In the

United States Court of Appeals

For the Seventh Circuit

Nos. 97-4027, 98-1226, 98-1917, 98-2941, 98-2942

United States of America,

Plaintiff-Appellee,

v.

Jack M. Lee,

Defendant-Appellant,

and

Margaret B. Lee,

Claimant-Appellant.

Appeals from the United States District Court

for the Central District of Illinois.

No. 93-CR-10075--Michael M. Mihm, Judge. 

Argued April 19, 2000--Decided November 7, 2000

 Before Harlington Wood, Jr., Kanne, and Diane P. Wood,

Circuit Judges.

 Diane P. Wood, Circuit Judge. Jack Lee defrauded

various individuals and institutions through a

variety of schemes. He eventually pleaded guilty

to committing numerous federal criminal offenses:

mail fraud, 18 U.S.C. sec. 1341, bank fraud, 18

U.S.C. sec. 1344, money laundering, 18 U.S.C.

sec. 1957(a), wire fraud, 18 U.S.C. sec. 1343,

and perjury, 18 U.S.C. sec. 1621. He reserved the

right to appeal the money laundering conviction,

which he has now done. Margaret Lee, Jack Lee’s

wife, was pulled into the fray when the

government executed a forfeiture judgment against

Jack, under 18 U.S.C. sec. 982, by taking the

home that the Lees owned as tenants by the

entirety. (For clarity, we refer to the two

appellants by their first names for the remainder

of this opinion.) The district court denied

Margaret’s petition to dismiss the forfeiture

proceedings, and that decision forms the basis

for her appeal. We find no merit in Jack’s

arguments, and so we affirm his conviction, but

we agree with Margaret that it was error to

forfeit the home, and we therefore reverse that
part of the judgment.

I

 We begin with Jack’s fraudulent activity. While

there was a great deal of it, for the purposes of

this appeal we need only discuss the basis of the

money laundering charge. That charge stemmed from

his procurement of a $280,000 loan from Amcore

Bank on behalf of one of the companies he had

formed, Capital Communications, Inc. (CCI).

 In February 1990, Jack approached Amcore Bank

in search of loans for CCI. CCI was a corporation

wholly owned by Jack’s two daughters, Margaret

and Debbie; Jack served as its president. To

support his application, Jack gave Amcore a

personal financial statement. Unfortunately for

everyone, including Jack by now, that statement

was false: it substantially overstated his

assets, and it omitted important details such as

liabilities of over three million dollars.

 Relying on this information, on April 6, 1990,

Amcore approved a $280,000 loan. The bank issued

a note, signed by both parties, which explained

that CCI was the borrower of $280,000, and that

it was liable for the repayment of the money plus

interest. Both parties also signed a document

labeled "Closing Statement Disbursement," which

described the form in which CCI would receive its

money: $192,034.38 to First of America Bank in

Peoria as the payoff of CCI’s building mortgage;

$41,728.76 to Amcore Bank itself to pay off Note

89324 from Equity Investors representing a loan

for which Equity Investors (another of Jack’s

companies) was responsible; $686.25 to the

Chicago Title Company; $600 to Richard McCoy,

Jack’s attorney; $49 to the Peoria County

Recorder; and $44,901.61 directly to CCI.

 After the bank note and the Closing Statement

had been signed, Amcore made out several bank

checks in the amounts and to the recipients

specified in the Closing Statement. Of particular

importance here, Amcore issued a $41,728.76 check

to Amcore Bank, with a note on the face of the

check that it was to be used to pay off Note

89324 from Equity Investors. Then, without going

through the formality of handing the check to

Jack so that he could tender it back, Amcore took

the check and deposited it in the Equity

Investors account.

 Jack was indicted on December 1, 1993, on

various counts involving several different

fraudulent schemes, including the Amcore loan

procured under false pretenses. Count 22 of the

indictment charged that by having Amcore use

$41,728.76 of the fraudulent loan to pay off
Equity Investors’ debt, Jack had engaged in money

laundering in violation of 18 U.S.C. sec.

1957(a). Jack pleaded guilty to the list of

charges reviewed above, which included Count 22.

His plea reserved the right to appeal the

district court’s denial of his motion to dismiss

Count 22. After a sentencing hearing, on November

21, 1997, Jack was sentenced to 78 months of

imprisonment followed by five years of supervised

release and was ordered to pay restitution in the

amount of $1,587,321.50, and to forfeit $337,000

to the United States.

II

 Before this court, Jack argues that the

Amcore/Equity Investors transaction did not

violate 18 U.S.C. sec. 1957(a). That statute

states that a person who "knowingly engages or

attempts to engage in a monetary transaction in

criminally derived property that is of a value

greater than $10,000 and is derived from

specified unlawful activity" is guilty of money

laundering. In Jack’s view, the charged conduct

could not properly be characterized as money

laundering because there was only one fraudulent

transaction: he defrauded Amcore of the money,

and part of that fraud was requiring the bank to

give the money to Equity Investors, rather than

directly to him. Therefore, he reasons, the money

may have been "criminally derived," but he never

"engage[d] in a monetary transaction" with it.

The government parses the transaction differently

and unsurprisingly concludes that the

requirements of section 1957(a) were met: Jack

"criminally derived" the $41,728.76 by falsely

representing his financial status in order to get

the loan, and he then "engage[d] in a monetary

transaction" with that money by using it to pay

off the Equity Investors debt. 

 For a section 1957(a) conviction to be proper,

"criminally derived property" must first have

existed, and then at a later time, the charged

party must have attempted to bring about or have

actually brought about a transaction with it. See

United States v. Mankarious, 151 F.3d 694, 705

(7th Cir. 1998) ("[T]he predicate offenses must

produce proceeds before anyone can launder those

proceeds."). Here, the money was not criminally

derived until Jack committed bank fraud by

defrauding Amcore, a financial institution, or by

"obtain[ing] any . . . property owned by, or

under the custody or control of [Amcore], by

means of false or fraudulent pretenses,

representations, or promises." 18 U.S.C. sec.

1344. 

 Jack’s bank fraud was complete, and the loan

money therefore "criminally derived," when he and
Amcore signed the bank note and transferred

control of the money to Jack. See United States

v. Gregg, 179 F.3d 1312, 1316 (11th Cir. 1999)

(finding bank fraud complete when bank made funds

available for defendant’s use). No one doubts

here that the initial monetary transaction from

Amcore to Jack was completed, and that fact

distinguishes this case from United States v.

Piervinanzi, 23 F.3d 670 (2d Cir. 1994), to which

both parties refer. In that case, an attempted

wire transfer was not completed, and therefore no

money was actually laundered. We therefore find

Piervinanzi to be of no particular assistance

here. The parties’ focus on who physically

touched the bank check used to pay off Equity

Investors’ debt and when the person did so is

similarly unhelpful. We live in an age where

money can be and often is transferred between

owners with a few strokes on a computer’s

keyboard. The physical transferring of dollar

bills may not be quite as obsolete as the

medieval English practice of feoffment with

livery of seisin, under which land was conveyed

with the symbolic handing over of a clod of dirt,

but it may be getting there.

 After the signing of the bank note, Amcore

acted under Jack’s direction, as it was bound to

do under the signed Closing Statement. In effect,

therefore, it was Jack who "engage[d] in a

monetary transaction" with the bank when Amcore

deposited a check into the Equity Investors

account. Those funds belonged to Jack in his

capacity as president of CCI, and Jack was

responsible for the transfer. Amcore was not

using its own money to help Equity Investors. It

had already loaned the money to Jack, and was

simply following his instructions as to how to

disburse it. Amcore’s role in transferring Jack’s

money does not let Jack off the hook, and we

conclude that he cannot escape a money laundering

conviction by using an agent to launder the money

for him.

III

 Margaret’s appeal relates to that part of

Jack’s sentence requiring forfeiture of $337,000

to the United States. The government, in an

attempt to recover that sum of money, moved to

substitute Jack and Margaret Lee’s family home in

Florida, which had not been connected to any

criminal activity, for the forfeiture amount.

That fact, among others, distinguishes this case

from Bennis v. Michigan, 516 U.S. 442 (1996), in

which the Supreme Court held that a Michigan

forfeiture statute with no innocent owner defense

was not unconstitutional. It also distinguishes

this case from the Eleventh Circuit’s decision in

United States v. Kennedy, 201 F.3d 1324 (11th
Cir. 2000), on which the government also relies,

because the jury in Kennedy found that the

property was involved in the unlawful transaction

or was traceable to property that was so

involved. Id. at 1326. Kennedy also turned on the

question whether the innocent spouse ever

purchased her husband’s interest in the property,

id. at 1329-31, which is not at issue here.

 Margaret petitioned to dismiss the forfeiture

proceedings, claiming that Jack had no

forfeitable property interest in the house

because it was owned by the couple as tenants by

the entirety. On July 22, 1998 the district court

dismissed Margaret’s petition. It ruled that the

government would, in effect, be substituted for

Jack in the ownership of the home--in other

words, the government would become Margaret’s cotenant by the entirety. Margaret would thus

retain use of the property during her lifetime.

She would also retain her right of survivorship:

if she survived Jack she would own the property

in fee simple, but if she died before Jack the

government would attain ownership of a fee

simple. 

 We look to state property law to determine

whether Jack’s interest in the Lee home was a

property interest subject to forfeiture. See

United States v. Ben-Hur, 20 F.3d 313, 317 (7th

Cir. 1994). Margaret and Jack Lee held their

Florida home in a tenancy by the entirety, a form

of title under which a husband and wife may

jointly own an estate in Florida. See Sitomer v.

Orlan, 660 So.2d 1111, 1113 (Fla. Dist. Ct. App.

1995). Such a tenancy must possess five unities

in order to survive: there must be joint

ownership and control; each tenant must have an

equal interest in the property; those interests

must have originated at the same time; those

interests must have been derived from the same

instrument; and the tenants must be married. See

id. "The essential characteristic of an estate by

the entirety is that each spouse is seized of the

whole or the entirety, and not of a share,

moiety, or divisible part. Upon the death of one

spouse, the other does not ’inherit’ the interest

of the other in such estate, but merely comes

into the full beneficial enjoyment of such

estate, which is said to vest by operation of law

in the surviving spouse." Ashwood v. Patterson,

49 So.2d 848, 849 (Fla. 1951) (en banc) (internal

citations omitted). 

 The two tenants, then, in a valid tenancy by

the entirety, are bound to make decisions

regarding the property together. Tenancies by the

entirety in Florida operate under these rules to

protect the rights of each spouse-- against one

another, and against creditors. "Neither spouse
may sever or forfeit any part of the estate

without the assent of the other, so as to defeat

the right of the survivor." Sitomer, 660 So.2d at

1113. "Property owned as a tenancy by the

entiret[y] cannot be made available to answer for

the judgment debts of one of the tenants

individually." Neu v. Andrews, 528 So.2d 1278,

1279 (Fla. Dist. Ct. App. 1988).

 Florida law clearly prohibits the forfeiture of

Jack’s interest in the family home without

Margaret’s consent. See Havoco of Am., Ltd. v.

Hill, 197 F.3d 1135, 1139 (11th Cir. 1999)

(finding that a tenant by the entirety does not

possess a forfeitable interest in property);

United States v. One Single Family Residence With

Out Buildings, 894 F.2d 1511, 1515-16 (11th Cir.

1990) (same). Margaret’s security as against her

husband’s creditors, such as the federal

government here, is exactly what the law of

tenancy by the entirety protects. 

 The district court came to the opposite

conclusion by relying on the Third Circuit’s

decision in United States v. Parcel of Real

Property Known as 1500 Lincoln Avenue, 949 F.2d

73 (3d Cir. 1991). It found that the federal

government has a special interest in criminal

forfeiture, and that the "innocent spouse’s"

interest in such an estate might be preserved by

giving that spouse the use and possession of the

property during her life, as well as a

survivorship right should her husband predecease

her. See id. at 77-78. But the Third Circuit was

faced with a substantially different problem from

the one now before us. In 1500 Lincoln Avenue,

the contested property once again had been used

for the illegal activities (there, the illegal

diversion of various pharmaceutical drugs). The

court concluded that it had to come to an

accommodation between two parts of the statutory

mandate of 21 U.S.C. sec. 881(a)(7): on the one

hand, the government’s right to obtain forfeiture

of property used to commit or facilitate the drug

offense, and on the other, protection of the

rights of innocent owners. See 1500 Lincoln

Avenue, 949 F.2d at 77. The federal law mandate

would have been compromised if the court had

given full force to Pennsylvania’s rules about

tenancies by the entirety. Faced with that

dilemma, the court adopted the middle ground that

the government urges here as well, namely,

forfeiture of the husband’s interest in the

tenancy by the entirety and recognition of the

wife’s right to full and exclusive use of the

property during her lifetime, protection against

any alienation without her consent, and the right

to obtain title in fee simple if the husband

predeceased her.
 Our context is significantly different, because

the only claim the government has to the Lee

house arises because the house could be treated

as a substitute asset, pursuant to 18 U.S.C. sec.

982(b)(2) and 21 U.S.C. sec. 853(p). In such a

case, the need to strike a balance between the

government’s interest in seizing the means for

committing a crime and the innocent spouse’s

rights must be assessed differently. In our view,

there is no warrant for ignoring the nature of

the property right created by the state law--

here, the Florida law of tenancy by the entirety-

-in a substitute asset case. (We thus have no

need to consider whether we would agree with the

Third Circuit’s approach in a case involving

property used to commit an offense or property

that can be traced to it.) 

 Without the compelling need to seize unlawfully

used property (or its derivatives), the interests

of the innocent party become far more important.

And from that perspective, it is plain that the

Third Circuit’s compromise substantially

diminishes the innocent spouse’s rights. In the

hybrid arrangement that was approved in 1500

Lincoln Avenue, Margaret would, as a practical

matter, lose her right to control and manage the

estate. The government would be Margaret Lee’s

co-tenant in a form of property ownership which

requires both parties to participate in nearly

every decision concerning the property. No

mortgage would be possible without the signature

of both tenants (since otherwise creditors would

risk losing their entire investment at the death

of one of the Lees). Margaret would need the

government’s approval to sell the property or to

transfer the estate into a tenancy in common.

Though she would be fully liable for taxes and

other costs of homeownership in any tenancy by

the entirety, in a normal tenancy by the entirety

there would be a chance that her husband, also

fully liable for the property, would contribute

to those expenses. Because the government (as it

admitted at oral argument) would not be there

with its checkbook, she could do little more than

sit by and hope that the estate would not fall

into disrepair. We therefore conclude that the

attributes of tenancy by the entirety recognized

by Florida law here should not have been

overridden by the district court, and the house

should have been considered unavailable for a

substitute asset order. (We note, should it

become relevant in the future, that if the

tenancy by the entirety is ever split in

accordance with Florida law, Jack and Margaret’s

interests would then become distinct and

separable so that a later forfeiture of Jack’s

interest in the property would not affect

Margaret’s rights. See One Single Family

Residence, 894 F.2d at 1516, n.6.)
IV

 We Affirm Jack Lee’s money laundering conviction

and Reverse the district court’s rejection of

Margaret Lee’s petition to dismiss the

forfeiture.