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U.S. v. REAL E. 2030 E. M.

May 9, 1995


The opinion of the court was delivered by: Richard Mills, District Judge:


Civil Forfeiture.

The claimant says she is an innocent owner.

The facts say she is not an owner at all.

At bench trial, the government sought to forfeit the defendant property as being purchased with the proceeds of drug sales and for being used to facilitate drug transactions. 21 U.S.C. § 881(a)(6) and 881(a)(7). The claimant said she was an innocent owner as defined in §§ 881(a)(6) and (a)(7). The government argued claimant has no standing to challenge the forfeiture or (in the alternative) claimant knew the defendant property was purchased with drug money and used to facilitate drug transactions.

Because the Court finds claimant does not have standing to contest the forfeiture, her innocent owner argument will not be addressed. Accordingly, the following discussion focuses solely on the issue of claimant's standing.


On June 3, 1993, Willis Gragg pled guilty to one count of conspiring to distribute cocaine and one count of attempting to possess cocaine with intent to distribute. On July 13, 1993 the United States filed a verified in rem Complaint against 2030 East Monroe seeking forfeiture of the property pursuant to 21 U.S.C. § 881(a)(6) and 881(a)(7). The Complaint alleged the property had been used to commit or to facilitate the commission of a violation of Title II of the Controlled Substance Act, 21 U.S.C. § 801 et seq., punishable by more than one year of imprisonment and the property represented proceeds traceable to an illegal drug transaction punishable by more than one year of imprisonment.

Also on July 13, 1993, United States Magistrate Judge Charles H. Evans issued an Order finding probable cause for the seizure and forfeiture of 2030 East Monroe. Judge Evans' Order instructed the Clerk's office to issue a Warrant of Arrest in rem for the seizure of 2030 East Monroe. On July 19, 1993, Defendant 2030 East Monroe was seized by the United States Marshal.

Notice of the seizure and Complaint was given to Willis Gragg, Dorothy Gragg (Willis' wife), and Bernice Gragg (Willis' mother). Notice of the seizure was also published in The State Journal-Register, Springfield, Illinois, once a week for three consecutive weeks.

On July 26, 1993, Bernice Gragg and Richard Gragg (Willis' brother) filed verified claims to 2030 East Monroe. On the same day, Bernice and Richard filed answers to the government's verified Complaint.

The case was set for bench trial and discovery ensued. On August 15, 1994, Richard Gragg withdrew his claim to 2030 East Monroe. On September 9, 1994, the bench trial commenced. The parties stipulated there was probable cause to believe 2030 East Monroe was used to facilitate a drug transaction and that the property represented the proceeds of drug transactions.

Bernice Gragg proceeded to attempt to establish herself as an innocent owner pursuant to 21 U.S.C. § 881(a)(6) and 881(a)(7). To support her claim, Bernice called two witnesses, her son, Richard, and herself.

Richard Gragg testified that on October 17, 1988, he entered into a contract for deed with Hattie Horton to purchase three pieces of property, one of which was 2030 East Monroe. The purchase price was $18,000. Richard paid $6,000 down and agreed to make monthly installments of $500. The deed was executed the same day and placed in escrow. Richard took immediate possession of the real estate.

Richard began extensive renovation of the house located at 2030 East Monroe. No improvements were made to the other pieces of real estate. Richard presented receipts indicating he spent approximately $7,500 on materials to improve 2030 East Monroe. Richard completed the remodeling about four to six months after taking possession of 2030 East Monroe. It was Richard's intent to rent the premises after completing his renovations. The premises was never rented, however, and remained vacant until Willis and Dorothy moved into the house in August of 1989.

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 ...

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