U.S. v. Timilty

• Decision Date: 08 May 1998
• Docket Number: No. 97-2371,97-2371
• Citation: 148 F.3d 1
• Parties: UNITED STATES of America, Appellant, v. Joseph TIMILTY, Appellee. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 1

148 F.3d 1

UNITED STATES of America, Appellant, v. Joseph TIMILTY, Appellee.

No. 97-2371.

United States Court of Appeals, First Circuit.

Heard May 8, 1998.

Decided June 16, 1998.

David S. Mackey, Assistant U.S. Attorney, with whom Donald K. Stern, U.S. Attorney, was on brief, for appellant.

Morris M. Goldings, with whom Alice E. Moore, Kirsten Nelson Callahan, and Mahoney, Hawkes & Goldings were on brief, for appellee.

Before STAHL, Circuit Judge, CYR, Senior Circuit Judge, and LYNCH, Circuit Judge.

LYNCH, Circuit Judge.

The United States obtained a criminal verdict against Joseph Timilty in 1993 and an attendant order that Timilty pay restitution to four banks which had been defrauded in a real estate development project. This appeal concerns questions about the limits on the government's ability to enforce such restitution orders.

The restitution order was for an amount not to exceed $60,000, although the total losses to the four banks were almost $3 million. The district court had declined to order full restitution, finding that Timilty had no money. Timilty paid only $1,866.21 of the restitution ordered. The government then sought to utilize debt collection procedures to require Timilty to appear and submit to an examination about his property and ability to pay. Timilty resisted.

The government grounded its efforts in the Victim and Witness Protection Act ("VWPA") (as it then stood), ¹ 18 U.S.C. § 3663, and Fed.R.Civ.P. 69, and through those laws invoked Massachusetts debt collection practices under Mass. Gen. Laws ch. 224, § 14. That state statute permits the type of examination of judgment debtors which the government sought here. Timilty countered with a motion to dismiss, arguing that the Federal Debt Collection Procedure Act ("FDCPA"), 28 U.S.C. §§ 3001-3308, preempted the field, that the VWPA thus gave no authority to the government, and that the FDCPA was not available to the United States since it was attempting to collect on private debts. To the extent that the United States was acting on behalf of the Resolution Trust Company, which had taken over one of the four defrauded banks, the FDCPA was still not available, Timilty argued, because the underlying contract was not entered into by the United States but by the bank when it was a private entity. See 28 U.S.C. § 3002(3). The government is not left without recourse, according to Timilty; it must first reduce each restitution order to a civil judgment and then it may seek to enforce that judgment. Timilty argues that this civil judgment method is fairer in that it will give both sides the opportunity for discovery. Timilty's motion to dismiss was granted.

The proper procedure for enforcing restitution orders is an issue of some importance and one of first impression for this court. We reverse the dismissal of the petition. We hold that the government may proceed to enforce restitution orders for sums owing to private persons or entities under the VWPA, that the VWPA is not preempted by the FDCPA as to such orders, and that the government need not reduce a restitution order first to a civil judgment before invoking Fed.R.Civ.P. 69 and its reference to state law debt collection procedures. We do so confident that there are adequate mechanisms available to the trial judges to allow for discovery and such process as is due.

I

On May 26, 1993, Timilty was convicted of one count of conspiracy to commit wire fraud in violation of 18 U.S.C. § 371. Four banks were injured by the scheme. On August 31, 1993, Timilty was sentenced to four months of imprisonment and two years of supervised release, and ordered to pay "restitution ... in an amount not to exceed $60,000, and in a manner prescribed by the Probation Department." The criminal judgment provided that "any payment shall be divided proportionally among the payees unless otherwise specified here."

On February 6, 1997, the government filed petitions against Timilty and fifty-five other "criminal judgment debtors," each with outstanding restitution obligations, to gain use of the post-judgment enforcement procedure contained in Mass. Gen. Laws ch. 224, § 14: an order that each defendant "appear at [an assigned] time and place ... and submit to an examination relative to his property and ability to pay." Each petition was filed under the criminal docket number of each individual felon.

On the same day, the government filed an "Omnibus Motion to Consolidate Fifty-Six Judgment Debtor Examination Petitions for the Purpose of Conducting One Initial Hearing." This motion sought an order that all the defendant-debtors appear at one initial hearing at which the defendant-debtors would have two choices: (1) negotiate payment of the outstanding debt with the U.S. Attorney's Office, or (2) have a debtor examination before the district judge originally assigned to the debtor's case (or the magistrate judge to whom the district judge is paired). Aside from the one initial hearing, the motion did not seek to transfer or reassign the fifty-six debtor examination petitions away from the original sentencing judges.

The omnibus motion was initially granted and an order issued that the debtors appear for a scheduling conference before a magistrate judge. The court later decided it was inappropriate to have the debtors appear at such a hearing. The court entered an order canceling the May 15 examination and returned each petition to the appropriate sentencing judge for further proceedings. In this the court was plainly correct and the government wrong: it is the sentencing judges, highly informed about the reasons for the restitution orders, before whom further proceedings should have been sought.

The petition to examine Timilty was thus returned to his sentencing judge. On July 12, 1997, the government filed a motion for clarification of the restitution order in Timilty's case. This motion asked how the $60,000 restitution order would be allocated among the four banks injured in Timilty's scheme. Timilty filed a motion to undertake discovery of Citicorp Mortgage, Inc., one of the four banks, to see whether they would share in any award. Neither motion was ruled on.

On October 7, 1997, Timilty's motion to dismiss was granted by margin order without explanation. ² The government appeals that dismissal.

II

The order of restitution against Timilty was entered under the authority of the VWPA, 18 U.S.C. § 3663. See United States v. Friedman, 143 F.3d 18, 21-22 (1st Cir.1998) (restitution ordered to victims of defendant's offense). That statute, at subpart (h), discusses the means of enforcement of the restitution order:

(h) An order of restitution may be enforced--

(1) by the United States--

(A) in the manner provided for the collection and payment of fines in subchapter B of chapter 229 of this title; or

(B) in the same manner as a judgment in a civil action; and

(2) by a victim named in the order to receive the restitution, in the same manner as a judgment in a civil action.

18 U.S.C. § 3663(h). Timilty's argument raises the question of the meaning of the phrase "in the same manner as a judgment in a civil action" in § 3663(h)(1)(B). Timilty urges that the language means the United States must first obtain a civil judgment. We disagree.

Such a reading impermissibly reads the "in the same manner as" language out of the statute. A restitution order may be enforced in like manner as a civil judgment; it need not be reduced first to a civil judgment. While this point has not been specifically adjudicated, several courts have read § 3663 as having that meaning. In United States v. Porter, 90 F.3d 64 (2d Cir.1996), the court noted that New York (along with federal) law governed the extent to which a judgment debtor's wages could be garnished to pay an outstanding restitution order; the court did not suggest that § 3663 contained an implicit requirement of converting the restitution order into a civil judgment as a prerequisite for triggering state law enforcement proceedings. See id. at 69-70. And in United States v. Cannistraro, 694 F.Supp. 62 (D.N.J.1988), the court wrote that:

The statutes concerning the enforcement of criminal judgments which impose fines or restitution provide that these monetary judgments entered in criminal cases may be enforced by execution against the property of the defendant in the same way as judgments in civil cases.

Id. at 76-77 (citing 18 U.S.C. §§ 3613, 3663). The court held that the government "acted properly," id. at 77, under New Jersey law when it obtained a writ of execution to enforce the criminal judgment (which included both restitution and fines) against the defendant pursuant to Fed.R.Civ.P. 69(a); the court did not suggest that any intermediate steps needed to be taken. See id.; see also United States v. Berardini, 112 F.3d 606, 611 (2d Cir.1997) (reaching same conclusion regarding applicability of New York law).

Courts have read older statutes with similar language as having the same meaning. In United States v. Thornton, 672 F.2d 101 (D.C.Cir.1982), the government sought to enforce a criminal fine under a statute providing that the fine could be enforced "in like manner as judgments in civil cases." Id. at 103. The court wrote that:

The manner of enforcing a judgment imposing a criminal fine in favor of the United States is provided for by 18 U.S.C. § 3565, Fed.R.Civ.P. 69(a), and 28 U.S.C. § 2413.

Thornton, 672 F.2d at 103. The court did not suggest that it was necessary to start a new action, civil or criminal, to engage in supplementary process proceedings. See id. at 102-106. ³ See also United States v. Wickenhauser, 710 F.2d 486, 488 n. 1 (8th Cir.1983) (interpreting § 3565); United States v. Powell, 639 F.2d 224, 226 (5th Cir. Unit A Mar.1981) (same).

The legislative history of the VWPA supports the conclusion that restitution orders may be enforced like civil judgments without the order being first reduced to a judgment. The Senate Report...