The Second Circuit Court of Appeals has reversed a lower court's decision regarding the garnishment of Evan Greebel's retirement accounts. This ruling affects Greebel, who is seeking to satisfy a criminal restitution order stemming from his conviction for fraud. The case highlights the complexities involved in garnishing retirement accounts for restitution purposes.
The court's decision, made on July 29, 2026, comes after Greebel's lengthy legal battles to determine how his retirement accounts could be garnished to pay $10.4 million in restitution to his former company, Travere Therapeutics, Inc. This ruling is significant because it clarifies the legal standing and rights of defendants in similar situations, particularly in regards to the garnishment process.
Background
Evan Greebel was convicted of conspiracy to commit wire and securities fraud in connection with a scheme involving Retrophin, Inc. Following his conviction, he was ordered to pay restitution to the company. The Government sought to garnish Greebel's 401(k) accounts held at Charles Schwab and Merrill Lynch to enforce this restitution order.
Greebel objected to the garnishment, arguing that he did not have a unilateral right to receive payments from the accounts and that the Consumer Credit Protection Act limited the garnishment amount. The district court initially ruled against Greebel, allowing the garnishment to proceed. Greebel appealed, and the Second Circuit upheld the garnishment but sent the case back to the district court to determine the specifics of Greebel's interest in the accounts and any tax implications.
The Ruling
The Second Circuit ruled that the lower court had erred in rejecting the proposed stipulated orders of garnishment submitted by the parties. The court stated, "the case remains a live controversy notwithstanding the liquidation of the retirement accounts" and found that the district court's application of the mandate rule was incorrect.
The judges on the panel included Circuit Judges PÉREZ and NATHAN, along with Judge KATZMANN, who sat by designation. The court emphasized that Greebel had standing to challenge the garnishment and that the proposed settlement reached by the parties should have been approved.
Impact
This ruling has significant implications for individuals facing similar restitution orders. It clarifies that defendants can contest garnishment actions even after their accounts have been liquidated. Moreover, the decision underscores the importance of allowing parties to reach settlements in garnishment cases, particularly when all interested parties consent to the terms.
The court's reversal also highlights the need for lower courts to carefully consider the broader implications of their rulings and to facilitate settlements rather than impose their own procedures without proper justification.
What's Next
The district court is now instructed to approve the parties' proposed stipulated orders of garnishment. It remains to be seen if the Government will appeal this decision or if there are any related cases pending that could impact the outcome of this case.