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United States of America v. Robert Walston

August 31, 2011

UNITED STATES OF AMERICA, PLAINTIFF,
v.
ROBERT WALSTON,
DEFENDANT, LORENA WALSTON, INDIVIDUALLY AND IN HER CAPACITY AS AN OFFICER AND SOLE SHAREHOLDER OF LNW FINANCIAL, INC., A DISSOLVED ILLINOIS CORPORATION, THIRD PARTY CITATION RESPONDENT.



The opinion of the court was delivered by: Charles P. Kocoras, District Judge:

MEMORANDUM OPINION

This case comes before the Court on several motions of the United States of America (the "United States"). The United States filed a petition for relief against Third Party Citation Respondent Lorena Walston ("Lorena"), individually and in her capacity as an officer and sole shareholder of LNW Financial, Inc. ("LNW Financial"), a dissolved Illinois corporation, pursuant to Federal Rule of Civil Procedure 69 and Illinois Code of Civil Procedure Section 2-1402. The United States also filed a motion for summary judgment pursuant to Federal Rule of Civil Procedure 56. For the reasons stated below, the United States' motions are granted.

BACKGROUND*fn1

This case arises from a conspiracy to conduct an illegal union election. From around August 2004 to around May 2005, Robert Walston ("Robert") and others conspired to conduct an illegal union election of Local 743 of the International Brotherhood of Teamsters (the "Union") by stealing election ballots and casting fraudulent votes. The illegal conduct ensured the re-election of the incumbent officers, including Robert, which guaranteed them salaries, benefits, and expenses from January 1, 2005, to December 31, 2007. As a benefit of his employment with the Union, Robert had a pension fund with the Employees Pension Plan of Local 743 IBT ("IBT Pension").

Before the relevant conduct in this case, in 2003, Robert had purchased and received fee simple title as an unmarried man to a single family residence in Chicago, Illinois (the "Residence"). After the relevant criminal conduct in this case, in early 2007, Lorena moved from Mexico into the Residence and married Robert. From the time Lorena moved to the United States in 2007 until Robert was sentenced in 2009, Lorena was unemployed and had no property, assets, or resources of her own. In May 2007, Robert individually took out a mortgage on the Residence in the amount of $85,000, made payable to Rogelio Llamedo, an individual.

In September 2007, an original indictment was publicly filed against Richard Lopez, Cassandra Mosley, Mark Jones, and David Rodriguez. The indictment alleged that these individuals, who were employed by the Union, knowingly conspired with each other and with others to defraud the Union and its members. Robert knew of a civil investigation by the United States Department of Labor, Office of Labor Management Standards, as early as February 2005. On or about September 1, 2007, and around the time of the public indictment, Robert withdrew the full amount of $951,366.16 from his IBT Pension.

In March 2008, a superseding indictment charged Robert with conspiring with those named in the original indictment. On March 23, 2009, pursuant to a written plea agreement with the United States, Robert entered a plea of guilty to conspiracy to commit mail fraud and to embezzle/steal property from a labor organization in violation of 18 U.S.C. § 371, and theft from a labor organization in violation of 29 U.S.C. § 501(c). In the plea agreement, Robert acknowledged that he would be obliged to pay restitution, although he disagreed with the amount of $2.2 million, as calculated by the United States.

After Robert received his lump sum IBT Pension distribution, he used part of the funds to remodel the Residence. Then, in June 2008, three months after Robert was indicted, Robert used some of the funds to pay off two mortgages on the Residence, one for $85,000 and another for $200,000. From 2003 until after Robert pleaded guilty in 2009, title to the Residence and any promissory notes secured by mortgage liens on the Residence were held solely in Robert's name. On or about March 30, 2009, just seven days after pleading guilty in this case and years after Robert married Lorena, Robert transferred his interest in the Residence to himself and Lorena as a tenant by the entirety via a quit claim deed. At the time of the transfer, the Residence was unencumbered and had a value in excess of $200,000. Robert continued to reside at the Residence until his incarceration in February 2010.

In May 2009, within two months of pleading guilty, Robert deposited $150,000 of the IBT Pension funds into an account held by LNW Financial, a now-dissolved corporation that Robert set up to hold the transferred funds. Lorena is the sole officer and shareholder of LNW Financial. As of June 30, 2011, the account had a balance of $229,759.11, subject to market fluctuation.

No value or consideration accompanied either the March 2009 transfer of the Residence or the May 2009 transfer of the IBT Pension funds to LNW Financial. The transfers rendered Robert insolvent. At the time of the transfers, Robert had some cash and other assets of no more than $112,635. Based on his plea agreement, Robert knew or should have known at the time of the transfers that he faced forfeiture and restitution claims in excess of $2.2 million. After the transfers, Robert had only a half interest in the Residence, monthly pensions in the amount of $2,531.34, and monthly distributions from the Social Security Administration in the amount of $1,881.

On September 3, 2009, this Court sentenced Robert to 57 months in prison and ordered Robert to pay restitution in the amount of $900,936 to the Union. On October 22, 2009, the United States recorded a notice of lien to reflect the statutory lien that arose upon all of Robert's property and rights in property pursuant to 18 U.S.C. § 3613. As of July 19, 2011, Robert owes $889,623.55 in restitution.

The United States filed a petition for relief against Lorena and an unopposed motion for summary judgment seeking avoidance of Robert's fraudulent transfers and a money judgment against Lorena.

LEGAL STANDARDS

I. Summary ...


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