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United States v. Villongco

United States District Court, District of Columbia

July 11, 2016

UNITED STATES OF AMERICA,
v.
DAVID VILLONGCO, Defendant. v.

          MEMORANDUM OPINION

          BERYL A. HOWELL Chief Judge.

         The defendant David Villongco, who is proceeding pro se, contests the government's effort to garnish funds in his retirement and brokerage accounts in partial satisfaction of the defendant's restitution obligation in the amount of $14, 284, 852.78. Def's Mot. to Quash the Writ of Continuing Non-Wage Garnishment, ECF No. 46 ("Def's Mot.").[1] This restitution obligation was ordered as part of a criminal judgment entered against the defendant over eight years ago, with directions that the restitution be paid in monthly installments, with which payment schedule the defendant has fully complied. Id. at 1. Nevertheless, the government now seeks to garnish from the garnishee, Fidelity Investments, four of the defendant's accounts containing approximately $806, 536.52, as "non-exempt disposable earnings in which the Defendant has a substantial non-exempt interest." Appl. for Writ of Continuing Non-Wage Garnishment ("Gov't's Appl. for Writ"), at 1, ECF No. 40; Answer of Garnishee ("Answer"), ¶¶ 7, 9, ECF No. 42; Supplemental Answer of the Garnishee ("Suppl. Answer"), at 2, ECF No. 43. For the reasons discussed below, the defendant's motion to quash is granted.

         I. BACKGROUND

         Summarized below is the relevant factual and procedural background of this case. The Presentence Investigation Report ("PSR") prepared by the United States Probation Office ("USPO") in connection with the defendant's sentencing described the defendant's "Financial Condition: Ability to Pay" and disclosed that the defendant held, inter alia, the following assets: (1) "a 401K retirement savings account with Fidelity Investments" that "was established from his former employment with Visa" and, as of January 28, 2008, had a balance of $376, 003.14, see PSR ¶¶ 64, 64a, ECF No. 51; (2) "another 40IK with General Electric (GE), from his former employment with this company, " which, "[a]s of December 2007, he believes . . . had a total asset value of $120, 000, " id. ¶ 64; and (3) "[a]s of December 2007, " GE and Prudential stock with a value of $6, 134.00, id. ¶ 65.[2] After noting that the defendant must be ordered to pay "full restitution to the victim without consideration of the economic circumstances of the defendant, " id. ¶ 96 (citing 18 U.S.C. §§ 3663A(a)(l), (3)), the PSR advised that "[t]he Court may order the defendant to make nominal periodic payments if the Court finds from facts on the record that the economic circumstances of the defendant do not allow the payment of any amount of [] restitution, ... in the foreseeable future under any reasonable schedule of payments, " id. (quoting 18 U.S.C. § 3664(f)(3)(B)).

         At the sentencing hearing, in addition to concurrent terms of imprisonment and supervised release on each of two counts of conviction, the defendant was ordered to "pay restitution totaling $14, 284, 652.78 jointly and severally with [his] accomplices, with credit to [him] for amounts already paid." Tr. of Sentencing Hr'g at 28:8-11, (Feb. 29, 2008), ECF No. 52.[3] The Court also issued instructions regarding the timing and manner of the restitution payments, ordering, first, that "[t]he special assessment and restitution are immediately payable to the clerk of this court, " and, second, that as a special condition of supervised release, the defendant "must pay the balance of any restitution owed at a rate of no less than $500 each month and provide verification of that payment to the probation office." Id. at 28:16-17, 29:12-14.[4]

         Apparently confused by the seemingly contrary directions about when restitution payments became due-either "immediately" or in installments while on supervised release-, defense counsel raised the question of when payments on the restitution obligation would begin, asking, "does that begin upon release from custody and is a condition of his supervised release or does that begin now?" Id. at 31:16-17. The Court responded: "No, the order I just entered required the beginning - required the payment due immediately. You will certainly probably need to work through with others how and - how much to pay, when it starts, but certainly during the period of incarceration, payments will have to come through the Inmate Financial Responsibility Program. It's understandable that there may end up being some limits on how much that can be during that period of time, but the payments for the restitution as well as the special assessments are due and payable immediately." Id. at 31:18-32:1. The Court continued, "[t]he fact is that, you know, payment schedules end up getting worked out when people don't have the full amount of all that's due and payable immediately." Id. at 32:3-5.

         The Judgment and Commitment Order, entered on March 14, 2008, generally reflects the sentence imposed at the earlier hearing: the defendant was sentenced to concurrent terms of thirty-three months of imprisonment and three-year terms of supervised release on each of two counts, to which he pleaded guilty, of conspiracy to defraud the Government and mail fraud, in violation of 18 U.S.C. §§ 286 and 1341, 1342. Judgment and Commitment Order, ("J & C") at 1, ECF No. 33. The order directed the defendant, inter alia, to pay "[restitution totaling $14, 284, 652.78 to be paid jointly and severally with your accomplices with credit to the defendant for amount already paid, " and to "pay the balance of any restitution owed at a rate of no less than $500.00 each month and provide verification of same to the Probation Office." J & C at 5-6.[5] The order further required as "a condition of supervised release that the defendant pay [a fine or restitution] in accordance with the Schedule of Payments sheet of this judgment, " id. at 3, and that the defendant "notify the court and United States attorney of material changes in economic circumstances, " id. at l.[6] Neither party objected to or appealed the sentence. See generally Tr. of Sentencing Hr'g.

         Almost eight years later, on March 4, 2016, the government filed an Application for Writ of Continuing Non-Wage Garnishment to Fidelity Investments as to David Villongco, see Gov't's Appl. for Writ, to which the garnishee, Fidelity Investments, filed an answer, see Answer at 1. The garnishee explained that the defendant "is a terminated participant in the General Electric Retirement Savings Plan, " in which "the [defendant has an account balance of $186, 456.02 as of March 15, 2016." Answer ¶¶ 7, 9. Further, the defendant "is a retired participant in the Visa 401(k) Plan, " in which "the [defendant has an account balance of $405, 264[.]23 as of March 15, 2016." Id. The garnishee subsequently supplemented this information identifying two additional accounts of the defendant: a UC Individual Brokerage Account in the amount of $2, 764.56, and a Rollover Individual Retirement Account of the defendant in the amount of $212, 051.71. Suppl. Answer at 2.

         Pending before the Court is the defendant's request that the Court "rescind this collection effort or procedure." Defi's Mot. at 1. The defendant states that he has "been diligently paying [the amount of $500.00 each month] ever since [he] was released." Id. To demonstrate this compliance, he attached the last three months of restitution payments. See Def.'s Mot., Ex. 1 ("Financial Docs."), ECF No. 46-1. While not disputing the defendant's full compliance with the restitution payment schedule both during and after his now expired supervised release term, the government opposes this motion. Gov't's Mem. Opp'n Def.'s Mot. to Quash Writ of Garnishment ("Gov't's Opp'n"), ECF No. 49; see Min. Order (May 9, 2016) (setting briefing schedule and directing government to address in its opposition: United States v. Hughes, 813 F.3d 1007 (D.C. Cir. 2016); United States v. Martinez, 812 F.3d 1200 (10th Cir. 2015); and United States v. Ekong, 518 F.3d 285 (5th Cir. 2007)).

         II. DISCUSSION

         To satisfy part of the remaining $13, 975, 907.08 owed on the original $14, 284, 652.78 restitution order against the defendant, Gov't's Appl. For Writ at 1, the government seeks to garnish the defendant's Fidelity Investments retirement and brokerage accounts, worth approximately $806, 536.52. The defendant requests that the garnishment be stopped for the straightforward reason that he is in full compliance with the court-ordered restitution payment schedule. Def's Mot. at 1. Essentially, the defendant's position is that, absent any delinquency or default in the restitution payments of $500.00 per month, the government is not entitled to accelerate these payments by garnishing funds in the targeted savings accounts. The government's arguments supporting the garnishment and opposing the motion to quash are analyzed after a review of the statutory framework.

         A. STATUTORY FRAMEWORK

         "Federal courts have authority to order restitution solely pursuant to statute." United States v. Anderson, 545 F.3d 1072, 1077 (D.C. Cir. 2008) (citing United States v. Bok, 156 F.3d 157, 166 (2d Cir. 1998)); see also United States v. Gottesman, 122 F.3d 150, 151 (2d Cir. 1997) ('"Federal courts have no inherent power to order restitution. Such authority must be conferred by Congress through statute.'" (quoting United States v. Helmsley, 941 F.2d 71, 101 (2d Cir. 1991))). In fact, there is a '"specific and detailed [statutory] scheme addressing the issuance . . . of restitution orders arising out of criminal prosecution.'" Martinez, 812 F.3d at 1204 (quoting United States v. Wyss, 744 F.3d 1214, 1217 (10th Cir. 2014)).

         The two principle restitution statutes applicable to defendants convicted of federal crimes are the Victim Witness Protection Act of 1982 ("VWPA"), 18 U.S.C. § 3663, and the Mandatory Victims Restitution Act of 1996 ("MVRA"), 18 U.S.C. §§ 3663A, 3664. These two statutes share a number of parallel provisions, with the primary distinctions being that the VWPA "provides federal courts with discretionary authority to order restitution to victims of most federal crimes, " while the MVRA "requires restitution in certain federal cases involving a subset of the crimes covered by the [VWPA]. (Recall that under the 1982 Act, restitution is discretionary, not mandatory)." United States v. Papagno, 639 F.3d 1093, 1096 (D.C. Cir. 2011). In addition, unlike the VWPA, the MVRA "requires the court to award full restitution regardless of the defendant's financial circumstances, . . .; and gives victims a role in the sentencing process." United States v. Monzel, 641 F.3d 528, 543 (D.C. Cir. 2011) (citing 18 U.S.C. §§ 3664(d)(2), (f)(1)(A)).[7] Set forth below are the relevant provisions of the MVRA and the enforcement provisions applicable here.

         1. The Mandatory Victims Restitution Act of 1996

         As noted, the MVRA mandates that a defendant convicted of certain enumerated offenses, "including any offense committed by fraud or deceit, " be ordered to "make restitution to the victim of the offense ..." 18 U.S.C. §§ 3663A(a)(l), (c)(l)(A)(ii). The defendant's convictions in this case, conspiracy to defraud the government and mail fraud in violation of 18 U.S.C. §§ 286, 1341, and 1342, are indisputably subject to the MVRA. Under the MVRA, the court must: "(a) order the full amount of restitution; (b) establish an initial payment schedule that takes into consideration the defendant's financial situation; and (c) respond to any change in the defendant's economic condition by adjusting the schedule." United States v. Scales, No. 14-10725, 2016 U.S. App. LEXIS 5179, at *14 (5th Cir. Mar. 17, 2016).

         In computing the amount of restitution to be paid by the defendant, the MVRA requires that restitution be ordered for "each victim in the full amount of each victim's losses as determined by the court and without consideration of the economic circumstances of the defendant." 18 U.S.C. § 3664(f)(1)(A); see also 18 U.S.C. § 3663A(b) (providing guidance on calculating amount of loss). The MVRA next requires the court to "specify in the restitution order the manner in which, and the schedule according to which, the restitution is to be paid, " upon consideration of certain factors, such as "the financial resources and other assets of the defendant, " "projected earnings and other income of the defendant, " and "any financial obligations to dependents." 18 U.S.C. § 3664(f)(2). Thus, the statute requires two distinct inquiries: first, the court must ascertain and order the total amount of restitution no matter the defendant's financial situation; and, second, the court must direct the defendant to satisfy the restitution obligation in a particular manner, a direction predicated upon an evaluation of the defendant's particular financial circumstances. While the MVRA thereby cabins judicial discretion in setting the amount of restitution to be paid by a defendant, the statute authorizes broader flexibility ...


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