US v. Infelise

• Decision Date: 23 August 1996
• Docket Number: No. 90 CR 87.,90 CR 87.
• Citation: 938 F. Supp. 1352
• Parties: UNITED STATES of America v. Rocco Ernest INFELISE and Salvatore DeLaurentis.
• Court: U.S. District Court — Northern District of Illinois

938 F. Supp. 1352

UNITED STATES of America v.Rocco Ernest INFELISE and Salvatore DeLaurentis.

No. 90 CR 87.

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

August 23, 1996.

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Patrick A. Tuite, Arnstein & Lehr, Peter A. Regulski, Anthony J. Onesto, Chicago, IL, for Plaintiff/Petitioner.

David D. Buvinger, Stephen Anderson, Assistant U.S. Attorney, Chicago, IL, for Defendant/Respondent.

MEMORANDUM OPINION AND ORDER

ANN CLAIRE WILLIAMS, District Judge.

Before the court are petitions by defendants and third parties seeking to amend a 1992 criminal forfeiture order entered by the court pursuant to 18 U.S.C. § 1963.In addition, the United States seeks a final forfeiture order and moves for forfeiture of various substitute assets pursuant to 18 U.S.C. § 1963(m).

Background

Salvatore V. DeLaurentis and Rocco E. Infelise were among twenty defendants convicted in 1992 of conspiracy in violation of the Racketeer Influenced Corrupt Organizations Act("RICO"), 18 U.S.C. § 1962.The RICO case was based on predicate acts of murder, extortion, bribery and other offenses committed by the defendants as members of the Ferriola Street Crew, a subdivision of the Chicago Outfit "Mob" organization.Upon conviction, the jury returned a special verdict pursuant to 18 U.S.C. § 1963 ordering forfeiture to the United States of various pieces of real property belonging to DeLaurentis, Infelise, and their families.In addition, the jury ordered DeLaurentis and Infelise to forfeit $3,000,000 in proceeds from their RICO activities, for which they were jointly and severally liable.To satisfy this $3,000,000 judgment, the government subsequently moved for forfeiture of additional property of DeLaurentis and Infelise as substitute assets pursuant to 18 U.S.C. § 1963(m), including houses, jewelry, bank accounts and investment accounts.After receiving notification of the forfeiture order, members of both the DeLaurentis and Infelise families petitioned the court to amend its order, claiming third party interest in much of the forfeited property.¹The parties then engaged in extensive discovery on the forfeiture issues, agreed to a set of Omnibus Factual Stipulations, and assembled a series of Joint Group Exhibits.In order to expedite the court's consideration of the forfeiture issues, the parties agreed to waive a formal evidentiary hearing on the third party petitions, asking the court to rely instead on the stipulations and exhibits, along with affidavits, the trial record and the parties' briefs.

On March 1, 1996, the Seventh Circuit affirmed the convictions of DeLaurentis, Infelise and their co-defendants, but ordered the resentencing of DeLaurentis.United States v. DiDomenico,78 F.3d 294(7th Cir.1996).The court is now prepared to issue a final order of forfeiture.

Analysis

The court will first address property relating to DeLaurentis, and will then address property relating to Infelise.

I.PROPERTY OF SALVATORE DELAURENTIS

Three items pertaining to Salvatore DeLaurentis are at issue.The two principal items are real property in Inverness and Island Lake, Illinois.Because their disposition depends on common principals of trust law, the court will begin by providing the relevant law covering both items, and will then proceed to offer background facts and analysis for each item separately.The third item, a bank account, will be addressed last.

A.Relevant Law

Under 18 U.S.C. § 1963, the government may seek forfeiture of certain property belonging to an individual who violates 18 U.S.C. § 1962.Section 1963(a) describes the three general categories of forfeitable property interests: (1) those "acquired or maintained in violation of Section 1962;"(2) those "affording a source of influence over any enterprise" operated in violation of Section 1962; and (3) those "constituting, or derived from, any proceeds which the person obtained, directly or indirectly, from racketeering activity or unlawful debt collection in violation of Section 1962."

Under the "relation back" doctrine of 18 U.S.C. § 1963(c), the government's interest in a convicted RICOdefendant's property vests at the time of the commission of acts that give rise to the forfeiture.If a defendant transfers the property after the commission of the acts, the government's interest in the property remains paramount unless the transferee can show, by a preponderance of the evidence, either that: (a) his interests and rights in the property were superior to the defendant's at the time of the commission of the acts; or (b)he was a bona fide purchaser for value who was reasonably without cause to believe that the property was subject to forfeiture.18 U.S.C. § 1963(l)(6).

If forfeited property cannot be located or is otherwise unavailable, the government may, pursuant to 18 U.S.C. § 1963(m), seek forfeiture of any other property of the defendant as a substitute asset up to the value of the unavailable forfeited property.

To determine the extent of a defendant's interest in forfeited property, federal courts turn to state property law.United States v. Marx,844 F.2d 1303, 1305(7th Cir.1988), cert. denied,503 U.S. 939, 112 S.Ct. 1480, 117 L.Ed.2d 623(1992).A resolution of the disputes over 411 Lauder Lane and 103 East State Road therefore turns on Illinois trust law.Three types of trusts are relevant here: express trusts, resulting trusts and constructive trusts.

Express Trusts.Under Illinois law, an express trust exists where there is: (1) intent of the parties to create a trust; (2) a definite subject matter or trust property; (3) ascertainable beneficiaries; (4)a trustee; (5) specifications of a trust purpose and how the trust is to be performed; and (6) delivery of the trust property to the trustee.In re Marchiando,142 B.R. 246, 249-50(N.D.Ill.1992), aff'd,13 F.3d. 1111(7th Cir.1994), cert. denied,___ U.S. ___, 114 S.Ct. 2675, 129 L.Ed.2d 810(1994);In re Estate of Zukerman,218 Ill.App.3d 325, 161 Ill.Dec. 121, 124, 578 N.E.2d 248, 251(1991);Estate of Wilkening,109 Ill.App.3d 934, 65 Ill.Dec. 366, 371, 441 N.E.2d 158, 163(1982).If the existence of any one of these elements is uncertain, no trust is created.Wilkening,65 Ill.Dec. at 371, 441 N.E.2d at 163;Marchiando,142 B.R. at 250.To determine whether intent to create an oral express trust existed, Illinois courts look to the conduct of the parties to see if they treated the property as if it were the subject of a trust.Zukerman,161 Ill. Dec. at 125, 578 N.E.2d at 252.In the context of a forfeiture case, where a preexisting trust is asserted to avoid forfeiture of property, the proximity in time between government efforts to prosecute a defendant and the emergence of evidence proving the existence of the trust becomes especially relevant.United States v. 10652 South Laramie,779 F.Supp. 952, 955(N.D.Ill.1991).Scrutiny of such timing is necessary to prevent "sham transfers" of property to third parties by defendants facing forfeiture.Id.

In addition, Illinois' Statute of Frauds requires that express trusts in land be in writing.740 ILCS 80/9(ILL. ANN.STAT. 1993).This writing requirement applies to the transfer of a beneficial interest in an Illinois land trust.IMM Acceptance Corp. v. First Nat. Bank and Trust Co.,148 Ill. App.3d 949, 102 Ill.Dec. 232, 236, 499 N.E.2d 1012, 1016(1986).The written manifestation of the express trust, however, need not be a formal trust agreement, nor need it be executed contemporaneously with the declaration of trust.E.g., Kellogg v. Peddicord,181 Ill. 22, 54 N.E. 623, 626(1899)(later deposition was satisfactory);First Nat. Bank of Ottawa v. Weise,333 Ill.App. 1, 76 N.E.2d 538, 542(1948)(various letters and correspondence sufficed).

The Statute of Frauds is an affirmative defense and use of it to undermine an oral trust agreement is limited to the parties to the purported trust and their privies.Pasquay v. Pasquay,235 Ill. 48, 85 N.E. 316, 320(1908);Whildin v. Kovacs,93 Ill.App.3d 582, 49 Ill.Dec. 46, 47, 417 N.E.2d 736, 737(1981).Strangers to the trust agreement are thus unable to invoke it.Haas v. Cravatta,71 Ill.App.3d 325, 27 Ill.Dec. 414, 416-17, 389 N.E.2d 226, 228-29(1979)(trial court could not raise it sua sponte).In other words, "an oral trust in violation of the Statute of Frauds is voidable at the election of the trustee, but not void" per se.In re German,193 F.Supp. 948, 952(S.D.Ill.1961)(citingKlass v. Hallas,16 Ill.2d 161, 157 N.E.2d 261, 265(1959)).²In addition, the Statute of Frauds cannot be invoked to avoid a trust that has been fully performed.David v. Schiltz,415 Ill. 545, 114 N.E.2d 691, 697(1953);In re Naramore,3 B.R. 709, 714(N.D.N.Y.1980)(applying New York law).But this full performance must be done solely on account of the oral agreement, and not, for example, to carry out a subsequent need to keep property out of the reach of creditors.Murray v. Behrendt,399 Ill. 22, 76 N.E.2d 431, 433(1947);In re Fill,82 B.R. 200, 222-23(Bankr.S.D.N.Y1987).

Regardless of whether the Statute of Frauds applies to an express trust, parol evidence offered to prove the existence of an express trust must be clear, unambiguous and unequivocal: "if the evidence is doubtful or capable of reasonable explanation upon theories other than the existence of a trust, it is not sufficient."Carrillo v. O'Hara,400 Ill. 518, 81 N.E.2d 513, 520(1948);In re Wilkening,65 Ill.Dec. at 371, 441 N.E.2d at 163

Resulting Trusts.If all the requisite elements of an express trust do not exist, two classes of implied trusts can arise outside of the Statute of Frauds by operation of law: resulting trusts and constructive trusts.Murray,76 N.E.2d at 434.A resulting trust arises by law when one party receives title to property, but under circumstances which raise an inference that — despite having failed to express...