The Seventh Circuit breathed new life into a high-stakes collection fight over a $13.7 million restitution judgment on Monday, shipping the dispute back to a Chicago federal court for a full-blown evidentiary hearing. The appeals panel said there are still open factual questions about whether a building company’s payout to a convicted trader was a legitimate severance package or a tactical move to keep assets away from the victim.
David Venkus, founder of Rock Capital, has spent years trying to collect a $13,776,518 restitution judgment from former trader Thomas Lindstrom, who pleaded guilty to wire fraud that helped topple Venkus’s firm, the Seventh Circuit recounted in its opinion, according to Justia. After his conviction, Lindstrom landed at Ryan Building Group, where he drew a salary, accumulated stock options and racked up substantial debts to his new employer.
When Ryan Building Group fired Lindstrom in late 2023, internal documents show the company started with the pre-termination value of his vested options, roughly $445,633, then subtracted $372,543 that Lindstrom allegedly owed RBG, landing on a severance figure of $73,090. Only a small slice of that number ever made its way to Venkus, as reported by the Tampa Free Press. RBG told the district court the options had already expired and the severance calculation was simply a “hypothetical” benchmark, not a real transfer of value.
The appellate panel did not hide its distrust of that explanation, labeling RBG’s approach “highly suspect” and zeroing in on why an employer would hand over a five-figure payment to an employee it had fired for theft. “We struggle to understand why RBG would have paid Lindstrom anything if it was not recovering the significant debt Lindstrom owed,” the opinion said. The Seventh Circuit concluded the lower court jumped the gun by resolving the dispute without an evidentiary hearing, according to Justia.
What The Court Sent Back For More Fact-Finding
The appeals court reversed and remanded for a full evidentiary hearing so the Northern District of Illinois can dig into whether RBG’s severance math effectively “frustrated” Venkus’s citation and improperly put the company’s own recovery ahead of the victim’s lien, and it told the lower court to consider awarding attorney’s fees if it finds a citation violation, according to CaseMine. On remand, the district judge has discretion to order more discovery and call witnesses to untangle the parties’ dealings. The hearing will ultimately decide whether Venkus can reach more of the severance payout or the underlying stock option value.
The 15% Garnishment Question
A central legal wrinkle is whether a one-time severance payment counts as “wages” that are subject to Illinois’s 15% garnishment cap under the Illinois Wage Deduction Act, 735 ILCS 5/12-803. The district court previously read the statute to cover severance payments, but the Seventh Circuit left open whether Venkus may withdraw a concession on that point and asked the lower court to sort out the statutory issue at the evidentiary hearing. The statute’s language is published by the Illinois General Assembly.
Why Creditors And Employers Are Watching
Legal observers say this case could reshape how judgment creditors go after payouts tied to stock options or improvised severance calculations, since allowing the sort of workaround alleged here could make it tougher for victims to collect post-conviction restitution. Coverage of the ruling has highlighted the court’s skepticism about RBG’s conduct and suggested that whatever the district court finds on remand may trigger closer scrutiny of similar employer payouts, according to Law360.
The case now heads back to the U.S. District Court for the Northern District of Illinois, where a judge will decide what discovery and evidence are needed and whether RBG crossed the line on the citation. As of publication, court records did not list a hearing date, according to CaseMine. Expect the lower court proceeding to drill into a narrow but crucial question: whether the severance was a real, contractually owed payment or a deliberate device that elevated the company’s claims over the victim’s lien.
