U.S. v. Reid
| Decision Date | 17 August 2000 |
| Docket Number | No. CV196-053.,CV196-053. |
| Citation | 127 F.Supp.2d 1361 |
| Parties | UNITED STATES of America, Plaintiff, v. Charles A. REID, Jr., a/k/a C.A. Reid, Jr. and Charlie Reid, Jr.; Edwina William Charles, a/k/a Edwina Charles; Marcus Anthony Reid; Katrina N. Reid; Anna P. Reid; Suntrust Bank, Augusta, N.A., as successor to FNB of Augusta; Tax Commissioner of Richmond County; and Richmond County, Defendants. |
| Court | U.S. District Court — Southern District of Georgia |
Brian P. Kaufman, Trial Atty., Maggie O'Shaughnessy, Philip Doyle, U.S. Department of Justice, Washington, DC, for U.S.
Michael C. Garrett, Garrett & Gilliard, PC, Augusta, GA, for Charles Albert Reid, Jr.,
J. Larry Broyles, Law Offices of J. Larry Broyles, P.C., Augusta, GA, for Charles Albert Reid, Jr., Edwina William Charles, Marcus Anthony Reid, Katrina N. Reid, Anna P. Reid, defendants.
James B. Wall and Lee H., Augusta, GA, for State and County Tax Commission, Richmond County.
Before the Court in the captioned matter are claims tried without a jury on February 22-23, 2000. Plaintiff ("the Government") is seeking to foreclose tax liens in place on property transferred by Defendant Charles A. Reid, Jr. ("Reid") and to set aside certain transfers of real property as fraudulent conveyances. The conveyances at issue are transfers from Reid to his mother and children. As required by Federal Rule of Civil Procedure 52(a), the following findings of fact and conclusions of law are entered in narrative form.
In this case, the parties have made energetic presentations, elaborate preparations, and plausible arguments for each side. The relatively brief trial represented the proverbial "tip of the iceberg" compared to the effort that preceded it. Despite the relatively brief term of the trial, the factual aspects of the case are somewhat complex because they involve eight different parcels of real property, each of which is unique and has been put to a different use by the Reid family. Consequently, each parcel must be treated separately, and the Government's claims to set aside fraudulent transfers thereof must be considered separately against the backdrop of the facts of Reid's life during the periods in question.1
The story of this dispute begins with Reid's father, Charles A. Reid, Sr.2 In his world and day, Reid's father was a puissant figure. He was a property owner, a businessman, and something of a power broker. Reid's father was courted politically and was thought by many to have a substantial voice in the "black vote." Charles Reid, Jr. had an elevated degree of familiarity with "nominee" real estate transactions because that is how he acquired most of his holdings. Reid's father's powerful personality enabled him to manipulate family members and to control a number of properties without regard to actual title. Thus, Charles Reid, Jr. was no stranger to the concept of nominee titles and to the practical aspects of de facto ownership. Reid's father died in 1987, several years after most of the disputed events took place.
According to Reid, the saga began over half a century ago. Reid's father married Pauline Stapleton in 1937. They separated in 1942. That same year, Reid's father married Defendant Edwina Charles ("Edwina Charles"). After Reid's father married Edwina Charles, he filed a divorce petition against Pauline Stapleton. A judgment entered on January 23, 1943 authorized this divorce. Reid was born to Edwina Charles and Charles A. Reid, Sr. in 1944.
In 1947, Edwina Charles filed for divorce against Reid's father. Reid's father was ordered to pay alimony to Edwina Charles. This alimony order was approved by the Georgia Supreme Court in a published opinion, Reed v. Reed [sic], 202 Ga. 508, 43 S.E.2d 539 (1947). Edwina Charles moved to New York. Reid continued to live with his father here in Augusta, visiting his mother on occasion. The divorce became final in 1948. Reid claims that his father promised to give his mother some property as part of this divorce. Reid contends that some of the disputed property transfers were intended to satisfy this divorce settlement over thirty years later.
Reid continued to grow up in Augusta. He graduated from Immaculate Conception High School in 1963. In 1966, Reid married his former wife, Defendant Anna P. Reid ("Anna Reid"). (Tr. of Trial on Feb. 22-23, 2000 at 85.) In 1969, they bought some land on Flagler Road in Augusta. (Govt.'s Ex. 156.) Reid initially purchased the entire tract from Pioneers, Inc. and the Georgia Railroad Bank and Trust Company ("Georgia Railroad Bank"). (Id.) Reid then conveyed an undivided one-half interest in the Flagler Road land to his wife. (Govt.'s Ex. 157.) Unlike the other properties, Reid's ownership of the Flagler Road residence seemed to be virtually free from his father's controlling influence. (Tr. of Trial on Feb. 22-23, 2000 at 92.)
Shortly after the purchase of the Flagler Road property, Reid's father deeded him ten acres of land, which were subject to two deeds to secure debt. (Govt.'s Ex. 172.) The current street address of this property is 314 Laney Walker Boulevard.3 These ten acres consist of three individual parcels. Various business have been operated on this land. (Tr. of Trial on Feb. 22-23, 2000 at 182-83.) Reid claims that the income from these properties went to his father. (Id.)
On Christmas Day in 1970, the Internal Revenue Service assessed taxes against Reid's father. In early 1972, Reid acquired two additional parcels of real property. These two parcels comprise a corner lot at the intersection of Sibley Street and Laney Walker Boulevard (formerly Gwinnett Street) in Augusta. (Govt.'s Ex. 190.) At the time, there was a night club on this property. (Tr. of Trial on Feb. 22-23, 2000 at 184.) According to Reid, his father received the income from this night-club although the property was titled in Reid's name. (Id. at 185.) Eight days after its purchase, on February 12, 1972, a tax lien of approximately $111,000 was filed against Reid as a transferee of his father. (See Govt.'s Ex. 225, ¶ 70.)
Two children were born to Charles and Anna Reid. Defendant Marcus Reid ("Marcus Reid") was born on August 3, 1972. (Tr. of Trial on Feb. 22-23, 2000 at 101.) Defendant Katrina Reid ("Katrina Reid") was born six years later on December 8, 1978.
On various occasions, Reid conveyed property to his children. On September 25, 1975, another tax lien was filed against Reid as a transferee of his father.4 Two months later, Reid conveyed his one-half interest in the Flagler Road property to his son, Marcus Reid, reserving a life estate for himself. (Govt.'s Ex. 158.) Further conveyances took place in 1980. The validity of these 1980 conveyances is vigorously disputed.
In 1976, Reid acquired four parcels of land on Laney Walker Boulevard. (Govt.'s Ex. 164.) This purchase may have been arranged by Reid's father. These parcels were used for various business ventures, including a liquor store and a barber shop. (Tr. of Trial on Feb. 22-23, 2000 at 132 182.) One week later, on March 12, 1976, a tax lien was filed against Reid as a transferee of his father.5 Reid then executed a deed to secure debt on the Flagler Road residence in favor of Pilgrim Health and Life Insurance Company ("Pilgrim Life") to secure a debt of $60,000. (Govt.'s Ex. 159.) The purported purpose of this loan was to help Reid's father pay some debts. (Tr. of Trial on Feb. 22-23, 2000 at 99, 133.)
Marital problems emerged around 1978. (Id. at 79.) Reid and his wife separated in 1978 pursuant to a written separation agreement. (Id.; Def. Reid's Ex. 1.) Reid moved out of the Flagler Road residence but lived there intermittently until 1993. (Tr. of Trial on Feb. 22-23, 2000 at 126.) Reid continued to pay the taxes and the mortgage on the Flagler Road residence. (Id. at 81.) His wife paid for the utilities and other upkeep. (Id. at 82.) Reid and his wife Anna finally divorced in 1993. (Id. at 126.)
Two batches of conveyances are primarily in dispute. Both relate to a bank fraud scheme in which Reid became involved. The first batch of conveyances took place on July 17, 1980, after Reid learned that he was under investigation. The second batch took place on May 8, 1981, after Reid pled guilty.
In 1978, around the time of Katrina's birth, Reid became involved in a bank fraud scheme. During this period, Reid was commuting to mortuary school in Atlanta so that he could learn to operate the family's funeral home business. (Id. at 128.) In January 1980, Reid met with some agents of the Federal Bureau of Investigation ("the FBI") and learned that he was under investigation for his participation in the bank fraud. A flurry of conveyances ensued. Reid encumbered part of the ten acre tract on 314 Laney Walker Boulevard with a security deed in favor of First National Bank and Trust Company of Augusta ("First National Bank"), the predecessor in interest to Defendant SunTrust Bank, Augusta, N.A. ("Defendant SunTrust"). (Govt.'s Ex. 173.) Reid then conveyed a substantial portion of his real property to his children on July 17, 1980. (Govt.'s Exs. 160, 165, 174, 192, 198.) Reid also purchased a landlocked parcel behind the Flagler Road residence and transferred it to his mother, Edwina Charles. (Govt.'s Exs. 184, 185.) Reid contends that his father directed him to execute these 1980 conveyances. (Tr. of Trial on Feb. 22-23, 2000 at 141.) These 1980 conveyances to Reid's family comprise the first batch of disputed transfers.
The second batch took place approximately one year later. In 1981, Reid was indicted on numerous criminal charges arising from the bank fraud scheme. (Doc. No. 74, Ex. 9.) Three weeks later, Reid pled guilty to counts one and sixteen. This guilty plea initiated a second spate of conveyances. Reid transferred four parcels of property to his mother, Edwina Charles. (Govt.'s Exs. 175,...
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