U.S. v. Kollintzas

• Decision Date: 05 September 2007
• Docket Number: No. 06-2034.,06-2034.
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Frank KOLLINTZAS, Defendant. Appeal of Joanna Kollintzas, Interested Person.
• Court: U.S. Court of Appeals — Seventh Circuit

501 F.3d 796

UNITED STATES of America, Plaintiff-Appellee, v. Frank KOLLINTZAS, Defendant.

Appeal of Joanna Kollintzas, Interested Person.

No. 06-2034.

United States Court of Appeals, Seventh Circuit.

Argued November 27, 2006.

Decided September 5, 2007.

Sharon Johnson (argued), Office of the United States Attorney, Hammond, IN, for Plaintiff-Appellee.

Theodore T. Poulos, Cotsirilos, Tighe & Streicker, Chicago, IL, for Defendant.

Visvaldis P. Kupsis (argued), Valparaiso, IN, for Appellant.

Before EASTERBROOK, Chief Judge, and ROVNER and SYKES, Circuit Judges.

SYKES, Circuit Judge.

A jury found Frank Kollintzas guilty of converting large sums of money from the City of East Chicago, Indiana. After the trial Kollintzas disappeared. The district court sentenced him in absentia and ordered that he pay over $25 million in restitution. The government immediately initiated collection proceedings, including garnishment, under the existing criminal docket number. While the garnishment proceedings were pending, Kollintzas's wife, Joanna, filed for divorce in Indiana state court. The government served her with notice of the garnishments pursuant to the requirements of the Federal Debt Collection Procedures Act ("FDCPA"), and she made a general appearance in the district court. She subsequently filed a brief asserting an interest in the property being garnished; she argued that her interest in the marital assets was a matter for the state court, not the federal court, to decide. The district court disagreed and ultimately concluded Mrs. Kollintzas had failed to establish her property interest under Indiana law. The court granted the government's motion to release the funds for garnishment, and Mrs. Kollintzas appealed. We affirm.

I. Background

In November 2004 Frank Kollintzas was convicted by a jury of converting money from the City of East Chicago, Indiana, in violation of 18 U.S.C. § 666(a)(1). Sentencing was scheduled for February 24, 2005, but he did not appear. Chief Judge Robert Miller issued a bench warrant, sentenced Kollintzas in absentia to a term of imprisonment, and ordered him to pay restitution of over $25 million pursuant to the Mandatory Victims Restitution Act of 1996 ("MVRA"), 18 U.S.C. § 3663A. Kollintzas has not been found.

The government quickly initiated efforts to collect a portion of the $25 million Kollintzas owes in restitution. On March 1, 2005, the government filed a Notice of Lien in Lake County, Indiana, where Kollintzas's property is located. The government also initiated garnishment proceedings before Chief Judge Miller pursuant to the FDCPA, 28 U.S.C. §§ 3001-3308, and served interrogatories on third-party account holders ("the garnishee-defendants") to determine the amounts they were holding and to verify the names on the accounts. Based on information Kollintzas had provided during the presentence investigation and the garnishee-defendants' interrogatory responses, the government decided to pursue the following assets ("the Assets"), all held in the sole name of Frank Kollintzas unless otherwise indicated:

• Northwestern Mutual Life Insurance tax-deferred annuity with a cash surrender value • School of East Chicago retirement package;

• Public Employees Retirement Fund account;

• Wachovia Securities account;

• Peoples Bank checking accounts owned by Frank and Joanna as joint tenants with rights of survivorship;

• Northwestern Mutual Life Insurance policies owned by Frank and with Frank listed as the person with the right to withdraw cash surrender values;

• Nationwide Retirement Solutions account;

• Tech Credit Union savings and checking accounts;

• Indiana Teachers Retirement Fund;

• Funds held by the City of East Chicago as a pension package; and

• Sandridge Bank savings and checking accounts.

On March 31, 2005—while the garnishment proceedings were pending and after the government's liens were perfected— Kollintzas's wife, Joanna, filed for divorce in Indiana state court. The state court issued an ex parte temporary restraining order prohibiting the garnishee-defendants, who had been served with the garnishment notice in Kollintzas's federal criminal case, from transferring any funds from the Assets. The government then served Mrs. Kollintzas with notice of the garnishment proceedings pursuant to the FDCPA, § 3202(c),¹ so that she could assert any claimed interest in the Assets.

Mrs. Kollintzas made a general appearance in the district court at a status conference, and at that time the court set a briefing schedule to address the government's motion for release of the specified funds for garnishment purposes. Mrs. Kollintzas then filed a brief identifying herself as an "intervenor" and asserting an interest in Frank's property based on the fact that she contributed income to the marriage. She did not, however, specify the amount of her contribution to the Assets, nor did she indicate why she was legally entitled to any of the Assets under state law. Instead, she argued more generally that the Assets were part of the "marital pot" and that it was the "province of the state trial court to determine what interest in marital property is held by Frank Kollintzas and what interest in marital property is held by Joanna Kollintzas."

The district court granted the government's motion to release funds. The court held that the government's liens relating to "all property and rights to property" of Frank Kollintzas were superior to Mrs. Kollintzas's claim to marital property in the divorce proceedings because the liens were perfected before she filed for divorce. Moreover, the court rejected Mrs. Kollintzas's generalized claim regarding her contributions to the marriage as insufficient to establish an interest in the Assets. Shortly after granting the government's motion, the district court issued final garnishment disposition orders for the Assets. Mrs. Kollintzas appealed.²

II. Discussion

A. Mrs. Kollintzas's status as an "interested person" under the FDCPA

Throughout these proceedings Mrs. Kollintzas has referred to herself as an "intervenor." This is procedurally incorrect. She never filed a motion to intervene, nor did the district court ever recognize her as an intervening party. The government initiated these FDCPA collection proceedings under the existing docket number in Frank Kollintzas's criminal case, and Mrs. Kollintzas participated in the proceedings through counsel after being served with the garnishment notice. We raised the question of Mrs. Kollintzas's status at oral argument, and after argument ordered supplemental briefing on the following questions: (1) whether intervention by a private party is proper in a criminal case; and (2) whether there is a basis for continuing jurisdiction in the district court to make further rulings in the criminal case.

There is no provision in the Federal Rules of Criminal Procedure for intervention by a third party in a criminal proceeding; intervention in civil proceedings is governed by Rule 24 of the Federal Rules of Civil Procedure, which does not apply in a criminal case. Mrs. Kollintzas argues that the FDCPA collection proceedings, although technically part of Frank Kollintzas's criminal case, were civil in nature and therefore she could have intervened as of right pursuant to Rule 24. The government sidesteps the question whether intervention is available in FDCPA proceedings initiated in the context of a criminal case; it takes the position that Mrs. Kollintzas is not an intervenor at all but rather an "interested person" entitled to participate in the collection proceedings under the FDCPA in order to assert an interest in the property subject to garnishment.

We need not decide whether intervention is ever appropriate in this situation; as we have noted, Mrs. Kollintzas never sought to be recognized as an intervening party, a step which can only be accomplished by motion. See FED. R. CIV. P. 24(c) ("A person desiring to intervene shall serve a motion to intervene upon the parties as provided in Rule 5," which "shall be accompanied by a pleading. . . ."). Mrs. Kollintzas's participation in the garnishment proceedings was as a person with an interest in property subject to collection remedies under the FDCPA. That statute is applicable to the enforcement of restitution orders and requires the government to serve notice on "each person whom the United States . . . has reasonable cause to believe has an interest in property to which the remedy is directed." 28 U.S.C. § 3202(c).

It has been established in this and other circuits that district courts may entertain civil garnishment and other collection proceedings as postjudgment remedies within an underlying criminal case; nothing precludes the government from initiating a collection proceeding under an existing criminal docket number in order to collect a fine or restitution ordered as part of the criminal sentence. United States v. Vitek Supply Corp., 151 F.3d 580, 585-86 (7th Cir.1998) (holding the government may proceed against a corporate defendant's alter egos as a post-judgment remedy in a criminal case in order to collect on restitution obligation of individual and corporate defendants); United States v. Mays, 430 F.3d 963, 966 (9th Cir.2005) (holding FDCPA procedures are available as post-judgment remedies in criminal cases) (cert. denied, 546 U.S. 1207, 126 S.Ct. 1416, 164 L.Ed.2d 113 (Feb. 21, 2006)); United States v. Timilty, 148 F.3d 1, 3 (1st Cir.1998) (holding the government need not reduce a restitution order to a civil judgment prior to enforcing it; the government may proceed with collection action within a criminal case); United States v. Thornton, 672 F.2d 101, 106 (D.C.Cir.1982) (stating "[i]t is not necessary [for the government] to start a new action, civil or criminal," to proceed with garnishment).

The Ninth Circuit's decision in Mays is instructive here. In Mays, the district court entered a restitution order against the...