IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TLLINOTS

EASTERN DIVISION

UNITED STATES OF AMERICA )
)

)

VS. ) No. 03 CR 779 - 02

)

JACK L. HARGROVE, )
)

Defendant, )

MEMORANDUM OPINION AND ORDER

The government has presented alternate preliminary orders of forfeiture, It argues
that the court should approve the order that includes forfeitures of defendant Jack L.
Hargrove’s interest in an employee pension plan. The defendant disagrees, and so do we.

The government contends that the substitute asset provision explicitly authorizes the
government to forfeit “any” property of the defendant, 21 U.S.C. §853(p)(2), and the interest
in the pension plan is property of the defendant. It is right about that, but that does not
resolve the issue. Pension plan benefits are protected against assignment or alienation by 29
U.S.C, §1056(d)(1). The Supreme Court, in Guidry v. Shect Metal Workers National Pension

Fund, 493 U.S,365 (1990), determined that the anti-alienation provision protected the pension

benefits of a union official who had embezzled union funds; the union could not impose a
constructive trust on those benefits so as to be repaid. The government points out that Guidry
was a civil case having to do with whether a civil plaintiff may obtain a constructive trust
against one who has committed a tort, and, again, it is correct (although it is perhaps
somewhat disingenuous in this context to describe a criminal embezzlement as simply a tort).

A careful reading of Guidry, however, leads to the conclusion that the protection is


No. 03 CR 779-02 Page2

broad indeed. The forfeiture provision is general; it does not explicitly deal with pension
funds. In those circumstances the Supreme Court has ruled out the judicial creation of
exceptions to the ERISA anti-alienation provision:

. +» Were we to accept respondents’ position, ERT SA’s anti-alienation provision
would be inapplicable whenever a judgment creditor relied on the remedial
provisions of a federal statute. Such an approach would eviscerate the
protection of §206(d), and we decline to adopt so broad a reading of §514(d)

It is an elementary tenet of statutory construction that “[w]here there is no
clear intention otherwise, a specific statute will not be controlled or nullified by
a general one ....”. Morton v. Mancari, 417 U.S. 535, 550-551 (1974).

* OK OK
Nor do we think it appropriate to approve any generalized equitable
exception — cither for employee malfeasance or for criminal misconduct — to
ERISA’s prohibition on the assignment or alienation of pension benefits.
Section 206(d) reflects a considered congressional policy choice, a decision to
safeguard a stream of income for pensioners (and their dependents, who may
be, and perhaps usually are, blameless), even if that decision prevents others
from securing relief for the wrongs done them. If exceptions to this policy are
to be made, it is for Congress to undertake that task.
RR

A court attempting to carve out an exception that would not swallow the rule
would be forced to determine whether application of the rule in particular
circumstances would be “especially” inequitable. The impracticability of
defining such a standard reinforces uur conclusion that the identification of any
exception should be left to Congress,

Understandably, there may be a natural distaste for the result we reach here.
The statute, however, is clear. In addition, as has been noted above, the
malefactor often is not the only beneficiary of the pension.

Td, at 375-377,

JAMES B. MORAN
Senior Judge, U. 8. District Court

Hens UC, 2006.