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United States v. Corso

United States District Court, D. Connecticut

June 14, 2016

UNITED STATES OF AMERICA,
v.
STEPHEN P. CORSO, Defendant.

          RULING RE: UNITED STATES' MOTION FOR DISBURSEMENT OF FUNDS (DOC. NO. 155)

          Janet C. Hall United States District Judge.

         I. BACKGROUND

         On April 20, 2005, defendant Stephen P. Corso ("Corso") entered a plea of guilty to one count of wire fraud in violation of section 1343 of title 18 of the United States Code and one count of attempted income tax evasion in violation of section 7201 of title 26 of the United States Code. See Minute Entry (Doc. No. 9). Four years later, on February 3, 2009, the court sentenced Corso to a term of imprisonment to be followed by supervised release, and imposed a restitution obligation of $5, 446, 735. See Judgment (Doc. No. 73). A separate Restitution Order entered shortly after Corso's sentencing proceeding specifying the amount of restitution Corso owes to individual victims, as well as the schedule on which Corso is obligated to make restitution payments. See Restitution Order (Doc. No. 74).

         On February 17, 2016, the United States filed the Motion now pending before the court, which asks the court to disburse funds currently held in the Registry of the Court to individual victims pursuant to the Restitution Order. See United States' Mot. for Disbursement of Funds ("Mot. to Disburse") at 1-2 (Doc. No. 155). The funds in the Registry of the Court come from a variety of sources, including restitution payments made by Corso and the government's garnishment in September 2014, of a "previously undisclosed financial account." Id. at 2. All told, there is $597, 496.06[1] in the Registry of the Court available for distribution. These funds were being held by the court while the government worked on obtaining "additional contact information for the remaining victims." Id. The pending Motion states that the necessary information has been compiled, with the result that the government now seeks to have these funds distributed. See id. at 3.

         Although the pending Motion primarily seeks to have the funds in the Registry of the Court distributed to Corso's victims pursuant to the Restitution Order, the government has also asked "that this Court acknowledge and prioritize . . . child support arrearage" due to Corso's former spouse, Beth Ann Corso ("Mrs. Corso"). Id. The government states that section 3205(c)(8) of title 28 of the United States Code, which provides that "[j]udicial orders and garnishments for the support of a person shall have priority over a writ of garnishment issued under this section, " grants priority to child support payments owed to Mrs. Corso over payments of restitution to Corso's victims under the Restitution Order. See Mot. to Disburse at 2-3 (Doc. No. 155). The government represented that child support arrearages of $13, 567.94 were owed to Mrs. Corso as of February 17, 2016, pursuant to Orders entered by state courts in California and Connecticut. See id. at 2.

         After receiving the government's Motion, the court ordered Corso to show cause why the Motion should not be granted. See Order to Show Cause (Doc. No. 156). In a brief response, Corso disputed that there is any past-due child support owed, but otherwise "agree[d] with the government's general proposition that the garnished funds at issue should be applied first to outstanding support obligations (if any), and the balance used toward [Corso's] restitution obligation." Def.'s Resp. to Order to Show Cause Re: Gov't Mot. for Disbursement of Funds ("Corso Resp.") at 1 (Doc. No. 157).

         After the court ordered Corso to show cause why the government's Motion should not be granted, the court received a series of letters from Mrs. Corso. See Letter from Beth Ann Corso to Judge Hall ("Mrs. Corso Letter #1") (Doc. No. 158-1); Letter from Beth Ann Corso to Judge Hall ("Mrs. Corso Letter #2") (Doc. No. 165); Letter from Beth Ann Corso to Judge Hall ("Mrs. Corso Letter #3") (Doc. No. 166). In these letters, Mrs. Corso principally asserts that she is entitled not just to a priority distribution of funds to cover past-due child support payments, but that she is also entitled to a priority distribution of funds to cover alimony arrearages. See Mrs. Corso Letter #1 at 1-2 (Doc. No. 158-1). As of March 14, 2016, Mrs. Corso was owed $200, 482.01 in past-due alimony payments, as well as additional sums for property settlement arrearages, unreimbursed medical bills, and attorneys' fees. See Order of Danbury Superior Court (Doc. No. 166-1); see also Mrs. Corso Letter #3 (Doc. No. 166) (stating that Mrs. Corso is owed a total of $262, 268.01).

         The court construed Mrs. Corso's first letter as a Motion to Intervene and ordered Corso and the government to show cause why her Motion should not be granted.[2] See Order to Show Cause (Doc. No. 159). In response, the government argued that Mrs. Corso could participate in this action as an "interested party" pursuant to section 3202(c) of title 28 of the United States Code and that, as a result, it was unnecessary to allow Mrs. Corso to intervene. See United States' Resp. to Order to Show Cause ("Gov't Resp.") at 3 (Doc. No. 160). In that same filing, the government argued that Mrs. Corso's alimony arrearages should not be afforded priority over restitution payments to Corso's victims. See id. at 4. After due consideration, the court accepted the government's argument and granted Mrs. Corso status as an "interested party" in this action. See Order (Doc. No. 161).

         On April 14, 2016, the court held a hearing on the pending Motion to Disburse Funds. See Minute Entry (Doc. No. 173). Counsel for both the government and Corso were present and participated in the hearing, as did Mrs. Corso, who appeared pro se. See id. At the close of the hearing, the court took the government's Motion under advisement.

         For the reasons that follow, the court now GRANTS the Motion for Disbursement of Funds (Doc. No. 155), and orders that the full sum held in the Registry of the Court be distributed to Corso's victims pursuant to the Restitution Order entered in this case. See Restitution Order (Doc. No. 74). Although the court is sympathetic to Mrs. Corso's plight, the court concludes that she is not entitled to a priority distribution of funds to cover child support or alimony arrearages under federal law. The victims who are still owed restitution as identified in the Restitution Order are: D. & S. Patrick; K. Mansour; J. & R. Barber; C. Souki; P. Kessler; M. Hadid; A. & Robin Burditt; the Internal Revenue Service; the State of Connecticut; and substitute victim Executive Risk Indemnity Inc. See Restitution Order (Doc. No. 74).

         II. DISCUSSION

         Although the government's Motion for Disbursement of Funds invokes section 3205(c)(8) of title 28 of the United States Code-part of the Federal Debt Collection Procedures Act ("FDCPA"), see Mot. to Disburse at 1 (Doc. No. 155)-the liability at issue in this case arose under the Mandatory Victims Restitution Act ("MVRA") which, among other things, makes restitution mandatory in cases "in which an identifiable victim or victims has suffered a physical injury or pecuniary loss." 18 U.S.C. § 3663A(a)(1), (c)(1)(B). Federal law makes clear that the government may enforce restitution orders entered pursuant to the MVRA "in accordance with the practices and procedures for the enforcement of a civil judgment under Federal law or State law." 18 U.S.C. § 3613(a), (f); see also 18 U.S.C. § 3664(m)(1)(A)(i)-(ii). In other words, "the government is authorized to enforce any restitution order imposed as part of a criminal sentence by using its authority under FDCPA." United States v. Cohan, 798 F.3d 84, 89 (2d Cir. 2015).

         Although the FDCPA is a tool that the government may use when seeking to enforce an order of restitution entered pursuant to the MVRA, the FDCPA itself makes clear that, in the event a provision of the FDCPA conflicts with the MVRA, it is the MVRA that governs. See 28 U.S.C. § 3001(b) ("To the extent that another Federal law specifies procedures for recovering on a claim or a judgment for a debt arising under such law, those procedures shall apply to such claim or judgment to the extent those procedures are inconsistent with this chapter."); see also 28 U.S.C. § 3003(b)(2) (noting that the FDCPA "shall not be construed to curtail or limit the right of the United States under any other Federal law or any State law . . . to collect any fine, penalty, assessment, restitution, or forfeiture arising in a criminal case"); United States v. Elashi, 789 F.3d 547, 553 (5th Cir. 2015) ("Thus, when the FDCPA's procedures conflict with the procedures laid out in another federal law, it is the other procedures-here, the procedures in the MVRA-that must apply.").

         Similarly, the plain text of the MVRA makes clear that, in the event the MVRA conflicts with any other federal law, the MVRA must prevail. See 18 U.S.C. § 3613(a), (f) ("Notwithstanding any other Federal law . . . a judgment imposing [an order of restitution[3] may be enforced against all property or rights to property of the person fined . . . ."); Elashi, 789 F.3d at 552 (noting that "[t]his court has interpreted this ‘notwithstanding' clause as signaling a clear Congressional intent to override conflicting federal law" (internal quotations, alterations, and citation omitted)); see also Cisneros v. Alpine Ridge Group, 508 U.S. 10, 18 (1993) ("As we have noted previously in construing statutes, the use of such a ...


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