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Judge blocks IRS from role in case

State Supreme Court Justice John A. Michalek on Wednesday refused to allow the Internal Revenue Service to intervene in state court proceedings aimed at closing the financial books and paying workers of the former St. Augustine human resource center.

U.S. District Judge John V. Elfvin two weeks ago quashed an IRS effort to have the matter handled in federal court, when the case was returned to Michalek.

Lisa L. Bellamy, a U.S. Justice Department attorney who made the intervention request Friday, could not be reached to comment Wednesday.

As the result of a state Labor Department suit, Michalek ordered the closing of the debt-plagued center 11 months ago. The nonprofit human services agency for decades served Buffalo's black community.

In court papers, Bellamy contended that the IRS has a $592,325.54 lien on the St. Augustine operations for unpaid federal taxes and penalties.

After Wednesday's court session, Adam W. Perry, the center's state court-appointed receiver, said he is preparing a report for Michalek on paying off center creditors and obtaining back pay for 85 employees who worked months without pay last year while transferring clients to other agencies.

In court papers, Bellamy contended that the IRS has a right to intervene in the case to assist in the final disbursement of the center's funds.

Bellamy says that at least $178,262.82 of the center's assets have been accumulated by Perry for distribution to creditors and former employees.


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