THE PEOPLE v. CHRISTEN BROWN (2011)

Substantial Evidence Supports the Trial Court's Finding that Brown

Does Not Have a Legitimately Acquired Interest in the Frozen Assets

Brown stresses that section 186.11, subdivision (i)(3) mandates that “[i]n making its final order [of distribution], the court shall seek to protect the legitimately acquired interests of any innocent third persons, including an innocent spouse, who were not involved in the commission of any criminal activity.”   Brown failed to meet her burden of establishing that she was an innocent third person with a legitimately acquired interest in Mozes's frozen assets.  (Semaan, supra, 42 Cal.4th at p. 87;  Q-Soft, supra, 157 Cal.App.4th at p. 450.)

In claiming a legitimate interest in the frozen assets in the trial court, Brown asserted that she and Mozes used home equity lines of credit to meet their living expenses, rather than Mozes's income from AIP. She testified regarding home loans but failed to present any forensic accounting.   The AIP 2006 tax return reported that its gross income was over $450,000.   The family law court imputed a monthly income of $25,000 to Mozes.   The trial court found that between 2004 and 2007, Mozes's AIP earnings produced at least $770,000.

After Brown received notice that gold coins were seized from Mozes in Florida, she signed a sworn declaration in July 2009, stating that gold coins were missing from the safe in the family's Montecito home, after Mozes left California.   Mozes left California in June 2007.   The record includes receipts showing that the seized coins were all purchased after June 2007.

Brown also claims, as she did below, that she had no significant involvement in the operations of AIP during the period when Mozes accepted the victims' payments.   The record belies her claim.   For example, she communicated with disgruntled AIP clients and participated in hiring AIP employees during the relevant period.   Substantial evidence supports the trial court's findings that the frozen assets were the product of criminal activity and that Brown did not have a legitimately acquired interest in them. (§ 186.11, subd. (i)(3).)   Substantial evidence also supports its finding that Brown was not an innocent spouse for purposes of section 186.11, subdivision (j)(3).

Child Support Orders Should Not Receive Priority Over Victim

Restitution in Freeze and Seize Proceedings Where the Third Party Claimant Has Not Established Any Legitimate Interest in the Frozen Assets

Brown also argues that when read together, section 1202.4 and Family Code sections 4011 and 17523 “demonstrate the policy of the state of California that child support orders are given the utmost priority in any contest between claimants to any fund or asset in the possession of delinquent support obligor,” including restitution to third party victims.   We disagree.

In arguing that child support takes priority over restitution to third party victims, Brown ignores or minimizes the fact that this case involves a special category of victims-victims of aggravated white collar crimes.   The Legislature enacted section 186.11, a specific statute to protect aggravated white collar crime victims and their right to receive restitution.  (See, e.g., § 186.11, subd. (e)(2) [authorizing the prosecution to seek a temporary restraining order to preserve assets];  186.11, subd. (e)(3) [requiring notice to persons who might have an interest in protected assets];  186.11, subd. (e)(6) [providing an opportunity for persons to claim an interest in protected assets];  and 186.11, subd. (i)(D)(3) [providing protection for legitimately acquired interests of innocent third persons].)   In contrast, section 1202.4 is a general restitution provision.   To the extent that there is a tension or conflict between the general and specific statutory provisions, the specific provisions control.  (Capitol Racing, LLC v. California Horse Racing Bd. (2008) 161 Cal.App.4th 892, 901-902.)

Brown bases her argument that the trial court erroneously failed to give her child support order priority largely upon the following language in section 1202.4, subdivision (f):  “The court may specify that funds confiscated at the time of the defendant's arrest, ․ be applied to the restitution order if the funds are not exempt for spousal or child support or subject to any other legal exemption.”   Brown also relies upon Family Code sections 17523 and 4011 in making her argument.   For reasons we shall explain, Family Code section 17523 has no application to this case.

We first consider whether reading section 1202.4 with Family Code section 4011 compelled the trial court to give the child support order priority, when viewed with other relevant laws, including our state Constitution.  Family Code section 4011 provides:  “Payment of child support ordered by the court shall be made by the person owing the support payment before payment of any debts owed to creditors.”   Brown argues that by reading section 1202.4, subdivision (f) with Family Law section 4011 to mean that child support orders are exempt where those orders are issued before the confiscation of section 186.11 funds, it reconciles the conflict between section Family Code section 4011 and the section 186.11 provisions that favor white collar crime victims.   We disagree.

Section 1202.4 implements an important state constitutional policy.   Our state Constitution declares:  “It is the unequivocal intention of the People of the State of California that all persons who suffer losses as a result of criminal activity shall have the right to seek and secure restitution from the persons convicted of the crimes causing the losses they suffer.”  (Cal. Const., art. 1, § 28, subd. (b)(13)(A).)  Sections 186.11 and 1202.4 et seq. implement that declaration.  (Semaan, supra, 42 Cal.4th at p. 86.)   Brown's proposed application of section 1202.4, subdivision (f) to reconcile the different priorities of section 186.11 and Family Code section 4011 ignores the compelling constitutional purpose underlying section 1202.4.

Moreover, the facts of this case illustrate why it would be absurd to conclude that section 1202.4, subdivision (f), and Family Code section 4011 always compel a court to pay child support from frozen assets in section 186.11 proceedings.   The trial court gave Brown ample opportunity to establish that she had a legitimate interest in Mozes's frozen assets.   It unequivocally found that the frozen assets were derived from Mozes's criminal conduct, and the only persons with legitimately acquired interests in the funds seized are the victims of his crimes.   It also found that Brown was “not an innocent spouse (or person),” and did “not have a ‘legitimately acquired interest’ in the confiscated assets.”

We must follow a statute's plain meaning, if such appears, unless doing so would lead to absurd results the Legislature could not have intended.   (People v. Birkett (1999) 21 Cal.4th 226, 231.)   If the plain meaning of Family Code section 4011 is that in any proceeding, a court must pay child support before distributing funds to any other creditor, following that meaning would produce an absurd result here, where the funds were derived from Mozes's criminal conduct and Brown has no legitimate interest in them.   The trial court correctly concluded that Brown's child support claim should not be paid from assets that Mozes took from white collar crime victims.   In any case where it is appropriate to grant a child support claim priority, the court can do so, after the claimant establishes that he or she is an innocent third party with a legitimately acquired interest in the seized assets.

Brown also cites Family Code section 17523, which provides that a lien for child support arises by operation of law where the obligor is delinquent and the local child support agency is enforcing the support obligation.2  In this case, however, there is no evidence that the local child support agency was enforcing the support obligation.

Until August 14, 2009, DCSS made no attempt to appear on behalf of Brown's child in the Freeze and Seize proceedings.   Brown's attorney represented that Brown had contacted DCSS a couple of weeks before that date.   Brown argues that the trial court refused to permit the DCSS attorney to present the claim of her child.   The record indicates otherwise.   On August 14, 2009, in denying the DCSS request to appear and participate as untimely, the court specified that its denial was without prejudice to the right of DCSS to file appropriate documentation seeking to appear.   DCSS did not exercise that right.

DISPOSITION

CERTIFIED FOR PUBLICATION.

COFFEE, J.

We concur:

GILBERT, P.J.

PERREN, J.

George C. Eskin, Judge

Superior Court County of Santa Barbara

Vannessa Kirker for Claimant and Appellant.

Joyce E. Dudley, District Attorney and Paula M. Waldman, Senior Deputy District Attorney, for Plaintiff and Respondent.

FOOTNOTES

FN2. Family Code section 17523 provides in part as follows:  “(a) Notwithstanding any other provision of law, if a support obligor is delinquent in the payment of support and the local child support agency is enforcing the support obligation pursuant to Section 17400 or 17402, a lien for child support shall arise against the personal property of the support obligor․”.  FN2. Family Code section 17523 provides in part as follows:  “(a) Notwithstanding any other provision of law, if a support obligor is delinquent in the payment of support and the local child support agency is enforcing the support obligation pursuant to Section 17400 or 17402, a lien for child support shall arise against the personal property of the support obligor․”