* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not

be published and is not precedent except under the limited circumstances set forth in 5TH CIR.

R. 47.5.4.

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 06-11293

UNITED STATES OF AMERICA

Plaintiff - Appellee

v.

GERALD STONE

Defendant

COMMUNITY HOUSING FUND

Appellant

Appeal from the United States District Court 

for the Northern District of Texas

USDC No. 3:04-CR-318-2

Before JONES, Chief Judge, and OWEN and SOUTHWICK, Circuit Judges.

PER CURIAM:*

Community Housing Fund (“CHF”) appeals from the district court’s

dismissal of its third-party petition which claimed an interest in property subject

to a Preliminary Order of Forfeiture. The district court found the petition to be

untimely. We AFFIRM.

United States Court of Appeals

Fifth Circuit

F I L E D

December 31, 2008

Charles R. Fulbruge III

Clerk
No. 06-11293

2

I. BACKGROUND

CHF is a nonprofit corporation that Barbara Hildenbrand established in

1992. Hildenbrand serves as CHF’s registered agent for service of process and

as its president. CHF participated in the Department of Housing and Urban

Development’s (“HUD”) Single Family Affordable Housing Program. As part of

this program, CHF purchased HUD-owned properties at a discounted rate,

renovated them, and sold them to low-income buyers. Ranscott Construction,

Inc., which is run by Gerald Stone, performed the majority of the renovations.

While participating in HUD’s program, Hildenbrand and Stone were charged

with wrongful receipt or use of HUD funds. Both pled guilty in 2005. As part

of his plea agreement, Stone agreed to the forfeiture of a yacht and a

condominium in Florida. Hildenbrand entered no such agreement.

On May 22, 2006, the district court entered a Preliminary Order of

Forfeiture. It was served on all counsel of record in Stone and Hildenbrand’s

criminal case, both by mail and through the court’s electronic filing system.

Hildenbrand’s counsel received that order. The government also published the

final notice of forfeiture in a Florida newspaper on July 10, 2006. On August 8,

2006, CHF filed a petition for a hearing to adjudicate its interest in the yacht

and the condominium Stone had agreed to forfeit. The district court dismissed

the petition as untimely. 

On appeal, CHF disputes that it received direct written notice of the

forfeiture. Instead, CHF argues that its petition was timely when measured

from the date of the newspaper publication.

II. DISCUSSION

A. Receipt and Sufficiency of the Direct Written Notice

When a third party petitions a court asserting its interest in property to

be forfeited to the government, the court must conduct an ancillary proceeding.

Fed. R. Crim. P. 32.2(c). Although these proceedings arise in a criminal context,
No. 06-11293

3

they closely resemble civil proceedings. United States v. Corpus, 491 F.3d 205,

208 (5th Cir. 2007). Under Rule 32.2(c)(1), there are two points in time at which

a petition can be dismissed. Prior to a hearing or to discovery, the court may,

upon a motion from a party, “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).

Motions to dismiss under this provision resemble Federal Rule of Civil Procedure

12(b) motions and are reviewed as such. Pacheco v. Serendensky, 393 F.3d 348,

352 (2d Cir. 2004). After discovery but before a hearing, a party may move for

summary judgment. Fed. R. Crim. P. 32.2(c)(1)(B). A court’s decision under this

provision is reviewed using the same standard as under Federal Rule of Civil

Procedure 56. Corpus, 491 F.3d at 208-09.

Though the district court did not refer to a specific part of Rule 32.2(c)(1)

that was being applied, evidence outside the pleadings was necessary for the

resolution. Thus, this was a summary judgment. We review a grant of summary

judgment de novo. McInstosh v. Partridge, 540 F.3d 315, 319 (5th Cir. 2008).

Summary judgment is appropriate when no disputed issue of material fact

exists, and the movant is entitled to judgment as a matter of law. Id. at 320.

After an order of forfeiture is entered, the government is required to

publish notice ofthe order and may also,to the extent practicable, provide direct

written notice to anyone known to have a potential interest in the property. 21

U.S.C. § 853(n)(1). Any third party asserting an interest in the property being

forfeited may petition the court for a hearing within 30 days either of receiving

actual notice or of the date of final publication of the notice, whichever occurs

earlier. Id. § 853(n)(2). CHF argues that it never received direct written notice

because it was not served with the order. Therefore, CHF argues that its

petition was timely because it was filed within 30 days of the final publication

notice. The government argues that CHF received direct written notice when

Hildenbrand was served with the order through her lawyers.
No. 06-11293

4

There is no argument that written notice was ever sent to Hildenbrand’s

personal or CHF’s corporate address. The direct written notice that went out

was addressed to and received by Hildenbrand’s attorneys in her criminal case.

The issue is whether that receipt was sufficient to put CHF on notice. CHF

argues that direct written notice needed to be given to CHF or directed to

Hildenbrand in her official capacity as registered agent. However, CHF points

us neither to language in the statute nor other authority that “direct written

notice” is only satisfied in that way in circumstances such as this. We will delve

into the specifics of those circumstances below.

In summary, Hildenbrand through her attorneys received this notice;

nothing holds such notice to be inadequate. Thus, whether this procedure was

good enough is an issue of constitutional due process. The notice must have been

“reasonably calculated, under all the circumstances, to apprise interested parties

of the pendency of the action and afford them an opportunity to present their

objections.” Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 314

(1950). This focus on reasonableness is not done blindly but instead views all

the circumstances. The relevant ones here include that CHF is a small,

nonprofit organization. The government introduced certain corporate records

from the Texas Secretary of State’s Office. They reveal that when the Articles

of Incorporation were filed in 1992, Hildenbrand was one of the three

incorporators, was the original registered agent, and was the only signatory to

the Articles. When the amendments to the Articles were filed later that first

year, Hildenbrand signed as president and also did so in filings in 1996 and

1999. When amendments to the Articles were filed by Hildenbrand as president

in 2003, the document stated that there were no “members” of the corporation.

A Texas non-profit corporation need not have members. Tex. Rev. Civ. Stat.

Ann. art. 1396-2.08(A). Their absence suggests all the more, though, that

Hildenbrand was the corporation. 
No. 06-11293

5

At the time of the service of the notice to her attorney, Hildenbrand was

the president and registered agent of a nonprofit corporation without members.

On behalf of CHF, she brought the third-party petition that commenced the

proceedings we review today. She is also one of three members of the CHF board

of directors. Hildenbrand is the only director to have served on the board

continuously since CHF’s inception in 1992. 

Also a circumstance is that the prosecution for which Hildenbrand had

employed the attorney who received the forfeiture notice, charged her with using

CHF for illegal purposes, purposes which were the grounds for forfeiture. Thus,

her attorneys received the notice in a case in which CHF was a central actor.

Based on these circumstances, we find that direct written notice to

Hildenbrand through her attorneys on May 22, 2006, was reasonably calculated

to apprise CHF of the need to assert any rights to the property being forfeited.

With Hildenbrand’s receipt, it was proper for the district court to conclude that

CHF received direct written notice. When CHF filed its third-party petition on

August 8, 2006, the 30-day time period for filing the petition had expired.

CHF also argues that the notice was inadequate because it failed to

mention CHF specifically or its interest in the property. See United States v.

Estevez, 845 F.2d 1409 (7th Cir. 1988) (government provided insufficient notice

to a third party). In Estevez, the notice referred to the forfeiture of any of a

group of criminal defendants’ financial interests in a piece of real property. Id.

at 1411 & n.3. However, the third-party petitioner actually owned the piece of

real property, not the defendants. Id. at 1411. Until the third-party petitioner

was directly served, he was not on notice of the threat to his property. Quite

differently, in the present case, the order provided for the forfeiture of specific

property. Identified in the notice was the yacht and “all buildings,

appurtenances, and improvements” located at the condominium in Florida. This
No. 06-11293

6

was sufficient to put CHF on notice that it needed to file a third-party petition

if it had an interest in any of that specific property.

The filing by CHF of its petition was untimely.

B. Dismissal of the Petition Before the Government Could Seek a Final Order 

CHF also argues that granting the government’s motion to dismiss CHF

amounted to an improper default judgment. It offers caselaw on the standards

for default judgments and argues they were not met. See Eitel v. McCool, 782

F.2d 1470, 1471-72 (9th Cir. 1986). The argument focuses on the prejudice factor

relevant to the review of default judgments and concludes that no prejudice

existed because petitions from any third parties whose notice was solely by

publication would not yet have been due when CHF’s petition was filed.

We find the argument misdirected. What occurred here was not a default

judgment. It is true that the government cannot gain title until after the period

has expired during which parties who receive notice only by publication may file

their petitions. 21 U.S.C. § 853(n)(7). CHF is correct that when CHF filed its

petition on August 8, 2006, third parties that had received notice by publication

still had two more days to file their timely petitions. However, the district court

did not enter a defaultjudgment against CHF. Such a judgment resolves a claim

by a party properly served or who is otherwise present in the litigation, and who

thereafter fails to plead or defend. Fed. R. Civ. P. 55(a). We have found CHF to

have been served, but only with a notice of the opportunity to assert a claim. It

was for CHF to assert that claim within 30 days. 21 U.S.C. § 853(n)(2). All

those who are served or receive constructive notice of the forfeiture are not

parties against which a default judgment would be appropriate. They are

potential claimants who must timely appear and assert their rights.

We find the district court appropriately dismissed CHF’s petition based on

the fact that it was not timely filed. When any judgment on the forfeiture

eventually was entered, those who had not timely responded would not have
No. 06-11293

7

been eligible to have their interests considered. No default judgment would have

been needed against them. Disputes about whether or not the government

would have been prejudiced by considering any late-filed petitions are irrelevant.

The district court’s dismissal of the petition is AFFIRMED.
No. 06-11293

1 See 21 U.S.C. § 853(n)(2), which provides in pertinent part:

Any person, other than the defendant, asserting a

legal interest in property which has been ordered forfeited

to the United States pursuant to this section may, within

thirty days of the final publication of notice or his receipt

of notice under paragraph (1), whichever is earlier,

petition the court for a hearing to adjudicate the validity

of his alleged interest in the property.

2 See 21 U.S.C. § 853(n)(1).

8

OWEN, Circuit Judge, dissenting.

The Government had the burden of proving that it “provide[d] direct

written notice” of forfeiture proceedings pursuant to 21 U.S.C. § 853(n)(1). The

majority concludes that notice to legal counsel representing an individual in

criminal proceedings may be imputed to that individual and then imputed to a

corporation because the individual serves as president and registered agent of

that corporation. Because I cannot agree that imputed notice that is then

imputed to another entity constitutes “direct written notice,” I respectfully

dissent. 

Community Housing Fund (CHF) is a non-profit corporation formed by

Barbara Hildenbrand and was a victim of criminal activities conducted by

Hildenbrand and her co-defendant Gerald Stone. Hildenbrand has been

convicted of violating 18 U.S.C. § 1012 in connection with the wrongful receipt

or use of funds from the Department of Housing and Urban Development. Stone

pled guilty to a conspiracy to violate 18 U.S.C. §§ 666 and 7201 and agreed to the

forfeiture of the assets at issue in the present case, which are a yacht and a

condominium in Florida. CHF asserts an interest in these assets.

It is undisputed that CHF filed a request for a hearing regarding the

forfeiture of this property within thirty days after the final notice by publication

of the forfeiture proceedings.1 The only question is whether CHF was provided

“direct written notice” prior to the notice by publication.2If CHF was provided
No. 06-11293

3 Compare 19 U.S.C. § 1607(a) (stating that, in the context of administrative forfeiture

proceedings,“[w]rittennotice of seizure togetherwithinformationonthe applicable procedures

shall be sent to each party who appears to have an interest in the seized article”), with 21

U.S.C. § 853(n)(1) (stating that, as a substitute for published notice, the Government may

provide “direct written notice to any person known to have alleged an interest in the property

that is the subject of the order of forfeiture”).

4 See generally Taylor v. United States, 483 F.3d 385, 387, 390 (5th Cir. 2007)

(construing 19 U.S.C. § 1607(a), stating thatthe Government has the burden of demonstrating

that its notice was reasonably calculated, under all the circumstances, to apprise a claimant

ofthe forfeiture); United States v. Robinson, 78 F.3d 172, 173, 175 (5th Cir. 1996) (holding that

9

with direct notice, its requestfor a hearing was untimely. Otherwise, its request

was timely, and the district erred in dismissing its request for a hearing. The

Government does not contend that either CHF or Hildenbrand received actual

notice of the forfeiture proceedings before the final notice by publication. The

Government relies entirely on imputed and re-imputed notice.

The statute at issue, 21 U.S.C. § 853(n)(1), provides:

Following the entry of an order of forfeiture under this

section, the United States shall publish notice of the order and of its

intent to dispose of the property in such manner as the Attorney

General may direct. The Government may also, to the extent

practicable, provide direct written notice to any person known to

have alleged an interest in the property that is the subject of the

order of forfeiture as a substitute for published notice as to those

persons so notified.

The Government’s position is that notice to Hildenbrand’s counsel in the

criminal prosecution of Hildenbrand and Stone was “direct written notice” to

CHF because Hildenbrand was CHF’s president and registered agentfor service

of process. This notice to counsel was two-fold: a computer-generated notice on

the district clerk’s website as part of an electronic case-filing system and an email sent to all counsel for the criminal defendants in the criminal prosecution.

Although there is little authority construing 21 U.S.C. § 853(n)(1),

decisions applying 19 U.S.C. § 1607(a) provide guidance.3 The Government must

affirmatively establish that CHF had direct written notice of the forfeiture.4
No. 06-11293

the Government has the burden of demonstrating compliance with the notice requirements of

19 U.S.C. § 1607(a) on summary judgment).

5 339 U.S. 306, 314 (1950).

6 See Taylor, 483 F.3d at 388 (applying 19 U.S.C. § 1607(a)). 

7 Mullane, 339 U.S. at 315.

8 See Aero-Med., Inc. v. United States, 23 F.3d 328, 330-32 (10th Cir. 1994) (reviewing

adequacy of notice pursuant to 19 U.S.C. § 1607(a)); see also Lopez v. United States, 201 F.3d

478, 481 (D.C. Cir. 2000) (holding that the “absence of any suggestion that the notice [of a

forfeiture] was sent for a purpose other than informing [the claimant’s wife] of her own interest

in the proposed forfeiture renders the notice facially deficient as to [the claimant], regardless

whether [his wife] was his agent for the service of process” (citation omitted)); United States

v. Marolf, 173 F.3d 1213, 1215, 1217 (9th Cir. 1999) (noting that the Government conceded

10

CHF also contends that due process requires that notice must be

reasonably calculated, under allthe circumstances,to apprise interested parties

of the pendency of an action and afford them the opportunity to present their

objections. In applying statutory notice provisions that are similar to 21 U.S.C.

§ 853(n)(1), this court has held that the requirements set forth by the Supreme

Court in Mullane v. Central Hanover Bank & Trust Co.5 are implicated, and

therefore, “[a]lthough the Government is not required to undertake ‘heroic

efforts,’ it must fulfill Mullane’s command that the effort be ‘reasonably

calculated’ to provide notice.”6“The means employed must be such as one

desirous of actually informing the absentee might reasonably adopt to

accomplish it.”7

The Government did not take any affirmative steps to send a notice

directly to CHF. The Government has produced no evidence to contradict

allegations that it was aware of CHF’s interest in the property and that it

considered CHF a victim throughout the underlying criminal proceedings. It

also has not demonstrated that sending notice to CHF directly, or to

Hildenbrand specifically in her capacity as the registered agent for CHF, would

have imposed an undue burden.8
No. 06-11293

notice was insufficient when sent to co-defendant but not to claimant after claimant’s interest

in the same property was discovered). 

9 3 WILLIAM MEADE FLETCHER, FLETCHER CYCLOPEDIA OF THE LAW OF CORPORATIONS

§§ 789, 791, 793, 794 (2008) (noting that knowledge acquired by an officer of the corporation,

while conducting purely personal affairs and not purporting to act as a representative of the

corporation, is not imputable to the corporation); see also United States v. 7236 Highway 45

North, 965 F.2d 311, 316-18 (7th Cir. 1992) (holding that president’s knowledge of illegal

activities he was conducting on corporate property could not be imputed to the corporation for

purposes of the innocent owner defense in a forfeiture proceeding, observing “since [the

criminal defendant] did not obtain knowledge of his activities while acting to benefit his

principal, his knowledge cannot be imputed to [the corporation]”).

10 See Am. Standard Credit, Inc. v. Nat’l Cement Co., 643 F.2d 248, 270-72 (5th Cir.

1981) (stating that whether the agent possessed actual knowledge is ordinarily a question of

fact that must be resolved before such knowledge can be imputed to the principal); see also

FLETCHER, supra note 11 § 803 (stating that the type of knowledge that may be imputed from

the agentto the principal includes actualknowledge or actualnotice of circumstances sufficient

to put a prudent person upon inquiry).

11 See Aero-Med., Inc., 23 F.3d at 331 (noting that there was no finding of an alter-ego

relationship between the claimant, a corporation created by a criminal defendant, and that

defendant, and therefore “notice to [the criminal defendant], either personally or through

defense counsel, would not necessarily have been reasonably calculated to reach plaintiff”).

11

I agree that notice to Hildenbrand’s counsel in her criminal prosecution

was imputed notice to Hildenbrand in her individual capacity as a criminal

defendant. But I cannot say that this establishes that Hildenbrand received

actual notice or acquired actual knowledge of the forfeiture proceedings in her

capacity as CHF’s president or agent,9such that this knowledge could then be

imputed to CHF.10

The Government’s argument that notice sent to Hildenbrand in her

individual capacity through her attorney constitutes notice to CHF because of

the close relationship between CHF and Hildenbrand is also unpersuasive

because the Government has not produced any evidence, apartfrom a conclusory

statement in its brief, of an alter-ego relationship between Hildenbrand and

CHF.11 The evidence discussed by the majority would not support a finding of

alter ego, even had the district court made such a finding, which it did not.
No. 06-11293

12 See United States v. Puig, 419 F.3d 700 (8th Cir. 2005) (holding that an attorney’s

knowledge of the forfeiture proceeding was imputed to his client where the record contained

evidence that the attorney was in fact representing the claimant more than thirty days prior

to filing a petition for an ancillary hearing).

13 See generally Armendariz-Mata v. U.S. Dep’t of Justice, DEA, 82 F.3d 679, 683 (5th

Cir. 1996) (stating that because forfeitures are disfavored, the government must comply with

both the letter and spirit of the law in notifying potential claimants).

12

While CHFdid authorize Hildenbrand’s counselto representitin filing its

request for a hearing regarding the forfeiture, there is no evidence that at the

time this attorney received notice on behalf of Hildenbrand individually, this

attorney was also CHF’s counsel.12 Nor has the Government established that

CHF authorized counsel to act on its behalf in the forfeiture proceedings before

the final notice by publication occurred.

In light of the fact that forfeitures are traditionally a disfavored remedy

and the importance of due process safeguards in this context, I cannot say that

the Government has met its burden in this case.

13 CHF filed a petition for a

hearing within the time permitted following the published final notice in a

Florida newspaper. I would hold that CHF’s request for a hearing to adjudicate

its interest in the property at issue was timely.