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United States v. Scharton

United States District Court, D. Nebraska

December 31, 2018

UNITED STATES OF AMERICA, Plaintiffs,
v.
MARCELLA M. SCHARTON, Defendant.

          ORDER

          Cheryl R. Zwart, United States Magistrate Judge

         Pending before the court is Defendant Scharton's Objection to the garnishment of her checking account at Union Bank and Trust. (Filing No. 193). For the reasons stated below, the objection will be overruled.

         FACTS OF RECORD

         Defendant Scharton was indicted for defrauding, and providing false statements to, the Social Security Administration. She was found guilty by a jury on August 25, 2011. (Filing No. 113). A sentencing hearing was held on February 14, 2012, with judgment entered on February 16, 2012. (Filing No. 140). Pursuant to that judgment, Defendant Scharton was ordered to "pay restitution in the amount of $115, 010.40, jointly and severally with [her co-defendant, ] David Seevers ..." for losses incurred by the Social Security Administration. (Filing No. 140, at CM/ECF p. 3). The sentencing order states the "United States of America may institute civil collection proceedings at any time to satisfy all or any portion of the criminal monetary penalty," and without limiting that authority, included a payment schedule stating that upon "release from prison," the defendant shall make "monthly installments of $100 or 3% of the defendant's gross income, whichever is greater; . . . until the criminal monetary penalty is paid in full. . . ." (Filing No. 140, at CM/ECF pp. 3, 6).

         This judgment was appealed, and it was affirmed by the Eighth Circuit Court of Appeals on December 4, 2012, (Filing No. 160), with the Eighth Circuit's mandate entered on December 27, 2013. (Filing No. 162).

         On October 29, 2018, the government served a writ of garnishment on Union Bank and Trust to recover $46, 472.88, the remaining restitution owed by Scharton and her co-defendant as of that date. (Filing No. 176).

         Union Bank answered the writ on November 5, 2018, identifying a checking account with a balance of $4642.47.[1] (Filing No. 181). Scharton objected to the writ of garnishment on December 17, 2018. (Filing No. 193).

         ANALYSIS

         Defendant admits the government is authorized to collect unpaid restitution, (see, 18 U.S.C. § 3612), and can initiate garnishment proceedings to facilitate those collection efforts. 28 U.S.C. § 3205. (Filing No. 193, at CM/ECF pp.2-3). Nonetheless, Scharton objects garnishment of her Union Bank checking account, arguing:

1) Union Bank funds in her checking account were derived from wage income and garnishing those funds will violate the federal wage limit exemptions in the Consumer Credit Protection Act (CCPA), 15 U.S.C.A. §§ 1671 etseq.;and
2) Defendant has not defaulted on the payments owed under a 31 U.S.C.A. § 3720D agreement arising from the parties' course of dealing and Defendant's history of payments.

(Filing No. 193).

         The government did not serve a writ of garnishment on Scharton's employer. Instead, it seeks to garnish the bank account where Scharton's net wages are deposited.

         The exemptions under the CCPA are "limited to periodic payments of compensation and do not pertain to every asset that is traceable in some way to such compensation." Kokoszka v. Belford, 417 U.S. 642, 651 (1974). The CCPA garnishment limitations do not extend to wages deposited in financial institutions. Userv v First Nat. Bank, 586 F.2d 107 (9th Cir 1978); United States v. Tilford, 2014 WL 11048791 (N.D.Tex. 2014); United States v. Thomas, No. 08-15048, 2009 WL 4638862, at *2 (E.D. Mich. Dec. 1, 2009); United States v. Armstrong, No. 3:04-CV-1852-H, 2005 WL 937857, at *4 (N.D. Tex. Apr. 21, 2005), report and recommendation adopted, No. CIV.A.3:04CV1852-H, 2005 WL 1214669 (N.D. Tex. May 20, 2005); Dunlop v First Nat. Bank, 399 F.Supp 855 (DC ...


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