United States v. Susan Pioch

Cincinnati, Ohio - Criminal defense lawyer represented defendant with defrauding the multimillion-dollar estate of an elderly widower charge.

Susan Pioch and two codefendants were convicted of crimes arising from their scheme to

defraud the multimillion-dollar estate of an elderly widower. See United States v. Mallory, 902

F.3d 584, 588–89 (6th Cir. 2018). A third person was convicted and sentenced in Arizona. See

id. at 590.

The district court sentenced Pioch to 111 months of imprisonment and imposed on Pioch

a special assessment of $3,700 and restitution of $2,037,783.30. R. 380 (Judgment at 3, 7) (Page

ID #6116, 6120). Pioch shares joint-and-several liability with her codefendants for

$1,990,342.76 of the restitution, which is to be paid to James McLaughlin, the sole living heir of

the defrauded victim, pursuant to the Mandatory Victims Restitution Act of 1996 (MVRA), Pub.

L. No. 104-132, Title II, Subtitle A, § 206(a), 110 Stat. 1227, 1235 (codified at 18 U.S.C.

§ 3664(i)). R. 380 (Judgment at 7–9) (Page ID #6120–22) (citing 18 U.S.C. § 3664(i)); R. 426

(4/19/18 Response at 2) (Page ID #6424). Pioch personally owes the remaining $47,440.54 in

restitution to the Internal Revenue Service (IRS). R. 380 (Judgment at 8–9) (Page ID #6121–22).

Thus, Pioch is liable for a total of $2,041,483.30 for the assessment and restitution. The district

court ordered Pioch to liquidate eleven investment accounts and annuities totaling $467,188.50

in partial payment of her restitution obligations. Id. at 10 (Page ID #6123).

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The Government applied for writs to garnish $367,681.48 from two of Pioch's accounts

that were not part of the original list of eleven accounts. In these applications, the Government

stated that $2,091.48 of the debt had been paid off but did not clarify whether the $2,091.48 was

applied towards the assessment, the restitution due to the IRS, or the restitution due to

McLaughlin. Invoking the Federal Debt Collection Procedures Act of 1990 (FDCPA), Pub. L.

No. 101-647, Title XXXVI, Subtitle A, § 3611, 104 Stat. 4933, 4937–38 (codified at 28 U.S.C.

§ 3011(a)), the Government requested a 10% surcharge amounting to $204,148.33 (i.e., 10% of

the original balance of $2,041,483.30). R. 413 (Application #1 at 1–2 & n.1) (Page ID #6350–

51); R. 415 (Application #2 at 1–2 & n.1) (Page ID #6363–64); R. 423 (Proposed Order #1 at 1–

2) (Page ID #6417–18); R. 424 (Proposed Order #2 at 1–2) (Page ID #6419–20). Over Pioch's

objections, the district court granted the applications for writ of garnishment and the surcharge

request. See United States v. Pioch, No. 3:14CR403, 2019 WL 4305773, at *1 (N.D. Ohio Sept.

11, 2019).

Pioch timely appealed. She argues that the surcharge should be calculated based on the

"debt” that the United States "actually recover[s] through enforcement of a collection remedy”

(i.e., 10% of the $367,681.48 subject to garnishment) and not the total debt resulting from her

crimes (i.e., 10% of the $2,041,483.30 judgment). Appellant's Br. at 12. The Government has

slightly shifted gears on appeal. The Government no longer seeks a 10% surcharge applied to

the $2,041,483.30 judgment. Rather, the Government explains, the surcharge applies to the debt

outstanding when the garnishment applications were filed. See Appellee's Br. at 4 n.1. The

Government thus seeks a surcharge of $203,939.18, which is 10% of the $2,039,391.82 that

Pioch owed when the garnishment applications were filed. See id. at 4–5 & nn.1, 2.

II. ANALYSIS

We review de novo the district court's interpretation of the FDCPA. See United States v.

Shafer, 573 F.3d 267, 272 (6th Cir. 2009).

We begin with § 3011(a)'s text. See id. Section 3011(a), found in FDCPA subchapter A,

provides that "[i]n an action or proceeding under subchapter B or C, and subject to subsection

(b), the United States is entitled to recover a surcharge of 10 percent of the amount of the debt in

No. 19-3919 United States v. Pioch Page 4

connection with the recovery of the debt, to cover the cost of processing and handling the

litigation and enforcement under this chapter of the claim for such debt.” 28 U.S.C. § 3011(a).

FDCPA subchapter B lists prejudgment remedies; subchapter C lists postjudgment

remedies. See id. §§ 3101–3105; 3201–3206. Thus, "[t]he plain language of § 3011 makes it

applicable only to prejudgment or postjudgment procedures.” United States v. Sackett, 114 F.3d

1050, 1053 (10th Cir. 1997). Garnishment is listed as both a prejudgment and a postjudgment

remedy. 28 U.S.C. §§ 3104; 3205. Because the Government applied postjudgment to garnish

two of Pioch's accounts, § 3011(a) applies here. Section 3011(b) supplies two exceptions to

§ 3011(a)'s rule, neither of which is relevant to this case.

According to the next phrase of § 3011(a), the United States is "entitled” to recover a

10% surcharge of "the amount of the debt in connection with the recovery of the debt.” In

relevant part, 28 U.S.C. § 3002(3)(B) defines "debt” as "an amount that is owing to the United

States on account of . . . [an] assessment, . . . restitution, [or] recovery of a cost incurred by the

United States, or other source of indebtedness to the United States, . . .”1 Of course, restitution in

a criminal case is often owed to a victim who is not the United States. Here, for example, Pioch

jointly and severally owes $1,990,342.76 to McLaughlin. Notwithstanding, the FDCPA deems

the outstanding balance on a judgment of restitution arising in a criminal case to be "an amount

that is owing to the United States” for § 3002(3)(B) purposes. See 28 U.S.C. § 3003(b)(2) ("This

chapter shall not be construed to curtail or limit the right of the United States under any other

Federal law or any State law . . . to collect any fine, penalty, assessment, restitution, or forfeiture

arising in a criminal case.” (emphasis added)). Returning to § 3002(3)(B)'s definition of "debt,”

the plain and ordinary meaning of "owing” is "due to be paid.” See Owing, MERRIAM-WEBSTER

(defining "owing” as "due to be paid” and supplying "outstanding,” "overdue,” "owed,”

"payable,” "unpaid,” and "unsettled” as synonyms). Tying everything together: a "debt” can

constitute the amount due to be paid because of an assessment, an order of restitution (including

restitution owed to individuals arising out of criminal cases), or another source of indebtedness

to the United States.

1The § 3011(a) surcharge itself does not constitute "debt.” See 28 U.S.C. § 3002(3).

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Confusion arises from the confounding repetition of "debt” in § 3011's phrase "amount

of the debt in connection with the recovery of the debt.” Pioch urges that "[a]ll words [in

§ 3011(a)] are to be given effect and none are to be ignored.” Appellant's Br. at 8. She argues

that "in connection with the recovery of the debt” modifies "amount of the debt” and urges us

that "a surcharge may be recovered from that amount of the debt that is recovered through

litigation and enforcement of a collection claim under the FDCPA.” Id. at 12. So, Pioch insists,

"the 10 percent surcharge is to be computed with reference to the amount of the debt that is

actually recovered through enforcement of a collection remedy such as a claim for

garnishments.” Id. Put simply, Pioch conceives of the first two uses of "debt” in § 3011(a) as

referring to distinct concepts; the first "debt” is the amount that the Government recovers—via

garnishment, for example—and the second "debt” is the amount due on the judgment.

The Government disagrees. To the Government, "in connection with the recovery of the

debt” is a trigger, not a modifier; the phrase authorizes the United States to recover the

surcharge. See Appellee's Br. at 11. Put another way: the Government believes that § 3011's

first two uses of "debt” allude to the same debt—the outstanding balance due on the judgment.

The second "debt” is just a "redundanc[y]” that is "common in statutory drafting.” Appellee's

Br. at 10 (quoting Barton v. Barr, — U.S. —, 140 S. Ct. 1442, 1453 (2020)).

Pioch's reading runs into an insurmountable textual hurdle. Enforcement actions, like

garnishments, are not "debt.” FDCPA subchapter C lists garnishment as a postjudgment remedy

that is used to satisfy a debt. See 28 U.S.C. § 3205; see also id. § 3011(a) ("In an action or

proceeding under subchapter B or C . . .). That coheres with the ordinary and legal

understanding of garnishments. See Garnishment, MERRIAM-WEBSTER (defining garnishment as

"a legal summons or warning concerning the attachment of property to satisfy a debt” (emphasis

added)); Garnishment, BLACK'S LAW DICTIONARY (defining garnishment as "[a] judicial

proceeding in which a creditor (or potential creditor) asks the court to order a third party who is

indebted to or is bailee for the debtor to turn over to the creditor any of the debtor's property

(such as wages or bank accounts) held by that third party” (emphasis added)); cf. 15 U.S.C.

§ 1672(c) (defining "garnishment” as "any legal or equitable procedure through which the

earnings of any individual are required to be withheld for payment of any debt” in the context of

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wage garnishments (emphases added)); 31 U.S.C. § 3720D(a) ("[T]he head of an . . . agency that

administers a program that gives rise to a delinquent nontax debt owed to the United States by an

individual may . . . garnish the disposable pay of the individual to collect the amount owed, . . .”

(emphasis added)); FED. R. CIV. P. 64(a), (b) (listing garnishment as a "remedy” "to secure

satisfaction of the potential judgment” (emphases added)). So even if Pioch is correct that "in

connection with the recovery of the debt” modifies "amount of debt” in § 3011, a garnishment

action cannot be the "amount of debt” to which the United States is entitled to apply its

surcharge.

We thus agree with the Government. "[I]n connection with the recovery of the debt”

triggers the "recover[y] [of] a surcharge of 10 percent of the amount of the debt.” Thus, when

the Government initiates an action or proceeding under FDCPA subchapter B or C to recover

debt owed to the United States, the United States is entitled to recover a surcharge of 10% of the

outstanding debt.2

We emphasize two features of § 3011(a) that are applicable here. First, the Government

may collect the 10% surcharge only after Pioch has fully paid the assessment, the restitution

owed to McLaughlin, and the restitution owed to the IRS, in that order. Second, the "surcharge”

is an amount to be added to, and not subtracted from, the judgment.

In this case, the judgment states: "Payments shall be applied in the following order:

(1) assessment, (2) restitution principal, . . . (9) costs, including cost of prosecution and court

costs.” R. 380 (Judgment at 8) (Page ID #6121). The § 3011(a) surcharge is levied to cover the

cost of prosecution. See § 3011(a) ("to cover the cost of processing and handling the litigation

and enforcement . . . .”). Per the judgment alone, the surcharge is separate from and must be

2Other courts of appeals have acknowledged without deciding that § 3011(a) entitles the United States to a

10% surcharge on the debt outstanding to the United States and not 10% of the debt actually recovered by the

Government (through a garnishment, for example). See, e.g., Sears, Roebuck & Co. v. U.S. Postal Serv., 844 F.3d

260, 264–65, 268 (D.C. Cir. 2016); Bd. of Governors of Fed. Rsrv. Sys. v. Pharaon, 169 F.3d 110, 113–14 (2d Cir.

1999); Consol. Edison Co. of N.Y. v. Ashcroft, 286 F.3d 600, 606 (D.C. Cir. 2002); United States v. Peoples

Household Furnishings, Inc., 75 F.3d 252, 254 n.3 (6th Cir. 1996); United States v. Alphagraphics Franchising,

Inc., 973 F.2d 429, 430–31 (5th Cir. 1992); United States v. Goyette, 446 F. App'x 718, 721 (5th Cir. 2011); United

States v. Pugh, 75 F. App'x 546, 547 (8th Cir. 2003); United States v. Zharn, 8 F. App'x 465, 466 (6th Cir. 2001)

(order).

No. 19-3919 United States v. Pioch Page 7

paid after the full payment of the assessment and restitution. The MVRA, moreover, requires

that McLaughlin receive his restitution before the IRS does. 18 U.S.C. § 3664(i) ("[T]he court

shall ensure that all other victims receive full restitution before the United States receives any

restitution.”). The plain and ordinary meaning of "surcharge,” moreover, is "to charge an extra

fee”; "an extra fare”; and "an additional tax, cost, or impost.” Surcharge, MERRIAM-WEBSTER

(emphases added); see also Surcharge, BLACK'S LAW DICTIONARY (defining "surcharge” as

"[a]n additional tax, charge, or cost”); cf. 8 U.S.C. § 1714 ("[T]he Secretary of State is

authorized to charge surcharges related to consular services in support of enhanced border

security that are in addition to the passport and immigrant visa fees . . . .” (emphasis added)).

The insertion of "surcharge” into § 3011(a) indicates to us that Congress wanted the Government

to collect a fee on top of the "amount that is owing” to the United States.

Reality buoys our analysis of the language of the judgment in the present case, the

MVRA, and § 3011(a)'s plain text. "[I]t is rare that defendants are able to fully pay the entire

restitution amount owed.” U.S. DEP'T OF JUST., RESTITUTION (Feb. 5, 2020),

https://www.justice.gov/usao-ak/restitution. "Many defendants have already spent the money

that they stole, and will not have sufficient assets to repay their victims.” Id. "If and when the

defendant pays, [a victim of crime] most likely will receive a number of small payments over a

long period of time.” Id. In the mine-run restitution scenario, it would be unjust and unfair to

allow the Government to collect the § 3011(a) surcharge ahead of the victim of a crime or to

subtract the surcharge from the amount that the victim is owed.

We conclude by reiterating our three holdings. First, we hold that when the Government initiates an action or proceeding under FDCPA subchapter B or C to recover debt owed to the United States, the United States is entitled to recover a surcharge of 10% of the outstanding debt under § 3011(a). Second, we hold that the debt (here, the assessment and restitution) must be satisfied before the United States may collect the § 3011(a) surcharge. Finally, the § 3011(a) surcharge is an amount to be added to, and not subtracted from, the judgment.



Because a modification of the surcharge amount is in order, see Appellee’s Br. at 4–5 & nn.1, 2, we VACATE and REMAND so that the district court can calculate the amount that Pioch owed in assessments and restitution when the Government filed the applications for writs of garnishment. The Government may collect 10% of that amount as a surcharge only after the $3,700 assessment, the $1,990,342.76 of restitution owed to McLaughlin, and the $47,440.54 of restitution owed to the IRS are paid in full in that order. And the 10% surcharge must be added to, and not subtracted from, the outstanding debt owed by Pioch.