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Ninth Circuit Reverses Seizure of Funds from Federal Prisoner for Restitution

by Ed Lyon

In a case decided on August 28, 2019, the Court of Appeals for the Ninth Circuit reversed a district court’s order allowing the federal Bureau of Prisons to seize $6,671.81 from prisoner Lonnie Eugene Lillard’s institutional trust account. The U.S. Attorney had initiated the seizure process pursuant to 18 U.S.C. § 3664(n), after learning of the deposit into Lillard’s account while he was in pretrial detention on a 2016 charge. The seizure was to be credited toward a restitution order in an earlier conviction that occurred in 1998.

Lillard argued that he intended to use the money to pay for legal help and phone calls to his family and friends, to help his 90-year-old father and 81-year-old mother, and to buy commissary items such as hygiene products.

The 1998 restitution order did not include a payment schedule, even though it found at the time that Lillard “[had] no income or assets or the likelihood of either in the immediate future.” The government’s argument was “that § 3664(n) applied ‘squarely’ to Lillard because he was in ‘federal custody’ while in pretrial detention,” which made the funds in his prison trust account subject to seizure under the statute.

The district court granted the seizure order and Lillard appealed. The Ninth Circuit appointed a federal defender from Washington state’s Western District as amicus counsel. The issues that counsel was directed to brief included “whether 18 U.S.C. § 3664(n) applies to (1) pretrial detention, and (2) detention or incarceration unrelated to the judgment imposing the restitution order.”

A ruling by the appellate court that pretrial detention was not a “period of incarceration” for purposes of § 3664(n) mooted the second issue. The Court of Appeals further explained that, “Applying the rule of lenity, we resolve any lingering ambiguity in the phrase ‘period of incarceration’ in Lillard’s favor.”

The government raised two primary objections. The first was that the case was moot because Lillard had since been convicted and sentenced on the 2016 charge and ordered to pay restitution in that case, so the funds could simply be seized again. The appellate court did not agree. The fact that Lillard received the funds during pretrial detention, and pretrial detention is not a “period of incarceration,” meant they were not subject to a second seizure. The court then pointed out it was debatable that the relatively small sum of money was a “substantial” amount, based on recent Fifth Circuit precedent that held “substantial resources” under § 3664(n) “refers narrowly to ‘windfalls or sudden financial injections.’”

The second objection was that the Court of Appeals should limit its review to plain error since Lillard had not objected based on his pretrial custody status. The Court overruled that objection because it was the government that introduced the custody issue in the lower court, properly making it germane for appellate review because once a claim is raised, the other party may address it – which the amicus counsel did. Further, “when this court is ‘presented with a question that is purely one of law and where the opposing party will suffer no prejudice as a result of the failure to raise the issue in the trial court,’ this court is not limited to plain error review,” the Ninth Circuit noted.

The district court’s order approving the seizure of funds from Lillard’s trust account was reversed. Circuit Judge Mark J. Bennett dissented, arguing against the majority’s finding that pretrial detention is not considered a period of incarceration under § 3664(n). See: United States v. Lillard, 935 F.3d 827 (9th Cir. 2019). 

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Related legal case

United States v. Lillard