United States District Court, D. Arizona
ORDER
G.
Murray Snow, Chief United States District Judge
Pending
before the Court is Defendant Adrienne Marta Frazer’s
(“Defendant’s) Motion for Relief Regarding
Judgment and/or Relief of Levies by IRS and Tucson Litigation
Office. (Doc. 181.) The motion is denied.
BACKGROUND
In
March 2015, the Court convicted Defendant of five counts of
making a false claim against the United States. As part of
the Judgment, the Court ordered Defendant to pay $703, 978 in
criminal monetary penalties, including $703, 478 in
restitution to the Internal Revenue Service (IRS). The Court
imposed a payment schedule requiring that payments of $200
per month be made over a period of 34 months, to commence 60
days after Defendant’s release from imprisonment. Any
unpaid balance was to become a condition of supervision to be
paid within 90 days prior to the expiration of supervision.
In addition, Defendant owed over one million dollars to the
IRS directly.
Based
on the Judgment, Defendant’s restitution debt was
placed in the Treasury Offset Program in 2015. The IRS placed
its debt in the Treasury Offset Program as well. When
Defendant began receiving social security spousal benefits in
April 2019, the IRS began receiving offsets on its debt.
After Defendant met with the IRS agent assigned to her case
and discussed her current earnings, the IRS removed its debt
from the Treasury Offset Program, although the agent told
Defendant that the IRS would be checking her W4s and that she
would need to make payments towards her IRS debt if her
income earning capacity increased. Once the IRS’s debt
was removed, the United States began receiving offsets
through the Tucson office of the Financial Litigation Unit
(FLU). Defendant contacted that office and requested that her
debt be taken off the Offset Program. According to the IRS,
the FLU subsequently removed Defendant’s debt from the
Offset Program based on Defendant’s current assets and
income.[1] (Doc. 182 at 2.)
On
August 9, 2019, Defendant filed this motion asking the Court
for relief from the restitution component of her sentencing
order such that she could instead independently coordinate
with the IRS to pay only the non-restitutionary debt she owes
that entity. (Doc. 181 at 3.)
ANALYSIS
Defendant’s
restitution was ordered pursuant to the Mandatory Victims
Restitution Act (MVRA), 18 U.S.C. § 3663, 3664. Under
that provision, a district court may, on its own motion or
the motion of any party, modify a final order of restitution
upon a showing of a “material change in the
defendant’s circumstances.” 18 U.S.C. §
3664(k). However, modification under this provision requires
a “bona fide change in the defendant’s financial
condition.” United States v. Dale, 613 F.
App’x 912, 913 (11th Cir. 2015). “The burden of
demonstrating the financial resources of the defendant . . .
[is] on the defendant, ” 18 U.S.C. § 3664(e)
(2012), and is identified by an “objective comparison
of a defendant’s financial condition before and after a
sentence is imposed, ” United States v.
Caudle, 710 F. App’x 124, 125–26 (4th Cir.
2018). Although the Court is sympathetic to Defendant’s
financial difficulties, in the instant petition Defendant has
not demonstrated a meaningful change in her financial
condition from before her sentence was imposed. And even
assuming she could, “18 U.S.C. § 3664(k) only
authorizes the Court to adjust the restitution payment
schedule, ” not the payment amount. United
States v. Watts, 182 F. App’x 669, 670 (9th Cir.
2006) (emphasis added).[2]
Perhaps
more applicable to Defendant’s current circumstances is
§ 3664(j)(2), which allows a defendant’s
restitution to be reduced to account for a victim’s
later recovery for the same loss. But that provision, by its
express terms, is limited to a victim’s recovery for
“compensatory damages” in “any Federal
civil proceeding” or “any State civil proceeding,
” 18 U.S.C. § 3664(j)(2), and is inapplicable to
non-compensatory recovery, see, e.g., United
States v. Smalling, 644 F. App’x 3, 4 (2d Cir.
2016) (insurance payments do not constitute compensatory
damages for purposes of § 3664(j)(2)). The kinds of
recovery permitted under § 3664(j)(2) are not totally
clear, see, e.g., United States v. Doe, 374
F.3d 851, 856 (9th Cir. 2004) (leaving open the possibility
that disbursements to victims from forfeited funds could be
construed as “compensatory damages” within the
meaning of 18 U.S.C. § 3664(j)(2)), but courts of
appeals have acknowledged that one purpose of the provision
is to prevent victims from obtaining multiple recoveries for
the same loss, see, e.g., United States v.
May, 500 F. App’x 458, 464–65 (6th Cir.
2012) (affirming the district court’s conclusion that
the defendant was entitled to an offset of any amounts paid
to the victim because of a settlement agreement); United
States v. Melot, 562 F. App’x 646, 649 (10th Cir.
2014) (in a suit by the IRS to reduce assessed income taxes
and penalties to judgment and to foreclose tax liens on
Defendants’ property, conflict with restitution owed to
IRS in Defendants’ criminal case was
“resolve[d]” by 18 U.S.C. § 3664(j)(2)).
Because Defendant has not established that the funds
collected by the IRS over and above her $200 monthly payment
are compensatory damages recovered through a federal or state
proceeding, the Court cannot reduce her restitution amount
under § 3664(j)(2) at this time. However, the Court will
deny the Defendant’s motion without prejudice to allow
Defendant to revise her motion and provide the required
additional information should she choose to do so.
CONCLUSION
Defendant
has not established the requisite change in her financial
circumstances or recovery of compensatory damages by the IRS
to warrant any modification to the terms of her restitution
sentence. The Court will dismiss Defendant’s motion
without prejudice and allow Defendant to renew her motion.
IT
IS THEREFORE ORDERED that Defendant’s Motion
for Relief Regarding Judgment and/or Relief of Levies by IRS
and Tucson Litigation Office (Doc. 181) is
DENIED without prejudice.
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