United States District Court, S.D. Alabama, Southern Division
V. S. GRANADE SENIOR UNITED STATES DISTRICT JUDGE
action is before the Court on the objection of Defendant
Xiulu Ruan to the Writ of Execution filed by the United
States and the Ex Parte Order granting the Writ of Execution
(Doc. 785), the response thereto of the United States (Doc.
796), and Ruan's reply (Doc. 799). For the reasons
explained below, the Court finds a hearing is not necessary
and that the transfer of property in Ruan's divorce
decree to Ling Cui and the resulting quit claim deeds should
be declared void and set aside.
Ruan filed a one-page objection to the Writ of Execution
filed by the United States and the Ex Parte Order granting
the Writ of Execution and requested a hearing on his
objection based on the following grounds:
The Circuit Court of Mobile County, Alabama has granted a
divorce to Xiulu Ruan and his wife, Ling Qui, which sets out
the terms upon which these parties are divorced, and the Writ
of Execution and the Order are an attempt by the United
States of America to circumvent the divorce decree.
(Doc. 785). However, as detailed in the United States'
response, the divorce decree and resulting quit claim deeds
should be set aside as fraudulent transfers.
31, 2017, this Court sentenced Defendant Xiulu Ruan to 252
months imprisonment and to pay $15, 239, 369.93 in
restitution and a special assessment of $1, 500. (Doc. 665).
The United States reports that Ruan has paid no funds towards
restitution and has paid only $100 towards the special
assessment through the Inmate Financial Responsibility
Program. Ruan's court-ordered restitution gives rise to a
lien in favor of the United States on all of his property and
rights to property, just as if the liability were for a tax
assessed under the Internal Revenue Code of 1986. 18 U.S.C.
§ 3613(c). That lien arose upon the entry of
judgment of divorce was entered on December 10, 2017 which
transferred the majority of Ruan's assets to Ling Cui.
(Doc. 796-2). On May 10, 2018, this Court entered a
restraining order prohibiting Ruan, his former wife and their
agents from “pursuing further action to transfer the
real and personal property set forth in the ‘JUDGMENT
OF DIVORCE' filed December 7, 2017, in Circuit Court of
Mobile County, Alabama, CIVIL ACTION No.
DR-2011-901100.00-H.” (Doc. 769). On May 11, 2018 and
June 7, 2018, quit claim deeds were recorded to perfect the
transfer of Alabama and Florida properties from Ruan and his
LLC to his former wife, Ling Cui, in accordance with the
divorce decree. (Docs. 796-9, 796-10). A deed must be
recorded to perfect the transfer of property set out in the
divorce decree from Ruan and his LLC to Cui . Johnson v.
Haleyville Mobile Home Supply, Inc., 477 So.2d 328 (Ala.
1985) (properly recording an instrument perfects the transfer
of title). As such, recording the deed constitutes
“pursuing further action to transfer the real ...
property set forth in the ‘JUDGEMENT OF DIVORCE'
” and violates this Court's restraining order.
29, 2018, this Court issued an Order for a Writ of Execution
for 15 properties that were owned either solely by Ruan or
Ruan's single member LLC (XLR Properties, LLC) or jointly
by Ruan and his former wife, Ling Cui. (Doc. 772). The United
States Marshal's service seized the properties and filed
returns of service. (Docs. 781, 784, 790, 791, 793, 794,
795). On September 5, 2018, counsel for the United States
served counsel for Ling Cui, via email. (Doc. 796-11). On
September 12, 2018, Ruan filed the instant objection. In
response, the United States moves to proceed with the
execution and to void and set aside the divorce decree and
quit claim deeds as fraudulent transfers.
to 18 US.C. § 3613(d), upon the proper filing of a
notice of lien, a restitution lien is “valid against
any purchaser, holder of a security interest, mechanic's
lienor or judgment lien creditor” in the same manner as
a notice of tax lien filed under 26 U.S.C. § 6323(f)(1)
and (2) of the Internal Revenue Code. In the instant case,
the United States filed notices of lien with the Mobile
County, Alabama Probate Court on June 12, 2017 and in Bay
County, Panama City, Florida on May 3, 2018. (Doc. 796-1).
Upon filing the notices of lien, the lien was perfected
against all third-party claims that did not have a prior
perfected lien. The quit claim deeds in question were
perfected on May 11, 2018 and June 7, 2018, after the United
States' lien was perfected.
transfer or obligation “is fraudulent as to a debt to
the United States, whether such debt arises before or after
the transfer is made or the obligation is incurred, if the
debtor makes the transfer or incurs the obligation”-
(A) with actual intent to hinder, delay, or defraud a
(B) without receiving a reasonably equivalent value in
exchange for the transfer or obligation if the debtor-
(i) was engaged or was about to engage in a business or a
transaction for which the remaining assets of the debtor were
unreasonably small in relation to the business or
(ii) intended to incur, or believed or reasonably should have
believed that he would incur, debts beyond his ability to ...