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Date: 08-14-2021
Case Style:
United States of America v. EDWARD J. ABELL, III
Case Number: 20-1120
Judge: Sandra Lynch
Court: United States Court of Appeals
For the First Circuit
Plaintiff's Attorney: Carol E. Head, Assistant United States Attorney, with whom
Andrew E. Lelling, United States Attorne
Defendant's Attorney:
Description:
Boston, MA - Criminal defense lawyer represented defendant with eight counts of wire fraud, money laundering, and unlawful monetary transactions charge.
Edward J. Abell, III and Shilo Abell are married and
residents of Massachusetts. Between 2006 and 2017 Edward Abell
served in "finance-related positions," including Chief Financial
Officer and Vice President of Finance, at four companies in the
Boston area.1 Edward Abell used these roles to embezzle millions
of dollars. At each of the victim companies he created fake vendor
profiles for a company called Pinehurst, which he controlled. He
then created fake invoices for work Pinehurst never performed, and
issued checks to Pinehurst on behalf of his employers. Once the
money was deposited in the Pinehurst accounts, Edward Abell either
spent it directly, or transferred it to his own personal and
1 Three of these companies were related entities. After
taking time off for poor health, Edward Abell began working at an
unrelated firm and resumed the same scheme.
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investment accounts. In total, Edward Abell embezzled
approximately $3,879,750 between 2006 and 2017. On September 24,
2018 he pleaded guilty to eight counts of wire fraud, money
laundering, and unlawful monetary transactions relating to this
scheme.
At his sentencing hearing, Edward Abell represented to
the court that he was able and willing to pay substantial
restitution to his victims. The district court sentenced him to
ninety-seven months' incarceration and three years of supervised
release and ordered him to pay $3,879,750 in restitution. Edward
Abell also forfeited an E*Trade account and other assets, including
two cars and a property in Maine. Edward Abell did not challenge
the restitution order in any direct appeal. In his appeal from
his sentence, he again made the representation that he could make
significant restitution, including from his 401(k) account. This
court upheld his sentence in an unpublished judgment. United
States v. Abell, No. 19-1125 (1st Cir. Sept. 16, 2019) (judgment
affirming sentence).
Despite his promise to make substantial restitution,
Edward Abell paid only $7,875 towards his restitution obligations
-- most of which came from the sale of one of his forfeited
vehicles. He took no money from his 401(k) account to meet his
restitution obligations. With accrued interest his outstanding
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balance grew to $3,922,484.02.2 On July 29, 2019, the government
asked the district court for a writ of garnishment directed at
Edward Abell's 401(k) plan, which Edward Abell held individually
in his own name.3 The account had a value of roughly $393,500.
After deducting taxes and early withdrawal fees, the government
asked that the full balance of the account be paid towards Edward
Abell's restitution balance.
Both Edward and Shilo Abell opposed the government's
motion for a writ of garnishment. Edward Abell argued that his
401(k) plan was exempt from forfeiture pursuant to 18 U.S.C.
§ 3613(a)(1) and 26 U.S.C. § 6334. He also joined in his wife's
objections. Even though she has not divorced her husband, Shilo
Abell argued that the district court should find that Massachusetts
divorce law implicitly recognizes a vested legal interest by
spouses in their husband's or wife's property, entitling her to a
portion of the account payout. The district court rejected these
objections and issued a garnishment order. It observed, "[i]t is
undisputed that the Abells are still married. In the absence of
a divorce decree or other qualifying domestic relations order,
state property law will not displace federal law." The district
2 At the time of the district court's order his restitution
amount had further increased to $3,968,490.35.
3 The writ of garnishment was directed at both the plan
and the plan administrator.
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court found Shilo Abell's remaining arguments that she held a
vested legal interest in the 401(k) account unpersuasive because
"[Edward Abell] was entitled to receive, without spousal consent,
$393,500, the approximate total value of the vested funds in his
401(k) Account." Shilo Abell brought this timely appeal.
II. Discussion
The Federal Debt Collection Procedures Act authorizes
the government to use writs of garnishment to collect on
restitution orders. United States v. Witham, 648 F.3d 40, 49 (1st
Cir. 2011); 28 U.S.C. § 3001 et seq. Shilo Abell does not challenge
the government's authority to garnish her husband's account in
this appeal. Rather, she renews her claim that Massachusetts law
gives her a vested legal interest in Edward Abell's 401(k) account.
She also argues for the first time on appeal that the contingent
death benefit in the plan gives her some current interest in the
account. Her remaining arguments rely on this initial premise
that she has a current vested legal interest in the 401(k) account
under Massachusetts divorce law and/or under the terms of the
401(k) plan itself. Because we reject both of these arguments we
do not reach her other claims. Nor do we reach any broader argument
as to the Employee Retirement Income Security Act of 1974 (ERISA),
the Mandatory Victim Restitution Act (MVRA), or preemption.
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We review the district court's interpretation of
Massachusetts law de novo.4 Salve Regina Coll. v. Russell, 499
U.S. 225, 231 (1991). We review the argument about the contingent
death benefit in the policy for plain error because Shilo Abell
failed to raise it before the district court. Rodriguez-Torres v.
Caribbean Forms Mfr., Inc., 399 F.3d 52, 65 n.11 (1st Cir. 2005).
As to the Massachusetts law argument, under any standard
of review, there was no error in the district court's decision.
Shilo Abell does not dispute that Edward Abell held the 401(k)
account individually, in his own name only. She argues instead
that Massachusetts divorce law recognizes that both spouses have
a vested property interest in a retirement account that one spouse
holds individually. She points to Mass. Gen. Laws ch. 208, § 34,
which states in relevant part,
Upon divorce or upon a complaint in an action
brought at any time after a divorce . . . the
court of the commonwealth . . . may make a
judgment for either of the parties to pay
alimony to the other . . . . In addition to or
in lieu of a judgment to pay alimony, the court
may assign to either husband or wife all or
any part of the estate of the other, including
but not limited to, . . . retirement benefits
. . . .
4 As the government notes, this court has not yet announced
the standard of review for an appeal from a writ of garnishment,
but other circuits review for abuse of discretion. See, e.g.,
United States v. Smith, 768 F. App'x 926, 931 n.3 (11th Cir. 2019);
United States v. Clayton, 613 F.3d 592, 595 (5th Cir. 2010).
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Nothing in that statute indicates that both spouses have a vested
property right in any retirement account that one spouse holds
individually before divorce.
To the contrary, Massachusetts case law makes clear that
§ 34 only governs the division of property as it exists at the
time of divorce. "[I]n making a division of assets the judge [is]
limited, for better or worse, to the property owned by the parties
at the time of the divorce." Heins v. Ledis, 664 N.E.2d 10, 16
(Mass. 1996).
Further, the terms of § 34 require rejection of her
argument for another reason. The statute authorizes the court to
"assign" "all or any part of the estate of the other" to one
spouse. The court could not "assign" a portion of one spouse's
estate to the other if both spouses had a pre-existing vested
interest in the property, as Shilo Abell claims. Massachusetts
case law confirms this view. The Massachusetts Supreme Judicial
Court defines "estate" as used in § 34 to mean all property held
by "a spouse." Dalessio v. Dalessio, 570 N.E.2d 139, 142 (Mass.
1991) (citing Lauricella v. Lauricella, 565 N.E.2d 436, 438 (Mass.
1991)). The fact that Massachusetts recognizes that each spouse
individually holds an estate composed of their own property refutes
Shilo Abell's claim that Massachusetts law creates some vested
interest for one spouse in property held individually in his or
her spouse's name. Shilo Abell has not pointed to a single case
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from Massachusetts that states § 34 creates or recognizes some
pre-divorce property interest. Indeed, the case law she cites
largely discusses California's community property rules and other
issues not relevant here.
Shilo Abell next argues that Edward Abell's 401(k) plan
itself gives her a vested interest in the account because she would
be entitled to a death benefit if Edward Abell were to pass away.
Under the terms of the plan, "[i]f you are married at the time of
your death, your spouse will be the beneficiary of the entire death
benefit unless an election is made to change the beneficiary."
That the plan required consent in writing from both spouses to
change the beneficiary during marriage does not give Shilo Abell
a vested interest in the death benefit. Indeed, the death benefit
in the plan would be explicitly contingent on a number of
circumstances. It states, "[i]f you have designated your spouse
as your beneficiary for all or part of your death benefit, then
upon your divorce[] the designation is no longer valid." Edward
Abell could also choose to "have [his] vested account balance
distributed to [him] as soon as administratively feasible
following [his] termination of employment." Receiving this lump
sum payout would not require spousal consent. And, of course, any
death benefit was contingent on the balance that remained in the
account and the beneficiary surviving the plan-holder. In these
circumstances Shilo Abell fails to show how this creates a current
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vested legal interest in the account. She is entitled to payment
only if (1) Edward Abell does not unilaterally choose to receive
his full 401(k) balance in a single lump-sum payment before his
death, (2) there are still assets in the account at the time of
Edward Abell's death, (3) Shilo and Edward Abell remain married
until Edward Abell's death, and (4) Edward Abell predeceases Shilo
Abell. There is no requirement in the plan that some portion of
the plan funds be administered for the benefit of the current death
beneficiary. We conclude it was not plain error for the district
court to issue the writ of garnishment without compensating Shilo
Abell for her contingent death benefit under the policy.
In all, Shilo Abell cannot rely on either Massachusetts
divorce law or the contingent death benefit provision in the 401(k)
policy when her husband is not deceased and the Abells are not
divorced. Shilo Abell has not pointed to a single authority that
recognizes a spousal vested interest in a 401(k) account in
circumstances similar to this case. Because she has no interest
in her husband's 401(k) account, we reject her challenge to the
garnishment order without reaching her additional arguments.5
Outcome: The order of the district court is affirmed.
Plaintiff's Experts:
Defendant's Experts:
Comments: