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In re Property Seized from Li

Supreme Court of Iowa

April 27, 2018

IN THE MATTER OF PROPERTY SEIZED FROM BO (BRIAN) LI, NA TIAN, and WEI TIAN. STATE OF IOWA, Appellant.

          Appeal from the Iowa District Court for Dubuque County, Michael J. Shubatt, Judge.

         State appeals judgment dismissing civil in rem forfeiture action against spa advertising massages. AFFIRMED.

          Thomas J. Miller, Attorney General, Louis S. Sloven, Assistant Attorney General, Ralph Potter, County Attorney, and Brigit Barnes, Assistant County Attorney, for appellant.

          Christopher M. Soppe of Pioneer Law Office, Dubuque, for appellees.

          WATERMAN, Justice.

         This appeal presents a question of statutory interpretation: whether practicing massage therapy without a license constitutes a serious misdemeanor. Police, responding to complaints by neighbors suspecting prostitution, conducted surveillance on a spa in Dubuque advertising massage services. Police raided the business and seized cash, cell phones, and other property. The State filed a civil in rem forfeiture action alleging the cash was the proceeds of an unlicensed massage business or prostitution. Following a bench trial, the district court found the State failed to meet its burden to prove prostitution and ruled that practicing massage therapy without a license was not a crime and therefore could not support forfeiture. The district court dismissed the forfeiture action and ordered the cash returned to the claimants. The district court, however, denied the claimants' application for return of the other property and allowed the State to retain that property pursuant to its ongoing criminal investigation. The State appealed, and we retained the case. The claimants did not cross-appeal.

         For the reasons explained below, we hold that practicing massage therapy without a license is not a serious misdemeanor. We affirm the district court's ruling finding that the State failed to prove prostitution and affirm the district court's judgment returning the cash to the claimants. Because the claimants failed to file a cross-appeal, we do not review the district court's ruling allowing the State to retain the remaining property while it completes its investigation.

         I. Background Facts and Proceedings.

         The claimants, Bo Li, Wei Tian, and Na Tian all live together in Dubuque. Wei Tian and Na Tian are sisters, and Wei Tian is dating Bo Li. Li owns Therapeutic Spa, located in Dubuque. Li, Wei Tian, and Na Tian all work at Therapeutic Spa, which provides massages and accupressure to its clients. None of them have a massage therapy license. When Li purchased the business from Hong Zhou in September 2016, he kept the name because he thought it "promote[d] health" and because he could save money by retaining the signage. Wei Tian and Na Tian sell dresses online to make additional money. They planned to open a dress store in Dubuque.

         In the summer of 2016, months before Li purchased Therapeutic Spa, police began investigating the business after neighbors complained of hearing "sexual-type noises" inside. The police found Therapeutic Spa listed on Craigslist and on "Rubmaps, " a website which reviews businesses that offer sex services. Claimants learned that the business was listed on Rubmaps when they applied for a credit card machine. They wrote and emailed Rubmaps requesting that the business information be removed from that website.

         City of Dubuque police officers conducted surveillance of the business over several weeks. The daily surveillance varied from several hours to the entire day. The police saw only male customers entering the business, though Wei Tian later testified that the spa kept a list of customers and identified names of female customers.

         One night, the police observed two females remove a trash bag from the spa, ignore the dumpster behind the business, and dispose of the garbage at the claimants' shared residence. The police seized the trash bag and found strips of toilet paper that appeared to be soiled with semen and fecal matter. They sent the toilet paper to the Iowa Division of Criminal Investigation (DCI) Criminalists Laboratory for analysis. Criminalists at the DCI laboratory confirmed the presence of semen but did not run a DNA test.

          Claimants testified that they threw away the trash at their personal residence because the hair salon next door paid for the dumpster behind the building and did not allow them to use it. One officer testified that he never saw the women use the dumpster behind the building. Additionally, Wei Tian claimed that she and Li engaged in sexual relations at the business, so the semen on the toilet paper would have come from Li.

         In February 2017, Dubuque police officers obtained and executed a search warrant for the business and the claimants' apartment. During the search, officers seized $16, 278 from Li, $4341 from Na Tian, and $858 from Wei Tian. They also seized electronic devices (including phones and an iPad'), several prepaid cards, and paper records.

         The State filed in rem forfeiture complaints against Li, Wei Tian, and Na Tian pursuant to Iowa Code sections 809A.13 and 809A.8(1)(a)(2) (2017), seeking to forfeit the seized cash. In each complaint, the State alleged that the "[p]roperty was acquired from or is proceeds of a crime." Li, Wei Tian, and Na Tian each filed an answer to the in rem forfeiture complaints, claiming that "[t]he money was not the proceeds from any criminal activity." The claimants also filed applications for return of the other property that had been seized.

         In April, an undercover officer conducted a sting operation that resulted in the arrest of a woman who solicited the officer for sex at a hotel in Dubuque. Upon their search of the woman's hotel room, officers found a business card for Therapeutic Spa in the woman's purse.

         On May 9, the district court held a civil forfeiture hearing, as well as a hearing on the claimants' applications for return of seized property, and granted the parties additional time to file briefs. The State claimed the cash was forfeitable as proceeds of either prostitution or the unlicensed practice of massage therapy. The State argued that practicing massage therapy without a license is a serious misdemeanor and therefore could serve as the predicate offense to forfeiture. The claimants argued that the unlicensed practice of massage therapy was not a forfeitable offense. They also contended that the State failed to prove the cash was proceeds from prostitution.

         The district court entered its ruling on July 28. The court determined that practicing massage therapy without a license is not a serious misdemeanor and therefore cannot support forfeiture. The court reached that decision by determining that Iowa Code section 152C.4 provides a specific penalty-a civil fine-for practicing massage therapy without a license. As a result, section 147.86, which provides that any violation of a provision of that subtitle constitutes a serious misdemeanor unless a specific penalty is otherwise provided, does not apply.

         The district court also found that the State had not proved by a preponderance of the evidence that the seized funds were the proceeds of prostitution, so the money could not be forfeited on that ground. The court acknowledged it was suspicious of the claimants' actions. But the court explained that "forfeiture is a significant exercise of the State's power[, ] and it requires ...


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