                             In the
 United States Court of Appeals
               For the Seventh Circuit
                          ____________

No. 00-4004
UNITED STATES OF AMERICA,
                                                Plaintiff-Appellee,
                                 v.

HERBERT AND CAROL ENGH,
                                          Defendants-Appellants,
                                and

MARSTONMOOR TRUST,
                                            Intervenor-Appellant.
                          ____________
            Appeal from the United States District Court
       for the Northern District of Illinois, Western Division.
           No. 97 C 50309—Philip G. Reinhard, Judge.
                          ____________
      ARGUED APRIL 10, 2003—DECIDED JUNE 2, 2003
                     ____________


  Before BAUER, RIPPLE, and EVANS, Circuit Judges.
  EVANS, Circuit Judge. The Enghs, Herbert and Carol
(along with a trust they created), appeal a finding that they
engaged in a fraudulent conveyance 20 years ago. The
finding grows out of an action by the government to col-
lect a 1982 federal tax liability by, among other things,
foreclosing a lien on property the Enghs passed to a trust
“for the benefit of their daughters” in 1983. Because we
agree that the conveyance was indeed fraudulent, we re-
2                                               No. 00-4004

ject the Enghs’ appeal and affirm the judgment of the
district court.
  Despite a good paying job as a pilot with American
Airlines, Herbert Engh (we need not refer to Carol any
more as she is just in this case for the ride) bought into
the tax protest movement. In 1982, while disputing an
IRS claim that his 1979 tax return included an improper
$8,000 deduction, Engh relied on tired—and uniformly
rejected—arguments of the tax protester movement, in-
cluding an assertion that the federal tax on income is
unconstitutional. He lost the dispute, paid the deficiency,
but then embraced the tax protest movement with greater
vigor. In his own words he amassed “a whole library” of
books concerning the legality of the income tax. Convinced
that the “system” did not apply to him, he stopped filing
returns from 1982 through 1987, although his pilot’s
salary was in the neighborhood of $100,000 a year. In
addition, Engh did things like file an IRS Form W-4 with
American Airlines claiming to be exempt from income tax
withholding. He also stashed all mail received from the
IRS in a drawer, unopened.
  It was in this climate that Engh created an Illinois land
trust which he called “The Marstonmoor Trust” in 1983.
The trust instrument came to Engh via George Thiel, a
well-known apostle of the tax protest movement. Once
created, Engh transferred his interest in his home, which
was on a four-parcel tract of land on Marstonmoor Road
in Davis, Illinois, to the trust.
  Although the government in this suit sought a more
sizeable deficiency, the district court settled on $39,049.56
as the amount due on Engh’s 1982 federal income tax
return. That figure is not challenged on this appeal. It
is only the characterization of Engh’s transfer of his in-
terest in the Marstonmoor property that we need to con-
No. 00-4004                                                 3

sider.1
  Under Illinois law, which governs in this case, a convey-
ance is void if it is “made with the intent to disturb, delay,
hinder or defraud creditors or other persons.” Ill. Rev. Stat.
ch. 59, para. 4 (repealed 1990). In 1989 Illinois adopted
the Uniform Fraudulent Transfer Act (UFTA), 740 ILCS
160/1, which became effective on January 1, 1990. Levy v.
Markal Sales Corp., 724 N.E.2d 1008, 1010 (Ill. App. Ct.
2000). Although the district court analyzed Engh’s 1983
property transfer to the trust under the UFTA, whether
the UFTA applies retroactively is not clear. Compare
Farm Credit Bank of St. Louis v. Lynn, 561 N.E.2d 1355,
1357 (Ill. App. Ct. 1990) (finding that UFTA injunctive
relief provisions could be granted against pre-enactment
fraudulent conveyances); Cannon v. Whitman Corp., 569
N.E.2d 1114, 1117-1118 (Ill. App. Ct. 1991) (same, noting
that other states had applied the UFTA retroactively),
with Klingman v. Levinson, 114 F.3d 620 (7th Cir. 1997)
(applying pre-UFTA law to a pre-enactment transfer). We
need not decide the UFTA retroactivity issue, however,
because the result in this case would be the same under
any version of Illinois law. Under both the UFTA and
preexisting law, a transfer is fraudulent if the trans-
feror acted with the actual intent to hinder creditors.
Compare Ill. Rev. Stat. ch. 59, para. 4 (1989) with 740 ILCS
160/5(a)(1) (2002). See United States v. Kitsos, 770 F. Supp.
1235 n.13 (N.D. Ill. 1991); In re Sevko, Inc., 143 B.R. 167,
173 (Bankr. N.D. Ill. 1992); United States v. Paradise, 127
F. Supp. 2d 951, 954 n.3 (N.D. Ill. 2000).
  As Arthur Godfrey once said, “I’m proud to be paying
taxes in the United States. The only thing is—I could be


1
  Although we originally questioned our jurisdiction and thus
asked the parties to file memoranda on the point, our review
now convinces us that the district court’s order was final and
that we do have jurisdiction under 28 U.S.C. § 1291.
4                                              No. 00-4004

just as proud for half the money.” Few people enjoy pay-
ing taxes, and Mr. Engh is certainly in the majority. But
most people do not react as he did and suffer the conse-
quences he has suffered. His case is a good example of
why taxpayers, even very frustrated taxpayers, should
resist the false siren call of the tax protester movement.
Engh can win his case today only if the record fails to
support the finding of District Judge Reinhard that his
1983 property transfer machinations had nothing to do
with playing a shell game to keep his assets away from
the reach of the government. In this quest, Engh has a
very difficult row to hoe.
  As we see it, the record in this case is brimming with
evidence supporting the district court’s conclusion that the
transfer in question was fraudulent. To demonstrate the
existence of fraudulent intent, Illinois law looks to the
presence of “badges of fraud.” See Kaibab Indus., Inc. v.
Family Ready Homes, Inc., 372 N.E.2d 139, 142 (Ill. App.
Ct. 1978). And Engh has badges galore. For one thing, no
consideration was given for property that had considerable
value (“love and affection” is not legal consideration, see
O’Neill v. DeLaney, 415 N.E.2d 1260, 1266 (Ill. App. Ct.
1980)). For another, Engh retained possession of the
property, continuing at all times to live there and pay
property taxes and maintenance expenses. Transferring
the title of assets while retaining their use and enjoyment
is a sham. Finally, Engh’s transfer was to family mem-
bers, and although a transfer to family members doesn’t
always raise eyebrows, eyebrows must be raised here
when the transfer is viewed in the context of what else
was going on in Engh’s life when the conveyance was
made. Regardless of what other motivations for the trans-
fer may have been present, a clear intent to avoid a
creditor—the IRS—was also present.
  Engh’s actions soon after the transfer cast more light on
his intentions. As his interest in the tax protester move-
No. 00-4004                                              5

ment increased, so did his efforts to put his property
and income beyond the reach of the tax laws. Among his
efforts were an investment in offshore companies and the
conversion of his paychecks into bullion (using commodity
and barter associations). In buying bullion, he used sepa-
rate transactions to fly under the $10,000 requirement
for filing currency transaction reports. Engh also put his
American Airlines retirement funds into a limited part-
nership investing in South American gold mines. Another
fact cannot be denied: In 1991 Engh was convicted on
three counts of federal income tax evasion and five counts
of failure to file returns for which he served 28 months of
a 48-month prison sentence. The events forming the ba-
sis for his convictions started to unfold in 1983 when the
Marstonmoor home went into the trust. All of these
events, even those occurring after the 1983 property trans-
fer, are fair game as circumstantial evidence bearing on
the issue of Engh’s state of mind when he moved the
Marstonmoor property out of his name.
  We could go on and on, but that’s unnecessary, for this
isn’t even a close case. The circumstances overwhelmingly
demonstrate that Engh transferred his interest in the
Marstonmoor property to the trust in furtherance of a
scheme to put his assets out of the reach of the IRS. The
judgment of the district court is AFFIRMED.

A true Copy:
      Teste:

                       ________________________________
                       Clerk of the United States Court of
                         Appeals for the Seventh Circuit



                   USCA-02-C-0072—6-2-03
