United States District Court, D. Arizona
G. Campbell, Judge
November 17, 2006, the Court entered a Judgment against
Defendant Robert F. Alexander. See Doc. 129. The
Judgment required Defendant to pay $9, 923, 225.55 in
restitution to the victims of his offense, commencing with
$300 minimum monthly payments during the term of his
supervised release. Id. at 1-2. Defendant complied
with this provision, and continued to make $300 monthly
payments after the expiration of his supervised release term.
Doc. 161 at 1. But when the government raised the minimum
monthly restitution payment to $750, Defendant could no
longer make the payments. Id.
does not dispute that he owes additional restitution.
Id. To satisfy this outstanding obligation, the
government seeks a charging order against Defendant’s
interest in E-Logic, LLC. Doc. 160 at 2. Defendant is the
sole member of E-Logic, which generated an annual profit of
$8, 100 in 2014 and a similar profit in 2015. Doc. 161 at 2.
E-Logic’s annual profit is distributed to Defendant,
the company’s only worker. Id. Defendant seeks
to limit the charging order to no more than 25 percent of his
disposable earnings, consistent with Arizona’s
garnishment statutes. Id. at 2-3. The government
never responded to Defendant’s objection.
United States is entitled to a charging order against
Defendant’s member interest in E-Logic. “The
United States may enforce a judgment imposing a fine 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); see also United
States v. Berger, 574 F.3d 1202, 1204 (9th Cir. 2009).
Under Arizona law, a court of competent jurisdiction
“may charge the member’s interest in the limited
liability company with payment of the unsatisfied amount of
the judgment plus interest.” A.R.S. § 29-655(A).
In such a case, “the judgment creditor has only the
rights of an assignee of the member’s interest.”
Id. An assignee of a member’s interest is not
entitled to participate in the LLC’s management. A.R.S.
§ 29-732(A). Instead, an assignee “is only
entitled to receive, to the extent assigned, the share of
distributions, including distributions representing the
return of contributions, and the allocation of profits and
losses, to which the assignor would otherwise be entitled
with respect to the assigned interest.” Id. A
charging order is the exclusive remedy by which a judgment
creditor may satisfy a judgment out of a member’s
interest in a limited liability company. A.R.S. §
29-655(C). Here, Defendant is the sole member of E-Logic,
LLC. The United States may charge Defendant’s interest
in E-Logic for Defendant’s unpaid restitution plus
interest. The United States, however, is not entitled to
participate in E-Logic’s management. Instead, the
United States is only entitled to Defendant’s share of
charging order is limited to the garnishment permitted by
Arizona law. The fact that a charging order is entered,
however, “does not deprive any member of the benefit of
any exemption laws applicable to his interest in the limited
liability company.” A.R.S. § 29-655(B). Arizona
law limits garnishment to 25 percent of a garnishee’s
disposable earnings. A.R.S. § 33-1131(B).
“Earnings” are defined broadly to include
“compensation paid or payable for personal services,
whether these payments are called wages, salary, commission,
bonus or otherwise.” A.R.S. § 12-1598(4).
“Disposable earnings” is defined as the
“amount remaining from the gross earnings for a pay
period after the deductions required by state and federal
law.” A.R.S. § 12-1598(3). As the sole member of
E-Logic, Defendant receives distributions equivalent to the
LLC’s annual income. These are provided as compensation
for his personal services to E-Logic. These distributions
qualify as earnings and are protected by the personal
property exemption. The charging order therefore cannot
deprive Defendant of more than 25 percent of his disposable
United States’ motion for a charging order (Doc. 160)
Defendant Robert F. Alexander’s membership interest in
E-Logic, LLC is hereby charged for payment of the unsatisfied
amount of the Judgment entered in this action until the
Judgment is paid in full. The amount charged is not to exceed
25 percent of Defendant’s disposable earnings.
E-Logic, LLC shall promptly deliver any and all
distributions, funds, profits, proceeds of sale, payments and
disbursements owed to Defendant Robert F. Alexander, over
which it has control or possession, now or in the future, to
the Clerk of Court for the District of Arizona for
application to the Judgment imposed in this case, United
States v. Alexander, No. CR-05-00472-001-PHX-DGC, until
all financial liability imposed therein is paid in full.
Payments shall be made to the following: Clerk of Court,
United States District Court for the District of Arizona, 401
W. Washington St., SPC 1, Phoenix, Arizona 85003-2118, with
case notation, Case Number: CR-05-00472-001-PHX-DGC.
charging order shall be treated as a lien upon the interests
of Defendant Robert F. Alexander in E-Logic, LLC in favor of
the United States, and may be filed and treated like any
other lien under 18 U.S.C. § 3613(c).
 Defendant also proposes an alternative
resolution. Defendant states that he “would be
agreeable to resolve this matter and is willing to pay a
monthly restitution payment of $500.00 or 25% of his
non-exempt earnings each and every month whichever is less
for the next 24 months in lieu of a charging order.”
Doc. 161 at 3. The Court has determined that the United
States is entitled to a charging order against the
Defendant’s member interest in E-Logic. The Court need
not consider this ...