By Mike Scarcella

WASHINGTON (Reuters) -The U.S. Supreme Court on Tuesday declined to hear a bid by a New York lawyer to restrict how much money federal prosecutors can take from his 401(k) retirement accounts to compensate fraud victims after he was convicted in a scheme involving former pharmaceutical executive Martin Shkreli.

The justices turned away Evan Greebel’s appeal of a lower court’s ruling that prosecutors could tap into two of the attorney’s accounts to help satisfy a $10.4 million judgment owed to victims. Greebel, who was outside counsel for Shkreli-founded Retrophin Inc, was sentenced in 2018 to 18 months in prison for helping Shkreli bilk investors at the drug company now known as Travere Therapeutics Inc.

Prosecutors have sought to garnish $921,000 from Greebel’s retirement accounts to help pay back victims of the fraud.

Lawyers for Greebel, a former partner at law firm Katten Muchin Rosenman, have argued that a federal law called the Consumer Credit Protection Act capped the amount prosecutors could take from 401(k) plans, which are company-sponsored retirement accounts to which employees can contribute a portion of their wages.

In their petition for the Supreme Court to hear Greebel’s appeal, they said that this law “provides that no more than 25% of an individual’s ‘earnings’ may be garnished in most federal and state garnishment proceedings” including those involving mandatory victim restitution.

Prosecutors have argued that Greebel is not an “honest debtor” subject to the Consumer Credit Protection Act but instead “a convicted criminal who owes over $10 million dollars to his victims.” The Justice Department told the Supreme Court that the funds in Greebel’s accounts were not “earnings” subject to the 25% garnishment cap.

Greebel also said he has no power to withdraw funds from his 401(k) accounts.

Shkreli was convicted in 2017 of defrauding investors in two hedge funds he ran and scheming to defraud investors in drugmaker Retrophin Inc, where he had been chief executive, and sentenced to seven years in prison for his role in the scheme. He and Greebel have been released after serving time in prison.

In 2015, Shkreli drew attention when he raised the price of anti-parasitic drug Daraprim from $13.50 per pill to $750 – an increase that provoked outrage among U.S. lawmakers and patients and earned him the nickname “Pharma bro.”

The New York-based 2nd U.S. Circuit Court of Appeals last year ruled that prosecutors have authority under a federal law called the Mandatory Victims Restitution Act to pursue garnishment of accounts belonging to Greebel, prompting his appeal to the Supreme Court.

“This case touches on a feature of the human experience that nearly every single American must plan for: retirement,” lawyer Akiva Shapiro, representing Greebel, told the justices.

(Reporting by Mike Scarcella; Editing by Will Dunham and Leigh Jones)

---