UNITED STATES OF AMERICA, Plaintiff-Appellee, v. VICTOR ROBERT NAVA, SR., aka Big Vic, Defendant, and VICTORIA NAVA, Defendant-Appellant.
No. 03-30010
D.C. No. CR-00-00121-JDS
UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT
Filed April 18, 2005
4217
Before: Diarmuid F. O’Scannlain, Pamela Ann Rymer, and Jay S. Bybee, Circuit Judges. Opinion by Judge Bybee; Dissent by Judge Rymer
Argued and Submitted March 5, 2004—Seattle, Washington
Jack E. Sands, Attorney at Law, Billings, Montana, for the appellant.
William W. Mercer and James E. Seykora, U.S. Attorney’s Office, Billings, Montana, for appellee United States of America.
BYBEE, Circuit Judge:
Victor “Big Vic” Nava, Sr., was convicted of conspiracy to distribute and possession with intent to distribute methamphetamine. The jury also rendered a special verdict that several properties were used to facilitate his crimes or were proceeds of them and should be forfeited to the government pursuant to
We must decide whether forfeiture was proper where Victor has never held title to the two forfeited properties. We reverse and remand.
I. BACKGROUND AND PROCEEDINGS
A
The government may seek the forfeiture of property in either a civil or a criminal proceeding. The principal civil drug forfeiture provision,
In a proceeding under
Section 853 provides that any person convicted of a violation of specified drug laws, punishable by more than a year of imprisonment, shall forfeit to the United States
(1) any property constituting, or derived from, any proceeds the person obtained, directly or indirectly, as the result of such violation; [and]
(2) any of the person’s property used, or intended to be used, in any manner or part, to commit, or to facilitate the commission of, such violation.
Section 853(n) specifies procedures under which third parties may assert their interests in the forfeited property. After the court enters the preliminary order of forfeiture as part of the defendant’s sentence, the United States must publish notice of the order.
The petitioner may prevail only upon showing, by a preponderance of the evidence, that he possessed a vested or superior legal right, title, or interest in the property at the time the criminal acts took place, or that he was a bona fide pur
(A) the petitioner has a legal right, title, or interest in the property, and such right, title, or interest renders the order of forfeiture invalid in whole or in part because the right, title, or interest was vested in the petitioner rather than the defendant or was superior to any right, title, or interest of the defendant at the time of the commission of the acts which gave rise to the forfeiture of the property under this section; or
(B) the petitioner is a bona fide purchaser for value of the right, title, or interest in the property and was at the time of purchase reasonably without cause to believe that the property was subject to forfeiture under this section.
Section 853(n) is the exclusive proceeding in which third parties may claim interests in property subject to criminal forfeiture. Libretti v. United States, 516 U.S. 29, 44 (1995) (“Once the government has secured a stipulation as to forfeitability, third-party claimants can establish their entitlement to a return of the assets only by means of a hearing afforded under
B
A superseding indictment charged Victor with multiple counts of possessing marijuana and methamphetamine with intent to distribute and conspiring to possess those drugs, in violation of
A jury convicted Victor of conspiracy to possess with intent to distribute methamphetamine and marijuana, and possession of those and other illegal drugs. In a special verdict, the jury found that the three properties had been “used or intended to be used to facilitate” Victor’s crimes or were pro
After the government published notice of the intended forfeiture, Victoria submitted a handwritten “Proof of Ownership” to the district court, claiming that two of the three properties—the 414 and 1102 properties—were hers. She moved to set aside the forfeiture order.
At an ancillary hearing to determine if forfeiture was proper, Victoria testified that she acquired the 1102 property indirectly from her grandmother, Jessie Nava, who owned the property for many years. According to Victoria, Jessie wanted Victoria to own it when Victoria reached the age of 18, and therefore deeded it in 1990 to Frank Nava, Victoria’s cousin, to hold until Victoria reached that age. Victoria contended that because the property was a gift she paid only a dollar for it when Frank deeded it to her in 1996 upon her reaching her eighteenth birthday. Frank Nava’s testimony corroborated this account. In addition, Victoria introduced two deeds: one from Jessie to Frank that was dated July 1990, and another from Frank to Victoria that was dated April 1996. Both deeds listed $1.00 as the consideration.
As for the 414 property, Victoria testified at the ancillary hearing that her cousin, Frank Nava, purchased it from Robert E. Lee in 1991 and that Frank deeded it to her in 1996. She claimed that Frank gave it to her for nothing, “[o]ut of the goodness of his heart.” Frank testified that he gave the property to Victoria but that he did so because he hoped to keep it from his wife, whom he eventually divorced. Two deeds introduced as evidence corroborated the sequence of title. A deed dated 1991 showed a transfer from Lee to Frank, and
Except for transfers to a bonding company, Victoria has retained title to both properties since 1996. The 414 property remains entirely in her name and has been occupied by various relatives. The 1102 property is now jointly in her and her husband’s names. At the time of the hearing, she had lived at the 1102 property for six years. Victoria testified that in 2001 she deeded the 1102 property to herself and her husband, Joseph Reyna, jointly in order for them to borrow $33,000 on the house. She testified that they initially intended to use the loan for home improvements, but ultimately used it to hire a lawyer for Victor’s criminal trial. Victoria’s husband Joseph corroborated her account and further testified that the couple remains liable on the loan and pays monthly installments of $314. Victoria also introduced documentary evidence of this transfer. A deed dated April 2001 showed a transfer from Victoria to Victoria and Joseph jointly. A copy of Victoria and Joseph’s loan application on the 1102 property also substantiated their account. The application stated that because Victoria did not work outside of the home, the property was transferred from Victoria’s sole name to herself and Joseph Reyna jointly in order to secure the loan. It showed that Victoria had received the property as a gift and that the purpose of the loan was to obtain cash for unspecified purposes.
The government introduced a title search, which corroborated Victoria’s account. A representative of the title company testified that, except for brief periods when the properties were deeded to a bonding company, both properties had been in Victoria’s name since 1996, until 2001 when the 1102 property was placed in Victoria’s and Joseph’s names jointly.
The district court denied Victoria’s motion to set aside the forfeiture order. The district court held that Victoria was not a bona fide purchaser for value because “she paid one dollar for one of the houses and was given the other.” The court fur
II. ANALYSIS
A
[1] At the outset, we must determine what law to apply.3 We have held that “[s]tate law determines whether Claimants have a property interest, but federal law determines whether or not that interest can be forfeited.” Hooper, 229 F.3d at 820. See also Lester, 85 F.3d at 1412 (“Once ownership interests are defined under state law, however, the federal forfeiture statutes determine whether those property interests must be forfeited to the Government.”); United States v. Alcaraz-Garcia, 79 F.3d 769, 774 (9th Cir. 1996) (“Under
[2] The dissent argues, relying on the Fourth Circuit’s decision in Morgan, 224 F.3d at 343, that while “legal title” must be established under state law, the question of “bare legal title” is a matter of federal law. Dissent at 4251-53. We disagree that the notion of “bare legal title” can be separated from the principle of “legal title” and decided as a matter of federal law. Congress has not employed the phrase “bare legal
The “devolution of property . . . is an area normally left to the States,” United States v. Oregon, 366 U.S. 643, 649 (1961), the transfer of property being a “part of the residue of sovereignty retained by the states, a residue insured by the Tenth Amendment.” United States v. Burnison, 339 U.S. 87, 91-92 (1950). There are few things as important to the states as to be able to guarantee the integrity of title to real property. See Warburton v. White, 176 U.S. 484, 496 (1900) (“Where state decisions have interpreted state laws governing real property, or controlling relations which are essentially of a domestic and state nature—in other words, where the state decisions establish a rule of property—this court, when called upon to interpret the state law, will, if it is possible to do so, in the discharge of its duty, adopt and follow the settled rule of construction affixed by the state court of last resort to the statutes of the state, and thus conform to the rule of property within the state.”); Hervey v. R.I. Locomotive Works, 93 U.S. 664, 671 (1877) (“[E]very state has the right to regulate property within its limits.”). The Court recognized this even in Swift v. Tyson when its example of “state laws strictly local” was “rights and titles to things having a permanent locality, such as the rights and titles to real estate, and other matters immovable and intraterritorial in their nature and character.” 41 U.S. (16 Pet.) 1, 18 (1842), overruled on other grounds, Erie R.R. v. Tompkins, 304 U.S. 64 (1938).
As a practical matter, dual sovereignty does not work with respect to property rights, particularly with regard to the transfer of real property. Were Congress to create a different system, or were we to try to create a federal common law of property ownership in forfeitures, it would risk upsetting settled expectations in property transfer rules in the states. As the
[3] We thus disagree with the dissent and the Fourth Circuit that we are free to reject “the role of state law,” Morgan, 224 F.3d at 343, when, irrespective of whether the state would recognize the title, we think the transaction is a sham. We have previously rejected Morgan’s approach, Hooper, 229 F.3d at 820 n.5., and we repeat our disagreement with that decision.4 Federal forfeiture statutes govern the disposition of property, but state law determines what rights, title or interests the various claimants possess in that property.
B
[4] Under
[5] Montana presumes that a person possessed of the record title is the lawful owner. See
Victor’s crimes actually began much earlier, perhaps as early as 1991, the district court specifically instructed the jury that these crimes were “previously committed,” “not charged here,” and admitted under
Victoria’s legal title does not end our inquiry, however. If state law would recognize an “actual” owner over a “straw” or “nominal” owner, then we must inquire whether Victoria was a mere nominal owner and Victor the actual owner of the 414 and 1102 properties. See United States v. O’Dell, 247 F.3d 655 (6th Cir. 2001) (holding under Tennessee law that defendant’s rights to a property were extinguished because defendant did not pay the mortgage interest and the warranty deed on the property was re-acquired by another party); United States v. Alcaraz-Garcia, 79 F.3d 769 (9th Cir. 1996) (holding under California law that appellants retained dominion and control over the property and could have reclaimed their property). Montana courts have recognized that “dominion and control” is the essence of ownership and not “bare legal title.” Safeco Ins. v. Lapp, 695 P.2d 1310, 1312 (Mont. 1985) (citing National Farmers Union Property & Cas. v. Colbrese, 368 F.2d 405 (9th Cir. 1966)); see also Kranjcec v. Behnak, 132 P.2d 150, 152-53 (Mont. 1942); Hayes v. Moffat, 271 P. 452, 454 (Mont. 1928); Earl v. Benger, 20 P.3d 788, 791 (Mont. 1918).6
The “constructive trust” doctrine “arises when a person holding title to property is subject to an equitable duty to convey it to another on the ground that the person holding title would be unjustly enriched if he were permitted to retain it.”
[7] Neither of these trust doctrines favors finding title in Victor.7 His occasional tax payments, improvements, and illegal activities on the property do not demonstrate his ownership interests. As Montana cases show, it is perfectly consistent with ownership for a parent or other relative to make tax payments, improvements, and even mortgage payments without having a trust imposed on the record title holder. It takes more than anecdotal evidence—indeed, it takes “clear and convincing evidence”—to dispossess a record title holder who has exercised any of the usual privileges of ownership, such as residing on the property, transferring title and taking out a second mortgage, all of which Victoria did.
The district court did not expressly rely on these doctrines, nor has the government urged these doctrines on appeal. Rather, the district court simply rejected the conclusion that Victoria held lawful title. It cited three reasons: (1) the jury at Victor’s criminal trial heard the testimony of several witnesses and determined that Victor owned the houses; (2) Victoria “never maintained significant employment, and she demonstrated no means of paying for costs associated with the houses;” and (3) a federal probation officer testified that “Victoria told him that Victor either gave to her or sold her the residence.” Since it is not self-apparent that these reasons will support a conclusion that Victoria held the property in a constructive or a resulting trust for Victor, we will examine the facts underlying each reason.
1
[8] Before turning to the witnesses heard by the jury, we note that the jury at Victor’s trial did not decide who owned the properties or held title to or interest in them. Instead, it decided whether the properties were eligible for forfeiture under
The district court expressly drew this distinction in its jury instructions. The court admonished the jurors that the properties “may be held in the name of a person or business entity other than that of the defendant” and that “you should simply disregard any such title or formal claim of ownership.” The
The district court’s reliance on the testimony of the witnesses heard by the jury is troubling. As the court characterized their collective testimony, without identifying any particular witness or statement, the witnesses “indicated that the houses belonged to Victor Nava.” We do not know which of the witnesses’ testimony the district court credited, or whether the district court thought it was bound by the jury’s findings or came to its own conclusion, but the evidence does not support the district court’s conclusion.
The government has cited the testimony of five witnesses who testified regarding the 414 and 1102 properties. With respect to the 414 property, one witness, Robert Schaefer, Jr., testified that he did some work at the house and that Victor paid him cash. He also described it as “[Victor’s] son’s house,” and a place where he had purchased drugs. A second witness, Sandy Illie, testified that she obtained drugs from Victor’s son, Victor Nava, Jr., at the 414 house. A third witness, Jeff Holliday, was asked if he was familiar with the 414 house; he answered that it was Victor’s house. He did not explain what basis he had for believing that. He also related that he had had a conversation at some point with Frank Nava about one of the properties:
A. . . . . [Frank Nava] had said something about he had a disagreement with Victor because he wasn’t
paying the money for it, for him keeping the name in his house [sic].
Q. Victor was not paying [Frank] for keeping the house in his name?
A. Yeah.
Q. And which house was he referring to?
A. I’m not sure which one it was.
Q. Was it one of these three that have been pictured here today?
A. I’ve got a feeling it’s the [414 property], but I’m not sure. I’m pretty sure. That’s what my guess would be.
The evidence does not come close to showing that the 414 property was Victor’s. The witnesses relied on hearsay, suggested two different owners (Victor and Victor, Jr.), and could not even identify with any certainty which property they were talking about.
There was more testimony with respect to the 1102 property, but the testimony is even more convoluted. Two witnesses testified they had gone to the 1102 house to purchase drugs. One testified that he obtained the drugs from Victor, but he offered no time frame for his activities. Robert Schaefer and Jeff Holliday both testified that they did work at the 1102 house and were paid in cash or drugs; one testified he was paid by Victor, and the other, by Victoria. Holliday identified the 1102 house as Victor’s daughter’s house and knew that it had belonged to Victor’s mother. He later testified that the house was Victor’s. “He owns it, but he doesn’t live there.” When asked if Victor told him it was his house, Holliday equivocated: “Well, he didn’t ever tell me it was his
[9] There is other evidence that the government introduced at the ancillary hearing that hinted that Victor might actually control the properties, but these suggestions are not enough to surmount the fact that the properties vested in Victoria before the earliest date of the crimes for which Victor was convicted. At the ancillary hearing, the government introduced, over Victoria’s objection, the plea agreement that Victor struck with the government and subsequently withdrew. In it, he agreed to forfeit any asset acquired through the proceeds of drug sales and any asset used to facilitate drug trafficking, and he expressly agreed to forfeit the 414 and 1102 properties as included in these categories. Despite Victor’s representation to the government that he owned both properties, his assertion of ownership in a plea agreement does not establish legal or equitable title under Montana law. While Montana courts have invoked estoppel to prevent a claim of ownership, see Kauffman-Harmon v. Kauffman, 36 P.3d 408, 412 (Mont. 2001), Victor’s plea bargain representation cannot establish his ownership. “[A] defendant’s consent to forfeit property does not expand the Court’s power over that property, if the property is not the defendant’s own,” United States v. Schwimmer, 968 F.2d 1570, 1580-81 (2d Cir. 1992), for the obvious reason that he cannot agree to forfeit property that belongs to someone else.
[10] None of this testimony concerning the 414 and 1102 properties, whether considered individually or collectively, demonstrates that Victor is the owner of the properties. It is
2
The district court‘s general observation concerning Victoria‘s ability to maintain the houses is equally misplaced. Victoria testified that she was unemployed during much of the time she held the title to the houses, but she also testified that she had three children five years of age and under, and her husband testified that he had been employed. Moreover, she acquired both properties by gift so that, apparently, there was no mortgage to pay until she and her husband borrowed against the 1102 property to pay for Victor‘s attorneys fees; even then, Joseph testified that they were paying on the loan.
[11] There is evidence that Victor made tax payments and some improvements on the properties. Victoria herself testified that her father had made several tax payments for them. This has been addressed in Montana law. Occasional payments on behalf of another—without some additional evidence of the intent of the parties—do not create a resulting or
3
[12] Finally, the district court placed great weight on the testimony of federal probation officer Steven Willis, who testified at the ancillary hearing that Victoria told him that Victor either gave her or sold her the 1102 property where she resides with her husband and children. The district court credited Willis‘s testimony and found Victoria‘s testimony not credible because “[w]hen asked if she knew her father to be a drug dealer, she testified she did not. Given Victor Nava‘s reputation in the community, the Court finds this answer implausible.” Given the overwhelming evidence of Victor‘s drug activities, we accept the court‘s finding that Victoria‘s denials are implausible, but her lack of candor regarding her father‘s drug dealing cannot controvert the indisputable facts supporting her ownership of the property. More importantly, Willis‘s testimony does not show that Victor is the owner of the property. Willis testified as follows:
I spoke with Victoria, and she indicated — I asked her how it was going with that. And she indicated she thought they may be able to keep their place. That she owned the place. And she had gotten the place, I‘m a little hazy whether she said she bought it from her dad or he had given it to her.
D
The dissent argues that federal courts must look beyond a claim to legal title to discern ownership and that straw owners may not reclaim property subject to forfeiture. Dissent at 4253-54 & nn.7-8. Even if we could accept the dissent‘s “bare legal title” test as a matter of federal common law, we could not conclude that Victor had better title under federal precedents. The cases cited by the dissent divide themselves into two patterns. In the first line of cases the defendant once held the title and then transferred his title to a nominal owner. See, e.g., Totaro, 345 F.3d at 996-99 (wife acquired title from defendant-husband; he represented himself as the owner and used the property as collateral for loans; proceeds from defendant‘s unlawful activities went into wife‘s account from which property-related expenses were paid; applying New York law);9 United States v. Ben-Hur, 20 F.3d 313, 314-15,
[13] In sum, Victoria demonstrated by a preponderance of the evidence that she holds legal title to the 414 and 1102 properties. She has exercised nearly continuous possession of the 1102 property with her husband and children. Although Victor made some tax payments on her behalf and may have conducted some activities, lawful and unlawful, on the 1102 property, the evidence falls well short of demonstrating the kind of “dominion and control” necessary to defeat her title under Montana law. Similarly, with respect to the 414 property, there is insufficient evidence to show Victor‘s control of that property. Again, he may have conducted some activities on the property, but he does not live there and does not control the property.11 The government has not offered any proof that Victor paid the purchase price for either of the properties on behalf of Victoria. Victoria received the deeds of both properties as gifts (and paid consideration of one dollar for each of the properties), but there is no showing by the government that Victor paid for the property or arranged for the gift or otherwise manipulated the system to disguise his real ownership of the property. Nor has the government shown that Victoria will be unjustly enriched by retaining her interest in the property. The facts will not support a claim that Victoria held the property as a resulting or constructive trust for Victor and, thus, Victor has never owned these properties in any sense recognized by Montana.
We recognize that it is possible that Victor “gamed the system” by encouraging transfer of the 414 and 1102 properties from his mother, Jessie, to his nephew, Frank, to his daughter, Victoria. If so, then Victor misjudged his right to control the property; with title go privileges and liabilities that give rise to predictable risks. When Victoria acquired title to the prop
ship, she assumed certain legal risks. She assumed liability for the taxes owed on the property. She assumed the risk for failing to clear the sidewalks of snow and ice, for not maintaining the property, and for observing any zoning restrictions. It is nearly unthinkable that if the city had approached her about any of these problems that she could have interposed the defense that her father really “owned” the property and he should be liable. By not acquiring lawful title for himself, Victor too assumed legal risks. He assumed the risk that Victoria would die, and that her property would pass to her lawful heirs. He assumed the risk that Victoria would exercise the privilege of ownership and would convey the property to someone else, including a bona fide purchaser; or that she would remodel the house or take out a second mortgage for her own use. Others, not a part of the Nava family, assumed risks based on Victoria‘s apparent ownership as well. The bank, relying, evidently, on the recording laws and Victoria‘s proof of occupancy, issued a second mortgage to Victoria.
We must “heed[ ] the Supreme Court‘s recent admonition that ‘[i]mproperly used, forfeiture could become more like a roulette wheel employed to raise revenues from innocent but hapless owners . . . , or a tool wielded to punish those who associate with criminals, [rather] than a component of a system of justice.’ ” Lester, 85 F.3d at 1413 (quoting Bennis v. Michigan, 516 U.S. 442, 456 (1996) (Thomas, J., concurring)). We doubt that there is any other context in which Victoria‘s ownership might be pitted against Victor‘s in which we would conclude that Victor is the rightful owner of the 414 and 1102 properties. For example, if Victoria had been charged with drug activity, the government might well have sought the forfeiture of her property; and if Victor had come forward to claim that the property was really his—even though he didn‘t have title and had never lived there—there is little doubt that we would dismiss his claim as nearly frivolous.
The dissent, the district court and the government have in reality proceeded on the belief that this is a bad family and
III. CONCLUSION
The district court erred in holding that Victoria failed to establish by a preponderance of the evidence that she had a legal right, title or interest in the 414 and 1102 properties. In light of our disposition, we do not address whether Victoria was a bona fide purchaser for value. See
REVERSED AND REMANDED.
RYMER, Circuit Judge, dissenting:
I part company with the majority because I do not believe that forfeiture pursuant to
I also part company with the majority‘s suggestion that, when the claimant to forfeited property holds bare legal title,
Thus, I would hold that Victoria Nava was required to prove that she held title to 414 South 25th Street (414) and 1102 South 28th Street (1102) for herself rather than for Victor at the time Victor committed the acts that gave rise to forfeiture. Following Victor‘s trial and an evidentiary hearing on Victoria‘s petition, the district court found that Victoria was not credible and that she had not established that the right, title or interest in either house was vested in her rather than Victor. The trial court‘s credibility findings are entitled to deference, and its findings of fact are well supported given evidence that Victor paid taxes on these properties as well as others held by other people; repairs were done at his behest and at his expense; Frank Nava (Victor‘s nephew who transferred 414 and 1102 to Victoria) held properties for Victor; 414 and 1102 came to be in Victoria‘s name on the same date although for ostensibly different reasons; Victoria and her husband had no visible means of lawfully maintaining the properties; and they took out a $33,000 mortgage on 1102 to defray Victor‘s legal expenses. I would, therefore, affirm.
I
Victor Nava, Sr. was indicted on November 20, 2000 for conspiracy to distribute dangerous drugs and possession with intent to distribute them on or before June 11, 1997. After he
There was never any question that Victoria held title to the two houses; the whole purpose of the hearing was to allow the introduction of testimony and exhibits so that the trial judge could determine whether the properties were really Victor‘s, or Victoria‘s. Victoria did not prove that she was a bona fide purchaser for value, as she paid one dollar for one of the houses and was given the other.
The evidence shows that Victoria received warranty deeds from Frank Nava for both 414 and 1102 on April 11, 1996.2 She testified that Frank gave her the 1102 house because he had received it from their grandmother who wanted Victoria to have it when she turned eighteen, and that Frank gave her the 414 property to prevent his wife from acquiring it in a divorce. However, Victoria had previously told a federal probation officer assigned to a case involving her husband that she received 1102 as a gift from Victor.
Robert Schaefer testified that Victor arranged for Schaefer to do remodeling work and yard clean-up on both houses, and that Victor paid him for the work. Victor purchased the building supplies. Jeff Holliday also did work for Victor on 1102. He stated that the house used to belong to Victor‘s mother, then Victor had taken ownership from her “but he doesn‘t live there.” Holliday testified to a conversation he overheard between Victor and Victor‘s nephew, Frank Nava, in which Frank and Victor argued over Victor‘s failure to pay Frank for his “service” of holding title to Victor‘s property in his name. Another witness testified that he lived in the 1102 house and paid Victor rent. He also stated that Victor had refused to provide him a receipt for the rent because the house was held in someone else‘s name. Bill Keene testified that he owned property at 414 which he sold to Victor Nava, Sr. for $2000 in cash; however, the deed was placed in the name of Victor Nava, Jr. and was never recorded. Victor paid taxes on this property.
Both houses were used to distribute drugs. Jeff Holliday testified that he had sold “crank” to Victoria at 1102. Laura Ison testified that Victor sent her to both houses to obtain drugs. Sandy Ilie testified that she went to 1102 for drugs between 1996 and 1999 and that she obtained drugs from Victor Nava, Jr. at 414.
Ison testified that Victor invited her to live at 414. Rudy Lucero lived at 414 for a couple of years when the property
Victoria lived at 1102 for some of the time after the deed was recorded in her name in 1996. She and her husband, Joseph Reyna, took out a mortgage in the amount of $33,000 on April 4, 2001. She executed a warranty deed on 1102 to Reyna and herself as joint tenants on April 19, 2001. All of the proceeds of the mortgage except what was necessary to pay loan expenses went to pay Victor‘s legal fees. There was no expectation that he would pay the money back.3
The district court explicitly found credible the probation officer‘s testimony that Victoria had told him that Victor gave or sold 1102 to her, and the court found Victoria was not credible.4 The court concluded that Victoria had failed to show that the right, title or interest in either house vested in her rather than Victor, or that her interest in the houses was superior to Victor‘s.
Victoria argues that the district court‘s approach was flawed because criminal forfeiture cannot cause the forfeiture of property not owned by the defendant. She contends that she received both houses by direct deed from her cousin Frank Nava, and never received either from Victor, directly or indirectly. Victoria also submits that it was clear error for the district court to conclude that she failed to show a legal right to the property, as the titles of record establish that she was deeded both properties in 1996.
Victoria‘s contentions necessarily fail as to 1102 because the district court explicitly found that this residence came from Victor. Her contentions equally fail as to 414 given the court‘s adverse credibility determinations as to Frank Nava as well as Victoria. This leaves no evidence credited by the trier of fact that Victoria received either property as a gift from Frank, and substantial evidence that Victor exercised dominion and control over both properties. The only possible conclusion on this record is the one reached by the district court, that Victoria failed to carry her burden of showing that she held title for herself rather than for Victor.
Victoria has never argued that there is anything about Montana law that affects the analysis. I would not venture there, as the majority does. First, the path is uncharted, unbriefed, and unvetted. Even more importantly, there is no issue in this case about the nature of the petitioner‘s alleged interest that requires resort to state law.5 The character of Victoria‘s interest has never been in dispute: she had legal title that was free and clear except for occasional transfers to a bonding com-
Under the law of this circuit, ownership interests (such as community property) are defined under state law while the federal forfeiture statutes determine whether those property interests must be forfeited to the government. See, e.g., United States v. Lester, 85 F.3d 1409, 1412 (9th Cir. 1996); United States v. Alcaraz-Garcia, 79 F.3d 769, 774 (9th Cir. 1996). Here the ownership interest is legal title. The question is whether that interest may be forfeited. I believe this is a matter of federal law, and that the answer is yes, an interest based upon bare legal title may be forfeited if the title is held in name only.
The Fourth Circuit so held in a
The intent of Congress in enacting the forfeiture provisions of
§ 853 was to “strip these offenders [racketeers and drug dealers] and organizations of their economic power.” S.Rep. No. 225, reprinted in 1984 U.S.C.C.A.N. 3182, 3374. Therefore, Congress noted that§ 853(n)(6) “should be construed to deny relief to third parties acting as nominees of the defendant or who knowingly engage in sham or fraudulent transactions.” S.Rep. No. 225, supra at3392 n.47. In order to effectuate the legislative purpose of the statute, courts must evaluate whether the petitioner is a nominee when reviewing the substance of a § 853(n) claim.
Id. at 343 (alteration in original). The court further reasoned that “[f]ailing to look beyond bare legal title or whether the petitioner has a property interest under state law would foster manipulation of ownership by persons engaged in criminal activity.” Id. Accordingly, based on evidence that the checking account was used to facilitate the defendant‘s drug activity, that Mrs. Morgan had no idea about the logistics of the transactions involved in opening the account, that the defendant had acquired other properties in her name but she knew little or nothing about them, that the certificate of deposit was bought with the defendant‘s funds, and that Mrs. Morgan did not draw upon these assets, the court affirmed the district court‘s conclusions that the checking account and certificate of deposit were subject to forfeiture because Mrs. Morgan exercised insufficient dominion and control over them and her name on the accounts was merely nominal. See also United States v. Ben-Hur, 20 F.3d 313 (7th Cir. 1994) (noting that the purpose of
I agree with this analysis. It is consistent with the text of the statute, and with what we, and other circuits, have said in other forfeiture contexts. The whole point of
While we have not directly held that a straw owner holding nominal title may not invalidate a forfeiture order under
Given the majority‘s contrary conclusion, it bears repeating that
In sum, we are obliged to construe the provisions of
While any one of us might have measured the witnesses’ credibility or found the facts differently in this case, I am not firmly convinced that the district court got either wrong. It is implausible that Victoria came to hold title to 414 and 1102 on the same day because her grandmother wanted her to have 1102 when she turned eighteen and because Frank wanted to give 414 to her to hide it from his wife. There was a conflict in testimony about whether Victoria got 1102 from her grand-
There is no evidence credited by the trier of fact that Victoria received either property as a gift from Frank—which was her only claim—and substantial evidence that Victor exercised dominion and control over both properties. The only possible conclusion on the record is the one reached by the district court: that Victoria failed to carry her burden of showing that she held title for herself rather than for Victor. Accordingly, I would affirm.
Notes
If, after the hearing, the court determines that the petitioner has established by a preponderance of the evidence that—
(A) the petitioner has a legal right, title, or interest in the property, and such right, title or interest renders the order of forfeiture invalid in whole or in part because the right, title, or interest was vested in the petitioner rather than the defendant or was superior to any right, title, or interest of the defendant at the time of the commission of the acts which gave rise to the forfeiture of the property under this section; . . .
the court shall amend the order of forfeiture in accordance with its determination.
Construction
The provisions of this section shall be liberally construed to effectuate its remedial purposes.