United States v. Bryan Boneshirt

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 10-2133
No. 10-2162
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United States of America, *
*
Plaintiff - Appellee, *
*
v. *
*
Geff Yielding, * Appeals from the United States
* District Court for the
Defendant - Appellant, * Eastern District of Arkansas.
*
Vespa Beverages LLC; Vespa *
Holdings, Inc.; Samuel A. Perroni, PA; *
Shelly H. Koehler, PA, *
*
Third Party - Appellants. *
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Submitted: March 15, 2011
Filed: October 5, 2011
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Before LOKEN and COLLOTON, Circuit Judges, and NELSON, District Judge.*
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LOKEN, Circuit Judge.
The Honorable Susan Richard Nelson, United States District Judge for the*
District of Minnesota, sitting by designation.

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Geff Yielding was convicted of aiding and abetting a violation of the federal
Anti-Kickback Statute and the falsification of a document. The sentence included an
order to pay $944,995.84 in restitution to various victims. With his direct appeal
pending, the government learned that Yielding would be paid $160,000 to settle
unrelated civil litigation. It moved the district court for, inter alia, a temporary
restraining order (TRO) enjoining “defendant, his attorney or agents from spending,
dispersing, investing or otherwise placing the [$160,000] beyond the reach of the
United States while this issue is resolved.” The district court issued the TRO.
After the government and Yielding submitted extensive documentary evidence
and argument, the district court ordered that Yielding “pay $80,000 to the government
to apply to his restitution debt,” following which the TRO would be dissolved.
Yielding and third parties claiming an interest in the settlement proceeds separately
appeal the TRO and the payment order. We assigned these appeals and the criminal
appeal to the same panel, which heard oral arguments sequentially on the same day.
Contemporaneous with this opinion, we are filing an opinion affirming Yielding’s
conviction, vacating the restitution order, and remanding for further consideration of
the restitution issue. We likewise vacate the order directing Yielding to pay $80,000
of his now-vacated restitution liability. We decline to vacate or dissolve the TRO.
I. The Settlement in Question
The civil litigation grew out of Yielding’s dispute with a former business
associate, Luther Pate, concerning their complex business venture to manufacture and
distribute an energy drink, “Killer Buzz.” In March 2010, following his criminal
conviction and sentencing, Yielding settled the litigation by entering into a consent
judgment incorporating the terms of an Asset Purchase Agreement (“APA”). The1
See Pate v. Yielding, No. 4:09-CV00371, Consent Judgment and Stipulation1
(E.D. Ark. Mar. 22s, 2010).
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APA provided that an entity controlled by Pate would purchase for $160,000 all
assets owned in connection with the manufacture and distribution of Killer Buzz by
Yielding, Vespa Holdings, Inc. (“VHI”), and Vespa Beverages, LLC (“VBL”). The
APA and its schedules listed Yielding as the sole shareholder of VHI, and VHI as the
sole member of VBL. The purchase price was paid by a $160,000 check dated March
18, 2010, payable to “Geff Yielding, Perroni & Koehler & Perroni Law Firm,”
attorneys who represented Yielding, VHI, and VBL in various matters.
In his initial response to the government’s motions, filed after the TRO issued,
Yielding submitted supporting documents and argued that, although the APA named
him as a “Seller,” the only assets conveyed in which he had a personal ownership
interest were a used copier valued at $200 and several vehicles subject to liens that
exceeded their value. He further asserted that the other assets sold belonged to VHI
and VBL, and that the sale proceeds were “encumbered by judgment creditors and
lien holders that provided services to the corporations.” Therefore, he asserted, no
part of the settlement proceeds was available to him to apply to his restitution
obligation. The government promptly moved for a continuance and discovery to
investigate these competing claimants. The district court denied a continuance and
scheduled a hearing on the government’s pending motion to adjust Yielding’s
restitution payment schedule.
At the May 7, 2010 hearing, Yielding presented evidence that various judgment
creditors, attorneys, and other secured and unsecured creditors of Yielding, VHI, and
VBL had superior interests in the settlement proceeds. He also submitted documents
reflecting that he transferred his ownership interest in VHI to an irrevocable trust in
May 2009, and undated minutes from a “special meeting” of the VHI Board of
Directors authorizing VHI to pay “any and all fees and expenses incurred, and to be
incurred, as a result of the efforts of Perroni & Koehler and The Perroni Law Firm to
defend the corporation, its subsidiary . . . and its President and Secretary, Geffrey A.
Yielding.” Granted additional time to respond, the government filed a brief
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conceding that Perroni & Koehler had a prior lien on $69,386.06 of the settlement
proceeds for services rendered in the Pate litigation. However, the government
asserted, Yielding is the owner of the $160,000 payment because VHI and VBL were
not operating when the payment was made; the restitution order creates a claim prior
or superior to all other creditor claims to the proceeds; and therefore Yielding should
be ordered to pay “a large portion” of the remaining $90,614 toward his restitution
obligation. VHI, VBL, and attorneys Samuel Perroni and Shelly Koehler
(collectively, the “third-party appellants”) submitted a brief asserting lack of
jurisdiction and contesting the government’s contentions that Yielding owns the
settlement proceeds and the government’s restitution claim has priority.
On May 17, the district court ordered Yielding to pay $80,000 of the proceeds
to be applied to his restitution debt. The settlement check “clearly lists Yielding as
the recipient,” the court explained, “and nothing indicates that there are any lien
holders or creditors having priority over the victims who are to be paid restitution.”
Therefore, the entire $160,000 is “available to” Yielding. Taking into account the
interest of the attorney co-payees, the court concluded that fifty percent should be
applied to his restitution obligation. Yielding and the third-party appellants then
appealed both the grant of a TRO and the payment order.
II. Validity of the TRO
Third-party appellants argue on appeal, as Yielding argued to the district court,2
that the court had no subject matter jurisdiction to issue a TRO in this criminal case
because the federal All Writs Act is not an independent source of federal jurisdiction.
We reject the government’s contention that the third party appellants lack2
standing to appeal the court’s post-conviction orders. A non-party has standing to
appeal when it is bound or adversely affected by an injunction. See Pediatric
Specialty Care, Inc. v. Ark. Dep’t of Human Servs., 364 F.3d 925, 933 (8th Cir.
2004); In re Piper Funds, Inc., 71 F.3d 298, 301 (8th Cir. 1995).
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The All Writs Act empowers federal courts to issue “all writs necessary or appropriate
in aid of their respective jurisdictions and agreeable to the usages and principles of
law.” 28 U.S.C. § 1651(a). This contention is without merit because the district
court had jurisdiction to enforce its restitution order.
The Attorney General is responsible for the collection of unpaid restitution.
See 18 U.S.C. § 3612(c). In the Mandatory Victims Restitution Act of 1996, Pub. L.
No. 104-132, §§ 201-211, 110 Stat. 1214, 1227-41, Congress granted the Attorney
General expanded authority to enforce a sentencing court’s restitution order:
(m)(1)(A)(i) An order of restitution may be enforced by the
United States in the manner provided for in subchapter C of chapter 227
and subchapter B of chapter 229 of this title; or
(ii) by all other available and reasonable means.
* * * * *
(n) If a person obligated to provide restitution . . . receives
substantial resources from any source, including . . . settlement . . .
during a period of incarceration, such person shall be required to apply
the value of such resources to any restitution or fine still owed.
18 U.S.C. § 3664(m), (n); see United States v. Witham, 648 F.3d 40, 45-46 (1st Cir.
2011). The United States may enforce a restitution order “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), part of subchapter B of chapter 229. A civil3
action under the Federal Debt Collection Procedure Act, 28 U.S.C. §§ 3001 et seq.,
An order of restitution is also a lien in favor of the United States, which is3
valid and enforceable in a manner similar to a tax lien. 18 U.S.C. §§ 3613(c), (d).
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is the primary -- but not the exclusive -- procedure for collecting a restitution debt to
the United States. See United States v. Timilty, 148 F3d 1, 5 (1st Cir. 1998).
Consistent with the plain import of these statutes, numerous courts have held
that a sentencing court has jurisdiction to enforce its restitution order in the criminal
case. See United States v. Resnick, 594 F.3d 562, 565, 569 (7th Cir. 2010); United
States v. Mays, 430 F.3d 963, 965-66 (9th Cir. 2005), cert. denied, 546 U.S. 1207
(2006); Lyndonville Sav. Bank & Trust Co. v. Lussier, 211 F.3d 697, 702-03 (2d Cir.
2000); Timilty, 148 F.3d at 3-4; United States v. Scarboro, 352 F. Supp. 2d 714, 716-
17 (E.D. Va. 2005). A number of those decisions upheld, as necessary and
appropriate in aid of this jurisdiction, orders issued under the All Writs Act
restraining a restitution debtor from diverting or concealing assets to avoid paying
restitution. See United States v. Simmons, No. 07-30, 2008 WL 336824, at *1 (E.D.
Wis. Feb. 5, 2008); United States v. Runnells, 335 F. Supp. 2d 724, 725-26 (E.D. Va.
2004); United States v. Abdelhadi, 327 F. Supp. 2d 587, 598-601 (E.D. Va. 2004).
The court in Abdelhadi discussed various statutory mechanisms available to enforce
its restitution order and upheld equitable relief under the All Writs Act because none
could be “instantly implemented” to ensure that the “defendant’s assets [would] not
be secreted, wasted or placed beyond the reach of the victim or the government.” 327
F. Supp. 2d at 600-01 & nn.20, 21; see also 18 U.S.C. § 3664(m)(1)(A)(ii) (restitution
orders may be enforced “by all other available and reasonable means”); 28 U.S.C.
§ 3202(a) (court may use the All Writs Act “as necessary to support” postjudgment
remedies). We agree that a sentencing court has jurisdiction to enforce its restitution
order and may use the All Writs Act, when necessary and appropriate, to prevent the
restitution debtor from frustrating collection of the restitution debt.
In this case, the government learned that Yielding, an incarcerated defendant
with a substantial restitution obligation, was receiving $160,000 to settle unrelated
litigation. Given the nature of Yielding’s criminal offenses, and the complexity of
the civil litigation, the government was legitimately concerned that the settlement
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proceeds were an asset that should be applied to Yielding’s restitution debt but were
at risk of disappearing absent judicial intervention. Although the MVRA provided
other potential remedies, the government reasonably concluded that the sentencing
court was in the best position to take decisive action to keep the settlement proceeds
available until its claim for restitution payment could be determined. Accord
Abdelhadi, 327 F. Supp. 2d at 601.
Likewise, the district court reasonably determined that Yielding, as named
payee of the check and a party to the APA in his individual capacity, likely had some
personal interest in the $160,000 and that a TRO was “necessary to effectuate the
criminal restitution order and preserve this asset.” As co-payees, Yielding and his
attorneys could cash the check and place its proceeds beyond the reach of restitution
creditors. The district court did not abuse its discretion in enjoining Yielding and his
agents from transferring this liquid asset and in declining to dissolve that injunction
until the amount to be applied to his restitution debt has been paid. See United Indus.
Corp. v. Clorox Co., 140 F.3d 1175, 1179 (8th Cir. 1998) (standard of review).
The third-party appellants argue that we should vacate the TRO because the
government and the district court failed to comply with procedural requirements of
Rule 65 of the Federal Rules of Civil Procedure. But injunctive relief under the All
Writs Act need not rigidly comply with Rule 65’s prescriptions so long as the
injunction is “specific and definite enough to apprise those within its scope of the
conduct that is being proscribed.” In re Baldwin-United Corp., 770 F.2d 328, 338 (2d
Cir. 1985); but cf. Scardelletti v. Debarr, 265 F.3d 195, 212 (4th Cir. 2001) (applying
Rule 65 to an All Writs Act injunction issued in a civil case), rev’d on other grounds
sub nom. Devlin v. Scardelletti, 536 U.S. 1 (2002). Here, Yielding’s attorneys were
electronically notified of the TRO motion on March 19, 2010; did not move to
dissolve the TRO until April 28; and had an opportunity to argue the motion to
dissolve at the May 7 hearing. The third-party appellants had notice of the TRO,
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submitted a brief urging that it be vacated, and do not contend that it lacked
specificity. The grant of All Writs Act relief was not procedurally infirm.
The third-party appellants further argue that the TRO must be vacated because
the district court lacked personal jurisdiction over them in the criminal case. We
disagree. “[A] decree of injunction not only binds the parties defendant but also those
identified with them in interest, in ‘privity’ with them, represented by them or subject
to their control.” Thompson v. Freeman, 648 F.2d 1144, 1147 (8th Cir. 1981),
quoting Regal Knitwear Co. v. NLRB, 324 U.S. 9, 14 (1944); see Fed. R. Civ. P.
65(d); United States v. City of Detroit, 329 F.3d 515, 517, 524-25 (6th Cir. 2003) (en
banc). The power conferred by the All Writs Act “extends, under appropriate
circumstances, to persons who, though not parties to the original action or engaged
in wrongdoing, are in a position to frustrate the implementation of a court order.”
United States v. N.Y. Tel. Co., 434 U.S. 159, 174 (1977).
For these reasons, we decline to vacate or dissolve the TRO. That order
remains in effect on remand until the district court reconsiders the restitution issues
and, in light of that reconsideration, determines whether the TRO should be modified
or dissolved.
III. The Payment Order
Yielding argues on appeal that the district court erred in ordering him to pay
one-half of the $160,000 proceeds to be applied to his restitution debt. As we have
vacated the restitution order, this payment order must also be vacated. However, we
have remanded to the district court for further consideration of the restitution issue.
Should the court reimpose a restitution obligation, particularly one that is greater than
$160,000, and if the government renews its request for a collection remedy in the
criminal case, the payment issue will likely resurface.
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We are troubled by the district court’s summary disposition of the payment
issue. The government invoked a collection method lacking procedural safeguards
typically found in statutory creditor remedies. See, e.g., 26 U.S.C. § 7403 (tax lien
enforcement); Ark. Code Ann. § 16-66-203 (execution of judgment on encumbered
property). But “[t]he Due Process Clause of the Fifth Amendment prohibits the
United States . . . from depriving any person of property without ‘due process of
law,’” which in this context means “that individuals whose property interests are at
stake are entitled to ‘notice and an opportunity to be heard.’” Dusenbery v. United
States, 534 U.S. 161, 167 (2002) (administrative forfeiture of property), quoting
United States v. James Daniel Good Real Prop., 510 U.S. 43, 48 (1993) (in rem civil
forfeiture action). This principle applies whether the government’s motions are
viewed as an in personam action against Yielding or an in rem action based on the
court’s power to control disposition of the settlement proceeds. See Mennonite Bd.
of Missions v. Adams, 462 U.S. 791, 796 n.3 (1983).
Yielding may not be ordered to apply the settlement proceeds to his restitution
debt simply because the funds are “available” to him. He must be the owner; it must
be his money. To take an obvious example, a pickpocket with a new victim’s money
in his hands could not be ordered to apply the money to his prior restitution debt
simply because it is “available.” So when the district court became aware that the
third party appellants claimed ownership interests in the settlement proceeds, those
claimants had a due process right to an opportunity to have their competing claims
adjudicated. “Ownership interests are defined by the law of the State in which the4
interest arose.” United States v. One Lincoln Navigator, 328 F.3d 1011, 1013 (8th
Cir. 2003). The district court did not resolve this ownership issue.
The third party appellants grasped the procedural unfairness here but urged an4
improper fix. The district court does not need personal jurisdiction over the third
party appellants to determine whether Yielding owns the settlement proceeds. But
it must give third party claimants an opportunity to adjudicate their competing
property interests if they choose to do so.
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If it is determined that the settlement proceeds are owned (in whole or in part)
by VHI and/or VBL, Yielding’s only interest in those proceeds will be by reason of
his ownership of the corporations, unless the court finds, as a matter of state law, that
the corporate veil should be pierced. See 18 U.S.C. § 3572(f). That equity interest
may well be inferior to the corporations’ creditors, so those creditors have property
interests requiring notice and an opportunity to be heard. On the other hand, if it is
determined that Yielding personally owns all or part of the proceeds, the record
suggests that he has other creditors who may have property rights to his assets
superior to the government’s claim as restitution creditor. See 18 U.S.C. § 3613(c)
& (d); 26 U.S.C. § 6323; Minnesota Dep’t of Revenue v. United States, 184 F.3d
725, 728 (8th Cir. 1999), cert. denied, 528 U.S. 1075 (2000). Again, these creditors
have due process property interests requiring notice and an opportunity to be heard.
We take no position on the merits of any of these issues. We simply note that they
must be resolved on remand if the government obtains a restitution order and elects
to enforce it against the settlement proceeds in the criminal case. Cf. United States
v. Ritchie Special Credit Invs., Ltd., 620 F.3d 824, 835 (8th Cir. 2010).
The district court’s order dated May 17, 2010, is reversed and the case is
remanded for further proceedings not inconsistent with this opinion.
______________________________
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