The owners of the former Ohio Scrap Corporation in Delta are claiming in a seven-count civil lawsuit that some or all of the Internal Revenue Service agents who raided the business three years ago misappropriated nearly $1.9 million they confiscated from a company safe.
Todd and Carrie Zappone assert the agents of the IRS Criminal Investigation unit have accounted for only $1.264 million–or less than half–of $3.1 million taken from the safe during the Nov. 8, 2012, raid. They also contend that raid and another simultaneously held at their home were illegal, violated their privacy, and tainted their reputations.
IRS spokespersons Craig Casserly and Luis Garcia both declined comment. Garcia said it is both prohibited by law and inappropriate to discuss a taxpayer’s case.
The 22-page civil suit also accuses the more than one dozen agents involved with denial of liberty and property without due process of law, unreasonable searches and seizures, indebitatus assumpsit, conversion, invasion of privacy, intentional infliction of emotional distress, and civil conspiracy.
As a legal term in the suit, indebitatus assumpsit, which translates to “being indebted,” references the $1,886,000 million in cash the Zappones allege the IRS confiscated from the safe and haven’t acknowledged.
The civil suit requests an unspecified amount of compensatory and punitive damages, although the Zappones’ attorney, Stephen Dunn, suggests it totals in the tens of millions of dollars.
According to the suit, raids at the former Ohio Scrap Corporation, which was located on US 20A in Swancreek Township, and at the Zappones’ home on County Road 1-2 in Swanton were orchestrated after an IRS agent concluded the company had not reported all of its workers on employment tax returns.
Allegedly, the company had caught the agent’s attention after Fifth Third Bank filed suspicious activity reports with the IRS Financial Crimes Enforcement Network (FinCEN). The bank’s reports noted that Carrie Zappone had broken down withdrawals from Ohio Scrap’s bank account into amounts under $10,000.
According to the civil suit, Zappone broke down the withdrawals at the direction of the bank’s tellers. They allegedly told her withdrawals under that amount did not have to be filed in currency transaction reports with FinCEN.
As of presstime, Fifth Third Bank had failed to respond to an inquiry about the tellers’ alleged directions.
Search warrants obtained after agents found the money alleged tax evasion, structuring, and failure to collect, account for and pay over tax.
The Zappones claim the agents removed the full amount of $3,150,000 from a safe in Todd Zappone’s office and spread the cash on his desk. They say the agents boxed up the cash about 4 p.m. and confiscated it without honoring Zappone’s request that they count, photocopy or photograph it, record the bills’ serial numbers and denominations, and issue a receipt.
According to the civil suit, the next day IRS agents took cash removed from the safe to Brinks Inc., in Toledo, where it was counted and a receipt was issued for $1,264,000. The Zappones say the IRS agents involved in the raid have never accounted for the remaining $1,886,000 the couple claims they took.
They also claim the cash seizure left them unable to pay Ohio Scrap’s operating expenses. They say that and widespread publicity of the raid resulted in a loan foreclosure by The Farmers and Merchants State Bank. The bank then appointed a receiver for the company, which took control of the premises, causing the business to close.
Dunn said the couple kept large amounts of cash in the safe, in part, out of convenience. He said they regularly conducted business with cash, and needed it for the intended purchases of a metal shredder and two cranes, the latter costing several hundred thousand dollars apiece.
But the Zappones also stored cash because they felt insecure about their relationship with The Farmers and Merchants State Bank, which eventually foreclosed on their company, Dunn said.
He emphasized that it’s legal to store large sums of money in a safe, and that the cash the agents confiscated was reported on the couple’s tax returns.
A previous lawsuit the couple filed against the IRS to recover the alleged missing money was dismissed by the Northern District Court of Ohio after it was determined the court doesn’t have the authority to rule in that particular matter.
Dunn said he’s confident the civil suit will bring justice.
“What happened to the Zappones was terrible,” he said. “Their lives were destroyed by the government agents…This cannot go unanswered… The government must be required to respond to what it has done to these good people…The government shut down a thriving business, which did not help your community at all.”
Dunn said the case likely will not reach trial for another 18 months to two years. He said that time will be necessary to subpoena the IRS for the names of all agents involved in the raids, to take depositions, and to produce documents related to the civil suit.
David J. Coehrs can be reached at 419-335-2010.