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Sixth Circuit: “Minimal Findings Necessary” Before Garnishing Funds From Federal Prisoner in Ohio

by Casey J. Bastian

On December 16, 2022, the U.S. Court of Appeals for the Sixth Circuit reversed a district court order permitting the government to seize nearly $3,737.89 from the inmate trust fund account of federal prisoner Adam Carson, 40. As the lower court failed to make necessary findings necessary and cited no authority to do so, the Court vacated the decision and remanded the case.

Carson had already served a two-year sentence for a 2008 robbery of a bank in Youngstown when he was arrested and charged with robbing two more Ohio banks in 2012. It’s unclear how he was then released, but he robbed another bank in Cleveland in 2016, this time sending his girlfriend to a teller with a note claiming she’d been kidnapped and had a bomb strapped to her back.

Sentenced to 20 years in federal prison in 2018, Carson was ordered to “immediately begin paying $5,590 in restitution” to the victim banks. Carson agreed to participate in the Inmate Financial Responsibility Program (IFRP) of the federal Bureau of Prisons (BOP), which began taking 25% of Carson’s gross monthly income to apply towards the restitution amount. Carson remained in full compliance with his IFRP contract.

When the government learned that Carson had $4,037.89 in his inmate trust fund account, it asked the federal court for the Northern District of Ohio to order BOP to turn over all but $300 to satisfy Carson’s IFRP obligation, citing 18 U.S.C. § 3664(n) to lay claim to the defendant’s “substantial resources from any source, including inheritance, settlement, or other judgment.” The motion was granted without a hearing. Carson appealed.

 At the Sixth Circuit, Carson was appointed counsel from Federal Public Defender Kevin M. Schad, who argued that the defendant was compliant with his IFPR contract and denied due process under 18 U.S.C. § 3613, 3664(k), and 3664(n). The district court’s order covered “the full amount of the non-exempt funds,” presumably referring to 18 U.S.C. § 3613(a)(1) exemptions from seizure provided for clothing, gas, furnishings, books, unemployment benefits, undelivered mail, “certain annuity and pension payments,” workmen’s compensation, child support or “assistance under [the] Job Training Partnership Act.” Carson objected that the funds had been seized without a hearing to determine what part might be exempted by this statute.

As an initial matter, the Sixth Circuit declared that “mere compliance with his judgement and payment agreement does not bar garnishment.” Next, under § 3664(n), a court must determine if “substantial resources” exist to warrant garnishment. Accumulated prison wages do not constitute “substantial resources” and are exempt, but the district court failed to determine the source of the funds and whether they are actually “substantial.” Under § 3664(k), a district court is also allowed to modify a restitution order “as the interests of justice require,” but the district court did not make any “interest-of-justice findings.”

For the first time, the government argued that the majority of the money in Carson’s trust account was from federal COVID-19 stimulus payments, which were subject to lien under § 3613 to satisfy a restitution obligation. However, this has two limits, the Court said. First, a notice of lien must be filed in accordance with the Internal Revenue Code (IRC) of 1986. Also, liens filed under § 3626 are subject to the Consumer Credit Protection Act (CCPA), which limits what may be garnished. Nothing in the district court’s record indicated it made a compliance determination by the government with either IRC or CCPA.

As the district court “failed to make minimal findings necessary to determine whether Carson’s funds fell within these statutes,” the Sixth Circuit said it “need not address what more – if anything – the constitutional guarantee of due process requires.” Accordingly, the district court’s order was vacated and the case remanded for the missing findings. See: United States v. Carson, 55 F.4th 1053 (6th Cir. 2022).

The case has now returned to the district court, which appointed Carson representation from the Federal Public Defender’s office on January 11, 2023. PLN will report updates as they are available. See: United States v. Carson, USDC (N.D.Oh.), Case No. 1:17-cr-00008.

Additional source: Ashtabula Star Beacon