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United States v. Tracts 31A

United States Court of Appeals, Fifth Circuit

March 9, 2017

UNITED STATES OF AMERICA, Plaintiff - Appellee
v.
TRACTS 31A, LOTS 31 AND 32, Lafitte's Landing Phase Two Port Arthur, Jefferson County Texas, including all buildings, appurtenances, and improvements thereon Defendant STACY WALKER, Claimant - Appellant

         Appeal from the United States District Court for the Eastern District of Texas

          Before STEWART, Chief Judge, and KING and DENNIS, Circuit Judges.

          PER CURIAM.

         The husband of Claimant-Appellant Stacy Walker agreed to forfeit two annuities held solely in his name as a part of a plea agreement with Plaintiff- Appellee, the United States of America. Stacy contends that the district court erred in effectively ordering the forfeiture of her one-half community interest in those annuities. Because the Government was entitled to rely on the legal presumption that her husband was authorized to forfeit the annuities as a part of his plea agreement, we AFFIRM.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         On May 4, 2011, a federal grand jury indicted Calvin Walker, the husband of Claimant-Appellant Stacy Walker, for various types of fraud and money laundering. The indictment generally alleged that Calvin defrauded the Beaumont Independent School District of more than $3.7 million by submitting false or inflated invoices for electrical supplies and materials. The indictment contained a notice of the Government's intention to seek forfeiture of, among other things, two Transamerica Preferred Choice Fixed Annuity Contracts purchased for a total of $3.4 million. The indictment alleged the two annuities represented proceeds from the charged fraud offenses and, therefore, were subject to forfeiture pursuant to 18 U.S.C. §§ 981(a)(1)(C) and 982(a)(4), and 28 U.S.C. § 2461(c). The two annuity contracts listed Calvin as the sole owner and Stacy as the primary beneficiary. On December 12, 2011, Calvin's criminal trial ended in a mistrial after the jury was unable to reach a unanimous decision.

         On April 10, 2012, the Government filed a civil forfeiture complaint in rem, initiating the present forfeiture proceeding. The complaint alleged, in pertinent part, that the two annuities were subject to forfeiture because they were "property involved in a transaction or attempted transaction in violation of 18 U.S.C. §§ 666, 1343 or is property traceable to such violation."[1] On June 7, 2012, Calvin and Stacy Walker filed their own verified claim. The claim asserted that "Calvin Walker and Stacy Walker are the true owners of the . . . two Transamerica Annuities made the subject of the government's Complaint for Forfeiture, " and alleged that the Government's complaint was "a belated attempt to bring pressure on Calvin Walker to enter a guilty plea to the false charges he has fought vigorously." The Walkers subsequently filed an answer and counterclaim to the Government's complaint, in which they denied that the annuities were subject to forfeiture[2] and "demand[ed] the return of the subject community property" after hearing and trial.

         On July 13, 2012, the Government filed an information in the criminal proceeding, charging Calvin with one misdemeanor count of willful failure to pay income tax in violation of 26 U.S.C. § 7203. Calvin pleaded guilty, with the benefit of a plea agreement, to the charge on July 17, 2012. As relevant to this appeal, the plea agreement contained a restitution provision, stating that restitution "shall consist solely of taxes, penalties, and interest, " and that "[t]he payment of any tax liability will be accomplished by . . . payment directly to the Internal Revenue Service from the proceeds of the liquidation of any annuity currently held under seizure warrant in this matter." The plea agreement also contained a forfeiture provision, stating, in pertinent part:

The defendant agrees to enter into an agreed order of forfeiture in [the civil forfeiture proceeding] and agrees to forfeit to the United States voluntarily and immediately all of the defendant's right, title and interest to the property which is subject to forfeiture under the agreed order pursuant to 18 U.S.C. § 981. The property subject to [the] agreed order of forfeiture are the liquidated value of two annuities . . . less $200, 000 to be returned to the defendant and the amount of any fine imposed by the court. . . . The defendant agrees not to file a claim, and agrees to withdraw any filed claim, to the [annuities] in any civil proceeding, administrative or judicial, which may or has been initiated.

         On November 12, 2013, the Government moved for entry of judgment in the civil forfeiture proceeding, asserting that the plea agreement resolved all of the issues in the proceeding except one-whether interest that accumulated on the two annuities after entry of the plea agreement was subject to forfeiture-and requesting that the district court resolve this dispute.[3] The Walkers filed an objection to the Government's motion, arguing that its proposed judgment allocated a greater amount of funds to the IRS than had been agreed because the IRS was impermissibly calculating interest and penalties assuming a finding of fraudulent conduct.

         On April 3, 2014 (more than 20 months after the execution of Calvin's plea agreement), the Walkers' counsel moved to stay entry of judgment in the civil forfeiture proceeding to address a conflict of interest in their joint representation. Counsel stated that, although Calvin had agreed to forfeit his interest in the two annuities and "abide[d] by that agreement, " Stacy "was not a party to the plea agreement" and "would not consent to an entry of judgment in this case that would divest her of her [community] interest in the annuities." Counsel asserted that Stacy informed him of her lack of consent on April 2, 2014, at which point he told her that he could not continue to represent her in this matter.

         On April 18, Stacy's new counsel filed a response and objection to the Government's motion for entry of judgment. In pertinent part, Stacy asserted that the two annuities were community property and, as such, she was the owner of one-half of them. She further asserted:

While claimant Calvin Walker, as a part of his plea agreement, waived notice of any forfeiture proceeding and expressly agreed to forfeit "the defendant's (his) interest" in the two annuities, claimant Stacy Walker has not waived anything, and has never agreed with the government to deal with her interest in the two annuities. As such, Stacy Walker's interest in the two annuities has never been litigated in this proceeding.

         Stacy requested the district court to deny the Government's motion for entry of judgment to the extent it sought to forfeit Stacy's interest in the two annuities.

         On September 30, 2014, a magistrate judge granted the government's motion for judgment of forfeiture. After Stacy appealed to the district court, the magistrate judge withdrew the order, and the Government moved for summary judgment. In its motion, the Government asserted, in pertinent part, that the two annuities are presumed to be subject to Calvin's sole management, control, and disposition because they were held in his name; therefore, the Government asserted, it was ...


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