Court Opinion

ID: 619572
Source: CourtListenerOpinion
Date Created: 2011-12-22 17:18:54+00
Date Added: 2024-06-11T12:13:33.174550
License: Public Domain

NONPRECEDENTIAL DISPOSITION
                          To be cited only in accordance with
                                   Fed. R. App. P. 32.1

              United States Court of Appeals
                                  For the Seventh Circuit
                                  Chicago, Illinois 60604

                                    Argued July 7, 2010
                                  Decided August 12, 2010

                                           Before

                          JOEL M. FLAUM, Circuit Judge

                          ILANA DIAMOND ROVNER, Circuit Judge

                          JOHN DANIEL TINDER, Circuit Judge

No. 09-4150

UNITED STATES OF AMERICA,                      Appeal from the United States District Court
    Plaintiff-Appellee,                        for the Northern District of Illinois,
                                               Eastern Division.

       v.                                      No. 03 CR 546-2

KATHLEEN LESTINA,                              Elaine E. Bucklo,
    Defendant-Appellant.                       Judge.

                                         ORDER

       Kathleen Lestina pleaded guilty in 2003 to mail fraud, 18 U.S.C. § 1341, and was
sentenced to 37 months’ imprisonment and ordered (jointly with codefendant John
Gibbons) to pay restitution of $22.8 million. Lestina contests the district court’s
postjudgment decision to double her monthly restitution payments. We affirm.

       Lestina’s fraud precipitated the collapse of Ty-Walk Liquid Sales Inc., a grain
elevator and fertilizer manufacturer. Lestina, who was Ty-Walk’s Vice President of Grain
Policy and Procedure, admitted in her plea agreement that she made false statements to
lenders by inflating the amount of grain available and pledging the same grain as collateral
to several lenders as part of a scheme to increase the credit available to the enterprise.
No. 09-4150                                                                             Page 2

When the loans came due, Ty-Walk defaulted, and the lenders were left with insufficient
collateral. In her plea agreement, Lestina agreed that she would be liable for restitution in
the amount the district court determined. The district court found that Lestina and
Gibbons, the CEO at Ty-Walk, were jointly liable for $22,844,825 in restitution and ordered
that full restitution be paid immediately. Lestina did not file a direct appeal, and thus did
not challenge the amount of restitution or the order to pay immediately. The government
had recovered about $27,000 from Lestina by the time she was released from prison. After
that she began paying restitution at the direction of the probation office. Her monthly
payments were initially set at $200 but eventually increased to $1,000.

        In late 2009, after Lestina had submitted a current financial statement as required by
her plea agreement and the conditions of her supervised release, her probation officer
concluded that she could afford to pay $2,000 a month. Lestina had reported on her
financial statement, which she prepared in August, that she brings home $2,284 after taxes
each month from her job as a legal secretary. Her husband, she disclosed, was bringing
home $6,198 each month after deductions for taxes, insurance, and 401(k) contributions,
plus another $810 in mileage reimbursements. The couple, who have no children and pay
no mortgage or rent, identified monthly household expenses of $2,480, leaving $6,812
available for discretionary spending. Lestina also reported that she owns a one-third share
in her family’s farm, and a one-half interest in the home she and her husband occupy. She
valued her shares of the farm at $80,000 and the home at $87,500.

       When Lestina balked at the probation officer’s proposed increase, the government
sought a court order raising the monthly obligation to $2,000. Lestina objected that the
government had overstated the couple’s discretionary income because, she said, her
husband’s take-home pay fluctuates because he is paid on commission. She submitted the
July 2009 pay stubs to support her contention, but did not provide an estimate of her
husband’s annual salary or typical paycheck. The district court granted the government’s
motion to set monthly payments at $2,000.

       On appeal Lestina contends that the district court erred because, she says, there was
no factual or legal justification for doubling her payments to $2,000. She insists that the
court did not adequately consider that her husband’s income fluctuates, leading to what
Lestina characterizes as “the commingling of household expense funds and restitution
funds to meet both obligations.” Finally, she argues that it is unfair to require her innocent
spouse to shoulder nearly all the joint household living expenses while more than 90% of
her income must be used to make restitution payments. We review a restitution schedule
for abuse of discretion. United States v. Hosking, 567 F.3d 329, 336 (7th Cir. 2009).
No. 09-4150                                                                              Page 3

        Lestina’s only developed argument on appeal is that the district court had an
insufficient factual basis for increasing her monthly payment to $2,000. Under the
Mandatory Victim Restitution Act, the court was required to consider “(A) the financial
resources and other assets of the defendant, including whether any of these assets are jointly
controlled; (B) projected earnings and other income of the defendant; and (C) any financial
obligations of the defendant; including obligations to dependents.” 18 U.S.C. § 3664(f)(2);
see United States v. Day, 418 F.3d 746, 753 (7th Cir. 2005).

        In seeking the increase from $1,000 to $2,000, the government relied on Lestina’s
financial statements from November 2008 and August 2009. Both documents comprise
Lestina’s own reporting of her and her husband’s assets, earnings, and expenses. The two
financial statements speak to all three factors the district court was required to consider. See
18 U.S.C. § 3664(f)(2). Lestina never impugned her submissions by suggesting they were
falsified or that she had mistakenly overstated her household earnings or understated the
expenses. Because the court considered the appropriate factors, and there is no suggestion
the court relied on an inappropriate consideration, it did not abuse its discretion in ordering
the revised schedule of payments. See Hosking, 567 F.3d at 336.

      Lestina essentially contends that she truthfully reported her current income on the
August 2009 financial statement but should have been given a break because her husband’s
income varies. Her husband’s earnings as stated on the August 2009 financial statement
were exaggerated, she says, because in the prior month he had received three instead of two
paychecks. Her husband’s income, Lestina explains, always varies because it is dependent
on commission.

        But these caveats were noted in her addendum to the August 2009 financial
statement and were repeated in her response to the government’s motion. Lestina does not
suggest what alternative figure for her husband’s income the court should have considered
(she did not provide an annual estimate), nor does she even contend that her household
income in any month would be insufficient to pay ordinary expenses and still make a $2,000
monthly restitution payment. Even if her husband’s monthly income is usually closer to the
figure of $5,487 reported on Lestina’s November 2008 financial statement—and she has
never characterized that month as atypically high—Lestina would still have sufficient
income to comfortably pay $2,000 monthly while covering all other household expenses.
She also does not explain how her husband’s income would ever be used to satisfy the
restitution payment if her own income (which she does not say varies) is always sufficient
to make the $2,000 restitution payment.
No. 09-4150                                                                               Page 4

       Moreover, as the government points out, if Lestina’s financial position shifts and she
is unable to meet her monthly household expense obligations—if her husband’s income
should substantially drop, for example—the MVRA provides that the payment schedule
may be altered. 18 U.S.C. § 3664(k); United States v. Sawyer, 521 F.3d 792, 796 (7th Cir. 2008).
Lestina makes no argument that this provision is inadequate to safeguard against her
speculation that changed circumstances might make a $2,000 payment onerous.

        Lestina thinks it is unfair that the revised payment amount requires that she commit
most of her income to her restitution, leaving her husband to pay most of the household
bills. But Lestina’s appeal to fairness overlooks the considerable indulgence she has already
received in this case. Though Lestina has a current obligation of $22 million, the
government thus far has not sought to take her interest in the family farm or home. The
government could have gone after those assets because the order of restitution in the
criminal judgment acts as a lien in favor of the United States “on all property and rights to
property of the person,” with the same enforcement rights as a tax lien. See 18 U.S.C.
§ 3613(c); Hosking, 567 F.3d at 335. And whether or not Lestina is in a position to advocate
for her husband (who did not try to appear in the district court as an interested party,
see United States v. Kollintzas, 501 F.3d 796, 800 (7th Cir. 2007)), her argument that the
restitution schedule is unfair to her husband rings hollow. Spouses have a general
obligation to support each other, see 305 ILCS 5/10-2; Poindexter v. State ex rel. Dep’t of Human
Servs., 890 N.E.2d 410, 415 (Ill. 2008), but there is no requirement that each spouse contribute
equally—or at all—to the support of the other so long as each is supported, see In re Estate of
McGloon, 548 N.E.2d 438, 440 (Ill. App. Ct. 1989) (holding that both husband and wife are
obligated to support each other based on relative ability to pay). As Lestina’s own reporting
reveals, this restitution award puts neither Lestina nor her husband in danger of having
unmet financial obligations.

        Finally, Lestina implies that the district court acted arbitrarily because the court’s
written order lacks any explanation. But Lestina fails to explain what else needed to be
said. The district court spelled out that she still owes $22 million and that “[b]ased on the
financial disclosure provided to the United States, defendant is able to make payments of at
least $2,000 per month.” Lestina has more than $4,000 in disposable household income even
after subtracting $2,000 for restitution, and a personal stake of at least $160,000 in assets the
government has the right to seize but has not. Further explanation was unnecessary.
                                                                                      AFFIRMED.