Zamora

In this appeal, we are asked to resolve two novel questions: (1) whether district court decisions bind bankruptcy courts in other districts and (2) whether criminal restitution payments are recoverable by a trustee in bankruptcy as preferences under 11 U.S.C. § 547 (b). We conclude that (1) district courts do not bind bankruptcy courts in other districts and (2) criminal restitution payments, so long as they otherwise meet the statutory requirements of § 547(b), are recoverable by a trustee as preferences.

I. Background

Jeffrey and Faye Silverman owned and operated an electrical contracting company, for which State Compensation Insurance Fund (“State Fund”) provided workers’ compensation insurance for the 2002, 2003, and 2004 policy periods. Sometime in October 2004, the Silvermans began participating in a scheme, wherein they underreported payroll, underpaid premiums, and prevented injured workers from obtaining benefits under the workers’ compensation law. The government discovered the fraud and indicted the Silvermans for insurance fraud under California Insurance Code section 11880(a). The Silver-mans pleaded nolo contendere and were convicted pursuant to a plea…