NO STATEMENTS 1/16/2016 TO 6/15/2016
6/16/2016 TO 7/15/2016	$1.81

SSA Ex. 36 at 8-65. Portions of the statements offered by the IG are redacted, preventing identification of recipients for most withdrawals or transfers, except for some wire transfers. The IG also offers no explanation for either the redactions or the missing statements. The IG presented no evidence of the ownership of this account or who had the authority to withdraw or otherwise control funds, except for the fact both Biogenesis Foundation, Inc. and Respondent are listed on the statements.8  SA Zgraggen testified that he obtained copies of the bank statements using an IG subpoena. SSA Ex. 40 at 5 ¶ 12. However, the subpoena is not in evidence to show why the bank produced the particular statements in evidence as SSA Ex. 36. SA Zgraggen also did not testify as to the actual ownership of the account. The names of both Biogenesis Foundation, Inc., a Massachusetts corporation (SSA Ex. 40 at 3 ¶ 8), and Respondent on the account

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constitute some evidence of ownership of the account and permits the inference that they were joint owners. Mass. Gen. Laws, ch.167, § 4-406 (2019) (available at: https://malegislature.gov/Laws/GeneralLaws/PartI/TitleXV/Chapter106/Article4/Section4-406) (bank must provide statement of account to owners to trigger customer’s duty to discover and report errors or fraud). Respondent has not denied he jointly owned this bank account with Biogenesis Foundation, Inc. The same analysis applies to the other bank accounts and the certificates of deposit, including those that list Biogenesis Church, Inc. and Respondent. Respondent does not deny that he jointly owned all the accounts with either Biogenesis Foundation, Inc. or Biogenesis Church, Inc. I conclude that Respondent was an owner of all the accounts discussed in this decision.

SA Zgraggen testified that he received other bank records from East Boston Savings Bank (formerly Mt. Washington Bank) pursuant to an IG subpoena. The records include a business certificate of deposit with an account number ending in 5707. SSA Ex. 40 at 4 ¶ 10. SA Zgraggen’s description is consistent with the document placed in evidence by the IG as SSA Ex. 37. The document appears to be an annual account statement for a 60-month renewable business certificate of deposit first opened with $4,466,836.72 in 2004, renewed July 1, 2011, and with an account number ending in 5707. The document lists:

BIOGENESIS FOUNDATION INC

DANIEL H GEORGE

1 WARREN CT

ROCKPORT MA 01966-1625

SSA Ex. 37 at 1-2. The statement reflects a balance on May 31, 2011, of $7,125,651.77 and an ending balance on December 31, 2011, of $7,229,823.33. SSA Ex. 37 at 1-2. The statement for the period 2012 appears to be altered but lists a balance on September 30, 2012, of $7,554,745.53. The statement shows two withdrawals totaling $7,559,361.16 on October 11, 2012, that drained the account and closed the certificate of deposit. SSA Ex. 37 at 3-4.

The evidence shows that on October 11, 2012, Respondent opened a new 60-month business certificate of deposit with East Boston Savings Bank that lists as the title of the account:

BIOGENESIS CHURCH, INC.

DANIEL H GEORGE

1 WARREN CT

ROCKPORT MA 01966-1625

Biogenesis Church, Inc. at 1 Warren Court, Rockport, MA is listed as the business entity. SSA Ex. 39 at 1. Respondent is listed as the owner of the account. SSA Ex. 39 at 2. Account statements show the initial deposit of $7,559,361.16 on October 11, 2012, which

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is the amount of the closed certificate of deposit that listed Biogenesis Foundation, Inc. and Respondent. SSA Ex. 39 at 1, 7. Respondent is listed as the depositor of the opening deposit on October 11, 2012. SSA Ex. 39 at 6. The fact Respondent made the deposit is further evidence of his ability to control the funds, which were in excess of $7 million. The certificate of deposit earned interest and grew to $7,804,549.98. SSA Ex. 39 at 31. The account statement shows two withdrawals on September 7, 2016, that closed the certificate of deposit. SSA Ex. 39 at 31. The evidence shows that the final withdrawal of $7,719,049.98 was by check payable to the Internal Revenue Service. SSA Ex. 39 at 33-34; SSA Ex. 40 at 4 ¶ 11.

SA Zgraggen testified that he also obtained pursuant to an IG subpoena records of a second business checking account with an account number ending in 0454. SSA Ex. 40 at 5 ¶ 13. SSA Zgraggen’s description matches documents placed in evidence by SSA as SSA Ex. 38. SSA Ex. 38 shows that on November 8, 2012, Respondent opened a new business account with East Boston Savings Bank. The account title was:

BIOGENESIS CHURCH INC.

DANIEL H GEORGE

1 WARREN CT

ROCKPORT MA 01966-1625

The business is described as a “non-profit or organization.” Respondent is listed as owner. SSA Ex. 38 at 1-2. Respondent made the initial deposit of $13,055.82 sometime after opening the account on November 8, 2012. SSA Ex. 38 at 5, 8. On November 8, 2012, Respondent signed a form document that purports to be a resolution of Biogenesis Church, Inc. without checking any of the check boxes to indicate his relationship to the church. SSA Ex. 38 at 6-7. The fact Respondent opened the account and made the initial deposit is further evidence of ownership. Unfortunately, many entries of transactions on the account statements are redacted. The IG provides no explanation for who did the redactions or why they were necessary and it is not possible to determine the source of many credits to the account or the recipients of the debits. SSA Ex. 39 at 8-98. Monthly bank statements in evidence show the following:

STATEMENT PERIOD	DEPOSITS & WITHDRAWALS
12/1-31/2012	BEGIN BALANCE $13,055.82 / DEPOSITS $12,213.31 / WITHDRAWALS $25,269.13
1/1-31/2013	$115,560
2/1-28/2013	NO STATEMENT
3/1-31/2013	$12,020
4/1-30/2013	$0
5/1-31/2013	$13,625
6/1-30/2013	$0

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STATEMENT PERIOD	DEPOSITS & WITHDRAWALS
7/1-31/2013	$12,025
8/1-31/2013	$108,000
9/1-30/2013	$59,696.82
10/1-31/2013	$10,879.82
11/1-30/2013	$21,235.30
12/1-31/2013	26,135.11
1/1-31/2014	$19,117.78
2/1-28/2014	NO STATEMENT
3/1-31/2014	$22,113.10
4/1-30/2014	$21,258.83
5/1-31/2014	NO STATEMENT
6/1-30/2014	NO STATEMENT
7/1-31/2014	$25,281.66
8/1-31/2014	NO STATEMENT
9/1-30/2014	BEGIN BALANCE $10 / DEPOSITS $14,136.84 / WITHDRAWALS $14,146.84
10/1-31/2014	$9,208.21
11/1-30/2014	$10,170.51
12/1-31/2014	DEPOSITS $32,741.40 / WITHDRAWALS $25,241.40
1/1-31/2015	BEGIN BALANCE $7,500 / DEPOSITS $21,263.51 / WITHDRAWALS $28,763.51
2/1-28/2015	NO STATEMENT
3/1-31/2015	$16,888.62
4/1-30/2015	NO STATEMENT
5/1-31/2015	$19,113.55
6/1-30/2015	NO STATEMENT
7/1-31/2015	$2,467.09
8/1-31/2015	$16,029.54
9/1-30/2015	NO STATEMENT
10/1-31/2015	$15,348.55
11/1-30/2015	$17,832.89
12/1-31/2015	$64,938.84
1/1-31/2016	$15,715.11
2/1-29/2016	$110,375.14
3/1-31/2016	$87,995.87
4/1-30/2016	NO STATEMENT
5/1-31/2016	NO STATEMENT
6/1-30/2016	$24,334.70
7/1-31/2016	$2,408.96

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SSA Ex. 38 at 8-98. In the foregoing table, except where noted, a single amount listed indicates that the amount deposited was the amount withdrawn. All statements, except eight, show one or more debits or credits listed as “Automatic Transfer” “Transfer to Deposit System Account” or “Automatic Transfer” “Transfer from Deposit System Account” with an account number that ended in 1473, in various amounts. SSA Ex. 38, at 16, 19, 22, 28, 34, 39, 42, 45, 47, 52, 54, 57, 60, 66, 68, 71, 72, 76, 79, 81, 83, 86, 88, 91, 94. I have received no evidence that shows who owns the account that ended in 1473.

It is alleged in the report of investigation (ROI) submitted by SA Zgraggen on February 1, 2017, that Respondent used funds from the corporate accounts to pay for his living expenses. SSA Ex. 28 at 2. However, the ROI cites no evidence in support of that assertion. SA Zgraggen also did not state in his declaration that he determined that Respondent used any funds from the corporate accounts to pay his living expenses. SSA Ex. 40. The evidence does not show that Respondent made any withdrawals for his own use from any of the accounts for which records were obtained by the IG. The IG presented no evidence of any accounts solely in Respondent’s name.

The IG also submitted the following court and administrative decisions involving Respondent.

SSA Ex. 2 is the decision of the U.S. Court of Appeals for the First Circuit affirming Respondent’s conviction of four counts of tax evasion for tax years 1996 through 1999, and his sentence to 30 months imprisonment. U.S. v. Daniel H. George, Jr., 448 F.3d 96 (1st Cir. 2006). This decision is of limited probative value on the issues before me. Nevertheless, the evidence is consistent with and supports other evidence of record and its consideration is not unduly prejudicial to Respondent.

SSA Ex. 16 at 14-22 is the decision of an SSA ALJ dated September 27, 2012. The ALJ determined that Respondent was at fault for an overpayment of $81,466 in title II DIB during a period ending July 2005, because Respondent failed to disclose substantial gainful activity as a chemist. This evidence is relevant as an aggravating factor in fixing the amount of the CMP and assessment in this case.

On August 12, 2015, the U.S. Tax Court issued a Memorandum of Findings of Fact and Opinion in Docket No. 758-13, Daniel H. George, Jr. v. Commissioner of Internal Revenue. SSA Ex. 29. The case involved Respondent’s challenges to tax deficiencies and penalties imposed by the IRS against Respondent for years 1995 through 2002. The Tax Court upheld the tax deficiencies and related penalties. SSA Ex. 29 at 26-27. I conclude that this decision is of little probative value on the issues before me based on the fact it involved conduct that occurred approximately nine years before the events in this case. However, the evidence is consistent with and supports other evidence of record and its consideration is not unduly prejudicial to Respondent.

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SSA Ex. 35 is a November 13, 2017 Memorandum and Order issued by the U.S. District Court, District of Massachusetts in Civil Action No. 16-11628, Biogenesis Church, Inc. v. United States. The case involved a suit by Biogenesis Church alleging wrongful levy by the IRS and seeking declaratory and injunctive relief and damages. The court granted summary judgment in favor of the U.S., finding the material facts undisputed, including the following:

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SSA Ex. 35 at 1-5. This lawsuit was filed by Respondent in the name of Biogenesis Church, Inc. in an effort to recover the amount the IRS levied plus damages. The district court, however, concluded that Respondent’s transfer of money to Biogenesis Foundation, Inc. in 2003 was constructively fraudulent; and Biogenesis Church, Inc. was a subsequent transferee of the constructively fraudulent 2003 transfer and obtained no right to the money. Therefore, the money belonged to Respondent and was properly levied upon by the IRS. SSA Ex. 35 at 6-12. In the alternative, the court held that Biogenesis Church, Inc. was the fraudulent nominee of Respondent as he retained “unfettered control over its finances and benefit in the form of rent and utility bills for his personal home.” SSA Ex. 35 at 14.

The IG placed in evidence as SSA Ex. 31, at 1-76, a letter addressed to Respondent at a redacted address, which informed Respondent that he was not entitled to an SSI payment for February 2017. The letter further advised Respondent that SSA was changing the amounts of SSI due Respondent from May 2007 through January 2017, based on the fact Respondent had countable resources in excess of $2,000 for those months. The notice

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reflected the SSA determination that Respondent was not entitled to any payment for any of the months from May 2007 through January 2017, because he had countable resources in excess of $2,000 each month. SSA Ex. 31 at 1-10. SSA provided a summary of the resources it considered in determining that Respondent had excess resources. The summary lists the following as the location of cash resources of Respondent: “Institution for Savings in Newburyport A Savings Account” and “Other (Contact Social Security Office).” The following table reflects the dates and amounts that SSA relied upon.

MONTHS	TOTAL AMOUNT OF RESOURCES
4/2007 – 12/2010	$466,936.72
1/2011	$8,998.97
2/2011	$32,810.01
3/2011	$54,389.83
4/2011	$78,355.08
5/2011	$101,626.05
6/2011	$125,751.77
7/2011	$149,178.56
8/2011	$162,718.72
9/2011	$176,284.53
10/2011	$189,437.59
11/2011	$203,054.00
12/2011	$216,256.13
1/2012 – 6/2012	$229,923.33
7/2012	$512,540.28
8/2012	$526,768.64
9/2012	$541,023.94
10/2012	$554,845.53
11/2012 – 12/2012	$561,770.39
1/2013	$597,383.64
2/2013	$311,736.03
3/2013	$323,963.17
4/2013	$30,977.76
5/2013	$43,864.50
6/2013	$57,205.20
7/2013	$70,140.00
8/2013	$83,530.47
9/2013	$96,946.29
10/2013	$109,953.94
11/2013	$123,419.81
12/2013	$136,475.98
1/2014	$149,992.08
2/2014	$363.546.00

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MONTHS	TOTAL AMOUNT OF RESOURCES
3/2014	$376,142.54
4/2014	$390,112.57
5/2014	$403,657.55
6/2014	$417,679.69
7/2014	$431,275.20
8/2014	$445,349.64
9/2014	$459,450.74
10/2014	$473,122.82
11/2014	$487,276.52
12/2014	$500,999.59
1/2015	$515,206.09
2/2015	$529,439.50
3/2015	$542,319.83
4/2015	$706,806.21
5/2015	$720,931.65
6/2015	$735,554.70
7/2015	$749,732.83
8/2015	$764,410.43
9/2015	$779,115.82
10/2015	$793,373.80
11/2015	$808,134.05
12/2015	$672,344.41
1/2016	$686,875.43
2/2016	$701,433.98
3/2016	$715,079.05
4/2016	$729,691.02
5/2016	$743,858.40
6/2016	$758,524.87
7/2016	$772,745.11
8/2016	$784,461.55
9/2016	$794,314.64
10/2016 – 12/2016	$794,314.64
1/2017	$794,314.64

For the months October 2016 through January 2017, the SSA notice lists two sources but one is listed as “Cash” rather than “Other (Contact Social Security Office).” SSA Ex. 31 at 11-76. I have no other evidence of an account described as “Newburyport A Savings Account.” My attempts to correlate the monthly amounts determined by SSA with evidence of the accounts in evidence have proven fruitless. However, Respondent did not object to my consideration of SSA Ex. 31, or specifically dispute the amounts of

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resources found by SSA for the months listed in SSA Ex. 31. Accordingly, I accept the amounts of resources listed by month to be more likely true than not.

John M. Donovan, SSA Program Expert, provided a declaration. SSA Ex. 41. Respondent waived cross-examination of Mr. Donovan by waiving his right to appear at a hearing. Mr. Donovan states that the bank certificates of deposit and checking accounts discovered by SA Zgraggen should be attributed or deemed to Respondent because he was listed on the accounts and there is no evidence that he could not withdraw the funds and use the funds for his own support and maintenance. SSA Ex. 41 at 1-4 ¶¶ 5, 12-17. Mr. Donovan attests that during the six-year statute of limitations period, May 2011 to February 2017, Respondent was overpaid $50,525.29 in SSI payments and actually received payments totaling $47,401.39.9  SSA Ex. 41 at 4-5 ¶¶ 22-25. Mr. Donovan’s testimony is credible and weighty. Mr. Donovan’s declaration is consistent with and supported by the Special Determination he authored dated January 20, 2017. SSA Ex. 30.

Based on the foregoing I find that during the period May 18, 2011 to January 17, 2017:

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c. Analysis

Congress specified in the Act that the Commissioner will not make a determination adverse to any person under section 1129 until the person has been given written notice and an opportunity for a hearing. Act § 1129(b)(2); 20 C.F.R. § 498.109(a). Respondent received the required notice and Respondent raised no issue of the adequacy of the notice. Respondent and SSA waived the right to appear at an oral hearing and requested decision on the documentary evidence and written argument as permitted by 20 C.F.R. § 498.206(b)(5), thereby waiving the right to confront and cross-examine any witnesses. This decision is issued in accordance with 20 C.F.R. § 498.220.

Based on the foregoing findings of fact, Respondent’s acts and omissions during the six years preceding the IG notice of intent to impose a CMP and assessment as authorized by Act § 1129(b)(1) and 20 C.F.R. § 498.132(b), that are bases for the imposition of the CMP and assessment are his failures to report cash resources in the accounts of Biogenesis Foundation, Inc. and Biogenesis Church, Inc., accounts of which he was an

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owner. A person receiving SSI benefits, as Respondent was, is subject to a CMP and assessment if the person:

withholds disclosure of, a fact which the person knows or should know is material to the determination of any initial or continuing right to or the amount of monthly insurance benefits under title II or benefits or payments under title VIII or XVI, if the person knows, or should know, that the statement or representation with such omission is false or misleading or that the withholding of such disclosure is misleading . . . .

Act § 1129(a)(1)(C); 20 C.F.R. § 498.102(a)(3). The IG may impose a CMP for each receipt of a payment or benefits while a person withholds disclosure of a material fact. 20 C.F.R. § 498.103(a). Based on the plain language of the Act and regulations, the elements the IG must prove by a preponderance of the evidence are:

1. Respondent withheld disclosure of a fact;

2. Respondent knew or should have known that the fact not disclosed was material because, if the fact were known to SSA, it may have affected Respondent’s continuing right to SSI payments; and

3. Respondent knew or should have known that the failure to disclose was false or misleading.

The first element is satisfied based on the foregoing discussion of the facts. Respondent withheld reporting of his correct relationship to Biogenesis Foundation, Inc. and Biogenesis Church, Inc. and the assets held in the names of Biogenesis Foundation, Inc. and Biogenesis Church, Inc. and his own name for a total of 69 months including May 2011 through January 2017, during which period he received SSI payments.

Having determined that Respondent omitted or failed to report his correct relationship with and the assets he held with Biogenesis Foundation, Inc. and Biogenesis Church, Inc., it is necessary to determine whether the omissions were material to determining whether Respondent was entitled to continuing payment of SSI benefits; and whether Respondent knew or should have known the facts he omitted to report were material and that the withholding or omission was false or misleading. Act § 1129(a)(1)(C); 20 C.F.R. § 498.102(a)(3).

SSA Exs. 3 through 14 and 17 through 20, documents related to Respondent’s SSI application and subsequent notices, do not show it was more likely than not that Respondent had actual knowledge of his obligation to report his resources including

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funds held in the accounts of Biogenesis Foundation, Inc. and Biogenesis Church, Inc. The IG placed in evidence a document titled Application Summary for Supplemental Security Income that bears Respondent’s name. The document purports to be a summary of Respondent’s application for SSI, which may have been filed by telephone or online. The document is not signed by or acknowledged by Respondent in any way obvious from the face of the document. Inexplicably, the addressee block and other identifying information have been redacted. Therefore, it is not possible to determine whether Respondent lived at 1 Warren Court, Rockport, MA when he applied for SSI on April 13, 2007, or whether the forms were sent to that address. SSA Ex. 3. Identifying information has also been redacted from other documents placed in evidence by the IG that are purportedly related to Respondent’s application for SSI and subsequent notices. SSA Exs. 4-13. Respondent has not objected to the documents and I conclude Respondent does not dispute the documents are authentic. The imposition of the proposed CMP and assessment cannot be based on alleged false statements or misrepresentations in those documents because they were completed more than six years prior to the IG notice.10  The documents are relevant to the issue of whether Respondent had actual knowledge of his obligation to report his resources. However, because there is no evidence the documents were actually received by Respondent, they are of little probative value on the issue of whether it was more likely than not that Respondent had actual knowledge of his reporting responsibility. SSA Exs. 14 and 17 through 20 are notices from SSA to Respondent, at an address that was redacted, dated between November 27, 2011 and November 30, 2014. The notices are within the six-year period and include clear statements of Respondent’s obligation to report, but the evidence before me does not show that the notices were actually received by Respondent. In fact, the redaction of the mailing addresses in the notices makes it impossible to determine whether Respondent’s correct address was used and it is not possible to infer the documents were ever received by Respondent.

However, Respondent had constructive notice of his reporting requirements based on the published regulations. 5 U.S.C. §§ 552(a), 553(d); 2 Am. Jur. 2d Administrative Law § 166 (2019) (“Duly promulgated regulations provide constructive notice of their requirements and are legally binding regardless of actual notice.”) Respondent also admits that he knew of the requirement to report changes in his income and resources. RFH at 2 (DAB E-File #1b); R. Reply at 1.

A material fact is a fact that the Commissioner may consider in evaluating whether an applicant is entitled to benefits or payments under titles II, VIII, or XVI of the Act. Act

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§ 1129(a)(2); 20 C.F.R. § 498.101. I conclude that the facts Respondent failed to report were material, for if they had been reported, they may have affected a determination by SSA regarding Respondent’s right to continue to receive payment of SSI benefits and the amount of those benefits. I further conclude that Respondent knew or should have known that the facts he withheld from SSA were material. Eligibility for SSI benefits and the amount of those benefits are clearly dependent upon the beneficiary’s income and resources. Act §§ 1611, 1613; 20 C.F.R. § 416.203-.269. Resources, subject to some exceptions not applicable here, are “cash or other liquid assets or any real or personal property that an individual (or spouse, if any) owns and could convert to cash to be used for his or her support and maintenance.” 20 C.F.R. § 416.1201(a). If an individual has the “right, authority or power to liquidate the property,” it is a resource. 20 C.F.R. § 416.1201(a)(1). Funds held in a financial institution account, including savings, checking, and certificates of deposit, are an individual’s resource if the individual owns the account and can use the funds for his or her support and maintenance. 20 C.F.R. § 416.1208(a). Pursuant to 20 C.F.R. § 416.1208(c)(1), if one of the joint owners of an account is an SSI claimant or recipient, it is presumed that all the funds in the account belong to the individual. In this case, Respondent was listed on the statements of accounts of Biogenesis Foundation, Inc. and Biogenesis Church, Inc. in such a way to create a strong inference that Respondent was a co-owner. Respondent has not presented any evidence to rebut either the inference or the presumption of ownership of the funds in the accounts on which both he and Biogenesis Foundation, Inc. and Biogenesis Church, Inc. were listed. 20 C.F.R. § 416.1208(c)(3)-(4) (right to rebut presumption of ownership and procedures). Respondent’s home at 1 Warren Court in Rockport, MA is not considered a resource under the regulations based on the inference that it is his principal residence, and the evidence does not show he was using it for the production of rental income from either of the corporations. 20 C.F.R. § 416.1212. The evidence supports my conclusion that it is more likely than not that Respondent knew that his relationship to Biogenesis Foundation, Inc. and Biogenesis Church, Inc. and the funds in their accounts may have affected a determination regarding his continued receipt of SSI payments.

I conclude that the facts Respondent failed to report were material and he knew or should have known that they were material. Therefore the second element of section 1129(a)(1)(C) is satisfied.

Pursuant to 20 C.F.R. § 416.704(a)(1), as a recipient of SSI payments, Respondent was responsible to make reports to SSA. The regulations specifically state that it is important for the beneficiary to report because continuing eligibility for SSI benefits or the amount of the benefits may be affected. 20 C.F.R. § 416.701(a). Pursuant to 20 C.F.R. § 416.708, Respondent was required to report a change of address, a change in living arrangements, a change in income, and a change in resources, among other things. The regulatory requirement to report such facts is consistent with a conclusion that such facts are material to a determination of initial and continuing eligibility to receive benefits and payments. The declaration of John Donovan, Program Expert, SSA, supports my

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conclusion that the facts Respondent failed to report are material within the meaning of the Act and regulations. SSA Ex. 41 at 3 ¶ 14. Mr. Donovan states that under section 1611(a)(1)(B) of the Act, a disabled individual is not eligible for an SSI payment for any month the individual’s resources are more than $2,000 as determined under sections 1611(a)(3)(A) and 1613(a) of the Act. There is no evidence that Respondent lived with a spouse; therefore, Mr. Donovan’s citation to section 1611(a)(3)(A) is erroneous and the correct citation is to section 1611(a)(3)(B) of the Act. The preponderance of the evidence shows that from May 2011 through January 2017, Respondent had resources he held in one or more bank accounts in the name of either Biogenesis Foundation, Inc. or Biogenesis Church, Inc. and other resources that far exceeded $2,000. The fact that Respondent had resources in excess of $2,000 each month from May 2011 through January 2017, were material facts Respondent failed to report because the existence of those resources would have made him ineligible to receive SSI payments for each of those 69 months.

I also conclude that under the doctrine of res judicata, Respondent is bound by the decision in Biogenesis Church, Inc. v. United States, No. 1:16-cv-11628 (D. Mass, Nov. 13, 2017), a decision that appears to be final with no pending appeal. SSA Ex. 35. In that case, the court concluded that Respondent’s transfer of money to Biogenesis Foundation, Inc. was constructively fraudulent and Biogenesis Church, Inc. was the subsequent transferee of that fraudulent transfer. Because the transfers were constructively fraudulent, the IRS was permitted to levy upon funds in the Biogenesis Church, Inc. bank account. Effectively, the constructive transfer was ineffective to remove the funds from Respondent’s ownership, leaving the funds available to satisfy part of Respondent’s debt to the IRS. In light of the district court’s judgment, Respondent cannot deny that he owned the funds in the Biogenesis Foundation, Inc. and Biogenesis Church, Inc. accounts. Under the doctrine of res judicata, “a matter once judicially decided is finally decided.” 50 C.J.S. Judgments § 926 (Mar. 2019).

Any right, fact, or matter in issue, and directly adjudicated on, or necessarily involved in, the determination of an action before a competent court in which a judgment or decree is rendered on the merits is conclusively settled by the judgment therein and cannot again be litigated between the parties and privies or, under some authority, by a party or a privy to the first action, whether or not the claim or demand, purpose, or subject matter of the two suits is the same.

Id. There is no question that Respondent was the incorporator, owner, and principal officer of Biogenesis Foundation, Inc. and Biogenesis Church, Inc. Therefore, Respondent is a party or privy to the case brought by Biogenesis Church, Inc. against the United States in an effort to block an IRS levy to satisfy part of Respondent’s tax debt.

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Although res judicata is generally an affirmative defense, in this case it is appropriate to apply the doctrine of res judicata to bar any assertions by Respondent that he had no ownership of funds held in the Biogenesis Foundation, Inc. and Biogenesis Church, Inc. accounts.

I conclude that Respondent knew or should have known that the facts he omitted to report, specifically the resources in the Biogenesis Foundation, Inc. and Biogenesis Church, Inc. accounts, were material and his failure to report those resources to SSA misleading. Accordingly, the third element of section 1128(a)(1)(C) of the Act is satisfied.

Respondent argues that he was told in 2007, when he applied for SSI, that volunteer work was not considered work history and that volunteer work would not disqualify him for SSI payments. He also asserts he was told that the assets of state and federally-approved charitable organization would not be considered his resources even though he managed those assets. R. Br. at 2; R. Reply at 1-2. Respondent does not assert, however, that he revealed his relationship to Biogenesis Foundation, Inc. or the nature of the assets of that organization and he presents no proof of having done so when he applied for SSI benefits. Therefore, even if his assertions about what he was told were true, which facts I do not accept as having been proven, any advice he received can be no defense. Furthermore, estoppel against the federal government, if available at all, is presumably unavailable absent “affirmative misconduct,” such as fraud. See, e.g., Pacific Islander Council of Leaders, DAB No. 2091 at 12 (2007); Office of Pers. Mgmt. v. Richmond, 496 U.S. 414, 421 (1990). There is no evidence suggesting fraud or other affirmative misconduct on the part of SSA or its employees.

Respondent also asserts it was proper for Biogenesis Foundation, Inc. and Biogenesis Church, Inc. to pay legal fees and utility bills. R. Reply at 2. The issue is not whether such payments were proper. Rather, the payments that Respondent does not deny are evidence that he had the ability to control the assets of those organizations and use them as he directed. Respondent also argues that a CMP and assessment are not proper because there was no willful fraud. However, willful fraud is not an element that the IG must prove in order to impose a CMP and assessment. The IG need only show that Respondent knew or should have known that he was required to report resources that could affect his entitlement to SSI payments and that he failed to make the required report. In this case, Respondent received SSI payments for 69 months during which he failed to make the required report. To the extent Respondent’s argument suggests he was simply not aware the resources of Biogenesis Foundation, Inc. and Biogenesis Church,

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Inc. could be considered his resources, that suggestion is belied by the facts.11  The facts show that Respondent intentionally established both organizations and then transferred his funds to them in order to reduce his resources to nothing but his home, the ownership of which is not disqualifying. While the evidence strongly suggests that Respondent was attempting to avoid the IRS, in fact, his efforts also amounted to an effort to shield those assets from SSA and all others that may have had an interest in knowing about his resources. The federal district court had no trouble concluding that there was constructive fraud and that conclusion is well-founded.

I conclude that the elements of section 1129(a)(1)(C) of the Act are proved by a preponderance of the evidence and a CMP and assessment are authorized against Respondent in this case.

2. A $100,000 CMP and an assessment of $94,802 are reasonable and appropriate in this case.

Pursuant to 20 C.F.R. § 498.103(a), the maximum amount of a CMP that may be imposed pursuant to section 1129(a)(1) of the Act and 20 C.F.R. § 498.102(a) is $5,000, for each receipt of a payment or benefit while withholding disclosure of a material fact. However, after August 1, 2016, the maximum CMP was subject to an annual adjustment. 20 C.F.R. § 498.103(g)(2) (2017). A complicated formula is specified in the regulation for calculating the adjusted maximum CMP. Fortunately, the result must be published in the Federal Register annually. The maximum CMP authorized effective January 15, 2017, was $8,084 for each violation of withholding or failure to report a material fact. 81 Fed. Reg. 96,161, 96,162 (Dec. 29, 2016). Also authorized is an assessment of not more than twice the amount of benefits or payments received as a result of the false statements, representations, omissions, or, in this case, failure to report material facts. Act § 1129(a)(1); 20 C.F.R. § 498.104.

The maximum CMP that could be imposed in this case is $8,084 for each of the 69 months Respondent received SSI payments and failed to report his resources, a total maximum CMP of $557,796. The IG proposes a total CMP of only $100,000. SSA Ex. 33 at 1. SSA determined that Respondent actually received SSI payments totaling

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$47,401.39. Twice the amount of payments received is $94,802.78. The IG proposes an assessment of $94,802. SSA Ex. 1.

Pursuant to 20 C.F.R. § 498.220(b), I have the authority to affirm, deny, increase, or reduce the penalties or assessment proposed by the SSA IG. In determining the amount of CMP or assessment, my review is de novo. I consider the factors specified by section 1129(c) of the Act and 20 C.F.R. § 498.106(a) in determining the appropriate CMP and assessment, including the:

a. Nature of the statements, representations, or omitted material facts and the circumstances under which they occurred;

b. Degree of culpability, history of prior offenses, financial condition of the person committing the offense; and

c. Such other matters as justice may require.

(a) Nature of the facts Respondent failed to report and the circumstances under which they occurred.

Respondent’s conduct was egregious. After his indictment for tax evasion in 2003, Respondent created Biogenesis Foundation, Inc., transferring more than $7 million to accounts for which he was a co-owner. Respondent filed for and received SSI in 2007, reporting no resources other than a bank account with not more than $100 on deposit and no work since the 1960s and 1970s. In 2012, Respondent formed Biogenesis Church, Inc., to which he transferred more than $7 million from the account of Biogenesis Foundation, Inc. Respondent used funds from the accounts of both corporations to pay his personal legal bills and utilities for his residence. Respondent clearly engaged in a scheme to hide his resources from the IRS, and effectively the SSA, while maintaining control of the funds to use for his own benefit.

Egregious conduct of this nature is not acceptable and cannot be tolerated due to the risk it poses to the limited resources of the Social Security Trust Fund that must be allocated among the truly eligible. Deterrence of Respondent and others is achieved by imposition of a CMP and an assessment in egregious cases such as this. The $100,000 CMP proposed is approximately 18 percent of the maximum authorized CMP of $557,796. The $94,802 assessment is appropriate as it is the maximum allowed assessment of twice the SSI payments actually received by Respondent.

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(b) Degree of culpability, history of prior offenses, and financial condition of Respondent.

The simple definition for culpability is blameworthiness. Black’s Law Dictionary 406 (8th ed. 2004). Respondent is clearly blameworthy for his scheme. The preponderance of the evidence shows that Respondent acted intentionally, engaging in multiple legal actions in an attempt to preserve the resources he attempted to shield in the accounts of Biogenesis Foundation, Inc. and Biogenesis Church, Inc.

There is evidence that Respondent previously was entitled to disability benefits under title II of the Act. The entitlement was terminated and an overpayment was declared because Respondent failed to report disqualifying substantial gainful activity.

Respondent has presented no current financial data upon which to judge his ability to pay the proposed CMP and assessment. I find no basis to reduce the CMP or the assessment from the maximum authorized based on Respondent’s finances.

(c) Other matters as justice may require.

I find no other matters that merit consideration.

Accordingly, I conclude that the CMP of $100,000 for 69 months of failure to report material facts as well as an assessment $94,802, twice the amount of payments received during the 69 months Respondent received SSI payments, are reasonable and appropriate in this case.

III. Conclusion

For the foregoing reasons, I conclude that a CMP of $100,000 and an assessment of $94,802 are appropriate in this case.

• 1.This case was originally docketed listing Respondent as “Daniel George” because that was the name used in the request for hearing. However, the evidence shows Respondent’s full name is Daniel H. George, Jr., and that name is used in this decision to ensure correct identification. Respondent has also used the name Dan West for various purposes. SSA Exs. 29 at 1, 3; 40 at 2.
• 2.Citations are to 2016 revision of the Code of Federal Regulations (C.F.R.), unless otherwise stated.
• 3.The sanction, drawing an adverse inference based on Respondent’s refusal to produce documents, has no impact upon the outcome in this case, as it was not necessary to consider the adverse inference.
• 4.“Credible evidence” is evidence that is worthy of belief.  Black’s Law Dictionary 596 (8th ed. 2004).  The “weight of evidence” is the persuasiveness of some evidence compared to other evidence.  Id. at 1625.
• 5.I render no opinion on whether the IG may consider conduct that occurred more than six years prior to the IG notice for any purpose.  My task is to conduct a de novo review and not to review whether the IG properly executed his regulations.  20 C.F.R. § 498.220(b).
• 6.It is important to understand that the IG does not specifically allege or present evidence of work activity during the period May 18, 2011 through May 18, 2017.  For this reason, I conclude that work activity is not the basis for imposing a CMP or assessment in this case.
• 7.The IG placed in evidence several documents that appear to be related to Respondent’s application for SSI, as well as subsequent notices.  Key information including Respondent’s address and the address to which the documents were purportedly sent has been redacted, degrading significantly the evidentiary value of the documents.  SSA Exs. 4 through 14, 17 through 20.  Who did the redactions and for what reason are unknown.
• 8.The IG offered as Attachment C to its brief a copy of Program Operations Manual System (POMS) § SI01140.200.  The IG argues that the POMS provision supports Mr. Donovan’s opinion that Respondent’s name on account statements and records triggers an assumption that Respondent had the right to all the funds in the account.  The IG’s reliance on Mr. Donovan’s opinion and the POMS provision is misplaced.  Mr. Donovan’s opinion is based on the POMS provision offered by the IG.  SSA Ex. 41 at 3-4 ¶ 16.  However, the POMS is internal policy guidance or interpretative rules that guide SSA employees in processing beneficiary claims and the management of their accounts.  The POMS is not promulgated as regulations and does not have the force and effect of law.  Schweiker v. Hansen, 450 U.S. 785, 789-90 (1981); Carillo-Yeras v. Astrue, 671 F.3d 731, 735 (9th Cir. 2011).  Generally, the ownership of a bank account and the right to access funds is governed by the law of the domicile of the owner, including state contract law, the state’s version of the Uniform Commercial Code, and the intent of the parties.  See e.g., Owens v. Heckler, 748 F.2d 1511 (11th Cir. 1984); 9 C.J.S. Banks and Banking §§ 289, 292 (2019).  The POMS is applicable to and guides SSA employee actions nationwide but does not establish ownership of bank accounts.
• 9.Mr. Donovan explained that Respondent was overpaid a total amount of SSI of $86,658.56 based on a first payment in May 2007 with continuous payments until the last payment in January 2017.  During the pertinent six-year period from May 2011 through January 2017, Respondent was overpaid $50,525.29 according to Mr. Donovan.  However, Respondent’s monthly payment was reduced due to partial recovery of a prior overpayment and Respondent was determined to have actually received $47,401.39 during the 69 months from May 2011 through January 2017.  SSA Ex. 41 at 4-5 ¶¶ 20-25.
• 10.However, the documents are considered in determining the appropriate CMP and assessment as discussed hereafter.
• 11.Respondent also argues that he did not engage in substantial gainful activity and only did limited volunteer work for Biogenesis Foundation, Inc. and Biogenesis Church, Inc.  RFH (DAB E-File #1b at 2); R. Br.  As already explained, the IG presented no evidence of Respondent’s work activity during the pertinent period and I do not find work activity to be the basis for a CMP and/or assessment in this case.