US v. Real Estate 2030 E. Monroe, Springfield

Decision Date09 May 1995
Docket NumberNo. 93-3167.,93-3167.
Citation884 F. Supp. 1218
PartiesUNITED STATES of America, Plaintiff, v. ONE PARCEL OF REAL ESTATE COMMONLY KNOWN AS 2030 EAST MONROE STREET, SPRINGFIELD, ILLINOIS, With All Appurtenances and Improvements Thereon, Defendant.
CourtU.S. District Court — Central District of Illinois

Esteban F. Sanchez, Asst. U.S. Atty., Springfield, IL, for plaintiff.

Joseph S. Miller, Springfield, IL, for defendant.


RICHARD MILLS, District Judge:

Civil Forfeiture.

The claimant says she is an innocent owner.

The facts say she is not an owner at all.

At bench trial, the government sought to forfeit the defendant property as being purchased with the proceeds of drug sales and for being used to facilitate drug transactions. 21 U.S.C. §§ 881(a)(6) and 881(a)(7). The claimant said she was an innocent owner as defined in §§ 881(a)(6) and (a)(7). The government argued claimant has no standing to challenge the forfeiture or (in the alternative) claimant knew the defendant property was purchased with drug money and used to facilitate drug transactions.

Because the Court finds claimant does not have standing to contest the forfeiture, her innocent owner argument will not be addressed. Accordingly, the following discussion focuses solely on the issue of claimant's standing.


On June 3, 1993, Willis Gragg pled guilty to one count of conspiring to distribute cocaine and one count of attempting to possess cocaine with intent to distribute. On July 13, 1993 the United States filed a verified in rem Complaint against 2030 East Monroe seeking forfeiture of the property pursuant to 21 U.S.C. §§ 881(a)(6) and 881(a)(7). The Complaint alleged the property had been used to commit or to facilitate the commission of a violation of Title II of the Controlled Substance Act, 21 U.S.C. § 801 et seq., punishable by more than one year of imprisonment and the property represented proceeds traceable to an illegal drug transaction punishable by more than one year of imprisonment.

Also on July 13, 1993, United States Magistrate Judge Charles H. Evans issued an Order finding probable cause for the seizure and forfeiture of 2030 East Monroe. Judge Evans' Order instructed the Clerk's office to issue a Warrant of Arrest in rem for the seizure of 2030 East Monroe. On July 19, 1993, Defendant 2030 East Monroe was seized by the United States Marshal.

Notice of the seizure and Complaint was given to Willis Gragg, Dorothy Gragg (Willis' wife), and Bernice Gragg (Willis' mother). Notice of the seizure was also published in The State Journal-Register, Springfield, Illinois, once a week for three consecutive weeks.

On July 26, 1993, Bernice Gragg and Richard Gragg (Willis' brother) filed verified claims to 2030 East Monroe. On the same day, Bernice and Richard filed answers to the government's verified Complaint.

The case was set for bench trial and discovery ensued. On August 15, 1994, Richard Gragg withdrew his claim to 2030 East Monroe. On September 9, 1994, the bench trial commenced. The parties stipulated there was probable cause to believe 2030 East Monroe was used to facilitate a drug transaction and that the property represented the proceeds of drug transactions.

Bernice Gragg proceeded to attempt to establish herself as an innocent owner pursuant to 21 U.S.C. §§ 881(a)(6) and 881(a)(7). To support her claim, Bernice called two witnesses, her son, Richard, and herself.

Richard Gragg testified that on October 17, 1988, he entered into a contract for deed with Hattie Horton to purchase three pieces of property, one of which was 2030 East Monroe. The purchase price was $18,000. Richard paid $6,000 down and agreed to make monthly installments of $500. The deed was executed the same day and placed in escrow. Richard took immediate possession of the real estate.

Richard began extensive renovation of the house located at 2030 East Monroe. No improvements were made to the other pieces of real estate. Richard presented receipts indicating he spent approximately $7,500 on materials to improve 2030 East Monroe. Richard completed the remodeling about four to six months after taking possession of 2030 East Monroe. It was Richard's intent to rent the premises after completing his renovations. The premises was never rented, however, and remained vacant until Willis and Dorothy moved into the house in August of 1989.

Richard also produced receipts from Hattie Horton showing he made his monthly payments from October 1988 until August 1989. In fact, the receipts indicate that as of August 28, 1989 Richard was six months ahead on his payments with the total balance due on the contract of $4,500. Richard testified that in the spring of 1989 he began to experience financial problems due to his addiction to crack cocaine. According to Richard, he asked his mother to help him with the monthly payments and to purchase materials needed to complete the renovation. On October 19, 1990, Richard quitclaimed his interest in 2030 East Monroe to his mother Bernice. Richard testified he deeded the property to his mother because she had taken over the payments on the contract for deed.

On cross-examination Richard was unable to explain why Hattie Horton was threatening to foreclose on him in the spring of 1989 when according to his records he was at least three months ahead on his payments. Furthermore, Richard had difficulty explaining how he could afford his own mortgage payment, the $500 monthly installment on 2030 East Monroe, and pay for the materials to renovate 2030 East Monroe. Ultimately, Richard claimed his then girlfriend, now wife, gave him money for the renovation.

Bernice Gragg then testified on her own behalf. Bernice testified that in the spring of 1989 her son Richard asked her to help him make payments on real estate purchased from Hattie Horton. Bernice agreed to help Richard and claimed to have made two payments of $1,000 to Hattie Horton to bring Richard up to date on his payments. Bernice stated that she received receipts for these payments; however, they listed Richard as the payee. Bernice testified that she also spent approximately $2,000 on kitchen cabinets, carpeting and a storm door.

Bernice testified that around August of 1989 her son Willis and his family moved from Memphis back to Springfield where Willis was facing criminal charges. Willis and his family stayed with Bernice and her husband for about a month after returning to Springfield then moved into 2030 East Monroe. Willis did not pay Bernice any rent while living at 2030 East Monroe. Willis and Dorothy continued to live at 2030 East Monroe until Willis was arrested on drug charges about a year later.

To rebut Bernice's case, the government called several witnesses. Initially, the government called Ola Mae Briggity. Ms. Briggity is the daughter of Hattie Horton. Ms. Horton died on November 28, 1989 and Ms. Briggity was named executor of Ms. Horton's estate. During Ms. Briggity's inventory of Ms. Horton's estate, she found the contract for deed between Richard Gragg and Ms. Horton, and noted that $4,500 was still owed on the contract. Ms. Briggity hired an attorney, Mr. Theodis Lewis, to assist in the liquidation of Ms. Horton's estate including the contract for deed for 2030 East Monroe.

Mr. Lewis entered into negotiations with Attorney Carol Bellhouse Horstman to have the remaining $4,500 paid. Ms. Horstman represented Willis and Dorothy Gragg. A closing date on the contract for deed was set for September 19, 1990. On that date, Ms. Horstman, Willis and Dorothy Gragg were present in Mr. Lewis' office along with Ms. Briggity. Willis produced $4,500 in cash to pay the balance of the amount due on the contract for deed. Ms. Horstman was to hold the money in escrow pending Ms. Briggity's satisfaction of certain liens against the property. Apparently Ms. Horstman never disbursed the money to Ms. Briggity who reported Ms. Horstman to the Attorney Registration and Disciplinary Commission. Ms. Briggity testified that neither Richard Gragg nor Bernice Gragg participated in these events in any manner.

The government next called the Honorable Theodis Lewis. (Since acting as Ms. Briggity's attorney, Judge Lewis was appointed Associate Circuit Judge for the Seventh Judicial Circuit of Illinois.) Judge Lewis testified substantially to the same events as Ms. Briggity. Judge Lewis stated that during his participation in the negotiations he believed Willis and Dorothy Gragg were the purchasers of 2030 East Monroe. Judge Lewis dealt exclusively with Ms. Horstman who represented Willis and Dorothy Gragg. In connection with Judge Lewis' testimony, the government introduced several pieces of correspondence between Judge Lewis and Ms. Horstman regarding the balance due on the contract for deed. This correspondence includes letters sent between Judge Lewis and Ms. Horstman and also letters from Ms. Horstman to Willis and Dorothy Gragg. The letters highlight the negotiations between the two parties regarding the remaining balance due of $4,500 on 2030 East Monroe.

The government next called Dorothy Gragg. She denied telling Federal Bureau of Investigation agents that during a trip to Minnesota sometime in the summer of 1988 her husband began discussing with Hattie Horton (Dorothy's grandmother) the purchase and sale of certain real property owned by Ms. Horton. Dorothy also denied telling FBI agents she made the original $6,000 downpayment on the real estate purchased from Ms. Horton. Dorothy further denied she had stated Willis hired Carol Bellhouse Horstman to represent him during the purchase of the real estate. Finally, Dorothy denied telling the FBI that she and Willis owned 2030 East Monroe and that Bernice Gragg had no ownership interest in the property.

The government received permission to treat Dorothy Gragg as a hostile witness, and proceeded to impeach her denials with statements she gave to FBI agents. Basically, Dorothy told the FBI everything she...

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