Stacy Walker loses fifth circuit appeal

Stacy Walker loses fifth circuit appeal

Still fighting forfeiture of more than $3 million in annuities the U.S. government acquired from former Beaumont Independent School District electrician Calvin Walker, wife Stacy Walker argued to the Fifth Circuit Court of Appeals that her husband had no right to bargain away property that belonged to her as well. This past week, March 9, the court handed down an opinion.

Already off the table is other property initially pegged for forfeiture and returned to the Walkers including Pleasure Island property appraised at $130,300, down from an all-time high value of $175,450 in 2014, a vehicle, and interest earned off the annuities still in limbo.

The annuity forfeiture debate at hand is splintered from criminal causes sparked on May 4, 2011, when a federal grand jury indicted Calvin Walker for various types of fraud and money laundering and, according to the Fifth Circuit Justices’ retelling of the facts, “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 …”

Although the criminal prosecution ended in mistrial on Dec. 12, 2011, four months later the government initiated forfeiture proceedings leading to what has now been a five-year battle for possession of the allegedly ill-gotten goods. Walker’s legal counsel argued that the forfeiture filing was “a belated attempt to bring pressure on Calvin Walker to enter a guilty plea to the false charges he has fought vigorously,” but in July 2012 Walker entered into a plea deal that would provide for one misdemeanor count of willful failure to pay income tax.

As part of the plea deal, Walker arranged “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…”

April 3, 2014 (more than 20 months after the execution of Calvin’s plea agreement, the Fifth Circuit Court noted), 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 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.”

Hearing her plea, the appeals court noted that joint management community property—as the name suggests—is subject to the joint management, control, and disposition of the spouses. Accordingly, to affect a valid conveyance of joint management community property, Texas law requires both spouses to join in the transaction. However, because property that appears to be subject to sole management may, in fact, be subject to joint management—and thus require both spouses’ consent to affect a valid conveyance—third parties that enter into transactions involving community property might be placed in a precarious position and are afforded additional protection under the law.

Fifth Circuit Justices Carl Stewart, Carolyn King and James Dennis pointed to Texas Family Code, which states that property held in one spouse’s name is presumed to be sole management community property, and if the named spouse conveys such property to a third party, the third party is entitled to rely upon the authority of that spouse to convey the property.

Accordingly, the court affirmed the property forfeiture and further offered opinion of Stacy’s involvement in the forfeiture proceeding and why she was not entitled to reclaim her husband’s criminal collateral.

“As the district court recognized,” Fifth Circuit Justice Stewart penned, “the government had good reason to believe that Calvin did have authority to transfer the annuities without Stacy’s consent: Stacy was represented in the present forfeiture proceeding by the same attorney who was negotiating the plea agreement in Calvin’s criminal proceeding; Stacy was present at Calvin’s plea hearing, at which Calvin confirmed his understanding of the plea agreement; and Stacy never brought the lack of Calvin’s authority to the attention of her attorney or the government.

“Indeed, Stacy herself may have benefited, at least in part, from Calvin’s agreement. At the time the agreement was drafted, the government had been seeking forfeiture of two parcels of land and a vehicle, in addition to the two annuities. As part of the agreement, the government dropped its claim to the land and vehicle, and returned—to Stacy personally— three checks payable to Calvin’s company for the sum of $520,000. The government also agreed that all of Calvin’s restitution would be paid from the proceeds of the two annuities.”