United States v. Timilty

Opinion

USCA1 Opinion

                  United States Court of Appeals

                      For the First Circuit

                       ____________________



No. 97-2371



                    UNITED STATES OF AMERICA,



                            Appellant,



                                v.



                         JOSEPH TIMILTY,



                            Appellee.

                                 

                       ____________________


APPEAL FROM THE UNITED STATES DISTRICT COURT



                FOR THE DISTRICT OF MASSACHUSETTS



             [Hon. Rya W. Zobel, U.S. District Judge]



                       ____________________



                              Before



                     Stahl, Circuit Judge,

                                

                   Cyr, Senior Circuit Judge,

                                

                   and Lynch, Circuit Judge.

                                

                      ____________________

                                

     David S. Mackey, Assistant U.S. Attorney, with whom Donald K.

Stern, U.S. Attorney, was on brief, for appellant.

    Morris M. Goldings, with whom Alice E. Moore, Kirsten Nelson

Callahan, and Mahoney, Hawkes & Goldings were on brief, for

appellee.

    

                      ____________________

                                

                         June 16, 1998

____________________      



  LYNCH, Circuit Judge. The United States obtained a

criminal verdict against Joseph Timilty in 1993 and an attendant 

order that Timilty pay restitution to four banks which had been

defrauded in a real estate development project. This appeal

concerns questions about the limits on the government's ability to

enforce such restitution orders. 

  The restitution order was for an amount not to exceed

$60,000, although the total losses to the four banks were almost $3

million.  The district court had declined to order full

restitution, finding that Timilty had no money.  Timilty paid only

$1,866.21 of the restitution ordered.  The government then sought

to utilize debt collection procedures to require Timilty to appear

and submit to an examination about his property and ability to pay. 

Timilty resisted.

  The government grounded its efforts in the Victim and

Witness Protection Act ("VWPA") (as it then stood), 18 U.S.C. 

3663, and Fed. R. Civ. P. 69, and through those laws invoked

Massachusetts debt collection practices under Mass. Gen. Laws ch.

224,  14.  That state statute permits the type of examination of

judgment debtors which the government sought here.  Timilty

countered with a motion to dismiss, arguing that the Federal Debt

Collection Procedure Act ("FDCPA"), 28 U.S.C.  3001-3308,

preempted the field, that the VWPA thus gave no authority to the

government, and that the FDCPA was not available to the United

States since it was attempting to collect on private debts.  To the

extent that the United States was acting on behalf of the

Resolution Trust Company, which had taken over one of the four

defrauded banks, the FDCPA was still not available, Timilty argued,

because the underlying contract was not entered into by the United

States but by the bank when it was a private entity.  See 28 U.S.C.

 3002(3). The government is not left without recourse, according

to Timilty; it must first reduce each restitution order to a civil

judgment and then it may seek to enforce that judgment.  Timilty

argues that this civil judgment method is fairer in that it will

give both sides the opportunity for discovery.  Timilty's motion to

dismiss was granted.

     The proper procedure for enforcing restitution orders is

an issue of some importance and one of first impression for this

court.  We reverse the dismissal of the petition.  We hold that the

government may proceed to enforce restitution orders for sums owing

to private persons or entities under the VWPA, that the VWPA is not

preempted by the FDCPA as to such orders, and that the government

need not reduce a restitution order first to a civil judgment

before invoking Fed. R. Civ. P. 69 and its reference to state law

debt collection procedures.  We do so confident that there are

adequate mechanisms available to the trial judges to allow for

discovery and such process as is due.



                               I

     On May 26, 1993, Timilty was convicted of one count of

conspiracy to commit wire fraud in violation of 18 U.S.C.  371. 

Four banks were injured by the scheme.  On August 31, 1993, Timilty

was sentenced to four months of imprisonment and two years of

supervised release, and ordered to pay "restitution . . . in an

amount not to exceed $60,000, and in a manner prescribed by the

Probation Department."  The criminal judgment provided that "any

payment shall be divided proportionally among the payees unless

otherwise specified here."

     On February 6, 1997, the government filed petitions

against Timilty and fifty-five other "criminal judgment debtors,"

each with outstanding restitution obligations, to gain use of the

post-judgment enforcement procedure contained in Mass. Gen. Laws

ch. 224,  14: an order that each defendant "appear at [an

assigned] time and place . . . and submit to an examination

relative to his property and ability to pay."  Each petition was

filed under the criminal docket number of each individual felon.  

     On the same day, the government filed an "Omnibus Motion

to Consolidate Fifty-Six Judgment Debtor Examination Petitions for

the Purpose of Conducting One Initial Hearing."  This motion sought

an order that all the defendant-debtors appear at one initial

hearing at which the defendant-debtors would have two choices: (1)

negotiate payment of the outstanding debt with the U.S. Attorney's

Office, or (2) have a debtor examination before the district judge

originally assigned to the debtor's case (or the magistrate judge

to whom the district judge is paired).  Aside from the one initial

hearing, the motion did not seek to transfer or reassign the fifty-

six debtor examination petitions away from the original sentencing

judges.

     The omnibus motion was initially granted and an order

issued that the debtors appear for a scheduling conference before

a magistrate judge.  The court later decided it was inappropriate

to have the debtors appear at such a hearing.  The court entered an

order canceling the May 15 examination and returned each petition

to the appropriate sentencing judge for further proceedings.  In

this the court was plainly correct and the government wrong:  it is

the sentencing judges, highly informed about the reasons for the

restitution orders, before whom further proceedings should have

been sought.

     The petition to examine Timilty was thus returned to his

sentencing judge.  On July 12, 1997, the government filed a motion

for clarification of the restitution order in Timilty's case.  This

motion asked how the $60,000 restitution order would be allocated

among the four banks injured in Timilty's scheme.  Timilty filed a

motion to undertake discovery of Citicorp Mortgage, Inc., one of

the four banks, to see whether they would share in any award. 

Neither motion was ruled on.

     On October 7, 1997, Timilty's motion to dismiss was

granted by margin order without explanation.  The government

appeals that dismissal.

                               II

     The order of restitution against Timilty was entered

under the authority of the VWPA, 18 U.S.C.  3663.  See United

States v. Friedman, No. 97-2100, 1998 WL 210960 at *4 (1st Cir.

Mar. 3, 1998) (restitution ordered to victims of defendant's

offense).  That statute, at subpart (h), discusses the means of

enforcement of the restitution order:

     (h) An order of restitution may be enforced--

        (1) by the United States--

          (A) in the manner provided for the

               collection and payment of fines in

               subchapter B of chapter 229 of

               this title; or

          (B)  in the same manner as a judgment

               in a civil action; and

       (2) by a victim named in the order to   

          receive the restitution, in the same

          manner as a judgment in a civil action.

18 U.S.C.  3663(h).  Timilty's argument raises the question of the

meaning of the phrase "in the same manner as a judgment in a civil

action" in  3663(h)(1)(B). Timilty urges that the language means

the United States must first obtain a civil judgment.  We disagree. 

     Such a reading impermissibly reads the "in the same

manner as" language out of the statute.  A restitution order may be

enforced in like manner as a civil judgment; it need not be reduced

first to a civil judgment.  While this point has not been

specifically adjudicated, several courts have read  3663 as having

that meaning.  In United States v. Porter, 90 F.3d 64 (2d Cir.

1996), the court noted that New York (along with federal) law

governed the extent to which a judgment debtor's wages could be

garnished to pay an outstanding restitution order; the court did

not suggest that  3663 contained an implicit requirement of

converting the restitution order into a civil judgment as a

prerequisite for triggering state law enforcement proceedings.  Seeid. at 69-70.  And in United States v. Cannistraro, 694 F. Supp. 62

(D.N.J. 1988), the court wrote that: 

     The statutes concerning the enforcement of

     criminal judgments which impose fines or

     restitution provide that these monetary

     judgments entered in criminal cases may be

     enforced by execution against the property of

     the defendant in the same way as judgments in

     civil cases.



Id. at 76-77 (citing 18 U.S.C.  3613, 3663).  The court held that

the government "acted properly," id. at 77, under New Jersey law

when it obtained a writ of execution to enforce the criminal

judgment (which included both restitution and fines) against the

defendant pursuant to Fed. R. Civ. P. 69(a); the court did not

suggest that any intermediate steps needed to be taken .  See id.;

see also United States v. Berardini, 112 F.3d 606, 611 (2d Cir.

1997) (reaching same conclusion regarding applicability of New York

law).

     Courts have read older statutes with similar language as

having the same meaning.  In United States v. Thornton, 672 F.2d

101 (D.C. Cir. 1982), the government sought to enforce a criminal

fine under a statute providing that the fine could be enforced "in

like manner as judgments in civil cases."  Id. at 103.  The court

wrote that:

     The manner of enforcing a judgment imposing a

     criminal fine in favor of the United States is

     provided for by 18 U.S.C.  3565, Fed. R. Civ.

     P. 69(a), and 28 U.S.C.  2413.



Thornton, 672 F.2d at 103.  The court did not suggest that it was

necessary to start a new action, civil or criminal, to engage in

supplementary process proceedings.  See id. at 102-106.  See alsoUnited States v. Wickenhauser, 710 F.2d 486, 488 n.1 (8th Cir.

1983) (interpreting  3565); United States v. Powell, 639 F.2d 224,

226 (5th Cir. Unit A Mar. 1981) (same). 

     The legislative history of the VWPA supports the

conclusion that restitution orders may be enforced like civil

judgments without the order being first reduced to a judgment.  The

Senate Report explains that a central purpose of the VWPA's

restitution provision was to emphasize restitution as an important

goal of sentencing and to help victims of crime recover their

losses.  "The premise of the section is that the court, in devising

just sanctions for adjudicated offenders, should insure that the

wrongdoer make goods [sic], to the degree possible, the harm he has

caused his victim."  Sen. Rep. No. 97-532, 97th Cong., 2d Sess.

(1982), reprinted in 1982 U.S.C.C.A.N. 2515, 2536.  As for the "in

the same manner" language, the Senate Report states that the

provision was designed to "substantially increase[] the victim's

chances of collecting restitution," and that the provision did this

"by permitting either the victim or the United States to enforce

the order in the same manner as a judgment in a civil action."  Id.at 2539.  The history indicates that Congress intended the VWPA to

facilitate, not complicate, enforcement of restitution orders. 

There is no suggestion that the statute silently contains

additional procedural requirements.  Rather, the directness of the

Senate Report reinforces the directness of the statute.

     Although a restitution order operates as a civil judgment

for enforcement purposes, courts of appeals which have addressed

the issue in other contexts have concluded that a restitution order

is not in and of itself a civil judgment.  See United States v.

Mindel, 80 F.3d 394, 398 (9th Cir. 1996); United States v. Johnson,

983 F.2d 216, 220 (11th Cir. 1993); United States v. Palma, 760

F.2d 475, 479-80 (3d Cir. 1985); United States v. Brown, 744 F.2d

905, 910 (2d Cir. 1984).  There are good reasons for this.  A

district court may revoke or modify a restitution order.  See 18

U.S.C.  3664(k).  That may not be so easily done with a civil

judgment.  See, e.g., U.S. Bancorp Mortgage Co. v. Bonner Mall

Partnership, 513 U.S. 18, 29 (1994) (mootness by reason of

settlement does not justify vacatur of a federal civil judgment

under review).  In many instances, this flexibility -- inherent in

a restitution order and not in a civil judgment -- will work in

favor of a criminal defendant.

     Timilty nonetheless argues that the FDCPA preempts the

VWPA and that, as such, the government may not enforce restitution

orders under the FDCPA where the debt is owing to private parties. 

He relies largely on  3001 of the FDCPA, stating that the FDCPA

"provides the exclusive civil procedures for the United States . .

. to recover a judgment on a debt . . . ."  28 U.S.C.  3001(a)(1). 

Timilty says that this language means that the FDCPA preempts the

VWPA, and thus the government can collect money only through FDCPA

procedures.  

     Timilty secondly argues that the FDCPA, by its terms, see28 U.S.C.  3002(3)(B), and as interpreted by this court in United

States v. Bongiorno, 106 F.3d 1027, 1036-40 (1st Cir.), reh'g en

banc denied, 110 F.3d 132 (1997), applies only to debts owing to

the United States.  Timilty points out that his restitution order

is not owed to the United States, but private banks; therefore, he

says, the government may not enforce the order at all.

     The foundation of Timilty's arguments rests on sand.  The

FDCPA, while including restitution among the classes of debt to

which the FDCPA applies, see 28 U.S.C.  3002(3)(B), specifically

disclaims control over operation of statutes such as the VWPA: 

     This chapter shall not be construed to curtail

     or limit the right of the United States under

     any other Federal law or any State law . . .

     to collect any fine, penalty, assessment,

     restitution, or forfeiture arising in a

     criminal case.



28 U.S.C.  3003(b)(2) (emphasis added).  

     Further, that the FDCPA applies only to debts owing to

the United States works against Timilty, not for him.  As said in

Bongiorno, "types of restitution, which, when paid will not

increase public revenues (say, restitution to an individual victim

of a crime), do not come with the statutory encincture [of the

FDCPA]."  Bongiorno, 106 F.3d at 1039.  This court further

explained in Bongiorno, in dicta, that state law enforcement

procedures are available and appropriate where the government seeks

to enforce restitution orders for sums owed to private parties:

     The government . . . can attempt to collect

     the restitution order by resort to other civil

     remedies, see 28 U.S.C.  3003(b) (providing

     that the United States retains its authority

     under laws other than the FDCPA to collect

     debts owed to the government); see also Fed.

     R. Civ. P. 64 & 69.



Id. at 1040 (panel opinion), and

     We note . . . that the panel opinion in no way

     obstructs the government's ability to use

     section 3663(h) appropriately, that is, in

     tandem with conventional civil remedies (e.g.,

     Fed. R. Civ. P. 64, 69) as a vehicle for

     collecting restitution . . . .



Bongiorno, 110 F.3d at 134 (denying petition for rehearing en

banc).  In sum, the FDCPA does not affect the government's capacity

under the VWPA to collect restitution orders for sums owing to

private parties.  Indeed, the FDCPA is largely irrelevant to this

case.

     Because the VWPA alone governs the enforcement of

Timilty's restitution order, and the VWPA provides that restitution

orders are enforced "in the same manner as" civil judgments, we

turn to Fed. R. Civ. P. 69.  This rule provides the mechanism for

"enforc[ing] a judgment for the payment of money," Fed. R. Civ. P.

69(a), and states that: 

     [T]he judgment creditor . . . may obtain

     discovery from any person, including the

     judgment debtor, . . . in the manner provided

     by the practice of the state in which the

     district court is held. 

 

Id.  Hence we turn to Massachusetts law:

     A judgment creditor or a person in his behalf

     may file in court an application for

     supplementary process . . . .  Upon the filing

     of such an application, a summons may issue,

     requiring the judgment debtor to appear at a

     time and place named therein and submit to an

     examination relative to his or its property

     and ability to pay.



Mass. Gen. Laws ch. 224,  14.  We conclude that it is appropriate

for the government to seek the hearing provided in this statute.

                              III

     The concerns Timilty raises about the type of process to

be followed in debtor examinations are misplaced.  Although not

articulated in his brief, those concerns, articulated at oral

argument, are largely that the criminal judgment debtor have an

adequate opportunity in such proceedings to show inability to pay

or to pay on a particular schedule.  But Massachusetts law

satisfies that concern by providing that both judgment creditors

and judgment debtors may introduce evidence at the supplementary

process hearing.  See Mass. Gen. Laws ch. 224,  15 (stating that

"[e]ither party may introduce additional evidence" during a  14

hearing).  Timilty's fears on this point are hypothetical.

     Timilty may also be concerned that a failure to pay a

restitution order may ultimately lead to reimprisonment. 

Imprisonment may indeed result from failure to pay a restitution

order.  For example, a court could modify or revoke a criminal

judgment debtor's probation and require him to serve in prison "all

or part of the term of supervised release authorized by the statute

for the offense that resulted in such term of supervised release

without credit for time previously served on postrelease

supervision . . . ."  18 U.S.C.  3583(e)(3).  Before this can

happen, however, the court must reconsider factors initially

considered when sentence was imposed, see 18 U.S.C.  3553(a)

(laying out the factors), and find by "a preponderance of the

evidence that the defendant violated a condition of his supervised

release."  18 U.S.C.  3583(e)(3).  This would require a hearing. 

Alternatively, the government could seek to have a defendant

resentenced to "any sentence which might originally have been

imposed" for failure to pay, 18 U.S.C.  3614, held in criminal

default and sentenced up to a year, see 18 U.S.C.  3615, or held

in contempt, see 18 U.S.C.  3663(g) (referring to 18 U.S.C. 

3583(e)).  These also require further proceedings before a judge.

     The decision of the district court is vacated and the

case remanded to the district court for proceedings consistent with

this opinion.