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SACRAMENTO � Crime victims can tap their assailants’ pension funds for restitution despite federal laws that offer broad protections for retirement accounts, a split en banc panel of the Ninth Circuit U.S. Court of Appeals held Thursday. The ruling marks the first time an appellate court has spoken on the inherent conflict between the Mandatory Victims Restitution Act, which authorizes the government to seize personal assets of a convicted criminal, and the Employee Retirement Income Security Act, which shields private pension funds from creditors, according to Martin Bakst, the Encino attorney representing the pension-holder in this case. But it probably won’t be the last such case, Bakst said. “There are cases all over the court where people are raising the same issue,” he said. The decision, U.S. v. Novak, stems from the 2002 conviction of Southern California resident Raymond Novak on charges of conspiring to transport stolen goods and filing a false tax return. Between 1995 and 1998, Novak and his now ex-wife, Norma Ortega Nance, a communications official at Nestle Food Co., stole and later sold $3.3 million in phone equipment belonging to the multinational company, according to court filings. Novak was sentenced to 24 months in prison and ordered to pay restitution of $3.3 million. In September 2003, the U.S. attorney’s office tried to garnish Novak’s retirement funds through his former employer, The May Department Stores. Novak had a $10,836 life annuity as well as index funds and stock holdings worth $142,245. A federal district court held that ERISA protected Novak’s money from the government. The government appealed and a three-judge panel of the Ninth Circuit overturned the lower court’s ruling, finding that the victims’ restitution rights statute, MVRA, trumped ERISA’s coverage. “I thought things were over at that point,” Bakst said. But the full court ordered Bakst and the U.S. attorney to brief the case again for an en banc review. “This was not something that (the U.S. attorney) or I asked the court to do,” Bakst said. Writing for a 10-member majority, Judge Marsha Berzon said the case turned on a provision in MVRA that allows property to be seized for restitution “notwithstanding any other federal law.” “The overall context of MVRA dictates giving full effect to its use of the ‘notwithstanding’ language as applied to ERISA’s anti-alienation requirement,” Berzon wrote, adding that the language makes it clear “MVRA’s criminal restitution enforcement orders do override ERISA’s alienation restrictions.” In a 25-page dissent, Judge William Fletcher said the majority opinion ignores the U.S. Congress’ “clear” intent to uphold ERISA’s protection when authorizing MVRA in 1996 and again when amending ERISA in 1997. Bakst said he has no immediate plans to appeal the case to the U.S. Supreme Court. His client now works as a courier earning $10 an hour and has no money for such a fight. The Ninth Circuit remanded the case back to the district court to determine whether Novak’s retirement funds can be garnished immediately, or whether the government must wait until he turns 65 to access the money.

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