United States Of America v. Lattas et al

Filing 53

MEMORANDUM Opinion and Order: For the reasons stated in the attached order, the Court denies the motion to dismiss Counts III and IV 39 . The request for the appointment of an additional representative for Minor Defendants is denied without prejudice. The parties are granted leave to remove Minor Defendants' names from the public record as agreed. Signed by the Honorable Thomas M. Durkin on 3/12/2025. Mailed notice. (ecw, )

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
UNITED STATES OF AMERICA,
Plaintiff,

No. 23 C 3328

v.

Judge Thomas M. Durkin

ANGELICA LATTAS, D.L., J.L., AND A.L.,
Defendants.
MEMORANDUM OPINION AND ORDER
The United States brings federal and state law claims against Angelica Lattas
and her minor children D.L., J.L., and A.L. seeking to void allegedly fraudulent
transfers by Robert Lattas. The minor children (“Minor Defendants”) move to dismiss
Counts III and IV under Federal Rule of Civil Procedure 12(b)(6). R. 39. For the
following reasons, that motion is denied.
Legal Standard
A Rule 12(b)(6) motion challenges the “sufficiency of the complaint.” Berger v.
Nat. Collegiate Athletic Assoc., 843 F.3d 285, 289 (7th Cir. 2016). A complaint must
provide “a short and plain statement of the claim showing that the pleader is entitled
to relief,” Fed. R. Civ. P. 8(a)(2), sufficient to provide defendant with “fair notice” of
the claim and the basis for it. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).
This standard “demands more than an unadorned, the-defendant-unlawfullyharmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). While “detailed
factual allegations” are not required, “labels and conclusions, and a formulaic
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recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555.
The complaint must “contain sufficient factual matter, accepted as true, to ‘state a
claim to relief that is plausible on its face.’” Iqbal, 556 U.S. at 678 (quoting Twombly,
550 U.S. at 570). “‘A claim has facial plausibility when the plaintiff pleads factual
content that allows the court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.’” Boucher v. Fin. Sys. of Green Bay, Inc., 880 F.3d
362, 366 (7th Cir. 2018) (quoting Iqbal, 556 U.S. at 678). In applying this standard,
the Court accepts all well-pleaded facts as true and draws all reasonable inferences
in favor of the non-moving party. Tobey v. Chibucos, 890 F.3d 634, 646 (7th Cir. 2018).
Background
In October 2015, Robert Lattas was convicted of mail and wire fraud in
connection with a scheme to defraud mortgage lenders. R. 34 ¶¶ 8, 10. Several months
later, he pled guilty to bank fraud. Id. ¶¶ 11–12. Restitution was mandatory for the
convictions in both cases under the Mandatory Victims Restitution Act, 18 U.S.C. §
3663, and Robert acknowledged in his plea agreement that he owed $13 million in
restitution. Id. ¶¶ 10–12.
On May 16, 2016, after Robert’s convictions and plea, Angelica filed a petition
for dissolution of marriage in the Circuit Court of DuPage County. Id. ¶ 31. Angelica,
through counsel, intended to shield assets from collection. Id. ¶ 36. In May 2017,
following a “stipulated facts” trial, the court entered a judgment of dissolution of
marriage (“Dissolution Judgment”), which was nearly identical to the proposed order
submitted by Angelica’s counsel and reviewed by Robert’s counsel. Id. ¶¶ 38–39.
Among other things, the Dissolution Judgment provided for a trust to be created for
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Minor Defendants’ benefit until they reached the age of 18 under Section 5/503(g) of
the Illinois Dissolution of Marriage Act. Id. ¶ 42.
Robert thereafter transferred $705,909.04 to the trust. Id. ¶ 46. Between
January 2018 and March 2024, Angelica requested, and the trustee (her brother)
authorized, distributions from the trust account such that the balance of the trust is
now $0. Id. ¶¶ 43, 50–53. Counts III and IV of the amended complaint allege Robert’s
transfer of property to the trust for the benefit of Minor Defendants is voidable under
federal and state law. See 28 U.S.C. § 3304; 740 ILCS 160.
Discussion
Minor Defendants contend that they are not proper parties to this lawsuit
because the allegedly fraudulent transfer was made to the trust, not to them. But the
plain language of the relevant federal and state laws provides otherwise. Under 28
U.S.C. § 3307(b)(1), the United States can recover a judgment for the value of the
asset transferred from “the first transferee of the asset or the person for whose benefit
the transfer was made.” (emphasis added). And under Illinois law, a creditor can avoid
a fraudulent transfer and recover judgment against the “first transferee of the asset
or the person for whose benefit the transfer was made.” 740 ILCS 160/9 (emphasis
added). Because, as alleged, Minor Defendants are beneficiaries of the trust, they are
plausibly persons “for whose benefit the transfer was made” and thus proper parties
to this suit.
The single case Minor Defendants cite is distinguishable and undercuts their
argument. In Boyer v. Belavilas, 474 F.3d 375, 376–77 (7th Cir. 2007), a chapter 7
trustee alleged that insurance proceeds paid to a corporation jointly owned by the
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debtor and his wife were fraudulently transferred into accounts for their two children
under the Uniform Transfers to Minors Act (“UTMA”). Similar to the federal and
state laws discussed above, the Bankruptcy Code allows recovery from “the initial
transferee of [the avoided] transfer or the entity for whose benefit such transfer was
made.” 11 U.S.C. § 550(a). The couple argued the children were not transferees
because they did not control the accounts. Boyer, 474 F.3d at 377. The Seventh Circuit
explained that even if the children were not “prototypical” transferees, they were—
as beneficiaries of the accounts—persons “for whose benefit the transfer was made.”
Id. at 378. The real problem was that the bankruptcy court made the children jointly
and severally liable alongside their mother, and the UTMA provides that minors are
not personally liable for obligations arising from the ownership of custodial property
unless they are at fault. Id. at 378–79. Because the children were not at fault, the
Seventh Circuit limited the scope of the judgment against them to the custodial
property. Id. at 379. The Court did not, however, hold they weren’t proper parties to
the litigation.
This case is not a bankruptcy proceeding, and it does not involve UTMA
custodial accounts. 1 Even so, the logic of Boyer applies here. The fact that Minor
Defendants were not the initial transferees is not dispositive. Rather, by alleging
Minor Defendants are alleged beneficiaries of the trust, Plaintiff adequately pleads

1 It bears noting that while Minor Defendants criticize Plaintiff for relying on cases

that arose in the bankruptcy context, Boyer did too.
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they are persons “for whose benefit the transfer was made” under the relevant
statutes, and therefore properly named as parties to this suit. 2
In reply, Minor Defendants claim that if they are proper parties, they need an
appointed representative. But Minor Defendants are represented by counsel who filed
this motion, and counsel has not indicated any intent to withdraw from that
representation. The Court does not see any need to appoint an additional
representative for the Minor Defendants at this stage, so this request is denied
without prejudice.
Lastly, the parties agree that Minor Defendants’ names should be removed
from all prior pleadings and redacted versions should be filed with each of their
initials. The Court agrees and grants the parties leave to correct the filings on the
docket as proposed.
Conclusion
For the foregoing reasons, the Court denies the motion to dismiss Counts III
and IV. The request for the appointment of an additional representative for Minor
Defendants is denied without prejudice. The parties are granted leave to remove
Minor Defendants’ names from the public record as agreed.

2 In their opening brief, Minor Defendants make passing reference to Federal Rule of

Civil Procedure 21 but offer no substantive argument as to its application in this case.
See R. 39 at 1, 5. Similarly, Minor Defendants state, without any citation to authority,
that “[i]n Illinois, minors . . . are unable to be identified as defendants in this type of
civil lawsuit.” Id. at 4. Because these arguments are “perfunctory and undeveloped”
and “unsupported by pertinent authority,” they are waived. See Crespo v. Colvin, 824
F.3d 667, 673 (7th Cir. 2016).
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ENTERED:

______________________________
Honorable Thomas M. Durkin
United States District Judge

Dated: March 12, 2025

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