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United States v. Two Million Seven Hundred Sixty-Seven Thousand Two Hundred and Two Dollars and Twenty-Seven Cents In U.S. Currency

November 8, 2006

UNITED STATES OF AMERICA, PLAINTIFF,
v.
TWO MILLION SEVEN HUNDRED SIXTY-SEVEN THOUSAND TWO HUNDRED AND TWO DOLLARS AND TWENTY-SEVEN CENTS ($2,767,202.27) IN U.S. CURRENCY RESPONDENT.



The opinion of the court was delivered by: Michael M. Mihm United States District Judge

ORDER

Before the Court is a Motion for Summary Judgment Against the Claim of Burlington Assembly of God [#242] brought by Claimants Success Concepts, Inc. ("Success"), William H. Blackwell, Jr. ("Blackwell"), Robert and Jane Mehberg Family Partnership ("Mehberg"), Arthur F. Mueller, Trustee of the Pauline K. Rucker Trust ("Mueller"), Metropolitan Seven Day Adventist Church and Pastor John Glenn Roberts ("Roberts"), and Robert Allman ("Allman") (hereinafter, the "Six Claimants"). For the reasons set forth below, the Motion is GRANTED.

BACKGROUND

This is a civil forfeiture action in rem pursuant to Title 18 U.S.C. § 981, for the forfeiture of $2,767,202.27, which the Government asserts represents money obtained by Leslie Strong ("Strong") from investors as a result of a fraudulent investment scheme. By previous Order dated December 20, 2005, the Court found that the relevant dates for determining which investments can be traced to the $2,767,202.27 are December 6, 2001, and December 12, 2001, the dates on which a total of $4,500,000.00 was transferred out of the Sigma Trust Fund to the Highlander Global Trust. The Court has also found, at a hearing held on July 19, 2006, that in order to be entitled to a share of the $2.76 million under the Civil Asset Forfeiture Reform Act ("CAFRA"), a claimant must establish not only that it had maintained investments with Strong before the relevant December 2001 dates, but that its investment can be traced to actual seized funds, using the "first in, first out" method of tracing adopted by Illinois law.

DISCUSSION

The Six Claimants have brought this Motion for Summary Judgment against the Claim of Burlington Assembly of God, arguing that the evidence establishes that Burlington's claim cannot survive the first stage of inquiry--that is, that Burlington Assembly of God's investment was not part of the Sigma Trust account on or before December 6 or 12, 2001. Therefore, the Six Claimants argue that the Court should grant Summary Judgment against Burlington's Claim.

A. Standard of Review

Summary judgment should be granted where the pleadings and other admissible evidence show there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). The moving party has the responsibility of informing the court of portions of the record or affidavits that demonstrate the absence of a triable issue. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The moving party may meet its burden of showing that there are no disputed material facts by demonstrating "that there is an absence of evidence to support the non-moving party's case." Id. at 325. Any doubt as to the existence of a genuine issue for trial is resolved against the moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986); Cain v. Lane, 857 F.2d 1139, 1142 (7th Cir. 1988).

If the moving party meets its burden, the non-moving party then has the burden of presenting specific facts to show that there is a genuine issue of material fact. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986). Federal Rule of Civil Procedure 56(e) requires the non-moving party to go beyond the pleadings and produce evidence of a genuine issue for trial. Celotex, 477 U.S. at 324. In other words, the non-moving party "must do more than simply show there is some metaphysical doubt as to the material facts." Matsushita, 475 U.S. at 586. Nevertheless, this Court must "view the record and all inferences drawn from it in the light most favorable to the [non-moving party]." Holland v. Jefferson Nat. Life Ins. Co., 883 F.2d 1307, 1312 (7th Cir. 1989). Summary judgment will be denied where a reasonable jury could return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Hedberg v. Indiana Bell Tel. Co., 47 F.3d 928, 931 (7th Cir. 1995).

B. Burlington Assembly of God's Claim

On September 18, 2000, Burlington Assembly of God invested $1,100,000.00 in the Theta Trust account at Wells Fargo Bank. On September 29, 2000, $1,000,000.00 was transferred out of the Theta Trust account to an unidentified recipient. On October 2, 2000, $100,000.00 was transferred out of the Theta Trust account, leaving a balance of about $2.49 million in the Theta Trust. On October 12, 2000, that $2.49 million was transferred from the Theta Trust to the Epsilon Trust at Washington Mutual Bank. On October 13, that same amount was transferred out of the Epsilon Trust to open the Omicron Trust at Firstar Bank. On October 16 and 26, 2000, about $2.49 million was transferred from the Omicron Trust to the Sigma Trust.

The Six Claimants argue the evidence establishes that the $1,000,000.00 and $100,000.00 transferred out of the Theta Trust account in late September and early October were the $1.1 million of funds invested by Burlington Assembly of God. Because Burlington's funds were transferred out before the Theta Trust balance was transferred to the Epsilon Trust, so argue the Six Claimants, Burlington's funds could never have even made their way to the Sigma Trust, and therefore, its claim should be barred.

To support their theory that it was Burlington's $1.1 million dollar investment that was transferred out of the Theta Trust--$1,000,000.00 on September 29 and $100,000.00 on October 2--the Six Claimants rely chiefly on Exhibits 54 and 55, which the Six Claimants represent in their Motion to be a Wells Fargo Bank computer print-out of the history of the Theta Trust account between September 13, 2000 until October 2, 2000. The history reflects a $1,100,000.00 deposit on September 18, with a handwritten notation "Romero." Romero was one of the Trustees of the Theta Trust. The history reflects a $1,000,000.00 transfer out on September 29, and a $100,000.00 transfer out on October 2. These entries also show a handwritten notation "Romero." While the other deposits and withdrawls have hand-written notations, these three are the only ones with "Romero." The Six Claimants argue that this establishes that the deposit and transfers out are obviously connected and that it was undisputedly Burlington's funds that were transferred out of the Theta Trust on September 29 and October 2. The Six Claimants also rely heavily on Exhibit 56, which the Six Claimants represent in their Motion to be a hand-written "schedule of investors in the Theta Trust as of October 2, 2000, prepared by an employee of Strong." Burlington Assembly of God is not listed on this schedule, which Six Claimants argue is further proof that Burlington's investment was not part of the funds which were transferred from the Theta Trust to the Epsilon Trust, and eventually ended up in the Sigma Trust.

In response to this argument, Burlington Assembly of God argues that the evidence does not undisputedly show that its investment cannot be traced to the Sigma Trust. It states that it never authorized the transfer of any funds on its behalf. It argues that the $1,000,000.00 and $100,000.00 transfers identified on Exhibits 54 and 55 are not necessarily Burlington's ...


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