STATE OF WISCONSIN
LABOR AND INDUSTRY REVIEW COMMISSION
P O BOX 8126, MADISON, WI 53708-8126 (608/266-9850)

BRIAN M PLANK, Employer

UNEMPLOYMENT INSURANCE CONTRIBUTION LIABILITY DECISION
Account No. 331748, Hearing No. S0200033EC


An administrative law judge (ALJ) for the Division of Unemployment Insurance of the Department of Workforce Development issued a decision in this matter. A timely petition for review was filed.

The commission has considered the petition and the positions of the parties, and it has reviewed the evidence submitted to the ALJ. Based on its review, the commission agrees with the decision of the ALJ, and it adopts the findings and conclusion in that decision as its own.

DECISION

The decision of the administrative law judge is affirmed. Accordingly, Brian Plank does not owe unemployment contributions in the amount of $3,470.10.

Dated and mailed March 10, 2004
plankbr . ssd : 105 : 1  ER 451

/s/ David B. Falstad, Chairman

/s/ James T. Flynn, Commissioner

/s/ Robert Glaser, Commissioner

MEMORANDUM OPINION

The Department of Workforce Development argues, in its petition for review, that Mr. Plank essentially put his head in the sand and ignored the adverse financial circumstances of the corporation. Had Mr. Plank done so, the commission would agree with the department's position that he is personally liable for delinquent unemployment taxes of the corporation. The record does not support the department's characterization of Mr. Plank's actions, however.

The bookkeeper's embezzlement of hundreds of thousands of dollars from the corporation was facilitated by the computer accounting system put into effect by the previous bookkeeper. It allowed the bookkeeper to make unauthorized payments to herself by printing out checks payable to herself and then returning into the system and changing the designated payee of the checks in the accounting records. Thus, even had Mr. Plank examined the corporation's computer accounting records, he might not have discovered what the bookkeeper was doing.

In addition, Mr. Plank had outside accountants, with whom Mr. Plank met occasionally. They also did not discover what the bookkeeper was doing. Further, the bookkeeper's actions included the interception of any mail that might have led Mr. Plank to discover her actions.

At some point, finally, the bookkeeper (represented by counsel) went so far as to propose to Mr. Plank (also represented by counsel) that she buy into the corporation. Again, no one discovered the bookkeeper's actions during this subset of events.

In a federal case the commission has cited approvingly, the Seventh Circuit has indicated that the individual in question "is liable if he (1) clearly ought to have known that (2) there was a grave risk that withholding taxes were not being paid and if (3) he was in a position to find out for certain very easily." Wright v. United States, 809 F.2d 425, 427 (7th Cir. 1987). Mr. Plank's actions, or lack thereof, do not meet this standard; the commission therefore has affirmed the appeal tribunal's finding of no personal liability.

cc: 
OK Tire & Service, Inc.
Attorney Mart W. Swenson
Director Gregory A. Frigo


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uploaded 2004/03/11