United States v. Gwendolyn Berry, 951 F.3d 632

Background

Gwendolyn Berry pleaded guilty to wire fraud, mail fraud, and falsifying a tax return and was ordered to pay over $2 million in restitution.
The government sought writs of garnishment under the MVRA (18 U.S.C. § 3613) and ancillary federal garnishment statute (28 U.S.C. § 3205) targeting several Vanguard IRAs held in Gwendolyn’s and Michael Berry’s names.
Gwendolyn released the accounts in her name; the government then sought 50% of funds in two IRAs titled in Michael’s name (reflecting a one-half community interest).
The district court entered a final garnishment order directing liquidation of the specified Michael-titled IRAs and payment of half their value (about $1 million) to satisfy restitution; the Berrys appealed and obtained a stay pending appeal.
On appeal the Berrys argued (1) federal law (tax/IRA or anti-alienation rules) prevents garnishment of a non-defendant spouse’s IRA, (2) state (Texas) law makes the IRAs Michael’s separate property, and (3) the Consumer Credit Protection Act (CCPA) caps garnishment at 25% of “earnings.”

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether a non-defendant spouse’s IRA can be "property or rights to property" of a defendant under 18 U.S.C. § 3613	IRA anti‑alienation or federal tax treatment makes Michael’s IRA immune from garnishment for Gwendolyn’s debt	MVRA’s "notwithstanding" language and controlling Fifth Circuit precedent allow garnishment of a defendant’s one‑half interest in a solely managed IRA	The MVRA reaches Gwendolyn’s one‑half interest in Michael’s solely managed IRA; Loftis controls.
Whether Texas law treats the IRAs as Michael’s separate property or as community property subject to Gwendolyn’s one‑half interest	The rollover document and waiver convert the IRAs to Michael’s separate property	Texas law presumes marital property is community property; waiver here did not clearly evidence a partition or clear‑and‑convincing proof of separateness	Michael’s IRAs are solely‑managed community property; Gwendolyn has a one‑half interest.
Whether the CCPA 25% garnishment cap applies to a lump‑sum liquidation of IRA funds	Liquidation proceeds are "earnings" or retirement payments and thus capped at 25%	Lump‑sum IRA distributions are not "compensation paid for personal services" and thus not "earnings" under the CCPA	Lump‑sum IRA funds to be garnished are not "earnings," so the CCPA cap does not apply.
Whether controlling precedent permits the garnishment order	Argues Loftis and related authority are distinguishable or inapplicable	Relies on Loftis and DeCay to show MVRA can reach non‑defendant spouse’s retirement interest	Loftis and other Fifth Circuit precedent bind the panel; garnishment upheld.

Key Cases Cited

United States v. Loftis, 607 F.3d 173 (5th Cir. 2010) (held defendant’s one‑half interest in a non‑defendant spouse’s solely managed retirement account is subject to MVRA garnishment)
United States v. Elashi, 789 F.3d 547 (5th Cir. 2015) (MVRA lien applies to property interests defined by state law)
United States v. DeCay, 620 F.3d 534 (5th Cir. 2010) (ERISA anti‑alienation does not bar MVRA enforcement against retirement accounts)
Boggs v. Boggs, 520 U.S. 833 (1997) (ERISA preemption principles relied on by appellants but distinguished here)
United States v. Novak, 476 F.3d 1041 (9th Cir. 2007) (different approach to when retirement interests are §3613 property; distinguished)
United States v. Sayyed, 862 F.3d 615 (7th Cir. 2017) (lump‑sum distribution of retirement funds is not "earnings" under the CCPA)
United States v. Rodgers, 461 U.S. 677 (1983) (state law governs the scope of property interests subject to federal liens)

Disposition: Affirmed the district court’s garnishment order (half of the Michael‑titled IRAs, ~$1 million).