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COVID-19 Stimulus Garnished From Federal Prisoner, but Only After Eighth Circuit Says ‘Not So Fast’

by David M. Reutter

On March 28, 2022, the U.S. Court of Appeals for the Eight Circuit ruled that money may not be withdrawn from a federal prisoner’s trust account, even to satisfy court-ordered restitution, without first determining the source of the funds.

The Court’s decision concerned the strange case of Jason Woodring, a pool cleaner who vandalized several Arkansas electric transmission lines and substations in 2013. He pleaded guilty to related charges, including a drug violation (because he had a crystal meth habit at the time). The federal court for the Eastern District of Arkansas sentenced him to 180 months in prison and ordered him to pay $4,840,953.45 in restitution.

The district court’s order said that while he is incarcerated, Woodring must pay “50 percent per month of earned income available to him.” But attached to the order was a “Schedule of Payments” that said he owed “50 percent per month of all funds that are available to him.” At sentencing, his attorney asked for the first order to be the operative one, since Woodring’s elderly parents weren’t going to be able to send him much money. The government didn’t object.

By January 2021, Woodring had paid only $50 towards restitution. But by then he was also getting COVID-19 stimulus payments. The government said that had left his account with a balance of $2,001.75, and it moved to seize 50% of it.

Proceeding pro se, Woodring objected, arguing the money was not “earned income.” To bolster his case, he pointed to 26 U.S.C. § 32(c)(2)(A)(i), an Internal Revenue Code definition of “earned income” that includes “wages, salaries, tips, and other employee compensation, but only if such amounts are includible in gross income for a taxable year.” Without further explanation, however, the district court granted the government’s motion.

Picking up counsel from Assistant Federal Public Defender Sylvia Talley of Little Rock, Woodring appealed to the Eighth Circuit, which began and ended its review with this question:

Where did the money come from?

Until the district court determined the source of the funds, the Court said it couldn’t determine whether applying them to restitution is appropriate.

The government argued stimulus funds are “substantial resources” under 18 U.S.C. § 3664(n), making them proper to seize for restitution. But the Court found the record on appeal was insufficient to make such a finding.

What if some of the funds were earned at Woodring’s prison job? “[T]he gradual accumulation of prison wages” does not constitute “substantial resources” under § 3664, the Court said, citing U.S. v. Kidd, 23 F.4th 781 (8th Cir. 2022).

Thus the district court’s order was vacated and the case remanded “to determine the exact composition of the account balance and to determine if the government’s turnover motion is properly considered pursuant to § 3664.” See: United States v. Woodring, 35 F.4th 633 (8th Cir. 2022).

The case then returned to the district court, where the government specified that it was not seeking any portion of Woodring’s prison wages. Rather, it said the prisoner’s $2,001.75 account balance included the remnants of a $1,200 stimulus check received in December 2020, another $500 stimulus payment in January 2021, and still another $1,400 payment in April 2021. All are fair game for seizure under § 3664 to make restitution, the government argued. It asked for half of the total leftover, or $1,000.87. That motion was granted on August 3, 2022. See: USA v. Woodring, USDC (E.D. Ark.), Case No. 4:13-cr-00326.

Woodring filed another appeal with the Eighth Circuit on August 13, 2022. Talley again appeared for the appellant, but he asked her to withdraw, and the Court agreed on September 9, 2022. He is again proceeding pro se, and PLN will report developments as they are available. See: United States v. Woodring, USCA (8th Cir.), Case No. 22-2734. 

Additional source: Arkansas Times

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