United States v. Evans

48 F.4th 888

UNITED STATES of America, Plaintiff - Appellee

v.Robert Carey EVANS, Defendant - Appellant

No. 21-3114

United States Court of Appeals, Eighth Circuit.

Submitted: April 15, 2022

Filed: September 9, 2022

Counsel who represented the appellant was Molly C. Quinn, AFPD, of Sioux Falls, SD.

Counsel who represented the appellee was Matthew Greenley, AUSA, of Fargo, ND.

Before LOKEN, KELLY, and KOBES, Circuit Judges.

LOKEN, Circuit Judge.

In 2013, a jury convicted Robert Carey Evans of possessing materials containing child pornography in violation of 18 U.S.C. § 2252A(a)(5)(B), (b)(2). The district court sentenced him to 120 months imprisonment. The Violence Against Women Act of 1994 also required the court to order restitution to the victims of Evans's child pornography offense. See 18 U.S.C. § 2259(a), (b)(4). Only the victim in the "Vicky" child pornography series requested restitution. After a hearing, applying the Supreme Court's recent decision in Paroline v. United States, 572 U.S. 434, 134 S.Ct. 1710, 188 L.Ed.2d 714 (2014), the district court found that Vicky suffered $1,346,158.12 in total actual losses from the trafficking of her images, as the parties had stipulated, and ordered Evans to pay a proportionate share of $3,250 in restitution. Evans appealed, arguing the court abused its discretion under Paroline in determining the appropriate amount of restitution. We affirmed. United States v. Evans, 802 F.3d 942 (8th Cir. 2015).

In May 2021, the government moved for an order directing the Bureau of Prisons (BOP) to turn over $2,084 from Evans's inmate trust account to pay the remaining balance of his restitution obligation. The balance in the trust account was then $2,102.92. In a pro se response captioned Motion for Summary Judgment and Dismissal of Claims, Evans submitted a BOP document summarizing activity in his inmate trust account and stated: on "April 28, 2021, [he] receive[d] his final CARES Act stimulus payment into his Bureau of Prisons Trust Fund Account," bringing the total amount of funds in the account to "just over $2,260"; $2,102.92 was withdrawn on May 19 for a "Pending Federal Court Order." Evans argued that stimulus funds are "not subject to garnishment" and "must be returned to the Defendant." In addition, he questioned whether Vicky has been fully compensated for her total loss, which would satisfy his restitution obligation. He requested "an Order that the Government obtain a full accounting of all payments made to this victim," appointment of counsel, and a hearing to resolve these issues.¹

In a three-page order, the district court summarily denied Evans's motion requesting a hearing and granted the government's turnover motion. The court concluded that funds in an inmate's trust account are not exempt from the payment of restitution under 18 U.S.C. § 3613(a)(1), and that 18 U.S.C. § 3664(n), part of the Mandatory Victims Restitution Act (MVRA), "requires that resources received by [Evans] from any source during his term of incarceration" be applied to his restitution obligation (emphasis in original).² The court did not identify the sources of the funds in Evans's trust account or determine whether the funds were "substantial resources" within the meaning of § 3664(n). Evans appeals, raising all these issues.³ The district court stayed the collection or payment of restitution pending the appeal.

I.

Evans first argues the district court erred in ordering the turnover of $2,084 without first determining the source of the funds in his trust account and determining whether they were "substantial resources." We agree. With the appeal pending, we issued our decision in United States v. Kidd, addressing whether § 3664(n) "applies to accumulated prison wages in the trust account of an inmate." 23 F.4th 781, 783 (8th Cir. 2022). Like two sister circuits, we rejected the government's view that "any source" unambiguously means any source. Id. at 786. We disagreed with Fifth and Ninth Circuit decisions that § 3664(n) applies only to windfalls or sudden financial injections. Id. at 786-87. However, after "consider[ing] the words of § 3664(n) in their statutory context," we agreed "that § 3664(n) does not apply to prison wages." Id. We reversed the turnover order at issue and remanded because "the record on appeal does not reveal the sources of the accumulated funds in Kidd's inmate trust account," which precluded a determination of whether the account included either "substantial resources from outside sources that would be subject to § 3664(n)," or a gradual accumulation of "small amounts received from various sources," including prison wages, that would constitute a "material change in the defendant's economic circumstances" under § 3664(k). Id. at 787-88 (cleaned up).

We review the district court's decision to order a restitution payment under § 3664(n) for abuse of discretion and its interpretation of the statute de novo . Kidd, 23 F.4th at 785. Although this appeal involves a COVID-19 stimulus payment rather than an inmate's prison wages, we conclude the court's payment order must be vacated and remanded in light of Kidd.

First, in applying § 3664(n), "[t]he district court must first determine the source of the funds." United States v. Woodring, 35 F.4th 633, 635 (8th Cir. 2022). Here, the district court made no findings as to the source of the funds seized from Evans's trust account. The government argues that Evans in his response to the turnover motion admitted all of the funds came from stimulus payments. Not so. Evans acknowledged that his trust account had received stimulus payments, and he submitted an account transaction record showing a $1,400 deposit on April 28, consistent with the stimulus payment authorized in the American Rescue Plan Act of 2021. See 26 U.S.C. § 6428B. But this does not account for the full balance of the funds seized. The account document has no information on prior transactions, and it shows that Evans received smaller deposits from unidentified sources after April 28. Some of the other funds may have been from excludable sources such as prison wages. Without an adequate record as to timing and source of funds, we cannot determine whether the funds seized from Evans's trust account were "substantial resources from outside sources that would be subject to § 3664(n)." Woodring, 35 F.4th at 635 (citation omitted). In Woodring, we vacated and remanded a turnover order based solely on the government's allegation that the inmate's trust account included "a COVID-19 stimulus payment." Id.; see United States v. Robinson, 44 F.4th 758, 760-61 (8th Cir. 2022) (same).

Second, after establishing the source of the funds, the court must determine "if applying the funds to restitution is proper." Woodring, 35 F.4th at 635. Without question, CARES Act stimulus payments are from an outside source. They are "advance [tax] refunds and credits" payable to "eligible individual[s]." 26 U.S.C. § 6428B(g). "Eligible individual" is broadly defined to include those with no federal taxable income. § 6428B(c), (g)(1). Thus, the statute is "best interpreted as establishing the legal fiction that eligible taxpayers overpaid their [annual] taxes in an amount equal to the ‘advance refund.’ " Sarmiento v. United States, 678 F.3d 147, 156 (2d Cir. 2012). Even if the payments are not subject to garnishment, an issue we do not consider, they are subject to a turnover order under § 3664(n). See Kidd, 23 F.4th at 784 n.2.

The few courts to consider the issue have concluded that COVID-19 stimulus payments are the "receipt of substantial resources" under § 3664(n). See United States v. Long, No. 3:15-CR-30118, 2022 WL 703220, at * 4 (D.S.D. Mar. 9, 2022), and cases cited. The court in Long said our decision in Kidd "is not a problem" because prison wages were not at issue. Id. But it did not consider the words of § 3664(n) and the CARES Act "in their statutory context," the essence of our decision in Kidd. Here, the statutory context is the interaction of § 3664(n) with the CARES Act and ARPA. Viewed in this context, we see the issue as being whether Congress intended in the COVID-19 economic relief acts to pay millions of taxpayer dollars directly to crime victims who are entitled to mandatory restitution payments from incarcerated defendants. Many might consider this an easy question, given the widespread, legitimate sympathy for restitution victims. But the Executive Branch apparently does not consider it an easy question -- the Internal Revenue Service first declared that incarcerated persons were not eligible for CARES Act COVID-19 stimulus payments, an interpretation enjoined by a district court in a decision the government did not appeal. Scholl v. Mnuchin, 494 F. Supp. 3d 661 (N.D. Cal. 2020). The district court should address this issue of law on remand.

Third, the district court ignored the limitation that § 3664(n) applies only to a person who "receives substantial resources," instead relying on the "any source" language to order turnover of the full $2,084. However, what constitutes substantial resources is an issue that requires careful, case-specific analysis. See Kidd, 23 F.4th at 787 & n.3 ; Woodring, 35 F.4th at 635 (citation omitted).

For these reasons, the district court's turnover order based on § 3664(n) must be vacated and remanded. The government's turnover motion also argued the funds in Evans's trust account amounted to a "material change" in his economic circumstances that warrants modification or immediate payment under § 3664(k). The district court did not rely on this provision, perhaps because the government had not complied with § 3664(k) ’s notification requirement. The government urges us to decide the issue on appeal because "Evans has made little progress toward paying his outstanding restitution." We are not inclined to decide this fact-based issue in the first instance, and even if we were, the record on appeal is similarly undeveloped for us to...