Wednesday, February 2, 2011

Advanced Collection Techniques in Third Party Citations

A recent case from the Seventh Circuit Court of Appeals involved several sophisticated collection issues. In Dexia Credit Local v. Rogan, 629 F.3d 612 (2010), the plaintiff had secured a $124 million judgment against Rogan relating to a Medicare and Medicaid fraud scheme that he executed out of a hospital on Chicago's north side.  Rogan abandoned his defense several years into the fraud case and moved to Canada.  The judgment was eventually entered against him by default.

The plaintiff then commenced supplementary proceedings against Rogan, his wife, and trusts controlled by his three adult children.  Supplementary proceedings are post-judgment processes that support the judgment creditor in asset discovery and final satisfaction of judgment, and specifically include citations, garnishments, wage deductions, etc.  This appeal followed the district court's turnover of assets held by the children's trusts during the course of a third party citation to discover assets.

The Court found that none of the issues raised on appeal required  reversal.  Every point decided by the Court was favorable to the plaintiff, and to creditors' lawyers in general.  The Court issued a 40 page opinion which is overflowing with instructions for creditors' lawyers pursuing third parties in search of the debtor's assets.  Below I have linked to four separate posts examining different issues discussed in the opinion, including a review of the statutes and case law involved. 
Supplementary proceedings (citations to discover assets) are governed by Supreme Court Rule 277 and Section 2-1402 of the Code of Civil Procedure.  Every lawyer trying to collect a debt on behalf of his or her client should read these statutes.  They clearly set forth the procedures and remedies available in collection proceedings.  And then for further reference, you should refer back to this blog the next time you think a third party is holding funds on behalf of your debtor.

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