U.S. v. Yielding

657 F.3d 722

UNITED STATES of America, Plaintiff–Appellee,

v.Geff YIELDING, Defendant–Appellant,Vespa Beverages LLC; Vespa Holdings, Inc.; Samuel A. Perroni, PA; Shelly H. Koehler, PA, Third Party–Appellants.

Nos. 10–2133

10–2162.

United States Court of Appeals, Eighth Circuit.

Submitted: March 15, 2011.Filed: Oct. 5, 2011.

Timothy Oliver Dudley, argued and on the brief, Little Rock, AR, for appellant.Stacey E. McCord, AUSA, argued and on the brief, Jane Duke, AUSA, on the brief, for appellee.Before LOKEN and COLLOTON, Circuit Judges, and NELSON,^* District Judge.LOKEN, Circuit Judge.

Geff Yielding was convicted of aiding and abetting a violation of the federal Anti–Kickback Statute and the falsification of a document. The sentence included an order to pay $944,995.84 in restitution to various victims. With his direct appeal pending, the government learned that Yielding would be paid $160,000 to settle unrelated civil litigation. It moved the district court for, inter alia, a temporary restraining order (TRO) enjoining “defendant, his attorney or agents from spending, dispersing, investing or otherwise placing the [$160,000] beyond the reach of the United States while this issue is resolved.” The district court issued the TRO.

After the government and Yielding submitted extensive documentary evidence and argument, the district court ordered that Yielding “pay $80,000 to the government to apply to his restitution debt,” following which the TRO would be dissolved. Yielding and third parties claiming an interest in the settlement proceeds separately appeal the TRO and the payment order. We assigned these appeals and the criminal appeal to the same panel, which heard oral arguments sequentially on the same day. Contemporaneous with this opinion, we are filing an opinion affirming Yielding's conviction, vacating the restitution order, and remanding for further consideration of the restitution issue. We likewise vacate the order directing Yielding to pay $80,000 of his now-vacated restitution liability. We decline to vacate or dissolve the TRO.

I. The Settlement in Question

The civil litigation grew out of Yielding's dispute with a former business associate, Luther Pate, concerning their complex business venture to manufacture and distribute an energy drink, “Killer Buzz.” In March 2010, following his criminal conviction and sentencing, Yielding settled the litigation by entering into a consent judgment incorporating the terms of an Asset Purchase Agreement (“APA”).¹ The APA provided that an entity controlled by Pate would purchase for $160,000 all assets owned in connection with the manufacture and distribution of Killer Buzz by Yielding, Vespa Holdings, Inc. (“VHI”), and Vespa Beverages, LLC (“VBL”). The APA and its schedules listed Yielding as the sole shareholder of VHI, and VHI as the sole member of VBL. The purchase price was paid by a $160,000 check dated March 18, 2010, payable to “Geff Yielding, Perroni & Koehler & Perroni Law Firm,” attorneys who represented Yielding, VHI, and VBL in various matters.

In his initial response to the government's motions, filed after the TRO issued, Yielding submitted supporting documents and argued that, although the APA named him as a “Seller,” the only assets conveyed in which he had a personal ownership interest were a used copier valued at $200 and several vehicles subject to liens that exceeded their value. He further asserted that the other assets sold belonged to VHI and VBL, and that the sale proceeds were “encumbered by judgment creditors and lien holders that provided services to the corporations.” Therefore, he asserted, no part of the settlement proceeds was available to him to apply to his restitution obligation. The government promptly moved for a continuance and discovery to investigate these competing claimants. The district court denied a continuance and scheduled a hearing on the government's pending motion to adjust Yielding's restitution payment schedule.

At the May 7, 2010 hearing, Yielding presented evidence that various judgment creditors, attorneys, and other secured and unsecured creditors of Yielding, VHI, and VBL had superior interests in the settlement proceeds. He also submitted documents reflecting that he transferred his ownership interest in VHI to an irrevocable trust in May 2009, and undated minutes from a “special meeting” of the VHI Board of Directors authorizing VHI to pay “any and all fees and expenses incurred, and to be incurred, as a result of the efforts of Perroni & Koehler and The Perroni Law Firm to defend the corporation, its subsidiary ... and its President and Secretary, Geffrey A. Yielding.” Granted additional time to respond, the government filed a brief conceding that Perroni & Koehler had a prior lien on $69,386.06 of the settlement proceeds for services rendered in the Pate litigation. However, the government asserted, Yielding is the owner of the $160,000 payment because VHI and VBL were not operating when the payment was made; the restitution order creates a claim prior or superior to all other creditor claims to the proceeds; and therefore Yielding should be ordered to pay “a large portion” of the remaining $90,614 toward his restitution obligation. VHI, VBL, and attorneys Samuel Perroni and Shelly Koehler (collectively, the “third-party appellants”) submitted a brief asserting lack of jurisdiction and contesting the government's contentions that Yielding owns the settlement proceeds and the government's restitution claim has priority.

On May 17, the district court ordered Yielding to pay $80,000 of the proceeds to be applied to his restitution debt. The settlement check “clearly lists Yielding as the recipient,” the court explained, “and nothing indicates that there are any lien holders or creditors having priority over the victims who are to be paid restitution.” Therefore, the entire $160,000 is “available to” Yielding. Taking into account the interest of the attorney co-payees, the court concluded that fifty percent should be applied to his restitution obligation. Yielding and the third-party appellants then appealed both the grant of a TRO and the payment order.

II. Validity of the TRO

Third-party appellants argue on appeal,² as Yielding argued to the district court, that the court had no subject matter jurisdiction to issue a TRO in this criminal case because the federal All Writs Act is not an independent source of federal jurisdiction. The All Writs Act empowers federal courts to issue “all writs necessary or appropriate in aid of their respective jurisdictions and agreeable to the usages and principles of law.” 28 U.S.C. § 1651(a). This contention is without merit because the district court had jurisdiction to enforce its restitution order.

The Attorney General is responsible for the collection of unpaid restitution. See 18 U.S.C. § 3612(c). In the Mandatory Victims Restitution Act of 1996, Pub.L. No. 104–132, §§ 201–211, 110 Stat. 1214, 1227–41, Congress granted the Attorney General expanded authority to enforce a sentencing court's restitution order:

(m)(1)(A)(i) An order of restitution may be enforced by the United States in the manner provided for in subchapter C of chapter 227 and subchapter B of chapter 229 of this title; or

(ii) by all other available and reasonable means.

* * * * * *

(n) If a person obligated to provide restitution ... receives substantial resources from any source, including ... settlement ... during a period of incarceration, such person shall be required to apply the value of such resources to any restitution or fine still owed.

18 U.S.C. § 3664(m), (n); see United States v. Witham, 648 F.3d 40, 45–46 (1st Cir.2011). The United States may enforce a restitution order “in accordance with the practices and procedures for the enforcement of a civil judgment under Federal law or State law.” 18 U.S.C. § 3613(a), part of subchapter B of chapter 229.³ A civil action under the Federal Debt Collection Procedure Act, 28 U.S.C. § 3001 et seq., is the primary—but not the exclusive—procedure for collecting a restitution debt to the United States. See United States v. Timilty, 148 F.3d 1, 5 (1st Cir.1998).

Consistent with the plain import of these statutes, numerous courts have held that a sentencing court has jurisdiction to enforce its restitution order in the criminal case. See United States v. Resnick, 594 F.3d 562, 565, 569 (7th Cir.2010); United States v. Mays, 430 F.3d 963, 965–66 (9th Cir.2005), cert. denied, 546 U.S. 1207, 126 S.Ct. 1416, 164 L.Ed.2d 113 (2006); Lyndonville Sav. Bank & Trust Co. v. Lussier, 211 F.3d 697, 702–03 (2d Cir.2000); Timilty, 148 F.3d at 3–4; United States v. Scarboro, 352 F.Supp.2d 714, 716–17 (E.D.Va.2005). A number of those decisions upheld, as necessary and appropriate in aid of this jurisdiction, orders issued under the All Writs Act restraining a restitution debtor from diverting or concealing assets to avoid paying restitution. See United States v. Simmons, No. 07–CR–30, 2008 WL 336824, at *1 (E.D.Wis. Feb. 5, 2008); United States v. Runnells, 335 F.Supp.2d 724, 725–26 (E.D.Va.2004); United States v. Abdelhadi, 327 F.Supp.2d 587, 598–601 (E.D.Va.2004). The court in Abdelhadi discussed various statutory mechanisms available to enforce its restitution order and upheld equitable relief under the All Writs Act because none could be “instantly implemented” to ensure that the “defendant's assets [would] not be secreted, wasted or placed beyond the reach of the victim or the government.” 327 F.Supp.2d at 600–01 & nn. 20, 21; see also 18 U.S.C. § 3664(m)(1)(A)(ii) (restitution orders may be enforced “by all other available and reasonable means”); 28 U.S.C. § 3202(a) (court may use the All Writs Act “as necessary to support” postjudgment remedies). We agree that a sentencing court has jurisdiction to enforce its restitution order and may use the All Writs Act, when necessary and appropriate, to prevent the restitution debtor from frustrating...