United States v. Cullenward
2:14-mc-00022
E.D. Cal.Apr 9, 2014Background
- Martin Cullenward, convicted in a criminal case, was ordered to pay restitution of $1,483,620.14 under the MVRA. The United States sought to satisfy the judgment by issuing writs of garnishment against two retirement accounts registered to his spouse, Michele (a Scottrade rollover IRA and a T. Rowe Price–administered Bogle Vineyards 401(k)).
- Scottrade answered that the IRA is self-directed, owned and controlled solely by Michele Cullenward (≈ $25,127.66 in securities + cash). T. Rowe Price stated the 401(k) balance was ≈ $7,909.04 and that it only provides recordkeeping (identified the actual plan administrator).
- Michele Cullenward moved to quash both writs, arguing the accounts are her property and Mr. Cullenward lacks any present unilateral right to receive lump-sum distributions or control over the accounts.
- The United States conceded the accounts are registered to Michele but argued the funds derive from marital earnings and thus are community property under California law and available to satisfy her husband’s restitution judgment.
- The court evaluated the interplay between the MVRA (which permits enforcement of restitution against a defendant’s property rights) and ERISA’s anti-alienation protections, applying Ninth Circuit precedent.
- The court quashed the writs, holding the government cannot immediately liquidate the spouse’s retirement accounts because the criminal defendant (whose rights the government steps into) lacks a present unilateral right to obtain lump-sum distributions from those plans.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the government may garnish the spouse’s retirement accounts to satisfy the defendant’s MVRA restitution judgment | Retirement accounts are community property under California law because funds derive from marital earnings; thus the government may garnish them | Accounts are owned and controlled by Michele; defendant lacks any current unilateral right to receive lump-sum payments, so ERISA/Novak prevent immediate liquidation | Quashed: government cannot immediately liquidate spouse’s retirement accounts because defendant has no current unilateral right to demand lump-sum payments under the plans |
| Whether a continuing writ should issue so the government can seize funds when spouse reaches withdrawable age (e.g., 59½) | Court should issue a continuing writ permitting future liquidation when distributions become available | Government steps into defendant’s shoes; defendant cannot force spouse to withdraw funds at 59½, so continuing writ is improper | Denied: continuing writ inappropriate because defendant cannot compel spouse to take distributions and government’s rights are limited to defendant’s present rights |
Key Cases Cited
- United States v. Novak, 476 F.3d 1041 (9th Cir. 2007) (MVRA can reach retirement benefits only to the extent the defendant has present rights under ERISA plan terms)
- United States v. Berger, 574 F.3d 1202 (9th Cir. 2009) (community property may satisfy restitution judgments; distinguished here because it did not involve ERISA retirement plans)
- Boggs v. Boggs, 520 U.S. 833 (1997) (ERISA anti-alienation policy protects retirement funds from dissipation)