United States of America v. $500,000.00 in U.s. Currency

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 08-20579
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
$500,000.00 IN U.S. CURRENCY, et al.,
Defendants,
v.
Principal KHIEM NGO; SAVING CALL, L.L.C.,
Claimants-Appellants.
Appeal from the United States District Court for the
Southern District of Texas, Houston Division
USDC No. 4:08-CV-972
Before BENAVIDES, DENNIS, and ELROD, Circuit Judges.
JENNIFER WALKER ELROD, Circuit Judge:
After the United States initiated forfeiture proceedings against funds
thought to have been involved in illegal activity, several persons claiming to be
the funds’ rightful owners objected and filed a claim pursuant to 18 U.S.C. § 983.
Upon the government’s motion, the district court dismissed the claim for lack of
standing under the statute. The claimants appealed. We reverse and remand.
United States Court of Appeals
Fifth Circuit
F I L E D
December 16, 2009
Charles R. Fulbruge III
Clerk

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No. 08-20579
Ngo filed the claim on behalf of himself and as the representative of Saving Call. We1
refer to both as Saving Call.
2
I.
Appellant Khiem Ngo owns and manages Saving Call, LLC, a California
telephone calling card company. Ngo’s brother and sister-in-law, Lan Ngo and
Ly Le, operate V247, a Texas company that provides Saving Call with
distributing, billing, and collection services, among others. In 2007, the United
States seized $500,900 and $110,000 from the residence of Le, Lan Ngo, Mon
Mgo, and Man Tran, and $100,000, $496,100, and $500,000 from safe deposit
boxes bearing the names of Le, Mgo, and Tran. During the ensuing
administrative forfeiture proceedings, Saving Call asserted a claim to the funds,
thereby halting their automatic forfeiture. See 18 U.S.C. § 983(a)(2)(A) (“Any
person claiming property seized in a nonjudicial civil forfeiture proceeding under
a civil forfeiture statute may file a claim with the appropriate official after the
seizure.”); § 983(a)(3)(A) (“Not later than 90 days after a claim has been filed, the
Government shall file a complaint for forfeiture in the manner set forth in the
Supplemental Rules for Certain Admiralty and Maritime Claims or return the
property pending the filing of a complaint . . . .”). The United States then filed
a forfeiture complaint in the United States District Court for the Southern
District of Texas, naming the following in-rem defendants: $500,000, $110,000,
$100,000, $496,100, and $500,900. After Saving Call filed a verified claim for
the funds, the United States filed a motion to dismiss Saving Call’s claim for1
lack of standing, and Saving Call filed a response with evidence. The district
court granted the United States’ motion and denied Saving Call’s motion for
reconsideration. Saving Call appeals the district court’s standing decision.

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No. 08-20579
The claimant opposing forfeiture bears the burden of establishing standing. See2
United States v. $9,041,598.68 (Nine Million Forty One Thousand Five Hundred Ninety Eight
3
II.
“This court reviews questions of standing de novo.” Nat’l Athletic Trainers’
Ass’n, Inc. v. U.S. Dep’t of Health & Human Servs., 455 F.3d 500, 502 (5th Cir.
2006). To evaluate the prudential standing requirement at issue here, “we must
identify what interest the litigant seeks to assert and then decide if that interest
is arguably within the zone of interests to be protected or regulated by the
statute.” Bonds v. Tandy, 457 F.3d 409, 413–14 (5th Cir. 2006). Under Title 18’s
civil forfeiture scheme, see 18 U.S.C. § 983, only “innocent owner[s]” of seized
property hold the right to defend against forfeiture proceedings. § 983(d)(1) (“An
innocent owner’s interest in property shall not be forfeited under any civil
forfeiture statute.”). Section 983(d) defines “owner”:
(6) In this subsection, the term “owner”--
(A) means a person with an ownership interest in the specific
property sought to be forfeited, including a leasehold, lien,
mortgage, recorded security interest, or valid assignment of
an ownership interest; and
(B) does not include--
(i) a person with only a general unsecured interest in,
or claim against, the property or estate of another;
(ii) a bailee unless the bailor is identified and the bailee
shows a colorable legitimate interest in the property
seized; or
(iii) a nominee who exercises no dominion or control
over the property.
§ 983(d)(6). The question presented to the district court, and now to us, is
whether Saving Call’s pleadings and evidence sufficed to present Saving Call2

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No. 08-20579
Dollars and Sixty Eight Cents), 163 F.3d 238, 245 (5th Cir. 1998).
4
as an “innocent owner.” According to the government, Saving Call asserted only
the interest of a general creditor—someone to whom V247 simply owes money
as a result of past business dealings—that would fall within the § 983(d)(6)(B)(i)
provision for “general unsecured interest[s].” Saving Call responds by arguing
that it holds a bailment under Texas law that would fall within the
§ 983(d)(6)(B)(ii) provision for the interest of a “bailee” who shows a “colorable
legitimate interest in the property seized.”
Our first task to define the asserted ownership interest, which depends
upon state law. See United States v. $47,875.00 in U.S. Currency, 746 F.2d 291,
294 (5th Cir. 1984). Texas defines a bailment as “(1) the delivery of personal
property from one person to another for a specific purpose; (2) acceptance by the
transferee of the delivery; (3) an agreement that the purpose will be fulfilled; and
(4) an understanding that the property will be returned to the transferor.” Sears
Roebuck & Co. v. Wilson, 963 S.W.2d 166, 168–69 (Tex. App—Fort Worth 1998,
no pet.) (citations omitted); accord DeLaney v. Assured Self Storage, 272 S.W.3d
837, 839 (Tex. App.—Dallas 2008, no pet.); Prime Prods., Inc. v. S.S.I. Plastics,
Inc., 97 S.W.3d 631, 635 (Tex. App.—Houston [1st Dist.] 2002, pet. denied).
Moreover, if properly asserted, a bailor’s interest in bailed property constitutes
“an ownership interest in the specific property” so long as it falls within the
§ 983(d)(6)(B)(ii) provision for situations where “the bailor is identified and the
bailee shows a colorable legitimate interest in the property seized.” See also
Allright Auto Parks, Inc. v. Moore, 560 S.W.2d 129, 130 (Tex. Civ. App.—San
Antonio 1977, writ ref’d n.r.e.) (“The very essence of a contract of bailment is
that after its purpose has been fulfilled the bailed property shall be redelivered
to the bailor.”); 8A Tex. Jur. 3d Bailments § 16 (West 2009) (“On creation of the
ordinary bailment, the general property right remains in the bailor, and the

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No. 08-20579
Likewise, the response to the motion asserts that V247 “collect[ed] Saving Call, LLC’s3
monies and [held] them until they are turned over to Saving Call, LLC.” The response also
outlined the relationship between the companies and their operators, and asserted that V247
operated as Saving Call’s bailee.
5
bailee has only a special interest in the objects of the express or implied
bailment. A bailor with legal title to the subject property retains title if the
bailment contract does nothing to change that relationship.” (footnote omitted)).
Having outlined the contours of the bailment interest that could confer
standing, our second task is to determine whether Saving Call sufficiently
asserted as much. We conclude that, for purposes of this motion to dismiss,
Saving Call’s pleadings and evidence succeeded in doing so. First, the pleadings
alleged that Saving Call owned the actual seized dollars. The claim itself
asserted that the seized money “belong[ed] to Saving Call, LLC,” and the
response to the government’s motion likewise asserted that Saving Call was the
“rightful owner” of the properties. The claim also asserted that Saving Call’s
business was “conducted with cash as opposed to credit card and check
payments,” and that Saving Call hired V247 to “h[o]ld this money in [its]
possession before transferring lump sum amount [sic] to rightful owner, Saving
Call.”3
Second, the evidence Saving Call attached to the response supported the
pleadings’ allegations. Khiem Ngo’s affidavit asserted that V247 was Saving
Call’s “sole distributor,” and provided “accounting, collections, and billing
functions.” Saving Call also attached a copy of its verified claim from the
administrative proceedings, in which Saving Call asserted that Saving Call had
“outsourced” its “cash collections” operation to V247. The Ly Le affidavit went
much further, and asserted that “V247, Inc. possessed money belonging to
Saving Call, L.L.C. which it has a fiduciary responsibility to safe keep and
provide to Saving Call, L.L.C.” The affidavit asserted that “V247, Inc. is not

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No. 08-20579
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permitted nor does it have the right to use Saving Call, L.L.C.’s money,” that the
money stored at Ly Le’s home and the Chase Bank deposit boxes was “money
from the business,” and that “[t]he money is money V247, Inc. collected for
Saving Call L.L.C. in its capacity as the business responsible for Saving Call,
L.L.C.’s account receivable, case collections, etc.” The affidavit further asserted
that the money “was simply being held for Saving Call, L.L.C.,” and that “[a]t
any time Khiem Ngo, as the owner and Principal Agent of Saving Call, L.L.C.
could demand all of the money from V247, Inc.” By presenting these pleadings
and this evidence, Saving Call established its status as the holder of a qualifying
bailment under § 983(d)(6)(B)(ii).
III.
We hold that Saving Call established its status as a § 983(d) “innocent
owner,” and that as a result, Saving Call possessed standing to object to the
forfeiture of the funds. Accordingly, we REVERSE the judgment of the district
court and REMAND the case for further proceedings consistent with this
opinion.

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