February 8, 2018
from the United States District Court for the Western
District of Wisconsin. No. 13-cr-00083 - Barbara B. Crabb,
Flaum, Easterbrook, and Manion, Circuit Judges.
MANION, CIRCUIT JUDGE.
Henricks (Henricks) pleaded guilty to mail fraud and was
sentenced to imprisonment and ordered to pay restitution.
Henricks's wife, Catherine, (Ms. Henricks) entered an
appearance as an interested person in Henricks's criminal
case. The district court determined the parties'
interests in various property so that Henricks's property
could be directed toward restitution to his victims. Ms.
Henricks appeals, arguing that the district court did not
have jurisdiction to decide the parties' property
interests in Henricks's criminal case, violated her due
process rights by not allowing her an opportunity to present
her case, and improperly determined the parties'
interests in particular property. In so far as the district
court had jurisdiction to determine the parties' property
interests in the criminal case and did not violate Ms.
Henricks's due process rights, we affirm. How ever,
because the district court relied upon post-judgment conduct
instead of determining the parties' property interests as
of the date of the judgment lien, we vacate the district
court's property-interest determination and remand for
Henricks owned a towing business, an auto body shop (Custom
Collision), and a recreational vehicle dealership. He used
those businesses to defraud insurance companies by filing
fraudulent claims. Henricks's wife, Catherine, worked at
some of these companies sporadically and was an officer of
two of them and a member of the other. Ms. Henricks also
opened bank accounts, applied for credit cards, and signed
loan documents on behalf of the companies.
August 14, 2013, Henricks pleaded guilty to one count of mail
fraud. Instead of immediately beginning to make restitution
as required by his plea agreement, Henricks began to hide
assets. Because of these activities, the district court
denied Henricks a sentencing reduction for acceptance of
responsibility. On January 9, 2014, he was sentenced to 121
months' imprisonment and ordered to pay $1, 306, 608.72
in restitution. The judgment was entered the next
Less than two weeks later, Ms. Henricks filed for divorce.
2, 2014, a writ of execution was issued directing the U.S.
Marshals Service to take possession of personal property at
the couple's home and at AJ's Auto Body, a business
that the couple set up in Ms. Henricks's name after
Henricks was indicted. Four days later, Ms. Henricks filed a
voluntary Chapter 7 bankruptcy petition. On May 7, the
Marshals secured property associated with the Henrickses'
businesses in accordance with the writ of execution.
20, Ms. Henricks filed an appearance as an interested person
in her husband's criminal case because she claimed an
interest in various property that was potentially subject to
Henricks's restitution order. Ms. Henricks also filed a
notice of the bankruptcy automatic stay, a response to the
clerk's notice of execution, and a motion for a stay of
execution. A little over two weeks later, the district court
ordered the parties to brief whether the bankruptcy stay
halted the government's restitution collection efforts,
whether the marital estate had been unjustly enriched by
Henricks's criminal activities, and, if so, whether Ms.
Henricks was entitled to a full half of the marital assets.
November 20, 2014, the government filed a motion for a
default finding for relief pursuant to 18 U.S.C. § 3613A
and resentencing pursuant to 18 U.S.C. § 3614 on the
grounds that Henricks willfully defaulted on his restitution
payments. In its motion, the government requested that the
district court order Henricks to pay restitution using
various property, including the assets of AJ's Auto Body,
Ms. Henricks's retirement account, and the
Henrickses' 2013 federal income tax refund.
Henricks filed an objection to the government's motion
for restitution default and resentencing, specifically
objecting to the property the government sought to apply to
Henricks's restitution, and requested a hearing on the
motion. On January 7, 2015, the district court granted Ms.
Henricks's motion for a stay of the writ of execution
stating that "it would be premature to decide the extent
to which the government is entitled to seize Ms.
Henricks's property" until the bank ruptcy court
lifted the automatic stay. United States v.
Henricks, 2015 WL 106160, at *1 (W.D. Wis. Jan. 7,
2015). In that same order, the district court scheduled an
evidentiary hearing on the government's restitution
default and resentencing motion for April 16, 2015.
January 7, Ms. Henricks received her discharge from the
bankruptcy court. She then filed a complaint for an adversary
proceeding in the bankruptcy court, alleging that the
government violated the automatic stay by continuing to keep
property it locked in buildings on AJ's Auto Body
property on May 7, 2014.
April 16, 2015, the district court held a hearing on the
government's motion for default and resentencing. Because
neither Ms. Henricks nor her attorney was present, the
district court deferred resolving the government's
property claims for restitution. The district court found
Henricks defaulted on his restitution payments. It found that
Henricks and Ms. Henricks worked together before and after
Henricks's January 9, 2014 sentencing to hide or shelter
assets from restitution. The court also found that the
couple's divorce, the property settlement of which was
entered on February 10, 2015, was a sham to divert assets
from restitution. In making this finding, in addition to the