UNITED STATES v. GREEBEL (2025)

MEMORANDUM & ORDER

The Court is in receipt of Mr. Greebel's May 2, 2025 letter motion, (ECF No. 821), requesting a stay pending appeal of the distribution of restitution funds from the Clerk of Court to Mr. Greebel's victim. (Id. at 1.) Mr. Greebel's one-page motion cites no cases or statutes and instead invokes the risks of “potentially unnecessary motion practice,” expenditure of “judicial and party resources,” and “irreparable harm to Mr. Greebel pending appeal (the irrecoverable distribution of the funds at issue)” to argue for a stay of the distribution of funds to Mr. Greebel's victim, Travere Therapeutics Inc. (formerly known as Retrophin, Inc.). (Id.)

The Court assumes general familiarity with Mr. Greebel's garnishment proceedings. (See ECF No. 816, at 1-5 (detailing the history of garnishment proceedings in this case)). Pursuant to the Second Circuit's decision dated August 24, 2022, United States v. Greebel, 47 F.4th 65 (2d Cir. 2022), remanding this case, this Court determined, as depicted below, the fund transfers necessary to effectuate the garnishment of Mr. Greebel's retirement accounts at Charles Schwab and Merrill Lynch (together, “Garnishees”) and the subsequent distribution of funds to his victim:

(ECF No. 816, 5-6.) As explained in the Court's April 10, 2025 Order, (see id.), the first step in effectuating garnishment is the liquidation of Mr. Greebel's accounts at Merrill Lynch and Charles Schwab. (Id.) The amount liquidated at this step is Amount A in the above diagram. The second step is that “the Garnishees withhold 20% of the funds of the liquidated accounts, pursuant to 26 U.S.C. § 3405(c)(1)(B)” and “the remainder [80%] of the liquidated accounts be deposited with the Clerk of Court in an interest-bearing account.” (Id.) The amount the Garnishees deposited to the Clerk of Court (80% of Amount A) is Amount B. The amount the Garnishees withheld and deposited (or will deposit) to the IRS (20% of Amount A) is Amount C. The third step is for the Clerk to “reserve 10% of the liquidated funds in escrow for the potential additional tax consequences of the early withdrawal,” (Amount E), and then “distribute the remainder [90%] to Mr. Greebel's victim,” (Amount D). (ECF No. 816, at 5-6.)

The first and second steps are complete. The total amount liquidated (Amount A) was $2,122,111.38.¹ Of that amount, 80% of Amount A – that is, $1,697,689.10 (Amount B) – was transferred to the Clerk of Court by the Garnishees. (See supra note 1.) The remaining 20% of Amount A – that is, $424,422.28 (Amount C) – has been remitted by the Garnishees to the IRS or has been withheld for that purpose.² (See id.) The table below summarizes the completed liquidation and transfer of funds by Garnishees Charles Schwab and Merrill Lynch:

(See id.) Mr. Greebel's accounts at Charles Schwab and Merrill Lynch have been liquidated, and the funds have been transferred. He has no property interest in or any claim to Amounts B and C. The garnishment of Mr. Greebel's accounts is complete.

The third and final step is the Clerk's post-garnishment distribution of restitution funds – that is, $1,697,689.10 (Amount B), pursuant to this Court's judgment and order of restitution dated August 24, 2018 (see ECF No. 674, at 5-7). Pursuant to the Court's April 10, 2025 Order, (ECF No. 816, at 5-6), the Clerk is reserving 10% of this amount – that is, $169,768.91 (Amount E) – for a potential 10% early withdrawal tax that may be levied by the Internal Revenue Service (“IRS”) under 26 U.S.C. § 72(t). The other 90% of the amount the Clerk received – that is, $1,527,920.19 (Amount D) – is due to be distributed to Mr. Greebel's victim. The transfers occurring in the third step are summarized below:

DISCUSSION

In the instant motion, Mr. Greebel requests a post-garnishment stay pending appeal of the third step – that is, the distribution of $1,527,920.19 (Amount D) from the Clerk of Court to Mr. Greebel's victim. Critically, Mr. Greebel is not seeking a stay pending appeal as to Amount E – which is the 10% share of Amount B reserved by the Clerk for a potential early withdrawal tax and also the share of funds that was the subject of the Second Circuit's limited remand in United States v. Greebel, 47 F.4th 65 (2d Cir. 2022). Mr. Greebel seeks a stay only as to the distribution of Amount D from the Clerk to Mr. Greebel's victim. (See ECF No. 821, at 1) (“[W]e respectfully ask that Your Honor stay the portion of the Court's April 21 [sic] Order stating ‘[t]he Court will order the Clerk of Court to distribute the remainder to Mr. Greebel's victim,’ ECF No. 816 at 6, and instead order the Clerk of Court to hold all funds that it receives from the Garnishees in an interest bearing account pending the resolution of Mr. Greebel's appeal.”). Mr. Greebel's instant motion does not and could not seek a stay as to the Court's imposition of restitution, the liquidation of Mr. Greebel's account by the Garnishees, or the transfer of liquidated funds by the Garnishees to the Clerk of Court. The Court therefore restricts its analysis to the scope of Mr. Greebel's motion – specifically, whether the distribution of $1,527,920.19 (Amount D) from the Clerk to Mr. Greebel's victim should be stayed.

For the reasons explained below, not only does Mr. Greebel lack Article III standing to bring the instant motion but also, even if he had standing, his motion would be barred by “the mandate rule, a branch of the law-of-the-case doctrine ․ that rigidly binds the district court, barring it from considering issues explicitly or implicitly decided on appeal.” United States v. Aquart, 92 F.4th 77, 87 (2d Cir. 2024) (cleaned up), cert. denied sub nom. Aquart v. United States., ––– U.S. ––––, 145 S. Ct. 1071, 220 L.Ed.2d 391 (2025).

A. Standing

1. Mr. Greebel has no property rights as to Amount D

As a threshold matter, Mr. Greebel has no property interest in Amount D, the amount held by the Clerk for distribution to Mr. Greebel's victim. As the Second Circuit has held in this case, “the Government, in seeking garnishment, steps into the defendant's shoes, acquiring whatever rights the defendant himself possesses.” United States v. Greebel, 47 F.4th 65, 73 (2d Cir. 2022) (cleaned up) (emphasis added). Once the government has “acquir[ed] whatever rights the defendant ․ possesse[d],” the defendant is necessarily divested of any property rights he once had in that property.

2. The “harm” Mr. Greebel alleges is not cognizable

Mr. Greebel cannot suffer a legally cognizable injury as to property he neither owns nor possesses. Mr. Greebel's instant motion asks for a stay of the distribution of funds from the Clerk to his victim “to prevent irreparable harm to Mr. Greebel pending appeal (the irrecoverable distribution of the funds at issue).” (ECF No. 821, at 1.) But this Court and the Second Circuit have already determined the rights to the garnished funds now on deposit with the Clerk, to be distributed to his victim pursuant to the judgment of restitution entered on August 24, 2018 (see ECF No. 674, at 5-7). Mr. Greebel challenged the garnishment of his accounts before this Court, the Second Circuit, and the Supreme Court. The Second Circuit held that “the Government, in seeking garnishment to enforce restitution under the MVRA, steps into the defendant's shoes, acquiring whatever rights the defendant himself possesses to the balance of the 401(k) accounts.” United States v. Greebel, 47 F.4th 65, 68 (2d Cir. 2022). The Second Circuit has already confirmed the validity of the garnishment of Mr. Greebel's accounts, and that ruling is binding on the parties and this Court. Consequently, Mr. Greebel's allegation of permanent, “irrecoverable” loss of property rights in his garnished accounts – the “irreparable harm” he fears and invokes as a basis for his requested stay – is no longer cognizable. Upon the completion of the garnishment of Mr. Greebel's accounts, his interest and rights to the funds were extinguished.

3. Mr. Greebel lacks Article III standing

In this motion, Mr. Greebel seeks a post-garnishment stay of the distribution of funds in which Mr. Greebel lacks any ownership or possessory interest. For the Court to find that Mr. Greebel has standing, the Court must find, inter alia, that he has “suffered an injury in fact — an invasion of a legally protected interest which is (a) concrete and particularized ․ and (b) actual or imminent, not conjectural or hypothetical.” Lujan v. Defs. of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) (cleaned up). Mr. Greebel has no “legally protected interest” in Amount D, the restitution funds held by the Clerk for distribution to his victim, because the government has “acquir[ed] whatever rights the defendant ․ possesse[d]” in funds from his garnished accounts. United States v. Greebel, 47 F.4th 65, 73 (2d Cir. 2022). Accordingly the Court must deny and dismiss Mr. Greebel's instant motion for lack of standing.

B. The Mandate Rule

Although the Court finds Mr. Greebel lacks standing to bring the instant motion and that his motion must be denied and dismissed on that ground, the Court also finds that, in the alternative, his motion should be barred for violating the mandate rule. As explained earlier, “the mandate rule, a branch of the law-of-the-case doctrine ․ rigidly binds the district court, barring it from considering issues explicitly or implicitly decided on appeal.” United States v. Aquart, 92 F.4th at 87.

The Second Circuit considered “whether the district court properly granted the Government's application for garnishment,” and found that it did. United States v. Greebel, 47 F.4th 65, 68 (2d Cir. 2022). The Second Circuit has affirmed all aspects of Mr. Greebel's garnishment except for the share of funds that may need to be set aside for a potential 10% early withdrawal tax:

Like the district court, we hold that the MVRA permits the Government to garnish Greebel's retirement funds to compensate the victims of his crimes, notwithstanding the Employee Retirement Income Security Act of 1974 (“ERISA”)’s anti-alienation provision.

We further agree with the district court that the plan documents provide Greebel the right to withdraw the funds in his retirement accounts. At the same time, we reiterate that the Government, in seeking garnishment to enforce restitution under the MVRA, steps into the defendant's shoes, acquiring whatever rights the defendant himself possesses to the balance of the 401(k) accounts. Thus, here, the Government's right to Greebel's retirement funds may be limited by the ten-percent early withdrawal tax to which Greebel would be subject. The district court did not consider whether Greebel would be subject to the early withdrawal tax upon seizure of funds by the Government or determine what property interest remains in Greebel's retirement accounts. Accordingly, we remand to the district court to address those questions in the first instance.

Id. As the Second Circuit makes clear, its remand was limited to one specific tax issue – specifically the impact of a potential 10% “early withdrawal tax” triggered by garnishment of Mr. Greebel's accounts. Later in its opinion, the Second Circuit defined the scope of its remand with even more specificity:

Specifically, the district court should determine whether the Government's garnishment would trigger the ten-percent early withdrawal tax, and, if so, the amount subject to garnishment by the Government. ․ To the extent the parties do not provide clarity on whether Greebel will be subject to the early withdrawal tax, the district court may wish to direct the liquidation of the retirement account and order the clerk to reserve a portion of the funds in escrow for the potential additional tax consequences of the early withdrawal.

Id. at 76. Mr. Greebel has failed to establish whether garnishment of his accounts triggers a 10% early withdrawal tax under 26 U.S.C. § 72(t). Given that the parties failed to “provide clarity on whether Greebel will be subject to the early withdrawal tax,” despite having several years to do so, this Court “direct[ed] the liquidation of the retirement account and order[ed] the clerk to reserve a portion of the funds [10%] in escrow for the potential additional tax consequences of the early withdrawal.” Id. See also ECF No. 816 (April 10, 2025 Order), at 5-6. The Court has complied with the Second Circuit's limited remand as to the 10% early withdrawal tax issue and followed the procedure the Second Circuit prescribed.³

Applying the mandate rule, the Court finds, pursuant to Aquart, that the validity of the garnishment of Mr. Greebel's accounts and any issues related to its validity (except for the 10% early withdrawal tax issue) were “issues explicitly or implicitly decided on appeal” and therefore barred from being relitigated. United States v. Aquart, 92 F.4th at 87. The post-garnishment distribution of funds by the Clerk to Mr. Greebel's victim was not an issue within the scope of the Second Circuit's remand – and Mr. Greebel is barred from relitigating it.

CONCLUSION

Mr. Greebel's May 2, 2025 letter motion, (ECF No. 821), requesting a stay pending appeal of the distribution of restitution funds from the Clerk of Court to Mr. Greebel's victim is denied and dismissed for lack of standing. In the alternative, the motion is barred for violating the mandate rule.

Pursuant to Mr. Greebel's judgment and order of restitution, (ECF No. 674, at 5-7), the Clerk of Court is respectfully directed to promptly distribute $1,527,920.19 (Amount D), less any applicable administrative fees, to Mr. Greebel's victim, Travere Therapeutics Inc. (formerly known as Retrophin, Inc.).

The Clerk of Court is also respectfully directed to reserve $169,768.91 (Amount E) in escrow until July 31, 2025 to provide the Internal Revenue Service an opportunity to collect this amount as an early withdrawal tax under 26 U.S.C. § 72(t) if the Internal Revenue Service determines that the government's garnishment of Mr. Greebel's accounts indeed triggered the 10% early withdrawal tax under 26 U.S.C. § 72(t). In its March 14, 2025 letter to the Court, the United States Attorney's Office wrote: “This Office anticipates that the ten-percent additional tax for early withdrawals under 26 U.S.C. § 72(t) will be triggered by the garnishment of Greebel's retirement accounts.” (ECF No. 815, at 2.)

Given that the garnishment of Mr. Greebel's retirement accounts is complete, the United States Attorney's Office is ordered to promptly and diligently consult with officials at the Internal Revenue Service to ascertain whether or not the garnishment of Mr. Greebel's accounts actually triggered the 10% early withdrawal tax under 26 U.S.C. § 72(t). By July 10, 2025, the United States Attorney's Office shall file a letter on the docket stating whether a 26 U.S.C. § 72(t) tax was triggered by the garnishment in this case. If a 26 U.S.C. § 72(t) tax was triggered, the government shall include in its letter a request for the Clerk to release to the IRS the relevant funds held in escrow – that is, $169,768.91 (Amount E).

If the United States Attorney's Office fails to comply with its July 10, 2025 deadline (or, if the Internal Revenue Service determines that a 26 U.S.C. § 72(t) tax was not triggered), the funds held in escrow – $169,768.91 (Amount E) – shall be released from the Clerk to Mr. Greebel's victim, Travere Therapeutics Inc., on July 31, 2025.

So ordered.

FOOTNOTES

1.   Upon liquidation of Mr. Greebel's Charles Schwab account (valued at $1,797,802.85 at liquidation), Charles Schwab issued a check to the Clerk of Court in the amount of $1,438,242.28 (80% of the liquidated amount) and remitted to the IRS $359,560.57 (20% of the liquidated amount). (ECF No. 824, at 1-3.) Likewise, upon liquidation of Mr. Greebel's Merrill Lynch account (valued at $324,308.53 at liquidation), Merrill Lynch issued a check to the Clerk of Court in the amount of $259,446.82 (80% of the liquidated amount) and withheld for remittance to the IRS $64,861.71 (20% of the liquidated amount). (ECF No. 825, at 1.)

2.   Charles Schwab remitted to the IRS $359.560.57, (ECF No. 824, at 2), and “Merrill Lynch has withheld the remaining 20% of the Liquidated Account Balance, totaling $64,861.71, for payment to the IRS pursuant to 28 U.S.C. § 3405(c)(1)(B)” (ECF No. 825, at 1).

3.   Although Mr. Greebel does not have standing to challenge the distribution of Amount D from the Clerk to his victim, he arguably may have standing to challenge the distribution of Amount E by the Clerk to the IRS if and when the IRS seeks to levy a 10% early withdrawal tax. If Mr. Greebel chooses to challenge that distribution, is found to have standing, and is able to successfully establish that a 10% early withdrawal tax is not owed, those funds (Amount E) will be promptly transferred to Mr. Greebel's victim pursuant to Mr. Greebel's restitution obligations.The Court is advised that, as of May 23, 2025, Mr. Greebel's original restitution ($10,447,979) and post-judgment interest ($1,728,611.74) total to $12,176,590.74. Of this total amount of $12,176,590.74, Mr. Greebel has thus far paid $1,728,614.10 (inclusive of Amount B, the funds derived from his garnished Charles Schwab and Merrill Lynch accounts) and owes his victim a balance of $10,447,976.64 in restitution.

Kiyo A. Matsumoto, United States District Judge: