U.S. v. Lampien

• Decision Date: 12 July 1996
• Docket Number: No. 95-3396,95-3396
• Citation: 89 F.3d 1316
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Carol J. LAMPIEN, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1316

89 F.3d 1316

UNITED STATES of America, Plaintiff-Appellee, v. Carol J. LAMPIEN, Defendant-Appellant.

No. 95-3396.

United States Court of Appeals Seventh Circuit.

Argued March 26, 1996.

Decided July 12, 1996.

Cheryl B. Schacht (argued), Office of the U.S. Attorney, Madison, WI, for Plaintiff-Appellee.

Brendan J. Rowen (argued), Wauwatosa, WI, for Defendant-Appellant.

Before ESCHBACH, MANION and ROVNER, Circuit Judges.

ILANA DIAMOND ROVNER, Circuit Judge.

Pursuant to a written plea agreement, Carol J. Lampien pleaded guilty to a one-count information charging her with embezzling funds from an insurance company in violation of 18 U.S.C. § 1033(b)(1)(A). Lampien was sentenced to twenty-four months in prison, to be followed by a three-year term of supervised release. Pursuant to the Victim and Witness Protection Act of 1982 ("VWPA"), the district court ordered Lampien to pay full restitution to the victim, Wausau Insurance Company (Wausau), in the amount of $498,972.94. In addition to requiring Lampien to make monthly payments of $350 in partial satisfaction of the restitution obligation, the court also directed her to make a lump sum payment that included the execution of a quitclaim deed conveying her interest in her home to Wausau. The court further ordered Lampien to provide it with a copy of her mother's will and of Lampien's disclaimer of interest in her mother's estate, by which she had allowed her share of the estate to pass to her son, Terry J. Lampien. During the pendency of this appeal, it was determined that Lampien's disclaimer of interest was invalid, and both Lampien and her son were subsequently held in civil contempt for refusing to relinquish assets that were ordered transferred to the victim as part of Lampien's restitution obligation. ¹ Carol Lampien appeals the district court's restitution order on the grounds that (1) her interest in her home is protected by the Wisconsin homestead exemption, Wis. Stat. § 815.20 (1994), which prevents the court from ordering her to relinquish that interest in favor of any creditor, with certain enumerated exceptions she asserts are inapplicable to this case, (2) the district court had no authority under the Victim and Witness Protection Act of 1982, as amended, 18 U.S.C. §§ 3663-3664 (1990), to order Lampien to quitclaim her home to Wausau, and (3) the court abused its discretion in ordering the payment of full restitution, and in requiring Lampien to make monthly restitution payments that are clearly beyond her means. For the reasons that follow, we vacate the restitution order and remand for further proceedings.

I. BACKGROUND

At the time that Wausau discovered the embezzlement, Lampien had been employed in the company's Milwaukee branch office for forty-two years. In early August 1993, Lampien held the position of Claims Services Representative in the Workers' Compensation Claims Unit when she began misappropriating funds by issuing checks to fictitious payees on existing workers' compensation accounts and having the checks mailed to her home. To complete the fraudulent scheme, Lampien forged the signatures of the nonexistent payees, endorsed the checks over to herself, and cashed them. The embezzlement escaped detection until mid-March 1995, when it was accidentally discovered by two of Lampien's co-workers. At that time, Wausau determined that 521 fraudulent checks totalling $498,972.94 had been negotiated by Lampien in this manner. When confronted with evidence of the embezzlement, Lampien freely admitted what she had done, and explained how she was able to conceal her activities from Wausau for a period of approximately nineteen months. Lampien then entered into a plea agreement with the government, conceding responsibility for the total amount of loss that had come to light as a result of Wausau's investigation. On July 19, 1995, she pleaded guilty to embezzlement from an insurance company in violation of 18 U.S.C. § 1033(b)(1)(A). The district court ordered the preparation of a presentence report and advised Lampien that she would be required to cooperate in its preparation by providing the probation department with further information concerning her offense.

Lampien's sentencing hearing took place on September 27, 1995. At the hearing, the government advised the court that Lampien had been highly reluctant to cooperate with the probation department in disclosing her assets, and that she had failed to inform the probation department that her mother had died and had left an estate. Although the sentencing report was quite vague in accounting for Lampien's disposition of the embezzled funds, the government did not indicate that any part of those funds remained in Lampien's control. In addition to sentencing Lampien to a twenty-four month term of imprisonment and three years of supervised release, the district judge, over defense counsel's objections, ordered Lampien to make full restitution to Wausau in the amount of $498,972.94. The restitution obligation took the form of a lump sum payment due within thirty days, followed by a series of installment payments of at least $350 per month, set to begin thirty days from the date of sentencing and to terminate six months prior to the expiration of Lampien's supervised release. To satisfy the initial lump sum payment, the district court ordered Lampien to execute a quitclaim deed conveying her interest in her home to Wausau. ² The court also ordered Lampien to transfer the value of her ITT-Hartford variable rate annuity to Wausau and to pay Wausau $7,500 in cash, all within thirty days of the sentencing hearing. The district court estimated the value of the assets Lampien was ordered to relinquish to be $99,172, or approximately one-fifth of the total restitution owed to Wausau, thus leaving approximately $400,000 to be paid in monthly installments over a period of fifty-four months.

In setting the minimum monthly installment payment of $350, the judge relied on the budget submitted by Lampien to the probation department and incorporated in Lampien's presentence report. Accepting the accuracy of the figures in the presentence report, the court noted that Lampien was due to receive a monthly pension benefit from Wausau of $920.69, and that Lampien would also be eligible to receive $716 per month in Social Security benefits upon attaining the age of sixty-two. According to the items listed in the budget, Lampien would thus receive a gross income of $1,636.69 per month, and incur expenses of $1,345.53 per month, leaving substantially less than the requisite $350 per month the court had allocated as the minimum restitution payment. Although noting that neither party had anticipated that the initial lump sum payment would include the relinquishment of Lampien's home, the district judge nevertheless ordered Lampien to quitclaim her home to Wausau. When counsel pointed out that Lampien's monthly budget had been computed on the assumption that Lampien would retain ownership of her home free of any mortgage payments, and that her housing expenses would thus entail property taxes, homeowner's insurance and maintenance costs rather than rental payments, the district court replied that when relieved of the expenses associated with owning a home and an automobile, Lampien would be able to afford approximately $380 per month in rent, and that in any event, Lampien could live with her son Terry in her late mother's house for a period of time after her release from prison. In response to counsel's objection that the restitution obligation would be impossible to fulfill given Lampien's lack of earning capacity and limited means, the district judge asserted that "this defendant does have the earning potential and the capacity to pay full restitution." (Sentencing Tr. at 30.)

During the pendency of this appeal, it was determined that Lampien had failed to transfer the amount of her ITT-Hartford annuity (less taxes and penalties for early withdrawal) to Wausau as ordered by the court. At a contempt hearing held on February 8, 1996, it was established that Lampien had provided her attorney with a nonnegotiable check, ostensibly representing the funds in the annuity account. Meanwhile, Lampien had gained access to those funds without her attorney's knowledge by negotiating a different instrument. She then retained the funds from the annuity rather than turning them over to Wausau as required by the court's restitution order. The district court accordingly held Lampien in civil contempt. Following oral argument, this court was advised that Lampien's disclaimer of interest in her late mother's estate had been held invalid under state law, and that Lampien's share of the estate thus did not pass to her son as had been assumed at the time the district court entered the restitution order.

II. DISCUSSION

A. The Victim and Witness Protection Act and homestead property

Lampien challenges the district court's order directing her to execute a quitclaim deed to her homestead on two grounds. First, Lampien maintains that the VWPA does not authorize a court to force an involuntary disposition of homestead property considered exempt under state law, and that the applicable Wisconsin statute, Wis. Stat. § 815.20 (1994), provides that $40,000 of the value of her home is beyond the reach of the court's restitution order. Second, Lampien contends that if her homestead may be used to satisfy the restitution order, the district court nevertheless exceeded its authority under the VWPA when it ordered her to execute a quitclaim deed to the property in favor of Wausau. In response, the government contends that the Wisconsin homestead exemption is preempted by the VWPA, which expressly allows the district court to reach any property belonging to the defendant for the purpose of making restitution to the victim. The government further argues that the court's decision to order Lampien to execute the quitclaim deed was well...