Thursday, February 9, 2006
State Supreme Court to Rule on Scope of ‘Freeze and Seize’ Law
Justices Also Restore Law License to Judge Removed From Bench 11 Years Ago
By KENNETH OFGANG, Staff Writer
The California Supreme Court yesterday agreed to decide what proof prosecutors must offer in order to use the state “Freeze and Seize” law to preserve victims’ interests in assets of defendants charged with serious economic crimes.
By a vote of 6-0, the high court voted to review the Nov. 9 ruling of the Fourth District Court of Appeal’s Div. Two in People v. Semaan, E035671. Justice Ming Chin, who had surgery recently, did not attend yesterday’s conference in San Francisco and is scheduled to miss next week’s oral arguments as well.
The court also restored the law license of a former judge removed for misconduct 11 years ago and voted not to review a ruling applying the state’s open meetings law to a multi-agency law enforcement task force in Los Angeles County.
In a mixed decision on the Freeze-and-Seize Law, the Fourth District panel overturned a Riverside Superior Court judge’s order allowing seizure of funds from one relative of a couple who pled guilty to charges of grand theft and fraud, but upheld a similar seizure from another relative.
In one instance, the appellate court found that there was sufficient evidence that the defendants actually owned a bank account that was seized. But in the other, the panel said prosecutors at most proved that the defendants controlled an account belonging to a relative, and held that was not enough for the law to apply.
The claimants in the two cases, Elham Cherfan and Marie Rose Semaan, are residents of Lebanon and the sisters-in-law of defendants Youssef and Liliane Semaan. Prosecutors, in charging the Semaans with 99 counts of credit card and check fraud in October 2002, charged them with the “aggravated white collar crime enhancement” authorized by Penal Code Sec. 186.11.
The statute provides that where a defendant is charged with fraud or embezzlement, and the amount involved allegedly exceeds $100,000, a court may order that assets of the defendant be seized. If the defendant is subsequently convicted, the seized assets are applied to the payment of fines and restitution.
If a third party claims a legitimate interest in the asset, the court holds an evidentiary hearing.
Riverside County authorities who charged the Semaans seized more than $219,000 in a Wells Fargo bank account in the name of Marie Rose Semaan and more than $325,000 in a Wells Fargo account in Cherfan’s name.
Third Party Claims
Marie Rose Semaan claimed that the funds in her account came from the sale of the home she had shared with her deceased husband, and from her Social Security benefits. Cherfan said the money in her account came from the sale of the defendants’ residence and was remitted to her in order to repay a loan.
Following an evidentiary hearing, Superior Court Judge Gordon Burkhart rejected the claims of the sisters-in-law and ordered the funds retained for restitution. In a separate proceeding, following the defendants’ guilty pleas, Burkhart ordered payment of more than $1.6 million in restitution to the victims.
The parties agreed that the burden in a “Freeze and Seize” case is on the third party claimant to establish legal title to the asset by preponderance of the evidence. But prosecutors argued that the claimants also had the burden of establishing that they had a legitimate interest in the funds, while the claimants argued that once they established legal title, the burden shifted to the prosecution to refute their claim of legitimacy by clear and convincing evidence.
Justice Barton Gaut, writing for a divided appellate panel, agreed with the claimants.
“While a showing of defendants’ control over an innocent third party’s property may be sufficient grounds for granting pendente lite orders to preserve the property, section 186.11 does not state that a showing of control alone constitutes sufficient grounds for taking an innocent third party’s property and using it for restitution,” Gaut explained.
Noting that the trial judge did not make findings regarding the burden of proof, Gaut concluded that both claimants established legal title; prosecutors, he said, successfully refuted Cherfan’s claim but not Marie Rose Semaan’s.
In Marie Rose Semaan’s case, the justice acknowledged, there was evidence that the defendants had access to the bank account, from which they withdrew funds for their own benefit, and that the sale of the residence was transacted by Youssef Semaan using a forged power of attorney.
But this only established the defendants’ control over the account, Gaut said, adding that it was entirely possible that Marie Rose Semaan was another victim of the defendants rather than an accomplice concealing their interest in the funds.
“While it is possible defendants were using Marie’s account for money laundering, the People have not established by clear and convincing evidence that Marie did not have a legitimate interest in the money deposited in her bank account,” the jurist wrote.
As for Cherfan’s account, however, Gaut said prosecutors successfully contradicted her claim that the funds she obtained were being used to repay a loan.
Justice Art McKinster concurred in the opinion, but Justice Thomas Hollenhorst argued in dissent that neither claimant had a legitimate interest in the funds. Noting that Marie Rose Semaan never objected to the defendants’ use of her funds or control over her account, the dissenting justice argued it was reasonable for the trial judge to conclude that she was a willing participant in the defendants’ scheme and only claimed the funds in order to assist them.
In the other matters, the justices:
•Voted 6-0, on the recommendation of the State Bar Court, to reinstate former Kings County Municipal Court Judge Glenda K. Doan’s State Bar membership upon payment of fees and costs.
Doan, now 61, was removed from office by the high court in 1995 after the Commission on Judicial Performance found that she had committed several ethical violations, including ordering release on recognizance for a drug defendant without disclosing that he was her former gardener and after ex parte communications with the defendant’s wife and with law enforcement officers involved in the case.
In ordering Doan’s removal, the high court noted that she had been publicly reproved twice before in her 12 years on the bench, once for interceding privately with a colleague on behalf of a jailed relative and once for failing to disclose income received in her private practice, which she continued to engage in while serving as a part-time justice court judge.
Her request for permission to practice law was denied by the high court at the time of her removal, without prejudice to a future petition to the State Bar Court. In recommending that Doan be allowed to practice again, the Review Department found that she was now fit to do so and had demonstrated rehabilitation.
Doan was elected to the Corcoran Justice Court in 1982, becoming a municipal court judge when the limited jurisdiction trial courts in Kings County were merged in 1992.
•Let stand a Nov. 23 ruling of this district’s Court of Appeal that the Los Angeles Interagency Metropolitan Police Apprehension Crime Task Force, also known as L.A. Impact, is a public body subject to the requirements of the Ralph M. Brown Act. There are more than 40 such task forces around the state.
The Los Angeles County Police Chiefs’ Association, which created L.A. Impact 14 years ago and supervises its operations today, argued that the multi-agency task forces should be shielded from public scrutiny because of the sensitive investigations they undertake.
The Court of Appeal said the task force can meet in executive session to discuss ongoing investigations, as the Brown Act provides, but is not entitled to blanket secrecy.
The six justices in attendance at yesterday’s conference were unanimous in allowing the ruling to stand, and in rejecting depublication requests by L.A. Impact and the California State Sheriffs’ Association.
The case, which was brought by open-government activist Richard McKee and former Pasadena Weekly reporter Chris Bray, who were represented by Los Angeles attorney Dennis A. Winston, is McKee v. Los Angeles Interagency Metropolitan Police Apprehension Crime Task Force, B179548.
Copyright 2006, Metropolitan News Company