                             UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT


                             No. 08-2065


UNITED STATES OF AMERICA,

                Plaintiff - Appellee,

          v.

JAMES EDGAR MUNSON,

                Movant - Appellant,

          and

REAL PROPERTY LOCATED AT 6124 MARY LANE DRIVE, SAN DIEGO,
CALIFORNIA,

                Defendant,

          and

ANN MUNSON,

                Claimant.



                             No. 08-2159


UNITED STATES OF AMERICA,

                Plaintiff - Appellee,

          v.

ANN MUNSON,

                Claimant - Appellant,
          and

REAL PROPERTY LOCATED AT 6124 MARY LANE DRIVE, SAN DIEGO,
CALIFORNIA,

                Defendant,

          and

JAMES EDGAR MUNSON,

                Movant.

------------------------

THOMAS EDWARD VANDERBLOEMEN,

                Amicus Supporting Appellant.



                             No. 08-4326


UNITED STATES OF AMERICA,

                Plaintiff - Appellee,

          v.

JAMES EDGAR MUNSON,

                Movant - Appellant,

          and

REAL PROPERTY LOCATED AT 6124 MARY LANE DRIVE, SAN DIEGO,
CALIFORNIA,

                Defendant,

          and

ANN MUNSON,

                Claimant.


                                  2
Appeals from the United States District Court for the Western
District of North Carolina, at Charlotte.     Graham C. Mullen,
Senior District Judge. (3:03-cv-00580-GCM; 3:03-cv-00580-GCM-1)


Argued:   January 24, 2012               Decided:   April 17, 2012


Before SHEDD, DAVIS, and DIAZ, Circuit Judges.


No. 08-2065 dismissed; Nos. 08-2159 and 08-4326 affirmed by
unpublished opinion. Judge Davis wrote the opinion, in which
Judge Shedd and Judge Diaz joined.


ARGUED: Thomas E. Vanderbloemen, GALLIVAN, WHITE & BOYD, PA,
Greenville, South Carolina, for Appellants and Amicus Supporting
Appellant.   William A. Brafford, OFFICE OF THE UNITED STATES
ATTORNEY, Charlotte, North Carolina, for Appellee.     ON BRIEF:
Anne M. Tompkins, United States Attorney, Charlotte, North
Carolina, for Appellee.


Unpublished opinions are not binding precedent in this circuit.




                                3
DAVIS, Circuit Judge:

      These     consolidated          appeals      arise        out        of     the     civil

forfeiture of real property located at 6124 Mary Lane Drive in

San   Diego,    California         (“the    Property”).         When       the     Government

filed its complaint for forfeiture in rem on December 3, 2003,

Claimant-Appellant           Ann   Munson     (“Ann”)         and    her        son,    Movant-

Appellant James Edgar Munson (“James”), held joint title to the

Property. The Government initiated forfeiture proceedings under

18 U.S.C. § 981 and 21 U.S.C. § 881 on the basis that James had

used the Property in conjunction with drug trafficking and money

laundering crimes. After Ann filed a verified claim asserting an

interest in the Property, she and the Government filed cross-

motions for summary judgment as to the forfeitability of her

interest. The district court granted summary judgment to the

Government,     denied        Ann’s      motion    for        summary       judgment,        and

entered a final judgment of forfeiture. The district court also

denied   several       pro    se    motions       that    James          had     filed    while

incarcerated in an attempt to assert a claim to the Property, as

well as his motion for reconsideration of the same.

      Ann and James individually noted appeals from the district

court’s order granting summary judgment, which were docketed as

No. 08-2159 and No. 08-2065, respectively. James also noted an

appeal   from    the    district         court’s    denial          of    his     motion     for

reconsideration,       which       was   docketed        as    No.       08-4326.      For   the

                                            4
reasons that follow, we dismiss No. 08-2065, affirm the district

court’s grant of summary judgment to the Government as to the

forfeiture of Ann’s property interest in No. 08-2159, and affirm

the    district         court’s        denial     of   James’s       motion    for

reconsideration in No. 08-4326.



                                          I.

      On   July   17,    1997,    Ann    Munson    purchased   the   Property,   a

house located at 6124 Mary Lane Drive in San Diego, California.

Although she was the sole owner of the Property, Ann allowed her

son, James Edgar Munson, and several other renters to live there

while she lived elsewhere. Ann explains that James had recently

graduated from college and she wanted to provide him with a

place to live that he might one day own. In October 1997, James

and several other individuals began packaging marijuana at the

Property    for   shipment        to    North    Carolina   and   various     other

locations. They also used the landline telephone at the Property

for   calls   relating      to     the    drug    trafficking     operation    and

accepted drug payments there. It is undisputed that all use of

the Property in connection with James’s criminal drug activity

had ceased by September 1999. Shortly thereafter, on October 12,

1999, Ann conveyed the Property to James by quitclaim deed and

gifted the equity to him.



                                           5
     Thereafter, in consequence of an ongoing investigation of

the drug trafficking operation, James was arrested on May 15,

2001, and subsequently indicted in Charlotte, North Carolina.

Ann contends, and the Government does not dispute, that she was

unaware of any criminal activity at the Property until the time

of James’s arrest. On January 16, 2002, during the pendency of

the criminal charges against him, James executed and recorded a

grant deed conveying the Property to him and Ann. In addition,

they executed a deed of trust in favor of IndyMac bank securing

a $240,000 indebtedness. Ann contends that she became co-owner

of the Property at this point in order to refinance the mortgage

to protect her financial interest following James’s arrest and

ensuing unemployment.

     James was convicted in May 2003 and sentenced in December

2003. 1 After James’s conviction but prior to his sentencing, the

Government   filed   a   civil   forfeiture   complaint   in   the   U.S.

District Court for the Western District of North Carolina under

the Civil Asset Forfeiture Reform Act of 2000, Pub. L. No. 106-


     1
       James was prosecuted in the Western District of North
Carolina, No. 3:01-cr-66-2-V, and was initially sentenced to 121
months’ imprisonment. On appeal, a panel of this court remanded
for resentencing. United States v. Munson, 181 F. App’x 368 (4th
Cir. 2006). The district court resentenced James to eighty-seven
months’ imprisonment and we affirmed. United States v. Munson,
299 F. App’x 297 (4th Cir. 2008). James was released from prison
on September 16, 2009.



                                    6
185,       114    Stat.   202     (2000)         (“CAFRA”).       The    complaint     sought

forfeiture of all rights, title, and interest in the Property

under 18 U.S.C. § 981(a)(1)(A) on the basis that the Property

was involved in James’s money laundering conspiracy, a violation

of 18 U.S.C. § 1956(h), and under 21 U.S.C. § 881(a)(7) on the

basis that the Property was used to commit, or to facilitate the

commission of, James’s drug conspiracy, a violation of 21 U.S.C.

§ 846. The complaint listed Ann and James, the Property owners

of record at the time of the filing of the complaint, as those

with       potential      claims       of        interest    in        the   Property.     The

Government         posted     notice        of     the    forfeiture         action   at   the

Property, served Ann, published notice in The Mecklenburg Times

and The San Diego Commerce newspapers, and attempted to serve

James      by     certified     mail     at      his     place    of    incarceration      and

through          his   attorney     in       the       related     criminal      case.     The

Government also filed a notice of lis pendens in California.

       Ann, acting through counsel, filed a claim to the Property,

asserting that she was “a co-owner of the defendant property

pursuant to a Grant Deed filed on 16 January 2002” and attached

a copy of the deed. 2 J.A. 115. In her answer, Ann asserted a


       2
       Ann initially filed her notice of claim on January 20,
2004 and her answer on February 8, 2004. Approximately eight
months later, the Government filed a motion to strike Ann’s
claim on the basis that it failed to comply with procedural
requirements in the Supplemental Rules for Certain Admiralty and
(Continued)
                                                  7
defense alleging that she originally purchased the Property in

1997; that she conveyed it to James in 1999 but continued to

provide funds toward mortgage payments; that James conveyed the

Property to her and himself on January 16, 2002; and that she

had no knowledge of any illegal activities at the property and

was therefore an innocent owner.

      James     did   not    timely     file   a   claim    to    the     Property,

ostensibly    because       the    Government’s    attempts      at     service   of

notice of the forfeiture action through prison officials at the

Mecklenburg County Jail and James’s criminal attorney had been

unsuccessful. Although James eventually learned of the pending

forfeiture through his mother, who had power of attorney over

his   affairs     while     he    was   incarcerated,      he    avers    that     he

erroneously     believed     her    attorney   was   also       representing      his

interests.




Maritime Claims (“Supplemental Rules”) because it was not
verified by her and did not identify her interest in the
defendant Property. Ann did not respond to this motion and the
court struck her claim. Ann subsequently filed a motion for
relief explaining that she had never received the Government’s
motion to strike. The court found that Ann’s failure to respond
was justified and granted the motion. Ann subsequently filed a
response to the Government’s motion to strike, as well as a
motion for leave to file a verified claim. The district court
permitted Ann to file a claim, reasoning that no prejudice to
the Government would result. Ann filed the operable verified
claim on September 22, 2005.



                                         8
     Ann    and    the    Government       filed     cross-motions        for   summary

judgment.      After     Ann    and    the       Government     moved    for    summary

judgment, but before the district court ruled on the motions,

James    filed    several      pro    se   pleadings       in   the   district    court

asserting procedural arguments relating to alleged deficiencies

in the Government’s service of notice. 3 The district court denied

James’s motions, finding that he had failed to timely file a

claim and could not credibly assert that he was an innocent

owner of the Property. James sought reconsideration, which the

district    court      also    denied.     James’s        timely   appeal      from   the

district court’s denial of his motion for reconsideration is now

before us. 4

     Ruling       on   the     cross-motions        for    summary      judgment,     the

district court first determined that the Property was subject to

forfeiture because it had undisputedly been used to facilitate a

criminal drug conspiracy. The court then found that, in order to

     3
        James filed motions to stay, to set aside default
judgment, and for miscellaneous relief. The district court did
not rule on James’s motion to set aside default judgment;
however, no default judgment was entered, so the issue is moot.
     4
       Even if the district court’s order denying James’s motion
for reconsideration was an interlocutory order from which no
appeal lies, James’s appeal of that order is merged into the
final judgment and is open to review on his appeal from that
judgment. See Hellerstein v. Mr. Steak, Inc., 531 F.2d 470, 474
(10th Cir. 1976) (“The general rule is that an interlocutory
order from which no appeal lies is merged into the final
judgment and open to review on appeal from that judgment.”).



                                             9
establish that her current ownership interest in the Property is

not subject to forfeiture as a matter of law, Ann had to prove

that she had been an innocent owner under 18 U.S.C. § 983(d)(3)

when she acquired a partial ownership interest by way of the

2002 grant deed. The district court found that Ann could not

establish innocent ownership under § 983(d)(3) as a matter of

law because, given that James had gifted an interest in the

Property to her after his arrest, she was neither a bona fide

purchaser for value nor was she without knowledge and reasonably

without    cause    to    believe       that       the    Property       was     subject    to

forfeiture.     Accordingly,          the    district          court    entered    an     order

granting     the   Government’s             motion       for    summary        judgment     and

denying Ann’s motion for summary judgment. James timely appealed

the order.

        Meanwhile, Ann moved to alter and amend the order on the

basis    that    the     district      court       had     erroneously          stated    that

James’s role in the drug conspiracy ended in 2000, while the

Government      conceded       that   he     withdrew          from    the   conspiracy     no

later    than   September       1999.       The    district       court      granted      Ann’s

motion in part, amended its order to reflect that James had

participated in the conspiracy “from October 1997 [through] at

least September 1999,” and entered the amended order granting

summary    judgment       to    the     Government.            J.A.     385.     Ann    timely

appealed from the amended order. The district court entered the

                                              10
final judgment of forfeiture in rem on October 22, 2008. 5 Neither

James nor Ann appealed the final forfeiture order. The Property

was sold on August 1, 2009, for $332,000. Approximately $264,304

was applied to pay off the mortgage and other costs. The balance

of   $67,696      is   being      held     pending       resolution       of    these

consolidated appeals.



                                         II.

                                          A.

     We begin by addressing James’s contention that the district

court erred in denying his motion for reconsideration. He argues

that, due to deficiencies in service, the Government failed to

provide him with adequate notice of the forfeiture proceedings.

James    argues   in   the   alternative         that,   even   if   he   had   been

properly served, the district court should have permitted him to

file an out-of-time claim on the basis of excusable neglect.

Legal questions concerning insufficient service of process are

reviewed    de    novo,   while     any        related   factual     findings    are

reviewed for clear error. See United States v. Elmes, 532 F.3d

     5
       Once this judgment was entered, the earlier notices of
appeal by James and Ann, even though premature, are deemed
timely appeals of a final order for purposes of appellate
jurisdiction. See In re Bryson, 406 F.3d 284, 287-89 (4th Cir.
2005). The district court had jurisdiction over the forfeiture
action under 28 U.S.C. §§ 1331 and 1335. We have jurisdiction
under 28 U.S.C. §§ 1291 and 1294.



                                          11
1138, 1141 (11th Cir. 2008). A district court’s decision to deny

permission   to    file    a   claim      “out    of    time”     in    forfeiture

proceedings is reviewed for abuse of discretion. United States

v. Borromeo, 945 F.2d 750, 754 (4th Cir. 1991).

     The   district    court     stated     in   its   Order     denying   James’s

motion for reconsideration that:

          Mr. Munson alleges that his substantive and
     procedural due process rights have been violated. But
     Mr. Munson neither filed a timely claim in this
     matter, nor can he claim to be an innocent owner of
     the property, therefore, he is not a party to this
     case. Further, since he is not a party to this case,
     he has no due process rights in this matter.

          Mr. Munson has filed numerous petitions before
     this Court, all of which have been denied for lack of
     standing. Similar to these previous motions, Mr.
     Munson fails to assert any basis of standing in his
     most   recent   motion,   therefore his   motion  for
     reconsideration is DENIED.

J.A. 330. It appears from the district court’s admonition that

James “neither filed a timely claim, nor can he claim to be an

innocent owner of the property,” and its references to James’s

“fail[ure]   to   assert   any    basis     of   standing,”      that   the   court

collapsed Article III standing requirements with the procedural

requirements for statutory standing under CAFRA and the merits

of   the   “innocent   owner”      affirmative         defense    to    forfeiture

codified at 18 U.S.C. § 983(d). 6


     6
       In other words, James had a due process right to notice of
the forfeiture action by virtue of his facially colorable
(Continued)
                                       12
       In   order     to   contest   a   government      forfeiture    action,    a

claimant must have the Article III standing required for any

action brought in federal court. United States v. $515,060.42 in

United States Currency, 152 F.3d 491, 497 (6th Cir. 1998). In

order to establish Article III standing, a claimant must have a

colorable ownership, possessory or security interest in at least

a portion of the defendant property. See, e.g., United States v.

16510 Ashton, 47 F.3d 1465, 1470 (6th Cir. 1995); United States

v. $321,470.00 in United States Currency, 874 F.2d 298, 302 (5th

Cir. 1989) (explaining that a claimant need not prove the merits

of his underlying claim to achieve standing, but he must claim a

facially      colorable     interest     in    the    seized   property);   United

States v. $122,043.00 in United States Currency, 792 F.2d 1470,

1473   (9th    Cir.    1986).   Both     Ann    and    James   have   Article   III

standing in this case given that they were the owners of record

when the Government filed its forfeiture complaint and during

the pendency of the subsequent forfeiture proceedings until the




ownership interest in the Property arising from the 2002 deed.
The question whether James filed a timely claim (a prerequisite
to statutory standing) is not properly determined without
reference to whether the Government provided adequate notice,
thereby triggering the statutory requirement that James file a
verified claim within fourteen days after execution of process,
as required under Supplemental Rule C(6)(A)(i)(A).




                                         13
sale of the Property. Accordingly, James was entitled to notice

of the forfeiture proceedings against the Property.

       The Government contends that it satisfied all statutory and

constitutional       notice     requirements       in     this     case      by      sending

copies of the complaint and related papers by certified mail

addressed to James at the Mecklenburg County Jail and to Claire

Rauscher, Esq., James’s attorney in the related criminal case,

at   her   office.     James    avers     that    neither        attempt        at     notice

actually reached him. The Government does not assert that James

actually   received        either     mailing,    but     rather      emphasizes         that

actual notice is not required. For the reasons that follow, we

find   that    James       received    adequate    notice        of    the     forfeiture

action and that his attempt to assert a claim by filing a motion

to stay on April 11, 2007, and each of his subsequent attempts,

were untimely.

       CAFRA   provisions        governing        civil     forfeiture            of     real

property provide that “[t]he Government shall initiate a civil

forfeiture     action       against     real     property        by,”     inter        alia,

“serving notice on the property owner, along with a copy of the

complaint.” 18 U.S.C. § 985(c)(1)(C); see also Fed. R. Civ. P.,

Supp. R. G(3)(a) (providing that “[i]f the defendant is real

property, the government must proceed under 18 U.S.C. § 985”).

In     order    to     comport        with     constitutional             due        process

requirements,        the    Government’s       service      of        notice      must    be

                                          14
“reasonably calculated, under all the circumstances, to apprise

the petitioner of the action.” Dusenberry v. United States, 534

U.S. 161, 173 (2002) (citing Mullane v. Cent. Hanover Bank &

Trust Co., 339 U.S. 306, 314 (1950)) (quotation marks omitted).

This analytical framework presents a “straightforward test of

reasonableness under the circumstances,” id. at 167, and does

not require actual notice, id. at 170-71.

     In Dusenberry, the Supreme Court held that the Government

satisfied this “straightforward test of reasonableness” when it

sent notice of forfeiture proceedings by certified mail to the

property owner’s place of incarceration. 534 U.S. at 172-73. The

Government relies upon Dusenberry for the proposition that its

attempt to serve notice on James by sending the complaint via

certified      mail    to     the   Mecklenburg      County   Jail      was     per   se

constitutionally         sufficient,     irrespective         of    whether       James

actually      received      notice.   This    argument    fails      to    recognize,

however, that the particular details of the correctional mail

system   at    issue     in    Dusenberry     were   critical      to     the   Court’s

analysis. 7 In this case, the Government concedes that officials


     7
       The correctional facility in Dusenberry had the following
standard mail-delivery practices: A mailroom staff member would
sign for the certified letter at the post office and it would be
entered into a logbook at the prison; a different staff member,
one assigned to the section of the prison in which the inmate
lived, would sign the letter out from the mailroom; and finally
a staff member would deliver the letter to the prisoner during
(Continued)
                                         15
at     the     Mecklenburg         County     Jail     refused     delivery      of   the

forfeiture complaint in keeping with the institution’s general

policy of refusing letters sent by certified mail. In light of

this       policy,     the    Government’s         attempt    to    serve     James    by

certified mail addressed to him at the jail was not “reasonably

calculated, under all the circumstances” to apprise him of the

forfeiture action. See Nunley v. Dep’t. of Justice, 425 F.3d

1132,       1137     (8th    Cir.     2005)    (“[T]here      is    no    irrebuttable

presumption          that      a      prison’s        internal     mail-distribution

procedures are reasonably calculated to provide notice.”).

       We     need   not     decide    whether       the   Government’s     attempt    to

serve        James    at     his    place     of     incarceration       alone    passes

constitutional muster, however, because the Government also sent

notice of the complaint by certified mail to James’s attorney in

the related criminal case 8 and James had actual knowledge of the




“mail call.” See 534 U.S. at 168-69. The Court determined that
the procedures established by the prison were sufficient for due
process purposes, but never stated that such procedures were
constitutionally obligatory. Id. at 172-73.
       8
       Although we recognize that Supplemental Rule G was not in
effect when the Government attempted to serve notice in this
case, we note that the rule now clearly provides that notice
“may be sent to . . . the attorney representing the potential
claimant with respect to the seizure of the property or in a
related investigation, administrative forfeiture proceeding, or
criminal case.” Fed. R. Civ. P., Supp. R. G(4)(b)(iii)(B)
(effective Dec. 1, 2006).



                                              16
forfeiture proceedings more than one year prior to filing his

initial      pro    se   motion      seeking         to   assert     an    interest       in    the

Property.        See,    e.g.,      United      States     v.     One     Star    Class       Sloop

Sailboat,        458     F.3d      16,     22    (1st      Cir.      2006)       (“A     putative

claimant’s         actual      knowledge        of    a   forfeiture           proceeding      can

defeat       a     subsequent        due      process      challenge,           even     if    the

government botches its obligation to furnish him with notice.”)

(citations omitted). In a letter from James to Ann’s attorney

dated February 2, 2006, he mentioned “the civil suit on the

house,”      J.A.      279,     indicating        that     he     had     knowledge       of    the

forfeiture case no later than that date. Nevertheless, James did

not   file       his    first      pro   se     motion    asserting        a     claim    to    the

Property until April 11, 2007.

      James argues that, even if he received adequate notice, the

district court should have allowed him to file an out-of-time

claim on the basis of excusable neglect. Under Borromeo, “[e]ven

where    a   claimant         is   properly      served,        or   perhaps      has     ‘actual

notice,’ a court may allow a claim to be filed out of time on a

showing of excusable neglect. Fed. R. Civ. P. 6(b)(2).” 945 F.2d

at 753. Relevant factors include:

      when the claimant became aware of the seizure, whether
      the   claimant  was   properly  served,   whether  the
      government would be prejudiced, whether the government
      encouraged the delay or misguided the plaintiff,
      whether the claimant informed the government and the
      court of his interest before the deadline, whether the
      claimant had expended resources preparing for trial,

                                                 17
       the claimant’s good faith, the claimant’s health
       problems,   whether  the   government  complied  with
       procedural rules, and whether the claimant was acting
       pro se.

Id. (citations omitted). While certain of these factors arguably

weigh in favor of allowing James to file an out-of-time claim,

the    district    court    did   not    abuse    its    discretion     in    denying

James’s motion for reconsideration where it correctly concluded

that James could not prevail on the merits. See, e.g., United

States v. Indoor Cultivation Equip., 55 F.3d 1311, 1313 (7th

Cir. 1995) (finding that to prevail upon a motion to set aside a

default judgment in a civil forfeiture case, a party must show

“the existence of a meritorious defense to the original action”)

(citations omitted). James first acquired an ownership interest

in    the   Property   in     1999,    after     he    had   himself   used     it   to

facilitate drug trafficking and money laundering. Thus, he does

not have a colorable innocent owner defense to forfeiture under

either 18 U.S.C. § 983(d)(2) or (d)(3). Accordingly, we affirm

the     district       court’s        denial      of     James’s       motion        for

reconsideration in No. 08-4326.

       Given that James failed to timely file a verified claim to

the Property and is not entitled to file an out-of-time claim,

he lacks statutory standing to challenge the district court’s

Order granting summary judgment to the Government. See Fed. R.

Civ.    P.,   Supp.    Rule    C(6);     United       States   v.   United      States


                                         18
Currency in the Amount of $2,857.00, 754 F.2d 208, 213 (7th Cir.

1985) (“Once the procedural requirements of Rule C(6) are met, a

claimant has standing to defend the forfeiture.”). Accordingly,

in   considering   whether   the     district   court   erred   in    granting

summary judgment to the Government, we need only address whether

the undisputed facts establish that Ann’s property interest is

subject to forfeiture as a matter of law.

                                      B.

       Ann contends that she is entitled as a matter of law to the

“innocent owner” defense to forfeiture in 18 U.S.C. § 983(d)(2)

on the basis that she was the sole owner of the Property for the

duration of the illegal drug activity giving rise to forfeiture

and was unaware of this conduct, and that the district court

accordingly     erred   in     granting    summary      judgment      to    the

Government. Ann argues in the alternative that even if she may

rely only upon her current (joint) ownership interest arising

from the 2002 grant deed, she is nonetheless an innocent owner

as a matter of law under § 983(d)(3) because she took as a bona

fide purchaser for value without knowledge or reason to know of

the illegal activity giving rise to forfeiture. The Government

contends that the district court correctly applied § 983(d)(3),

rather   than   § 983(d)(2),    to    determine   on    the   basis    of   the

undisputed facts that Ann is not innocent owner as a matter of

law.

                                      19
       We review the district court’s grant of summary judgment in

a civil forfeiture action de novo. See United States v. Kanasco,

Ltd., 123 F.3d 209, 210 (4th Cir. 1997). Summary judgment is

appropriate          if     the      “pleadings,               depositions,          answers          to

interrogatories,           and     admissions            on    file,       together       with     the

affidavits, if any, show that there is no genuine issue as to

any    material      fact     and    that       the      moving       party    is    entitled          to

judgment as a matter of law.” Fed. R. Civ. P. 56(c).

       CAFRA governs civil forfeitures to the United States. See

18    U.S.C.    §    981.    Section          983    of       Title   18     sets    forth       rules

governing       civil       forfeiture             proceedings         and     delineates             the

circumstances in which property described in § 981 cannot be

forfeited. See 18 U.S.C. § 983. The initial burden of proof in a

civil forfeiture action “is on the Government to establish, by a

preponderance of the evidence, that the property is subject to

forfeiture.” Id. § 983(c)(1). If the government’s theory is that

the property was used in or facilitated the commission of a

criminal    offense,         as    in       this    case,      the    government          must    also

prove    that       there     was       a     substantial        connection         between        the

property    and      the     offense.         Id.       § 983(c)(3).        Section       983(d)(1)

sets    forth       the    basic     principle           that     “[a]n       innocent      owner’s

interest    in      property       shall       not      be    forfeited       under       any    civil

forfeiture       statute,”         and      further          provides      that     the    claimant

shall    have       the     burden       of    proving         innocent       ownership          by     a

                                                   20
preponderance            of    the     evidence.       Id.     § 983(d)(1).         Thus,       the

Government has the initial burden of proving that the property

is subject to forfeiture and the claimant bears the burden on

the affirmative defense of innocent ownership.

       Ann       does    not    dispute       that   the       Property     is     subject       to

forfeiture on the basis that James and others used the house to

package      marijuana          in     connection       with     the     drug      trafficking

conspiracy. 9 See United States v. Herder, 594 F.3d 352, 364 (4th

Cir.       2010)        (stating       that     substantial           connection         may    be

established         “by       showing    that    use      of   the     property         made   the

prohibited         conduct      less    difficult       or     more    or   less    free       from

obstruction         or    hindrance”)         (citation        and     internal         quotation

marks      omitted).          Thus,     the   district         court     did      not    err     in

concluding that the Property was subject to forfeiture (i.e.,

that the Government established its prima facie case), and the

burden      of    proof       shifted    to   Ann    to      establish      the    affirmative

defense of innocent ownership.

       The statutory innocent owner defense in CAFRA is divided

into two parts, so that property interests in existence at the


       9
       Although the district court did not expressly find that
there was a “substantial connection” between the Property and
the criminal activity giving rise to forfeiture, James admitted
at sentencing that he and others packaged marijuana at the house
and Ann has also conceded that the Property was used in drug
trafficking.



                                                21
time the illegal conduct giving rise to forfeiture took place

(“pre-existing interests”) are treated differently from property

interests acquired after the illegal conduct giving rise to the

forfeiture took place (“after-acquired interests”). With respect

to     pre-existing       interests,     CAFRA        provides   that     the     term

“innocent owner,” means an owner who

       (i) did not know           of    the     conduct    giving   rise     to
       forfeiture; or

       (ii) upon learning of the conduct giving rise to the
       forfeiture, did all that could reasonably be expected
       under the circumstances to terminate such use of the
       property.

18   U.S.C.    §   983(d)(2)(A).       Regarding      after-acquired      interests,

CAFRA provides that the term “innocent owner” means a person

who,    at   the   time    that   person       acquired    the   interest    in     the

property

       (i) was a bona fide purchaser or seller for value
       (including a purchaser or seller of goods or services
       for value); and

       (ii) did not know and was reasonably without cause to
       believe that the property was subject to forfeiture.

18 U.S.C. § 983(d)(3)(A).

       Ann    asserts     that    she    is     an    innocent    owner     under     §

983(d)(2)(A)(i)-(ii)        because      she    has    a   pre-existing     interest

arising from her sole ownership of the Property from July 1997

until October 1999, the undisputed period of James’s illegal

drug trafficking and money laundering activity, and because it

is undisputed that she had no knowledge of the conspiracy during

                                         22
that time. The district court recognized that “[t]he conditions

one must meet to be an innocent owner depend on whether the

claimant’s property interest was acquired before or after the

illegal conduct giving rise to the forfeiture took place,” but

reasoned   that   Ann   “clearly   gave   up   her    legal   interest   in

existence at the time of the initial criminal activity at the

property because she quitclaimed the deed to [James] in 1999.”

United States v. Real Prop. Located at 6124 Mary Lane Dr., San

Diego, Cal., No. 3:03-cv-580, 2008 WL 3925074, at * 2 (W.D.N.C.

Aug. 20, 2008). Accordingly, the court determined that, in order

to establish innocent ownership, Ann must satisfy the conditions

set forth in § 983(d)(3). We agree.

     As    a   threshold   requirement    under      § 983(d),   Ann   must

establish that she is an “owner” of the defendant property. 10

Indeed, “[i]f the claimant cannot establish that she has the

required ownership interest, then her innocence is irrelevant.”

Stefan D. Cassella, The Uniform Innocent Owner Defense to Civil


     10
        The requirement that a claimant establish an ownership
interest in the defendant property as part of her affirmative
defense to forfeiture is distinct from her duty to establish
that she has standing to contest the forfeiture. As set forth
above, to establish standing, a claimant need only show that she
has a facially colorable interest in the proceedings sufficient
to satisfy the case-or-controversy requirement under Article III
of the United States Constitution. See $515,060.42 in United
States Currency, 189 F.3d at 35. Thus, a claimant may have
standing without being an owner of the property.



                                   23
Asset       Forfeiture,      89    K.Y.   L.    J.    653,   672     (2001)    (internal

citations       omitted).         Section      983(d)(6)(A)        provides    that    an

“owner” is “a person with an ownership interest in the specific

property [under state law] sought to be forfeited, including a

leasehold, lien, mortgage, recorded security interest, or valid

assignment of an ownership interest.” 18 U.S.C. § 983(d)(6)(A)

(emphasis       added). 11    It    is      unsurprising,      then,    that    in    her

verified claim filed on September 22, 2005, Ann identified the

deed of January 16, 2002 as the legal basis for her asserted co-

ownership of the Property. As the Government points out, “even

at the foundational level of state property law, neither James

nor Ann has showed a colorable existing ownership interest in

the defendant property based on the 1997 grant deed.” Govt’s Br.

at    32.    Rather,   as     the    district        court   found,    this    ownership

interest was extinguished when Ann quitclaimed the Property to

James on September 21, 1999, well before the Government filed

its     forfeiture        complaint.         Accordingly,       in     asserting      the

affirmative defense of innocent ownership, Ann must rely on the




       11
        Conversely, an “owner” does not include “(i) a person
with only a general unsecured interest in, or claim against, the
property 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.”   18  U.S.C.   §
983(d)(6)(B).



                                             24
partial ownership interest James conveyed to her by way of the

2002 grant deed.

     Given that the 2002 deed gave rise to “a property interest

acquired after the conduct giving rise to the forfeiture has

taken place,” Ann must establish innocent ownership under 18

U.S.C. § 983(d)(3). As set forth above, § 983(d)(3)(A) requires

that Ann establish (i) she was a bona fide purchaser for value

(“BFP”) and (ii) she did not know and was reasonably without

cause to believe that the property was subject to forfeiture

when she acquired a partial ownership interest in 2002. “Bona

fide purchaser for value” is not defined in CAFRA. Accordingly,

courts often turn to the definition in the criminal forfeiture

statute, which “includes all persons who give value . . . in an

arm’s length transaction with the expectation that they would

receive equivalent value in return.” 18 U.S.C. § 853(n)(6)(b).

Based     upon   the   undisputed   facts   in   the   record,   Ann   cannot

satisfy this standard.

     The record indicates that Ann did not give value for her

partial ownership interest in the Property. Tellingly, the 2002

deed of trust states that it was a “GIFT-NO CONSIDERATION.” 12 In


     12
       The word “GIFT” was handwritten, while “NO CONSIDERATION”
was typed. The deed also contains boilerplate language stating
“FOR A VALUABLE CONSIDERATION,” but the handwritten “GIFT”
notation clearly indicates the true nature of the transaction.



                                     25
addition,    Ann      testified     at   her      deposition     that   she    did    not

remember    discussing      payment        with    James    at   the    time   of     the

transaction. Although she apparently often gave or loaned her

son money, there is no evidence that any of these gifts or loans

were part of a bargained-for exchange related to the conveyance

of an interest in the Property in 2002. Ann concedes that a BFP

must part with something of value in exchange for the property,

but argues that she satisfied this requirement by co-signing as

a   borrower     on   the   Deed    of     Trust    for    $240,000,     and   thereby

becoming jointly liable for that amount. The Government argues

that Ann’s undertaking of this legal obligation does nothing to

demonstrate that the conveyance was an arm’s length transaction

and, in fact, supports an opposite conclusion. See Govt’s Br. at

42 (“Ann’s liability on the IndyMac loan confirms that there was

no arm’s length bargain with her son, since she became jointly

liable     for   a    $240,000      debt     without       receiving     any   of     the

additional funds that were taken out of the equity in the house;

all the money went to him”). We agree with the district court

that Ann’s assumption of joint liability for the outstanding

mortgage debt does not establish that she gave value in an arm’s

length transaction. Rather, the ineluctable inference from the

undisputed facts is that like most any loving parent, she was

doing her level best to help her offspring, who faced felony

prosecution      in   federal      court.    Accordingly,        Ann    is   unable    to

                                            26
establish that she is a BFP and cannot prevail on the innocent

owner defense as a matter of law.

     Having concluded that the district court correctly found

that Ann was not a BFP when she acquired her current ownership

interest in the Property by way of the 2002 grant deed, we need

not decide whether she “did not know and was reasonably without

cause to believe that the property was subject to forfeiture,”

as required under 18 U.S.C. § 983(d)(3)(A)(ii).



                                III.

     For the reasons set forth herein, James’s appeal from the

district court’s grant of summary judgment, docketed as No. 08-

2065, is dismissed. Ann’s appeal from the district court’s grant

of summary judgment, docketed as No. 08-2159, and the district

court’s denial of James’s motion for reconsideration, docketed

as No. 08-4326, are affirmed.

                                             No. 08-2065 DISMISSED
                                 Nos. 08-2159 and 08-4326 AFFIRMED




                                 27
