United States v. Colasuonno
697 F.3d 164
2d Cir.2012Background
- Colasuonno was convicted of bank fraud and tax crimes and sentenced to probation with restitution to the IRS.
- He subsequently filed for Chapter 7 bankruptcy, raising issues about the automatic stay.
- The district court set a restitution payment schedule, which Colasuonno began to pay but then reduced and eventually ceased.
- In 2010 he argued the bankruptcy stay relieved him of paying restitution and that the probation violation proceedings were stayed.
- The district court held the stay did not apply to probation enforcement and found willful violation of restitution by Colasuonno.
- Colasuonno was resentenced to four months’ imprisonment and four money payments under a 15% income-based schedule; he appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §362(b)(1) exempts probation enforcement from the automatic stay | Colasuonno contends the stay barred probation enforcement and nonpayment proceedings. | The government argues enforcement is a continuation of the criminal action and thus exempt. | Yes; probation enforcement is a continuation of the criminal action and exempt. |
| Whether restitution-based conditions are exempt from the automatic stay | Colasuonno asserts restitution collection is stayed as part of bankruptcy. | Restitution is enforcement of a criminal sentence; exempt under §362(b)(1). | Restitution enforcement falls within §362(b)(1) continuation; not stayed. |
| Whether Colasuonno failed to establish an advice-of-counsel defense | The district court lacked an error in rejecting the defense due to withholding facts from counsel. | Colasuonno relied on bankruptcy counsel’s advice to not pay during the stay. | District court did not abuse discretion; no valid advice-of-counsel defense. |
| Whether the written judgment to pay restitution while incarcerated is ripe for modification | Colasuonno seeks modification to delete the prison restitution obligation. | No-ripe issue; the judgment was a matter of record and not presently actionable. | Not ripe for adjudication; dismissal of modification request. |
Key Cases Cited
- United States v. Caddell, 830 F.2d 36 (5th Cir. 1987) (automatic stay does not suspend restitution conditions)
- In re Gruntz, 202 F.3d 1074 (9th Cir. 2000) (probation-related proceedings treated as continuations of criminal actions)
- Pennsylvania Dept. of Pub. Welfare v. Davenport, 495 U.S. 552 (1990) (Congress withdrew or narrowed restitution dischargeability; relevance to stay scope)
- United States v. Verkhoglyad, 516 F.3d 122 (2d Cir. 2008) (probation revocation can affect punishment; context supports continuation view)
- United States v. Lettieri, 910 F.2d 1067 (2d Cir. 1990) (reasonableness standard for probation violation findings)