U.S. v. Ben-Hur

• Decision Date: 30 March 1994
• Docket Number: Nos. 93-2064 and 93-2429,D,BEN-HU,s. 93-2064 and 93-2429
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Shiaefendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 313

20 F.3d 313

UNITED STATES of America, Plaintiff-Appellee, v. Shia BEN-HUR, Defendant-Appellant.

Nos. 93-2064 and 93-2429.

United States Court of Appeals, Seventh Circuit.

Argued Dec. 8, 1993.

Decided March 30, 1994.

Joseph R. Wall, Asst. U.S. Atty. (argued), Milwaukee, WI, for plaintiff-appellee.

David J. Cannon (argued), Michael, Best & Friedrich, Milwaukee, WI, for defendant-appellant.

Before POSNER, Chief Judge, KANNE, Circuit Judge, and REINHARD, District Judge. ^*

REINHARD, District Judge.

The defendant, veterinarian Shia Ben-Hur, pled guilty to one count of distribution of cocaine, in violation of 21 U.S.C. Sec. 841(a)(1). Pursuant to 21 U.S.C. Sec. 853(a)(2), Ben-Hur in a written plea agreement forfeited "any right, title, and interest" he held in certain real property located at 10800 North Port Washington Road, Mequon, Wisconsin and known as the North Shore Animal Hospital ("the property"), which he had used to facilitate the commission of the cocaine distribution. When the government later moved for entry of an order of forfeiture of the property, however, Ben-Hur objected, contending that while he did own the property at the time of the forfeiture proceedings, he had not owned it on the relevant date for purposes of section 853, the date of commission of the offense. The district court found Ben-Hur did own the property on the date of commission of the offense and ordered its forfeiture. It is from this order that Ben-Hur now appeals.

I. BACKGROUND

Ben-Hur and his former wife, Judith Ben-Hur, acquired the property by warranty deed on July 29, 1966, which deed was recorded in the register's office for Ozaukee County, Wisconsin. Judith Ben-Hur later quitclaimed her interest in the property to Ben-Hur on September 18, 1981, which transaction was also recorded.

The next series of related transactions with regard to the property, which occurred on June 28, 1982, is the most significant with respect to the issue in the present case. On that day, Ben-Hur, as vendor, entered into a land contract for the property with David L. Husman, as trustee for an unidentified trust, as vendee. Under the terms of the land contract, the final payment was due July 15, 1987, and Husman could not prepay the unpaid balance before that date without Ben-Hur's permission. Until payment under the contract was complete, Husman was not permitted to transfer, sell, or convey any interest in the premises without Ben-Hur's permission.

On June 28, 1982, Ben-Hur and Husman also entered into an agreement by which Ben-Hur acquired a right of first refusal over the sale property and the right to approve in advance any lien on or encumbrance of the property by Husman. Ben-Hur purchased this right of first refusal on behalf of North Shore Animal Hospital, Inc., a status he claimed on a number of occasions and which was apparently interchangeable with his status as an individual. On that same day, Ben-Hur leased the property back from Husman for a term of seven years, ending July 15, 1989. In addition to rent, Ben-Hur agreed to pay all licenses, utilities, maintenance and repairs, insurance, and taxes with regard to the property. According to the terms of the lease, Ben-Hur acquired the right to assign or sublease any or all of the lease without Husman's permission. On June 28, 1982, Ben-Hur additionally executed a promissory note, agreeing to pay to Husman a particular sum of money. The terms of this note explicitly provided that the land contract was not to be recorded. The land sale contract was not, in fact, recorded.

On December 12, 1982, Ben-Hur, on behalf of North Shore Animal Hospital, Inc., acquired from Husman an option to purchase the property. This option could be executed up to May 31, 1988 through written notice accompanied by a check for $25,000.

Ben-Hur obtained a $150,000 loan from the Grafton State Bank on April 15, 1987, using the property as collateral. Not surprisingly, a title search conducted for Grafton State Bank did not reveal the land contract between Ben-Hur and Husman or that any individual other than Ben-Hur held an interest in the property. The mortgage which Ben-Hur signed states that "[Ben-Hur] warrants title to the property, excepting only restrictions and easements of record, municipal and zoning ordinances, [and] current taxes and assessments not yet due." The majority of the proceeds of this loan went to pay off a prior lien on the property by another bank, although $60,700 went to Ben-Hur.

Ben-Hur obtained a $42,291 loan from the First Wisconsin National Bank of Mequon on April 16, 1987, again using the property as collateral. Under the title warranty provision of the mortgage on the property for this loan, Ben-Hur represented in writing that he was the owner of the property and that the only existing lien or encumbrance upon the property was the preceding Grafton State Bank mortgage.

According to Ben-Hur's version of events, at some unspecified time prior to September 28, 1987, Husman's remaining obligations as vendee under the land contract were satisfied by Ben-Hur and Husman offsetting certain obligations between them. The district court neither relied upon nor gave any weight to this factual assertion.

On February 1, 1988, in a personal financial statement Ben-Hur was required to provide under the terms of the Grafton State Bank loan, he represented that he was the sole owner of the property. On March 29, 1988, in a personal financial statement Ben-Hur was required to provide under the terms of the First Wisconsin National Bank of Mequon loan, he represented that he was sole owner of the property.

On May 27, 1988, Ben-Hur sent Husman a letter purporting to exercise the option to purchase acquired on December 12, 1982. The letter stated that a check for $25,000 was enclosed. It made no mention of whether the option was exercised on behalf of North Shore Animal Hospital, Inc.

Ben-Hur obtained a $50,000 loan from the Tri-City National Bank on June 14, 1988, using the property as collateral. In obtaining the loan, Ben-Hur represented in writing that he was the sole owner of the property. A title search contemporaneous with the loan did not reveal the land contract between Ben-Hur and Husman. The proceeds of the loan were issued to Ben-Hur. In a personal financial statement provided later, as required under the terms of the loan, Ben-Hur represented that on April 28, 1989, he was the owner of the property.

On July 5, 1988, Ben-Hur committed the violation of 21 U.S.C. Sec. 841(a)(1) which would form the basis of his February 20, 1991 guilty plea and of the subsequent forfeiture orders, by selling two ounces of cocaine to an undercover FBI agent. The cocaine sale occurred on the property, inside the animal hospital. A title search done on behalf of the FBI on February 2, 1989 showed Ben-Hur as the owner of the property and did not reveal the existence of the land contract.

During June of 1989, Ben-Hur and Husman engaged in a series of transactions by which they purported to transfer title to the property back to Ben-Hur. On June 1, Ben-Hur signed, as president of North Shore Animal Hospital, Inc., an "assignment and acceptance" purporting to "transfer[ ], set[ ] over and assign[ ] all [of North Shore Animal Hospital, Inc.'s] right title and interest in and to that certain option to purchase agreement dated June 28, 1982" to himself individually. On June 12, Ben-Hur signed a quit-claim deed, conveying the property to "Mequon Associates, an Illinois General Partnership" in satisfaction of the June 28, 1982 land contract. On June 13, Husman signed, as general partner for "Mequon Associates, an Illinois General Partnership" a quitclaim deed conveying the property to "Mequon Associates Liquidating Trust." That same day, Husman signed, as trustee of "Mequon Associates Liquidating Trust," a trustee's deed conveying the property to Ben-Hur. That same day, Husman also signed, using the title "trustee," but not identifying what entity he was trustee for, a warranty deed conveying the property to Ben-Hur.

A federal grand jury indicted Ben-Hur on October 23, 1990 on one count of distributing cocaine in violation of 21 U.S.C. Sec. 841(a)(1), based on the July 5, 1988 sale of two ounces of cocaine. The indictment named the property as subject to forfeiture under 21 U.S.C. Sec. 853(a)(2), under which property of a criminal defendant used to facilitate any of a number of crimes, including a violation of section 841(a)(1), must be forfeited. Ben-Hur pled guilty on February 20, 1991. The plea agreement provided that Ben-Hur would "forfeit any right, title, and interest in the property described in the forfeiture provisions of the indictment, and ... take whatever steps are necessary to pass clear title to the government." When the government moved the district court for entry of an order of forfeiture, however, Ben-Hur filed a response in opposition and requested a hearing in regard to the government's motion. The government concedes that while the forfeiture provision in the plea agreement is operative as to any interest in the property Ben-Hur possessed as of July 5, 1988, it is not operative as to any interest held at the time of the plea agreement which was obtained after July 5, 1988. Ben-Hur's position is that the only forfeitable interest in the property he held on July 5, 1988 was a lease and that his ownership interest in the property was obtained after that date.

The district court held evidentiary hearings on the government's motion for entry of an order of forfeiture and Ben-Hur's response. The issue raised by Ben-Hur's response to the government's motion and focused on at these hearings was whether, on the date of the commission of the offense, July 5, 1988, Ben-Hur owned the property, subjecting it to forfeiture. On April 15, 1993, the district court issued its decision and order, determining that on the relevant date, Ben-Hur held an ownership interest in the property and...