How Restitution Affects White Collar Sentencing

A white collar criminal conviction often carries more than a prison sentence. In cases involving fraud, embezzlement, or other financial losses, the court will order the defendant to pay restitution to the victim. This can take the form of a single lump-sum payment, a payment plan over time, or even “in-kind” payments in the form of particular assets.

Texas Judge Limits Feds’ Ability to Garnish Fraud Defendant’s Pension

And one thing you can be sure of: When the victim of the white collar crime is the government itself, the state will make every effort to obtain as much restitution as possible.

A recent decision from a federal judge in Dallas illustrates a scenario where the government’s zeal went a little too far. This case, United States v. Foster, involves a woman pleaded guilty to “federal program fund.” The court subsequently the defendant to pay $600,000 in restitution as part of her sentence.

The government sought to garnish the defendant’s annuity from her pension account. Normally, the government is not allowed to garnish more than 25 percent of a defendant’s disposable earnings. But there is an exception to this 25 percent limit for “substantial resources from any source” the defendant receives while in prison.

Naturally, the government argued this exception applied. The defendant replied that since the pension benefits were “earnings,” they did not fall under the exception. U.S. District Judge Jane J. Boyle agreed with the defendant’s reading of the law. She said “periodic pension payments do not fall under [the exception to the 25 percent limit], at least when the earnings are known to the Government at the time of sentencing,” which in this case they were.

Judge Boyle acknowledged there are other courts that have accepted the government’s interpretation and applied the exception to any money received by a defendant while in jail. But in the Fifth Circuit, which includes Texas, binding precedent suggests the exception only applies to “windfalls or sudden financial injections.”

For example, if a defendant received a substantial inheritance from a deceased relative while in jail, the exception would apply. The government could then garnish the inheritance money to satisfy a restitution order without having to deal with the 25-percent garnishment restrictions. Indeed, such a “windfall during imprisonment triggers an automatic payment requirement.”

But in this case, the defendant’s future pension benefits are not an unexpected windfall. To the contrary, the defendant disclosed her pension to the government as part of the sentencing process. Under these circumstances, Judge Boyle said, it would be unfair to let the government make an “endrun around the limitation Congress enacted.” Of course, this still means the government can still take 25 percent of the defendant’s annuity payments.

Speak with a League City, Galveston, and Houston White Collar Criminal Defense Attorney Today

Restitution often imposes a substantially greater (and long-lasting) burden on white collar defendants than even imprisonment. This is why you always need to take such charges seriously. If you have been charged with fraud or a related white collar offense and need representation from an experienced Houston criminal defense lawyer, contact the Law Offices of Tad Nelson & Associates today.(713) 802-1631.