Title: P. v. Semaan
Citation: N/A
Docket Number: S139685
State: California
Issuer: California Supreme Court
Date: August 13, 2007

1
Filed 8/13/07 
 
 
 
IN THE SUPREME COURT OF CALIFORNIA 
 
 
 
THE PEOPLE, 
) 
 
 
) 
 
Plaintiff and Respondent, 
) 
 
 
) 
S139685 
 
v. 
) 
 
 
) 
Ct.App. 4/2 E035671 
YOUSSEF SEMAAN et al., 
) 
 
) 
Riverside County 
 
Defendants; 
) 
Super. Ct. No. RIF106168 
 
 
) 
ELHAM CHERFAN et al., 
) 
 
 
) 
 
Third Party Claimants and 
) 
 
Appellants. 
) 
___________________________________ ) 
 
Penal Code section 186.11,1 sometimes called the “Freeze and Seize 
Law,”2 permits the superior court in certain white collar criminal cases to take 
possession of assets under defendants’ control and to preserve them for the 
payment of restitution.  A person who claims an interest in frozen assets may seek 
their release by filing a verified claim with the superior court.  (§ 186.11, 
subd. (e)(6).)  In this case, the superior court denied a claim filed by the person 
whose name appeared on a frozen bank account controlled by defendants, finding 
the claimant failed to show she actually owned any of the money in the account.  
                                              
1  
All further statutory citations are to the Penal Code, except as noted.   
2  
E.g., People v. Green (2004) 125 Cal.App.4th 360, 363.   
 
2
The Court of Appeal, reasoning that the People had the burden to show by clear 
and convincing evidence the claimant did not own the disputed funds, reversed.  
We conclude the Court of Appeal erred and, thus, reverse.     
I. BACKGROUND 
Defendants Youssef Semaan and Lilliane Semaan pled guilty to a 
complaint charging them with 99 felony counts arising out of a “credit card bust-
out” scheme.3  The scheme exploited “courtesy checks” mailed by credit card 
issuers to cardholders in order to encourage the cards’ use.  Using courtesy checks, 
defendants would overpay by thousands of dollars the balance due on a credit 
card; a card issuer that received an overpayment would credit the account instead 
of refunding the overpayment, thus temporarily increasing (“busting out”) the 
amount that could be charged on the card; defendants would then spend the 
busted-out credit limit before the courtesy check was dishonored for insufficient 
funds.  Defendants also submitted fraudulent credit applications to merchants in 
order to finance purchases, and then used courtesy checks on busted-out credit 
card balances to delay collection.  Through this scheme, defendants ultimately 
stole over $1.6 million, committing in the process 24 counts of grand theft (§ 487, 
subd. (a)) and 75 counts of fraudulently drawing checks without sufficient funds 
(§ 476a).  Based on these offenses, defendant Youssef Semaan was sentenced to 
14 years in state prison and defendant Lilliane Semaan to 10 years’ probation.  
Defendants were also ordered to pay $1,632,418.61 in restitution.  (See § 186.11, 
subd. (i)(1)(A) & (B).)   
                                              
3  
We grant the People’s request to augment the record to include the 
reporter’s transcripts of hearings in the criminal case on November 25, 2002, and 
November 21, 2003.  The transcripts are properly part of the record because a 
proceeding under section 186.11 is “pendent to the criminal proceeding . . . .” (Id., 
subd. (e)(2).)   
 
3
While the criminal case was pending, the People filed a petition under 
section 186.11 to preserve assets and property for the payment of restitution.  (See 
id., subd. (e)(2).)  The superior court granted the petition and appointed a receiver 
to take possession of a list of assets and property the People had identified in the 
course of their investigation as being in defendants’ control.   
Among the frozen assets were bank accounts in the names of Marie Semaan 
and Elham Cherfan, both of whom appear to reside in Lebanon and are sisters-in-
law of defendant Youssef Semaan.  Both women filed claims asking the court to 
release money from the frozen accounts.  (See § 186.11, subd. (e)(6).)  The 
superior court, after an extensive evidentiary hearing, rejected both claims.  
Neither claimant appeared at the hearing or submitted a declaration.  While each 
claimant in her written claim asserted ownership of some of the frozen funds held 
in her name, the claims were verified by the claimants’ jointly retained attorney 
and, thus, while procedurally proper had no evidentiary value.  (Code Civ. Proc., 
§ 446, subd. (a).)4  Both claimants, through an accountant expert witness, 
attempted to trace to the frozen accounts funds once assertedly belonging to them.  
Claimant Elham Cherfan sought to prove that $325,067.08 of the funds held in her 
name represented defendants’ repayment of a loan.  But the purported loan was 
not documented, and the evidence did not support her expert’s conclusion about 
the circumstances under which the loan was supposedly made.  The superior court 
ultimately found that the accountant’s opinion testimony concerning the loan 
                                              
4  
Under Code of Civil Procedure section 446, subdivision (a), when a 
pleading is verified by the attorney for a party, “the pleadings shall not otherwise 
be considered as an affidavit or declaration establishing the facts therein alleged.”  
Verification by the attorney is not, as claimants seem to suggest, a defect in the 
verification to which the People were required to object.  Such verification does, 
however, as noted, affect a pleading’s evidentiary value.   
 
4
“lack[ed] credibility” and denied the claim for “insufficient evidence.”  The Court 
of Appeal affirmed this part of the superior court’s decision, and Cherfan has not 
sought review of the Court of Appeal’s decision as to her.  We therefore do not 
consider her claim further.   
As mentioned, the superior court also denied the claim of Marie Semaan 
(hereafter Marie).  Marie did not appear at the hearing and made no sworn 
statements in support of her claim.  In an amended claim, which was also verified 
by her attorney, Marie asserted that “$219,577.53 . . . in the [frozen bank account] 
. . . is the sole property of claimant and said money is not the fruits or product of 
any criminal activity.”  As mentioned, however, the amended claim’s factual 
assertions had no evidentiary value.  (Code Civ. Proc., § 446, subd. (a).)   
At the hearing on her claim, Marie’s attorney presented a single witness—
the same accountant mentioned above—who opined, based on her effort to trace 
the source of the funds in the frozen bank account, that Marie owned the funds.  
The witness had not met or spoken to Marie.  The witness’s investigation of the 
bank account showed a beginning balance of $1,986.89, deposits of $22,921.00 
representing Social Security payments in the name of Marie and Elias Semaan,5 a 
deposit of $196,771.20 representing the proceeds of the sale of a house on 
Mountain Court in Brea, California, and a transfer of $380.40 from another 
account in Marie’s name.   
The People, for their part, accepted the expert witness’s conclusions about 
the source of the funds but endeavored to show that Marie’s name was used by 
defendants as an alias for financial transactions.  Through cross-examination of 
Marie’s own accounting expert witness, and through direct examination of a 
                                              
5  
The record does not make clear who Elias Semaan is.   
 
5
detective serving on the financial crimes task force of the United States Secret 
Service, the People showed the following:  Defendants possessed and used for 
their own benefit more than six credit cards in Marie’s name.  Defendants also 
possessed a driver’s license and Social Security card in Marie’s name.  All 24 
checks written on the account, and all ATM withdrawals from the account, were 
for the benefit of defendants; all of these transactions (totaling $2,482.00) 
occurred at a time when Marie was not in the United States.  The registered 
address for the bank account was a post office box rented by defendant Youssef 
Semaan in Marie’s name.  A signature card existed for the bank account, but 
neither witness claimed any expertise in handwriting identification and neither 
attempted to authenticate the signature as Marie’s.  The several documents 
purporting to bear Marie’s signature in fact bore apparently very different 
signatures, none of which was shown to be her own.  Ownership of the house was 
unclear.  In her amended claim, Marie asserted that her deceased husband Simon 
Semaan owned the Brea house; in that document she did not, however, claim an 
ownership interest in the house, as opposed to the funds in the account.  While a 
last will and testament for Simon Semaan was in evidence, the will contained no 
listing of assets.  The Brea house was sold by defendant Youssef Semaan while 
Marie was in Lebanon, under a power of attorney purportedly executed by her in 
Beirut.  But the People questioned the power of attorney’s authenticity, and no 
witness attempted to authenticate Marie’s signature on the document.  Prior to the 
sale, and while Marie was in Lebanon, a deed to the house was created in her 
name; the People questioned the deed’s authenticity, and it was not shown to be 
genuine.  Finally, the escrow check payable to Marie representing the proceeds of 
the sale was endorsed and deposited into the bank account while she was out of 
the country.  One attempt, apparently by Marie, to withdraw money from the bank 
account from overseas failed for unknown reasons.   
 
6
Based on this evidence, the superior court rejected Marie’s claim.  The 
court held that, “[a]lthough [Marie] may have once had some property interest in 
the Mountain Court residence, she has failed to show evidence that she owned any 
of the money in the Wells Fargo Account . . . .  Thus, it is the order of this court 
that [Marie’s] claim is denied.”   
The Court of Appeal reversed.  In the court’s view, once “Marie met her 
initial burden of establishing legal title to the bank funds from the sale of her 
home, the burden of producing evidence shifted to the People to refute by clear 
and convincing evidence her legal title to the funds.”  The court based this 
conclusion on Evidence Code section 662, which provides that “[t]he owner of 
legal title to property is presumed to be the owner of the full beneficial title.  This 
presumption may be rebutted only by clear and convincing proof.”  The court 
acknowledged that “there is evidence of defendants’ control over Marie’s bank 
account funds,” and that “it is possible defendants were using Marie’s account for 
money laundering . . . .”  Nevertheless, the court concluded “the People have not 
established by clear and convincing evidence that Marie did not have a legitimate 
interest in the money deposited in her bank account.”  We granted the People’s 
petition for review.   
II. DISCUSSION 
The People contend the Court of Appeal erred in applying Evidence Code 
section 662 to shift to the People the burden of disproving a claimant’s interest in 
frozen assets once the claimant has shown nominal title.  “[S]uch a minimal 
showing,” the People contend, “would permit a sophisticated white collar criminal 
to retain stolen property or other assets simply by placing the asset into the name 
of a willing, or even an unwilling or unsuspecting, friend or family member.”  We 
conclude section 662 does not apply to this case.   
 
7
Section 186.11 says nothing about evidentiary burdens or standards of 
proof.  The applicable burdens and standards are, however, fairly inferable from 
the language and purpose of the statute, considered in the light of the default rules 
set out in the Evidence Code.   
Section 186.11, like other provisions of the Penal Code (e.g., § 1202.4 et 
seq.), implements the state Constitution’s declaration “that all persons who suffer 
losses as a result of criminal activity shall have the right to restitution from the 
persons convicted of the crimes for losses they suffer.”  (Cal. Const., art. I, § 28, 
subd. (b).)  The principal focus of section 186.11, as noted, is to facilitate the 
payment of restitution by “prevent[ing] dissipation or secreting of assets or 
property . . . .”  (Id., subd. (e)(2).)  Section 186.11 accomplishes this by 
authorizing the superior court to order preliminary relief, including “temporary 
restraining order[s], preliminary injunction[s], the appointment of a receiver, or 
any other protective relief necessary to preserve the property or assets” (id., subd. 
(e)(2)) from which restitution might properly be paid.  Assets or property become 
subject to the court’s jurisdiction on a showing that the defendant controls them.  
When a person has been charged under section 186.11 with an aggravated white 
collar crime enhancement, “any asset or property that is in the control of that 
person, and any asset or property that has been transferred by that person to a third 
party, subsequent to the commission of any criminal act alleged pursuant to 
subdivision (a), other than in a bona fide purchase, whether found within or 
outside the state, may be preserved by the superior court in order to pay restitution 
and fines pursuant to this section.”  (Id., subd. (e)(1).)   
A showing that the defendant controls assets or property suffices to justify 
the issuance of preliminary relief because control furnishes an inference of 
ownership:  “A person who exercises acts of ownership over property is presumed 
to be the owner of it.”  (Evid. Code, § 638.)  Unlike the state and federal drug-
 
8
related-asset forfeiture laws (e.g., Health & Saf. Code, § 11470; 21 U.S.C. § 881), 
section 186.11 does not require that assets or property, to fall within the court’s 
jurisdiction, be connected with criminal activity.  This is because a defendant’s 
obligation to pay restitution is a general obligation and not one limited to the value 
of assets and property connected with crime.  While the scope of preliminary relief 
under section 186.11 is thus very broad, the section also protects the property 
interests of innocent third parties by giving them the right to file claims to the 
frozen assets (id., subd. (e)(6)), and by requiring the court, “in making its orders, 
[to] seek to protect the interests of any innocent third persons, including an 
innocent spouse, who were not involved in the commission of any criminal 
activity” (id., subd. (g)(5)).   
To assert a claim to frozen assets, as mentioned, a claimant must file “a 
verified claim stating the nature and amount of his or her interest in the property or 
assets.”  (§ 186.11, subd. (e)(6).)  This plain language is reasonably interpreted as 
meaning simply that the claimant must show an ownership interest.  Also fairly 
inferable from the statutory language is the requirement that the claimant be 
“innocent” and “not involved in the commission of any criminal activity.”6  (Id., 
subd. (g)(5).)  Because section 186.11 does not expressly assign the burden of 
proving these facts, the burden belongs to the claimant.  This is the default rule set 
out in Evidence Code section 500:  “Except as otherwise provided by law, a party 
has the burden of proof as to each fact the existence or nonexistence of which is 
essential to the claim for relief or defense that he is asserting.”  To assign the 
burden of proving ownership to the claimant of frozen assets is also consistent 
with the evidentiary showing on which assets are frozen under section 186.11.  
                                              
6  
The People at trial expressly disclaimed any intention to show that Marie 
was “a party to the criminal conduct that happened here . . . .”   
 
9
The People’s showing that the defendant controls assets gives rise to the 
presumption that he or she owns them and, thus, places on anyone who would 
prove the contrary the burden of producing evidence to that effect.  Evidence Code 
section 638,7 which articulates the presumption just mentioned, is a presumption 
affecting the burden of producing evidence.  (Evid. Code, § 630.)   
The court’s finding that a claimant does not have an interest in frozen assets 
is a question of fact resolved on the basis of conflicting evidence and, thus, 
properly reviewed under the substantial evidence test.  (People v. Superior Court 
(Jones) (1998) 18 Cal.4th 667, 681; Crocker National Bank v. City and County of 
San Francisco (1989) 49 Cal.3d 881, 888.)  “The standard is deferential:  ‘When a 
trial court’s factual determination is attacked on the ground that there is no 
substantial evidence to sustain it, the power of an appellate court begins and ends 
with the determination as to whether, on the entire record, there is substantial 
evidence, contradicted or uncontradicted, which will support the determination 
. . . .’ ” (People v. Superior Court (Jones), supra, 18 Cal.4th 667, 681, quoting 
Bowers v. Bernards (1984) 150 Cal.App.3d 870, 873-874, italics omitted.)   
Reviewing the superior court’s finding under the substantial evidence test, 
we see no difficulty in affirming.  The People’s undisputed evidence that 
defendants exclusively controlled the bank account in Marie’s name suffices to 
uphold the finding.  Marie’s argument to the contrary, which the Court of Appeal 
accepted, is that the presumption set out in Evidence Code section 662 compels a 
different conclusion.  We do not agree.   
Evidence Code section 662 provides:  “The owner of the legal title to 
property is presumed to be the owner of the full beneficial title.  This presumption 
                                              
7  
“A person who exercises acts of ownership over property is presumed to be 
the owner of it.”  (Evid. Code, § 638.)   
 
10
may be rebutted only by clear and convincing proof.”  Section 662 thus codifies 
the common law rule (e.g., Olson v. Olson (1935) 4 Cal.2d 434, 437; Toney v. 
Nolder (1985) 173 Cal.App.3d 791, 796) that oral trusts in derogation of title are 
disfavored and must be proved by clear and convincing evidence.  (See Cal. Law 
Revision Com. com., 29B pt. 2 West’s Ann. Evid. Code (1995 ed.) foll. § 662, 
p. 210 [noting that section 662 codifies the rule of Olson v. Olson].)  “Allegations 
that deeds absolute are actually mortgages, that conveyances are subject to a trust, 
and that legal title does not represent beneficial ownership have . . . been 
historically disfavored because society and the courts have a reluctance to tamper 
with duly executed instruments and documents of legal title.”  (Weiner v. 
Fleischman (1991) 54 Cal.3d 476, 489.)    
Evidence Code section 662 does not apply, however, when title itself is 
challenged as not genuine.  In Murray v. Murray (1994) 26 Cal.App.4th 1062, 
1067, on which the People rely, the Court of Appeal held that section 662 did not 
apply when the plaintiff in a quiet title action challenged as fraudulent a deed in 
another person’s name.  “Evidence Code section 662,” the Court explained, “has 
application, by its express terms, when there is no dispute as to where legal title 
resides but there is question as to where all or part of the beneficial title should 
rest.”  (Murray v. Murray, supra, at p. 1067.)  “We are unaware, however, of a 
single reported case in which Evidence Code section 662’s presumption and 
burden were applied when the legal title itself was in dispute.  Nor can we see 
anything in the language of section 662 requiring such application.”  (Murray v. 
Murray, supra, at p. 1068.)  This interpretation of section 662 appears self-
evidently correct.  Otherwise, the section would encourage fraud by permitting a 
dishonest person, simply by creating false documents of title, to shift to an 
innocent owner the burden of proving ownership by clear and convincing 
evidence.   
 
11
In the case before us, the whole thrust of the People’s case was to show that 
defendants used Marie’s name as an alias for their financial transactions and 
completely controlled the bank account in question.  While Marie’s name was on 
the frozen bank account, no evidence showed that she herself had opened the 
account or ever successfully exercised control over it.  No witness claimed ever to 
have seen or spoken with Marie, and no witness attempted to authenticate as 
Marie’s own signature any of the various, apparently different signatures 
attributed to her on financial and legal documents.  The People’s theory that 
defendants used Marie’s name as an alias had the support of undisputed evidence 
that defendants possessed credit cards, a driver’s license, and a Social Security 
card in her name, that all checks written on her bank account were written while 
she was out of the country and to pay defendants’ expenses, and that the sale of 
the Brea house, whose ownership was uncertain, was transacted entirely by 
defendants.  For her part, Marie neither appeared in court nor made any statements 
under oath claiming ownership of the bank account, the proceeds of the sale of the 
house, or the Social Security benefits paid in her name.  Marie’s expert proved 
only what was not in dispute, namely, that the proceeds of the sale and Social 
Security benefits were deposited into the account.  Finally, while Marie’s attorney 
suggested in argument that she may have been “as much of a victim as anyone 
else,” Marie asserted no claim to restitution for the checks written by defendants 
on the account.   
In conclusion, given the undisputed evidence that defendants used Marie’s 
name as an alias for their financial transactions, and given that the People disputed 
the genuineness of Marie’s title to the bank account and the funds therein, 
Evidence Code section 662 does not apply.  Thus, the burden to prove by a 
preponderance of the evidence (Evid. Code, § 500) “the nature and amount of . . . 
her interest in the [claimed] property or assets” (§ 186.11, subd. (e)(6)) remained 
 
12
with Marie.  Substantial evidence supports the trial court’s finding that she failed 
to carry this burden.   
III. DISPOSITION 
The judgment of the Court of Appeal is reversed in part and the matter 
remanded for further proceedings consistent with the views expressed herein.   
 
 
 
 
 
 
 
WERDEGAR, J. 
WE CONCUR: 
GEORGE, C. J. 
KENNARD, J. 
BAXTER, J. 
CHIN, J. 
MORENO, J. 
CORRIGAN, J. 
 
 
 
See next page for addresses and telephone numbers for counsel who argued in Supreme Court. 
 
Name of Opinion People v. Semaan 
__________________________________________________________________________________ 
 
Unpublished Opinion 
Original Appeal 
Original Proceeding 
Review Granted XXX 133 Cal.App.4th 1445 
Rehearing Granted 
 
__________________________________________________________________________________ 
 
Opinion No. S139685 
Date Filed: August 13, 2007 
__________________________________________________________________________________ 
 
Court: Superior 
County: Riverside 
Judge: Gordon R. Burkhart 
 
__________________________________________________________________________________ 
 
Attorneys for Appellant: 
 
Jerome D. Stark and Robert Klein for Third Party Claimants and Appellants. 
 
 
 
 
__________________________________________________________________________________ 
 
Attorneys for Respondent: 
 
Grover Trask, District Attorney, and Elise J. Farrell, Deputy District Attorney, for Plaintiff and 
Respondent. 
 
David R. LaBahn for California District Attorneys Association as Amicus Curiae on behalf of Plaintiff and 
Respondent. 
 
 
 
 
 
 
 
Counsel who argued in Supreme Court (not intended for publication with opinion): 
 
Jerome D. Stark 
2700 North Main Street, Suite 630 
Santa Ana, CA  92705 
(714) 558-8014 
 
Elise J. Farrell 
Deputy District Attorney 
4075 Main Street, First Floor 
Riverside, CA  92501 
(951) 955-6620