Opinion
2:22-cr-00142-CDS-DJA
09-10-2024
UNITED STATES OF AMERICA, Plaintiff v. MEELAD DEZFOOLI, Defendant
JASON M. FRIERSON United States Attorney DANIEL D. HOLLINGSWORTH Assistant United States Attorney
JASON M. FRIERSON United States Attorney
DANIEL D. HOLLINGSWORTH Assistant United States Attorney
ORDER GRANTING UNITED STATES OF AMERICA'S MOTION FOR AN INTERLOCUTORY ORDER OF SALE OF 6116 CHINOOK WAY, LAS VEGAS, NEVADA 89108 [ECF NO. 136]
CRISTINA D. SILVA UNITED STATES DISTRICT JUDGE
The United States moves this Court to issue an Order for an Interlocutory Sale of real property held in the name of Sanam Limited, located at 6116 Chinook Way, Las Vegas, Nevada 89108 (6116 Chinook), which is subject to criminal forfeiture, and to authorize Doug Sawyer as the designated real estate agent to sell 6116 Chinook. Meelad Dezfooli identified himself as the sole owner of Sanam Limited.
6116 Chinook Way, Las Vegas, Nevada, 89108, is more particularly described as:
LOT TWENTY-FOUR (24) IN BLOCK C OF LEWIS HOMES RAINBOW VISTA UNIT NO. 1, AS SHOWN BY MAP THEREOF ON FILE IN BOOK 30 OF PLATS, PAGE 41, AND AS AMENDED BY A CERTIFICATE OF AMENDMENT RECORDED AUGUST 2, 1985 IN BOOK 2159 AS DOCUMENT NO. 2118935, IN THE OFFICE OF THE COUNTY RECORDER OF CLARK COUNTY, NEVADA; TOGETHER WITH ALL IMPROVEMENTS AND APPURTENANCES THEREON, APN: 138-26-615-070.
Superseding Criminal Indictment (SCI), ECF No. 97.
SCI, ECF No. 97, p. 2.
The grounds for granting the Order for an Interlocutory Sale of 6116 Chinook are as follows. First, 6116 Chinook is subject to taxes, its fees, and liens, and the granting of an interlocutory sale will stop the accruing of taxes, its fees, and liens against its value. Second, granting an interlocutory sale will avoid accidents and liability accruing against 6116 Chinook. Third, this Court is authorized to approve interlocutory sales.
This Motion is made and is based on the following Memorandum of Points and Authorities, the pleadings and papers on file herein, and the attached Exhibits.
All Exhibits are attached hereto and incorporated herein by reference as if fully set forth herein.
MEMORANDUM OF POINTS AND AUTHORITIES
I. STATEMENT OF FACTS
The United States adopts and incorporates the facts stated in the Superseding Criminal Indictment.
SCI, ECF No. 97.
Beginning on or around April 2020 and continuing until at least on or around March 2021, Meelad Dezfooli knowingly executed, and attempted to execute, a scheme to defraud and artifice to obtain money and property owned by, and under the custody and control of, financial institutions by means of materially false and fraudulent pretenses, representations, and promises. Dezfooli submitted fraudulent PPP loan applications and obtained approximately $11.2 million to unjustly enrich himself and others.
Id.
On or about April 27, 2020, Dezfooli completed and signed the PPP loan application in support of a $8,672,800 loan on behalf of Nevada Sales, dba Nevada Design, through Financial Institution C. Dezfooli identified himself the manager and 100% owner of Nevada Sales.
SCI, ECF No. 97, p. 9-10; Ex. 3-1, PPP Loan Application.
On the PPP loan application, the following misrepresentations were made on behalf of Nevada Sales: (1) Dezfooli falsely represented that the average monthly payroll of Nevada Sales was $3,469,142, when in fact, Nevada Sales had no employees and had not paid any salaries; (2) Dezfooli falsely represented Nevada Sales had four hundred seventyseven employees, when in fact, Nevada Sales had no employees and had not paid any salaries; (3) Dezfooli falsely represented that the business address of Nevada Sales was 1621 East Sunset Road, Las Vegas, Nevada 89119, when in fact, Nevada Sales did not have a lease at this address when the application was submitted; (4) Dezfooli falsely certified the loan funds would be used to retain workers and maintain payroll, in accordance to PPP rules, when in fact, Dezfooli intended to divert the proceeds for personal benefit; and (5) Dezfooli falsely certified he was not the owner of any other business, when in fact Dezfooli owned several other businesses at the time he submitted the PPP loan application for Nevada Sales.
Id.
To further the scheme in support of the Nevada Sales PPP loan application, Dezfooli submitted a signed IRS Form 940 dated January 9, 2020, in the name of Nevada Sales, falsely indicating the company had paid $41,629,708 in wages in 2019, when in fact, Nevada Sales had not filed Form 940 with the IRS for tax year 2019. On May 8, 2020, Dezfooli caused $8,672,800 of the fraudulently obtained PPP loan to be disbursed by Financial Institution C into a Wells Fargo account ending in 3281 (WF Account x3281), held in the name of Nevada Design, LLC. Dezfooli had signatory authority for WF Account x3281, which was opened prior to the pandemic.
SCI, ECF No. 97, p. 10; Ex. 3-1, PPP Loan Application, p. 15-16.
SCI, ECF No. 97, p. 10; Ex. 7-1, book 1, line 265.
SCI, ECF No. 97, p. 10; Ex. 4-1, WFB Account x3281 signature cards.
After receiving the illegally obtained PPP loan proceeds, Dezfooli purchased four cashier's checks totaling $1,668,872.56 using funds from WF Account x3281. One of those cashier's checks, no. x1811, in the amount of $790,406.21 was purchased on or around May 12, 2020. On or around May 22, 2020, Dezfooli, using the name James Dez, purchased 6116 Chinook Way at auction on behalf of Sanam Limited for $228,000 and used cashier's check no. x1811 to purchase the property. A subsequent refund of $562,406.21 was issued.
SCI, ECF No. 97, p. 10-11; Ex. 7-1, book 1, line 268; Ex. 7-1, book 2, lines 16-20.
SCI, ECF No. 97, p. 10; Ex. 8-2, Cashier's Check No. x1811; Ex. 7-1, book 1, line 268; Ex. 7-1, book 2, line 16.
SCI, ECF No. 97, p. 11; Ex. 8-2, Cashier's Check No. x1811; Ex. 7-1, book 2, line 16; Ex. 7-1, book Property Tracing, lines 19-33; Ex. 8-1, Trustee's Deed Upon Sale.
SCI, ECF No. 97, p. 11; Ex. 7-1, book Property Tracing, line 33.
On July 12, 2022, the United States filed Notices of Lis Pendens with this Court for all five real properties subject to forfeiture as identified in the Superseding Criminal Indictment: 6116 Chinook Way; 6033 Watermelon Street, Las Vegas, Nevada, 89081;1829 La Calera Avenue, North Las Vegas, Nevada, 89084; 890 Harbor Avenue, Henderson, Nevada 89002; and 176 Glen Falls Avenue, Henderson, Nevada 89002.
Lis Pendens, ECF No. 8.
Lis Pendens, ECF No. 9.
Lis Pendens, ECF No. 10.
Lis Pendens, ECF No. 11.
Lis Pendens, ECF No. 12.
On December 1, 2022, the United States recorded a Request for Notice Under Chapter 107 NRS with the Clark County Recorder, requesting a copy of any Notice of Default or Notice of Sale regarding 6116 Chinook.
Ex. A, Recorded Request for Notice.
On December 12, 2023, a Ten-Count Superseding Criminal Indictment was entered charging Dezfooli with three counts of bank fraud in violation of 18 U.S.C. § 1344(2), three counts of concealment money laundering in violation of 18 U.S.C. § 1956(a)(1)(B)(i), and four counts of monetary transactions in criminally derived property in violation of 18 U.S.C. § 1957. At his arraignment, Dezfooli plead not guilty to all ten Counts. A jury trial is currently set for August 26, 2024.
SCI, ECF No. 97.
Court Minutes - Arraignment & Plea, ECF No. 104.
Order to Continue, ECF No. 131.
In the Superseding Criminal Indictment, forfeiture is alleged under 18 U.S.C. § 981(a)(1)(A) with 28 U.S.C. § 2461(c); 18 U.S.C. § 981(a)(1)(C) with 28 U.S.C. § 2461(c); and 18 U.S.C. § 982(a)(1) and 982(a)(2)(A) and identified 6116 Chinook Way, four other real properties, a 2021 Tesla, and a 2021 Bentley as forfeitable property, and criminal forfeiture money judgments of at least $11,231,186.52, $2,303,872.56, and $965,276.11.
SCI, ECF No. 97, p. 16-21.
A records search of 6116 Chinook from the Clark County Recorder's website reveals Clark County deeded the property to the Treasury for unpaid taxes, and the Tax Deed was recorded on June 13, 2023. As of March 18, 2024, Dezfooli owes $9,114.73 in past due property taxes, interest, and penalties. The unpaid taxes and its fees are continuing to accumulate against the property and are decreasing the value of 6116 Chinook. Additional liens, besides taxes, have been placed against the property that further reduces the property's value. The United States was recently made aware that tenants reside on the property which increases risks and liability and further decreasing its value.
Ex. B, Clark County Recorder, Property Search; Ex. C, Clark County Assessor, Owner Search.
Ex. D Clark County Treasurer, Account Inquiry.
Ex. B, Clark County Recorder Property Search.
II. ARGUMENT
This Court has authority to issue the Interlocutory Order of Sale. “At any time before entry of a final forfeiture order, the court, in accordance with Supplemental Rule G(7) of the Federal Rules of Civil Procedure, may order the interlocutory sale of property alleged to be forfeitable.”
Only one of the grounds for interlocutory sale is required since Supplemental Rule G(7)(b) is disjunctive.
See Shelter Cove Marina, Ltd. v. M/Y ISABELLA, No. 3:17-cv-01578-GPC-BLM, 2017 WL 5906673, 2 (S.D. Cal. Nov. 30, 2017) (explaining that another Supplemental Rule for interlocutory sale with similar language is disjunctive); Cal. Yacht Marina-Chula Vista, LLC v. S/V OPILY, No. 14-cv-1215-BAS-BGS, 2015 WL 1197540, 2 (S.D. Cal. Mar. 16, 2015) (explaining the same).
On motion by a party or a person having custody of the property, the court may order all or part of the property sold if: (A) the property is perishable or at risk of deterioration, decay, or injury by being detained in custody pending the action; (B) the expense of keeping the property is excessive or is disproportionate to its fair market value; (C) the property is subject to a mortgage or to taxes on which the owner is in default; or (D) the court finds other good cause.
Supp. R. G(7)(b) (paragraphs omitted).
Under Supplemental Rule G(7)(b), this case meets grounds for issuing an Order for an Interlocutory Sale: (1) the property is at risk of deterioration, decay, and injury especially when tenants reside on the property as time passes; (2) the expense of keeping the property will become disproportionate to its fair market value because it is subject to taxes, additional liens, their fees, assessments, special assessments, late fees, interest, penalties, and their continual accrual against the real property's value; and (3) the court finds other good cause: (a) the value of the property depreciates as mortgage interest rates have increased; and (b) unpaid taxes, interest, and penalties will continue to accrue and need to be paid.
Supplemental Rule G(7)(b); Fed. R. Crim. P. 32.2(b)(7); see United States v. One Parcel of Real Prop. Described as Lot 41, Berryhill Farm Estates, 128 F.3d 1386, 1389-90 (10th Cir. 1997) (explaining the district court orders an interlocutory sale when the property is deteriorating and decaying). See United States v. All Right, Title & Interest in Prop., Appurtenances, & Improvements Known as 479 Tamarind Drive, Hallendale, Fla., 98 CIV. 2279 DLC, 2012 WL 3886698, 2 (S.D.N.Y. Sept. 7, 2012) (explaining that interlocutory sale order was granted because of past due taxes would lower the value of the real property).
The accruing non-payments of the taxes, additional liens, assessments, special assessment, late fees, interest, and penalties are decreasing the property's equity. In 479 Tamarind Drive, the court granted the interlocutory sale because the property had “[m]ore than $40,437.55 in taxes, currently due. raising the risk that the County may move to impose a lien and thereby diminish the property's value to the Government should this forfeiture action succeed.”
United States v. All Right, Title & Interest in Prop., Appurtenances, & Improvements Known as 479 Tamarind Drive, Hallendale, Fla., 98 CIV. 2279 DLC, 2012 WL 3886698, 2 (S.D.N.Y. Sept. 7, 2012).
In this case, the accruing taxes, additional liens, assessments, special assessment, late fees, and interest are decreasing the property's equity. As shown above, Clark County has taken further action even though the Lis Pendens and the Request for Notice were recorded. It deeded the property to the Clark County Treasury for unpaid taxes, and the Tax Deed was recorded on June 13, 2023, a worse situation than the court feared in 479 Tamarind Drive.
Ex. B, Clark County Recorder, Property Search; Ex. C, Clark County Assessor, Owner Search.
In Fisch, the interlocutory sale was granted due to the accumulation of past due taxes. The Fisch property was substitute property and was divisible with the defendant's wife. 6116 Chinook was purchased with illegal proceeds and is subject to forfeiture after any unpaid taxes, liens, interest, and penalties are paid. 6116 Chinook's property value is declining rapidly.
United States v. Fisch, No. H-11-722, 2016 WL 4702588 (S.D. Tex. Sep. 8, 2016).
Id.
If an accident occurred on the property or the property is damaged in any way, that would further cut into the property's equity. The risk of accident and damages on the property immediately increases when tenants are involved, as in this case. The government seeks to preserve as much of the equity as possible for the forfeiture proceedings. The sale proceeds of 6116 Chinook will be the “substitute res subject to forfeiture in place of the property that was sold [, and] the proceeds must be in an interest-bearing account maintained by the United States pending the conclusion of the forfeiture action.”
United States v. Haley, No. 11-CR-0540-WDQ, 2011 WL 6202787, 1 (D. Md. Dec. 8, 2011) (granting the interlocutory sale to avoid liability for accidents and to “avoid falling in arrears on the payment of applicable property taxes.”).
Supplemental Rule G(7)(b)(iv) (brackets added); United States v. King, No. 10 CR. 122 (JGK), 2010 WL 4739791, 4 (S.D.N.Y. Nov. 12, 2010).
“A sale must be made by a United States agency that has authority to sell the property, by the agency's contractor, or by any person the court designates.” If the Court grants this Motion, the United States recommends this Court authorize Doug Sawyer to sell the property under “28 U.S.C. §§ 2001, 2002, and 2004.”
Supplemental Rules G(7)(b)(ii) (emphasis added).
Supplemental Rules G(7)(b)(iii).
III. JUDICIAL SALES PROCEDURE
If a court orders an interlocutory sale of property over the objection of any interested party, the sale must comply with the provisions of 28 U.S.C. §§ 2001 and 2002. These statutes provide procedural safeguards to ensure that court-ordered sales are made on terms that best preserve the parties' interests. Section 2001(a) authorizes public sales of property and sales by court-appointed receivers. Section 2001(b) permits private sales of property for cash or other consideration after a hearing of which notice to all interested parties shall be given by publication, or as otherwise directed by the court, and after the court finds that the best interests of the estate will be conserved thereby.
By this Motion, the United States requests authorization to proceed with a private sale of the above-listed property. Based upon the reasons set forth herein, the United States believes that a prompt sale of the property by the United States, followed promptly by releasing the proceeds to the United States affords the best protection to all concerned. The United States believes that a private sale versus a public sale will allow the United States the discretion to sell the property in the most commercially feasible manner and maintain the most value for Dezfooli.
As required by 28 U.S.C. § 2001(b), notice of the Government's Motion must be given by publication or otherwise as this Court directs. The sale of the property through the multiple listing service and other major internet websites for real property meets the requirements of 18 U.S.C. §§ 2001, 2002, and 2004.
Under 28 U.S.C. § 2001(b), three disinterested persons must appraise the properties. To meet that requirement, the United States has obtained the following neutral appraisal estimates as of April 2, 2024:
1. Redfin.com for $449,850;
2. Homes.com for $385,454; and
3. Realtor.com for $386,531.
IV. CONCLUSION
Based on the foregoing reasons, this Court should Order the Interlocutory Sale of 6116 Chinook Way, Las Vegas, Nevada 89108 and to authorize Doug Sawyer as the designated real estate agent to sell it.
IT IS SO ORDERED:
Index of Exhibits
Exhibit 3-1 .............. Nevada Sales (dba Nevada Design) PPP Loan Application (Excerpt)
Exhibit 4-1 ............................................. WFB Account x3281 Signature Cards (Excerpt)
Exhibit 7-1, book 1 ................................... WFB Account x3281 LIBR Analysis (Excerpt)
Exhibit 7-1, book 2 ...................... WFB Account x3281 Transactions of Cashier's Checks
Exhibit 7-1, book Property Tracing ...................... Tracing Reports to Properties (Excerpt)
Exhibit 8-1 .................................................. Trustee's Deed Upon Sale for 6116 Chinook
Exhibit 8-2 ................................... Cashier's Check No. x1811 from WFB Account x3281
Exhibit A ................................................. Recorded Request for Notice on 6116 Chinook
Exhibit B................................ Clark County Recorder, Property Search on 6116 Chinook
Exhibit C .................................. Clark County Assessor, Owner Search for 6116 Chinook
Exhibit D .............................. Clark County Treasurer, Account Inquiry for 6116 Chinook
Exhibit 3-1 - Nevada Sales (dba Nevada Design) PPP Loan Application (Excerpt)
[Exhibit Omitted]