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Al-Rayes v. Willingham

United States Court of Appeals, Eleventh Circuit

February 5, 2019

ABDULLAH M. AL-RAYES, et al., Plaintiffs-Appellants,
v.
ERIKA M. WILLINGHAM, individually and as Trustee of the ERIKA M. WILLINGHAM TRUST, Defendant-Appellee.

          Appeals from the United States District Court for the Middle District of Florida D.C. Docket No. 3:15-cv-107-J-34JBT

          Before JILL PRYOR, BRANCH, and GRANT, Circuit Judges.

          GRANT, CIRCUIT JUDGE.

         The creditors in this case claim that a husband and wife worked together to commit multiple acts of mail and wire fraud over several years for the purpose of hiding the husband's assets-acts which, in the creditors' telling, violated RICO. The creditors sued the wife. While the district court agreed that the couple may have committed the alleged acts of fraud, it nonetheless granted the wife's motion for summary judgment. According to the court, because the couple's marriage predated the alleged RICO acts, and the couple had created no sort of structure external to their marital relationship, no reasonable juror could conclude that they "formed an organization with some sort of framework, formal or informal, for the purpose of engaging in racketeering activity." In other words, to put it in RICO terms, the court found no evidence of an "association-in-fact" enterprise. We are convinced otherwise; after a thorough review of the record, we conclude that a genuine factual dispute exists about whether this couple formed an association-in-fact enterprise separate and apart from their marital relationship. We therefore reverse the district court's order granting summary judgment and remand for further proceedings. We also vacate the district court's order awarding the wife costs.

         I.

         Abdullah Al-Rayes and various corporate entities under his control (collectively "Al-Rayes") sued Ben Willingham and several of his businesses, asserting that Ben defrauded Al-Rayes over the course of many real-estate transactions. Roughly a year after that 2006 lawsuit, Al-Rayes received a $25.7 million consent judgment against Ben. But after more than a decade, he has been able to collect only $39, 943.81. Al-Rayes now argues that Ben's wife, Erika Willingham, has stymied his efforts to collect the judgment by working with Ben to execute an intricate asset-concealment scheme. Viewed in the light most favorable to Al-Rayes as the nonmovant, the record reflects the following facts.

         According to Al-Rayes, Erika and Ben's scheme to hide Ben's assets involved secretly transferring funds to offshore bank accounts. Their efforts to conceal those accounts began shortly after Al-Rayes secured the consent judgment against Ben. Less than a year after that judgment was entered, Al-Rayes's counsel deposed Ben as part of an attempt to collect the judgment. Ben testified that he did not have any accounts or assets in Switzerland, where Erika was from and where he and Erika had previously lived. Ben also swore that Erika did have a single Swiss bank account in her name, but that she had sole control over it. According to Ben, Erika made wire transfers from her Swiss account to the couple's joint account in the United States, and then used that money to pay for living expenses. Erika, on the other hand, testified that she had no Swiss bank accounts in her name, and that her husband controlled all of her financial matters.

         Additional facts emerged a few years later when Ben filed for bankruptcy and Al-Rayes renewed his attempt to collect the consent judgment. During the proceedings, Erika stood by her earlier testimony that she did not have any bank accounts in Switzerland. But the bankruptcy court concluded otherwise, finding that approximately 68 wire transfers were made from a Swiss bank account held only in Erika's name to the couple's joint account in the United States. Those transfers, totaling $255, 740, were all made within approximately three years of the consent judgment.

         Bank records subsequently turned over to the bankruptcy court revealed that over an eleven-year span Erika and Ben (individually or together) made at least 240 wire transfers of Ben's salary and benefits to Erika's known Swiss account and to other (previously undisclosed) Swiss accounts held in Erika's name. When confronted with these records, Ben admitted that-despite his prior testimony that he had no control over his wife's (purportedly) single Swiss bank account-he actually had signatory authority over four Swiss bank accounts held in Erika's name. He also conceded that-contrary to his prior testimony that he had no assets in Switzerland-he had made numerous transfers of his salary, benefits, and tax refunds to Erika's Swiss accounts. Following these admissions, he acknowledged that he and Erika had used Swiss funds to pay their living expenses.

         Still, the parties dispute the extent of Erika's involvement in these transfers. For his part, Al-Rayes cites Ben's testimony that his wife was aware that he was making the transfers, consented to the transfers, and even initiated some of the transfers herself. Erika, on the other hand, consistently testified that her husband had sole control over her finances and that she did not know about the Swiss accounts or any transfers involving those accounts.

         Al-Rayes's allegations do not end there; he argues that Erika and Ben misrepresented not only the location of Ben's assets, but also their extent. For example, Al-Rayes points to Ben's declaration to the bankruptcy court that he and Erika had no significant assets and a combined monthly income of $4, 062. Only a week after that declaration, however, the couple applied to a retirement community and represented that they owned $750, 000 in real estate, $395, 000 in investments, and $40, 000 in cash. And subsequent events showed that the couple did have available assets; a few months later, they paid the retirement community a $254, 962.50 entrance fee.

         The couple also failed to notify the bankruptcy court of two important real-estate transactions made while the bankruptcy action was pending. First, they sold their house and received $334, 295.53 in net proceeds, but failed to notify either the bankruptcy court or Al-Rayes. Moreover, both Erika and Ben paid for the house and signed the mortgage, but the title was in Erika's name only, shielding Ben's funds from creditors who were seeking his assets. And a few months later, the couple purchased a condo for $120, 000 and again failed to notify the bankruptcy court or Al-Rayes. Like the house, the condo was purchased using funds from a joint account, but title was placed in Erika's name alone-again, Al-Rayes contends, in an attempt to hide Ben's assets.

         These were not the only transactions that went unreported. The couple also failed to notify the bankruptcy court or Al-Rayes when they received a partial refund of their retirement-home entrance fee after moving out early. And they failed to notify the bankruptcy court or Al-Rayes when Erika created a trust, named herself as trustee, and executed a quitclaim deed transferring the condo title to herself as trustee, while reserving a life estate in the condo for herself-and for her husband.

         Their alleged scheme did not end there. A few months before the bankruptcy action closed, Erika and Ben formed a corporation-Osborn of Jacksonville, Inc.-purportedly to market a book that Ben had written. In the four months between Osborn's creation and the close of the bankruptcy action, Ben made several transfers totaling $176, 630 from the couple's joint bank account to the corporation's bank account. He did not notify the bankruptcy court or Al-Rayes ...


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