August 24, 2019

Tenth Circuit: Government Lacks Authority to Garnish Retirement Accounts When Restitution Paid According to Schedule

The Tenth Circuit Court of Appeals issued its opinion in United States v. Martinez on Wednesday, December 16, 2015.

Toby Martinez was convicted of mail fraud and conspiracy and was ordered to pay roughly $2.7 million in restitution. The district court ordered that he was to pay the restitution through monthly payments of a percentage of his net disposable income. Upon leaving prison, Martinez was unable to obtain steady employment, and as a result owed relatively little through his court-ordered payment schedule. The government served writs of garnishment for two of Martinez’s retirement accounts, which were worth roughly $470,000 together. Martinez moved to quash the writs of garnishment in district court, but the court denied his motion. Martinez appealed, asking the court to consider whether the government can garnish assets beyond the amount currently due under the court-ordered payment plan. The Tenth Circuit determined it could not.

The Tenth Circuit began by analyzing 18 U.S.C. §§ 3613 and 3664, which allow the government to enforce orders of restitution as if they were liens or judgments in favor of the United States. The Tenth Circuit rejected the government’s argument that it could garnish the entire restitution amount, noting the argument incorrectly assumed the entire restitution amount was currently owed. The Tenth Circuit found that by statute, the district court—not the government—had the ability to determine how a defendant is to pay restitution. It is the government’s job to enforce the district court’s order. The Tenth Circuit analyzed whether Martinez owed the full restitution amount immediately or whether he owed only the installment payments until the full amount was paid. Analyzing the district court’s restitution order, the Circuit found that the district court ordered that Martinez owed only the installment payments. The Tenth Circuit noted that the full amount of restitution is owed only immediately only if the restitution order does not provide for installment payments. The Tenth Circuit also cautioned that the government’s position conflicts with the statutory directive to the district court to impose a payment schedule that reflects the defendant’s financial condition.

The Tenth Circuit reversed and remanded with instructions for the district court to grant Martinez’s motion to quash.

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