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 TO PREVENT THE SALE OF 176 GLEN FALLS AVENUE, HENDERSON, NEVADA 89002 [ECF NO. 231]
CRISTINA D. SILVA UNITED STATES DISTRICT JUDGE
The United States moves this Court to issue an Order to prevent the Clark County Treasurer from pursuing a tax sale and to prevent Paradise Hills Landscape Maintenance Association, Inc. (Paradise Hills HOA) from proceeding with a HOA default foreclosure sale on 176 Glen Falls Avenue, Henderson, Nevada 89002 (176 Glen Falls). 21 U.S.C. § 853(k) prohibits the Treasurer and Paradise Hills HOA from selling the property because 176 Glen Falls is subject to forfeiture in the Criminal Superseding Indictment. The United States has authority to protect its forfeiture interest in 176 Glen Falls under 21 U.S.C. § 853(c) and 853(e)(1)(A). Accordingly, this Court should grant this Motion and issue the Order.
176 Glen Falls Avenue, Henderson, Nevada 89002, more particularly described as:
LOT 17 IN BLOCK “C” OF PARADISE HILLS NO. 16, AS SHOWN BY MAP THEREOF ON FILE IN BOOK 97 OF PLATS, PAGE 8, IN THE OFFICE OF THE COUNTY RECORDER OF CLARK COUNTY, NEVADA. EXCEPTING THEREFROM ALL MINERALS, OIL, GAS PETROLEUM, OTHER HYDROCARBON SUBSTANCES AND ALL GEOTHERMAL ENERGY SOURCES IN OR UNDER OR WHICH MAY BE PRODUCED FROM THE WITHIN-DESCRIBED LAND WHICH LIE BELOW A PLANE PARALLEL TO AND FIVE HUNDRED (500) FEET BELOW THE SURFACE OF THE WITHIN-DESCRIBED LAND, FOR THE PURPOSE OF PROSPECTING, EXPLORATION, DEVELOPMENT, PRODUCTION, OR EXTRACTION OF SAID SUBSTANCES BY MEANS OF MINES, WELLS, DERRICKS, AND/OR OTHER EQUIPMENT; PROVIDED, HOWEVER, THAT THE OWNER OF SAID SUBSTANCES SHALL HAVE NO RIGHT TO ENTER THE SURFACE OF THE WITHIN-DESCRIBED LAND NOR TO USE SAID LAND ABOVE SAID PLANE PARALLEL TO AND FIVE HUNDRED (500) FEET BELOW THE SURFACE OF SUCH LAND; TOGETHER WITH ALL IMPROVEMENTS AND APPURTENANCES THEREON, APN: 179-31-212-022.
This Motion is made and is based on the following Memorandum of Points and Authorities, the pleadings and papers on file, 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.
LR IA 10-3(a); 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.
SCI, ECF No. 97.
On or around March 24, 2021, Dezfooli purchased 176 Glen Falls at public auction for $452,000 under the name of Sanam Limited, an entity formed by Dezfooli to further his scheme of fraudulent PPP loan applications. Dezfooli identified himself as the sole owner of Sanam Limited.
SCI, ECF No. 97; Exhibit (Ex.) 14-1 Trustee's Deed Upon Sale for 176 Glen Falls Avenue, Henderson, Nevada 89002.
SCI, ECF No. 97, p. 2.
On June 22, 2022, a Grand Jury returned an Eight-Count Criminal Indictment charging Dezfooli with bank fraud, concealment money laundering, and monetary transactions in criminally derived property. On December 12, 2023, a Ten-Count Superseding Criminal Indictment was returned 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 commenced on August 26, 2024.
Criminal Indictment, ECF No. 1; Minutes of Proceedings, ECF No. 3.
SCI, ECF No. 97.
Court Minutes - Arraignment & Plea, ECF No. 104.
Minutes of Proceeding, ECF No. 216.
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 176 Glen Falls, 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.
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: 176 Glen Falls; 6116 Chinook Way, Las Vegas, Nevada, 89108; 6033 Watermelon Street, Las Vegas, Nevada, 89081; 1829 La Calera Avenue, North Las Vegas, Nevada, 89084; and 890 Harbor Avenue, Henderson, Nevada 89002. On the same day, the United States recorded the certified copies of each Lis Pendens for all five real properties, including 176 Glen Falls.
Lis Pendens, ECF No. 12.
Lis Pendens, ECF No. 8.
Lis Pendens, ECF No. 9.
Lis Pendens, ECF No. 10.
Lis Pendens, ECF No. 11.
Ex. A, Recorded Certified Copy of Lis Pendens for 176 Glen Falls.
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 176 Glen Falls.
Ex. B, Recorded Request for Notice for 176 Glen Falls.
Despite the fact the United States recorded a Lis Pendens and a Request for Notice for 176 Glen Falls, a records search from the Clark County Recorder's website reveals that the Clark County Treasurer took action against the United States' interest when it recorded a Tax Certificate for Delinquent Taxes on January 3, 2023. A property inquiry of 176 Glen Falls from the Clark County Treasurer's website reveals that taxes have not been paid since March 2021 and unpaid taxes, interest, penalties, and fees have accrued to $17,359.84 as of August 20, 2024. The unpaid taxes and its fees continue to accumulate against the property and are decreasing the value of 176 Glen Falls.
Ex. C, Clark County Recorder Property Search for 176 Glen Falls.
Ex. D, Clark County Treasurer, Property Account Inquiry for 176 Glen Falls.
On July 22, 2024, the United States Attorney's Office received a cover letter from Red Rock Financial Services with a copy of the Notice of Default and Election to Sell 176 Glen Falls issued by Paradise Hills HOA. According to the Notice, “no sale date may be set until the ninety-first (91st) day after the recorded date and the mailing date of the Notice of Default and Election to Sell.” The Notice of Default was recorded on July 15, 2024, which results in a possible HOA default sale date of October 14, 2024. An amount of $2,903.96 is owed for unpaid HOA fees as of July 9, 2024, excluding additional accruing assessments, interests, costs, and fees.
Ex. E, Notice of Default and Election to Sell 176 Glen Falls.
Id.
Despite the fact the United States recorded a Lis Pendens in July 2022, Paradise Hills HOA still attempted to act against the United States' interest in 176 Glen Falls when it issued its Notice of Default and Election to Sell in July 2024.
Besides the unpaid taxes and the HOA default, additional liens have been placed against the property that further reduces the property's value. The United States was recently made aware that tenants could possibly be residing on the property which increases risks and liability and further decreasing its value.
Ex. C.
The Clark County Treasurer and Paradise Hills HOA are precluded from taking any further action against the United States' interest in 176 Glen Falls under 21 U.S.C. § 853(k).
II. ARGUMENT
A. This Court Has Authority to Prevent the County Treasurer from Advancing with a Tax Sale and Paradise Hills HOA from Proceeding with a Default Foreclosure Sale under 21 U.S.C. § 853(k).
The United States recorded a Lis Pendens for 176 Glen Falls on July 12, 2022, notifying the world, including the Treasurer and Paradise Hills HOA, that the government was litigating the real property in a criminal action. When the grand jury returns a criminal indictment, the government is authorized to forfeit any of the defendant's property, “which constitutes or is derived from proceeds traceable to [the crime], or a conspiracy to commit such offense[;]” “constituting, or derived from, proceeds, obtained directly or indirectly, as the result of” the crime, “or a conspiracy to violate” such offense, “affecting a financial institution[;]” “involved in a transaction or attempted transaction in violation of [the crime], or any property traceable to such property[;]” or “involved in [the crime], or any property traceable to such property.”
18 U.S.C. § 981(a)(1)(C) with 28 U.S.C. § 2461(c) (brackets added).
18 U.S.C. § 982(a)(2)(A) (brackets and ellipsis added).
18 U.S.C. § 981(a)(1)(A) with 28 U.S.C. § 2461(c) (brackets added).
To prevent third parties claiming an interest in forfeitable property from interfering with the orderly conduct of criminal cases, Congress prohibits third parties from commencing actions against the interest of the United States in forfeitable property after an indictment has been filed.
Except as provided in subsection (n), no party claiming an interest in property subject to forfeiture under this section may - -...
(2) commence an action at law or equity against the United States concerning the validity of his alleged interest in the property subsequent to the filing of an indictment or information alleging that the property is subject to forfeiture under this section.
21 U.S.C. § 853(k)(2) (ellipses added).
In MacInnes, the Ninth Circuit expressly held a foreclosure sale is “an action at law or equity against the United States in contravention of § 853(k).” Under 21 U.S.C. § 853(c), (k), and (n), advancing with a tax sale or any other proceeding against the United States' interest in 176 Glen Falls, a forfeitable property, is an action against the United States, outside the confines of the exclusive ancillary procedure of § 853(n) and Fed. R. Crim. P. 32.2(c), and is, therefore, barred.
United States v. MacInnes, 223 Fed.Appx. 549, 550, 553-54 (9th Cir. 2007) (per curiam) (citing United States v. Phillips, 185 F.3d 183,187-88 (4th Cir. 1999) (holding “the foreclosure action constituted ‘an action at law or equity against the United States' and was statutorily barred under § 853(k)” quoting 21 U.S.C. § 853(k)); United States v. Lazarenko, 476 F.3d 642, 648 (9th Cir. 2007) (explaining third party cannot bring an action at law or equity) (citing 21 U.S.C. § 853(k)).
See Libretti v. United States, 516 U.S. 29, 44 (1995) (When the government has forfeited property, third-party petitioners may “establish their entitlement to a return of the assets only by means of a hearing afforded under 21 U.S.C. § 853(n).”); Lazarenko, 476 F.3d at 646-48, 650, 652; Phillips, 185 F.3d at 187-88.
“Section 853(n) provides the process for vindicating a third party's interests in forfeited property. The law appears settled that an ancillary proceeding constitutes the only avenue for a third party claiming an interest in seized property.” When a property is forfeitable in a criminal indictment, third parties are prohibited from foreclosing on that property. A third party's only recourse is to petition the Court in the process identified in § 853(n) and Fed. R. Crim. P. 32.2(c).
Lazarenko, 476 F.3d at 648 (explaining “a court adjudicates a third party's interest in the forfeited property in an ancillary proceeding after concluding the criminal case and entering a preliminary order of forfeiture.”); Fed. R. Crim. P. 32.2(b) advisory committee's note (bracket added) (“[T]hird party interests in a criminally forfeited property are litigated by the court in the ancillary proceeding following the conclusion of the criminal case and the entry of a preliminary order of forfeiture.”); 21 U.S.C. § 853(n); 18 U.S.C. § 1963(l).
MacInnes, 223 Fed.Appx. at 550, 553-54.
See Id.; Libretti, 516 U.S. at 44 (When the government has forfeited property, third-party petitioners may “establish their entitlement to a return of the assets only by means of a hearing afforded under 21 U.S.C. § 853(n).”); Fed. R. Crim. P. 32.2(b) advisory committee's note (brackets added) (“[T]hird party interests in a criminally forfeited property are litigated by the court in the ancillary proceeding following the conclusion of the criminal case and the entry of a preliminary order of forfeiture.”); 21 U.S.C. § 853(n); 18 U.S.C. § 1963( l); Fed. R. Crim. P. 32.2(c).
Although the United States took appropriate measures to provide notice of its judicial interests in 176 Glen Falls prior to the Treasurer's Tax Certificate and prior to Paradise Hills HOA's Notice of Default, the HOA could commence with a default foreclosure around October 2024, and the Treasurer could proceed with a tax sale around January 2025. However, 21 U.S.C. § 853(k)(2) prevents them from taking further action since 176 Glen Falls is identified as forfeitable property in the superseding criminal indictment. The Treasurer, Paradise Hills HOA, and potential third parties, who may have an interest in the property, are statutorily barred from selling the property. Their only recourse is 21 U.S.C. § 853(n) and Fed. R. Crim. P. 32.2(c).
MacInnes, 223 Fed.Appx. at 550, 553-54.
See; Phillips, 185 F.3d at 187-88; In re America Basketball League, Inc., 317 B.R. 121, 129 (Bankr. N.D. Cal. 2004) (“Consistent with the plain language of the statute, the case law has uniformly found that § 853(k) imposes an absolute bar to actions that assert an interest in forfeitable property if they are commenced outside of the ancillary proceedings.”); Libretti, 516 U.S. at 44; Lazarenko, 476 F.3d at 646-48; 650, 652.
B. The United States Has Authority to Protect its Forfeiture Interest in 176 Glen Falls under 21 U.S.C. § 853(c) and 853(e)(1)(A).
The United States has authority to seek the preservation of property for forfeiture. Under 21 U.S.C. § 853(c), the property “vests in the United States upon the commission of the act giving rise to [the] forfeiture....” Under 21 U.S.C. § 853(e)(1)(A), “the court may.take any. action to preserve the availability of property. upon the filing of an indictment. charging a violation. for which criminal forfeiture may be ordered..”
21 U.S.C. § 853(c) (brackets added).
21 U.S.C. § 853(e)(1)(A) (ellipses added).
In 92 Buena Vista, the Supreme Court determined that the “relation back” doctrine in 21 U.S.C. § 853(c) does not self-execute and the government does not become an owner until after forfeiture is decreed and title is retroactively vested. Because the United States' interest in the property is not perfected until after forfeiture is decreed, the United States does not have a right to prematurely cut off the interests of potential third-parties.
United States v. 92 Buena Vista Ave., 507 U.S. 111, 125-26 (1993). Buena Vista is discussing 21 U.S.C. § 881(h), which has similar vesting language to 21 U.S.C. § 853(c).
The Clark County Treasurer and Paradise Hills HOA may have an interest in the property, and the United States does not seek to bypass those interests. The United States requests this Court to prevent the Treasurer and Paradise Hills HOA from selling the property, resulting in eliminating any potential recovery of forfeiture proceeds. The United States has alleged that 176 Glen Falls was purchased with illegal proceeds. Once forfeiture is completed the property title will vest in the United States, but only if the property is still available. “The Government's interest in winning undiminished forfeiture thus includes the objective of returning property, in full, to those wrongfully deprived or defrauded of it.” The Treasurer and Paradise Hills HOA will have an opportunity to assert their interests in the property during the ancillary proceeding.
See SCI, ECF No. 97.
Caplin & Drysdale v. United States, 491 U.S. 617, 629 (1989); United States v. Lillard, 57 F.4th 729, 734-36 (9th Cir. 2023).
Fed. R. Crim. P. 32.2(c); 21 U.S.C. § 853(n); Libretti, 516 U.S. at 44 (When the government has forfeited property, third-party petitioners may “establish their entitlement to a return of the assets only by means of a hearing afforded under 21 U.S.C. § 853(n).”); United States v. Hooper, 228 F.3d 818, 821 (9th Cir. 2000) (After the government forfeits property, third parties may assert a third-party petition with the court to litigate their interests.);
Under 21 U.S.C. § 853(e), the Court has the discretion to issue protective orders at the request of the government. “Whatever discretion Congress gave the district courts in § 853(e) and 853(c), that discretion must be cabined by the purposes for which Congress created it: to preserve the availability of property for forfeiture.”
United States v. Crozier, 777 F.2d 1376, 1382 (9th Cir. 1985).
United States v. Monsanto, 491 U.S. 600, 613 (1989) (quotation marks and ellipsis omitted); see United States v. 849 N.W. Wall Street, Bend, Oregon, co7-359Z, 2008 U.S. Dist. Lexis 104313, 6-7 (W.D. Wash. December 17, 2008).
This Court is authorized to prevent the Treasurer and Paradise Hills HOA from proceeding with a sale of the property to preserve the United States' interests and rights to the property.
III. CONCLUSION
For the foregoing reasons, this Court should enter an Order prohibiting the Clark County Treasurer with a tax sale and prohibiting Paradise Hills HOA from a default foreclosure sale of 176 Glen Falls Avenue, Henderson, Nevada 89002.
IT IS SO ORDERED:
Index of Exhibits
Exhibit 14-1 ......................................... Trustee's Deed Upon Sale for 176 Glen Falls Ave.
Exhibit A .................................................. Recorded Lis Pendens for 176 Glen Falls Ave.
Exhibit B ......................................... Recorded Request for Notice for 176 Glen Falls Ave.
Exhibit C ....................... Clark County Recorder, Property Search for 176 Glen Falls Ave.
Exhibit D ....... Clark County Treasurer, Property Account Inquiry for 176 Glen Falls Ave.
Exhibit E ......................................................... Paradise Hills HOA Notice of Default and Election to Sell 176 Glen Falls Ave.
Exhibit 14-1 - Trustee's Deed Upon Sale for 176 Glen Falls Ave.
[Exhibit Omitted]