United States District Court, E.D. North Carolina, Western Division
W. FLANAGAN UNITED STATES DISTRICT JUDGE
case returns to the court's attention in post-judgment
proceedings, including on joint motion of petitioners Regina
Krol and Universal Mania, Inc. (“Universal
Mania”) to quash writs of garnishment, (DE 97),
supplemented by petitioners' separate response, joined in
by Sims Enterprises, Inc. (“Sims Enterprises”)
and Singh Harpreet Enterprises, Inc. (“Singh
Enterprises”), to amended answer of garnishee Branch
Banking & Trust Company (“BB&T”) (DE
116). Petitioner Regina Krol's motion to quash writ of
garnishment issued against All American Homes, Inc.
(“All American Homes”) also comes now before the
court. (DE 142). An assembly of other, related motions are
ripe for decision, too. These include: 1) petitioners'
motion for stay of discovery pending resolution of
petitioners' motions to quash (DE 150); 3) the
government's motion to seal its response in opposition to
petitioner's response to BB&T's amended answer
(DE 121); and 4) the underlying response itself raising for
determination whether accounts on deposit with BB&T
should be subject to a restraining order (DE 119).
OF THE CASE
December 15, 2015, defendant pleaded guilty, pursuant to plea
agreement, to trafficking in counterfeit goods, in violation
of Title 18, United States Code, Section 2320(a)(1). On May
3, 2017, the court entered a criminal judgment against
defendant. The court sentenced defendant to 72 months
imprisonment and ordered him to pay $4, 214, 317.08 in
restitution. (DE 55, p. 7, 10). The restitution payment was
“due in full immediately.” (Id. at 10,
¶ F). If, “[h]owever, . . . defendant [was] unable
to pay [the restitution] in full immediately, ” the
court's judgment indicates that “the special
assessment and restitution may be paid through the Inmate
Financial Responsibility Program (IFRP).” (Id.
at 8). The judgment further provides that “any balance
still owed [by defendant] at the time of release shall be
paid in installments of $100 per month to begin 60 days after
the defendant's release from prison.”
(Id.). Also on May 3, 2017, the court entered a
preliminary order and judgment of forfeiture. (DE 51).
preliminary order and judgment of forfeiture, the court found
the following property forfeitable pursuant to 18 U.S.C.
§§ 2320(c) and 2323(b):
A. All counterfeit articles seized, including all parts and
B. Proceeds of $156, 932.00 seized from [four] BB&T
account[s] . . .;
C. Proceeds of $51, 988.00 seized from [two] USAA account[s]
. . .;
D. 201 Forest Creek Drive, Fayetteville, North Carolina, . .
E. 179 Oakridge Drive, Raeford, North Carolina, . . . .
(DE 51, p. 1). As such, there are two distinct, but related,
post-judgment actions before the court. In addition to issues
concerning the government's attempt to collect
restitution, also pending are proceedings related to the
court's preliminary order of forfeiture (DE 51), and
petitioners' objections thereto. (DE 61). Pursuant to 21
U.S.C. § 853(n), Regina Krol, defendant's wife, and
Universal Mania, filed petition contesting forfeiture on June
13, 2017. (DE 61). On July 26, 2017, the Cumberland County
Tax Collector filed a petition for the court to preserve its
tax lien on real property identified in the preliminary order
of forfeiture, described as 201 Forest Creek Drive,
Fayetteville, North Carolina. (DE 70). The government does
not contest the tax lien. (See DE 89). On August 23,
2017, the court consolidated proceedings on the tax lien with
proceedings on petitioners' joint petition contesting
forfeiture. (DE 61). This court does not address the
forfeiture proceeding here, except to the extent of
scheduling the dispositive motions deadline.
effort to collect restitution, on July 12, 2017, the
government filed four applications for writs of garnishment
directed to the following: 1) BB&T (DE 63); 2) JP Morgan
Chase Bank NA (“JP Morgan”) (DE 64); 3) Universal
Mania (DE 65); and 4) USAA Federal Savings Bank
(“USAA”) (DE 66). On July 28, 2017, the court
granted the government's writ of garnishment as to JP
Morgan. With regard to the remaining three writs, the court
ordered the government to show cause by August 4, 2017, as to
why the writs should issue. Following receipt of the
government's response, the magistrate judge granted the
government's applications for the then remaining writs on
August 8, 2017.
JP Morgan filed answer August 16, 2018, attesting to no
indebtedness due and owing the judgment debtor, (DE 88).
Garnishee USAA filed its answer two days later, on August 18,
2018, attesting to control over the sum of $3.55 on deposit
in a joint bank account belonging to the judge debtor and his
spouse, Regina Krol. Garnishee Universal Mania filed its
answer to the writ of garnishment issued to it August 21,
2017, (DE 93), stating through Anthony Krol, its president,
that it maintains no interest in any property belonging to
the judgment debtor. (DE 93). Finally, garnishee BB&T
answered under oath the writ of garnishment issued to it on
August 23, 2017. (DE 95).
August 28, 2017, petitioners filed a joint motion to quash
the writs of garnishment as to BB&T, Universal Mania, and
USAA. (DE 97). On September 12, 2017, petitioners, together
with Sims Enterprises and Singh Enterprises, separately
responded to garnishee BB&T's answer. (DE 99).
BB&T's answer was amended by it on October 13, 2017
(DE 106). Petitioners, again together with Sims Enterprises
and Singh Enterprises, signaled persistent objections to
BB&T actions in response to the writ freezing subject
accounts. (DE 116). In its amended answer, BB&T attests
that it is in control of amounts spread between five accounts
(DE 106, p. 3).
referral, United States Magistrate Judge James E. Gates
issued order November 22, 2017, denying petitioners'
motion to quash writs of garnishment directed to BB&T,
Universal Mania, and USAA. Petitioners timely filed
objections to the magistrate judge's rulings, or in the
alternative, noticed appeal of his order, (DE 134), to which
the judgment creditor responded in opposition. (DE 141).
Petitioners contend that the writs should be quashed, in
part, because the terms of the payment set forth in
defendant's criminal judgment preclude the government
from collecting restitution through garnishment. The
government maintains that issuance of the writs was, in all
December 1, 2017, the government filed an application for
writ of continuing garnishment against All American Homes,
Inc. (“All American Homes”). (DE 132). On January
6, 2018, petitioner Regina Krol filed the instant motion to
quash the writ of garnishment (DE 142) against All American
Homes, which answered January 10, 2018, under oath, that it
was in the possession of the following rental funds belonging
to the judgment debtor:
(DE 143, p. 3).
in petitioner's motion was a list of claimed exemptions
and request for hearing, where Regina Krol contends this
property is exempt under law from levy, where garnished funds
are necessary for the care of her children, to provide fuel
and food, and to secure tools of business, among other
things. The judgment creditor's opposition was made in
filing entered on the record January 11, 2018. (DE 144).
in the parallel forfeiture proceeding, consent discovery
commenced in July 2017, for a period of 180 days, set to
conclude January 25, 2018, remained ongoing. On January 18,
2017, petitioners, including Sims Enterprises, Singh
Enterprises, Universal Mania, and Regina Krol, filed motion
to stay discovery pending resolution of the motions to quash,
(DE 150), which motion the judgment creditor opposed. (DE
152). In its opposition filing, the government described
discovery ongoing on two fronts, where discovery on
restitution necessarily was intertwined with that on
forfeiture. The government noted petitioners'
motion's focus is solely on the part of discovery
directed to restitution.
February 8, 2018, the parties made joint report to the court
wherein they indicated consent to extend the deadline for
written discovery on forfeiture to February 26, 2018, and the
deadline to complete any remaining deposition until February
28, 2018. (DE 153). The parties also requested
deadline of April 30, 2018, to file any dispositive motion on
February 26, 2018, petitioner Regina Krol sought protective
order prohibiting the government from taking her deposition,
scheduled for March 1, 2018. (DE 154). Petitioner argued that
the court should preclude the government from taking her
deposition where the government failed to follow certain
court orders and federal rules governing discovery. Finding
no good cause existed to prohibit or otherwise delay the
scheduled deposition, the court denied petitioner's by
text order dated March 1, 2018.
Motions to Quash ...