United States v. Nava ( 2005 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, 
Plaintiff-Appellee,
v.
No. 03-30010
VICTOR ROBERT NAVA, SR., aka Big
Vic,  D.C. No.
CR-00-00121-JDS
Defendant,
OPINION
and
VICTORIA NAVA,
Defendant-Appellant.

Appeal from the United States District Court
for the District of Montana
Jack D. Shanstrom, District Judge, Presiding
Argued and Submitted
March 5, 2004—Seattle, Washington
Filed April 18, 2005
Before: Diarmuid F. O’Scannlain, Pamela Ann Rymer, and
Jay S. Bybee, Circuit Judges.
Opinion by Judge Bybee;
Dissent by Judge Rymer
4217
4220 UNITED STATES v. NAVA
COUNSEL
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.
UNITED STATES v. NAVA 4221
OPINION
BYBEE, Circuit Judge:
Victor “Big Vic” Nava, Sr., was convicted of conspiracy to
distribute and possession with intent to distribute metham-
phetamine. The jury also rendered a special verdict that sev-
eral properties were used to facilitate his crimes or were
proceeds of them and should be forfeited to the government
pursuant to 21 U.S.C. § 853. Victor’s daughter, Victoria
Nava, petitioned the district court claiming that she held legal
title to two of the properties. The district court denied Victo-
ria’s petition to set aside the forfeiture.
We must decide whether forfeiture was proper where Vic-
tor 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, 21 U.S.C. § 881, operates in rem
against the property itself on the theory that the property itself
is guilty of wrongdoing. See Austin v. United States, 509 U.S.
602, 614-18 (1993); United States v. Lester, 85 F.3d 1409,
1414 n.8 (9th Cir. 1996) (“[A] civil forfeiture is an in rem
proceeding in which liability attaches to a particular property
and not particular institutions or individuals.” (quoting United
States v. $814,254.76 in United States Currency, 51 F.3d 207,
210-11 (9th Cir. 1995))). In contrast, criminal forfeiture pro-
visions operate in personam against the assets of the defen-
dant and serve as part of the penalty for the defendant’s
conviction. See, e.g., 18 U.S.C. § 1963; 21 U.S.C. § 853; see
also United States v. $814,254.76, 51 F.3d at 210-11 (“A
criminal forfeiture is an in personam judgment against a per-
4222 UNITED STATES v. NAVA
son convicted of a crime” (citing Alexander v. United States,
509 U.S. 544, 558-59 n.4 (1993))); United States v. Certain
Real Property at 2525 Leroy Lane, 910 F.3d 343, 346 (6th
Cir. 1990) (§ 853 “authorizes an in personam action against
a defendant in a criminal case, and forfeiture in such a case
is imposed as a sanction against the defendant upon his con-
viction.”).
In a proceeding under § 853, “the sole legal issue before the
court is the ownership interests of the competing parties, a
consideration that is often irrelevant in an in rem civil forfei-
ture action, which turns instead on the culpability of the
owner and the role of the property in the prohibited activity.”
United States v. McHan, 345 F.3d 262, 281 (4th Cir. 2003)
(Luttig, J., concurring in part and concurring in the judgment
in part); see also United States v. $814,254.76, 51 F.3d at
210-11. Because the principal criminal forfeiture statute for
drug offenses, 21 U.S.C. § 853, acts in personam, it permits
the forfeiture of the defendant’s interests only, not the prop-
erty of innocent parties. See United States v. Chavez, 323 F.3d
1216, 1219 (9th Cir. 2003) (citing Lester, 85 F.3d at 1413).
The instant case involves a criminal forfeiture under § 853
because the jury convicted Victor of multiple qualifying drug
offenses.1
Section 853 provides that any person convicted of a viola-
tion of specified drug laws, punishable by more than a year
of imprisonment, shall forfeit to the United States
1
The text of § 853 is “substantially identical” to the criminal forfeiture
provisions of the Racketeer Influence and Corrupt Organizations Act
(RICO), 18 U.S.C. § 1963. In addition, we have noted that the two statutes
“contain identical ancillary hearing provisions for adjudication of third
party claims.” United States v. Hooper, 229 F.3d 818, 821 n.7 (9th Cir.
2000). We therefore consider cases and legislative history discussing both
statutes in analyzing either one. See id. at 821; see also United States v.
Totaro, 345 F.3d 989, 994 (8th Cir. 2003) (decided under 18 U.S.C.
§ 1963(l)).
UNITED STATES v. NAVA 4223
(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.
21 U.S.C. § 853(a). The title to the forfeited property vests in
the United States at the time the defendant commits the
unlawful acts, id. § 853(c), although it attaches only upon the
defendant’s conviction. Cf. Totaro, 345 F.3d at 993 (citing
United States v. Ginsburg, 773 F.2d 798, 801 (7th Cir. 1985)
(“[W]hile the government’s interests in the profits or proceeds
of the racketeering activity does not attach until conviction,
its interest vests at the time of the act that constitutes the
[RICO] violation.” (emphasis in original)) . At sentencing, the
district court must order forfeiture of the property in addition
to imposing any other sentence. See 21 U.S.C. § 853(a).
Section 853(n) specifies procedures under which third par-
ties 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. 21 U.S.C. § 853(n)(1). A third party
claiming an interest in the property may then petition for an
ancillary hearing. Id. § 853(n)(2). A third party’s petition
asserting an interest in the property must “set forth the nature
and extent of the petitioner’s right, title, or interest in the
property, the time and circumstances of the petitioner’s acqui-
sition of the right, title, or interest in the property, any addi-
tional facts supporting the petitioner’s claim, and the relief
sought.” Id. § 853(n)(3).
The petitioner may prevail only upon showing, by a pre-
ponderance 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-
4224 UNITED STATES v. NAVA
chaser for value. Id. § 853(n)(6). In particular, the court
amends the order of forfeiture only upon the petitioner’s
showing, 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 ren-
ders 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.
Id. § 853(n)(6); see also Hooper, 229 F.3d at 821; United
States v. Kennedy, 201 F.3d 1324, 1334-35 (11th Cir. 2000);
United States v. Morgan, 224 F.3d 339, 341 (4th Cir. 2000).
The petitioner bears the burden of proving his right, title, or
interest under § 853(n)(6). “Congress chose to place the bur-
den of proof on the third-party during the ancillary proceed-
ing, since the government would necessarily have carried its
burden of proving that the defendant’s interest in the property
was subject to forfeiture during the criminal trial.” United
States v. Gilbert, 244 F.3d 888, 911 (11th Cir. 2001) (citation
omitted).
Section 853(n) is the exclusive proceeding in which third
parties may claim interests in property subject to criminal for-
feiture. Libretti v. United States, 516 U.S. 29, 44 (1995)
(“Once the government has secured a stipulation as to for-
feitability, third-party claimants can establish their entitlement
to a return of the assets only by means of a hearing afforded
under 21 U.S.C. § 853(n).” (emphasis added)). The statute
UNITED STATES v. NAVA 4225
specifically bars third parties from intervening in the trial or
the appeal of a criminal case to assert their interests, or from
bringing independent suits against the United States once an
indictment alleging that the property is subject to forfeiture
has been filed. 21 U.S.C. § 853(k). We have held that third
parties must await the defendant’s conviction before filing
proceedings to protect their interest in the property and must
await the court’s order of forfeiture before requesting an
ancillary hearing. United States v. Crozier, 777 F.2d 1376,
1382-83 (9th Cir. 1985).
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 21 U.S.C. §§ 841(a)(1) and 846. It alleged that
the conspiracy spanned “from on or about July 11, 1997, or
before, and up to and including October 6, 1999,” and the
possession occurred “on or about October 6, 1999.” In Sep-
tember 2002, Victor signed a plea agreement which required
him to plead guilty to drug possession and conspiracy counts.
As part of the agreement, he also consented to forfeit three
properties as proceeds obtained from the drug violations or
property used or intended to be used to commit and facilitate
the violations. The two properties that are the subject of this
appeal, one at 414 South 25th Street (“the 414 property”) and
another at 1102 South 28th Street (“the 1102 property”), and
the third property at 317 South 31st Street (“the 317 proper-
ty”), are all in Billings, Montana. Victor subsequently with-
drew from the plea agreement and proceeded to trial.
A jury convicted Victor of conspiracy to possess with
intent to distribute methamphetamine and marijuana, and pos-
session 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-
4226 UNITED STATES v. NAVA
ceeds of his crimes. Accordingly, the district court ordered the
houses forfeited.2
After the government published notice of the intended for-
feiture, Victoria submitted a handwritten “Proof of Owner-
ship” 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 prop-
erty 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
2
The order mistakenly invoked 18 U.S.C. § 2253 (the criminal forfeiture
statute for child pornography offenses), but should have invoked 21
U.S.C. § 853 (the criminal forfeiture statute for drug offenses). The ancil-
lary forfeiture proceedings properly took place under the latter statute.
UNITED STATES v. NAVA 4227
another dated 1996 showed a transfer from Frank to Victoria
and listed one dollar as consideration.
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 vari-
ous 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 Vic-
toria to Victoria and Joseph jointly. A copy of Victoria and
Joseph’s loan application on the 1102 property also substanti-
ated their account. The application stated that because Victo-
ria 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 Vic-
toria 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 corrobo-
rated 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-
4228 UNITED STATES v. NAVA
ther found that Victoria did not have legal right, title or inter-
est in the properties. The court credited the jury at Victor’s
trial which determined that he was “the owner of both houses”
and discounted Victoria’s testimony after she denied knowing
that her father was a drug dealer. Acknowledging that “Victor
never held title to the houses,” the court found that “Victoria
never has maintained significant employment, and she dem-
onstrated no means of paying for costs associated with the
houses.” The court directed the United States Marshal to sell
the properties. Victoria timely appealed.
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 21 U.S.C.
§ 853(n)(6) the ‘legal right, title or interest’ of the third party
is determined by state law.”).
[2] The dissent argues, relying on the Fourth Circuit’s deci-
sion 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 dis-
agree 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
3
In a case involving § 853(n), we review the district court’s findings of
fact for clear error and its legal conclusions de novo. See Lester, 85 F.3d
at 1410-11.
UNITED STATES v. NAVA 4229
title” in § 853(n), but instead used the phrase “legal right,
title, or interest.” State law principles that determine “legal
right, title or interest” may or may not include some formula-
tion of “bare legal title,” but we are not free to adopt our own
“bare legal title” test as a matter of federal common law.
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 prop-
erty 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 trans-
fer of real property. Were Congress to create a different sys-
tem, or were we to try to create a federal common law of
property ownership in forfeitures, it would risk upsetting set-
tled expectations in property transfer rules in the states. As the
4230 UNITED STATES v. NAVA
Montana Supreme Court has pointed out, when “[t]he overrid-
ing issue is whether the public has a right to rely on the public
record,” decisions casting doubt on the recording system
“would cast doubt as to the validity of every recorded deed
and wreak havoc in the county courthouse.” Benson v. Diehl,
745 P.2d 315, 317 (Mont. 1987). While we have no occasion
to consider Congress’s power to adopt a national definition of
title ownership, we will not read such a definition into the
code absent some clear statement from Congress.
[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 deci-
sion.4 Federal forfeiture statutes govern the disposition of
property, but state law determines what rights, title or inter-
ests the various claimants possess in that property.
B
[4] Under § 853(n)(6)(A), the relevant inquiry is whether,
under Montana law, Victoria established by a preponderance
of the evidence that legal right, title, or interest in the 414 and
1102 properties vested in her, rather than in Victor, at the time
of the commission of the crimes for which Victor was con-
victed.5 See 21 U.S.C. § 853(n)(6)(A). We begin with the
4
The Fourth Circuit itself recognized that our decisions in Lester and
Alcaraz-Garcia might be inconsistent with Morgan, because we “analyzed
the question of whether a § 853(n) petitioner has a property interest by
determining ownership under state law.” Morgan, 224 F.3d at 343. In
addition, the Sixth Circuit noted the divide between Morgan and our deci-
sions. See United States v. O’Dell, 247 F.3d 655, 680 n.9 (6th Cir. 2001)
(“[O]ther courts have consistently applied relevant state law in determin-
ing whether a third party has such a property interest. See, e.g., United
States v. Hooper, 229 F.3d 818, 820 n.5 (2000) (expressly rejecting the
test used in Morgan).”).
5
The superseding indictment charged Victor with criminal acts as early
as July 11, 1997. Although the government introduced some evidence that
UNITED STATES v. NAVA 4231
obvious: Victoria has record title to the 414 and 1102 proper-
ties, and Victor has never held record title to either property.
The evidence presented at the ancillary hearing established
that Victoria had title to both properties and that she acquired
title before July 11, 1997, the earliest date of Victor’s charged
offenses.
[5] Montana presumes that a person possessed of the record
title is the lawful owner. See MONT. CODE ANN. § 70-19-404
(in an action for adverse possession, “the person establishing
a legal title to the property is presumed to have been pos-
sessed thereof”); Luloff, 906 P.2d at 192 (“possession which
is not adverse can be overcome by any record owner who has
acquired title to the land by conventional means,” the “two
historically recognized ways to acquire unassailable fee title”
being transfer and gift). Under Montana law, a party who duly
records a deed in the appropriate registry prevails against sub-
sequent purchasers or encumbrancers. See MONT. CODE ANN.
§ 70-21-304; Kossel v. Stone, 404 P.2d 894, 896 (Mont. 1965)
(“Under our recording statutes, [recorded deeds] constituted
constructive notice of their contents to subsequent purchas-
ers.”); Hastings v. Wise, 8 P.2d 636, 638-39 (Mont. 1932); see
also Kirgan v. Kirgan, 207 P.2d 557, 559 (Mont. 1949) (“ ‘A
person, in dealing with another in respect to real estate, may
rely on the record title to the property, in the absence of actual
knowledge of the title in fact, or of facts sufficient to put him
on inquiry in respect thereto’ ”) (quoting 45 AM. JUR. Records
and Recording Laws § 82 (1946), now found at 66 AM. JUR.
2d Records and Recording Laws § 83 (2004)). As Victoria’s
Victor’s crimes actually began much earlier, perhaps as early as 1991, the
district court specifically instructed the jury that these crimes were “previ-
ously committed,” “not charged here,” and admitted under FED. R. EVID.
404(b) to show only “intent, motive, opportunity, preparation, and knowl-
edge.” Moreover, the alleged earlier crimes cannot trigger forfeiture,
because Victor was not convicted of these offenses. Only properties
involved in criminal violations for which a defendant is convicted are sub-
ject to forfeiture. See 21 U.S.C. §§ 853(a)(1), (2).
4232 UNITED STATES v. NAVA
name appears on the recorded deeds, she holds legal title to
the properties and is, for various purposes, denominated the
“owner” of the properties. See, e.g., MONT. CODE ANN. § 7-12-
1103(7) (defining “owner” for business improvement districts
as “a person in whom appears the legal title to real property
by deed duly recorded in the county records . . . .” ); Id. § 85-
9-103(10) (defining “owner” for water conservancy districts
as “the person or persons who appear as owners of record of
the legal title to real property according to the county records
whether such title is held beneficially or in a fiduciary capac-
ity . . . .”).
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 domin-
ion and control over the property and could have reclaimed
their property). Montana courts have recognized that “domin-
ion 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
6
We have observed the “ ‘possession of mere legal title by one who
does not exercise dominion and control over the property is insufficient
even to establish standing to challenge a forfeiture.’ ” United States v. One
Parcel of Land, 902 F.2d 1143, 1444 (9th Cir. 1990) (per curiam) (quoting
United States v. A Single Family Residence, 803 F.2d 625, 630 (11th Cir.
1986)). The government has not challenged Victoria’s standing.
UNITED STATES v. NAVA 4233
[6] Montana has, by statute, recognized two trust doctrines
—resulting and constructive trusts—that allow parties to
pierce the veil of apparent, recorded title to real property. See
In Re Estate of McDermott, 51 P.3d 486, 490 (Mont. 2002).
Under the “purchase money resulting trust” doctrine, “[w]here
a transfer of property is made to one person and the purchase
price is paid by another, a resulting trust arises in favor of the
person who paid the purchase price.” MONT. CODE ANN. § 72-
33-218(1). The resulting trust does not arise, however, if the
transferee is a spouse or child unless it can be shown that “the
party paying the purchase price manifested an intention that
the transferee should not have the beneficial interest in the
property.” Id. § 72-33-218(2)(b), (3). Thus, where a father
placed property in his son’s name but located, negotiated and
paid for the property; paid all insurance and property taxes;
and took exclusive possession of the property, a resulting trust
arose, and the father was the lawful owner. Hilliard v. Hil-
liard, 844 P.2d 54 (Mont. 1992). In general, however, a trans-
fer from a parent to child or from spouse to spouse is
presumed to be a gift, and not a resulting trust, and can be
overcome only by clear and convincing evidence. Id. at 58;
Platts v. Platts, 334 P.2d 722, 727 (Mont. 1959); Dial v. Dial,
310 P.2d 610, 612 (Mont. 1957). See also Luloff, 906 P.2d at
192 (transfer and gift are the “two historically recognized
ways to acquire unassailable fee title”).
The “constructive trust” doctrine “arises when a person
holding title to property is subject to an equitable duty to con-
vey it to another on the ground that the person holding title
would be unjustly enriched if he were permitted to retain it.”
MONT. CODE ANN. § 72-33-219. Generally, “fraud, accident,
mistake, undue influence, and violation of a trust, or other
wrongful acts are the bases upon which a constructive trust is
found,” but a constructive trust may also be imposed “where
a title holder innocently obtained title but would be unjustly
enriched if they were allowed to retain the title.” In re Mar-
riage of Moss, 977 P.2d 322, 327 (Mont. 1999). See also
United States v. $4,224,958.57, 379 F.3d 1146 (9th Cir. 2004)
4234 UNITED STATES v. NAVA
(“[I]t is hornbook law that, when a fraudster acquired property
from a victim by fraud, the fraudster holds the property in
constructive trust for his victim.” (citing SCOTT ON TRUSTS
§ 462.4 (4th ed. 1989))). “Thus, Montana law no longer
requires a showing of fraud or other wrongful acts as a pre-
requisite to imposing a constructive trust . . . .” In re Estate
of McDermott, 51 P.3d at 491. Parents who held title to prop-
erty, advanced the purchase price, and paid the taxes and
insurance nevertheless held the property in trust for their son
and daughter-in-law who occupied and improved the property
and repaid the purchase price. In re Marriage of Moss, 977
P.3d at 327. By contrast, no constructive trust resulted when
parents held the title and paid all but $1,000 of the down pay-
ment, the parties entered into a lease agreement, and the par-
ents had sent their son and daughter-in-law an eviction notice.
In re Marriage of Owen, 797 P.2d 226 (Mont. 1990).
[7] Neither of these trust doctrines favors finding title in Vic-
tor.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 pay-
ments, 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 convinc-
ing 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.
7
The D.C. and Second Circuits have held that interests imposed in
equity, such as constructive trusts, qualify as a “legal” interest under 21
U.S.C. § 853(n)(6)(A). See, e.g., United States v. BCCI Holdings (Luxem-
bourg), S.A., 46 F.3d 1185, 1190 (D.C. Cir. 1995); United States v.
Schwimmer, 968 F.2d 1570, 1582 (2d Cir. 1992).
UNITED STATES v. NAVA 4235
C
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 wit-
nesses and determined that Victor owned the houses; (2) Vic-
toria “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 § 853(a). The special verdict charged the jury to find
whether the properties either constituted or derived from any
proceeds Victor obtained, directly or indirectly, as a result of
his criminal activity, or whether the properties were used, or
intended to be used, in any manner or part, to commit or facil-
itate the commission of his crimes. The special verdict thus
determined only whether the properties met the two criteria
for forfeiture under 21 U.S.C. § 853(a), rather than who held
title to the properties.
The district court expressly drew this distinction in its jury
instructions. The court admonished the jurors that the proper-
ties “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
4236 UNITED STATES v. NAVA
court specifically warned the jurors that questions of owner-
ship or title were not before them. “Any interest that another
person may claim to have in such property can be taken into
account later by this Court in imposing sentence and dispos-
ing of the property. This is not for your consideration as
jurors. Stated differently, your sole task is to decide whether
this property, regardless of whose name it is now held, was
derived from or was intended to facilitate the defendant’s
drug violations.” Thus, contrary to the district court’s charac-
terization in its ruling on Victoria’s claim, the jury made no
finding as to ownership or title to the properties.
The district court’s reliance on the testimony of the wit-
nesses heard by the jury is troubling. As the court character-
ized 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 wit-
ness, 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
UNITED STATES v. NAVA 4237
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 pic-
tured 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, sug-
gested 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 prop-
erty, but the testimony is even more convoluted. Two wit-
nesses 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 Schae-
fer 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 iden-
tified 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, Holli-
day equivocated: “Well, he didn’t ever tell me it was his
4238 UNITED STATES v. NAVA
house, I don’t think, but I knew it was his because it was his
mother’s house. He took it over after that.” Finally, Jaime
Navarez, who was related to the Navas by marriage, testified
that he lived at the 1102 house in 1992 and 1993 and paid rent
to Victor.8
[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. Sch-
wimmer, 968 F.2d 1570, 1580-81 (2d Cir. 1992), for the obvi-
ous 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
8
That time period is irrelevant because it is both prior to the time that
Victoria acquired title to the property and before the crimes charged
against Victor.
UNITED STATES v. NAVA 4239
anecdotal, unclear, and contradictory. The testimony, insofar
as it relates to his ownership, is pure hearsay, at best. It may
not even rise to the level of hearsay. It is common practice to
refer to “my house” or “my apartment” even though one is a
leaseholder, renter or boarder; the statement is not to be
understood in its technical, legal meaning, but as a familiar
way of indicating where one may be found. It is not surprising
that these witnesses testified that they thought it was “Victor’s
house.” But this of itself proves nothing. Even if Victor might
have been found at these properties from time to time,
arranged for their repair and dealt drugs from them, the state-
ments from these witnesses do not show that he controlled the
properties in the sense demanded by Montana law. Moreover,
most of the statements have no time frame, so we cannot
determine whether the events in question occurred prior to
1996, when Victoria acquired title to the properties, or even
1997, which is the earliest date of the acts for which Victor
was charged.
2
The district court’s general observation concerning Victo-
ria’s ability to maintain the houses is equally misplaced. Vic-
toria 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 testi-
fied that her father had made several tax payments for them.
This has been addressed in Montana law. Occasional pay-
ments on behalf of another—without some additional evi-
dence of the intent of the parties—do not create a resulting or
4240 UNITED STATES v. NAVA
constructive trust. See Neset v. Fifer, 942 P.2d 712, 714-15
(Mont. 1997) (holding that a party’s payment of property
taxes and claim of the income tax deduction “is not conclu-
sive as to whether a purchase money resulting trust exists”).
Nothing in Montana law suggests that lack of employment or
inability to pay creates a resulting or constructive trust in
favor of the family member making those payments. To the
contrary, Montana courts have been reluctant to recognize
implied trusts based on the fact that parents had assisted a
child with a down payment, mortgage payments, taxes and
insurance. See In re Marriage of Moss, 977 P.2d at 327;
Neset, 942 P.2d at 714-15.
3
[12] Finally, the district court placed great weight on the
testimony of federal probation officer Steven Willis, who tes-
tified 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 cred-
ited 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.
UNITED STATES v. NAVA 4241
On cross-examination, Willis admitted that he made notes of
the conversation but that his “notes say she indicated the resi-
dence was hers.” He repeated that he couldn’t remember how
she said she acquired it. Willis’s “hazy” recollection provides
no basis for concluding that Victor owned the property and is
contradicted by his own notes. Indeed, neither of the sug-
gested means by which she acquired the property—purchase
or gift from her father—bears on the offered evidence of the
chain of title, nor does it correlate with any other facts elicited
at the trial or the hearing. And the government provided no
evidence to show that Victoria’s cousin, Frank Nava, or her
grandmother, Jessie Nava, were not the actual owners of the
properties they conveyed 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 prece-
dents. 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 defen-
dant’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,
9
Notwithstanding the overwhelming evidence that the defendant was the
“actual owner,” the Eighth Circuit was “reluctant to declare [the wife] a
mere straw or nominal owner” where she exercised some dominion and
control over the property by living in the house. Totaro, 345 F.3d at 996.
The court ultimately declared the property forfeitable, but on the theory
that the defendant’s unlawful proceeds paid for the “considerable mort-
gage.” In the end the court directed the district court to determine the
wife’s and defendant-husband’s respective interests in the property under
New York State divorce law. Id. at 999.
4242 UNITED STATES v. NAVA
318 (7th Cir. 1994) (defendant divested himself of legal title,
but continued to pay “all licenses, utilities, maintenance and
repairs, insurance, and taxes”; applying Wisconsin law, the
court concluded that defendant retained all “ownership ‘sticks
or rights’ other than bare legal title”) (citation omitted); Brax-
ton v. United States, 858 F.2d 650, 654-55 (11th Cir. 1988)
(defendants gave the nominal owner a warranty deed “as fed-
eral law enforcement authorities were closing in on the
[defendants]”; transaction was “an absolute sham”). In the
second line of cases, the defendant never held title to the
property, but the nominal owner also never exercised domin-
ion and control over the property. See, e.g., Morgan, 224 F.3d
at 343-44 (spouse named on checking account was “no more
than a mere name on the account, with no power over the dis-
position of the account funds”); United States v. One 1945
Douglas C-54 (DC-4) Aircraft, Serial No. 22186, 604 F.2d
27, 29 (8th Cir. 1979) (defendant supplied purchase money
for aircraft, but registered it in co-conspirator’s name “as a
subterfuge”; defendant used a blank bill of sale from the reg-
istered owner as collateral for a bank loan).10 Here, neither of
these criteria is present: Victor never held title to the proper-
ties, and Victoria has exercised the obvious and traditional
right of ownership by exclusively occupying the property.
The dissent can cite no case in which a court awarded owner-
ship to someone who never held title and did not live on the
property, in preference to the titled owner who occupied the
property.
10
The unpublished Sixth Circuit case the dissent calls “quite similar” on
its facts is, in fact, not similar at all. In United States v. Warner, 968 F.2d
1217, 1992 WL 163258 (6th Cir. 1992) (per curiam), the court found that
the record owners purchased the property at the request of the defendant
and for her use and benefit; moreover, “the property had actually been
purchased and the mortgage payments and taxes had been paid by defen-
dant.” Id. at **3.
 UNITED STATES v. NAVA 4243
E
[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 prop-
erty, 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 con-
trol 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 govern-
ment that Victor paid for the property or arranged for the gift
or otherwise manipulated the system to disguise his real own-
ership 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 sys-
tem” 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-
erty and began exercising the rights that go with titled owner-
11
By contrast, Victor held title and resided at the 317 property, which
is not at issue here.
4244 UNITED STATES v. NAVA
ship, she assumed certain legal risks. She assumed liability for
the taxes owed on the property. She assumed the risk for fail-
ing 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 Vic-
toria 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 sys-
tem of justice.’ ” Lester, 85 F.3d at 1413 (quoting Bennis v.
Michigan, 516 U.S. 442, 456 (1996) (Thomas, J., concur-
ring)). We doubt that there is any other context in which Vic-
toria’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 frivo-
lous.
The dissent, the district court and the government have in
reality proceeded on the belief that this is a bad family and
UNITED STATES v. NAVA 4245
that there are nefarious things going on at these properties.
There appears to be ample evidence to support this. Indeed,
there is even evidence that, if believed, suggests that Victoria
herself was involved in illegal drug activities on these proper-
ties. The government is not without remedy. It may have
grounds for a civil forfeiture action—an action in rem—
against the property. See 21 U.S.C. § 881. Or it may have
grounds for a criminal action against Victoria which, if suc-
cessful, might result in criminal forfeiture under § 853. But
the government may not declare property forfeit on the trans-
parent claim that these properties were really Victor’s.
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 § 853(n)(6)(B). The
judgment of the district court is reversed and remanded for
further proceedings consistent with this opinion.
REVERSED AND REMANDED.
RYMER, Circuit Judge, dissenting:
I part company with the majority because I do not believe
that forfeiture pursuant to 21 U.S.C. § 853 turns on who holds
bare legal title. Otherwise, forfeiture could always be avoided
by putting property in the name of a nominee. Recognizing
that § 853(o) imposes upon us the obligation to construe
§ 853 liberally, I would hold that property of a defendant
whose title is held by a straw or nominal owner may be for-
feited.
I also part company with the majority’s suggestion that,
when the claimant to forfeited property holds bare legal title,
4246 UNITED STATES v. NAVA
the burden shifts to the government to show that the property
is held as a resulting or constructive trust for the defendant
pursuant to state law. Section 853(n)(6)(A) in plain language
puts the burden on the petitioner to show by a preponderance
of the evidence that the petitioner’s right, title or interest was
vested in the petitioner rather than the defendant. Absent par-
ticular circumstances warranting it (and here, absent any facts
or argument justifying it), there is no reason for the validity
of the petitioner’s alleged interest in the property to turn on
the state law of trusts. Instead, when the character of the inter-
est is uncontroverted, the only question is whether that inter-
est is subject to forfeiture.
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 Vic-
tor at the time Victor committed the acts that gave rise to for-
feiture. 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 def-
erence, and its findings of fact are well supported given evi-
dence 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 trans-
ferred 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
UNITED STATES v. NAVA 4247
was convicted, the jury returned a special verdict of forfeiture
against several pieces of property including 414 and 1102.1
The court held an ancillary hearing when Victoria claimed
that the properties belonged to her. Fed. R. Crim. P.
32.2(c)(1); 21 U.S.C. § 853(n)(2).
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. 21 U.S.C. § 853(n)(6)(B).
Therefore, she had to establish a legal right, title or interest
that rendered the forfeiture order invalid because it was vested
in her, rather than Victor, or was superior to Victor’s right,
title, or interest, when he was dealing drugs. Id.
§ 853(n)(6)(A).
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 pro-
bation officer assigned to a case involving her husband that
she received 1102 as a gift from Victor.
1
Under the instructions, the jury had to find that Victor’s property (spe-
cifically including 414 and 1102) was acquired with proceeds of, or was
used to commit or facilitate commission of, the drug-trafficking offenses
of which he was found guilty, whether or not the property was held in
someone else’s name.
2
The chain of title shows that Frank Nava also recorded quit claim
deeds to 414 to Victoria on January 20, 1998 and June 15, 1998. This
would, of course, have been unnecessary had Victoria’s title truly been
vested in her (rather than in Frank as Victor’s nominee) on April 11, 1996.
4248 UNITED STATES v. NAVA
Tax receipts indicate that Victor paid cash for overdue
property taxes on both houses for the tax year 1998. The
receipts show that taxes were paid from 1992 forward, but not
who paid them. Victoria claimed that she paid Victor back,
but her husband contradicted this. Victoria was not gainfully
employed except for a few months in 2000 or 2001 when she
earned no more than a thousand dollars for the year. She testi-
fied that her husband paid the taxes, but he was incarcerated
from 1997 through early 2000.
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 build-
ing 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 pro-
vide 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 Vic-
tor 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
UNITED STATES v. NAVA 4249
was in Victoria’s name, but Victoria received no rent from
him.
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 credi-
ble.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.
3
The district court admitted Victor’s written plea agreement (signed
September 25, 2001 but later withdrawn) in which he acknowledged that
414 and 1102 were the proceeds of, or were used for, his drug-trafficking
crimes that he would forfeit. He also agreed to do whatever was necessary
to pass clear title, including for property held or controlled by a nominee.
Victoria appeals the admissibility of the agreement, but it is not necessary
to resolve the issue because the district court did not rely on Victor’s
admissions for its decision.
4
This finding is based in part on disbelieving Victoria’s denial of
knowledge about Victor’s drug trafficking. The court also found testimony
of Frank Nava and Joseph Reyna to the same effect implausible. Victor
was known in the community as a drug dealer. Also, there is evidence that
Holliday sold “crank” to Victoria at the 1102 house; that Sandy Ilie
arranged between 1996 and 1999 for a third party to acquire drugs from
“one of Victor’s daughters” living in the 1102 house; and that Laura Ison
sometimes acquired drugs from Joseph Reyna, Victoria’s husband, who
told her that the drugs came from Victor.
4250 UNITED STATES v. NAVA
II
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 indi-
rectly. Victoria also submits that it was clear error for the dis-
trict 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 domin-
ion and control over both properties. The only possible con-
clusion 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 Mon-
tana 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 inter-
est has never been in dispute: she had legal title that was free
and clear except for occasional transfers to a bonding com-
5
In particular, there is no issue here about Victoria’s right, title or inter-
est vis-a-vis a subsequent purchaser or encumbrancer, or an adverse pos-
sessor, from whence the Montana presumption relied upon by the majority
— that the person who possesses record title is the lawful owner — arises.
UNITED STATES v. NAVA 4251
pany and the mortgage she took out for Victor’s legal fees.
Her position has always been that the title is truly hers, not
Victor’s, because it came from Frank. However, the district
court determined that this was not so.
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 mat-
ter 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 § 853(n) proceeding in
United States v. Morgan, 224 F.3d 339 (4th Cir. 2000). In
Morgan, the defendant’s assets were forfeited to the United
States when he was convicted of drug dealing. The defen-
dant’s wife petitioned to set aside the forfeiture of a certificate
of deposit and a checking account. She asserted that neither
was the property of the defendant under § 853 because she
had a property interest in both that was superior to her hus-
band’s. The court found it unnecessary to consider the role of
state law in these circumstances given the intent of Congress
in enacting the forfeiture provisions of § 853. As it explained:
The intent of Congress in enacting the forfeiture pro-
visions of § 853 was to “strip these offenders [racke-
teers 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 at
4252 UNITED STATES v. NAVA
3392 n.47. In order to effectuate the legislative pur-
pose of the statute, courts must evaluate whether the
petitioner is a nominee when reviewing the sub-
stance 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 check-
ing account was used to facilitate the defendant’s drug activ-
ity, that Mrs. Morgan had no idea about the logistics of the
transactions involved in opening the account, that the defen-
dant 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 § 853 is not just to punish illegal conduct but to
strip drug dealers of their economic power, and holding that
properties in a third party’s name are forfeitable when, among
other things, the defendant acted as if he retained ownership
after entering into land contracts); Braxton v. United States,
858 F.2d 650, 654-55 (11th Cir. 1988) (forfeiting property
under the RICO statute, 18 U.S.C. § 1963(l)(6)(A), which is
identical to § 853(n), when third party held title through a
warranty deed from defendant as a nominee); United States v.
Totaro, 345 F.3d 989, 996 (8th Cir. 2003) (recognizing that
bare legal title is insufficient to prevent forfeiture under the
RICO statute when property in which a spouse might other-
wise have an interest is acquired with RICO proceeds because
“[i]t would do a severe disservice to the intent and purpose of
the RICO forfeiture statute if a criminal were able to protect
UNITED STATES v. NAVA 4253
and enjoy RICO proceeds by investing them in property titled
to a spouse.”).6
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 § 853(n)(6)(A)
is that a person who holds legal title to property has to show
that it is truly hers rather than the convicted felon’s.7
While we have not directly held that a straw owner holding
nominal title may not invalidate a forfeiture order under
§ 853, we have held that a nominal owner lacks standing to
claim return of property that was forfeited pursuant to 21
U.S.C. § 881. United States v. One Parcel of Land, 902 F.2d
1443 (9th Cir. 1990) (per curiam); United States v. Vacant
Land, 15 F.3d 128 (9th Cir. 1993). In One Parcel of Land, for
example, the claimant was listed as the title owner but he
presented no documentary evidence regarding his finances or
payments with respect to purchase of the property, and he
claimed he paid property taxes but had no record to support
it. In these circumstances, we upheld the district court’s deter-
mination that the claimant had failed to meet his burden of
proving more than nominal ownership. It follows that we
should uphold the district court’s determination here that Vic-
6
The Sixth Circuit considered the issue so straightforward that it
affirmed rejection of a claim on facts quite similar to those now before us
in an unpublished disposition. See United States v. Warner, 968 F.2d
1217, 1992 WL 163258 (6th Cir. 1992) (per curiam) (unpublished table
decision) (concluding that under § 853(n) “in spite of the fact that the nor-
mal indicia of legal ownership, the deed, indicated that [the petitioners]
had a legal interest in [the property], they were in reality nothing more
than the nominal legal owners of the property.”). Id. at **3.
7
This being so, I do not see how the validity of an order of forfeiture
has anything to do with whether state law “would recognize an ‘actual’
owner over a ‘straw’ or ‘nominal’ owner.” Maj. op. at 4232. For purposes
of criminal forfeiture, federal law already assumes the possibility of nomi-
nal ownership and provides a procedure for determining it.
4254 UNITED STATES v. NAVA
toria failed to meet her burden of proving more than nominal
ownership.8
Given the majority’s contrary conclusion, it bears repeating
that § 853 imposes the burden of proof on Victoria, not on the
government.9 Without actually saying so, the majority appears
to shift the burden by invoking the Montana presumption that
the title holder of record owns the property (at least vis-a-vis
subsequent purchasers or adverse possessors); ruling that
Montana trust law applies; and faulting the government for
failing to show that Victor paid the purchase price for the
properties in behalf of Victoria, that he arranged for the gift
of the properties or otherwise manipulated the system to dis-
8
Other circuits also look through bare legal title to whether the holder
is a straw or nominal owner when considering third party claims in other
forfeiture contexts. See, e.g., United States v. Carrell, 252 F.3d 1193, 1204
(11th Cir. 2001) (holding in the context of civil forfeiture that courts must
look beyond bare legal title to determine whether the record title owner is
a strawman); United States v. 526 Liscum Drive, 866 F.2d 213, 217 (6th
Cir. 1989) (holding in a § 881 proceeding that claimant holding legal title
must prove indicia of true ownership to demonstrate she was not a nomi-
nal or straw owner), abrogation on other grounds recognized by United
States v. Certain Real Property Located at 16510 Ashton, 47 F.3d 1465
(6th Cir. 1995); United States v. One 1945 Douglas C-54 (DC-4) Aircraft,
Serial No. 22186, 604 F.2d 27, 28-29 (8th Cir. 1979) (indicating that bare
legal title may be insufficient to establish ownership in a § 881 forfeiture
challenge).
9
Section 853(n)(6) provides in this respect:
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 prop-
erty, 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.
UNITED STATES v. NAVA 4255
guise his real ownership, or that Victoria will be unjustly
enriched by retaining her interest in the properties. However
— and without regard to how Montana courts would treat the
problem — this construct cannot comport with § 853, which
squarely places the burden of proof on the petitioner.10
In sum, we are obliged to construe the provisions of § 853
liberally to effectuate its remedial purposes. 21 U.S.C.
§ 853(o).11 To allow straw owners to defeat forfeiture would
defeat the statute’s prime remedial purpose: to strip drug traf-
fickers of their economic power. I would therefore hold that
to prevail in a § 853(n) proceeding, a petitioner holding legal
title must prove by a preponderance of the evidence that the
title vests in her truly, not nominally.
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-
10
Victoria makes the different point that allocating the burden to peti-
tioners and including the trial record in a § 853(n) proceeding offends due
process. However, § 853(n)(5) specifically allows for consideration of rel-
evant portions of the trial record in an ancillary proceeding; Victoria offers
no authority, and no basis in the record of the ancillary proceeding, in sup-
port of her argument that she lacked opportunity to cross-examine wit-
nesses whose testimony was offered for the court’s consideration. Section
853(n)(6) also specifically prescribes the burden of proof (preponderance
of the evidence) and places it on the petitioner. This is not inconsistent
with United States v. James Daniel Good Real Property, 510 U.S. 43
(1993), the only authority upon which Victoria relies.
11
Section 853(o) states:
Construction
The provisions of this section shall be liberally construed to
effectuate its remedial purposes.
4256 UNITED STATES v. NAVA
mother via Frank (as she testified) or from Victor (as the pro-
bation officer testified she previously represented); who is
telling the truth is for the district court to decide, not us. Vic-
tor used Frank Nava (and others) to hold property for him, so
the district court could reasonably infer that Victor used Frank
to hold (and transfer) 414 and to deed 1102 to Victoria as a
subterfuge. Victor treated both premises as his own: he
arranged and paid for repairs; he invited a friend to live in one
of the houses; he rented them out and received the rental pay-
ments; he paid taxes on these and other properties that were
titled to others; he was the sole beneficiary of the proceeds of
a mortgage on 1102; and he used both places to deal drugs
before, during, and after title was recorded in Victoria’s name.
There is no evidence credited by the trier of fact that Victo-
ria received either property as a gift from Frank — which was
her only claim — and substantial evidence that Victor exer-
cised 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 show-
ing that she held title for herself rather than for Victor.
Accordingly, I would affirm.