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United States v. Taylor

United States District Court, Eighth Circuit

November 6, 2013

UNITED STATES OF AMERICA, Plaintiff,
v.
RUTH TAYLOR, Defendant.

ORDER

THOMAS D. THALKEN, Magistrate Judge.

This matter is before the court on the defendant Ruth Taylor's (Taylor) Written Objection to Answer of the Garnishee and Request for Hearing (Filing No. 45)[1] and Amended Written Objection to Answer of the Garnishee and Request for Hearing (Filing No. 51). Taylor filed an amended brief (Filing No. 56) and affidavit (Filing No. 56-1) in support of the objection. The United States filed a brief (Filing No. 52), an index of evidence (Filing No. 53), and a reply brief (Filing No. 57), with an attached affidavit (Filing No. 57-1) in opposition to Taylor's objection.

BACKGROUND

On December 6, 2012, the court accepted Taylor's plea agreement and sentenced Taylor for fraudulent representation to obtain disability benefits in violation of 42 U.S.C. § 408(a)(4). See Filing No. 32. The sentence included a three-year term of probation and restitution in the amount of $61, 118.99, due and payable immediately. Id. at 3, 6. As of September 10, 2013, $55, 134.39 remained owing on the restitution amount. See Filing No. 53-1 Donato Decl. ¶ 4. The conditions of probation include Taylor making payments on the restitution and "provid[ing] the probation officer with access to any requested financial information." See Filing No. 32, p. 4 ¶¶ 5, 7.

Upon request from her probation officer, Taylor provided personal financial statements on February 15, 2013, and August 6, 2013. See Filing No. 53-1 p. 40-52 Donato Decl. Exs. E1 and E2. Neither of the statements disclosed any account containing funds in excess $171, 000. Id. However, in response to a Writ of Garnishment served on August 9, 2013, a credit union provided information that Taylor is the joint owner of a checking account and a savings account, which has an approximate value in excess of $171, 000. See Filing No. 49.

Taylor argues the credit union savings account is exempt from garnishment, pursuant to Neb. Rev. Stat. § 44-371, because the account contains only life insurance proceeds. See Filing No. 56 - Brief p. 1. Taylor provided an affidavit explaining her biological son, Darrell Taylor, died in 2011. See Filing No. 56-1 Taylor Aff. ¶ 2. Taylor states she was the named beneficiary of a life insurance policy and received $286, 103.55, after expenses, on February 27, 2012. Id. ¶¶ 3-4. Taylor states the insurance proceeds were initially placed in a benefit management account then transferred to the credit union savings account. Id. ¶ 5. Taylor states the only money ever deposited into the credit union savings account was the proceeds from the life insurance policy. Id. ¶ 6. Taylor further explains:

13. I failed to disclose the contents of this account to the probation office purely as an oversight. I certainly recognize how the sequence of events leads to the assumption that was made by probation and alluded to in the brief by the government, however, the way the request was phrased to me led me to believe they were not seeking information regarding this account;
14. The additional $40, 500 that was put into the account between June 30, 2013 and September 11, 2013 was deposited by myself. I removed the money in an attempt to pay the remaining restitution amount to the probation office. I was informed that this is not the correct procedure for doing this and I deposited the money back into the account;

Id. ¶¶ 13-14.

ANALYSIS

Taylor seeks to protect her interest in the credit union savings account from garnishment arguing the entire amount constitutes life insurance proceeds and, as such, is exempt from garnishment under Nebraska state statute, which provides:

all proceeds, cash values, and benefits accruing under any annuity contract, under any policy or certificate of life insurance payable upon the death of the insured to a beneficiary other than the estate of the insured, or under any accident or health insurance policy shall be exempt from attachment, garnishment, or other legal or equitable process and from all claims of creditors of the insured and of the beneficiary if related to the insured by blood or marriage, unless a written assignment to the contrary has been obtained by the claimant.

Neb. Rev. Stat. § 44-371(1)(a).

The United States moved for writ of garnishment under the Federal Debt Collection Procedures Act (FDCPA) seeking seizure of the defendant's interests in her savings account to satisfy the restitution order. The parties agree the statutory prerequisites to garnishment were satisfied under 28 U.S.C. § 3205(b). See Filing No. 52 - Brief p. 4; Filing No. 56 - Response p. 2. The defendant has the burden of proving any valid grounds exist to sustain an objection to garnishment. See 28 U.S.C. §§ 3202(d)(1), 3205(c)(5). The United ...


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