Marital property and federal law

Last Wednesday, The Indiana Daily Lawyer reported on something rather rare for divorce lawyers. Appearing under the headline, 7th Circuit rules on garnished 'Sidewalk Six' money, nothing seems related divorces. Here is the meat of the story:

One of East Chicago's so-called "Sidewalk Six" convicts is the subject of a 7th Circuit Court of Appeals ruling today, though the case more accurately centers on the $25 million in restitution he was ordered to repay and whether those garnishments should be considered marital assets during his subsequent divorce proceedings.

In U.S. v. Frank Kollintzas, Appeal of: Joanna Kollintzas, No. 06-2034, the appellate court affirmed a decision by U.S. District Chief Judge Robert Miller in South Bend that Joanna Kollintzas did not prove her property interest under Indiana law and the court properly granted a government motion to release the funds for garnishment.

Frank Kollintzas was convicted in November 2004 of converting money from East Chicago in the so-called Sidewalk Six scandal, which involved political allies of long-time Democratic Mayor Robert Pastrick who spent more than $25 million to lay free concrete and make improvements to properties in exchange for votes in the 1999 primary election. The criminal case surfaced in 2003, and eventually 12 city officials and contractors - including then-city councilor Frank Kollintzas - were sentenced to prison for taking part in the scheme. Kollintzas disappeared after trial and didn't appear at sentencing; he has not been found.

After he was sentenced in absentia and ordered to repay the $25 million, the garnishment proceedings began in federal court and his wife Joanna subsequently filed for divorce in state court. She obtained from the state court an ex-parte temporary restraining order prohibiting the garnishee defendants from transferring any funds, but the District Court ultimately determined the government's liens relating to Frank Kollintzas' property were superior to her claim to martial property because "the liens were perfected before she filed for divorce," and she failed to specify how much income she had contributed to the "marital pot."