Severance, stock options and a convicted employee put one employer under scrutiny
A disputed severance tied to expired stock options has put one employer’s handling of a judgment creditor’s lien back under scrutiny.
On a February 23, 2026 decision, the US Court of Appeals for the Seventh Circuit reversed a district court decision and ordered further fact-finding in a case involving former trader Thomas Lindstrom, his employer Ryan Building Group, Inc. (RBG), and restitution judgment creditor David Venkus. The opinion centers on how RBG handled Lindstrom’s severance, stock options and debt to RBG while under an Illinois citation to discover assets.
The dispute traces back to Rock Capital, a proprietary trading firm started by Venkus in Northfield, Illinois. Lindstrom worked there for over 20 years, earning 80% of any net profit on his trades while Rock Capital kept 20%. In 2016, the United States charged him with eight counts of securities and wire fraud over a scheme that falsely made it appear his trades were profitable. The scheme boosted his compensation but caused Rock Capital to lose $13,776,518 and ultimately cease operations.
Lindstrom pleaded guilty to one count of wire fraud. In 2019, the district court sentenced him to 60 months in prison and two years of supervised release, and ordered him to pay $13,776,518 in restitution to Venkus. Venkus registered the restitution as a civil judgment and began collection efforts.
By then, Lindstrom was working for RBG, where he received a semi-monthly salary and stock options. He also accumulated significant debt to RBG: $230,000 used to fund his criminal defense, $69,016 in personal charges on RBG’s corporate credit card that he claimed as business expenses, and $10,000 that RBG spent uncovering those wrongful expenses. RBG calculated that Lindstrom owed the company $372,543 in all.
In 2022, the district court granted Venkus a citation to discover assets against RBG under Illinois judgment-enforcement law. Through the citation, Venkus sought to discover assets controlled by RBG that Lindstrom owned or that RBG owed to him. Service of the citation created a lien on covered assets, and the order prohibited RBG from transferring non-exempt property belonging to Lindstrom or due to him, requiring the company to withhold payment or transfer of money or property up to twice the amount of the unsatisfied judgment.
RBG responded that Lindstrom was earning a semi-monthly salary and that, under Illinois’s 15% garnishment cap on wages, Venkus was entitled to $918.75 per month, representing 15% of Lindstrom’s semi-monthly salary. It also reported that Lindstrom had an interest in vested stock options that, according to RBG, had been pledged as security for a loan and that the amount owed on the loan exceeded the value of any vested options.
Venkus then sought a turnover order only for the 15% portion of Lindstrom’s wages, expressly reserving his right to seek relief as to the stock options. The district court granted the turnover order, and RBG began making monthly payments to Venkus.
In October 2023, RBG discovered that Lindstrom had charged personal expenses to his RBG expense account and claimed them as business expenses. It terminated his employment and stopped making the wage payments to Venkus. About three weeks later, RBG informed Venkus of the termination and said it was “still working out any severance.” Over the next one to two months, Venkus’s counsel repeatedly requested information about the termination and any severance, but RBG provided little information and delayed its responses.
Under Lindstrom’s stock options agreement, options would expire 30 days after termination if not exercised. According to the opinion, Lindstrom did not exercise his vested options and they expired. Venkus never moved for a turnover order specifically directed at the options.
In late December 2023, RBG paid Venkus $10,963 without explaining the basis for the payment. When Venkus asked for an explanation, the company again delayed. In January 2024, Lindstrom sent Venkus a document titled “Ryan Building Group Tom Lindstrom Options Net Payout,” which he signed. The document valued a “Fully Vested Options Payout” at $445,633, subtracted $372,543 in debt Lindstrom owed RBG, and identified a “severance” figure of $73,090. RBG had paid 15% of that amount – $10,963 – to Venkus.
In later filings, RBG told the district court that Lindstrom “received gross severance in the amount of $73,090” by taking what he would have received had he exercised his stock options ($445,633) and subtracting the amounts he owed RBG, totaling $372,543. It said it paid 15% of this severance to Venkus based on its understanding that the turnover order required it to remit 15% of amounts due to Lindstrom.
At the same time, RBG maintained that the stock options had expired and that their value was $0 when it calculated the severance. It described using the earlier options value as a “hypothetical” benchmark for calculating a severance package, not as a transfer of the options’ value. RBG also viewed the severance as “wages” under Illinois’s wage-deduction provisions and therefore subject to the 15% garnishment cap.
Venkus moved for a finding that RBG had violated the citation. He argued that by using the full $445,633 options value and subtracting the $372,543 Lindstrom owed RBG, the company effectively transferred the value of Lindstrom’s options to itself even though his lien was senior. He also argued that a lump-sum severance payment is not subject to the 15% wage garnishment cap and that he should have received the full $73,090, minus what had already been paid, instead of only 15%.
The district court denied his motion. It found that because the options had expired, they had no value when RBG calculated the severance, making the options figure a “hypothetical” reference point. On that basis, it concluded that RBG had not violated the citation by recovering on Lindstrom’s debt. The court also interpreted Illinois’s wage-deduction statute to cover severance payments and held that RBG did not violate the citation by treating the $73,090 severance as wages subject to the 15% cap.
The Seventh Circuit disagreed with that assessment. While it did not decide that RBG violated the citation, it described the severance calculation as “highly suspect” on the limited record. The panel noted that RBG had characterized the payment as gratuitous and that there was no contractual obligation to pay severance if Lindstrom did not exercise his options. It questioned why an employer would make such a payment to an employee it terminated after discovering misappropriated and embezzled funds, and why the amount was tied directly to the options’ full value minus the debt Lindstrom owed RBG.
The court observed that the severance structure enabled RBG to retain an amount equal to Lindstrom’s debt – an amount that, given the lien priority, otherwise would not have been recoverable ahead of Venkus’s $13,776,518 restitution judgment. It held that Venkus had raised material questions of fact about the nature of the severance payment and whether RBG transferred assets in violation of the citation.
The Seventh Circuit reversed the district court’s denial of his motion and remanded for an evidentiary hearing and any further discovery or proceedings the district court considers necessary. It also identified unresolved issues under Illinois law, including whether a severance payment like this falls within the statutory definition of “wages” and whether the 15% garnishment cap applies to a one-time, lump-sum severance – questions the district court must address on remand.
For HR leaders and in-house counsel, the case shows how severance, stock options and internal debts can be scrutinized when an employee is subject to a large judgment or restitution order, and how courts may closely examine the structure and timing of such payments once a creditor’s lien is in place.
