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finding untimely any objections to writ of garnishment filed after the statutory deadline
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Case No. 8:05-cr-143-T-24MAP.
February 9, 2010
ORDER
This cause comes on for consideration of the United States of America's Motion for Entry of Final Order in Garnishment (D-292), the pro se Response of Defendant Michael Rosin to Writ of Garnishment of Plaintiff United States of America (D-273), thepro se Claim of Defendant Michael Rosin for Exemption and Request for Hearing (D-274), Defendant's Memorandum of Law in Opposition (D-293), the United States of America's Reply to Defendant's Memorandum of Law in Opposition to United States of America's Motion for Entry of Final Order in Garnishment (D-298), and Defendant's Sur-Reply to the Government's Reply Brief (D-301).
By way of background, on March 3, 2006, a jury convicted Defendant Rosin of 70 counts of health care fraud and making false statements in a health care matter in violation of 18 U.S.C. §§ 1347 and 1035. On October 4, 2006, after a hearing that spanned six days, the Court sentenced Defendant to a total term of incarceration of 264 months. The Court ordered Defendant to pay restitution in the amount of $3,697,225.38 in the context of the Mandatory Victims Restitution Act ("MVRA"), 18 U.S.C. § 3613, and a fine in the amount of $25,000. Additionally, the Court ordered Defendant to forfeit to the United States $3,697,225.38, pursuant to 18 U.S.C. § 982(a)(7) and Fed.R.Crim.P. 32.2(b)(2). The Judgment provides: "[p]ayments shall be applied in the following order: (1) assessment, (2) restitution principal, (3) restitution interest, (4) fine principal, (5) fine interest, (6) community restitution, (7) penalties, and (8) costs, including prosecution and court costs." (D-234, p. 6.) On March 31, 2008, the Court amended the Judgment changing the total restitution to $3,696,225.33. (D-259.)
Defendant appealed his conviction and sentence on multiple grounds. Amongst his challenges, Defendant claimed that the forfeiture order constituted an excessive fine. He did not challenge the restitution order. The Eleventh Circuit affirmed Defendant's conviction and sentence. United States v. Rosin, 263 Fed. Appx. 16 (11th Cir.), cert. denied, 128 S.Ct. 2982 (2008).
On April 3, 2009, Government filed an Application for Issuance of Writ of Garnishment of Defendant's GunnAllen Financial Individual Retirement Account pursuant to a provision of the Fair Debt Collection Procedure Act, 28 U.S.C. § 3205. (S-11, D-268.) The Government sought the writ of garnishment in connection with the restitution and fine owed by Defendant in accordance with his Criminal Judgment. The Government claimed that Defendant paid $3,207,256.07 in restitution, leaving a balance owed of $696,760.15 (consisting of $488,943.63 in principal and interest in the amount of $207,816.52, with interest continuing to accrue at a rate of 4.9% per annun). The Government further claimed that Defendant had not paid his fine and that the fine balance owed is $26,546.98 (consisting of $25,000 in principal and $1,546.98 in interest, with interest continuing to accrue at a rate of 4.9%per annun.) The Government stated that demand for payment had been made and that Defendant had failed to satisfy the debt.
By order dated April 3, 2009, the Court granted the motion for writ of garnishment. (D-269.) The Clerk issued the writ of garnishment and a Clerk's Notice of Post-Judgment Garnishment. (D-270, 271.) The writ of garnishment was served on GunnAllen Financial on May 13, 2009. (S-15, D-272.) GunnAllen Financial's answer was filed on June 12, 2009, stating that it had in its possession or under its control, Defendant's Individual Retirement Account with total equity of $1,225,942.76, as of May 31, 2009. (D-278.) Defendant was mailed copies of the answer on June 9 and 12, 2009.
Defendant was served with copies of the application, the writ of garnishment, the order, the Notice of Garnishment and Instructions to Defendant, and the Clerk's Notice of Post-Judgment Garnishment on June 3, 2009. (D-277.) However, prior to even being served, Defendant learned of the writ of garnishment and filed a pro se "response" to the writ of garnishment on May 26, 2009, claiming he had paid $3,175,025,79 towards the restitution leaving a balance of $522,000.64. He further claimed he paid the $25,000 fine in full on December 26, 2006. (D-273.) He also filed a Claim for Exemption asserting that his Individual Retirement Account ("IRA") was exempt from garnishment under Florida Statute § 222.21. Furthermore, Defendant requested a hearing in the Southern District of Florida where he is incarcerated. (D-274.)
On August 8, 2009, the Government filed its Motion for Entry of Final Order in Garnishment pursuant to 28 U.S.C. § 3205(c)(7). The Government stated that as of July 24, 2009, Defendant's total remaining criminal monetary obligation is $730,918.72 (with interest continuing to accrue at a rate of $68.99 per day). In its motion, the Government addressed Defendant's pro se response and claim for exemption.
The Government argued that under the Fair Debt Collection and Procedures Act, Defendant may only contest the garnishment on the following two grounds: (1) the probable validity of any exemption claimed; (2) the United States' compliance with the statutory requirements for garnishment. (D-292, p. 4, citing 28 U.S.C. §§ 3202(d)(1) and (2)). The Government argued that Defendant's claimed exemption under Florida Statute § 222.21 is meritless because IRA's are not included in the list of retirement funds exempt from collection under 18 U.S.C. §§ 3613(a)(1), (f) and 26 U.S.C. § 6334(a)(6). The Government argued that, furthermore, state law exemptions are specifically excluded from consideration in enforced collection of Federal monetary penalties.
The Government continued that to the extent Defendant claims that the Government failed to comply with the statutory requirements in 28 U.S.C. § 3205(b)(1)(B), that claim also fails. The Government interpreted Defendant's pro se response as claiming that the Government understated the principal balance of his restitution debt by $33,107.01 and overstated his fine balance.
Title 28, United States Code, section 3205(b)(1)(B) requires the Government to include in its application for a writ of garnishment, "The nature and amount of the debt owed and the facts that not less than 30 days has elapsed since demand on the debtor for payment of the debt was made and the judgment debtor has not paid the amount due. . . ."
In arguing that it correctly stated the nature and the amount of the debt owed, the Government argued that while Defendant attempted to pay the $25,000 fine on December 26, 2006, this payment was applied to his outstanding restitution obligation. The Government pointed out that 18 U.S.C. §§ 3612(c)(2) and (3) set forth the sequence of payments as (1) penalties under § 3013; (2) restitution; and (3) fines.
Additionally, U.S.S.G. § 3E1.l(c) provides that money paid shall be applied to restitution first. Moreover, the Judgment in the Criminal case specified the order of payments. (D-234, p. 6.)
In support of its position, the Government filed the Declaration of Janice A. Ramsey, Paralegal Specialist for the Financial Litigation Unit of the United States Attorney's Office for the Middle District of Florida. (See D-292, Exh. A.) Ms. Ramsey stated that the Clerk's Office received a $25,000 check that Defendant directed be applied to his outstanding fine, but that the payment was applied to his outstanding restitution in accordance with 18 U.S.C. § 3612(c). (Id. at ¶ 3.) Ms. Ramsey further states that the Clerk's Office received a check in the amount of $3,175,025.79 on October 2, 2007. The funds were divided such that $2,381,269.34 was applied to the outstanding principal and $793,756.45 was placed in the Court's registry pursuant to the order of August 22, 2007. (Id. at ¶ 4.) On December 2, 2009, the Clerk's Office credited $800,812.36 (the principal amount plus interest) to Defendant's restitution obligation in accordance with an Order Granting Motion for Release of Funds from the Court Registry in United States ex rel. Ferrara v. United States, Case No. 8:04-cv-349-T-30MAP. (D-292, Exh. A, ¶ 5.)
On August 24, 2009, Defendant, through newly retained counsel, filed a memorandum in opposition to the Government's Motion for Entry of Final Order in Garnishment and a request for oral argument. (D-293, 296.) In this memorandum, Defendant raised two new arguments, including that: (1) no restitution is due Medicare because the United States already received full compensation for any loss by its recovery of the forfeiture amount; and (2) garnishment is not available to the United States under 18 U.S.C. § 3613 because the evidence introduced at the sentencing hearing did not establish the "actual amount" of loss to the United States as required by the MVRA. In addition to these arguments, Defendant again claimed that the funds sought to be garnished by the United States are in an IRA account that is exempt from collection under Fla. Stat § 222.21. This argument, however, is based on the contention that the Government failed to identify that it was seeking a writ of garnishment under Federal law and thus Florida law prevails.
By order dated September 11, 2009, the Court instructed the Government to file a reply brief addressing the issues raised in Defendant's August 24, 2009 filing. (D-297.) On September 25, 2009, the Government filed its Reply in which it contended that Defendant's memorandum is an untimely attempt to contest the garnishment of Defendant's IRA. It argued, alternatively, that: (1) Defendant's claim of double recovery is contrary to law; (2) Defendant's claim regarding the loss amount is an impermissible collateral attack on the Criminal Judgment; and (3) Defendant's claim that the Government failed to identify that it is proceeding under Federal law is a misstatement of the record. (D-298.)
Defendant, in his sur-reply permitted by the Court, argued that his timely pro se objection to the garnishment preserved his right to raise additional grounds when he retained an attorney under Rule 15(c)(1)(B), Fed.R.Civ.P., as enforcement of a civil judgment under Federal law or State law. . . ." 18 U.S.C. §§ 3613(a), (f). Obtaining a writ of garnishment under the Federal Debt Collection Procedure Act (the "FDCPA") is one procedure by which to enforce such a judgment. 28 U.S.C. § 3205(b)(1). The district court may issue a writ of garnishment "against property (including nonexempt disposable earnings) in which the debtor has a substantial nonexempt interest and which is in the possession, custody, or control of a person other than the debtor, in order to satisfy the judgment against the debtor." Id., 28 U.S.C. § 3205(a) (emphasis added).
Pursuant to 28 U.S.C. § 3202(a), "a judgment may be enforced by any remedies as set forth in this subchapter. . . ." 28 U.S.C. § 3202(a). When the Government commences a proceeding to enforce a judgment, notice is required to be served on the judgment debtor advising of the proceeding, possible exemptions, and the right to object and to request a hearing. 28 U.S.C. § 3202(b), (c). The issues at any such hearing are limited to: (1) the probable validity of any claim or exemption by the judgment debtor; and (2) compliance with any statutory requirement for the issuance of the postjudgment judgment. 28 U.S.C. § 3205(b)(1). The district court may issue a writ of garnishment "against property (including nonexempt disposable earnings) in which the debtor has a substantial nonexempt interest and which is in the possession, custody, or control of a person other than the debtor, in order to satisfy the judgment against the debtor." Id., 28 U.S.C. sec; 3205(a) (emphasis added).
Pursuant to 28 U.S.C. § 3202(a), "a judgment may be enforced by any remedies as set forth in this subchapter. . . ." 28 U.S.C. § 3202(a). When the Government commences a proceeding to enforce a judgment, notice is required to be served on the judgment debtor advising of the proceeding, possible exemptions, and the right to object and to request a hearing. 28 U.S.C. sec; 3202(b), (c). The issues at any such hearing are limited to: (1) the probable validity of any claim or exemption by the judgment debtor; and (2) compliance with any statutory requirement for the issuance of the postjudgment remedy granted. Id. at (d).
Another issue allowed to be addressed does not apply in this case. See 28 U.S.C. § 3202(d)(3).
I. TIMELINESS OF DEFENDANT'S AUGUST 24, 2009 MEMORANDUM
At the hearing, the Government argued that while Defendant'spro se filings were timely, Defendant's August 24, 2009 memorandum filed pursuant to Local Rule 3.01(b), M.D. Fla., and December 28, 2009 sur-reply filed through counsel constitute untimely attacks on the garnishment. The Government argued that, pursuant to the applicable statutes, Defendant had until July 2, 2009, by which to object to the writ of garnishment and that anything filed thereafter should not be considered by the Court.
Counsel for Defendant responded that the August 24, 2009 memorandum was timely filed in response to the Government's August 8, 2009 Motion for Final Entry of Garnishment in accordance with the Local Rules. He further adopted the argument set forth in Defendant's sur reply that the August 24, 2009 memorandum which raised new issues is a permissible amendment under Fed.R.Civ.P. 15(c).
Pursuant to the FDCPA, Defendant had twenty days from the notice of the writ to object to the writ of garnishment. 28 U.S.C. §§ 3202(b) and (d). Furthermore, under section 3205(c)(5), Defendant had 20 days after the receipt of the answer to file an objection to the answer of the garnishee. 28 U.S.C. § 3205(c)(5).
In this case, Defendant was served with the notice of the writ of garnishment on June 3, 2009. Thus, Defendant had until June 23, 2009, by which to object to the writ of garnishment. GunnAllen sent Defendant a copy of its answer on June 9, 2009. Furthermore, the Government mailed Defendant a copy of GunnAllen's answer on June 12, 2009. Even allowing a liberal seven days thereafter (until June 19, 2009) for Defendant to receive the answer, he had until July 9, 2009, at the latest, to object to the answer.
Defendant filed his pro se response and claim for exemption before he was even served, but certainly not late, and, thus, those filings are timely. Defendant's August 24, 2009 memorandum and his sur reply, however, were filed long after the statutory deadline to object to the writ of garnishment and the answer.
The cases cited by Defendant in his sur-reply in support of his contention that the new arguments in his August 24, 2009 memorandum should be considered as timely are not persuasive. Three of the cases cited by Defendant involved amending petitions in cases brought pursuant to 28 U.S.C. § 2255. (See D-301, p. 4.) The fourth case, United States v. Shusterman, 331 Fed. Appx. 994 (3rd Cir. 2009), also does not support Defendant's position as there is no indication that the claimant therein ever raised additional exemption claims after the 20-day period set forth in the statute.
Furthermore, no case has been cited involving a garnishment wherein the court allowed the claimant to raise additional arguments pursuant to Fed.R.Civ.P. Rule 15(c), which provides that amendments to a pleading "relate back" to the date of the original pleading in certain circumstances. As the Government pointed out at oral argument, Rule 7(a) defines "pleadings," and does not include a claim for exemption. See Fed.R.Civ.P. 7(a).
Finally, while, at that time, Local Rule 3.01(b) provided that a party opposing a motion shall file a response within ten days after service of the motion, the Rules also provide as follows:
Effective December 1, 2009, parties now have 14 days to file a response in opposition to a motion. Local Rule 3.01(b), M.D. Fla.
These rules are intended to supplement and complement the Federal Rules of Civil Procedure, the Federal Rules of Criminal Procedure, and other controlling statutes and rules of Court. They shall be applied, construed and enforced to avoid inconsistency with other governing statutes and rules of court, and shall be employed to provide fairness and simplicity in procedure, to avoid technical and unjustified delay, and to secure just expeditious and inexpensive determination of all proceedings.
Local Rule 1.01(b), M.D. Fla. If the Court were to read Rule 3.01(b) to allow Defendant, in his response to the Government's motion, to raise new arguments or objections to the writ of garnishment and answer it would be inconsistent with the 20-day objection period set forth in the FDCPA. Thus, Defendant's claims that (1) the United States has been fully compensated for any loss through its recovery of forfeiture; (2) garnishment is not available because the actual loss was not appropriately established; and (3) the writ failed to identify that garnishment was sought under federal law, included in the August 24, 2009 memorandum seeking to quash the writ of garnishment, are untimely. Nonetheless, in an abundance of caution and in the interests of justice and judicial economy, the Court will address the arguments included therein.
II. DOUBLE RECOVERY
As previously indicated, Defendant claims that no restitution is due to Medicare because the United States received full compensation for any loss by its recovery of the forfeiture amount. In this regard, Defendant argues that because the Federal Government was a substantial victim in this case, allowing the United States to recover funds through forfeiture and again through restitution violates the policy and purpose of the MVRA. In support of this contention, Defendant cites United States v. O'Connor, 321 F.Supp. 2d 722 (E.D. Va. 2004).
O'Connor involved an immigration, tax and bank fraud prosecution that resulted in convictions as well as forfeiture and restitution orders. Id. at 724. The defendants were ordered to pay restitution in the amount of $17,591,365.17 pursuant to the MVRA and, further, were ordered to forfeit $17,868,250. 321 F.Supp. 2d at 725-26. Approximately $124,000 in forfeiture proceeds had been remitted to the Clerk's Office when the government filed an unopposed motion requesting that the forfeited proceeds be used to make partial restitution payments to the victims. Id. at 727-30.
The district court found that both restitution and forfeiture were required and properly imposed. Id. at 729. The court explained:
[I]t is important to note that forfeiture and restitution are not mutually exclusive; rather, they each serve separate and distinct goals. Specifically, forfeiture generally serves to remove from an offender the fruits and instrumentalities of his crime, and thereby provides a powerful disincentive to commit the crime in the first instance. An order of restitution, on the other hand, serves primarily to compensate victims for any losses suffered as a result of a defendant's criminal activity.Id. (footnotes omitted). The court further recognized that:
Because forfeiture and restitution serve distinct goals, a defendant generally has no right or entitlement to use forfeited funds to satisfy an additional restitution obligation. Put another way, amounts that are forfeited by a defendant to the United States are not typically available to pay whatever criminal monetary penalties are imposed upon that defendant. See United States v. Alalade, 204 F.3d 536, 540-41 (4th Cir. 2000). This is so, in part, because rightful ownership of forfeited funds vests in the United States at the moment the triggering forfeiture act occurs. See supra n. 8; 21 U.S.C. § 853(c); United States v. Emerson, 128 F.3d 557, 567 (7th Cir. 1997) (noting that "once the Government wins a judgment of forfeiture, the relation-back doctrine provides that the right, title, and interest in the forfeited property vests in the United States at the time the defendant committed the offense that gives rise to the forfeiture") (citations omitted).321 F.Supp. 2d at 729. Nonetheless, the court specifically found that despite the foregoing principals, in appropriate cases, the government could agree to assign the forfeited proceeds towards restitution and therefore granted the government's request. Id. at 729-30.
There is a significant difference between O'Connor and this case that Defendant fails to recognize. That is, because the defendants in O'Connor had insufficient funds to satisfy their forfeiture and restitution obligations, the government requested the forfeited proceeds to be assigned to the victims owed restitution. Id. at 729-30. There has been no suggestion by the Government in this case that Defendant has insufficient funds to satisfy both his restitution and forfeiture obligations and, obviously, the Government has not agreed to such a procedure in this instance.
Neither United States v. Smith, 297 F.Supp. 2d 69 (D.D.C. 2003), nor United States v. Ruff, 420 F.3d 772 (8th Cir. 2005), cited by Defendant at the hearing, support Defendant's position. In Smith, the court offset the amount of restitution owed where the government remitted to the victims funds recovered through administrative forfeiture. 297 F.Supp. 2d at 72-73. The court recognized, however, that the MVRA does not grant the court discretion to offset the restitution where the government retains the funds forfeited. Id. at 73 (citing United States v. Alalade, 204 F.3d 536, 540-41 (4th Cir. 2000).
The Ruff court remanded the case for a hearing to determine whether the victim law enforcement agency had received any forfeited funds, and if so, to offset the restitution owed in order to prevent double recovery. 420 F.3d at 776. However, on remand, the district court found that the Iowa Division of Narcotics Enforcement received funds from the forfeiture and that, as the forfeited funds went to separate distinct agencies, there was no danger of double recovery United States v. Ruff, No. 03-CR-1027-LRR, 2006 WL 274433, at *3 (N.D. Iowa Feb. 2, 2006), aff'd, 472 F.3d 1044 (8th Cir. 2007).
Defendant fails to recognize that he previously briefed the issue of double recovery for purposes of sentencing and unsuccessfully argued it at sentencing. (D-189, D-246, p. 173-74.) The Court, in ordering both forfeiture and restitution, implicitly rejected Defendant's double recovery argument.
Additionally, on appeal, Defendant argued that "[p]ermitting the Government to collect restitution and forfeiture and to pay both to itself as the 'victim' results in double payment." Initial Brief of Appellant at 18, United States v. Rosin, 263 Fed. Appx. 16 (11th Cir. 2008) (06-15538-GG), 2007 WL 774271. Defendant further argued, "the forfeiture money judgment and restitution order are duplicative and excessive" and that requiring him to pay both was an "excessive punishment [that] violates the Eighth Amendment." Id. at. 76-77. Defendant specifically contended that because Medicare is a Government agency to which over 98% of the ordered restitution is owed, allowing the "Government to collect in full for both restitution and forfeiture is double payment."Id. The Government responded in opposition that forfeiture and restitution are distinct and independent components of Defendant's sentence that were both mandated by statute. Brief of the United States at 61, United States v. Rosin, 263 Fed. Appx. 16 (11th Cir. 2008) (06-15538-GG), 2007 WL 1898851. The Government further argued that the Department of Justice would receive the forfeited proceeds and the Department of Health and Human Services would receive the restitution, thus there was no unlawful double payment. Id.
The Eleventh Circuit, in addressing Defendant's arguments, noted the different goals served by restitution and forfeiture and stated,
[t]hat a defendant may ultimately be ordered to pay in restitution and forfeiture more than he took is of little consequence:
[P]aying restitution plus forfeiture at worst forces the offender to disgorge a total amount equal to twice the value of the proceeds of the crime. Given the many tangible and intangible costs of criminal activity, this is in no way disproportionate to the harm inflected upon government and society by the offense.Rosin, 263 Fed. Appx. at 19 (citation omitted).
It is simply not appropriate for Defendant to relitigate the issue of restitution in this post-judgment proceeding. See e.g. United States v. Pugh, 75 Fed. Appx. 546, 547 (8th Cir. 2003) (per curiam) (finding that defendant could not challenge the validity of his restitution obligation at post-judgment garnishment hearing); United States v. Smith, 88 Fed. Appx. 981 (8th Cir. 2004) (per curiam) (affirming denial of a hearing where defendant sought to challenge the validity of the fine imposed, which she could not do); United States v. Minneman, 38 Fed. Appx. 321, 323 (7th Cir. 2002) (finding res judicata prevented defendant from relitigating validity of the restitution order in post-judgment garnishment proceeding where defendant chose not to appeal the restitution order and the restitution order as to his co-defendant was affirmed on direct appeal).
In any event, the Court finds that requiring Defendant to pay restitution in addition to forfeiting proceeds does not result in a double recovery to the Government, and that, further Defendant is not entitled to offset with the forfeited proceeds the restitution owed. Last year, the Eleventh Circuit addressed inUnited States v. Hoffman-Vaile, 568 F.3d 1335 (11th Cir. 2009), whether a defendant convicted of Medicare fraud should have her forfeiture amount reduced by the amount of restitution she paid to the individual patient and insurance company victims. The Eleventh Circuit, in rejecting the defendant's argument stated:
Although "might appear to 'double dip,' restitution and forfeiture serve different goals[.]" United States v. Leahy, 464 F.3d 773, 793 n. 8 (7th Cir. 2006). "[T]he focus of restitution is on the victim, [but] forfeiture focuses on the defendant." United States v. Browne, 505 F.3d 1229, 1281 (11th Cir. 2007). "In addition to forcing the disgorgement of dishonest profits, therefore, forfeiture is also a punitive action against the defendant." Id.Hoffman-Vaile, 568 F.3d at 1344-45.
Furthermore, several courts have found ordering both forfeiture to the United States Department of Justice and restitution to another government agency does not result in a double recovery to the United States. United States v. Taylor, 582 F.3d 558, 565-66 (5th Cir. 2009) (finding restitution to FEMA and forfeiture to Department of Justice did not result in double recovery to the Government), cert. denied, ___ S.Ct. ___ 2010 WL 58760 (2010); United States v. Veneturella, 585 F.3d 1013, 1019-20 (7th Cir. 2009) (finding forfeiture to DOJ and restitution to the Social Security Administration and the State of Wisconsin did not constitute double recovery), pet. for cert. filed, (Dec. 29, 2009) (No. 09-8372); United States v. Emerson, 128 F.3d 557, 567-68 (7th Cir. 1997) (rejecting defendant's contention that orders of restitution to Postal Service and forfeiture to Department of Justice resulted in a windfall to the Government). These courts reasoned that the Department of Justice, which receives the forfeited proceeds, and the government agency victims to which the restitution was owed, are distinct entities. Id.; Taylor, 582 F.3d at 566. In Emerson, the court explained that "the Postal Service is an entity distinct from the DOJ, given that the Postal Service is 'an independent establishment of the executive branch,' . . . and the DOJ is an "executive department. . . ." 128 F.3d at 567-68 (citations and footnote omitted). Similarly, in Taylor, the court explained that "FEMA, an executive agency under control of the United States Department of Homeland Security, is a distinct entity from the Department of Justice." 582 F.3d at 566 (citation omitted). The court continued that "[t]he Department of Justice is an executive department of the United States at the seat of Government. . . ." Id. (citation omitted).
Similarly, the Medicare program is a program under control of the Department of Health and Human Services, which is a distinct entity from the Department of Justice. There has been no showing that the Department of Justice remitted to Medicare any of the forfeited funds. Nor is the Department of Justice under any legal obligation to remit the forfeited funds to Medicare. As such, the Court rejects Defendant's claim as to double recovery.
III. EVIDENCE REGARDING ACTUAL LOSS
Defendant next claims that the Government failed to establish by a preponderance of the evidence at the sentencing hearing the amount of the loss required for payment of restitution under the MVRA. In this regard, Defendant attacks the evidence presented by the Government at the sentencing hearing relating to the loss figure. Defendant argues that the Government cannot utilize the provisions of the FDCPA and MVRA to collect the outstanding restitution owed because the actual loss was based on an extrapolation.
Defendant claims that his argument does not constitute a collateral attack as to the restitution portion of his sentence. At oral argument, counsel for Defendant admitted that Defendant had not previously attacked on direct appeal either the imposition or amount of restitution. He, however, argued that the appropriate time to mount an attack regarding the Court's order of restitution is not when the Court originally orders restitution at sentencing and enters a criminal judgment including the restitution but rather when the Government seeks to enforce the order and collect the restitution.
He did, however, object to sentencing enhancements based on the number of victims and the amount of the loss and argued it was error for the Court to reject Defendant's experts and rely on Dr. Flowers when arriving at a loss figure. The Eleventh Circuit found that this Court's findings were supported by a preponderance of the evidence and that, "Relying on the testimony of Dr. Flowers (the expert witness who reviewed the greatest number of slides), the court concluded Rosin committed fraud with respect to more than 700 different victims, and the losses associated with those victims exceeded $4 million." Rosin, 263 Fed. Appx. at 34.
Over $3,000,000 in restitution has previously been collected. Defendant did not object at that time of that collection.
Defendant offers absolutely no case authority supporting his position. Furthermore, the Court finds that regardless of how Defendant phrases his claim, his claim constitutes a collateral attack of the restitution portion of his sentence. The Eleventh Circuit has held that a defendant waives his right to challenge the district court's original calculation of restitution at sentencing where the defendant fails to raise the issue on direct appeal. United States v. Cani, 331 F.3d 1210, 1213-14 (11th Cir. 2003). The court explained, "we can find no case (and have been cited to none) in which a defendant has been permitted to advance such a challenge for the first time in a collateral proceeding." Id. at 1214. Thus, a defendant can raise an objection to the initial calculation of restitution in a collateral proceeding only where the defendant has demonstrated the existence of exceptional circumstances. Id. Here, Defendant has not demonstrated any exceptional circumstances that excuse his failure to raise the issues as to restitution on direct appeal. As such, Defendant may not challenge the order of restitution in this proceeding.
IV. STATE EXEMPTION
Defendant initially claimed that his IRA account is exempt from the garnishment under Florida Statutes section 222.21. Once represented by counsel, Defendant altered his claim to argue that the April 3, 2009 Writ of Garnishment did not specify whether the garnishment was sought under federal or Florida law so therefore Florida law applies and his IRA is exempt. At the hearing, counsel for Defendant did not make any argument with regard to these claims but rather rested on Defendant's written filings.
With regard to Defendant's claim he was not notified that the garnishment was proceeding under Federal law, a review of the record shows that the Government's Application for Writ of Garnishment specifically provided that application was made "in accordance with 28 U.S.C. § 3205. . . ." (S-11, D-268, p. 1.) The Order directing the Clerk to issue the Writ of Garnishment provided that "the requirements of 28 U.S.C. § 3205(b)(1) have been met." (S-10, D-267.) Additionally, the Claim for Exemption Form attached to the Writ of Garnishment cited limited exemptions under Federal statutes 18 U.S.C. § 3613 and 26 U.S.C. § 6334. (S-13, D-270, p. 4-6.) Defendant was served with copies of these documents on June 3, 2009. (D-277.) Accordingly, Defendant was on notice that the Government was seeking garnishment pursuant to Federal law, and his claim otherwise is rejected.
The Court next turns to Defendant's claim that his IRA is exempt from garnishment. Defendant has the burden to show that his claimed exemption applies to be successful in quashing the writ. See McKenna v. Foley, No. 805CV2200T30TGW, 2009 WL 275419, at *1 (M.D. Fla. Feb. 3, 2009).
While funds in IRA accounts that are needed to provide the maintenance and support of the debtor or his family are exempt from garnishment under Florida law, Fla. Stat. § 222.21(a), the plain language of 18 U.S.C. § 3613(a)(2) preempts state law. In this regard, while section 3014 of the FDCPA permits debtors to invoke state law exceptions, the MVRA specifically provides that "section 3014 of chapter 176 of title 28 shall not apply to enforcement under federal law." 18 U.S.C. § 3613(a)(2). Thus, pursuant to § 3613(a), state exemptions are not applicable in federal enforcement actions seeking to collecting outstanding restitution. United States v. Nash, 175 F.3d 440, 443 (6th Cir. 1999) (finding state exemption not relevant in garnishment proceeding relating the Federal criminal judgment); United Stats v. DeCay. No-05-186, 2009 WL 36623, at *6 (E.D. La. Jan. 5, 2009) (finding "under the plain language of the MVRA, no state exemptions are applicable to an enforcement action arising from a restitution judgment");United States v. Wilson, No. CR 305-008, 2007 WL 4557774, at *1 (S.D. Ga. Dec. 20, 2007) (finding Government could garnish retirement fund to collect criminal restitution); United States v. McClanahan, No. CRIM. 3:0300053, 2006 WL 1455698, at *5 (S.D. W.VA. May 24, 2006) (finding West Virginia law did not prevent Government from garnishing the defendant's pension to collect restitution owed pursuant to Federal criminal judgment).
Furthermore, section 3003(d) of the FDCPA provides that, "[t]his chapter shall preempt State law to the extent such law is inconsistent with a provision of this chapter." 28 U.S.C. § 3003(d). Additionally, pursuant to the Supremacy Clause of the United States Constitution, the Laws of the United States preempt conflicting state statutes. U.S. Const. art. VI, cl. 2.
The only retirement funds exempt from collection of a Federal criminal restitution judgment are those set forth in 18 U.S.C. §§ 3613(a)(1) and (f), and 26 U.S.C. § 6334(a)(6). IRA's are not included among the list of exempt retirement funds. See United States v. Hosking, 567 F.3d 329, 335 (7th Cir. 2009) (IRA's not among the enumerated exemptions under 18 U.S.C. § 3613(a)(1) and 26 U.S.C. § 6334(a)(6)); United States v. Citigroup Global Markets, Inc., 569 F.Supp.2d 708, 711-12 (E.D. Tex. 2007) (the court found that the defendant's Simplified Employee Pension IRA did "fall within any of the types of annuities and pension payments exempt from levy under § 6334(a)(6)" and thus was not exempt from seizure to satisfy his outstanding criminal fine and restitution.).
Defendant's IRA does not fall within those retirement funds that are exempt under 18 U.S.C. §§ 3613(a)(1) and (f), and 26 U.S.C. § 6334(a)(6). Thus, Defendant's claim that his IRA is not subject to garnishment fails.
V. DEFENDANT'S ALLEGED PAYMENT OF THE FINE
In this pro se response, Defendant claimed that he paid the $25,000 fine in full on December 26, 2006. (D-273.) The Government does not dispute that Defendant attempted to pay the fine, his payment was applied to the outstanding restitution obligation. (D-292, p. 6-8 and Exh. A.)
Title 18, United States Code, section 3612(c) sets forth the sequence for disbursement of payments received from a defendant. Such payments are to be applied to restitution before fines. 18 U.S.C. § 3612(c)(2) and (3). Additionally, the United States Sentencing Guidelines provide that, "[if] a defendant is ordered to make restitution to an identifiable victim and to pay a fine, the court shall order that any money paid by the defendant shall first be applied to satisfy the order of restitution." U.S.S.G. § 5E1.1(c). The Court provided in the Criminal Judgment that, "[p]ayments shall be applied in the following order: (1) assessment, (2) restitution principal, (3) restitution interest, (4) fine principal, (5) fine interest, (6) community restitution, (7) penalties, and (8) costs, including cost of prosecution and court costs." (D-234, p. 6; D-259.) In light of the foregoing, the application of the $25,000 towards Defendant's restitution obligation was appropriate. See United States v. Phillips, 50 Fed. Appx. 303, 305 (6th Cir. 2002) (the district court was correct in applying $5,000 payment to restitution obligation rather than the fine.) The Court finds the United States has properly credited Defendant for his payments. Thus, the entry of a final order in garnishment is in all respects proper.
THE COURT therefore ORDERS as follows:
(1) Defendant's Claim for Exemption is disallowed.
(2) The United States of America's Motion for Entry of Final Order in Garnishment (D-292) is GRANTED.
(3) Garnishee GunnAllen Financial, Inc., shall forthwith liquidate Individual Retirement Account, number xxx-xxx92-13, and pay over to the United States the proceeds of that account, not to exceed $745,530.91, plus per diem in the amount of $68.99 beginning February 10, 2010, through date of payment. The payment made to the United States pursuant to this Order shall bear the notation "Michael Rosin, Case No. 8:05-cr-143-T-24MAP," be made payable to "Clerk, United States District Court," and be sent to:
Clerk, United States District Court
ATTN: DCU
401 West Central Boulevard, Suite 2-100
Orlando, Florida 32801
(4) Upon payment to the United States of the proceeds of Individual Retirement Account, number xxx-xxx92-13, not to exceed $745,530.91, plus per diem in the amount of $68.99 beginning February 10, 2010, through date of payment, the Writ of Garnishment directed to GunnAllen Financial, Inc., shall terminate pursuant to 28 U.S.C. § 3205(c)(10).
DONE and ORDERED at Tampa, Florida.