United States v. Cullenward, 2:14-mc-00023

Background

Martin S. Cullenward was ordered to pay $1,483,620.14 in restitution under the MVRA in a criminal case; the U.S. sought to satisfy the judgment by garnishing two retirement accounts registered to his wife, Michele (Scottrade IRA and a T. Rowe Price-held 401(k)).
Clerk issued writs of garnishment for the two accounts; garnishees (Scottrade and T. Rowe Price) answered that the accounts are in Michele Cullenward’s name and under her sole control; T. Rowe Price noted it was only a recordkeeper, not plan administrator.
Michele Cullenward moved to quash the writs, arguing the accounts belong to her and Mr. Cullenward lacks any present unilateral right to receive lump-sum distributions from them.
The United States argued the accounts are community property under California law and therefore available to satisfy the spouse’s restitution judgment, seeking immediate liquidation or a continuing writ to seize funds when payable.
The court applied Ninth Circuit precedent (Novak) requiring federal/ERISA analysis of whether the defendant has a present, unilateral right to plan funds, concluding Mr. Cullenward has no such right in his spouse’s plans and the government cannot unilaterally cash them out.
The court granted Michele Cullenward’s motions and quashed the writs of garnishment; it ordered the U.S. to notify the garnishees of the order.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the government can garnish retirement accounts registered to the defendant’s spouse to satisfy the defendant’s MVRA restitution judgment	Retirement accounts are community property under California law and thus subject to garnishment to satisfy spouse’s judgment	Accounts are owned/controlled by Michele; Mr. Cullenward has no present unilateral right to distributions, so funds are not reachable under MVRA/ERISA framework	Quashed writs: government cannot immediately liquidate spouse’s retirement accounts because defendant lacks current unilateral right to receive lump-sum payments
Whether ERISA’s anti-alienation is displaced by the MVRA for retirement accounts held by the spouse	MVRA enforcement against all property of the person fined permits garnishment of community property retirement accounts	ERISA governs participant rights; government steps into defendant’s shoes and cannot bypass ERISA spousal-consent protections to cash out another’s plan	ERISA/Novak controls: government’s rights limited to what defendant could unilaterally obtain; cannot force liquidation without participant/spousal consent
Whether a continuing writ should issue to seize funds when the spouse reaches an age permitting withdrawals (e.g., 59.5)	United States requested a continuing writ to capture funds when withdrawals become available	Michele argued the government cannot compel her to withdraw or demand lump sum; defendant’s rights do not include forcing her to take distributions later	Denied: future seizure depends on rights the defendant would have; no present indication defendant will obtain unilateral right in foreseeable future
Whether garnishee T. Rowe Price was a proper party and whether CCPA limits apply	U.S. proceeded against the recordkeeper as garnishee	Michele argued T. Rowe Price is only a recordkeeper, not plan administrator, and CCPA limits may apply	Court did not reach these arguments as it quashed writs on substantive ERISA/MVRA grounds

Key Cases Cited

United States v. Novak, 476 F.3d 1041 (9th Cir. 2007) (MVRA enforcement against retirement benefits limited to rights defendant presently holds under ERISA-governed plans)
United States v. Berger, 574 F.3d 1202 (9th Cir. 2009) (community property may satisfy MVRA judgments, but concerned non-retirement assets)
Boggs v. Boggs, 520 U.S. 833 (1997) (ERISA policy that retirement funds remain protected until retirement)