Richard also produced receipts from Hattie Horton showing he
made his monthly payments from October 1988 until August 1989.
In fact, the receipts indicate that as of August 28, 1989
Richard was six months ahead on his payments with the total
balance due on the contract of $4,500. Richard testified that
in the spring of 1989 he began to experience financial
problems due to his addiction to crack cocaine. According to
Richard, he asked his mother to help him with the monthly
payments and to purchase materials needed to complete the
renovation. On October 19, 1990, Richard quitclaimed his
interest in 2030 East Monroe to his mother Bernice. Richard
testified he deeded the property to his mother because she had
taken over the payments on the contract for deed.
On cross-examination Richard was unable to explain why
Hattie Horton was threatening to foreclose on him in the
spring of 1989 when according to his records he was at least
three months ahead on his payments. Furthermore, Richard had
difficulty explaining how he could afford his own mortgage
payment, the $500 monthly installment on 2030 East Monroe, and
pay for the materials to renovate 2030 East Monroe.
Ultimately, Richard claimed his then girlfriend, now wife,
gave him money for the renovation.
Bernice Gragg then testified on her own behalf. Bernice
testified that in the spring of 1989 her son Richard asked her
to help him make payments on real estate purchased from Hattie
Horton. Bernice agreed to help Richard and claimed to have made
two payments of $1,000 to Hattie Horton to bring Richard up to
date on his payments. Bernice stated that she received receipts
for these payments; however, they listed Richard as the payee.
Bernice testified that she also spent approximately $2,000 on
kitchen cabinets, carpeting and a storm door.
Bernice testified that around August of 1989 her son Willis
and his family moved from Memphis back to Springfield where
Willis was facing criminal charges. Willis and his family
stayed with Bernice and her husband for about a month after
returning to Springfield then moved into 2030 East Monroe.
Willis did not pay Bernice any rent while living at 2030 East
Monroe. Willis and Dorothy continued to live at 2030 East
Monroe until Willis was arrested on drug charges about a year
To rebut Bernice's case, the government called several
witnesses. Initially, the government called Ola Mae Briggity.
Ms. Briggity is the daughter of Hattie Horton. Ms. Horton died
on November 28, 1989 and Ms. Briggity was named executor of Ms.
Horton's estate. During Ms. Briggity's inventory of Ms.
Horton's estate, she found the contract for deed between
Richard Gragg and Ms. Horton, and noted that $4,500 was still
owed on the contract. Ms. Briggity hired an attorney, Mr.
Theodis Lewis, to assist in the liquidation of Ms. Horton's
estate including the contract for deed for 2030 East Monroe.
Mr. Lewis entered into negotiations with Attorney Carol
Bellhouse Horstman to have the remaining $4,500 paid. Ms.
Horstman represented Willis and Dorothy Gragg. A closing date
on the contract for deed was set for September 19, 1990. On
that date, Ms. Horstman, Willis and Dorothy Gragg were present
in Mr. Lewis' office along with Ms. Briggity. Willis produced
$4,500 in cash to pay the balance of the amount due on the
contract for deed. Ms. Horstman was to hold the money in
escrow pending Ms. Briggity's satisfaction of certain liens
against the property. Apparently Ms. Horstman never disbursed
the money to Ms. Briggity who reported Ms. Horstman to the
Attorney Registration and Disciplinary Commission. Ms.
Briggity testified that neither Richard Gragg nor Bernice
Gragg participated in these events in any manner.
The government next called the Honorable Theodis Lewis.
(Since acting as Ms. Briggity's attorney, Judge Lewis was
appointed Associate Circuit Judge for the Seventh Judicial
Circuit of Illinois.) Judge Lewis testified substantially to
the same events as Ms. Briggity. Judge Lewis stated that during
his participation in the negotiations he believed Willis and
Dorothy Gragg were the purchasers of 2030 East Monroe. Judge
Lewis dealt exclusively with Ms. Horstman who represented
Willis and Dorothy Gragg. In connection with Judge Lewis'
testimony, the government introduced several pieces of
correspondence between Judge Lewis and Ms. Horstman regarding
the balance due on the contract for deed. This correspondence
includes letters sent between Judge Lewis and Ms. Horstman and
also letters from Ms. Horstman to Willis and Dorothy Gragg.
The letters highlight the negotiations between the two parties
regarding the remaining balance due of $4,500 on 2030 East
The government next called Dorothy Gragg. She denied telling
Federal Bureau of Investigation agents that during a trip to
Minnesota sometime in the summer of 1988 her husband began
discussing with Hattie Horton (Dorothy's grandmother) the
purchase and sale of certain real property owned by Ms. Horton.
Dorothy also denied telling FBI agents she made the original
$6,000 downpayment on the real estate purchased from Ms.
Horton. Dorothy further denied she had stated Willis hired
Carol Bellhouse Horstman to represent him during the purchase
of the real estate. Finally, Dorothy denied telling the FBI
that she and Willis owned 2030 East Monroe and that Bernice
Gragg had no ownership interest in the property.
The government received permission to treat Dorothy Gragg as
a hostile witness, and proceeded to impeach her denials with
statements she gave to FBI agents. Basically, Dorothy told the
FBI everything she denied on the witness stand, i.e. Willis
discussed buying the property from Ms. Horton in the summer of
1988 during a trip to Minnesota, Dorothy paid the $6,000
downpayment, Willis hired Attorney Horstman to assist in the
purchase, and Bernice had no ownership rights in 2030 East
The government also confronted Dorothy with a petition for
dissolution of marriage and an amended petition for
dissolution of marriage filed in the Circuit Court of the
Seventh Judicial Circuit, Sangamon County, on August 17, 1989
and April 9, 1990 respectively. In the initial petition,
Dorothy stated that she and Willis were purchasing 2030 East
Monroe from her grandmother on a contract for deed and asked
the Court to award that property to her. In the amended
petition, Dorothy again stated she and Willis were purchasing
2030 East Monroe from her grandmother on a contract for deed;
however, she asked the Court to award the property to Willis.
These petitions were made under oath.
The government next called Ronald Williams. Williams pled
guilty to conspiracy to distribute cocaine and agreed to
cooperate with the government. Williams testified that he met
Willis in late November 1991. Williams owned a construction
business and Willis, who had just gotten out of jail, needed
work. Williams hired Willis although as it turns out Willis
never did any work. According to Williams, Willis did not
actually want a job; he simply wanted an employer to issue him
false paychecks to make it look like he had legitimate income.
Williams agreed to carry Willis on his books as a phantom
Williams further testified that in December 1991 Willis
approached Williams about building a garage with an upstairs
apartment at 2030 East Monroe. Williams and Willis met to
discuss the garage. Williams agreed to build the garage and
asked for a $3,000 downpayment. According to Williams, Willis
made a phone call and a short while later Bernice Gragg came
to Williams' office with a velvet bag containing $7,000 which
Willis put towards the garage as a downpayment. Willis
requested the construction contract be made out to his mother.
Williams followed the request and Willis returned the contract
to Williams with Bernice Gragg's signature. Bernice testified
she had never seen the contract before and that her signature
was in Willis' handwriting.
The footings for the garage were poured; however, that is as
far as the construction went. Bad weather slowed progress on
the garage and Willis' and Williams' subsequent arrests put a
permanent hold on the project.
There are two types of standing in a civil forfeiture
action, statutory standing and Article III standing.
United States v. U.S. Currency, the Amount of $103,387.27,
863 F.2d 555, 560 n. 10 (7th Cir. 1988).
To contest a forfeiture, a claimant first must
demonstrate a sufficient interest in the property
to give him Article III standing,
otherwise there is no `case or controversy.'
United States v. $38,000.00 in United States
Currency, 816 F.2d 1538, 1543 (11th Cir. 1987).
With respect to statutory standing, once the
procedural rules of Rule C(6) are met, a claimant
has standing to defend the forfeiture.
"A claimant in a forfeiture case has Article III standing if
`he has a legally cognizable interest in the property that
will be injured if the property is forfeited to the
government. It is this claim of injury that confers upon the
claimant the requisite "case or controversy" standing to
contest the forfeiture.'" United States v. 105,800 Shares of
Common Stock, 830 F. Supp. 1101, 1115 (N.D.Ill. 1993) (quoting
United States v. $38,000.00 in U.S. Currency, 816 F.2d 1538,
1543-44 n. 12 (11th Cir. 1987)). "Courts generally do not deny
standing to a claimant who is either the colorable owner of the
res or who has any colorable possessory interest in it." United
States v. Accounts Nos. 3034504504 and 14407143, 971 F.2d 974,
985 (3rd Cir. 1992), cert. denied sub nom. Friko Corp. v.
United States, ___ U.S. ___, 113 S.Ct. 1580, 123 L.Ed.2d 148
(1993) (citations omitted).
There is, of course, an exception to this general rule. "The
courts have uniformly rejected standing claims put forward by
. . . nominal or straw owners. Thus, even possession of legal
title to the res may be insufficient to establish standing to
contest the forfeiture." 1 David B. Smith, Defense and
Prosecution of Forfeiture Cases, ¶ 9.04 at 9-62.8 (1994). Every
Circuit which has addressed the issue has held that a claimant
who has bare legal title to the res without having the
authority to exercise dominion or control over the res does not
have Article III standing to challenge the forfeiture of the
res. Accounts Nos. 3034504504 and 14407143, 971 F.2d at 985;
United States v. Liscum Dr., Dayton, Montgomery County,
866 F.2d 213, 217 (6th Cir. 1988); United States v. One 1945
Douglas C-54 (DC-4) Aircraft, 604 F.2d 27, 28 (8th Cir. 1979),
cert. denied, 454 U.S. 1143, 102 S.Ct. 1002, 71 L.Ed.2d 294
(1982); United States v. Vacant Land, 15 F.3d 128, 130 (9th
Cir. 1993); United States v. A Single Family Residence,
803 F.2d 625, 630 (11th Cir. 1986). United States v. Certain Real
Property Located at River Rd., 839 F. Supp. 1, 2 (D.Me. 1993)
aff'd 23 F.3d 395 (1st Cir. 1994). Furthermore, several
district courts in the circuits which have not yet addressed
the issue have followed the First, Third, Sixth, Eighth, Ninth
and Eleventh Circuits' reasoning. United States v. Ground Known
as 2511 E. Fairmount Ave., 737 F. Supp. 878, 882 (D.Md. 1990);
United States v. Premises and Real Property With Buildings,
Appurtenances and Improvements at 500 Delaware Street,
Tonawanda, New York, 868 F. Supp. 513, 518 (W.D.N.Y. 1994);
United States v. 105,800 Shares of Common Stock, 830 F. Supp. 1101,
1115-16 (N.D.Ill. 1993).
Judge Scott from the Southern District of Florida succinctly
stated the rationale behind the exception.
The rationale for the rule that bare legal title
may be insufficient is based on a candid
determination that things are often not what they
appear to be, especially in the world of drug
trafficking any [sic] other illegal operations.
In brief, people engaged in illegal activities
often attempt to disguise their interests in
property by placing title in someone else's name.
The criminal's need to hide his ownership of
property is especially acute when the property
itself is used in the illegal activity, such as
when a high-speed boat is used to ferry
United States v. One 1977 36 Foot Cigarette Ocean Racer,
624 F. Supp. 290, 294-95 (S.D.Fla. 1985). The government has the
initial burden to establish a prima facie case that a claimant
is merely a nominal owner. Once the government makes its
showing, the burden shifts to the claimant to show he has