United States’ Motion to Dismiss Third-Party Petition — United States v. Baver (Dkt. 219, D. Utah)

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The United States' Motion to Dismiss Third-Party Petition in United States of America v. Allison Marie Baver, Case No. 2:21-CR-00520-JNP, in the U.S. District Court for the District of Utah, filed August 26, 2024. The government asks the Court to dismiss the petition of Allison Baver Entertainment, LLC, which claims an interest in property forfeited under the Preliminary Order of Forfeiture. The listed property includes $9,016,830.76, $465,936.99, $33,932.39 and $22,018.81 seized from bank accounts and payments owed to the company by Fintage Collection Account Management, BV. The motion argues that the company cannot plead facts entitling it to relief under either prong of 21 U.S.C. § 853(n)(6) and asks that the petition be dismissed with prejudice.

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Case 2:21-cr-00520-JNP Document 219 Filed 08/26/24 PageID.3260 Page 1 of 13




TRINA A. HIGGINS, United States Attorney (7939)
TRAVIS K. ELDER, Assistant United States Attorney (11987)
Attorneys for the United States of America
111 South Main Street, Suite 1800
Salt Lake City, Utah 84111
(801) 524-5682
travis.elder@usdoj.gov

                             UNITED STATES DISTRICT COURT
                                      DISTRICT OF UTAH


 UNITED STATES OF AMERICA,
                                                   UNITED STATES’ MOTION TO
                       Plaintiff,                  DISMISS THIRD-PARTY PETITION

        v.                                         Case No. 2:21-CR-00520-JNP

 ALLISON MARIE BAVER,                              Judge Jill N. Parrish
                       Defendant.


 ALLLISON BAVER ENTERTAINMENT,
 LLC

                       Third-Party Petitioner

                           INTRODUCTION AND RELIEF SOUGHT
       Allison Baver Entertainment, LLC (ABE) has filed a third-party petition claiming an

interest in property ordered forfeited in the court’s Preliminary Order of Forfeiture (ECF 210)

including:

       1. $9,016,830.76 seized from First Internet Bank Account ending in 4629;

       2. $465,936.99 seized from Meridian Bank Account ending in 8439;

       3. $33,932.39 seized from Meridian Bank Account ending in 2022;

       4. $22,018.81 seized from Meridian Bank Account ending in 4101; and

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       5. All payments due and owing to Allison Baver Entertainment, LLC by Fintage
          Collection Account Management, BV under the terms and conditions of a Collection
          Account Management Agreement entered into between Allison Baver Entertainment,
          LLC and Fintage Collection on June 6, 2020;

(Subject Property).

       Pursuant to FED. R. CRIM. P. 32.2(c)(1)(A), the United States of America moves the

Court to dismiss the petition for failure to state a claim and lack of standing. ABE cannot have a

superior interest in the Subject Property under 21 U.S.C. § 853(n)(6)(A) because the Subject

Property is criminal proceeds, and a third party can likely never have a superior interest in

criminal proceeds. Nor can ABE be a bona fide purchaser under § 853(n)(6)(B) because the

imputed knowledge of its single member and sole owner and controller, the defendant, means

ABE cannot have been “reasonably without cause to believe that the property was subject to

forfeiture.” Even if ABE amended its petition to properly state a theory of relief under 21 U.S.C.

§ 853(n)(6), ABE will not be able to state a valid claim for relief under either cause of action

available to third-party petitioners under that statute. Consequently, amendment would be futile 1

and the United States requests that the dismissal be with prejudice.

                                              FACTS
       A. Background

       On October 19, 2022, a Second Superseding Indictment charged Allison Marie Baver in

Count Six with False Statement Designed to Influence a Bank in violation of 18 U.S.C. § 1014

and in Count Nine with Money Laundering in violation of 18 U.S.C. § 1957.



       1
         A futile amendment is one that fails to state a valid theory or liability or could not
withstand a motion to dismiss. Reagan v. Bankers Trust Co., 863 F. Supp. 1511, 1519 (D. Utah
1994); Bower v. Jones, 978 F.2d 1004, 1008 (7th Cir. 1992).

                                                 2

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         On July 13, 2023, a jury found Baver guilty of various charges including Count Six and

Count Nine. See Verdict Form, ECF 179. 2

         On July 26, 2024, this court ordered the Subject Property forfeited to the United States

because the United States had established the nexus between the property and the offenses. Am.

Forfeiture Order 2, ECF 210.

         On August 14, 2024, ABE filed a petition claiming an interest in the Subject Property.

Claim of Allison Baver Entertainment, LLC (Pet.), ECF 218. In its petition, ABE scantily alleges

it has an interest in the Subject Property as “owner of the bank accounts from which the property

was seized and as the recipient of the property from the United States in the form of a valid PPP

loan.” Pet. 2.

         B. Trial evidence related to proceeds of False Statement Designed to Influence a
            Bank in Violation of 18 U.S.C. § 1014.

         Baver’s convictions stem from her conduct in fraudulently obtaining a Paycheck

Protection Loan (PPP) from Meridian Bank for her company, ABE on April 25, 2020. ABE was

a single-member LLC that was controlled exclusively by Baver. ABE elected to be taxed as an S

corporation, a pass-through entity. Ex. 1 (election by a Small Business Corporation). As proven

at trial, Baver submitted a PPP loan application to Meridian Bank on April 25, 2020 (GX 16c). 3

In the application, Baver fraudulently represented that ABE had $4,770,583 in average monthly

payroll and 430 employees. In reality, ABE did not have any payroll, or any employees, and


         2
          As a result of dismissal of certain counts from the Second Superseding Indictment prior
to the jury’s deliberations, Count Six was listed on the verdict form as “I) Count,” and Count
Nine was listed on the verdict form as “III) Count.”
         3
             Cited trial exhibits are attached to the motion and redacted according to the court’s
rules.

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consequently was not eligible for a PPP loan. As a result of the fraudulent loan application,

Meridian Bank approved the application and ABE received the $10,000,000 PPP loan into

ABE’s Meridian Bank 2022 4 on May 11, 2020 (see ABE Meridian Bank Account Statements,

GX 26, pg. 1). As shown at trial, Baver opened multiple bank accounts at Meridian Bank to

receive and hold the PPP loan proceeds.

       On June 15, 2020, ABE transferred $5,000,000 of the PPP loan proceeds from ABE’s

Meridian Bank 8439 to ABE’s First Internet Bank (FIB) 4629. GX 26, pg. 12; GX 31b, pg. 1.

The prior balance of FIB 4629 was $0. GX 31b, pg. 1. On July 27, 2020, ABE transferred

another $4,000,000 of the PPP loan proceeds from ABE’s Meridian Bank 8439 to FIB 4629. GX

26, pg. 23; GX 31d, pg. 1. As of September 30, 2020, FIB 4629 had a balance of $9,016,830.76.

GX 31e. Pursuant to a seizure warrant authorized in the District of Utah by Magistrate Judge

Daphne A. Oberg, on or about October 9, 2020, the Federal Bureau of Investigation seized

$9,016,830.76 from FIB 4629 as proceeds of ABE’s PPP loan from Meridian Bank. See In the

Matter of the Seizure of Assets Listed in Attachment A, No. 2:20-mj-808-DAO.

       Pursuant to the same seizure warrant, on or about October 9, 2020, the FBI seized

$465,936.99 from ABE’s Meridian Bank 8439; $33,932.39 from ABE’s Meridian Bank 2022;

and $22,018.81 from Meridian Bank 4101, as proceeds of the fraudulently obtained PPP loan. Id.

       C. Trial evidence related to property involved in Money Laundering in violation of
          18 U.S.C. § 1957.

       As shown at trial, Baver paid $150,000 of the PPP loan proceeds to Company X

Productions, LLC, using ABE’s Meridian Bank 2022. GX 26, pg. 19; GX 27. This $150,000


       4
         All bank account references will include the bank name followed by the last four digits
of the account.

                                                 4

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payment was an investment in a film titled No Man of God. The $150,000 payment was charged

as the money laundering offense in Count Nine for which the jury convicted Baver.

       On December 15, 2021, Magistrate Judge Jared C. Bennett authorized a post-indictment

restraining order in this case under 21 U.S.C. § 853(e)(1)(A). The order restrained all payments

due and owing to ABE from Fintage Collection Account Management B.V. (“Fintage

Collection”) under the terms and conditions of the Collection Account Management Agreement

(GX 45) entered between ABE and Fintage Collection on June 6, 2020. ABE was set to receive

the payments under the Collection Account Management Agreement based on the $150,000

payment to Company X Productions, LLC. Pursuant to the restraining order, Fintage Collection

paid the U.S. Marshals Service $153,549.52.

       D. ABE’s petition and interests claimed.

       In its petition, ABE alleges the following interest in the Subject Property:

       Claimant has an interest in the property as the owner of the bank accounts from
       which the property was seized and as the recipient of the property from the United
       States in the form of a valid PPP loan.

Pet. 2, ECF 218.

                                    STANDARD OF REVIEW
       “In the ancillary proceeding, the court may, on motion, dismiss the petition for lack of

standing, for failure to state a claim, or for any other lawful reason.” FED. R. CRIM. P.

32.2(c)(1)(A). “For purposes of the motion, the facts set forth in the petition are assumed to be

true.” Id. “Such a motion is treated like a motion under Federal Rule of Civil Procedure 12(b).”

United States v. Kingston, No. 2:18-CR-00365-JNP, 2023 WL 6963115, at *2 (D. Utah Oct. 20,

2023) (unpublished) (quoting United States v. Ceballos-Lepe, 977 F.Supp.2d 1085, 1088 (D.



                                                 5

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Utah 2013)). “[T]he petition may be dismissed only if it is clear that no relief could be granted

under any set of facts that could be proved consistent with the petitioner’s allegations.” Ceballos-

Lepe, 977 F. Supp. 2d at 1088. Under Rule 12(b)(6), a party may move to dismiss a claim for

“failure to state a claim upon which relief can be granted.”

        To survive a motion to dismiss under Fed. R. Civ. P. 12(b)(6), “a complaint must contain

sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell v. Atl. Corp. v. Twombly, 550 U.S. 544,

577 (2007)). A court must accept all well-pled factual allegations as true. Iqbal, 556 U.S. at 678.

However, a court is not required to accept as true conclusory allegations or legal conclusions

couched as factual allegations. Id. “Threadbare recitals of the elements of a cause of action,

supported by mere conclusory statements, do not suffice.” Id. A plausible claim is one that

includes facts that allow the court to reasonably infer that the claim entitles the petitioner to

relief. United States v. Recendez, No. 2:20-CR-00227-RJS, 2024 WL 1197705, at *3 (D. Utah

Mar. 20, 2024) (unpublished) (internal quotation omitted).

                                   APPLICABLE FEDERAL LAW
        Under 18 U.S.C. § 981(a)(1)(C) (applicable via 28 U.S.C. § 2461(c)), a defendant

convicted of False Statement Designed to Influence a Bank (18 U.S.C. § 1014), must forfeit “any

property, real or personal, that constitutes or is derived from proceeds traceable” to the offense.”

        The purpose of the ancillary proceeding is to allow third parties who assert an ownership

interest in forfeited property an opportunity to amend the preliminary order of forfeiture to

exclude their interest. United States v. Andrews, 530 F.3d 1232, 1236 (10th Cir. 2008); United

States v. Evanson, 2:05CR00805-TC, 2008 WL 3107332, at *2 n.3 (D. Utah Aug. 4, 2008)


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(unpublished) (“ownership is determined in the ancillary proceeding.”). “Accordingly, the one

and only purpose of the ancillary proceeding is to determine the ownership of the property.”

Stefan D. Casella, Asset Forfeiture Law in the United States 936 (3rd ed. 2022).

       The law has certain requirements for petitions claiming an interest in forfeited property.

The petitioner must state, under oath, the nature and extent of the alleged interest, the time and

circumstances under which the interest was acquired, other facts supporting the petition, and the

relief sought. 21 U.S.C. § 853(n)(3). These standards are strictly construed to discourage false or

frivolous claims. United States v. Recendez, No. 2:20-cr-00227-RJS, 2023 WL 4868569, at *5

(D. Utah July 31, 2023) (unpublished). Conclusory statements of entitlement to relief are not

sufficient. Id.; United States v. Furando, 40 F.4th 567 (7th Cir. 2022) (section 853(n)(3) requires

more than a conclusory statement that the claimant has a valid third-party interest in the forfeited

property; it must be supported by references to state law that support the claim and documents

showing the date and manner in which the interest was acquired).

       To claim an ownership interest, a third party must allege a “legal interest in the property

which has been forfeited to the United States.” 21 U.S.C. § 853(n)(2). State law defines the legal

interest. Andrews, 530 F.3d at 1238 (“We recognize that in federal forfeiture proceedings,

ownership interests (including constructive trusts) are defined by state law”); United States v.

Brinton, 880 F. Supp. 2d 1158, 1160 (D. Utah 2012). 5 However, the only state law interests



       5
          However, the application of state law is not inviolate. For example, some courts have
departed from state law when necessary to avoid frustrating the purposes of the forfeiture law.
United States v. Oregon, 671 F.3d 484, 490 n.8 (4th Cir. 2012) (the court may depart from state
law where it appears the claimant “has manipulated state law property rights to shield property
assets from the reach of forfeiture law”); United States v. Totaro, 345 F.3d 989, 994 (8th Cir.
2003) (court looks to state law “so long as doing so does not frustrate a federal interest”).

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sufficient to overcome the forfeiture are legal interests under 21 U.S.C. § 853(n)(2) that meet the

requirements of either 21 U.S.C. § 853(n)(6)(A) or (n)(6)(B) and do not violate the relation-back

doctrine in 21 U.S.C. § 853(c). See, e.g., Recendez, 2023 WL 4868569 at *2 (third parties have

relief under two narrow categories in 21 U.S.C. § 853(n)(6)(A) and (n)(6)(B)); Ceballos-Lepe,

977 F. Supp. 2d at 1090–91 (petitioner must show legal interest in specific asset subject to

forfeiture; general interest insufficient); United States v. Ramunno, 599 F.3d 1269, 1274 (11th

Cir. 2010) (“we apply federal law to determine whether [claimant’s] interest is a ‘legal interest’

under § 853(n)(6)(A)) and whether it was superior to [defendant’s] interest at the time of the

fraud”); United States v. Weiss, 467 F.3d 1300, 1308–09 (11th Cir. 2006) (a mere nominee lacks

the legal interest necessary to establish standing); Brinton¸ 880 F.Supp.2d at 1161 (under the

relation-back doctrine title to a house purchased with proceeds vested in United States as soon as

proceeds were used to make the purchase); United States v. Watts, 786 F.3d 152, 166–67 (2d Cir.

2015) (“by definition, the proceeds of an offense do not exist before the offense is committed,

and because the government’s interest under the relation-back doctrine immediately vests upon

the commission of that offense,” the proceeds “belong to the government from the moment that

they come into existence.”).

        To establish an interest that entitles the petitioner to forfeited property, the facts alleged

in the petition must plausibly establish that the petitioner has a (1) a legal interest in the property;

and (2) that such right, title, or interest was superior to that of Baver at the time of the

commission of the acts which gave rise to the forfeiture of the property under § 853(n)(6)(A); or

(3) that he or she was 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


                                                   8

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subject to forfeiture under § 853(n)(6)(B). Recendez, 2023 WL 4868569 at *2 (“These are the

‘two narrow [categories] of third parties’ entitled to relief under the statute.”). A petition that

fails to allege all elements necessary for recovery may, upon the government’s motion, be

dismissed by the court without a hearing. Furando, 40 F.4th at 577 (citing United States v. BCCI

Holdings (Luxembourg), S.A., 919 F. Supp. 31, 36 (D.D.C. 1996)); see also United States v.

Sigillito, 938 F. Supp. 2d 877, 884 (E.D. Mo. 2013) (The court is not required to hold a hearing

on a petition if it is clear that the petitioner could not prevail.).

                                      APPLICABLE UTAH LAW
        Petitioner alleges an interest in the Subject Property as the owner of bank accounts into

which the SBA deposited the fraudulently obtained PPP loan fraud proceeds.

        Under Utah law, corporate entities only act through their agents including their officers

and employees. Lane v. Provo Rehab. & Nursing, 2018 UT App 10, ¶ 27. The knowledge of a

corporate entity’s officers and agents is imputed to the corporate entity. Id. Specifically, “‘the

knowledge of [an] agent concerning the business which he is transacting for his principal is to be

imputed to his principal.’” Id. This is because the law presumes the agent will disclose such

knowledge to the principal. Wardley Better Homes & Gardens v. Cannon, 2002 UT 99, ¶ 16. The

imputation broadly includes “all notice or knowledge relating to the subject-matter of the agency

which the agent acquires or obtains while acting as such agent and within the scope of his

authority.” Id. (emphasis in original; internal quotation marks removed).




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                                            ARGUMENT

       A. As a matter of law, ABE cannot have had an interest superior to the United
          States’ interest in the fraudulently obtained PPP loan proceeds.

       ABE cannot except any interest from the forfeiture under 21 U.S.C. § 853(n)(6)(A)

because it cannot claim a superior interest in criminal proceeds. Under 21 U.S.C. § 853(c) “[a]ll

right, title, and interest in property . . . vests in the United States upon the commission of the act

giving rise to forfeiture. . . .” In other words, under this “relation-back doctrine,” the moment

criminal proceeds come into existence, the United States’ interest vests, and the proceeds

become forfeitable. Luis v. United States, 578 U.S. 5, 13–14 (2016) (“[T]itle to property used to

commit a crime (or otherwise ‘traceable’ to a crime) often passes to the Government at the

instant the crime is planned or committed.”).

       Section 853(n)(6)(A) applies only to “third parties who had an interest in property before

the subject crime was committed (and so before the government’s interest vested.”). United

States v. Swartz, 391 F.Supp.3d 199, 210 (N.D.N.Y. 2019). Accordingly, as the Ninth Circuit has

explained, 21 U.S.C. § 853(n)(6)(A) “is likely never to apply to proceeds of the crime” because

“proceeds of crime . . . do not precede the crime.” United States v. Hooper, 229 F.3d 818, 822

(9th Cir. 2000). Indeed, “by definition, the proceeds of an offense do not exist before the offense

is committed, and because the government’s interest under the relation-back doctrine

immediately vests upon the commission of that offense,” the proceeds “belong to the government

from the moment that they come into existence.” Watts, 786 F.3d at (citations and quotation

marks omitted); see also United States v. Timley, 507 F.3d 1125, 1130 (8th Cir. 2007) (citing

Hooper for the proposition that “a third party can never have a successful claim under §

853(n)(6)(A) if the property was proceeds of an offense”); United States v. Catala, 870 F.3d 6,

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10 (1st Cir. 2017) (“A third party cannot have an interest in proceeds that do not yet exist”); Sean

Michael Welsh, Tracing Commingled Funds in Asset Forfeiture, 88 Miss. L.J. 179, 189–90

(2019) (“[T]hird party never acquires title to the proceeds of crime because, when the proceeds

are generated, title immediately vests in the United States.”).

        Under these authorities, title to the PPP loan funds deposited into ABE’s bank account

vested in the United States as soon as Baver submitted the fraudulent loan application, which

caused the SBA to transfer funds to ABE’s bank account. And because these criminal proceeds

did not exist before the commission of the crime that gave rise to forfeiture, ABE cannot have

had a pre-existing ownership interest in them under 21 U.S.C. § 853(n)(6)(A). Accordingly, ABE

cannot, and will not be able, to allege facts sufficient to show it is entitled to relief under 21

U.S.C. § 853(n)(6)(A).

        B. As a matter of law, ABE has not and will not be able to allege facts in its petition
           to show that it is entitled to relief as a bona fide purchaser under 21 U.S.C.
           § 853(n)(6)(B).

        Likewise, ABE cannot except any interest from the forfeiture under 21 U.S.C.

§ 853(n)(6)(B), the only other avenue of relief available, because it will not be able to make a

plausible claim that it was a bona fide purchaser of the Subject Property. ABE has failed to even

plead that it is entitled to such relief in its petition or provide any facts to show it can qualify as a

bona fide purchaser. In contrast, significant evidence already before this court at the trial shows

that ABE cannot be a bona fide purchaser. At the time, Baver applied for the PPP loan and the

loan proceeds were deposited into ABE’s bank account, ABE was solely owned, operated, and

controlled by Baver. ABE was the vehicle Baver used to perpetrate her crime.




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       Under the principals of Utah law cited above, ABE clearly cannot allege any facts to

show that it “was at the time of purchase reasonably without cause to believe that the property

was subject to forfeiture.” In entering its preliminary order of forfeiture, the court recently

recognized the significance of Baver’s actions relative to ABE when it determined that Baver

“obtained” the PPP loan funds:

       Baver was not simply an officer or part owner of ABE . . . Instead, Baver was the
       sole member of ABE with an uncontested, controlling interest. She was the only
       person able to dictate the disposition and use of ABE’s funds.

United States v. Baver, No. 2:21-CR-00520-JNP, 2024 WL 3445061, at *4 (D. Utah July 17,

2024) (unpublished). ABE could and only did act through Baver. As solely owned and controlled

by Baver at the time of the loan application and transfer of funds by the SBA to ABE’s bank

account, ABE did not think or act but through Baver’s criminal acts. Far from an independent

third party of the type that typically can qualify as a bona fide purchase, ABE lied at the heart of

the fraud through the actions of Baver who now stands convicted of her conduct. ABE cannot

now use the bona fide purchaser exception to forfeiture as a shield against its owner’s fraudulent

conduct. Consequently, ABE cannot be a bona fide purchaser under 21 U.S.C. § 853(n)(6)(B).

See United States v. Emor, 2013 WL 3005366, *12 (D.D.C. June 18, 2013) (unpublished)

(dismissing third-party petition including because all of an LLC’s “activity was orchestrated

exclusively by” Baver “who used the company ‘as another means of implementing his fraud

scheme’”; consequently, LLC could not “hope to demonstrate that it obtained the funds . . .

reasonably without cause to believe they were subject to criminal forfeiture), aff'd on this point,

United States v. Emor, 785 F.3d 671 (D.C. Cir. 2015).




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                                         CONCLUSION

       For the foregoing reasons, ABE has not and cannot plead sufficient facts to show

entitlement to any relief under either prong of 21 U.S.C. § 853(n)(6). Consequently, this Court

should dismiss ABE’s petition with prejudice.

       Respectfully submitted,

                                                     TRINA A. HIGGINS
                                                     United States Attorney

                                                     /s/ Travis K. Elder
                                                     Travis K. Elder
                                                     Assistant United States Attorney




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