Supreme Court of California Justia
Docket No. S139685
People v. Semaan

Filed 8/13/07


Plaintiff and Respondent,
Ct.App. 4/2 E035671
Super. Ct. No. RIF106168
Third Party Claimants and

Penal Code section 186.11,1 sometimes called the “Freeze and Seize
Law,”2 permits the superior court in certain white collar criminal cases to take
possession of assets under defendants’ control and to preserve them for the
payment of restitution. A person who claims an interest in frozen assets may seek
their release by filing a verified claim with the superior court. (§ 186.11,
subd. (e)(6).) In this case, the superior court denied a claim filed by the person
whose name appeared on a frozen bank account controlled by defendants, finding
the claimant failed to show she actually owned any of the money in the account.

All further statutory citations are to the Penal Code, except as noted.
E.g., People v. Green (2004) 125 Cal.App.4th 360, 363.

The Court of Appeal, reasoning that the People had the burden to show by clear
and convincing evidence the claimant did not own the disputed funds, reversed.
We conclude the Court of Appeal erred and, thus, reverse.
Defendants Youssef Semaan and Lilliane Semaan pled guilty to a
complaint charging them with 99 felony counts arising out of a “credit card bust-
out” scheme.3 The scheme exploited “courtesy checks” mailed by credit card
issuers to cardholders in order to encourage the cards’ use. Using courtesy checks,
defendants would overpay by thousands of dollars the balance due on a credit
card; a card issuer that received an overpayment would credit the account instead
of refunding the overpayment, thus temporarily increasing (“busting out”) the
amount that could be charged on the card; defendants would then spend the
busted-out credit limit before the courtesy check was dishonored for insufficient
funds. Defendants also submitted fraudulent credit applications to merchants in
order to finance purchases, and then used courtesy checks on busted-out credit
card balances to delay collection. Through this scheme, defendants ultimately
stole over $1.6 million, committing in the process 24 counts of grand theft (§ 487,
subd. (a)) and 75 counts of fraudulently drawing checks without sufficient funds
(§ 476a). Based on these offenses, defendant Youssef Semaan was sentenced to
14 years in state prison and defendant Lilliane Semaan to 10 years’ probation.
Defendants were also ordered to pay $1,632,418.61 in restitution. (See § 186.11,
subd. (i)(1)(A) & (B).)

We grant the People’s request to augment the record to include the
reporter’s transcripts of hearings in the criminal case on November 25, 2002, and
November 21, 2003. The transcripts are properly part of the record because a
proceeding under section 186.11 is “pendent to the criminal proceeding . . . .” (Id.,
subd. (e)(2).)

While the criminal case was pending, the People filed a petition under
section 186.11 to preserve assets and property for the payment of restitution. (See
id., subd. (e)(2).) The superior court granted the petition and appointed a receiver
to take possession of a list of assets and property the People had identified in the
course of their investigation as being in defendants’ control.
Among the frozen assets were bank accounts in the names of Marie Semaan
and Elham Cherfan, both of whom appear to reside in Lebanon and are sisters-in-
law of defendant Youssef Semaan. Both women filed claims asking the court to
release money from the frozen accounts. (See § 186.11, subd. (e)(6).) The
superior court, after an extensive evidentiary hearing, rejected both claims.
Neither claimant appeared at the hearing or submitted a declaration. While each
claimant in her written claim asserted ownership of some of the frozen funds held
in her name, the claims were verified by the claimants’ jointly retained attorney
and, thus, while procedurally proper had no evidentiary value. (Code Civ. Proc.,
§ 446, subd. (a).)4 Both claimants, through an accountant expert witness,
attempted to trace to the frozen accounts funds once assertedly belonging to them.
Claimant Elham Cherfan sought to prove that $325,067.08 of the funds held in her
name represented defendants’ repayment of a loan. But the purported loan was
not documented, and the evidence did not support her expert’s conclusion about
the circumstances under which the loan was supposedly made. The superior court
ultimately found that the accountant’s opinion testimony concerning the loan

Under Code of Civil Procedure section 446, subdivision (a), when a
pleading is verified by the attorney for a party, “the pleadings shall not otherwise
be considered as an affidavit or declaration establishing the facts therein alleged.”
Verification by the attorney is not, as claimants seem to suggest, a defect in the
verification to which the People were required to object. Such verification does,
however, as noted, affect a pleading’s evidentiary value.

“lack[ed] credibility” and denied the claim for “insufficient evidence.” The Court
of Appeal affirmed this part of the superior court’s decision, and Cherfan has not
sought review of the Court of Appeal’s decision as to her. We therefore do not
consider her claim further.
As mentioned, the superior court also denied the claim of Marie Semaan
(hereafter Marie). Marie did not appear at the hearing and made no sworn
statements in support of her claim. In an amended claim, which was also verified
by her attorney, Marie asserted that “$219,577.53 . . . in the [frozen bank account]
. . . is the sole property of claimant and said money is not the fruits or product of
any criminal activity.” As mentioned, however, the amended claim’s factual
assertions had no evidentiary value. (Code Civ. Proc., § 446, subd. (a).)
At the hearing on her claim, Marie’s attorney presented a single witness—
the same accountant mentioned above—who opined, based on her effort to trace
the source of the funds in the frozen bank account, that Marie owned the funds.
The witness had not met or spoken to Marie. The witness’s investigation of the
bank account showed a beginning balance of $1,986.89, deposits of $22,921.00
representing Social Security payments in the name of Marie and Elias Semaan,5 a
deposit of $196,771.20 representing the proceeds of the sale of a house on
Mountain Court in Brea, California, and a transfer of $380.40 from another
account in Marie’s name.
The People, for their part, accepted the expert witness’s conclusions about
the source of the funds but endeavored to show that Marie’s name was used by
defendants as an alias for financial transactions. Through cross-examination of
Marie’s own accounting expert witness, and through direct examination of a

The record does not make clear who Elias Semaan is.

detective serving on the financial crimes task force of the United States Secret
Service, the People showed the following: Defendants possessed and used for
their own benefit more than six credit cards in Marie’s name. Defendants also
possessed a driver’s license and Social Security card in Marie’s name. All 24
checks written on the account, and all ATM withdrawals from the account, were
for the benefit of defendants; all of these transactions (totaling $2,482.00)
occurred at a time when Marie was not in the United States. The registered
address for the bank account was a post office box rented by defendant Youssef
Semaan in Marie’s name. A signature card existed for the bank account, but
neither witness claimed any expertise in handwriting identification and neither
attempted to authenticate the signature as Marie’s. The several documents
purporting to bear Marie’s signature in fact bore apparently very different
signatures, none of which was shown to be her own. Ownership of the house was
unclear. In her amended claim, Marie asserted that her deceased husband Simon
Semaan owned the Brea house; in that document she did not, however, claim an
ownership interest in the house, as opposed to the funds in the account. While a
last will and testament for Simon Semaan was in evidence, the will contained no
listing of assets. The Brea house was sold by defendant Youssef Semaan while
Marie was in Lebanon, under a power of attorney purportedly executed by her in
Beirut. But the People questioned the power of attorney’s authenticity, and no
witness attempted to authenticate Marie’s signature on the document. Prior to the
sale, and while Marie was in Lebanon, a deed to the house was created in her
name; the People questioned the deed’s authenticity, and it was not shown to be
genuine. Finally, the escrow check payable to Marie representing the proceeds of
the sale was endorsed and deposited into the bank account while she was out of
the country. One attempt, apparently by Marie, to withdraw money from the bank
account from overseas failed for unknown reasons.
Based on this evidence, the superior court rejected Marie’s claim. The
court held that, “[a]lthough [Marie] may have once had some property interest in
the Mountain Court residence, she has failed to show evidence that she owned any
of the money in the Wells Fargo Account . . . . Thus, it is the order of this court
that [Marie’s] claim is denied.”
The Court of Appeal reversed. In the court’s view, once “Marie met her
initial burden of establishing legal title to the bank funds from the sale of her
home, the burden of producing evidence shifted to the People to refute by clear
and convincing evidence her legal title to the funds.” The court based this
conclusion on Evidence Code section 662, which provides that “[t]he owner of
legal title to property is presumed to be the owner of the full beneficial title. This
presumption may be rebutted only by clear and convincing proof.” The court
acknowledged that “there is evidence of defendants’ control over Marie’s bank
account funds,” and that “it is possible defendants were using Marie’s account for
money laundering . . . .” Nevertheless, the court concluded “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.” We granted the People’s
petition for review.
The People contend the Court of Appeal erred in applying Evidence Code
section 662 to shift to the People the burden of disproving a claimant’s interest in
frozen assets once the claimant has shown nominal title. “[S]uch a minimal
showing,” the People contend, “would permit a sophisticated white collar criminal
to retain stolen property or other assets simply by placing the asset into the name
of a willing, or even an unwilling or unsuspecting, friend or family member.” We
conclude section 662 does not apply to this case.
Section 186.11 says nothing about evidentiary burdens or standards of
proof. The applicable burdens and standards are, however, fairly inferable from
the language and purpose of the statute, considered in the light of the default rules
set out in the Evidence Code.
Section 186.11, like other provisions of the Penal Code (e.g., § 1202.4 et
seq.), implements the state Constitution’s declaration “that all persons who suffer
losses as a result of criminal activity shall have the right to restitution from the
persons convicted of the crimes for losses they suffer.” (Cal. Const., art. I, § 28,
subd. (b).) The principal focus of section 186.11, as noted, is to facilitate the
payment of restitution by “prevent[ing] dissipation or secreting of assets or
property . . . .” (Id., subd. (e)(2).) Section 186.11 accomplishes this by
authorizing the superior court to order preliminary relief, including “temporary
restraining order[s], preliminary injunction[s], the appointment of a receiver, or
any other protective relief necessary to preserve the property or assets” (id., subd.
(e)(2)) from which restitution might properly be paid. Assets or property become
subject to the court’s jurisdiction on a showing that the defendant controls them.
When a person has been charged under section 186.11 with an aggravated white
collar crime enhancement, “any asset or property that is in the control of that
person, and any asset or property that has been transferred by that person to a third
party, subsequent to the commission of any criminal act alleged pursuant to
subdivision (a), other than in a bona fide purchase, whether found within or
outside the state, may be preserved by the superior court in order to pay restitution
and fines pursuant to this section.” (Id., subd. (e)(1).)
A showing that the defendant controls assets or property suffices to justify
the issuance of preliminary relief because control furnishes an inference of
ownership: “A person who exercises acts of ownership over property is presumed
to be the owner of it.” (Evid. Code, § 638.) Unlike the state and federal drug-
related-asset forfeiture laws (e.g., Health & Saf. Code, § 11470; 21 U.S.C. § 881),
section 186.11 does not require that assets or property, to fall within the court’s
jurisdiction, be connected with criminal activity. This is because a defendant’s
obligation to pay restitution is a general obligation and not one limited to the value
of assets and property connected with crime. While the scope of preliminary relief
under section 186.11 is thus very broad, the section also protects the property
interests of innocent third parties by giving them the right to file claims to the
frozen assets (id., subd. (e)(6)), and by requiring the court, “in making its orders,
[to] seek to protect the interests of any innocent third persons, including an
innocent spouse, who were not involved in the commission of any criminal
activity” (id., subd. (g)(5)).
To assert a claim to frozen assets, as mentioned, a claimant must file “a
verified claim stating the nature and amount of his or her interest in the property or
assets.” (§ 186.11, subd. (e)(6).) This plain language is reasonably interpreted as
meaning simply that the claimant must show an ownership interest. Also fairly
inferable from the statutory language is the requirement that the claimant be
“innocent” and “not involved in the commission of any criminal activity.”6 (Id.,
subd. (g)(5).) Because section 186.11 does not expressly assign the burden of
proving these facts, the burden belongs to the claimant. This is the default rule set
out in Evidence Code section 500: “Except as otherwise provided by law, a party
has the burden of proof as to each fact the existence or nonexistence of which is
essential to the claim for relief or defense that he is asserting.” To assign the
burden of proving ownership to the claimant of frozen assets is also consistent
with the evidentiary showing on which assets are frozen under section 186.11.

The People at trial expressly disclaimed any intention to show that Marie
was “a party to the criminal conduct that happened here . . . .”

The People’s showing that the defendant controls assets gives rise to the
presumption that he or she owns them and, thus, places on anyone who would
prove the contrary the burden of producing evidence to that effect. Evidence Code
section 638,7 which articulates the presumption just mentioned, is a presumption
affecting the burden of producing evidence. (Evid. Code, § 630.)
The court’s finding that a claimant does not have an interest in frozen assets
is a question of fact resolved on the basis of conflicting evidence and, thus,
properly reviewed under the substantial evidence test. (People v. Superior Court
(Jones) (1998) 18 Cal.4th 667, 681; Crocker National Bank v. City and County of
San Francisco (1989) 49 Cal.3d 881, 888.) “The standard is deferential: ‘When a
trial court’s factual determination is attacked on the ground that there is no
substantial evidence to sustain it, the power of an appellate court begins and ends
with the determination as to whether, on the entire record, there is substantial
evidence, contradicted or uncontradicted, which will support the determination
. . . .’ ” (People v. Superior Court (Jones), supra, 18 Cal.4th 667, 681, quoting
Bowers v. Bernards (1984) 150 Cal.App.3d 870, 873-874, italics omitted.)
Reviewing the superior court’s finding under the substantial evidence test,
we see no difficulty in affirming. The People’s undisputed evidence that
defendants exclusively controlled the bank account in Marie’s name suffices to
uphold the finding. Marie’s argument to the contrary, which the Court of Appeal
accepted, is that the presumption set out in Evidence Code section 662 compels a
different conclusion. We do not agree.
Evidence Code section 662 provides: “The owner of the legal title to
property is presumed to be the owner of the full beneficial title. This presumption

“A person who exercises acts of ownership over property is presumed to be
the owner of it.” (Evid. Code, § 638.)

may be rebutted only by clear and convincing proof.” Section 662 thus codifies
the common law rule (e.g., Olson v. Olson (1935) 4 Cal.2d 434, 437; Toney v.
Nolder (1985) 173 Cal.App.3d 791, 796) that oral trusts in derogation of title are
disfavored and must be proved by clear and convincing evidence. (See Cal. Law
Revision Com. com., 29B pt. 2 West’s Ann. Evid. Code (1995 ed.) foll. § 662,
p. 210 [noting that section 662 codifies the rule of Olson v. Olson].) “Allegations
that deeds absolute are actually mortgages, that conveyances are subject to a trust,
and that legal title does not represent beneficial ownership have . . . been
historically disfavored because society and the courts have a reluctance to tamper
with duly executed instruments and documents of legal title.” (Weiner v.
Fleischman (1991) 54 Cal.3d 476, 489.)
Evidence Code section 662 does not apply, however, when title itself is
challenged as not genuine. In Murray v. Murray (1994) 26 Cal.App.4th 1062,
1067, on which the People rely, the Court of Appeal held that section 662 did not
apply when the plaintiff in a quiet title action challenged as fraudulent a deed in
another person’s name. “Evidence Code section 662,” the Court explained, “has
application, by its express terms, when there is no dispute as to where legal title
resides but there is question as to where all or part of the beneficial title should
rest.” (Murray v. Murray, supra, at p. 1067.) “We are unaware, however, of a
single reported case in which Evidence Code section 662’s presumption and
burden were applied when the legal title itself was in dispute. Nor can we see
anything in the language of section 662 requiring such application.” (Murray v.
Murray, supra, at p. 1068.) This interpretation of section 662 appears self-
evidently correct. Otherwise, the section would encourage fraud by permitting a
dishonest person, simply by creating false documents of title, to shift to an
innocent owner the burden of proving ownership by clear and convincing
In the case before us, the whole thrust of the People’s case was to show that
defendants used Marie’s name as an alias for their financial transactions and
completely controlled the bank account in question. While Marie’s name was on
the frozen bank account, no evidence showed that she herself had opened the
account or ever successfully exercised control over it. No witness claimed ever to
have seen or spoken with Marie, and no witness attempted to authenticate as
Marie’s own signature any of the various, apparently different signatures
attributed to her on financial and legal documents. The People’s theory that
defendants used Marie’s name as an alias had the support of undisputed evidence
that defendants possessed credit cards, a driver’s license, and a Social Security
card in her name, that all checks written on her bank account were written while
she was out of the country and to pay defendants’ expenses, and that the sale of
the Brea house, whose ownership was uncertain, was transacted entirely by
defendants. For her part, Marie neither appeared in court nor made any statements
under oath claiming ownership of the bank account, the proceeds of the sale of the
house, or the Social Security benefits paid in her name. Marie’s expert proved
only what was not in dispute, namely, that the proceeds of the sale and Social
Security benefits were deposited into the account. Finally, while Marie’s attorney
suggested in argument that she may have been “as much of a victim as anyone
else,” Marie asserted no claim to restitution for the checks written by defendants
on the account.
In conclusion, given the undisputed evidence that defendants used Marie’s
name as an alias for their financial transactions, and given that the People disputed
the genuineness of Marie’s title to the bank account and the funds therein,
Evidence Code section 662 does not apply. Thus, the burden to prove by a
preponderance of the evidence (Evid. Code, § 500) “the nature and amount of . . .
her interest in the [claimed] property or assets” (§ 186.11, subd. (e)(6)) remained
with Marie. Substantial evidence supports the trial court’s finding that she failed
to carry this burden.
The judgment of the Court of Appeal is reversed in part and the matter
remanded for further proceedings consistent with the views expressed herein.

See next page for addresses and telephone numbers for counsel who argued in Supreme Court.

Name of Opinion People v. Semaan

Unpublished Opinion

Original Appeal
Original Proceeding
Review Granted
XXX 133 Cal.App.4th 1445
Rehearing Granted


Opinion No.

Date Filed: August 13, 2007


County: Riverside
Judge: Gordon R. Burkhart


Attorneys for Appellant:

Jerome D. Stark and Robert Klein for Third Party Claimants and Appellants.


Attorneys for Respondent:

Grover Trask, District Attorney, and Elise J. Farrell, Deputy District Attorney, for Plaintiff and

David R. LaBahn for California District Attorneys Association as Amicus Curiae on behalf of Plaintiff and

Counsel who argued in Supreme Court (not intended for publication with opinion):

Jerome D. Stark
2700 North Main Street, Suite 630
Santa Ana, CA 92705
(714) 558-8014

Elise J. Farrell
Deputy District Attorney
4075 Main Street, First Floor
Riverside, CA 92501
(951) 955-6620

Opinion Information
Date:Docket Number:
Mon, 08/13/2007S139685

1The People (Plaintiff and Respondent)
Represented by Elise Jacobs Farrell
Office of the District Attorney
4075 Main Street
Riverside, CA

2Semaan, Youseef (Defendant)
3Cherfan, Elham (Claimant and Appellant)
Represented by Jerome D. Stark
Attorney at Law
2700 N. Main Street, Suite 630
Santa Ana, CA

4Semaan, Marie Rose (Claimant and Appellant)
Represented by Jerome D. Stark
Attorney at Law
2700 N. Main Street, Suite 630
Santa Ana, CA

5California District Attorneys Association (Amicus curiae)
Represented by David Richard Labahn
California District Attorneys Association
731 "K" Street, 3rd Floor
Sacramento, CA

Aug 13 2007Opinion: Reversed

Dec 19 2005Record requested
Dec 19 2005Petition for review filed
  the People, plaintiff and respondent Elise Farrell, Dep. D.A.
Dec 21 2005Received Court of Appeal record
  one doghouse
Jan 6 2006Answer to petition for review filed
  appellant Elham Cherfan and Marie Rose Roukoz Semaan
Jan 9 2006Request for depublication (petition for review pending)
  the People, plaintiff and respondent Elise Farrell, Dep. DA
Jan 18 2006Opposition filed
  to request for depublication Elham Cherfan, Marie Semaan, claimants and appellants Jerome Stark, counsel
Feb 8 2006Petition for review granted (criminal case)
  Chin, J., was absent and did not participate. Votes: George, C.J., Kennard, Baxter, Werdegar, Moreno, and Corrigan, JJ.
Mar 13 2006Opening brief on the merits filed
  the People, plaintiff and respondent Elise Farrell, Dep. D.A. timely per CRC 40.1b
Mar 13 2006Request for judicial notice filed (granted case)
  the People, plaintiff and respondent Elise Farrell, Dep. D.A.
Apr 11 2006Answer brief on the merits filed
  Elham Cherfan and Marie Rose Roukoz Semaan, Claimants and Respondents Jerome D. Stark, counsel
May 2 2006Received:
  oversized reply brief on the merits. / CRC 40.1(b) The People, Respondent by Elise J. Farrell, counsel
May 2 2006Application to file over-length brief filed
  The People, Respondent by Elise J. Farrell
May 4 2006Reply brief filed (case fully briefed)
  the People, plaintiff and respondent Elise Farrell, Dep. D.A. (filed with permission)
Jun 6 2006Received application to file Amicus Curiae Brief
  California District Attorneys Association David LaBahn, counsel (appln & brief)
Jun 15 2006Permission to file amicus curiae brief granted
  by the California District Attorneys Association in support of respondent. Answers may be filed w/in 20 days.
Jun 15 2006Amicus curiae brief filed
  by the California District Attorneys Association in support of respondent.
Jul 5 2006Response to amicus curiae brief filed
  by respondents Elham Cherfan and Marie Rose Roukoz Semaan to a/c brief of California District Attorneys Association
May 2 2007Case ordered on calendar
  to be argued on Wednesday, June 6, at 1:30 p.m., in Los Angeles
Jun 6 2007Cause argued and submitted
Aug 10 2007Notice of forthcoming opinion posted
Aug 13 2007Opinion filed: Judgment reversed
  Majority opinion by Werdegar, J. --------------joined by George, C.J., Kennard, Baxter, Chin, Moreno, Corrigan, JJ.
Sep 13 2007Remittitur issued (criminal case)

Mar 13 2006Opening brief on the merits filed
Apr 11 2006Answer brief on the merits filed
May 4 2006Reply brief filed (case fully briefed)
Jun 15 2006Amicus curiae brief filed
Jul 5 2006Response to amicus curiae brief filed
If you'd like to submit a brief document to be included for this opinion, please submit an e-mail to the SCOCAL website