United States of America v. Schwarzbaum

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA

Case No. 9:18-CV-81147-BLOOM/REINHART

UNITED STATES OF AMERICA,

Plaintiff,

v.

ISAC SCHWARZBAUM,

Defendants.
_________________________________/

REPORT AND RECOMMENDATION ON THE GOVERNMENT’S MOTION
TO REPATRIATE FOREIGN ASSETS (ECF No. 115)

Currently before me is the Government’s Motion to Repatriate Foreign Assets
(“Government’s Motion”) referred by the Honorable Beth Bloom for report and
recommendation. ECF Nos. 115, 116. I have reviewed the Government’s Motion, Mr.
Schwarzbaum’s Response (ECF No. 121), the Government’s Reply (ECF No. 122), and
Mr. Schwarzbaum’s Objections to Notice (ECF No. 123), along with all included
exhibits. I am fully advised on this matter. The Government’s motion is ripe for
decision. For the reasons contained herein, I RECOMMEND that the Government’s
Motion be GRANTED.
I. BACKGROUND
The Government brought this action against Mr. Schwarzbaum for failing to
report his relationship with a foreign financial agency as required by 31 U.S.C. §
5314. ECF No. 1. After a five-day bench trial, the Court found in favor of the
Government. ECF No. 99. The Court ordered Mr. Schwarzbaum to pay the
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Government $12,555,813 plus interest and late penalties. ECF No. 105. Mr.
Schwarzbaum has not paid.
The Government sought a writ of garnishment under Federal Debt Collection
Procedures Act of 1990 (“FDCPA”) to enforce the judgment. ECF No. 115. However,
Mr. Schwarzbaum has insufficient assets within the United States to satisfy the
judgment against him (ECF No. 115), so obtaining a writ of garnishment under the
FDCPA would be fruitless. Thus, the Government requests that the Court order Mr.
Schwarzbaum to move his offshore funds within the Court’s jurisdiction so the Court
can issue a writ of garnishment. ECF No. 115.
II. LEGAL STANDARD
Prior to the existence of the FDCPA, federal debt collection was governed
exclusively by state law. 136 Cong. Rec. H13288-02 (statement of Rep. Jack Brooks).
At the time, the Federal Government had $90 billion in outstanding debt, but the
state-to-state variation on debt collection procedures made federal debt collection
inefficient and ineffective. Id. Per the request of many U.S. Attorneys, Congress
passed the FDCPA in order to create a uniform procedure to recover outstanding debt
to the United States. Id.
The FDCPA provides the “exclusive civil procedures of the United States to
recover a judgment on a debt.” 28 U.S.C. § 3001(a)(1). Under the FDCPA, a court may
issue a writ of garnishment. 28 U.S.C. § 3205 (“A court may issue a writ of
garnishment against property . . . in which the debtor has a substantial nonexempt
interest . . . .”). However, a court may not issue a writ of garnishment for funds in the
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possession of someone outside the jurisdiction of the court, such as a foreign bank
account. See Inversiones y Procesadora Tropical Inpotsa, S.A. v. Del Monte
International, No. 16-24275, 2020 WL 6384878, at *4 (S.D. Fla. Aug. 5, 2020) (J.
Louis) (“[A]ll the funds are held outside of the state of Florida and, thus, are beyond
the reach of a Florida writ of garnishment.”); APR Energy, LLC v. Pakistan Power
Resources, LLC, No. 3:08-cv-961-J-25MCR, 2009 WL 425975, at *2 (M.D. Fla. Feb.
20, 2009) (holding a court must have jurisdiction over “both the garnishee and the
property which is held by the garnishee” to execute a garnishment proceeding)
(emphasis in original).
After exhausting the procedures specifically available under the FDCPA, a
court may issue any writ necessary or appropriate to support a writ of garnishment.
28 U.S.C. § 3202(a) (citing the All Writs Act, 28 U.S.C. § 1651); see also Penn. Bureau
of Corr. V. U.S. Marshals Serv., 474 U.S. 34, 43 (1985) (“The All Writs Act is a residual
source of authority to issue writs that are not otherwise covered by statute.”). An
order to repatriate funds is precisely the kind of order permitted by the All Writs Act.
“Personal jurisdiction [gives] the court power to order [the defendant] to transfer
property whether that property was within or without the limits of the court’s
territorial jurisdiction.” Citronelle-Mobile Gathering, Inc. v. Watkins, 934 F.2d 1180,
1187 (11th Cir. 1991) (alteration in original) (quoting United States v. Ross, 302 F.2d
831, 834 (2d Cir. 1962)); see also, e.g., United States v. McNulty, 446 F. Supp. 90, 92
(N.D. Cal. 1978) (“It is clear, then, that this court, by virtue of its jurisdiction over the
defendant, has the power to order him to repatriate the assets located in the foreign
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bank.”) (emphasis added).
Accordingly, a courts has the authority to order a party under its jurisdiction
to repatriate foreign assets when it is appropriate to support a writ of garnishment
under the FDCPA.
1
See United States v. Grant, No. 00-8986, 2005 WL 2671479, at *2
(S.D. Fla. Sep. 2, 2005) (J. Klein).
III. DISCUSSION
The Court had the authority to enter judgment against Mr. Schwarzbaum.
2
So,
if Mr. Schwarzbaum refuses to pay, the Government could garnish Mr.
Schwarzbaum’s U.S. bank accounts according to the procedures laid out in § 3205.
However, Mr. Schwarzbaum does not have sufficient assets within the United States
for the Government to garnish. Thus, garnishing Mr. Schwarzbaum’s U.S. bank
accounts under § 3205 is not a sufficient remedy under the present circumstances.
Accordingly, I recommend the Court find that an additional order under the All Writs
Act, as incorporated into § 3202, is appropriate so the Government can collect the
judgment.

1
Mr. Schwarzbaum argues that the word “repatriate” implies that the assets in
question must have been in the United States at some point in the past. ECF No. 121.
This understanding is contradicted by the case law. See, e.g., United States v.
McNulty, 446 F. Supp. 90, 92 (N.D. Cal. 1978) (ordering a defendant to repatriate
lottery winnings collected in Ireland and deposited in a bank on the Island of Jersey).

2
Mr. Schwarzbaum argues that this Court should remand the case to the Internal
Revenue Service instead of awarding the Government damages. ECF No. 121. I do
not address his argument because Judge Bloom has already ruled against Mr.
Schwarzbaum on that exact issue. ECF No. 98. See generally Arizona v. California,
460 U.S. 605, 618 (1983) (“[W]hen a court decides upon a rule of law, that decision
should continue to govern the same issues in subsequent stages in the same case.”).

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Mr. Schwarzbaum’s primary argument against the Government’s Motion is
that his money is held in various Swiss bank accounts that are not within the Court’s
jurisdiction. However, this Court has the authority to order Mr. Schwarzbaum to
repatriate his foreign assets by virtue of personal jurisdiction over him. So, it is not
important whether or not Mr. Schwarzbaum’s assets are within the Court’s
jurisdiction as long as Mr. Schwarzbaum himself is within the Court’s jurisdiction.
The Court has jurisdiction over Mr. Schwarzbaum. Thus, the Court can order him to
repatriate his assets.
Mr. Schwarzbaum further argues that Florida’s homestead exemption applies,
so he cannot be ordered to repatriate his assets. However, the Government has not
requested Mr. Schwarzbaum repatriate the proceeds from selling his home. The
Government requested that Mr. Schwarzbaum repatriate some of the $50 million
from various Swiss bank accounts for which he has provided no exception.
Consequently, Florida’s homestead exemption is irrelevant here.
Mr. Schwarzbaum has no legal basis to resist a court order requiring him to
repatriate his foreign assets. Therefore, I recommend that the Court order Mr.
Schwarzbaum to repatriate $18,227,465.89,
3
in addition to any additional post-
judgment interest and penalties accrued since May 31, 2021.

3
Mr. Schwarzbaum has not disputed the Government’s calculation of the judgment,
interest, late-penalties, and surcharges. ECF Nos. 121, 123.

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IV. CONCLUSION
Accordingly, I RECOMMEND that the Government’s Motion to Repatriate
Foreign Assets be GRANTED and that Mr. Schwarzbaum be ordered to repatriate
$18,227,465.89 in addition to any additional post-judgment interest accrued since
May 31, 2021.
A party shall serve and file written objections, if any, to this Report and
Recommendation with the Honorable Beth Bloom, United States District Court
Judge for the Southern District of Florida, within FOURTEEN (14) DAYS of being
served with a copy of this Report and Recommendation. Failure to timely file
objections will bar a de novo determination by the District Judge of anything in this
recommendation and shall constitute a waiver of a party’s “right to challenge on
appeal the district court's order based on unobjected-to factual and legal conclusions.”
11th Cir. R. 3-1 (2016); see also 28 U.S.C. § 636(b)(1)(C).
DONE AND SUBMITTED in Chambers this 30th day of June, 2021, at West
Palm Beach in the Southern District of Florida.

________________________
BRUCE REINHART
United States Magistrate Judge

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