IRS eyes foreclosure on Old Snowmass property in alleged fraudulent land deal
October 28, 2015
A Pitkin County resident stands accused of transferring ownership of his property to a limited liability corporation to avoid having the Internal Revenue Service foreclose on the land because he owes nearly $400,000 in federal taxes.
But the IRS has found Martin Draper to be so elusive that it filed a court petition Monday asking that the case proceed without him being served with the complaint.
The IRS took legal steps in the U.S. District Court of Denver against Draper in late July. Its civil suit claimed Draper created 562 Gateway Road LLC and sold his undeveloped property with the same address to the LLC. Draper founded the LLC in 2008 and deeded his property to it for $10 in May 2009, public records show.
The IRS contends the LLC is liable for Draper's $392,590. That's the amount he owes in personal income taxes, interest and penalties from 2002 to 2008, the IRS claims. The IRS also has filed multiple federal tax liens on the property, most recently in March.
Draper and his attorney, Richard Neiley, did not return phone messages seeking comment for this story.
Public records show Neiley set up the LLC on Draper's behalf.
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Neiley also filed a formal response to the IRS' complaint for 562 Gateway LLC, but no response has been filed for Draper.
"562 Gateway Road LLC was established for legitimate business purposes and was not a nominee or fraudulent transferee of Martin W. Draper," Neiley's response says.
The case has been stagnant, however, because Draper has yet to be served with the lawsuit despite efforts by the federal government.
"To date, the United States has been unable to complete service on Mr. Draper despite enlisting the aid of two process servers and sending Mr. Draper a copy of the complaint and a waiver of service form in the mail," wrote E. Carmen Ramirez in a Sept. 23 filing.
And on Monday, Ramirez petitioned the court to allow the suit to proceed without Draper being served with the complaint. Ramirez, who declined comment, wrote in the filing that the Pitkin County Sheriff's Office tried unsuccessfully to serve Draper on eight occasions. Ramirez also wrote that she talked to Draper on the telephone Thursday, and he refused to accept service of the complaint.
Ramirez's petition asks the court to allow Neiley to accept service on Draper's behalf.
Pitkin County also is a defendant in the suit because it has a lien on the property for unpaid county taxes, said Lara Maker, assistant county attorney. The county responded to the suit in August claiming that its lien has "super priority and is senior to federal tax liens" on the property.
The county's lien is for $67,014 and includes $15,918 in interest. The lien is against 562 Gateway Road LLC.
The IRS, meanwhile, is asking that the court allow the federal government to foreclose on the property, with proceeds from the sale distributed to the lien holders.
The property, located in the Gateway of Snowmass Mesa in Old Snowmass, covers 1.1 acres of land. The county Assessor's Office gave it an actual value of $300,900 in 2015. Draper bought it for $90,000 in December 2005 before conveying it to the LLC he established, according to property records.