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People v. Mozes - 192 Cal. App. 4th 1124, 121 Cal. Rptr. 3d 808 (2011)

Rule:

In proceedings under Pen. Code, § 186.11 (California), a third party claimant bears the burden of proof to establish that the claimant is innocent and not involved in the commission of any criminal activity, and that the challenged assets are neither a product of the defendant's criminal activity nor otherwise actually owned by the defendant. An appellate court applies the substantial evidence standard in reviewing the trial court's findings in § 186.11 proceedings.

Facts:

Christen Brown is defendant Orson Mozes's former wife. Mozes pled guilty to 17 counts of theft by false pretenses, a white-collar crime, and agreed to pay restitution to the victims of his crimes. Brown claimed that a child support order should have priority over a victim restitution order. The trial court denied the Brown's third party claim. Following lengthy  proceedings concerning the distribution of Mozes's frozen assets, the trial court denied Brown's third party claim that a child support order should receive priority over the victim restitution order. Brown's appeal raises an issue of first impression—whether child support orders must be given priority over white-collar crime victim restitution in "Freeze and Seize" proceedings, Penal Code section 186.11, which permits the court in certain white-collar criminal cases to take possession of assets under a defendant's control and preserve them for the payment of restitution.

Issue:

Does a child support order have priority over white-collar crime victims restitution in Freeze and Seize proceedings?

Answer:

No.

Conclusion:

The Court of Appeal of California affirmed the order denying the ex-wife's third party claim. The court concluded that the claims of defendant's white-collar crime victims had priority over Brown's child support claim because she failed to meet her burden of establishing that she was an innocent third person under Pen. Code, § 186.11(i)(3), with a legitimately acquired interest in defendant's frozen assets. Although Brown claimed that she and defendant used home equity lines of credit to meet their living expenses, rather than defendant's income from his adoption business, she failed to present any forensic accounting. The record belied the former wife's claim that she had no significant involvement in the operations of the business during the period when defendant accepted the victims' payments. For example, Brown herself often communicated with disgruntled clients and participated in hiring employees during the relevant period. Substantial evidence supported the trial court's findings that the frozen assets were the product of criminal activity and that the former wife did not have a legitimately acquired interest in them.

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