United States District Court, D. Colorado
RECOMMENDATION ON (1) DEFENDANT ANDREW
SILVERMAN'S OBJECTION, CLAIMS OF EXEMPTION AND RESPONSE
TO WRITS OF GARNISHMENT (DKT. #42) AND (2) INTERESTED PARTY
TRACEY SILVERMAN'S OBJECTION, CLAIMS O
Reid Neureiter U.S. Magistrate Judge
Introduction and Procedural Background
matter comes before the Court on Defendant Andrew
Silverman's Objection, Claims of Exemption, and Response
to Writs of Garnishment, filed October 9, 2019. Dkt. #42.
Also before the Court is a similar Objection, Claims of
Exemption, and Response to Writs of Garnishment (also dated
October 9, 2019) filed by Mr. Silverman's wife, Tracy
Silverman. Dkt. #43. At issue are attempts by the United
States to garnish various bank and investment accounts owned
by the Silvermans to satisfy a restitution judgment of more
than $2 million that Mr. Silverman was ordered to pay in
connection with his criminal sentence.
October 10, 2019, Judge Brimmer referred the Objections to
me. Dkt. #44. Both Mr. and Mrs. Silverman sought an
evidentiary hearing. On October 10, 2019, I set a hearing on
these issues for November 5, 2019. Dkt. #45.
October 24, 2019, Mr. Silverman sought leave to present by
telephone testimony of his attorney in the criminal matter,
Mr. Gerald Krovatin. Dkt. #51. The United States did not
oppose the request and I granted the Motion of October 25,
2019. Dkt. #53. Mr. Silverman submitted an exhibit list and a
witness list the morning of the November 5, 2019 hearing.
See Dkt. ##60 & 61.
afternoon of November 5, 2019, I held an evidentiary hearing
and argument on the Silvermans' objections and claims of
exemption. See Dkt. #64 (Transcript of Proceedings).
The hearing lasted approximately three hours. I heard live
testimony from Mr. Silverman. Mr. Silverman's attorney in
the underlying criminal matter, Gerald Krovatin, did testify
by telephone from New Jersey.
commencement of the hearing, the United States objected to
Mr. Silverman testifying. The United States asserted that the
hearing was initially scheduled as a “motions hearing,
” and that it had only learned that Mr. Silverman was
going to testify the morning of the proceeding. The United
States' objection to Mr. Silverman's testimony was
overruled on basis that the United States had been given
adequate notice that it would be an evidentiary hearing. The
Court had approved in advance the telephone testimony of Mr.
Krovatin. It was apparent that this was likely to be an
evidentiary hearing, and the United States should have been
prepared to cross-examine Mr. Silverman.
The Underlying Offense and Judgment
2015, the United States District Court for the District of
New Jersey entered a criminal judgment against the Defendant,
Andrew Silverman. United States v. Silverman, Crim,
No. 15-cr-70, Dkt. #14 at 1 (D.N.J., July 21, 2015). Mr.
Silverman had pled guilty to wire fraud in violation of 18
Silverman was President, CEO and owner of DataQ Internet
Equipment Corporation, located in King of Prussia,
Pennsylvania. Mr. Silverman pled guilty to taking unlawful
advantage of certain discount programs created by
Hewlett-Packard and Cisco Systems which authorized
substantial discounts to specific end-users who agreed to use
purchased electronics and computer products internally and
not re-sell them. To take advantage of these discounts, a
customer had to verify in writing that the products were
intended solely for the customer's internal use, would
remain in the country of origin, and were not for resale. Mr.
Silverman committed fraud by obtaining large quantities of
Hewlett-Packard and Cisco computer equipment via straw buyers
at deeply discounted prices to which he was not entitled. He
did so by making materially false and fraudulent
representations about his identity and intended uses of the
equipment and then reselling the computer equipment for his
own benefit. This involved fraud across international
borders, including in Japan, Indonesia, Germany and Latin
America. It was contrary to the terms of HP's and
Cisco's programs and contrary to Mr. Silverman's
representations to HP and Cisco. Dkt. #2 at 7-8.
victim impact statements submitted by Cisco and
Hewlett-Packard indicated harm to Cisco of more than $8
million and harm to Hewlett-Packard in excess of $17 million.
was contacted by law enforcement, Mr. Silverman admitted his
conduct, provided significant cooperation, and entered into
an early plea agreement. In its victim impact statement,
Hewlett-Packard did not request that the court enter any
additional amount of restitution beyond the $2.5 million
agreed between Mr. Silverman and the United States. But
Hewlett-Packard did express disappointment that Mr. Silverman
was only required to pay $500, 000 of the restitution amount
prior to sentencing. Said Hewlett-Packard, “It is
unfortunate, however, that Mr. Silverman has only paid $500,
000 of that restitution amount, and in fact there is
uncertainty regarding when or even if HP will be paid the
remainder of the restitution obligation. In light of the
magnitude of the losses caused by Mr. Silverman, HP would
have expected that he would have paid the remaining $2, 000,
000 restitution in advance of sentencing.” Dkt. #2 at
16. Prior to his sentencing, Mr. Silverman did pay $500, 000
toward the restitution amount.
Silverman was sentenced to a six-month prison term and
ordered to pay (1) a $100 special assessment, (2) a $75, 000
fine and (3) $2.5 million in restitution. See Dkt.
#42-1 at 2-9 (Judgment in a Criminal Case, attached as
Exhibit to Affidavit of Gerald Krovatin). Restitution was to
be paid to Hewlett-Packard Company ($2.167 million) and Cisco
systems, Inc ($332, 500). Id.
judgment of conviction contains the following language with
respect to the $75, 000 fine:
This fine, plus any interest pursuant to 18 U.S.C. §
3612(f)(1), is due immediately. In the event
the fine is not paid prior to the commencement of
supervision, the defendant shall satisfy the amount due in
monthly installments of no less than $1, 000, to commence 30
days after release from confinement.
Dkt. #42-1 at 9. (emphasis added). The judgment also contains
similar language with respect to the ordered restitution:
The restitution is due immediately. It is
recommended that the defendant participate in the Bureau of
Prisons Inmate Financial Responsibility Program. (IFRP). If
the defendant participates in the IFRP, the restitution shall
be paid from those funds at a rate equivalent to $25 every 3
months. In the event the entire restitution is not paid prior
to the commencement of supervision, the defendant shall
satisfy the amount due in monthly installments of no less
than $1, 000, to commence 30 days after release from
Dkt. #42 at 10 (emphasis added).
The Silvermans' Assets and Residences
reflected in the pre-sentence report, Mr. Silverman disclosed
that he and his wife, Tracy, had a net worth of nearly five
million dollars, including four vehicles, a boat, two jet
skis, and residences in Gladwyne, Pennsylvania, on the Jersey
Shore, in Snowmass, Colorado, and a condo in Penn Valley,
Pennsylvania. Dkt. #2 at 25.
Silverman and his wife now reside at the single-family home
in Snowmass. Prior to moving to Colorado, the Silvermans
lived in Gladwyne, in the Eastern District of Pennsylvania,
near Philadelphia. Mr. Silverman testified that were he and
his wife to sell the house in Gladwyne, he would hope to
generate somewhere between $1.5 and $1.8 million. Dkt. #64 at
60:1-4. The house in Snowmass, Colorado is worth in the range
of $800, 000. Id. at 65:20-22. Mr. Silverman
testified that he contributed money from his earnings for the
purchase of all of this real estate. See Id. at
64-65. Based on Mr. Silverman's income level as President
and CEO of his company, and the fact that Mrs.
Silverman's occupation was that of a teacher with a
relatively modest income, it is a reasonable inference that
substantially all of these real estate assets were purchased
using funds generated from Mr. Silverman's income from
and ownership of DataQ. On May 5, 2017, jurisdiction in Mr.
Silverman's case was transferred from the District of New
Jersey to the Eastern District of Pennsylvania, where Mr.
Silverman first resided on his release from prison.
The Writs of Garnishment
26, 2017, the United States Attorney's Office for the
Eastern District of New Jersey applied to the District Court
for the District of New Jersey for writs of garnishment
directed at the following garnishees: TD Ameritrade, Inc.,
Oppenheimer & Co. Inc., and the Vanguard Group, Inc.
See United States v. Silverman, Crim. No. 15-cr-70,
Dkt. ##18, 20, 24. Because jurisdiction had been transferred
from the District of New Jersey to the District of
Pennsylvania, the District of New Jersey arguably did not
actually have jurisdiction to issue the writs. But it did so
anyway, the same day the writs were requested.
Silverman, Crim. No. 15-cr-70, Dkt. ##19, 21 &
March 1, 2018, nearly a year after jurisdiction had been
transferred to the Eastern District of Pennsylvania, the
District of New Jersey withdrew the writs of garnishment,
purportedly at the request of the United States
Attorney's Office in New Jersey. The motivation for the
withdrawal is disputed.
September 6, 2018, jurisdiction over Mr. Silverman as a
supervised releasee was transferred to the District of
Colorado from the Eastern District of Pennsylvania.
See Dkt. #1.
February 12, 2019, the United States applied for writs of
garnishment from the District of Colorado directed at
Oppenheimer, TD Ameritrade, and Vanguard. Dkt. ##5-7. The
District Court for the District of Colorado issued the writs
the next day. Dkt. ##8-10. Vanguard filed its Answer on
February 26, 2019. Dkt. #11. Oppenheimer filed its Answer on
March 4, 2019. Dkt. #12. Ameritrade filed its Answer on March
12, 2019. Dkt #20.
Answer, Vanguard identified an IRA brokerage account in the
name of Andrew F. Silverman, with a total value of $309,
655.62 as of February 15, 2019. Vanguard also maintains a
joint brokerage account registered in the names of Tracey L.
Silverman and Andrew F. Silverman, joint tenants.
(“Joint Account” or “Vanguard Joint
Account”). The assets of Joint Account consisted of
various securities and had a market value of $179, 569.98 as
of February 15, 2019. Also with Vanguard was a Uniform
Transfer to Minor Account (“UTMA”) account
registered to Andrew F. Silverman, as custodian of Shayna B.
Silverman. Dkt #11 at 1. On March 7, 2019, the United States
stipulated to release of the UTMA Account held by Vanguard as
custodian for Shayna Silverman. Dkt. #16.
on a recent payment history report, a balance of
approximately $2, 059, 077 remains outstanding on Mr.
Silverman's fine and restitution debt. Defendant's
Hearing Exh. A (Debtor Statement dated October 4, 2019 issued
by U.S. Department of Justice for Andrew Silverman).
Genesis of the Dispute
Silvermans object to the United States seeking to seize
assets of Mr. Silverman to satisfy the outstanding judgment
so long as Mr. Silverman continues to pay $1, 000 per month
as specified in the judgment of conviction. One element of
the dispute between Mr. Silverman and the United States is
the language in the judgment with respect to payment of the
fine and the restitution. The language says that if the
amounts are not paid prior to the commencement of the
sentence, then “the defendant shall satisfy the
amount due in monthly installments of no less than $1,
000, to commence 30 days after release from
confinement.” (emphasis added). Mr. Silverman had not
paid the entire amount due prior to the commencement of the
sentence. Instead, per the language of the judgment, he has
been paying timely $1, 000 a month to satisfy the restitution
and fine. But at the rate of $1, 000 per month, the roughly
$2, 059, 000 outstanding restitution amount (plus interest)
will not be repaid for approximately 170 years. Therefore,
the United States, charged as it is with the duty to recover
full and timely restitution for victims of Mr.
Silverman's crime, is seeking to satisfy the outstanding
$2 million fine and restitution judgment by seizing Mr.
Silverman's other assets-including via garnishment of his
IRA and other accounts. The question before me is whether the
United States is precluded from doing so, either by the
language of the judgment itself, by actions or statements by
the United States that estop the government from collecting
the debt via garnishment, or by other principles of equity or
The Silvermans' Specific Objections to the Writs of
Unfair Increase in Judgment Fine Amount Resulting from