On March 6, 2024, the United States Department of Justice, acting on behalf of the Internal Revenue Service, filed a civil lawsuit in the United States District Court for the District of Vermont alleging that Raymond Knutsen participated in a series of property transfers that prevented the federal government from collecting more than $1 million in unpaid federal tax liabilities.
The lawsuit, United States of America v. Marilynn F. Knutsen, et al. (Case No. 2:24-cv-254), names Raymond Knutsen as one of several defendants alongside Marilynn Knutsen, Ryan T. Fogerty, Pine Pond LLC, Bomoseen Vineyards LLC, and two lending institutions.
What the DOJ Alleged
The government’s complaint does not allege that Raymond Knutsen personally incurred the underlying tax debt. Instead, it alleges that after the IRS began examining Marilynn Knutsen’s tax returns, ownership of two Castleton, Vermont properties was transferred through a series of transactions involving family members and entities controlled by Raymond Knutsen.
According to the complaint, those transfers occurred after the IRS notified Marilynn Knutsen’s representative that significant tax adjustments were forthcoming.
The DOJ alleges the transfers were made without receiving reasonably equivalent value and were intended to place the properties beyond the reach of federal tax collection efforts.
The IRS Audit
The complaint states that Marilynn Knutsen received approximately $518,930 in federal tax refunds during 2009 after filing amended returns and claiming a substantial net operating loss carryback.
In 2011, the IRS opened an audit and ultimately concluded that the claimed loss should be adjusted. The complaint further alleges that more than $1 million in previously unreported retirement account withdrawals also had to be included as taxable income, dramatically reducing the claimed carryback.
By March 2024, the government alleged that the unpaid federal tax liabilities had grown to more than $1.03 million, including penalties and statutory interest.
The Property Transfers
The complaint identifies two Rutland County properties:
- 2240 Route 30 North (the residence property)
- 63/65 Avalon Beach Road (the winery property)
According to the DOJ, ownership of both properties moved repeatedly between Marilynn Knutsen, Raymond Knutsen, Ryan Fogerty, Pine Pond LLC, and Bomoseen Vineyards LLC.
The government alleges these transfers were made for little or no monetary consideration while Marilynn Knutsen was aware that substantial federal tax assessments were pending.
Those allegations had not yet been adjudicated at the time the complaint was filed.
Raymond Knutsen’s Alleged Role
The complaint alleges that Raymond Knutsen later caused one of the transferred properties to be mortgaged through Pine Pond LLC, an entity of which he is identified as the sole member.
The DOJ further alleges that Raymond Knutsen personally benefited from loan proceeds secured by those properties and asks the Court to hold him personally liable to the extent he received those funds.
The government also seeks to unwind the alleged fraudulent transfers, enforce federal tax liens against both properties, and, if necessary, recover the value of those transfers directly from Raymond Knutsen and other alleged transferees.
Why This Matters
This lawsuit is significant because it does not merely seek to collect unpaid taxes.
Instead, the United States alleges that property ownership was intentionally restructured through family members and closely controlled entities after the IRS began examining the taxpayer’s returns.
If proven, those transfers could be set aside by the Court, allowing the federal government to pursue the properties as though the transfers had never occurred.
Public Records
- United States District Court for the District of Vermont
- Case No. 2:24-cv-254
- Complaint filed March 6, 2024
- United States Department of Justice, Tax Division
Editor’s Note: This article summarizes allegations contained in a publicly filed complaint by the United States Department of Justice. A complaint sets forth the government’s allegations and requested relief. Unless and until those allegations are proven or admitted, they remain allegations rather than findings of fact.
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