IN THE SUPREME COURT OF IOWA
No. 17–1237
Filed 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.
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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
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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.
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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
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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 more than a suspicion.” The court denied all three of the
State’s in rem forfeiture complaints.
Finally, the court denied the claimants’ applications for return of the
noncash assets, concluding they were properly retained by law
enforcement under Iowa Code section 809.5 because they were “required
for use in an investigation.” The court acknowledged that law enforcement
was experiencing difficulty because the data on the electronic devices was
in Mandarin, so the time the State retained the assets was reasonable.
The State appealed, and we retained the appeal.
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II. Standard of Review.
“We review questions of statutory construction . . . for errors at law.”
State v. Iowa Dist. Ct., 888 N.W.2d 655, 662 (Iowa 2016) (quoting Dykstra
v. Iowa Dist. Ct., 783 N.W.2d 473, 477 (Iowa 2010)). We review forfeiture
proceedings “for correction of errors at law.” In re Prop. Seized for
Forfeiture from Young, 780 N.W.2d 726, 727 (Iowa 2010). In a forfeiture
proceeding, “[w]e examine the evidence in the light most favorable to the
district court judgment and construe the district court’s findings liberally
to support its decision.” In re Prop. Seized from Chiodo, 555 N.W.2d 412,
414 (Iowa 1996). The district court’s “findings are binding on us if
supported by substantial evidence.” Id. The “possibility that inconsistent
conclusions might be drawn from the same evidence does not preclude a
finding from being supported by substantial evidence.” In re Prop. Seized
from DeCamp, 511 N.W.2d 616, 619 (Iowa 1994).
III. Analysis.
We must decide whether the district court erred in rejecting the
State’s forfeiture claims. The State argues the defendants’ cash is subject
to forfeiture as proceeds of a crime because the seized cash is the proceeds
of an unlicensed massage business, a prostitution operation, or both.
Under Iowa Code section 809A.4(3), “[a]ll proceeds of any conduct giving
rise to forfeiture” are subject to forfeiture. The conduct that may give rise
to forfeiture includes “[a]n act or omission which is a public offense and
which is a serious or aggravated misdemeanor or felony.” Iowa Code
§ 809A.3(1)(a). The State has “the initial burden of proving the property is
subject to forfeiture by a preponderance of the evidence.” Id. § 809A.13(7)
(2017). 1 “If the state so proves the property is subject to forfeiture, the
1In 2017, the legislature changed the state’s burden of proof to clear and
convincing evidence. 2017 Iowa Acts ch. 114, § 10 (codified at Iowa Code § 809A.13(7)
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claimant has the burden of proving that the claimant has an interest in
the property which is exempt from forfeiture . . . by a preponderance of the
evidence.” Id.
“Forfeitures are not favored under the law[,] and this court strictly
construes statutes allowing forfeitures.” In re Prop. Seized for Forfeiture
from Williams, 676 N.W.2d 607, 612 (Iowa 2004). Forfeiture statutes have
faced increasing criticism in recent years. See, e.g., Leonard v. Texas, ___
U.S. ___, ___, 137 S. Ct. 847, 848–49 (2017) (Thomas, J., statement
respecting denial of certiorari) (acknowledging that civil forfeiture
operations—which have become more “widespread and highly profitable”
in recent decades—“frequently target the poor and other groups least able
to defend their interests in forfeiture proceedings” and expressing
skepticism over the constitutionality of the modern practice of civil
forfeiture); People ex rel. Hartrich v. 2010 Harley-Davidson, ___ N.E.3d ___,
___, 2018 WL 915075, at *14 (Ill. Feb. 6, 2018) (Karmeier, C.J., dissenting)
(emphasizing that “courts must be vigilant in safeguarding the rights of
innocent persons who have legitimate interests in the property at issue”).
Against this backdrop, we turn to the issues presented in this appeal.
A. Whether Practicing Massage Therapy Without a License Is a
Serious Misdemeanor Under Iowa Code Section 147.86. We must
decide whether the unlicensed practice of massage therapy is a serious
misdemeanor. This is a question of statutory interpretation. We begin
with the statutory text. McGill v. Fish, 790 N.W.2d 113, 118 (Iowa 2010)
(2018)). The amendment also changed the claimant’s burden of proof so that the claimant
is only required to make a prima facie showing that an exemption exists. Id. Finally, if
the claimant makes such a showing, the amended statute requires the state to prove by
clear and convincing evidence that the exemption does not apply. Id. This amendment
only applies to forfeiture proceedings that began on or after July 1, 2017, and, therefore,
does not apply to this case, in which the forfeiture complaint was filed February 23, 2017.
See 2017 Iowa Acts ch. 114, § 15; see also Iowa Code § 3.7(1) (2017).
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(“[O]ur starting point in statutory interpretation is to determine if the
language has a plain and clear meaning within the context of the
circumstances presented by the dispute.”).
Under Iowa Code section 147.2, “[a] person shall not engage in the
practice of . . . massage therapy . . . unless the person has obtained a
license for that purpose from the board for the profession.” Iowa Code
§ 147.2(1). Later in that chapter, the Code states, “Any person violating
any provision of this subtitle, except . . . where a specific penalty is
otherwise provided, shall be guilty of a serious misdemeanor.” Iowa Code
§ 147.86 (emphasis added). Here, a specific penalty is otherwise provided.
Subtitle 3 of Title IV of the Iowa Code encompasses both chapter 147
and chapter 152C, which deals exclusively with massage therapy. Iowa
Code section 152C.5 prohibits the unlicensed practice of massage
therapy. 2 Section 152C.4 provides a specific civil penalty for practicing
massage therapy without a license:
The board may, by order, impose a civil penalty upon a person
who practices as a massage therapist without a license issued
under this chapter or a person or business that employs an
individual who is not licensed under this chapter. The penalty
shall not exceed one thousand dollars for each offense. Each
day of a continued violation after an order or citation by the
board constitutes a separate offense, with the maximum
penalty not to exceed ten thousand dollars.
Id. § 152C.4(1).
2Section 152C.5 provides,
The practice of massage therapy as defined in section 152C.1 is
strictly prohibited by unlicensed individuals. It is unlawful for a person to
engage in or offer to engage in the practice of massage therapy, or use in
connection with the person’s name, the initials “L.M.T.” or the words
“licensed massage therapist”, “massage therapist”, “masseur”,
“masseuse”, or any other word or title that implies or represents that the
person practices massage therapy, unless the person possesses a license
issued under the provisions of section 152C.3.
Iowa Code § 152C.5.
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The language of section 147.86 is unambiguous: a person who
violates a provision of subtitle 3 is guilty of a serious misdemeanor, “except
where a specific penalty is otherwise provided.” Id. § 147.86 (emphasis
added). Section 152C.4 provides for a civil penalty for practicing massage
therapy without a license. Id. § 152C.4. The district court concluded this
civil penalty exempts the unlicensed practice of massage therapy from
criminal liability under section 147.86. We agree. Under the plain
meaning of these statutes, the unlicensed practice of massage therapy is
not a serious misdemeanor and, therefore, cannot be the predicate offense
for forfeiture.
Our conclusion is reinforced by other licensing provisions, which
show that when the legislature chooses to criminalize practicing without a
license, it says so expressly. For example, as the district court noted,
chapter 152D provides that “[i]t is unlawful for a person to engage in the
practice of athletic training . . . unless the person is licensed pursuant to
this chapter.” Id. § 152D.7(2). The next subsection expressly provides, “A
person who violates a provision of this chapter is guilty of a serious
misdemeanor.” Id. § 152D.8. Reading the statutes together, we can
conclude that if the legislature had intended to make practicing massage
therapy without a license a serious misdemeanor, it would have said so in
chapter 152C, as it did in section 152D.8 for athletic trainers. See
Shumate v. Drake Univ., 846 N.W.2d 503, 512 (Iowa 2014) (determining
legislative intent by noting “closely related chapters demonstrate that
when the legislature ‘wished to provide a private damage remedy, it knew
how to do so and did so expressly’ ” and acknowledging that the legislature
did not do so in the provision at issue (quoting Touche Ross & Co. v.
Redington, 442 U.S. 560, 572, 99 S. Ct. 2479, 2487 (1979))); Oyens Feed
& Supply, Inc. v. Primebank, 808 N.W.2d 186, 193 (Iowa 2011) (“The
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legislature selectively incorporated the prefatory clause, ‘Except as
provided in section 570A.2, subsection 3,’ into section 570A.5 subsection
(2) but not subsection (3). We presume this clause was located in
subsection (2) for a reason—to apply the affirmative defense solely to the
equal priority lien recognized in that subsection.” (Emphasis added.));
Freedom Fin. Bank v. Estate of Boesen, 805 N.W.2d 802, 812 (Iowa 2011)
(relying on selective placement and omission of phrase in related statutes
to determine meaning).
The State suggests the words “strictly prohibited” and “unlawful” as
used in section 152C.5 show the legislature intended the unlicensed
practice of massage therapy to be a serious misdemeanor. We disagree.
The legislature also used the word “unlawful” in section 152D.7(2).
Interpreting the use of the word “unlawful” to automatically make an act
a serious misdemeanor would render section 152D.8 surplusage. See
State v. Nall, 894 N.W.2d 514, 518 (Iowa 2017) (“[W]e try to interpret
statutes in a way that avoids rendering parts of them superfluous.”
(quoting State v. Merrett, 842 N.W.2d 266, 275 (Iowa 2014))). 3
Under the State’s interpretation, a friend without a license for
massage therapy who exchanges a backrub for ten dollars would be
committing a serious misdemeanor punishable by a one-year jail sentence.
The State’s statutory interpretation depends on a finding of ambiguity and
would violate “the rule of lenity, which guides us to resolve ambiguous
criminal statutes in favor of the accused.” State v. Hagen, 840 N.W.2d
140, 146 (Iowa 2013). By contrast, our holding serves the purposes of the
rule of lenity: “providing fair notice that conduct is subject to criminal
3The State also contends the legislative history supports the conclusion that the
unlicensed practice of massage therapy is a serious misdemeanor. The district court
determined that the legislative history is inconclusive. We reach the same conclusion
and rely on our textual analysis instead.
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sanction” and “promoting separation of powers by ensuring that crimes
are created by the legislature, not the courts.” State v. Hearn, 797 N.W.2d
577, 585 (Iowa 2011). 4 The legislature is free to criminalize the unlicensed
practice of massage therapy but has not done so yet.
B. Whether the District Court Erred in Finding the State Failed
to Meet Its Burden of Proving the Seized Funds Are Proceeds of
Prostitution. We next consider whether the district court erred in finding
that the State did not meet its burden of proving that the seized funds are
proceeds of prostitution. 5 The district court concluded,
[F]orfeiture is a significant exercise of the State’s power[,] and
it requires more than a suspicion. It requires that the State
prove by a preponderance of the evidence that the money it
seized is the proceeds of an act constituting a serious
misdemeanor, aggravated misdemeanor or felony. The State
has not met this burden.
The State acknowledges this “heavy burden” but argues that “the
circumstantial evidence of prostitution is simply overwhelming.” We
disagree. The State offered no direct testimony by an undercover officer
or customer that sex was for sale at the spa. The claimants denied they
engaged in prostitution and had plausible explanations for the evidence
relied upon by the State. We must view the evidence in the light most
favorable to the district court judgment. In re Prop. Seized from Chiodo,
555 N.W.2d at 414. The district court’s factual findings supported by
substantial evidence are binding on appeal. Id. The “possibility that
inconsistent conclusions might be drawn from the same evidence does not
4When interpreting statutes, we turn to the rule of lenity as a last resort. State v.
Velez, 829 N.W.2d 572, 585 (Iowa 2013) (“[W]e only invoke the rule of lenity after we have
‘exhausted all interpretive techniques.’ ” (quoting Hearn, 797 N.W.2d at 586)); see also
Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal Texts 197
(2012) (“[T]he rule of lenity applies only when a reasonable doubt persists after the
traditional canons of interpretation have been considered.”).
5Prostitution is an aggravated misdemeanor under Iowa Code section 725.1.
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preclude a finding from being supported by substantial evidence.” In re
Prop. Seized from DeCamp, 511 N.W.2d at 619. We review the record to
evaluate the State’s claim that it proved prostitution by overwhelming
evidence.
The State notes that Li did not change the name of the spa after
purchasing it, despite knowing that, under the previous owner, the spa
was “tied to maybe something . . . to do with sexual things.” Additionally,
the reputation of Therapeutic Spa made it more difficult for the claimants
to get a credit card machine. But Li provided plausible reasons for keeping
the name: he thought it “promote[d] health,” and it allowed him to save
money by not having to purchase new signs.
The listing of Therapeutic Spa on Rubmaps also does not
conclusively establish that the claimants engaged in prostitution; the
business was originally listed there before Li took ownership, and he
testified he attempted to remove the spa’s business information from the
website.
The State points out that one Rubmaps user, who reviewed the spa
before Li took ownership, also left a review of a massage by “Alice” at
Therapeutic Spa after Li purchased the business. The schedules
presented by the claimants referred to Wei Tian and Na Tian as “Jess” and
“Alice,” respectively. Two subsequent reviews were written by premium
Rubmaps members (members who pay monthly or yearly fees to access
reviews and ratings of businesses on the website). The State suggests that
these premium members “did not see anything in the review about ‘Alice’
that had dissuaded them from visiting Therapeutic Spa.” The State further
speculates that the members would have “declin[ed] to visit any massage
parlor that was receiving reviews . . . that cautioned that sexual contact
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with masseuses was prohibited.” The district court was not required to
credit this hearsay evidence as proving prostitution.
The State notes that officers who conducted surveillance testified
that only male customers were entering the spa. But the police did not
conduct surveillance around the clock. Wei Tian testified that the spa kept
a list of customers and identified female customers. A detective testified a
male customer reported sexual activity at the spa. The customer did not
testify; nor did the neighbors who complained they heard sexual noises
there. The district court could give such hearsay no weight.
The State also argues the disposal of trash at a personal residence—
instead of using the dumpster near the spa—is probative of guilt, as is the
presence of semen on toilet paper found in the spa’s garbage. If the semen
on the toilet paper in the trash was from Li, as Wei Tian testified, “there
would be no need for clandestine disposal.” Yet Wei Tian testified that the
hair salon next to the spa owned the dumpster and did not let the spa use
it. Their innocent explanations for this evidence are plausible. Credibility
determinations are for the district court as the finder of fact.
The district court found the cash in the claimants’ possession to be
“most compelling,” noting that the claimants had a bank account into
which they could have deposited the funds. A detective testified that
keeping a large amount of cash at a residence instead of a bank account
“is an indicator that there is potential money laundering going on or . . . is
an attempt to hide the assets of [a] business.” But the district court
concluded, “[T]he State did not establish to the Court’s satisfaction that
any laundering was occurring or that the seized money was tied to a
specific criminal act or acts.” At the hearing, Wei Tian testified that the
claimants were going to deposit the cash into a new account for the dress
store they planned to open. She also provided an explanation for why the
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claimants did not deposit the money in Therapeutic Spa’s existing bank
account: she believed transferring large sums of money from an existing
account to a new account “would become a tedious process because there
are daily limits as to how much you can take out.” Moreover, the claimants
experienced delays in their effort to obtain a credit card machine. 6
The district court found that the State failed to meet its burden to
prove the seized cash was the proceeds of prostitution. That finding is
supported by substantial evidence. Viewing the evidence in the light most
favorable to the district court’s judgment, we must affirm.
C. Whether the District Court Properly Denied Claimants’
Applications for Return of Seized Property. The district court ruled
that the State could retain the noncash property (including the cell phones
and iPad™) for its ongoing criminal investigation pursuant to Iowa Code
section 809.5. The district court determined that “law enforcement was
making a reasonable effort to conclude the investigation in a timely
manner” given delays translating data on the electronic devices in
Mandarin. The claimants did not file a cross-appeal of that adverse ruling.
See Iowa R. App. P. 6.101(2)(b) (providing that “any notice of cross-appeal
must be filed within the 30-day limit for filing a notice of appeal, or within
10 days after the filing of a notice of appeal, whichever is later”). For that
reason, claimants failed to preserve this issue for our review, and we
decline to reach it. Hagen, 840 N.W.2d at 144 n.3 (“Hagen did not file an
appeal or cross-appeal on the issue of the underlying tax due of $10,355
as determined by the district court. Therefore, this issue has not been
preserved for appeal.”); Ten Hagen v. DeNooy, 563 N.W.2d 4, 10 (Iowa Ct.
6The district court incorrectly found that the claimants were “forced to deal in
cash” because they had not yet obtained a credit card machine. But the record shows
the claimants were able to obtain a credit card machine after a delay.
15
App. 1997) (“It cannot go unnoticed that plaintiff did not file a cross-appeal
in this matter. Plaintiff was the unsuccessful party when the case was
tried on the merits; thus, we do not believe error has been adequately
preserved on this issue for our review.”).
IV. Disposition.
For these reasons, we affirm the judgment of the district court
denying the State’s in rem forfeiture action and ordering return of the cash
to the claimants, while allowing the State to retain the phones, computers,
and paper records pending completion of its criminal investigation.
AFFIRMED.
All justices concur except Hecht, J., who takes no part.