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United States v. Murphy

United States District Court, N.D. Illinois, Eastern Division

May 20, 2015

CHARLES MURPHY, Defendant, and PATRICIA MURPHY and UBS FINANCIAL SERVICES, INC., Third-Party Citation Respondents.


RONALD A. GUZMN, District Judge.

For the reasons stated below, the government's motion for entry of judgment on its petition for relief against Patricia Murphy [788] is granted. The government is directed to submit a proposed order to the Court. The government shall send a copy of the proposed order to Patricia's counsel prior to submitting it to the Court, and shall include with its submission to the Court a statement as to whether the proposed order is agreed as to form and briefly setting forth the substance of any objections.

Charles Murphy was charged with six others in a Fifth Superseding Indictment alleging various combinations of wire and mail fraud, engaging in monetary transactions with property derived through unlawful activity, and theft of public funds. He pleaded not guilty. In December 2011, after a nine-week trial, the jury returned guilty verdicts against Murphy and all but one of his co-defendants. (Stip. Facts, Dkt # 719, ¶ 10.)

On July 11, 2012, the Court entered judgment in favor of the United States and against Murphy ordering him, in part, to pay restitution in the amount of $656, 290.00, which remains unpaid. ( Id. ¶ 11.) This amount represents losses associated with eleven properties, which occurred during the time period of April 2002 to October 2004. At sentencing, Murphy provided financial records indicating that his net worth was $68, 765.00 (PSR, 1. 578.) On September 27, 2012, a citation to discover assets directed to defendant's spouse, Patricia Murphy ("Patricia"), and UBS Financial Services, Inc. ("UBS") issued. On October 11, 2012, the government recorded its notice of lien under 18 U.S.C. 3613(c) against the defendant's property rights and property. (Stip. Facts, Dkt. # 719, ¶ 13.) Unlike an ordinary judgment lien which when recorded simply binds real property, a § 3613 judgment lien extends to both real and personal property. United States v. Swan, 467 F.3d 655, 656 (7th Cir. 2006) (citing 26 U.S.C. §6321; applying tax lien principles to a § 3613 judgment). The judgment lien is entitled to priority vis-a-vis other lien creditors when properly recorded. See 18 U.S.C. § 3613(d).

On November 27, 2012, pursuant to the citation, Patricia appeared for examination and testified that: she and her husband originally established the account at UBS as a joint account in both of their names; the account was established with and maintained by the earnings of Murphy; Murphy took his name off the UBS account in 2005 and at approximately the same time transferred the family residence, which had been titled in both their names since 1977 and was free of any mortgage, into Patricia's name alone; and no consideration was given for either of these transfers. (Stip. Facts, Dkt # 719, ¶¶ 28(b), (e), (f).) As of May 31, 2013, the balance in the UBS account, which at that time was in Patricia's name only, was valued at approximately $773, 000.00. ( Id. ¶ 3.)

On June 3, 2013, the government filed a motion for turnover order directed to UBS, which alleged that pursuant to § 3613(c), upon entry of the judgment against Murphy, a lien arose on all of Murphy's property and rights to property. The government demanded that UBS turn over $656, 665.00 from Patricia's UBS account, the amount owed pursuant to the judgment of July 11, 2012. According to the government, the money in Patricia's account at UBS was the result of a 2005 fraudulent transfer from Murphy to Patricia. Section 3304(b)(1)(A) of the Federal Debt Collection Procedure Act ("FDCPA") provides that "a transfer made... by a debtor is fraudulent as to a debt the United States, whether such debt arises before or after the transfer is made... if the debtor makes the transfer... with actual intent to hinder, delay, or defraud a creditor." 28 U.S.C. § 3304(b)(1)(A). The FDCPA "enables the Government to seek relief from fraudulent transfers and to collect criminal debts owed to the Government." United States v. Schippers, 982 F.Supp.2d 948 (S.D. Iowa 2013).

Under the FDCPA:

(2) In determining actual intent..., consideration may be given, among other factors, to whether-
(A) the transfer or obligation was to an insider;
(B) the debtor retained possession or control of the property transferred after the transfer;
(C) the transfer or obligation was disclosed or concealed;
(D) before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit;
(E) the transfer was of substantially all the ...

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