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United States v. Su

United States District Court, N.D. California

February 27, 2015

UNITED STATES OF AMERICA, Plaintiff,
v.
SUSAN XIAO-PING SU, Defendant.

ORDER RE PETITION FOR ANCILLARY HEARING Re: ECF Nos. 218, 220, 223

JON S. TIGAR, District Judge.

Before the Court is the petition by Hong S. Yang for an ancillary hearing regarding property forfeited as a result of the conviction of his ex-wife, Susan Su. ECF No. 218. The United States has moved to dismiss Yang's petition for an ancillary hearing. ECF No. 220. For the reasons set forth below, the Court will dismiss Yang's petition and deny the United States' motion as moot.

I. BACKGROUND

A jury convicted Defendant Susan Su of mail fraud, wire fraud, false statements, and other crimes in connection with her establishment of Tri-Valley University in Pleasanton, California. ECF Nos. 199, 209. TVU was a university in name only: it offered no classes, employed no teaching faculty, and had no facilities for instruction. Because TVU had the status of an accredited university, Su was able to obtain F-1 student visas, and did so for any "student" who paid tuition or other fees to TVU. Although these "students" were shown as enrolled in TVU's records, none of them attended classes. ECF No. 199. Id . Overall, Su collected more than $5 million in fees from TVU, and used those funds to purchase real estate, a luxury automobile, and other personal items. Id.

After her conviction, the United States government sought to forfeit the properties she purchased with funds she collected from her scheme, the bank accounts that held proceeds from tuition fees, and other valuable property traceable to her crimes. ECF No. 129. On October 24, 2014, the Court entered a preliminary order of forfeiture permitting the United States to take possession of all proceeds and property traceable to her offenses. ECF No. 199. On October 31, 2014, at Su's sentencing, the Court incorporated its preliminary order into Su's sentence. ECF No. 203 at 2.

On December 31, 2014, Su's ex-husband, Dr. Hong S. Yang, petitioned the court for an ancillary hearing to assert his interest in one of Su's private bank accounts. Yang alleged that $100, 000 in the account was derived from equity in a home at 3518 Ovella Way in Pleasanton, which Yang alleged was originally the couple's marital property. ECF No. 218. Yang asserted a 50% interest in that $100, 000 and any property interest derived from that $100, 000. Id.

The United States filed a motion to dismiss Yang's petition. ECF No. 220. The United States argued that the $100, 000 Yang claimed an interest in was never held in a bank account that the Court ordered forfeited, and that Yang had not provided evidence that the $100, 000 was transferred into or used to purchase any of the property the government forfeited. Id. at 2.

On February 17, 2015, the Court held an evidentiary hearing pursuant to 21 U.S.C. § 853(n) in order to consider Yang's petition and the United States' motion to dismiss. ECF No. 222. At the hearing, Yang stated that the bank accounts forfeited to the United States might contain money derived from marital property, and that any funds in those accounts that pre-existed amounts traceable to the proceeds of Tri-Valley University represented marital property in which he owned a 50% interest.[1] He presented no evidence other his own unsworn, speculative comments to the Court.

II. LEGAL STANDARD

After a court enters an order of forfeiture, 21 U.S.C. § 853(n) permits third parties who may have a legal interest in the property to be forfeited to "petition the court for a hearing to adjudicate the validity of his alleged interest in the property." 21 U.S.C. § 853(n)(2). "At the hearing, the petitioner may testify and present evidence and witnesses on his own behalf and cross-examine witnesses who appear at the hearing." Id., subsection (5). The court must also "consider the relevant portions of the record of the criminal case which resulted in the order of forfeiture." Id.

Given the evidence at the hearing, the court must determine whether
the petitioner has established 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 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; or
(B) the petitioner is a bona fide purchase 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 ...

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