Order Granting Motion to Prevent HOA Foreclosure Sale of 6033 Watermelon Street — United States v. Dezfooli

Summary

This order grants the United States' motion to prevent Cambria Colinas Homeowners Association from proceeding with a default foreclosure sale of a North Las Vegas, Nevada property that the government alleges is subject to forfeiture in the Superseding Criminal Indictment. The motion relies on § 853(k), which it says bars third parties from foreclosing on property identified as forfeitable, and states that the association's only recourse is the process in § 853(n). It alleges the property was purchased on or around May 21, 2020, for $40,000 at a Trustee’s Sale in the name of Sanam Limited, and that Meelad Dezfooli obtained approximately $11.2 million through fraudulent PPP loan applications. The order is dated September 10, 2024, over the name of Judge Cristina D. Silva.

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          Case 2:22-cr-00142-CDS-DJA Document 254 Filed 09/10/24 Page 1 of 12



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 7                             UNITED STATES DISTRICT COURT
                                    DISTRICT OF NEVADA
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10 UNITED STATES OF AMERICA,                             Case No. 2:22-cr-00142-CDS-DJA

11                 Plaintiff                        Order Granting United States of America’s
                                                        Motion to Prevent HOA Default
12 v.                                                 Foreclosure Sale of 6033 Watermelon
                                                     Street, North Las Vegas, Nevada 89081
13 MEELAD DEZFOOLI,
                                                                   [ECF No. 134]
14                 Defendant

15

16         The United States moves this Court to issue an Order to prevent Cambria Colinas

17 Homeowners Association (Cambria HOA) from proceeding with a HOA default foreclosure

18 sale on 6033 Watermelon Street, North Las Vegas, Nevada 89081 (6033 Watermelon). 1 21

19 U.S.C. § 853(k) prohibits Cambria HOA from foreclosing on the property because the

20 government has alleged 6033 Watermelon is subject to forfeiture in the Superseding

21 Criminal Indictment. The United States has authority to protect its forfeiture interest in

22 6033 Watermelon Street under 21 U.S.C. § 853(c) and 853(e)(1)(A). Accordingly, this Court

23 should grant this Motion and issue the Order.

24         This Motion is made and is based on the following Memorandum of Points and

25 Authorities, the pleadings and papers on file herein, and the attached Exhibit. 2

26   6033 Watermelon Street, North Las Vegas, Nevada 89081 is more particularly described
     1

   as: LOT TWENTY-SIX (26) OF FINAL MAP OF TROPICAL/WALNUT – UNIT 1 (A
27 COMMON INTEREST COMMUNITY) AS SHOWN BY MAP THEREOF ON FILE IN
   BOOK 121 OF PLATS, PAGE 53, IN THE OFFICE OF THE COUNTY RECORDER,
28 CLARK COUNTY, NEVADA; TOGETHER WITH ALL IMPROVEMENTS AND
   APPURTENANCES THEREON, APN: 123-30-610-026.
   2
     All Exhibits are attached hereto and incorporated herein by reference as if fully set forth
   herein.
          Case 2:22-cr-00142-CDS-DJA Document 254 Filed 09/10/24 Page 2 of 12



 1                    MEMORANDUM OF POINTS AND AUTHORITIES

 2   I. STATEMENT OF FACTS

 3          The United States adopts and incorporates the facts stated in the Superseding

 4   Criminal Indictment and in Government’s Motion to Prevent MTC Foreclosure Sale. 3

 5          Beginning on or around April 2020 and continuing until at least on or around March

 6   2021, Meelad Dezfooli knowingly executed, and attempted to execute, a scheme to defraud

 7   and artifice to obtain money and property owned by, and under the custody and control of,

 8   financial institutions by means of materially false and fraudulent pretenses, representations,

 9   and promises. Dezfooli submitted fraudulent PPP loan applications and obtained

10   approximately $11.2 million to unjustly enrich himself and others.4

11          On or around May 21, 2020, Dezfooli purchased 6033 Watermelon for $40,000 at a

12   Trustee’s Sale to be vested under the name of Sanam Limited, another entity formed by

13   Dezfooli to further his scheme of PPP loan applications. 5 Dezfooli identified himself as the

14   sole owner of Sanam Limited. 6

15          On April 13, 2022, Cambria Colinas Homeowners Association (Cambria HOA)

16   recorded a Notice of Default for 6033 Watermelon. 7 “No sale date will be set until ninety

17   (90) days from the date of the notice of default,” which was July 11, 2022. Since then, a

18   default date or sale date has not been set or recorded. At that time, the past due amount of

19   HOA fees was $3,786.60. 8

20          On June 22, 2022, a Grand Jury returned an Eight-Count Criminal Indictment

21   charging Dezfooli with bank fraud, concealment money laundering, and monetary

22

23   3
       LR IA 10-3(a); Superseding Criminal Indictment (SCI), ECF No. 97; Motion to Prevent
     MTC Foreclosure of 6033 Watermelon Street, North Las Vegas, NV 89081 (MTC Motion),
24   ECF No. 95; MTC Motion Exhibits (Ex.), ECF No. 95-1, Exs. 1-1, 1-2, 2-1, 2-2a, 2-2b, 7-1
     books 6-7 and Property Tracing, 12-1, and 12-2.
25   4
       SCI, ECF No. 97.
     5
       SCI, ECF No. 97; MTC Motion Ex., ECF No. 95-1, Ex. 7-1, book Property Tracing, lines
26   280-293; Ex. 12-1 Trustee’s Deed Upon Sale for 6033 Watermelon; Ex. 12-2 Sale
     Documents for 6033 Watermelon.
27   6
       SCI, ECF No. 97, p. 2.
     7
       Exhibit D, Notice of Default and Election to Sell Under Notice of Delinquent Assessment
28   Lien.
     8
       Id.
                                                    2
           Case 2:22-cr-00142-CDS-DJA Document 254 Filed 09/10/24 Page 3 of 12



 1   transactions in criminally derived property. 9 On December 12, 2023, a Ten-Count

 2   Superseding Criminal Indictment was entered charging Dezfooli with three counts of bank

 3   fraud in violation of 18 U.S.C. § 1344(2), three counts of concealment money laundering in

 4   violation of 18 U.S.C. § 1956(a)(1)(B)(i), and four counts of monetary transactions in

 5   criminally derived property in violation of 18 U.S.C. § 1957.10 Forfeiture is alleged under 18

 6   U.S.C. § 981(a)(1)(A) with 28 U.S.C. § 2461(c); 18 U.S.C. § 981(a)(1)(C) with 28 U.S.C.

 7   § 2461(c); and 18 U.S.C. § 982(a)(1) and 982(a)(2)(A) and identified 6033 Watermelon, four

 8   other real properties, a 2021 Tesla, and a 2021 Bentley as forfeitable property, and criminal

 9   forfeiture money judgments of at least $11,231,186.52, $2,303,872.56, and $965,276.11. 11 At

10   his arraignment, Dezfooli plead not guilty to all ten Counts. 12 A jury trial is currently set for

11   August 26, 2024.13

12           On July 12, 2022, the United States filed Notices of Lis Pendens with this Court for

13   all five real properties subject to forfeiture as identified in the Superseding Criminal

14   Indictment: 6116 Chinook Way, Las Vegas, Nevada, 89108 14; 6033 Watermelon Street, Las

15   Vegas, Nevada, 89081;15 1829 La Calera Avenue, North Las Vegas, Nevada, 89084; 16 890

16   Harbor Avenue, Henderson, Nevada 89002; 17 and 176 Glen Falls Avenue, Henderson,

17   Nevada 89002. 18

18   II. ARGUMENT

19        A. This Court Has Authority to Prevent Cambria HOA from Advancing with a
          Homeowners Association Default Foreclosure Sale of 6033 Watermelon Under 21
20        U.S.C. § 853(k).
21           When the grand jury returns a criminal indictment, the government is authorized to

22   forfeit any of the defendant’s property, “which constitutes or is derived from proceeds

23   ///

24   9
       Criminal Indictment, ECF No. 1.
     10
        SCI, ECF No. 97.
25   11
        Id., p. 16-21.
     12
        Court Minutes - Arraignment & Plea, ECF No. 104.
26   13
        Order to Continue, ECF No. 131.
     14
        Lis Pendens, ECF No. 8.
27   15
        Lis Pendens, ECF No. 9.
     16
        Lis Pendens, ECF No. 10.
28   17
        Lis Pendens, ECF No. 11.
     18
        Lis Pendens, ECF No. 12.
                                                     3
           Case 2:22-cr-00142-CDS-DJA Document 254 Filed 09/10/24 Page 4 of 12



 1   traceable to [the crime], or a conspiracy to commit such offense[;]” 19 “constituting, or

 2   derived from, proceeds… obtained directly or indirectly, as the result of” the crime, “or a

 3   conspiracy to violate” such offense, “affecting a financial institution[;]” 20 “involved in a

 4   transaction or attempted transaction in violation of [the crime], or any property traceable to

 5   such property[;]” 21 or “involved in [the crime], or any property traceable to such property.” 22

 6           To prevent third parties claiming an interest in forfeitable property from interfering

 7   with the orderly conduct of criminal cases, Congress prohibits third parties from

 8   commencing actions against the interest of the United States in forfeitable property after an

 9   indictment has been filed.

10           Except as provided in subsection (n), no party claiming an interest in property
             subject to forfeiture under this section may - -
11           ...
             (2) commence an action at law or equity against the United States concerning
12           the validity of his alleged interest in the property subsequent to the filing of an
             indictment or information alleging that the property is subject to forfeiture
13           under this section. 23
14           In MacInnes, the Ninth Circuit expressly held a foreclosure sale is “an action at law

15   or equity against the United States in contravention of § 853(k).” 24 Under 21 U.S.C.

16   § 853(c), (k), and (n), Cambria HOA’s foreclosure sale against the government’s interest in

17   6033 Watermelon, a forfeitable property, is an action against the United States, outside the

18   confines of the exclusive ancillary procedure of § 853(n) and Fed. R. Crim. P. 32.2(c), and

19   is, therefore, barred. 25

20   ///

21
     19
        18 U.S.C. § 981(a)(1)(C) with 28 U.S.C. § 2461(c) (brackets added).
22   20
        18 U.S.C. § 982(a)(2)(A) (brackets and ellipsis added).
     21
        18 U.S.C. § 981(a)(1)(A) with 28 U.S.C. § 2461(c) (brackets added).
23   22
        18 U.S.C. § 982(a)(1).
     23
        21 U.S.C. § 853(k)(2) (ellipses added).
24   24
        United States v. MacInnes, 223 F. App’x 549, 550, 553-54 (9th Cir. 2007) (per curiam)
     (citing United States v. Phillips, 185 F.3d 183,187-88 (4th Cir. 1999) (holding “the foreclosure
25   action constituted ‘an action at law or equity against the United States’ and was statutorily
     barred under § 853(k)” quoting 21 U.S.C. § 853(k)); United States v. Lazarenko, 476 F.3d 642,
26   648 (9th Cir. 2007) (explaining third party cannot bring an action at law or equity) (citing
     21 U.S.C. § 853(k)).
27   25
        See Libretti v. United States, 516 U.S. 29, 44 (1995) (When the government has forfeited
     property, third-party petitioners may “establish their entitlement to a return of the assets
28   only by means of a hearing afforded under 21 U.S.C. § 853(n).”); Lazarenko, 476 F.3d at
     646-48, 650, 652; Phillips, 185 F.3d at 187-88.
                                                      4
           Case 2:22-cr-00142-CDS-DJA Document 254 Filed 09/10/24 Page 5 of 12



 1          “Section 853(n) provides the process for vindicating a third party's interests in

 2   forfeited property. The law appears settled that an ancillary proceeding constitutes the only

 3   avenue for a third party claiming an interest in seized property.” 26 Accordingly, when a

 4   property is identified as forfeitable in a criminal indictment, third parties are prohibited from

 5   foreclosing on that property. 27 A third party’s only recourse is to petition the Court in the

 6   process identified in § 853(n) and Fed. R. Crim. P. 32.2(c).28

 7          Cambria HOA could commence an HOA default foreclosure sale after July 11, 2022.

 8   However, § 853(k)(2) prevents the HOA from proceeding since 6033 Watermelon is

 9   identified as forfeitable property in the criminal indictment. Cambria HOA, a potential

10   third-party who may have an interest in the property, is statutorily barred from foreclosing

11   on the property. 29 Their only recourse is 21 U.S.C. § 853(n) and Fed. R. Crim. P. 32.2(c). 30

12          On December 9, 2023, the government filed a Motion to prevent the mortgage

13   company, MTC, from foreclosing on 6033 Watermelon. 31 On January 24, 2024, this Court

14   Ordered that “no foreclosure sale of the propert[y] located at … 6033 Watermelon Street,

15   North Las Vegas, 89081 shall occur without explicit approval of this Court.” 32

16   ///

17   ///

18   26
        Lazarenko, 476 F.3d at 648 (explaining “a court adjudicates a third party's interest in the
     forfeited property in an ancillary proceeding after concluding the criminal case and entering
19   a preliminary order of forfeiture.”); Fed. R. Crim. P. 32.2(b) advisory committee's note
     (bracket added) (“[T]hird party interests in a criminally forfeited property are litigated by
20   the court in the ancillary proceeding following the conclusion of the criminal case and the
     entry of a preliminary order of forfeiture.”); 21 U.S.C. § 853(n); 18 U.S.C. § 1963(l).
21   27
        MacInnes, 223 F. App’x at 550, 553-54.
     28
        See Id.; Libretti, 516 U.S. at 44 (When the government has forfeited property, third-party
22   petitioners may “establish their entitlement to a return of the assets only by means of a
     hearing afforded under 21 U.S.C. § 853(n).”); Fed. R. Crim. P. 32.2(b) advisory committee’s
23   note (brackets added) (“[T]hird party interests in a criminally forfeited property are litigated
     by the court in the ancillary proceeding following the conclusion of the criminal case and
24   the entry of a preliminary order of forfeiture.”); 21 U.S.C. § 853(n); 18 U.S.C. § 1963(l);
     Fed. R. Crim. P. 32.2(c).
25   29
        MacInnes, 223 F. App’x at 550, 553-54.
     30
        See; Phillips, 185 F.3d at 187-88; In re America Basketball League, Inc., 317 B.R. 121, 129
26   (Bankr. N.D. Cal. 2004) (“Consistent with the plain language of the statute, the case law has
     uniformly found that § 853(k) imposes an absolute bar to actions that assert an interest in
27   forfeitable property if they are commenced outside of the ancillary proceedings.”); Libretti,
     516 U.S. at 44; Lazarenko, 476 F.3d at 646-48; 650, 652.
28   31
        MTC Motion, ECF No. 95.
     32
        Order, ECF No. 116 (brackets and ellipses added).
                                                     5
           Case 2:22-cr-00142-CDS-DJA Document 254 Filed 09/10/24 Page 6 of 12



 1        B. The United States Has Authority to Protect its Forfeiture Interest in 6033
          Watermelon Under 21 U.S.C. § 853(c) and 853(e)(1)(A).
 2

 3           The United States has authority to seek the preservation of property for forfeiture.

 4   Under 21 U.S.C. § 853(c), the property “vests in the United States upon the commission of

 5   the act giving rise to [the] forfeiture….” 33 Under 21 U.S.C. § 853(e)(1)(A), “the court

 6   may…take any… action to preserve the availability of property… upon the filing of an

 7   indictment… charging a violation… for which criminal forfeiture may be ordered….” 34

 8           In 92 Buena Vista, the Supreme Court determined that the “relation back” doctrine in

 9   21 U.S.C. § 853(c) does not self-execute and the government does not become an owner

10   until after forfeiture is decreed and title is retroactively vested.35 Because the United States’

11   interest in the property is not perfected until after forfeiture is decreed, the United States

12   does not have a right to prematurely cut off the interests of potential third-parties.

13           Cambria HOA may have an interest in the property and the United States does not

14   seek to bypass those interests. The United States requests this Court to prevent the HOA

15   from selling the property, resulting in eliminating any potential recovery of forfeiture

16   proceeds. The United States has alleged the 6033 Watermelon was purchased with illegal

17   proceeds. 36 Once forfeiture is completed the property title will vest in the United States, but

18   only if the property is still available. “The Government’s interest in winning undiminished

19   forfeiture thus includes the objective of returning property, in full, to those wrongfully

20   deprived or defrauded of it.” 37 Cambria HOA will have an opportunity to assert their

21   interests in the property during the ancillary proceeding. 38

22
     33
        21 U.S.C. § 853(c) (brackets added).
23   34
        21 U.S.C. § 853(e)(1)(A) (ellipses added).
     35
        United States v. 92 Buena Vista Ave., 507 U.S. 111, 125-26 (1993). Buena Vista is discussing
24   21 U.S.C. § 881(h), which has similar vesting language to 21 U.S.C. § 853(c).
     36
        See SCI, ECF No. 97; See MTC Motion, ECF No. 95.
25   37
        Caplin & Drysdale v. United States, 491 U.S. 617, 629 (1989); United States v. Lillard, 57 F.4th
     729, 734-36 (9th Cir. 2023).
26   38
        Fed. R. Crim. P. 32.2(c); 21 U.S.C. § 853(n); Libretti, 516 U.S. at 44 (When the
     government has forfeited property, third-party petitioners may “establish their entitlement to
27   a return of the assets only by means of a hearing afforded under 21 U.S.C. § 853(n).”);
     United States v. Hooper, 228 F.3d 818, 821 (9th Cir. 2000) (After the government forfeits
28   property, third parties may assert a third-party petition with the court to litigate their
     interests.);
                                                     6
          Case 2:22-cr-00142-CDS-DJA Document 254 Filed 09/10/24 Page 7 of 12



 1            Under 21 U.S.C. § 853(e), the Court has the discretion to issue protective orders at

 2   the request of the government. 39 “Whatever discretion Congress gave the district courts in

 3   § 853(e) and 853(c), that discretion must be cabined by the purposes for which Congress

 4   created it: to preserve the availability of property for forfeiture.” 40

 5            As it has done so before, this Court is authorized to prevent Cambria HOA’s default

 6   proceedings and foreclosure sale of the property in order to preserve the United States’

 7   interests and rights to the property.

 8   III. CONCLUSION

 9            The United States identified 6033 Watermelon as forfeitable property upon the filing

10   of a criminal indictment and has authority to protect its forfeiture interests under 21 U.S.C.

11   § 853(c) and 853(e)(1)(A). Cambria HOA’s default proceedings and foreclosure sale violates

12   21 U.S.C. § 853(k). Accordingly, this Court should enter an Order prohibiting Cambria

13   HOA with the foreclosure sale of 6033 Watermelon Street, North Las Vegas, Nevada,

14   89081.

15            Dated: April 3, 2024.
                                                        Respectfully submitted,
16
                                                        JASON M. FRIERSON
17                                                      United States Attorney
18
                                                        /s/ Daniel D. Hollingsworth
19                                                      DANIEL D. HOLLINGSWORTH
                                                        Assistant United States Attorney
20

21                                                         IT IS SO ORDERED:

22

23
                                                        Cristina D. Silva
24                                                      United States District Judge
25
                                                        Dated: September 10, 2024
26

27   39
       United States v. Crozier, 777 F.2d 1376, 1382 (9th Cir. 1985).
     40
       United States v. Monsanto, 491 U.S. 600, 613 (1989) (quotation marks and ellipsis omitted);
28   see United States v. 849 NW Wall Street, Bend, Oregon, co7-359Z, 2008 U.S. Dist. Lexis 104313,
     6-7 (W.D. Wash. December 17, 2008).
                                                       7
           Case 2:22-cr-00142-CDS-DJA Document 254 Filed 09/10/24 Page 8 of 12



 1 JASON M. FRIERSON
   United States Attorney
 2 Nevada Bar No.7709
   DANIEL D. HOLLINGSWORTH
 3 Assistant United States Attorney
   Nevada Bar No. 1925
 4 501 Las Vegas Boulevard South, Suite 1100
   Las Vegas, Nevada 89101
 5 (702) 388-6336
   Daniel.Hollingsworth@usdoj.gov
 6 Attorneys for the United States

 7

 8
                                 UNITED STATES DISTRICT COURT
 9                                    DISTRICT OF NEVADA

10 UNITED STATES OF AMERICA,
                                                               Case No. 2:22-cr-00142-CDS-DJA
11                   Plaintiff
                                                                         Index of Exhibits
12 v.

13 MEELAD DEZFOOLI,

14                   Defendant

15

16 Exhibit D .......................................................... Cambria Colinas HOA Notice of Default

17

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 1              Exhibit D – Cambria Colinas HOA Notice of Default

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28              Exhibit D – Cambria Colinas HOA Notice of Default

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