US judge ponders man's jailing over 'whopper' in civil contempt case

SANTA ANA -- A court-proclaimed "whopper" about a duffel bag of missing money has presented a federal judge with a unique legal conundrum: Did the jailing of the money's owner for six years on a civil contempt charge violate his constitutional rights?

Released from jail in 2016, Zulmai Nazarzai maintained in testimony this week he doesn't know what happened to the $360,540 that led to his confinement, but he told U.S. District Judge Andrew J. Guilford he believes his former fiancé's betrayed him.

"Do you have any suspicions that she might now be enjoying that money with her new husband?" Guilford asked.

"I believe my love was taken advantage of," Nazarzai replied.

The unusual bench trial ended Friday with closing arguments that took the form of a question and answer session between the veteran jurist and attorneys sorting through what Guilford described as years of chaos rooted in various trial court rulings and appellate reviews. He referenced debtors' prisons and differentiated between refusal to disclose the location of the cash and the inability to pay.

"I think sometimes we blur the two in talking about civil contempt, and we forget that a man is in jail and denied his freedom based on his inability to pay," Guilford. "I think that inability needs to be constantly reviewed."

Nazarzai's lawyers, L. Thomas Murphy and Afshin Eftekhari, want damages from Orange County and now-retired Sheriff Sandra Hutchens, who operated the jail, for violating state Penal Code 19.2, which sets the maximum jail sentence at one year.

But the county's lawyer, Scott A. Martin of Koeller, Nebeker, Carlson & Haluck LLP, argued Friday neither is liable for Nazarzai's incarceration because Nazarzai was in jail by court order. Nazarzai v. County of Orange et al., 17CV-01884 (C.D. Cal., filed Oct. 26, 2017).

"The sheriff is duty bound by California statutory law to obey those orders if they appear to be regular on their face," and the orders were, Martin said. "It doesn't make the jailer liable for the acts of the judge that says take someone into custody."

Nazarzai went to jail in 2010 after now-retired Orange County Superior Court Judge Andrew P. Banks found him guilty of civil contempt for the missing money, which Nazarzai said disappeared from his now-ex fiancé's car after a crash. Nazarzai was to turn over the cash to a receiver for the duration of civil proceedings in a state attorney general's lawsuit over an alleged mortgage scheme involving his company, Statewide Financial Group Inc.

After extensive litigation, the 4th District Court of Appeal in 2016 ordered Banks to consider whether Nazarzai had the ability to comply with the order to turn over the cash, whether it was likely continued confinement would make him turn the cash over and whether his incarceration was punitive rather than coercive. Banks ordered him released in November 2016 after determining his confinement was approaching punitive.

Guilford said Friday he agrees with Banks' assessment that Nazarzai's story about the missing money is a "whopper," but Guilford said Nazarzai could have lost his ability to pay through other circumstances during his six years in jail.

"That doesn't mean someone else doesn't take the money. That doesn't mean a potential fiancé doesn't decide to marry someone else and take the money," Guilford said. "So how often does the trial court need to test inability to pay?"

Guilford, a former civil attorney at Sheppard, Mullin, Richter & Hampton LLP, indicated he's wrestling with various legal complexities, including the use of turnover orders to enforce civil judgments. He's repeatedly questioned whether the $360,540 was to be considered part of a $4 million judgment in the civil lawsuit against Nazarzai's company.

"Are there certain requirements as to when a turnover order is allowed? Or did I waste 40 years of my practice holding a judgment that I considered unenforceable, and never went to court and said, 'Throw this guy in jail'?" he asked.

The judge also asked Martin if Nazarzai had a remedy if he'd been ordered jailed for 50 years.

"At some point, some court is going to fix that," Martin answered.

"And what if they don't?" Guilford asked.

"If that's the case, then the system has failed, but it is not the county's responsibility to pay for Nazarzai because the system which the county does not control or own ... has gotten it wrong," Martin said. "It may not seem fair. It may not seem equitable. But it is legally correct."

Guilford took the case under submission.