Background
Peter Ayika was convicted of health care fraud and ordered to pay restitution. After a prior appeal, the government sought to turn over bank accounts to satisfy the restitution debt under the Texas turnover statute. The district court granted the order, and Ayika appealed, arguing the accounts were exempt as custodial property for his children, that he was denied due process, and that the government was estopped from relitigating forfeiture issues.
The court’s reasoning
The court reviewed the turnover order for abuse of discretion. While the court assumed arguendo that the accounts might be exempt under Texas law, it found the judgment sustainable because Ayika had acted inconsistently with a custodial role by disclaiming interest in the funds and directing them to his brother. However, the court vacated the order on due process grounds because the district court failed to notify Ayika’s now adult children, whose potential claims were unknown. The court also rejected the argument that the government was estopped from seeking turnover, distinguishing the restitution obligation from the prior forfeiture ruling.
What it means going forward
The government may still pursue the turnover of the accounts to satisfy restitution, but the district court must first notify the defendant’s adult children and allow them an opportunity to file claims.
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