U.S. v. Lane

• Decision Date: 30 January 2002
• Docket Number: No. 00 CR 0657.,00 CR 0657.
• Citation: 194 F.Supp.2d 758
• Parties: UNITED STATES of America v. Vincent LANE, Defendant.
• Court: U.S. District Court — Northern District of Illinois

194 F.Supp.2d 758

UNITED STATES of America v. Vincent LANE, Defendant.

No. 00 CR 0657.

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

January 30, 2002.

COPYRIGHT MATERIAL OMITTED

Robert Warren Kent, Jr., United States Attorney's Office, Chicago, IL, for U.S.

Anton Ronald Valukas, Thomas Shane O'Neill, Jenner & Block, Chicago, IL, for Vincent T. Lane.

OPINION AND ORDER

NORGLE, District Judge.

Before the court are Defendant Vincent Lane's motions for release pending appeal and for extension of the date of surrender. On January 15, 2002, the court issued a minute order denying the motions, and stating that a full opinion would follow giving the court's reasons in accordance with United States v. Swanquist, 125 F.3d 573 (7th Cir.1997). The reasons for the denials are outlined below.

I. BACKGROUND

In a nine count superceding indictment, Lane was charged with one count of violating 18 U.S.C. § 1344 and eight counts of violating 18 U.S.C. § 1014, all of which arose out of statements Lane made in connection with various loans he obtained. Lane's scheme involved several entities and transactions, which the court summarizes below.

At all times relevant, Lane was a one-third owner of a general partnership called LSM Venture Associates ("LSM"), which was involved in multiple real estate dealings. In the early 1980's, LSM was the general partner of several other limited partnerships involving real estate. One such undertaking was an apartment complex in Texas called Casa Bonita Apartments, which was owned by Casa Bonita Apartments, Limited and Casa Bonita Investors, Limited ("Casa Bonita entities"). LSM was the general partner of both Casa Bonita entities. In 1982, the Casa Bonita entities borrowed a large sum of money from National Income Realty Trust ("NIRT"). Lane signed a note on behalf of the Casa Bonita entities, and personally guaranteed the note.

In the mid 1980's LSM was also a general partner in an entity called Continental Commercial Partners ("CCP"). CCP had another general partner, Full Life, Inc., a corporation controlled by the Lake Region Conference Association of Seventh Day Adventists ("Seventh Day Adventists"). LSM and the Seventh Day Adventists each owned 49.5% of CCP. Lane personally owned the remaining 1% of CCP.

During the mid 1980's CCP purchased from Loyola University of Chicago ("Loyola") real estate located at 76th and Racine on the south side of Chicago for the purpose of developing a shopping center known as Continental Plaza. CCP held this property in a land trust at the American National Bank and Trust Company of Chicago ("ANB").

In order to purchase the property from Loyola, CCP obtained financing from several sources, most of which was secured by mortgages on the property and by personal guarantees. The first lien on the property was held by Lloyds Bank International, Limited, whose agent in the United States was Daiwa Bank, Limited (collectively "Daiwa"). The second lien on the property was held by Drovers Bank of Chicago, which became Cole Taylor Bank (hereinafter "Cole Taylor"). Loyola, in turn, guaranteed $1,916,000.00 of the debt to Cole Taylor.

Continental Plaza opened for business in 1988, with a grocery store occupying more than 40% of the center, and acting as the anchor tenant. In order for Continental Plaza to be financially viable, it was necessary that the anchor tenant space be leased.

Also in 1988, the Casa Bonita entities defaulted on the loan from NIRT, and failed to pay the money due on the note. In September 1991, NIRT gave written notice of demand on Lane to cure the default and pay the amount due. Lane did not do so, and on January 24, 1992, NIRT sued Lane in state court in Texas seeking $1,500,000.00 in unpaid principal and $300,000.00 in interest.

In the early part of 1992, CCP was several million dollars in debt on Continental Plaza. CCP owed $3,000,000.00 to Daiwa, and $2,000,000.00 to Cole Taylor. Daiwa filed a suit in 1992 seeking to foreclose on Continental Plaza. A judgment of foreclosure was entered, and a sheriff's sale was ordered. Both Lane and the Seventh Day Adventists stood to be personally liable if the sale of Continental Plaza resulted in a shortfall on the debt owed. Cole Taylor also filed suit in 1992, seeking to enforce the personal guarantees made in connection with the financing of Continental Plaza. Cole Taylor obtained a judgment against Lane personally, and began attempts to collect on that judgment.

In late 1992, the grocery store that was the anchor tenant at Continental Plaza closed, and the anchor space became vacant. At that time, the Daiwa and Cole Taylor lawsuits were still pending against Lane. Around that same time, unbeknownst to Lane, Loyola agreed to pay Cole Taylor $1,700,000.00 on Loyola's guaranty to Cole Taylor. In return, Cole Taylor agreed to return to Loyola 90% of any money that Cole Taylor collected from other sources. As will be seen later, Cole Taylor honored this obligation to Loyola.

In early 1993, Lane proposed a refinancing plan for Continental Plaza that would result in the dismissal of the Daiwa and Cole Taylor lawsuits, and resurrection of Continental Plaza as a viable shopping center. Lane's refinancing plan included the following elements: (1) the Seventh Day Adventists would contribute $2,500,000.00, in return for their release from all liabilities on their personal loan guarantees, and their interest in CCP would be converted to a limited partnership; (2) Daiwa would receive $2,500,000.00 as full payment on the debt CCP owed Daiwa, and dismiss its lawsuit; (3) ANB would issue a new loan for $1,900,000.00, which would be secured by a first mortgage on Continental Plaza, and further secured by an agreement from Loyola to purchase the loan if it went into default; and (4) Cole Taylor would receive $1,600,000.00 as partial payment on CCP's debt to Cole Taylor, take as security a second mortgage subordinate to ANB's lien, and dismiss its lawsuit.

When analyzing Lane's proposed refinancing, ANB determined that a viable anchor tenant was necessary to the success of both Continental Plaza and Lane's refinancing plan. In May 1993, Lane produced to ANB a copy of a lease for the anchor tenant space at Continental Plaza, which was dated May 7, 1993. Lane's proposed tenant was another grocery store called "Your Supermarket, Inc." The signatory for Your Supermarket was Mr. Franklin Searcy, who signed on behalf of Leonard Muhammad, the controlling person of Your Supermarket. Muhammad testified that he is the son-in-law of Minister Louis Farrahkan, the leader of a religious order known as The Nation of Islam. Muhammad further testified that he is employed as the chief of staff for The Nation of Islam. Your Supermarket agreed to lease the anchor space for five years at a rate of $120,000.00 per year, with no provision for a security deposit. The lease indicated that the landlord was ANB as trustee. At the time, ANB had not signed the lease, and the lease was therefore not binding.

In early August 1993, Lane on behalf of CCP, and ANB signed a commitment letter for the $1,900,000.00 refinancing loan. The commitment letter outlined the following conditions that had to be met before ANB would issue the loan: (1) Loyola had to sign the loan purchase agreement; (2) CCP had to tender a fully executed version of the May 7, 1993 lease with Your Supermarket; (3) CCP had to tender an Estoppel Certificate signed by Your Supermarket, certifying that the May 7, 1993 lease was in effect; (4) CCP had to tender financial statements for Your Supermarket, or alternatively, obtain a $240,000.00 security deposit from Your Supermarket; (5) CCP had to sign a Mortgage and a Collateral Assignment of Leases and Rents as further security for the loan; and (6) Lane had to sign a personal guaranty for repayment of the loan.

The principals of Your Supermarket had little experience in grocery operations. Accordingly, in August 1993, Lane arranged for Muhammad to meet with Reverend Wilbur Daniels, who was experienced in real estate development. Reverend Daniels and Muhammad originally explored being partners in the supermarket, but that did not come to pass. Reverend Daniels decided that if Your Supermarket was to proceed, it would have to be owned primarily by him or his representatives. But, eventually Reverend Daniels and his associates discontinued discussions with Lane about opening a supermarket at Continental Plaza. As it turned out, no supermarket ever opened again at Continental Plaza. There is, however, more to be said about the $240,000.00 security deposit.

Beginning in September 1993, Lane made several statements. The Government alleged that on October 21, 1993, Lane fraudulently directed ANB, in its capacity as landlord and trustee, to: (1) execute the May 7, 1993 lease for Your Supermarket to take the anchor space at Continental Plaza; (2) execute a Mortgage on the Continental Plaza property, which Lane signed as the beneficiary on October 29, 1993; and (3) execute a Collateral Assignment of Leases and Rents, which Lane signed as the beneficiary on October 29, 1993, all for the purpose of securing the $1,900,000.00 refinancing loan.

On November 1, 1993, Lane's refinancing deal on Continental Plaza took place. The Government alleged that on that date Lane took several more fraudulent actions, many of which surround the lease for the anchor space. According to the Government, on November 1st, Lane directed ANB to execute an amendment to the May 7th lease. The amendment changed the identity of the anchor tenant from Your Supermarket to an entity called "Shoppers Lane Supermarket, Inc." The amendment also stated that Shoppers Lane adopted, ratified and confirmed the lease as if it had been entered into by Shoppers Lane, and that the amended lease was in full force and effect. In the amendment, Muhammad confirmed Searcy's authority to sign on Muhammad's behalf. Under the amended lease, the obligation to pay...