Judiciary’s Interpretation and Enforcement of FDCPA in Asset Repatriation Case | The Schwarzbaum Compliance Dispute

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Stephanie Uribe

Stephanie Uribe

International Tax Consultant


Ms. Uribe is an international tax consultant with more than a decade of professional experience in Mexican taxation and international tax advisory matters.  She maintains a particular focus on acquisitions (including due diligence), transfers, mergers, spin-offs, and various corporate reorganizations. She is experienced with cross-border transactions, including advising clients with respect to federal and state tax obligations in Mexico; the application of international tax treaties and the avoidance of double taxation, including permanent establishment status; complex international tax strategies; expatriate compensation plans; and tax audits.

Stephanie is certified to practice as an Enrolled Agent (“EA”) before the IRS in the U.S. As a certified EA, she brings a profound understanding of U.S. tax law, and with her background experience in other tax jurisdictions, she offers a fresh and innovative perspective on tax representation. Stephanie’s capabilities extend to efficiently handling audits, appeals, and tax collection disputes, as well as providing advice in tax planning and preparation in the U.S.

Stephanie received her law degree from the Facultad Libre de Derecho de Monterrey, in Monterrey, Mexico, where she graduated with honors, and holds a Master’s in Law in International Taxation from Vienna University of Economics and Business (WU), in Vienna, Austria. For her Master Thesis she published the Article “Taxation of Capital Gains: The Substantial Participation Clause in Article 13(5)” in Special Features of the UN Model Convention.

She is member of the International Fiscal Association and has participated as a speaker in several Mexican and international tax conferences. She holds a certification in Management (Harvard ManageMentor Program) from Harvard Business School.

The United States District Court, Southern District of Florida, presided over by Magistrate Judge Bruce E. Reinhart, encountered a complex legal issue involving Isac Schwarzbaum (“Mr. Schwarzbaum”), who was ordered to repatriate assets to satisfy a significant judgment against him.

The core of the dispute lay in the Repatriation Order (ECF No. 176), directing Schwarzbaum to transfer overseas assets into a U.S. bank account. Schwarzbaum appealed this order (ECF No. 177) and contested the necessity of compliance, citing the absence of a notice under Section 3202 of the FDCPA (ECF No. 191). The case, hinging on the interpretation of a repatriation order and its compliance with the Federal Debt Collection Practices Act (“FDCPA”), raised substantial questions about the enforcement of court orders and the compliance prerequisites.

This article presents a summarized analysis of the decisive legal proceedings regarding the enforcement of a Repatriation Order by the U.S. District Court, Southern District of Florida, and the ensuing discussion regarding adherence to the Federal Debt Collection Practices Act (FDCPA).

On March 29, 2023, the U.S. District Court issued a Repatriation Order against Mr. Schwarzbaum for the repatriation of over $17 million in judgment debts plus post-judgment interest to satisfy the Outstanding Debt of the judgment, ECF No. 176 (“the Repatriation Order”). The order, which demanded compliance by April 28, 2023, was met with an appeal from Schwarzbaum, and a request for a stay was subsequently denied by Judge Bloom on June 8, 2023, thereby enforcing the order. See ECF No. 186.

By September 29, 2023, Schwarzbaum had failed to fulfill the order’s requirements, resulting in the U.S. filing a motion for contempt due to non-compliance, suggesting daily fines and potential incarceration. See ECF No. 189. In defense, Schwarzbaum argued that he was awaiting a mandatory notice under Section 3202 of the FDCPA before repatriation, a stance the U.S. rejected, stating the order was preliminary and not contingent on such notice. See ECF No. 192.

Mr. Schwarzbaum argued that he was not in contempt since he is not bound to return the funds until a formal notice is issued by the Court’s Clerk pursuant to the FDCPA. The statute stipulates that when the U.S. commences enforcement actions to uphold a judgment, the U.S. legal representative must generate a notice, which is then to be circulated by the court clerk. This notice is meant to alert the debtor of the collection activities in progress and to outline their particular rights in accordance with 28 U.S.C. § 3202(b).

However, the U.S. argued that FDCPA Section 3202 does not currently apply because the Repatriation Order is not classified as a remedy under the FDCPA. It is characterized instead as an initial directive that helps in the pursuit of a potential FDCPA remedy later on. See ECF No. 192, p. 3.

Moreover, the U.S. established that legal precedents emphasize immediate compliance with court orders, regardless of personal views on their legality or correctness. This principle was upheld in landmark cases like Maness v. Meyers, 419 U.S. 449 (1975) and Walker v. City of Birmingham, 388 U.S. 307 (1967), reinforcing the obligation to obey court orders pending appeal. See Maness v. Meyers, 419 U.S. 449 (1975) and Walker v. City of Birmingham, 388 U.S. 307 (1967).

The court’s analysis underscored the distinction between preliminary orders (like the Repatriation Order) and final remedies under the FDCPA. Judge Bloom’s interpretation (ECF No. 127) clarified that the Repatriation Order was a preliminary step to aid future FDCPA remedies, thus not contingent upon the issuance of an FDCPA Section 3202 Notice.

Consequently, the court concluded that Schwarzbaum’s arguments were inconsistent with the plain language of the FDCPA and the unequivocal nature of the Repatriation Order. Given the clarity of the order and Schwarzbaum’s capacity to comply, the court recommended finding him in civil contempt.

This decision not only highlights the importance of adhering to court directives but also clarifies the procedural nuances in enforcing judgments, particularly in the context of repatriating assets under the FDCPA and its consequences.

This case serves as a significant example of the judiciary’s role in interpreting and enforcing legal obligations, emphasizing the importance of compliance with court orders in the American legal system.