United States v. Calabrese
| Decision Date | 27 August 2013 |
| Parties | UNITED STATES OF AMERICA, Plaintiff, v. FRANK CALABRESE, SR., Defendant, and DIANE CIMINO CALABRESE, Third Party Citation Respondent. |
| Court | U.S. District Court — Northern District of Illinois |
MEMORANDUM OPINION AND ORDER
The United States of America moves for summary judgment and a turnover order against Diane Cimino Calabrese ("Diane" or "Claimant") and Frank Calabrese, Sr. ("Frank") for $350,000 in proceeds from the sale of 2820 N. 75th Court in Elmwood Park, Illinois (the "Property"), to partially satisfy a judgment order against Frank. For the reasons stated below, the Motion for Summary Judgment is denied.
In January 2009, Frank was sentenced to a term of life imprisonment for his involvement in illegal activities of the Chicago Outfit. He was later ordered to pay restitution to family members of his victims in a judgment amount of $4,422,572.89. To enforce this judgment, the government served a Third-Party Citation to Discover Assets on Diane in March 2010, and examined her in May 2010 to determine whether Frank held any right or interest to real andpersonal property held in her name. Diane was married to Frank from 1986 to 1993, and again from 1995 until at least 2010. Both parties agree that by 2002 Diane held sole title to the Property as the final record transferee in a line of Calabrese family members dating back to 1977. On May 11, 2006 Diane sold the Property for $349,925.66. It is undisputed that Frank was never on the title to the Property and never was a transferor of record.
The government argues that Frank was always the true owner of the Property and that he directed a series of transfers to family members as his "nominees" with the intent to avoid judgment claims against him and to defraud the United States. Alternatively, the government argues that the transfer of the Property to Diane was constructive fraud in that Frank directed the Property to be transferred from Sophie Calabrese, Frank's mother, as his nominee, to Diane for no financial consideration, thereby leaving Frank insolvent and without the value of this asset to satisfy his debts.
Claimant Diane Calabrese asserts that the Property was never owned, possessed, or controlled by Frank. She further claims that the 2002 transfer of the Property to her from Sophie did not constitute fraud because Sophie was a record owner since 1977 and not Frank's nominee. Diane maintains that Sophie's transfer was done with Sophie's input and approval for legitimate purposes of protecting the house from Sophie's children and estate planning. Claimant alleges the government's case is built on unreliable witness statements and unsupported inferences and that the United States has not demonstrated an absence of a genuine issue of material fact and thus is not entitled to judgment as a matter of law.
Summary judgment is appropriate if the moving party can show that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.Fed.R.Civ.P. 56(a); Vision Church v. Vill. of Long Grove, 468 F.3d 975, 988 (7th Cir. 2006). Once the moving party has set forth the basis for summary judgment, the non-moving party must then meet the burden of showing there is a genuine issue for trial. Fed.R.Civ.P. 56(e). They must offer specific facts and not merely deny the pleadings or proffer unsupported allegations. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In considering if factual issues exist, the court construes all facts and reasonable inferences in the light most favorable to the non-moving party. Sornberger v. City of Knoxville, Ill., 434 F.3d 1006, 1012 (7th Cir. 2006). Such facts and inferences will only be accepted, however, if they are backed up by relevant, admissible evidence. Bombard v. Fort Wayne Newspapers, Inc., 92 F.3d 560, 562 (7th Cir. 1996). The court's review probes "whether the evidence presents a sufficient disagreement to require submission to the jury, or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).1
The parties are in agreement that the 2009 criminal restitution judgment against Frank Calabrese created a lien against all of his assets. The government, as judgment creditor, isentitled to enforce collection of this debt under both federal law and Illinois state law as if the debt were a civil judgment or a tax lien. 18 U.S.C. §3613(a)(c). In a discovery examination of the judgment debtor's assets or income, Illinois law also provides for a service of citation to third-party holders of assets or income of the judgment debtor. 735 ILCS 5/2-1402(a). If a third party is found to be holding non-exempt assets or income of the judgment debtor, they can be compelled to deliver them to the judgment creditor to be applied in satisfaction of the debt. 735 ILCS 5/2-1402(c)(3).
To collect the sale proceeds of the Property at issue in this case, the government must show that Frank, and not Diane, held interest in the Property at least at the time of sale. The government proceeds on the theory that the 2002 transfer from Sophie that resulted in Diane obtaining sole title was one in a long line of fraudulent conveyances. The government suggests that the final transfer from Sophie to Diane was either done with the specific intent by Frank to hinder or defraud the United States or, at the very least, Frank directed the transfer from Sophie to Diane for no consideration when he knew or should have known it would render him insolvent as a debtor to the United States. While both parties more or less agree on the legal criteria to classify a conveyance by a debtor as fraudulent as to a creditor, each party comes to different conclusions when applying the criteria to their own set of facts and inferences. However, we need not parse the specific facts of each fraudulent conveyance criteria at the summary judgment phase. Since Frank the debtor was never a transferor of record, the government must first establish that no reasonable jury could conclude that Sophie was not a nominee of Frank.
In terms of direct evidence, the government produces statements from Nick Calabrese (Frank's brother) and Kurt Calabrese (Frank's son) that Frank used Sophie (and others) as a nominee. They also proffer an admission by Frank in a 1997 plea agreement that he hadpreviously titled bank accounts and another piece of property in others' names to shield his ownership. Diane maintains, and the government admits, that Sophie was a titled interest holder in the Property as far back as 1977, predating any indictments of Frank. On the other hand, Diane characterizes Nick and Kurt's statements as cooperation by convicted felons for preferential treatment by the government. She has no real explanation for the 1997 plea admission.
In terms of indirect evidence, the parties are again in agreement that property held by a third party may be levied upon if it is determined that the third party merely holds title as a nominee of the true beneficial owner. Oxford Capital Corp. v. United States, 211 F.3d 280, 284 (5th Cir. 2000). To determine the connection between debtor and property, courts have employed many factors for consideration. Holman v. United States, 505 F.3d 1060, 1065 (10th Cir. 2007) (); Spotts v. United States, 429 F.3d 248, 253 (6th Cir. 2005); Oxford Capital Corp., 211 F.3d at 284. No one factor is dispositive in deciding a nominee inquiry; rather the facts and circumstances of each case should be applied to the factors as a whole.
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