NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with
Fed. R. App. P. 32.1
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Submitted February 4, 2009*
Decided February 5, 2009
Before
JOHN L. COFFEY, Circuit Judge
JOEL M. FLAUM, Circuit Judge
DANIEL A. MANION, Circuit Judge
No. 08‐2198
UNITED STATES OF AMERICA, Appeal from the United States District
Plaintiff‐Appellee, Court for the Northern District of Illinois,
Eastern Division.
v.
No. 99 CR 269
JOHN P. MACCHIONE,
Defendant. Elaine E. Bucklo,
Judge.
Appeal of:
JOANNE MACCHIONE,
Interested Person.
O R D E R
Joanne Macchione’s husband, John Macchione, was found guilty of mail fraud and
tax evasion and was ordered to pay one million dollars in restitution. In trying to discover
his assets to satisfy the judgment, the government sought an order compelling Dolores
*
After examining the briefs and the record, we have concluded that oral argument is
unnecessary. Thus, the appeal is submitted on the briefs and the record. See FED. R. APP. P.
34(a)(2).
No. 08‐2198 Page 2
Veninga, the Macchiones’ tenant, to turn her rental payments over to the government.
Joanne appeared in the district court to object, asserting that she, not John, owned the
property and was entitled to the rental receipts. But the court entered the turnover order,
requiring Veninga to remit to the government the full amount of the rent and denied
Joanne’s motion to reconsider. We conclude that the court abused its discretion in ordering
Veninga to turn over the entire amount because only half of the net rental income (i.e., the
rental payments less the cost of maintaining the house) is John’s property—the other half
belongs to Joanne and cannot be used to satisfy the judgment against John.
John, who was convicted in 2001 and released from prison in December 2003, owns a
rental house with Joanne in Bartlett, Illinois. The house was deeded to the couple as joint
tenants in 1986, and was leased to Veninga in September 2007. John executed the lease, and
Veninga paid the rent to him for the first two months of the lease. Then in November 2007
the government served Veninga with a citation to discover assets. Based on the information
that Veninga provided, the government filed in the district court a motion for a turnover
order asserting that John owned the property and requesting the court to direct Veninga to
pay the rent directly to the clerk of the court. When Veninga received the citation, she
began holding her rent payments in escrow, awaiting the outcome of the proceedings.
John responded by asserting that Joanne “owns the property jointly” with him and
requesting that the district court deny the government’s motion. Joanne moved to intervene
and contended that she, not John, was entitled to the rent. The government opposed her
intervention, however, on the ground that Joanne had refused to comply with document
requests and to appear for a deposition in a separate citation proceeding the government
had commenced against her to discover other of John’s assets. The district court said it
would allow Joanne to intervene only if she appeared for her deposition by a certain date.
The court reasoned that Joanne “could not prove her entitlement to the rents without the
government having the opportunity to question her.” Joanne did not appear for the
deposition, and the district court entered the turnover order, directing Veninga to pay rent
to the clerk of court.
The next week Joanne asked the district court to reconsider the turnover order. The
court held a hearing at which Joanne pointed out that the deed, which she had previously
provided to the government, established that she owned the property in joint tenancy with
John. The government’s attorney agreed that the “property is owned between the two of
them,” but argued that the rental payments belonged to John because he negotiated the
lease and deposited the rental payments. The district court denied the motion to reconsider.
No. 08‐2198 Page 3
Joanne’s primary argument here is that the house belongs to her, that she is entitled
to the rental receipts, and that the district court improperly concluded that the rental
payments belonged to John and could be used to satisfy the restitution order. We review
the entry of the turnover order for abuse of discretion. See Divane v. Krull Elec. Co., 194 F.3d
845, 848 (7th Cir. 1999). But first we must address a preliminary matter raised by the
government.
The government acknowledges, as it must, that it was unnecessary for Joanne to
obtain the district court’s approval to intervene because she was entitled to appear and
contest the turnover motion as a matter of right. The government may enforce a restitution
order by any means available under federal or state law. See 18 U.S.C. §§ 3613(a), (f);
3664(m)(1)(A); United States v. Kollintzas, 501 F.3d 796, 800‐01 (7th Cir. 2007). In this case the
government chose to go after John’s assets using the “citation” procedures under Illinois
law. See 735 ILCS 5/2‐1402; Ill. Sup. Ct. R. 277; see also Soc’y of Lloyd’s v. Ashenden, 233 F.3d
473, 475‐76 (7th Cir. 2000). These procedures allow a judgment creditor to discover non‐
exempt assets held by the debtor or third parties and to order those assets turned over to the
creditor to satisfy the judgment. 735 ILCS 5/2‐1402(a), (b); Ill. Sup. Ct. R. 277(a), (b); see In re
Farm Credit Bank, 18 F.3d 413, 416 (7th Cir. 1994); City of Chi. v. Air Auto Leasing Co., 697
N.E.2d 788, 791 (Ill. App. Ct. 1998). But the state procedures also require the court to allow
any party who asserts an interest in the property to “appear and maintain his or her right”
to the property. 735 ILCS 5/2‐1402(g). Joanne claims a right to the rental payments the
government sought, and thus she was entitled to appear without filing a motion to
intervene. See Kollintzas, 501 F.3d at 801 (concluding that in supplementary proceeding to
discover assets under the Fair Debt Collection Practices Act, party claiming interest in
targeted property may participate without formally intervening); In re Farm Credit Bank, 18
F.3d at 417 (noting policy of “allowing third parties who have an interest in the property at
issue in a supplemental proceeding an opportunity to be heard”).
The government argues, however, that Joanne essentially waived any objection to its
turnover demand by refusing to appear for her deposition as directed by the district court.
We disagree. The district court did not refuse to entertain Joanne’s claim that the rental
receipts rightfully belong to her. Rather, the court concluded that, in the face of the
evidence put forward by the government that John had executed the lease agreement and
received and deposited Veninga’s checks, Joanne could not possibly support her contention
that she was entitled to the rental payments without providing further evidence. And while
the court implied that Joanne’s refusal to be deposed had made providing that evidence
impossible, the court nevertheless evaluated her motion for reconsideration and allowed her
to appear to argue it, which undermines the government’s suggestion that the court deemed
her arguments waived. More importantly, we fail to see the connection between Joanne’s
recalcitrance in a separate citation proceeding and her opposition to the turnover order
No. 08‐2198 Page 4
directed against Veninga. As the government acknowledges in its brief, each supplemental
proceeding is akin to a separate lawsuit, see Jones‐El v. Berge, 374 F.3d 541, 543 (7th Cir.
2004); ACORN v. Ill. State Bd. of Elections, 75 F.3d 304, 306 (7th Cir. 1996); Resolution Trust
Corp. v. Ruggiero, 994 F.2d 1221, 1224‐25 (7th Cir. 1993), and the government has never
explained what relevant information it sought to learn about the rental payments that was
not already included in the record. Joanne supplied the deed to the house, and Veninga
provided a statement and other documentary evidence concerning the lease. We do not
know how any additional information could have been helpful. See Mommaerts v. Hartford
Life & Accident Ins. Co., 472 F.3d 967, 968 (7th Cir. 2007) (explaining that “it would make
little sense to enter a default after a case has been decided on the merits” when there was no
prejudice).
We now turn to the question of who gets the rental receipts. Both Joanne and the
government assert full ownership of the payments, but each is only half correct. The deed
evinces that Joanne and John own the property as joint tenants. Their joint tenancy was
formed in 1986—long before John’s 1999 indictment—and there is no hint that the
conveyance was fraudulent or structured to avoid any obligations. Indeed, the government
acknowledged in the district court and in its brief on appeal that the couple owns the
property in joint tenancy. State law tells us what rights each joint tenant has to the rental
payments. See Drye v. United States, 528 U.S. 49, 58 (1999); Kollintzas, 501 F.3d at 802. The
government argues that, in Illinois, one joint tenant acting alone can lease the entire
property. See Nat’l Gas & Oil v. Rizer, 155 N.E.2d 848, 848‐89 (Ill. App. Ct. 1959). This is true
as far as it goes, but it does not follow, as the government contends, that the joint tenant
who signs the lease is entitled to the full amount of the rental receipts. To the contrary, all
joint tenants enjoy all of the benefits of the lease, even if they did not sign it. See Booth v.
Cebula, 166 N.E.2d 618, 621 (Ill. App. Ct. 1960). The right to receive rent is, of course, one of
those benefits, and each joint tenant is entitled to an equal share of the proceeds. See
Riechmann v. Riechmann, 283 N.E.2d 734, 736 (Ill. App. Ct. 1972); see also United States v.
Davenport, 106 F.3d 1333, 1336, 1337 n.5, 1338 (7th Cir. 1997); Capogreco v. Capogreco, 378
N.E.2d 279, 281 (Ill. App. Ct. 1978) (noting that each of two joint tenants “had a one‐half
interest in the land acquired during the marriage”); accord United States v. Craft, 535 U.S. 274,
280 (2002) (noting common‐law right of joint tenants to “enjoy a share of the property’s
income”). On the flip side, joint tenants are responsible for their share of the costs to
maintain the property (e.g., mortgage payments, property taxes, and repairs). See Moniuszko
v. Moniuszko, 606 N.E.2d 468, 474 (Ill. App. Ct. 1992). There is no evidence in the record
that the government is entitled to anything other than John’s one‐half share of the rental
payments less expenses; thus, it must split the proceeds and costs with Joanne. See
Davenport, 106 F.3d at 1336, 1337 n.5 (noting that husband’s interest in property held in joint
tenancy with wife subject to attachment of a federal lien, but that wife was entitled to
receive proceeds equal to her interest in the property). The district court, therefore, abused
No. 08‐2198 Page 5
its discretion in ordering Veninga to remit the entire amount of the rental payments to
satisfy the restitution order. See Divane, 194 F.3d at 848 (noting that it is an abuse of
discretion to base a decision on “an erroneous conclusion of law”). On remand, the district
court should establish a procedure to determine the net income from the rental payments
and transfer half to the government and the other half to Joanne.
VACATED and REMANDED.