0001 1 IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TEXAS 2 SAN ANTONIO DIVISION 3 4 THE UNITED STATES OF AMERICA ) Docket No. SA: 05-CV-01056 5 Petitioner ) San Antonio 6 VERSUS ) February 1, 2006 7 HENRY D. GOLTZ, ) 8 Respondent ) 9 -------------------------------------------------------------- 10 11 TRANSCRIPT OF PETITION TO ENFORCE IRS SUMMONS BEFORE THE HONORABLE ROYAL FURGESON 12 UNITED STATES DISTRICT JUDGE 13 14 APPEARANCES: 15 For the Government: HONORABLE CRAIG A. GARGOTTA 16 Assistant United States Attorney 601 NW Loop 410, Suite 600 17 San Antonio, Texas 78216 (210) 384-7350 18 For the Respondent: HENRY D. GOLTZ, Pro Se 19 Transcribed by: Randall E. Simpson 20 Deputy Official Court Reporter Federal Court Reporters of San Antonio, Inc. 21 10100 Reunion Place, Suite 310 San Antonio, Texas 78216 22 (210) 34-6464 23 24 25 0002 1 THE CLERK: SA: 05-CV-01056, the United 2 States versus Henry Goltz. 3 MR. GARGOTTA: Good afternoon, Your 4 Honor. Craig Gargotta from the US Attorney's office on 5 behalf of the United States. 6 THE COURT: Thank you. Why don't you 7 just stand there, Mr. Gargotta. 8 And Are you Mr. Goltz? 9 MR. GOLTZ: I am Mr. Goltz, yes, sir. 10 THE COURT: Great. Why don't you stand 11 there, Mr. Goltz. Mr. Goltz, I've had these cases from 12 time to time, and as I understand it, what the 13 Government wants is to meet with you and look at your 14 records and talk to you about, you know, whether or not 15 you're tax returns are accurate, or whether you filed 16 tax returns, or why you didn't, or whatever, whatever. 17 And my view is on all of these, the Government is just 18 trying to work this through. 19 Now, I will tell you I have people 20 sometimes come in here and say I don't have to file tax 21 returns, the Internal Revenue tax law is wrong, it's 22 against the law. 23 MR. GOLTZ: Really, people say that? 24 THE COURT: People say that, and you're 25 going to have to get some higher court than me to find 0003 1 that, because I've never read a court anywhere, any time 2 that says it's wrong. And the only other problem you 3 have - and I've only had to do this once - but if you're 4 just going to stand on that position and you're not 5 going to work with the Government, I have to put you in 6 prison, and I never like to do that. 7 I always encourage everybody -- I had one 8 time a grandfather, and he said, you know, I'm going to 9 go to prison. I'll spend the rest of my life in prison, 10 and I said well, I can only really put you in prison for 11 about 18 months, and then we have to kind of start over 12 again on a contempt issue. And he said, let me think 13 about it, came back and said well okay, I'll give the 14 guys the information they need. 15 And you know, I've never had a situation 16 after the information has been given, that there's been 17 any other problem. You may be the first one, after 12 18 years, that you may -- you know, you may end up having a 19 problem; but after the people meet with the Internal 20 Revenue Service and meet with the agents and go over it, 21 and try to do this in good faith, normally it's all 22 worked out. 23 So I don't even know your situation, but 24 I will tell you this: If you're saying the law is 25 unconstitutional and I'm not going to comply because I 0004 1 don't believe in the law, that's fine; you'll spend 18 2 months in prison. You can take it to a higher court, 3 because, you know, everybody has told me it's 4 constitutional, every law I've ever read. So I do 5 understand there are tax protestors, but you get to 6 protest from prison. So if that's your position, we 7 don't need to talk any more; I'll just call the marshals 8 up here, and, you know, they can take you into custody, 9 and you can appeal to the highest court in the land; or 10 if your position is I just don't want to work with these 11 people, well, I don't have any choice either. You know, 12 you've just got to work with them. I mean, that's the 13 way it works. 14 If your position is you don't have 15 anything, well then you've got to sit down and talk to 16 them anyway and explain it to them. But I've never had 17 a situation, once people start trying to work with the 18 Revenue Service, that there's been a further problem. 19 So I'm always encouraging people can't we just sit down 20 and work through this. 21 At any rate I get these cases, what; once 22 a month, once every two months. Only one time did a guy 23 say I'm just going to prison, and so he went to prison. 24 At any rate that's where we are. I'm just -- I don't 25 even know what your situation is. You may say there's 0005 1 just a big misunderstanding here, and I'm ready to 2 cooperate. 3 MR. GOLTZ: There's a big 4 misunderstanding here. 5 THE COURT: Okay. Great. Why don't you 6 tell me your side of it then. I just want to give you 7 this preface, because this is what happens in all of 8 these cases. 9 MR. GOLTZ: Well, first of all, is this a 10 court of record by the way, Judge? I mean, anything I 11 say, is it going on the record? 12 THE COURT: Right here. This man is 13 taking it down. 14 MR. GOLTZ: Okay. All right. Well, 15 first of all, I thought that I would hear from the 16 plaintiff -- the petitioner. I mean, I don't know why 17 I'm here, unless he's got a complaint or a petition. 18 THE COURT: You don't -- Okay. So you 19 have no earthly idea why you're here? 20 MR. GOLTZ: No, I don't mean that. I 21 don't mean that. I mean today that I'm standing here -- 22 and I'm here really on a special appearance basis. I'm 23 here not voluntarily, I'm here on a special appearance, 24 because I had thought -- I thought I answered 25 everything. 0006 1 So since that apparently is not 2 satisfactory with the petitioner, then I thought I would 3 hear from the petitioner to see what the problem is. 4 That's all. 5 THE COURT: So the last time you met with 6 them, you said here's all my answers, and they said this 7 is absolutely satisfactory. You don't know of any 8 objection they have to anything you've done; is that 9 right? In other words, you're coming here totally -- 10 totally confused, because every conversation you've had 11 with them indicates you're doing just great; is that 12 right? 13 MR. GOLTZ: Well, no. I'm not going to 14 permit you to testify for me, Judge. What I'm saying is 15 that I -- all right. Let me just go through it. I met 16 with the IRS on three occasions. I listened to their 17 questions. I asked them questions. Mr. Dietz is a fine 18 gentleman. I feel like he's a brother now that I've met 19 him so many times. I've given him answers. 20 Now, he may not be satisfied with the 21 answers - I don't know - but they were my answers. I 22 feel that the petitioner, the United States, has 23 disrespected this Court, because it told this Court in 24 the Petition, which I never had an opportunity to 25 respond to, that -- 0007 1 THE COURT: How come you never had an 2 opportunity? 3 MR. GOLTZ: I didn't know about it, until 4 I got an order from the Court. I got an order from the 5 Court, and right behind it was the Petition. That's the 6 first I saw of the Petition, and I did in fact file a 7 motion with this Court asking this Court to vacate the 8 order to give me an opportunity to answer the Petition. 9 This Court denied my motion. 10 Now, so I'm not sure -- as I said, I met 11 with Mr. Dietz; I listened to his questions. I asked 12 him some questions, based on -- based on information he 13 gave me. I asked him questions about that, which he 14 could not answer. Specifically, I asked him if he was 15 authorized to summon me, and he said he was. And I said 16 well, could you show me your authorization, your 17 delegation order, or whatever? Well, he didn't have 18 one, he doesn't have one. So I said well, that's fine. 19 On I think the third occasion I met with him, I said 20 that's fine. I have an affidavit here where you can 21 just swear that you are delegated to do this, and 22 Mr. Dietz refused to sign the affidavit. 23 So we didn't get very far. He asked me 24 some questions. I answered some, other ones I said I 25 have constitutionally protected rights. I hear it on 0008 1 television all the time, you have a right to remain 2 silent. 3 THE COURT: Well, let me say the other 4 opportunity you have is they can file a criminal 5 complaint against you. Do you want them to file a 6 criminal complaint and go to trial, hire a lawyer? 7 MR. GOLTZ: No, sir. No,sir. I don't 8 want -- 9 THE COURT: You do have constitutional 10 rights. You don't have to say a word, they can file a 11 criminal complaint against you, a felony charge, you can 12 come in here, you can defend yourself and that's fine. 13 If that's what you want to do, I'll tell them that's 14 fine. 15 MR. GOLTZ: Judge, let me explain this. 16 I met with him. He asked me questions. I provided 17 answers, and we have it all on tape. Mr. Dietz has a 18 tape, I have a tape. And so all I'm saying is that if 19 you're telling me that I have to give him specific 20 answers, certain answers, I gave him my answers. Now, 21 if there's other answers that I'm supposed to give him, 22 who is to tell me that? 23 THE COURT: Why don't you be seated. Let 24 me hear from Mr. Gargotta. 25 MR. GARGOTTA: Briefly, Your Honor, what 0009 1 we're seeking are two types of information: Collection 2 information as to Mr. Goltz' tax liability for 2000 and 3 2002, form 1040 individual income tax liability. He did 4 not file returns in these periods. The IRS, as I 5 indicated before on previous occasions, has the ability 6 under 26 USC, Section 6020 B, when a taxpayer declines 7 to file tax returns, to file returns on behalf of the 8 individual. We did that. In addition, we're asking 9 Mr. Goltz to file his 1999 and 2004 1040 returns. 10 Now, what Mr. Goltz says, where I do 11 agree with Mr. Goltz is he has meet with Mr. Dietz on 12 several occasions. He's absolutely correct about that. 13 Of course, the rub on this is did he cooperate and 14 provide answers to the questions that Mr. Dietz asked 15 him. We take a different view than what Mr. Goltz has 16 told the Court. We don't believe he's been responsive 17 to what we're seeking. We don't believe he's been 18 responsive in providing the income information, the 19 asset information with regard to the 2000, 2002 returns. 20 I should further tell the Court that 21 Mr. Goltz, I believe at the last meeting with Mr. Dietz, 22 did provide some tax returns to them. They were zero 23 returns. They had zero -- and correct me if I'm wrong, 24 Mr. Dietz - they had zero I think for income and 25 deductions and expenses, so it's what we call in the 0010 1 business a zero return. It doesn't reflect income, it 2 doesn't reflect expenses, it doesn't reflect anything. 3 We don't believe that that's a proper return. 4 So if Mr. Goltz were to tell you yes, 5 Your Honor, I filed one of the returns they sought, 6 technically that's correct. The question is is it an 7 accurate return? Is it a return that we can process? 8 The answer to that, Your Honor, would be no. 9 And that's where we are today. And if 10 you would like Mr. Dietz to come up and tell you his 11 side of the story when he met with him - I was not 12 present - I'll be happy to let him do that. 13 THE COURT: Sure. Mr. Dietz, you can 14 come up, too. 15 MR. GARGOTTA: And I'll ask Mr. Dietz to 16 be brief, Your Honor. I know it's been a long day. 17 THE COURT: Sure. Mr. Dietz, give me 18 your name and your occupation, your employment? 19 MR. GOLTZ: Forgive me for interrupting, 20 Your Honor. You said you'd invite -- Mr. Dietz, like 21 many of our other officers, operates under a pseudonym. 22 So Vick Dietz is not his name, it's a pseudonym. 23 THE COURT: Okay. But tell me what your 24 position is with the Internal Revenue Service. 25 MR. DIETZ: Your Honor, I'm a Revenue 0011 1 Officer with the Internal Revenue Service. 2 THE COURT: Okay. Tell me what's 3 happened in your meetings with Mr. Goltz. 4 MR. DIETZ: Well, basically we've met 5 approximately four times in my office. He's always 6 brought in a witness with him. He's requested that the 7 meetings are tape recorded. I've granted his request. 8 He's recorded, and I have a copy of the recording; and 9 I've asked him questions just about every time that he 10 comes in, questions that are pertinent to the 11 information that I'm seeking, which is financial 12 information. And he basically tells me -- or he has 13 told me that he'll answer as private, or he'll answer 14 it's personal. And I don't have any information. 15 That's basically what the interviews go -- how they go. 16 Now, Mr. Goltz has been very cordial at 17 each meeting, but I don't have any information. I asked 18 him questions such as where does your income come from, 19 and he'll say it's private, or he'll answer no, I'm not 20 going to answer it. And so I'm back to square one. 21 I mean I've been trying to get Mr. Goltz 22 to cooperate for several months now, and I still don't 23 have any information. Now, what I do know, from my own 24 research, is that he does own assets; but I've asked him 25 specific questions regarding his employment, where 0012 1 he's -- if he's receiving retirement income, and he'll 2 answer it's private. It private. It's private. 3 So I'm required -- part of my job, when I 4 have a case where I'm trying to collect tax liability, 5 is I'm required to make a collection determination. 6 Once I secure the financial information from the 7 taxpayer, then that's going to help me decide the 8 taxpayer has the ability to pay the liability, or he 9 does not have the ability to pay, or he has the ability 10 to part pay. With the information that Mr. Goltz has 11 provided, I cannot make that determination. 12 THE COURT: Okay. He says it's not that 13 he has earned income, he just tells you it's just 14 private, and I'm not going to tell you? 15 MR. DIETZ: Right. 16 MR. GOLTZ: May I -- 17 THE COURT: Okay. Sure. 18 MR. GOLTZ: -- have an objection here, 19 because Mr. Dietz is assuming something in all of his -- 20 I don't know if you call this testimony, but he says my 21 tax liability. Well, that's a very specific thing in 22 his book, and that has not been determined that I have 23 this tax liability. But he talks about my tax 24 liability, so -- 25 THE COURT: Well, but you have not 0013 1 answered any of his questions correctly; correct? I 2 mean he asked you if you have income, and you say it's 3 private. 4 MR. GOLTZ: Mr. Dietz has not answered my 5 question, which is that he has authority to even summon 6 me, and that's -- I mean we have to start there, just 7 because -- he operates under a pseudonym. I don't 8 really know who he is. 9 THE COURT: Well, it seems to me, 10 since -- maybe the best thing to do here, the Government 11 can proceed, and if you want to challenge the authority, 12 you can. Thank you, Mr. Dietz. You may step down. 13 Mr. Gargotta, tell us what you think is 14 appropriate here. 15 MR. GARGOTTA: You know, Your Honor, 16 taxes is a voluntary system. There's not enough Mr. 17 Dietzes, there's not enough Craig Gargottas to go out 18 and compel everyone to do what they should do. I don't 19 like paying taxes probably any more than Mr. Goltz does, 20 but it's part of my civic duty to do that. I enjoy the 21 benefits of government, and I have to pay for that, and 22 that's the rub on this. 23 If Mr. Goltz doesn't want to cooperate, 24 then I suggest to the Court, if he wants to be a martyr, 25 put him in jail for a while, maybe that will change his 0014 1 attitude; but what I cannot do is excuse him from 2 complying with the law. He is no different than anyone 3 else in this courtroom, and he has a responsibility to 4 comply. If we just say well, he's being too difficult, 5 so we'll just ignore it, then we have not fulfilled our 6 responsibility. Mr. Dietz hasn't fulfilled his 7 responsibility, and I haven't fulfilled my 8 responsibility. 9 So if Mr. Goltz doesn't want to 10 cooperate, then that's fine. Then I would ask the Court 11 to incarcerate him. 12 THE COURT: And I'll tell you -- what do 13 you have to say, Mr. Goltz? 14 MR. GOLTZ: Mr. Gargotta started by 15 saying it's a voluntary system, and then he wants people 16 to comply with his voluntary system, and I should be 17 thrown in jail to comply with his voluntary system. 18 Now, Judge, you know -- 19 THE COURT: Can I just interrupt you? 20 MR. GOLTZ: Yes, sir. 21 THE COURT: The system depends on 22 voluntary compliance. You have -- every United States 23 citizen who earns an income has the legal obligation 24 under the law to file a tax return and report their 25 income. That is the law. 0015 1 MR. GOLTZ: I would like to know, Judge, 2 where that is in the law. I have -- you're smiling at 3 me like I'm one of those guys that you get every month. 4 THE COURT: Well, I will tell you what 5 we're going to do is we're going to come back in here. 6 I'll set a hearing, and we're going to ask the questions 7 Mr. Dietz has asked to Mr. Goltz. I am a United States 8 District Judge. I've got a commission from the 9 President of the United States. Now, you may not accept 10 my authority, but I can tell you I do have the authority 11 to come in here and enforce the law. 12 I am going to let Mr. Gargotta, at a 13 hearing that we set, ask you questions about your income 14 and about the information about your income under oath 15 in that witness stand. I will tell you if you do not 16 answer those questions -- you choose not to answer those 17 questions, I do have the authority to put you in prison, 18 and I will let you know that I will put you in prison. 19 And that's your decision. 20 All I'm saying is you can cooperate with 21 these people. I mean, you know, you may not have any 22 tax liability. Tell them what your income is, and so 23 forth. If you decide that no, I don't believe you, 24 Judge, have authority; I don't believe Mr. Gargotta has 25 authority as an Assistant United States Attorney for the 0016 1 United States of America, or Mr. Dietz has authority as 2 a Revenue Agent, that's fine. 3 But I will tell you the marshals will 4 grab you by the arm and take you into prison, and then 5 you can appeal to whoever you want to appeal to. But 6 we're going to set a hearing, and you're going to be 7 given an opportunity to answer these questions, and if 8 you do not answer the questions, I will tell you what 9 will happen to you. 10 And you will be -- you're under a Court 11 order to appear at this hearing by order right now, and 12 if you decide not to appear at the hearing, the marshals 13 will come and bring you to the hearing. 14 Now, Mr. Frye, let's set a hearing. 15 MR. GOLTZ: May I respond? 16 THE COURT: Sure. 17 MR. GOLTZ: I went into the hearing with 18 Mr. Gargotta voluntarily. It was because he came to my 19 home, and he delivered a summons. Attached to that 20 summons was a statement of law, the law that you want to 21 enforce. And I want you to enforce the law. I don't 22 make any statements about constitutionality or anything 23 like that. 24 And the very first statute that was on 25 that piece of paper, which I have here, it was excerpts 0017 1 of the Internal Revenue Code said the Secretary was 2 authorized to do certain things, and one of them was to 3 summon me. Another one was to take testimony. Another 4 one was inspect books and records. That's in the law 5 that I want you to enforce. 6 So I asked Mr. Dietz if he was the 7 Secretary. I knew he's not the Secretary, but I asked 8 him if he was the secretary, and he said no, but he was 9 delegated. And I said Mr. Dietz, that's fine. May I 10 see your delegation order? He didn't have one. He 11 doesn't have one. He wasn't able to produce one any of 12 the times -- may I finish, please? Any of the times. 13 And I'm not trying to preach to the 14 Court. The Court knows the law better than I do. So 15 the third time I went in to see him, I said well, okay, 16 maybe we can get past this point, and I brought an 17 affidavit for him to swear that he was delegated to take 18 testimony, to issue summons, and he refused to sign it. 19 Now, maybe that's because of the 20 pseudonym. I don't know why he refused to sign it, but 21 I'm willing to cooperate, but I'm not going to cooperate 22 with somebody who just shows up at my door taping things 23 on my door. 24 THE COURT: Mr. Dietz is out of the 25 picture. It's me. 0018 1 MR. GOLTZ: Yes, sir. 2 THE COURT: And if you want me to, I will 3 go get my commission off of my -- 4 MR. GOLTZ: I believe you're 5 commissioned. 6 THE COURT: Okay. So it's just going to 7 be me, and we're going to be here with Mr. Gargotta, and 8 you're going to answer questions. You answer the 9 questions if you want to. If you don't want to, it's 10 your choice; but you're making a choice at that point to 11 be taken into custody if you don't answer the questions 12 that the law requires. 13 You may have a lawyer here. You may 14 appear with counsel. You may make any objections you 15 want. I will listen to all of them, but I have heard 16 these objections over and over again. 17 MR. GOLTZ: Well, I have not, Judge. I 18 mean this is all new to me. I'm just trying to get the 19 answers. I'm told that it's the law and that these are 20 the questions that are in the law, but no one can show 21 me that law. 22 THE COURT: If you need the Internal 23 Revenue Code, Mr. Gargotta will have it in front of us 24 when we talk to you, and we'll have the whole law here. 25 It's in the Code. If you want to look it up, you can 0019 1 look it up. 2 MR. GOLTZ: Well, I can't look it up. I 3 have brought the Code to the IRS office, and I asked 4 Mr. Dietz to show me, and he couldn't show me. 5 THE COURT: Well, it will be here. We're 6 going to set this hearing. Kevin, have you found a 7 time? 8 THE CLERK: Are you hear next Thursday, 9 Judge, in the morning? 10 THE COURT: I am here. Let's set it at 11 eight o'clock Thursday morning. We will be here at 12 eight o'clock Thursday morning, February the 9th, and 13 Mr. Gargotta, you will start and ask questions of 14 Mr. Goltz under oath; and then Mr. Goltz, you can 15 present any testimony you want for yourself, and I'll 16 hear the full testimony. 17 I'm trying though to be very clear with 18 you that I go through this about once a month with 19 people saying I don't know the law; I don't -- I don't 20 agree with the law; I don't like to pay my taxes. 21 MR. GOLTZ: Judge, I'm not saying any of 22 that. 23 THE COURT: Okay. I'm glad to hear that. 24 MR. GOLTZ: I do have a question. Who do 25 I get to question? 0020 1 THE COURT: You can call any witness you 2 want. 3 MR. GOLTZ: I want to call Mr. Dietz. 4 THE COURT: Well, but Mr. Dietz is not a 5 part of this any more. I don't care -- there is a 6 general delegation from the Secretary to Mr. Dietz, but 7 the delegation doesn't go to Mr. Dietz, it goes to the 8 agents working under the Secretary. There is a general 9 delegation. 10 If we have to have the Secretary handling 11 each case, of course, that would be impossible; and 12 that's why in the government, delegations occur from the 13 Secretaries of the various agencies to the agents 14 working under them. This happens all the time. For 15 example, with the Border Patrol, the Border Patrol is 16 cross-designated to do narcotics work. That is not a 17 delegation that goes to every one of the five or 6,000 18 Border Patrol agents. They're not each receiving their 19 own special -- it's given to Border Patrol agents in 20 their general capacity. 21 MR. DIETZ: Your Honor, I just wanted to 22 say that I did give him a copy of the delegation order, 23 what I could get at my office, and Mr. Goltz did not 24 accept it. I believe he told me that he wanted a copy 25 of the original from DC, and I said I don't have that. 0021 1 We don't have a copy of the original order, so I gave 2 you what I could get. It was not acceptable to him. 3 THE COURT: Well, we're not worried about 4 delegation any more. I'm a United States District Judge 5 to enforce United States laws. If you've complied with 6 the laws, there will be no problem, you'll be released. 7 You'll be released from your subpoena, you can go on. 8 If you haven't complied with the laws, then I have to 9 enforce the laws; and I will tell you if your answer to 10 me under oath is that my information about my income is 11 private, you know, you will be put into custody. 12 You can appeal. You have every right. 13 There has never been -- not one appellate court has ever 14 told a judge like me, not one time, that people don't 15 have to give their income; that people don't have to 16 talk about their taxes. It's never happened. 17 Yes, sir? 18 MR. GOLTZ: May I call Mr. Gargotta to 19 the stand? 20 THE COURT: Lawyers can't be called to 21 the stand. 22 MR. GOLTZ: May I call the petitioner to 23 the stand? 24 MR. GARGOTTA: The petitioner is the 25 United States. 0022 1 THE COURT: You know, it starts with the 2 President. We can't have President Bush here. 3 MR. GOLTZ: I'm not asking for President 4 Bush. I'm asking for someone who can answer questions 5 about what the law requires. 6 THE COURT: The law -- I decide the law. 7 The law is not for testimony. The law is in the books. 8 I decide what the law is; that's what I'm charged with 9 doing, decide what the law is. So if you have a legal 10 argument, you can surely make it. You can give me 11 whatever legal argument. You can bring a lawyer and 12 give a legal argument; but you cannot -- there's no 13 testimony taken in any court any time, under any 14 circumstances about the law. The Judge decides the law. 15 So that's just it. 16 The law is not a controversy to be argued 17 about by testimony. The law is a controversy to be 18 decided by briefing and presentation to the Court. 19 That's what the law is. If you want to make a 20 presentation to me about your disagreements with the 21 law, or whatever, you can surely do that. 22 MR. GOLTZ: I have no disagreements with 23 the law, Judge. I have no disagreements with you. I 24 have a problem in not clearly understanding the law, 25 apparently, and that's why I want to question about the 0023 1 law. I figure Mr. Gargotta, or somebody in his office 2 who knows the law that I could ask questions about it, 3 because if I'm obligated to obey the law, I need to know 4 the law. 5 And my understanding is that -- I've read 6 the law, I've listened to everybody. I listened to 7 Mr. Dietz, I've listened to a lot of people, and I've 8 tried to understand. So if I'm obligated to obey the 9 law, I need to know the law. So that's why I want it on 10 the stand. 11 THE COURT: In a courtroom, the way it 12 works is you go hire yourself a lawyer, and the lawyer 13 explains the law to you. If you don't want to hire a 14 lawyer, then you're going to have to take my word for 15 it, because you're not going to have anybody to argue 16 for you. 17 MR. GOLTZ: Well, I've heard that said 18 many times, but I know half the lawyers lose the cases. 19 So if the lawyers know -- if the lawyers know the law, 20 then why do half of them lose the cases? 21 THE COURT: Because they lose it on the 22 facts. Cases involve facts. The law is the law. 23 Lawyers lose cases on facts. At any rate, I'm just 24 trying to be clear with you. I always plead with people 25 just sit down and answer these questions. If you don't 0024 1 want to answer them to these gentleman, you're going to 2 answer them to me; but I will tell you you're going to 3 have to answer the questions. The questions are about 4 facts, not about law. The questions put to you are what 5 are the facts, what is your income, what are your 6 expenses. That's going to be the facts. It's just 7 going to be the facts. 8 MR. GOLTZ: Well, my problem, Judge, is 9 that when someone says what is your income, and I say I 10 have zero income, I'm told I'm wrong. So I would like a 11 definition then from this Court what is income. I've 12 looked at Supreme Court cases, and the Supreme Court is 13 very clear, they say that income is a gain, which is a 14 corporate profit, or something similar to a corporate 15 profit, not wages, not salaries. So if the Court can 16 define for me this key term -- 17 THE COURT: Well, I don't know what law 18 or what case you're looking at. 19 MR. GOLTZ: Bruche (phonetic) is one. 20 THE COURT: Income is clearly wages. I 21 mean there's been no question about that forever. 22 MR. GOLTZ: Could you cite the case that 23 says that? 24 THE COURT: I can easily find the case. 25 Do you understand that wages are taxed? 0025 1 MR. GOLTZ: Income -- I understand that 2 income is taxed. 3 THE COURT: And, you know, that's fine. 4 Come on -- you'll be here at eight o'clock -- 5 MR. GOLTZ: No, I don't want to argue 6 with the Court. 7 THE COURT: You're not going to argue 8 with me. I'm going to listen to your case. I'm going 9 to listen to your testimony. If you say I have no 10 income, I have no wages, I get no money from anywhere at 11 all, nothing; I get no money from any source, I live 12 without -- I live because -- I live at the mercy of 13 other people who feed me and house me and so forth. 14 MR. GOLTZ: Judge, I have to object 15 to that characterization of money, wages, income are 16 three different things, and -- 17 THE COURT: But that's going to be the 18 questions. I mean I will just tell you. 19 MR. GOLTZ: But I don't want them lumped 20 together as one thing. 21 THE COURT: They can ask you separately, 22 but I'm just telling you, you might as well get ready, 23 do you have -- do you get money from any source? 24 MR. GOLTZ: Sure. 25 THE COURT: Okay. 0026 1 MR. GOLTZ: I'll answer it now. 2 THE COURT: That's fine. They'll want to 3 know what sources, how you get the money; we're going to 4 ask all those things. You know, you can answer or not 5 answer. You can do whatever you want to. I'm just 6 telling you that I have never had a problem with the 7 Internal Revenue Service working with people, if they 8 answer their questions. I've never known them -- 9 Mr. Gargotta is in here. He has never had a problem, 10 after we've come in here, he's never had a problem with 11 working with people. He's never had a problem. This 12 may be his first one. If it is, it is. And we'll just 13 take it from there. 14 You have the right to appeal any decision 15 I make. You have the right to appeal it under any 16 circumstance. So I just want you to know that. The 17 Courts above will look and see what they think of my 18 ruling. 19 MR. GOLTZ: But you will permit me to 20 present the law to you? 21 THE COURT: If you have law, you can 22 present it to me, yes. You can present law to me. 23 MR. GOLTZ: Okay. 24 THE COURT: Absolutely. That's the way 25 it's done. You present it. It's not done by testimony, 0027 1 it's done by briefing, by handing it to me, showing this 2 is the law, Judge. I'll take a look at it. 3 Okay. So you're under order to -- and 4 we've got a notice setting the hearing. I'll give one 5 copy to you, one copy to Mr. Gargotta, and we'll go and 6 go through the hearing. 7 I will tell you that I would urge you, 8 even today, to step outside and talk to Mr. Gargotta; 9 but this is not a semantical problem, it's not a 10 semantical problem. It's very clear, and if you believe 11 that 100 plus thousand Americans file income tax every 12 year and they don't know what wages are -- they don't 13 know income is; in fact, wages from their employers are 14 not income, then you've been not involved in paying 15 attention to the way America works for a long time. 16 MR. GOLTZ: I'm well aware, I think, how 17 America works. I've got a couple of years probably on 18 you, and I've paid income taxes for over 40 years. 19 THE COURT: Then I don't -- 20 MR. GOLTZ: Well, the problem is that I 21 just did it because my daddy did it see, and before him, 22 and everybody else did it. But then I started studying. 23 When I got away from what my normal job was, I studied. 24 So I'm imploring the Court to advise me what is income. 25 THE COURT: I will listen to your legal 0028 1 arguments. I'll have to enter a court order, and in 2 that court order I will cite you the law. So I do want 3 you to know that. And you can read it while you're -- 4 you know, if this goes the way it looks like it's going, 5 you can read it while you're in detention. But you 6 know, we have young men on battle fields right now 7 dying. 8 MR. GOLTZ: Yes, sir. 9 THE COURT: For freedom. 10 MR. GOLTZ: I'm concerned about that, 11 too. 12 THE COURT: And I'm concerned about it 13 too. I was in Vietnam. I put one of my best friends in 14 a body bag. You know, the real issues here are not 15 taxes. 16 MR. GOLTZ: No, they're not. 17 THE COURT: The real issues are what's -- 18 you know, where we're going as a nation, and that's 19 where I think the issues we ought to be drawing the 20 lines. But at any rate -- 21 MR. GOLTZ: I'm with you on that. 22 THE COURT: Okay. Well, that's good. 23 But I just -- you know, I just think this often is a 24 tempest in a tea pot; and you look like a nice man, and 25 you know, I just want you to answer these questions and 0029 1 go on about your life. That's all I want you to do. 2 I'm not interested in making your life difficult, or my 3 life difficult. 4 MR. GOLTZ: I appreciate that, and I want 5 to obey the law. And I want everyone that I deal with 6 to obey the law. If they don't obey the law, I don't 7 want to deal with them. I'm sure that you feel the same 8 way. 9 THE COURT: I feel the same way. 10 MR. GOLTZ: So that's all I'm after. 11 THE COURT: Okay. Well, I'm going to 12 leave now. I'm going to tell you that you ought to talk 13 to Mr. Gargotta and Mr. Dietz just for a few minutes to 14 try to see if this thing can just be behind us, and we 15 go from there. We ought to do that. This is not where 16 America's problem is 17 MR. GOLTZ: Amen. 18 THE COURT: This is not where America's 19 problem is. America's problem is in other places, and 20 that's what I worry about. So at any rate, Mr. Gargotta 21 is a good guy, and I think you're probably a good guy; 22 but I don't want you to get into a position where you're 23 misunderstanding the problem here. 24 MR. GOLTZ: That's why I'm here. I 25 want -- well, I want to understand the problem, but I 0030 1 want to understand the law. 2 THE COURT: Okay. 3 MR. GOLTZ: And I want to obey the law. 4 That's what I've done all my life. 5 THE COURT: Well, we're going to have 6 this hearing, we're going to listen -- you're going to 7 get questions. You answer the questions any way you 8 want to, but answering the questions is one thing, the 9 law is another. But in a courtroom, you can't refuse to 10 answer the questions. You can argue that whatever the 11 answers are, you still don't have to do something under 12 the law. You can do that. I just want you to 13 understand you can always say that my answers don't 14 create any liability, don't create any need to do 15 anything, et cetera, et cetera; but you can't say -- or 16 you can say this -- you can always say this: I refuse 17 to answer on the grounds that my answer may incriminate 18 me. That's always -- every American citizen has that 19 right, and then you just have to see what happens after 20 that. 21 MR. GOLTZ: Kind of like a crap shoot, 22 huh? 23 THE COURT: Well, it is. But what you 24 don't want to do is you don't want to force these people 25 into the criminal arena. All I'm saying is this is an 0031 1 administrative civil matter right now, and all these 2 guys are saying give me the answers. I mean, you know, 3 I don't know. What happens almost every time is there's 4 almost no tax liability, or if there is, it's not a 5 matter of great moment to the person who's going to pay 6 the tax. You don't look like somebody who's making a 7 million dollars a year, is my guess, and if you were -- 8 MR. GOLTZ: Not in a lifetime. 9 THE COURT: Yeah. Well, I've been there 10 too. So at any rate, I mean I just don't think that 11 this is where the problems are. But talk to 12 Mr. Gargotta. If you want him to send you over a copy 13 of the statute or regulations, the law comes in many 14 forms. It comes in statutes, it comes in regulations, 15 it comes in bulletins. It comes in many forms. You 16 know, I think the law on this score is not in doubt. 17 So at any rate you talk to Mr. Gargotta, 18 you talk to Mr. Dietz; but you're welcome to be here. 19 Mr. Dietz is out of the picture. He doesn't ask 20 questions or get answers. Mr. Gargotta asks questions, 21 I get answers, and you get to argue the law; okay? 22 MR. GOLTZ: Okay. 23 THE COURT: Okay. Just think about this: 24 You've got these nice people out here, they're all here 25 I'm sure in support of you. Why is this a big deal? I 0032 1 just don't -- 2 MR. GOLTZ: I don't know. That's why I 3 came here to find out. 4 THE COURT: But you're making it a big 5 deal. Don't make this a big deal; okay? Go have a nice 6 life, for God's sake. Okay. Nothing more. 7 (Proceedings concluded.) 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 0033 1 UNITED STATES DISTRICT COURT ) 2 WESTERN DISTRICT OF TEXAS ) 3 I, Randall E. Simpson, Deputy Official Court Reporter, United States District Court, 4 Western District of Texas, do certify that the foregoing is a correct transcript from the 5 record of proceedings in the above-entitled matter. 6 I certify that the transcript fees and format comply with those prescribed by the Court 7 and Judicial Conference of the United States. 8 9 10 6/12/06 11 ___________________________________ 12 Randall E. Simpson Deputy Official Court Reporter 13 Western District of Texas 14 15 16 17 18 19 20 21 22 23 24 25