§610 Restitution
(U.S.S.G. §5E4.1)
5th Circuit finds appeal waiver extends to restitution. (610)(790) Defendant pleaded guilty pursuant to a plea agreement that contained a waiver of appeal “on any ground.” He tried to appeal his sentence and restitution obligation. The Fifth Circuit found that defendant had waived his right to appeal, including his right to appeal any restitution imposed by the district court. U.S. v. Meredith, __ F.4th __ (5th Cir. Nov. 9, 2022) No. 21-50487.
5th Circuit affirms restitution of money VA paid to fraudulent education provider. (610) As part of defendant’s sentence for fraud in providing trade school services to veterans paid for by the Veteran’s Administration and money laundering, the district court ordered defendant to pay restitution. Defendant argued that he was entitled to an offset for the value of educational services he provided to veterans. The Fifth Circuit found these arguments “meritless.” The court held that the VA would not have paid for anything absent the fraud, the VA did not receive a windfall because the VA was the victim of the fraud, and the funds ordered to be repaid in restitution were elements of the charged offenses. U.S. v. Davis, __ F.4th __ (5th Cir. Nov. 15, 2022) No. 21-10996.
6th Circuit upholds ordering alien to pay restitution to friend that he accidentally shot. (610) At defendant’s sentencing for being an undocumented alien in possession of a firearm, the district court ordered restitution for the cost of his friend’s medical care because defendant had shot his friend with the firearm he possessed. The Sixth Circuit held that defendant’s possession of the firearm was a direct and proximate cause of his friend’s injury because defendant had a loaded gun at a place where his friend would be. U.S. v. Ruiz-Lopez, __ F.4th __ (6th Cir. Nov. 15, 2022) No. 21-6094.
5th Circuit upholds restitution despite acquittal on some fraud counts. (610) At trial, defendant was convicted of some fraud charges but acquitted of others. At sentencing, the district court based restitution on one of the acquitted counts. The Fifth Circuit affirmed, ruling that fraud was a scheme and that the victims to whom defendant was ordered to pay restitution were directly harmed by the scheme. U.S. v. Swenson, __ F.4th __ (5th Cir. Feb. 2, 2022) No. 20-20509.
11th Circuit remands restitution order for further findings. (610) Defendants were convicted of fraud. The district court sentenced defendants to prison and ordered them to pay, jointly and severally, more than $40 million in restitution. The district court did not explain its restitution finding. The Eleventh Circuit remanded so that the district court could explain its finding. U.S. v. Maurya, __ F.4th __ (11th Cir. Feb. 1, 2022) No. 19-10746.
7th Circuit reverses restitution order for failure to set schedule and specify joint liability. (610) At defendant’s sentencing for various fraud offenses, the district court ordered restitution, but did not specify whether the restitution was joint and several with the codefendants and did not set a payment schedule. The Seventh Circuit agreed that restitution should be joint and several and that the district court should set a payment schedule. U.S. v. Alverez, __ F.4th __ (7th Cir. Dec. 23, 2021) No. 21-1119.
10th Circuit rules district court need not apply reasonable certainty standard for restitution. (610) Defendant was convicted of aggravated sexual abuse and ordered to pay restitution to his victim. The Tenth Circuit held that the district court need not apply a reasonable certainty standard and found that the restitution award was supported by the evidence. U.S. v. Burtrum, __ F.4th __ (10th Cir. Dec. 20, 2021) No. 20-5091.
1st Circuit says district court lacks jurisdiction to amend restitution order. (610) In 2011, defendant’s mail fraud sentence included a restitution order. In 2020, purporting to act under Fed. R. Crim. P. 36, the district court amended the restitution order to substitute the payee of restitution. The First Circuit reversed, ruling that the district court lacked subject matter jurisdiction over the restitution order. The district court had no statutory authority, including the Mandatory Victim’s Restitution Act, to amend the restitution order once it was entered. U.S. v. Harvey, __ F.4th __ (1st Cir. Dec. 9, 2021) No. 20-1869.
10th Circuit, despite error, says restitution for involuntary manslaughter was authorized by VWPA. (610) At defendant’s sentencing for involuntary manslaughter, the court relied on the Mandatory Victims Restitution Act to order restitution to a deceased passenger’s family and the driver of the vehicle defendant hit. Thereafter, Borden v. U.S., 141 S.Ct. 1817 (2021) held that an offense that can be committed recklessly is not a “crime of violence” under the Armed Career Criminal Act. Because the Mandatory Victim’s Restitution Act uses the same definition of “crime of violence,” defendant argued it was improper to impose restitution under the MVRA for involuntary manslaughter. The Tenth Circuit agreed, but found no “plain error” because the court could have imposed restitution under the Victim and Witness Protection Act. U.S. v. Benally, __ F.4th __ (10th Cir. Dec. 13, 2021) No. 20-2157.
11th Circuit upholds joint and several restitution order. (610) Defendants were convicted of entering a naval base and “engaging in symbolic disarmament.” The district court ordered that defendants make restitution jointly and severally. The Eleventh Circuit affirmed the restitution order, finding that defendants were convicted of conspiracy and the district court did not err by failing to make findings as to the damage caused by each individual. U.S. v. Grady, __ F.4th __ (11th Cir. Nov. 22, 2021) No. 20-14341.
1st Circuit affirms restitution of Social Security benefits that resulted from false statement. (610) Defendant was convicted of making a false statement with regard to Social Security benefits, and the court ordered restitution of just over $4,000—the overpayment resulting from his false statement. The First Circuit affirmed, noting that when defendant had filed an earlier application stating the true facts, his application had been denied. This was sufficient evidence that defendant’s later false statement caused the overpayments on which the restitution order was based. U.S. v. Rivera-Ortiz, __ F.4th __ (1st Cir. Sept. 21, 2021) No. 19-1100.
7th Circuit affirms delaying restitution hearing in sex trafficking case. (610) Defendant pleaded guilty to interstate sex trafficking. The district court delayed restitution under 18 U.S.C. § 3664(d)(5), but defendant was ultimately ordered to pay restitution to three of the victim women. Defendant argued that the amount of restitution was ascertainable when the district court delayed restitution, so the district court lacked jurisdiction to hold a delayed hearing. The Seventh Circuit found that even though the materials on which the district court relied were available before defendant’s sentencing, the district court had to parse the material and defendant should not benefit from any error by the district court. The court also held that the district court properly calculated the restitution obligation. U.S. v. Wyatt, __ F.4th __ (7th Cir. Aug. 12, 2021) No. 20-2382.
7th Circuit says defendant was represented during restitution hearing. (610) The district court delayed the restitution hearing in defendant’s case. After the hearing, but before the court entered a restitution order, defense counsel moved to withdraw from representing defendant. The Seventh Circuit held that defendant was represented at the hearing, and defense counsel’s representation of defendant was complete when he moved to withdraw. U.S. v. Wyatt, __ F.4th __ (7th Cir. Aug. 12, 2021) No. 20-2382.
4th Circuit says ERISA does not protect 401(k) plan from restitution. (610) As restitution, the government sought access to defendant’s 401(k) plan. Defendant argued that the anti-alienation provision of the Employment Retirement Income Security Act (ERISA), 29 U.S.C. § 1056(d)(1), barred access to his 401(k). The Fourth Circuit held that the Mandatory Victims Restitution Act trumps ERISA and allows the government to garnish defendant’s 401(k). The government stands in the shoes of the beneficiary of the 401(k) account, so any limitations on defendant’s ability to take payment of the 401(k) also apply to the government. Nor did the Consumer Credit Protection Act protect defendant’s 401(k). U.S. v. Frank, __ F.4th __ (4th Cir. Aug. 10, 2021) No. 20-6706.
7th Circuit allows district court to conduct restitution hearing more than 90 days after sentencing. (610) Defendant pleaded guilty to wire fraud and releasing an air pollutant. At sentencing, the district court ordered defendant to pay restitution, but set the restitution hearing 90 days from sentencing, citing 18 U.S.C. § 3664(d)(5). Defendant asked the district court to delay the restitution hearing pending his appeal, and the district court agreed. On appeal, defendant argued that the district court had no jurisdiction to conduct the hearing because it did not make the findings required by § 3664(d)(5). The Seventh Circuit held that defendant had requested the delay, and the 90-day period in § 3664(d)(5) was not a firm requirement. U.S. v. Robi, __ F.4th __ (7th Cir. Aug. 9, 2021) No. 20-1790.
7th Circuit says defendant need not be present when restitution is ordered. (610) The district court ordered defendant to pay restitution at a hearing at which defendant was not present (although his attorney was). The amount was the same as the loss amount and was slightly less than the amount the government proposed. The Seventh Circuit found no abuse of discretion, noting that defendant was not required to be present, and defendant had not shown that he provided services that should be subtracted from the restitution amount. U.S. v. Robi, __ F.4th __ (7th Cir. Aug. 9, 2021) No. 20-1790.
8th Circuit finds no breach despite government’s reliance on restitution statute not in plea agreement. (610)(790) Defendant pleaded guilty to interstate stalking in a plea agreement that stated that the government would seek restitution under the Mandatory Victims Restitution Act. The government also sought restitution under the Violence Against Women Act. The Eighth Circuit found that the government had not breached the plea agreement because the agreement did not state that MVRA was the only basis for restitution. U.S. v. Thomason, __ F.4th __ (8th Cir. Aug. 5, 2021) No. 19-2537.
D.C. Circuit reverses restitution for theft unconnected to defendant’s offense. (610) Defendant was convicted of unlawfully attempting to enter the White House grounds. At sentencing, the court ordered her to make restitution for the theft of a wallet that she stole in a casino in Nevada during her trip to Washington. The D.C. Circuit reversed, holding that her theft of the wallet was not a proper basis for restitution for attempting to enter the White House grounds. U.S. v. Jabr, __ F.3d __ (D.C. Cir. July 9, 2021) No. 19-3093.
5th Circuit finds defendant failed to appeal garnishment order to enforce restitution. (610)(850) Defendant was convicted of RICO violations. At sentencing, the district court ordered defendant to pay $178,000 in restitution. Four months later, the government obtained an order to garnish 100% of defendant’s annuity to satisfy the restitution. Defendant did not file a notice of appeal of the garnishment. Accordingly, the Fifth Circuit found that it had no jurisdiction to consider defendant’s argument that the order of garnishment was invalid. U.S. v. Onyeri, __ F.3d __ (5th Cir. Apr. 28, 2021) No. 18-50869.
7th Circuit says defendant need not be present at restitution hearing. (610) The district court delayed the hearing on defendant’s restitution obligation, and he was not present when the court ordered him to pay restitution. Defendant argued that this violated Fed. R. Crim. P. 43, which requires defendant to be present for all stages of trial, including sentencing. The Seventh Circuit held that Rule 43 does not apply to a delayed restitution hearing because 18 U.S.C. § 3664(c), provides that the Rule does not apply to a restitution hearing. U.S. v. Stivers, __ F.3d __ (7th Cir. May 7, 2021) No. 20-1180.
5th Circuit remands for failure to prove restitution amount. (610) At defendant’s sentencing for fraud in supplying computer parts to gaming room operators, the district court ordered defendant to pay restitution for all of the computer components he had supplied. On appeal, the Fifth Circuit reversed, noting that one of the gaming room owners said she owed defendant for computer components and supplies, and those supplies could be legitimate. The case was remanded to recalculate the restitution amount. U.S. v. Kim, __ F.3d __ (5th Cir. Feb. 19, 2021) No. 18-51024.
6th Circuit finds condition barring gambling made it more likely defendant could pay restitution. (580) (610) Defendant pleaded guilty to defrauding the social security administration, and the district court ordered her to pay more than $48,000 in restitution. Defendant fell behind in her payments, and the district court modified the supervised release conditions to bar her from entering gambling establishments. The Sixth Circuit upheld the condition, finding that barring defendant from gambling helped her ability to pay restitution. U.S. v. Budzynski, __ F.3d __ (6th Cir. Nov. 25, 2020) No. 20-1264.
5th Circuit affirms restitution in Medicare fraud absent showing that services were legitimate. (610) Defendants defrauded Medicaid by falsely certifying that a licensed psychologist had performed evaluations and adding hours to patient evaluations that they performed. The district court ordered them to pay restitution to the government. Defendants argued that some of the services they provided were necessary and the restitution amount should be reduced by the amount of legitimate services. The Fifth Circuit held that the government showed that the services were illegitimate, and defendants failed to meet their burden to show that some of the services were legitimate. U.S. v. Dubin, __ F.3d __ (5th Cir. Dec. 4, 2020) No. 19-50891.
2d Circuit says bribery may be an “offense against property” for restitution purposes. (610) Defendant defrauded a public utility when he worked as a manager at that utility. He pleaded guilty to bribery in an organization receiving federal funds, in violation of 18 U.S.C. § 666(a)(1)(B). At sentencing, the district court ordered that he pay restitution to the utility. Defendant argued that his offense was not a “offense against property” as the Mandatory Victims Restitution Act uses that term. The Second Circuit held that in deciding whether a crime is an “offense against property” the court may consider the facts of the offense, and that defendant’s crime was an “offense against property” supporting restitution. U.S. v. Razzouk, __ F.3d __ (2d Cir. Oct. 2, 2020) No. 18-1355.
5th Circuit upholds joint and several restitution. (610) At defendant’s sentencing for health care fraud, the district court ordered that defendant pay restitution jointly and severally with her codefendants. The Fifth Circuit found that joint and several liability was specifically contemplated by the Mandatory Victims Restitution Act and upheld the district court. U.S. v. Gozes-Wagner, __ F.3d __ (5th Cir. Sept. 28, 2020) No. 19-20157.
5th Circuit says district court must set restitution payment schedule. (610) At defendant’s sentencing for health care fraud, the district court ordered her to pay more than $19 million in restitution. The district court stated that amount was “completely unrealistic,” but imposed a payment plan. Defendant argued that the payment schedule should be discarded because of the district court’s comment. The Fifth Circuit held that even if there was a limited basis to believe that defendant would pay her restitution obligation during her life, the district court was required to set a payment schedule. U.S. v. Gozes-Wagner, __ F.3d __ (5th Cir. Sept. 28, 2020) No. 19-20157.
8th Circuit upholds restitution where defendant’s business was systematically tainted with fraud. (610) Defendant ran a child care center that received state funds. He was convicted of health care fraud. At sentencing, the district court ordered defendant to pay restitution for all the funds the state had paid to defendant’s company. The Eighth Circuit found that defendant’s entire business was conceived to commit fraud and that a business “systematically tainted by fraud” must pay restitution for all the amounts paid to it. U.S. v. Karie, __ F.3d __ (8th Cir. Sept. 30, 2020) No. 19-2779.
5th Circuit says restitution did not violate Eighth Amendment. (140)(610) Defendant committed health care fraud. At sentencing, the court ordered defendant to pay more than $19 million in restitution. Defendant argued that this amount violated the Excessive Fines Clause of the Eighth Amendment. Reviewing for plain error, the Fifth Circuit noted that the Supreme Court has never held that a restitution award could violate the Excessive Fines Clause. Accordingly, any error was not plain or obvious. U.S. v. Gozes-Wagner, __ F.3d __ (5th Cir. Sept. 28, 2020) No. 19-20157.
1st Circuit upholds restitution in price-fixing case. (610) Defendants were school bus drivers who fixed prices charged to a school district. After their conviction, the district court ordered restitution based on the difference the victim school district paid for the defendants’ routes after they fixed prices and the price the district paid after the price fixing was discovered. Defendants argued that the school district could afford the higher prices resulting from their price fixing and that there was no one else willing to bid in the year that prices were fixed. The First Circuit held that the school district was entitled to save money and it was therefore irrelevant that the school district could afford the higher prices. U.S. v. Vega-Martínez, __ F.3d __ (1st Cir. Jan. 31, 2020) No. 18-1189.
10th Circuit limits restitution to specific conduct that is the basis for conviction. (610) Defendant pleaded guilty to possessing three stolen firearms, in violation of 18 U.S.C. §§ 922(j) and 924(a)(2). The district court ordered him to pay restitution for all the losses suffered by a pawn shop from which the three guns and 59 other guns were stolen. Although defendant did not deny that he committed the burglary of the pawn shop, he argued that restitution for the other guns was improper. The Tenth Circuit agreed, holding that restitution is limited to the loss caused by the specific conduct that is the basis for the offense of conviction. Because defendant was not convicted of the pawn shop burglary, the district court erred by ordering restitution for all the losses in the burglary. U.S. v. Mendenhall, __ F.3d __ (10th Cir. Dec. 23, 2019) No. 19-7006.
2d Circuit reverses restitution order where defendants did not proximately cause loss. (610) Defendants were convicted of wire fraud and other offenses based on their fraudulent participation in a loan scheme. Defendants fraudulently altered shipping documents. Foreign banks defaulted in paying for the shipments, and the U.S. Department of Agriculture paid two American banks that in turn paid the foreign bank. At sentencing, the district court ordered defendants to pay restitution to the Department of Agriculture. The Second Circuit held that although defendants’ conduct had created risks for the American banks, their default was not caused by defendants’ actions but by the world financial crisis. For that reason, the court held, defendants’ conduct did not proximately cause the loss suffered by the American banks and restitution was improper. U.S. v. Calderon, __ F.3d __ (2d Cir. Dec. 3, 2019) No. 17-1956.
2d Circuit vacates restitution order that had no relation to criminal conduct. (610) Defendants were found guilty of fraud based in part on the sale of one company to another. At sentencing, the district court ordered defendants to pay $8 million in restitution based on the increase in price of the purchased company over the course of negotiations. The Second Circuit held that $8 million “does not attempt to approximate any increase in cost that is attributable to” defendants’ criminal conduct. The court remanded to allow the district court to recalculate the restitution order. U.S. v. Tanner, __ F.3d __ (2d Cir. Oct. 31, 2019) No. 18-3601.
10th Circuit reverses restitution order for one-time user of minor prostitute. (610) Defendant hired a minor for prostitution on one occasion. After his conviction, he was ordered to pay in restitution more than $300,000 for all the harm to the minor that her pimp had caused in a months-long exploitation. The Tenth Circuit ruled that the order improperly held defendant responsible for harm of which he was not the but-for cause. The panel remanded to allow the district court to disaggregate the harm caused by defendant from that caused by the minor’s pimp and to calibrate the harm caused by defendant. U.S. v. Anthony, __ F.3d __ (10th Cir. Oct. 31, 2019) No. 18-6047.
11th Circuit remands restitution award as inaccurate. (610) Defendant pleaded guilty to charges relating to her participation in a fraudulent tax scheme that claimed a $1,000 credit for numerous taxpayers. Pursuant to the scheme, the IRS issued $1,000 tax refunds to the taxpayers. At sentencing, the district court ordered defendant to pay more than $3 million in restitution. The government proposed this figure even though its calculation contained duplicate entries for some taxpayers. The Eleventh Circuit held that when the restitution amount was definite and easy to calculate, the government cannot satisfy its burden to show the amount of restitution by relying on a reasonable amount of loss. The court remanded for the district court to calculate the actual amount of restitution. U.S. v. Sheffield, __ F.3d __ (11th Cir. Oct. 1, 2019) No. 17-13682.
6th Circuit says restitution may span limitations period for entire fraud scheme. (610) In November 2016, defendant was indicted for fraud based on filing false tax returns. After her conviction, the district court ordered her to pay restitution for losses dating back to 2008. Defendant argued that she could not be ordered to pay restitution for any loss before 2011 because of the five-year statute of limitations applicable to fraud. The Sixth Circuit held that because at least one the false returns was filed within the statute of limitations, restitution could be ordered for the entire scheme. U.S. Ellis, __ F.3d __ (6th Cir. Sept. 6, 2019) No. 18-5158.
7th Circuit upholds restitution despite defendants’ poverty. (610) At defendants’ sentencing for kidnapping, the district court ordered them to pay more than $190,000 for the victim’s injuries. Defendants argued that they were destitute, and that the district court erred by not considering their financial situation. The Seventh Circuit held that the district court considered defendant’s financial situation and decided to order restitution despite defendants’ poverty. The court upheld the restitution order. U.S. v. Brazier, __ F.3d __ (7th Cir. Aug. 12, 2019) No, 16-4258.
7th Circuit upholds joint and several liability for restitution. (610) At defendants’ sentencing for kidnapping, the district court imposed a restitution obligation and held all three defendants jointly and severally liable for the obligation. The Seventh Circuit held that the Mandatory Victim Restitution Act, 18 U.S.C. § 3664(h), specifically provides for joint and several liability for restitution and the district court had not abused its discretion in imposing joint and several liability on all defendants, even if one defendant would get out of prison earlier than his accomplices and would have to start paying restitution earlier. U.S. v. Brazier, __ F.3d __ (7th Cir. Aug. 12, 2019) No, 16-4258.
8th Circuit finds court did not order restitution for investigative costs. (610) Defendant pleaded guilty to conspiracy to cause damage to a protected computer and to firearms offenses. At sentencing, the district court ordered defendant to pay almost a million dollars in restitution to the victims of his malicious computer attacks. In Lagos v. U.S., 138 S.Ct. 1684 (2018), the Supreme Court held that restitution may not include the costs of investigation incurred by the victim companies. The Eighth Circuit held that the district court had not ordered restitution for investigative expenses, but instead ordered restitution only for the damage that defendant had done to his victims. The victims’ investigative costs were a prerequisite to repairing the damage, and Lagos did not apply. U.S. v. Gammell, __ F.3d __ (8th Cir. Aug. 8, 2019) No. 18-2211.
8th Circuit finds restitution limited to victims’ losses. (610) At defendant’s sentencing for causing damage to a protected computer, the district court ordered defendant to pay a million dollars in restitution to his victims. Defendant argued that his victims gained a windfall because the restitution award covered future and speculative property losses due to already existing security vulnerabilities. The Eighth Circuit held that the district court limited the restitution award to the victims’ efforts to restore their computer networks after defendant’s attacks. U.S. v. Gammell, __ F.3d __ (8th Cir. Aug. 8, 2019) No. 18-2211.
5th Circuit allows challenge to restitution despite waiver of appeal of restitution. (610)(790) Defendant pleaded guilty to a child pornography offense pursuant to a plea agreement that waived his right to appeal any part of his sentence, including any restitution order. At sentencing, the district court sentenced him to a period of incarceration and $58,415 in restitution. On appeal, he sought to contest his restitution obligation. The Fifth Circuit held that an appeal of a restitution order is an appeal of a sentence exceeding the statutory maximum and is therefore exempt from an appeal waiver. U.S. v. Leal, __ F.3d __ (5th Cir. Aug. 5, 2019) No. 16-11330.
5th Circuit upholds restitution in child pornography case. (610) Defendant pleaded guilty to transportation of child pornography. The district court ordered him to pay $58,415 in restitution to the person pictured in the child pornography images. On appeal, defendant noted that he played no role in producing the images, and argued that the district court did not apply the factors in Paroline v. U.S., 572 U.S. 434 (2014), for restitution in child pornography cases. The Fifth Circuit said that although the government should have discussed its efforts to obtain restitution from other defendants for the same victim, the court sufficiently relied on the Paroline factors to order restitution here. U.S. v. Leal, __ F.3d __ (5th Cir. Aug. 5, 2019) No. 16-11330.
8th Circuit allows appeal of unauthorized restitution, despite appeal waiver. (610)(790) Defendant pleaded guilty to receipt of child pornography pursuant to a plea agreement that waived his right to appeal any sentence below the statutory maximum. Defendant received a sentence below the statutory maximum. The Eighth Circuit enforced the appeal waiver to the extent it barred any review of defendant’s prison sentence. However, because the district court ordered defendant to pay a restitution amount that was not authorized by statute, the court considered defendant’s appeal to the extent it challenged the restitution order. U.S. v. Thomas, __ F.3d __ (8th Cir. Aug. 5, 2019) No. 18-2412.
8th Circuit says restitution could not compensate victim for losses occurring before offense. (610) As part of defendant’s sentence for receiving child pornography, the district court ordered defendant to pay restitution for the victim’s psychological treatment that occurred six months before defendant’s charged conduct occurred. That counseling apparently arose from defendant’s uncharged earlier sexual conduct with the victim. The Eighth Circuit held that defendant could be ordered to pay restitution for his uncharged conduct before the offense of conviction only if the restitution order sought to compensate the victim for losses caused by the offense of conviction. In this case, the record showed that the restitution order sought to compensate the victim solely for losses occurring after the offense of conviction. U.S. v. Thomas, __ F.3d __ (8th Cir. Aug. 5, 2019) No. 18-2412.
5th Circuit finds insufficient showing that victim already received restitution. (610) Defendant argued that the restitution judgment entered against him should be vacated because his victim had already collected the judgment from other sources. The Fifth Circuit acknowledged that if true, defendant would be entitled to relief. However, it found that defendant had failed to show that his victim had recovered the amount defendant was ordered to pay in restitution. U.S. v. Parker, __ F.3d __ (5th Cir. June 18, 2019) No. 18-50058.
5th Circuit has jurisdiction to hear appeal of motion to quash restitution order. (610)(850) Ten years after he was convicted, defendant filed a “motion to quash” the execution of the district court’s restitution order, claiming that the victim of his crimes had recovered the amount ordered in restitution. After hearing evidence on this claim, the district court denied the motion. The Fifth Circuit held that it had jurisdiction over an appeal of a defendant’s motion to quash a restitution order. U.S. v. Parker, __ F.3d __ (5th Cir. June 18, 2019) No. 18-50058.
7th Circuit finds trial record can support restitution amount. (610) At defendant’s trial for fraud offenses, the evidence showed that defendant had caused $110,000 in actual losses to his victims. The district court imposed that amount in restitution. Defendant objected to that amount, but he never asked for an accounting under 18 U.S.C. § 3664(a), which permits a district court to order the probation officer to conduct a detailed accounting for restitution purposes. The Seventh Circuit held that a district court may rely on the trial record if that record supports the court’s conclusions by a preponderance of the evidence. U.S. v. Fennell, __ F.3d __ (7th Cir. May 30, 2019) No. 18-1969.
7th Circuit says basing restitution on “intended” loss was a slip of the tongue. (610) During defendant’s trial for fraud and other offenses, the record showed that defendant’s offenses resulted in $110,000 in actual losses to his victims. At sentencing, the district court imposed restitution in this amount, stating that it was based on “intended” loss. The Seventh Circuit held that this was merely a “slip of the tongue,” and that the evidence supported the district court’s conclusion that $110,000 was the actual loss. U.S. v. Fennell, __ F.3d __ (7th Cir. May 30, 2019) No. 18-1969.
1st Circuit holds loss amount does not determine restitution. (610) At defendant’s sentencing for fraud offenses, the district court awarded over $7 million in restitution. On appeal, defendant argued that the restitution amount should not have differed from the loss amount the district court found applicable. The First Circuit held that the loss amount and the restitution amount have different purposes and frequently differ. The court held that defendant’s “nebulous” challenge to his restitution obligation failed to differentiate between the purposes of the two provisions. U.S. v. Fiete-Garcia, __ F.3d __ (1st Cir. May 23, 2019) No. 18-1067.
9th Circuit holds restitution is not limited by statute of limitations. (610) Defendant participated in a scheme to defraud Medicare. The indictment alleged that the scheme began before the five-year statute of limitations in 18 U.S.C. § 3282(a) and continued into the limitations period. After conviction, the district court ordered defendant to pay restitution for the entire scheme, including the period that predated the statute of limitations. The Ninth Circuit held that restitution is not limited to conduct that occurs within the limitations period and may extend to all losses caused by defendant’s conduct during the fraudulent scheme. U.S. v. Anieze-Smith, __ F.3d __ (9th Cir. May 2, 2019) No. 16-50208.
9th Circuit affirms restitution based on evidence that company illegally submitted claims. (610) Defendant was convicted of health care fraud for her participation in a scheme to bill Medicare for power wheelchairs that were not medically necessary. At trial, the evidence showed that claims for power wheelchairs were exceedingly rare; that an inordinately high percentage of defendant’s Medicare claims were for power wheelchairs; that the claims used a compromised medical clinic; and that fraud permeated defendant’s company’s records. At sentencing, the district court ordered defendant to pay more than $800,000 in restitution. Reviewing for clear error, the Ninth Circuit found that the evidence supported the restitution award. U.S. v. Anieze-Smith, __ F.3d __ (9th Cir. May 2, 2019) No. 16-50208.
9th Circuit finds direct involvement in scheme leading to restitution. (610) Defendant, convicted at trial of heath care fraud, participated in a scheme to bill Medicare for power wheelchairs that were not medically necessary. At sentencing, defendant argued that she played a minor role in the business and did not “directly harm” Medicare, as the restitution statute requires. The district court disagreed and ordered defendant to pay more than $800,000 in restitution. The Ninth Circuit found that at trial the government presented credible evidence that defendant was substantially involved in the scheme and that she knew of the scheme’s billing practices. The court found that defendant had responded to a subpoena by identifying herself as the CEO and said that she was managing financial records involved in the scheme. U.S. v. Anieze-Smith, __ F.3d __ (9th Cir. May 2, 2019) No. 16-50208.
9th Circuit finds restitution under § 3663A is not limited to counts of conviction. (610) The government charged defendant with five individual executions of a scheme to defraud Medicare by providing medically unnecessary power wheelchairs. Defendant was convicted of those charges, and at sentencing, the district court ordered defendant to pay restitution for all losses to Medicare caused by defendant’s scheme. On appeal, defendant argued that restitution should be limited to the counts on which she was convicted. The Ninth Circuit held that the restitution statute, 18 U.S.C § 3663A, is not limited to the counts of conviction and instead requires restitution for a defendant’s entire scheme. U.S. v. Anieze-Smith, __ F.3d __ (9th Cir. May 2, 2019) No. 16-50208.
11th Circuit clarifies restitution owed to victims of child porn. (610) Defendant pleaded guilty to possession of child pornography depicting a minor under the age of 12. Under 18 U.S.C. § 2259, a defendant convicted of that offense must make full restitution to the persons pictured in the child porn. The district court ordered defendant to pay $142,600 in restitution to nine victims, stating that defendant was not being held responsible for all the losses incurred by the victims. The Eleventh Circuit held that as long as the district court holds defendant responsible for the amount of harm he caused, it is not required to determine, calculate, or disaggregate the specific amount of loss caused by the original abuser-creator or distributor of child pornography before it can decide the amount of the victim’s losses caused by the later defendant who possesses and views the images. U.S. v. Rothenberg, __ F.3d __ (11th Cir. May 8, 2019) No. 17-12349.
11th Circuit finds evidence supported restitution to child porn victims. (610) At defendant’s sentencing for possession of child pornography, the district court ordered defendant to pay $142,600 in restitution to nine persons depicted in the images that defendant possessed. The Eleventh Circuit upheld the award, rejecting defendant’s contentions that that a child pornography victim was aware of, and specifically harmed by, a particular defendant possessor’s conduct and finding that the government carried its burden of showing that defendant’s conduct harmed the victims. U.S. v. Rothenberg, __ F.3d __ (11th Cir. May 8, 2019) No. 17-12349.
1st Circuit upholds restitution even though victim continued to use goods fraudulently sold to it. (610) Defendant pleaded guilty to crimes arising from a scheme to steer contracts to a company controlled by another coconspirator. At sentencing, he was ordered to pay restitution of $408,000. On appeal, defendant argued that the district court calculated the restitution based on the conspiracy’s gain, not on the loss suffered by the victim. Defendant argued that the victim received the benefit of the conspiracy. The First Circuit acknowledged that restitution requires a but-for connection between the defendant’s fraud and the loss. But here, the court found the conspiracy sold the victim something it did not need in order to steer contracts to the conspiracy. The court held that the payments constituted a loss even though the victim continued to use the goods sold to it by the fraud. U.S. v. González-Calderón, __ F.3d __ (1st Cir. Apr. 3, 2019) No. 17-1519.
5th Circuit denies offset for claimed legitimate services rendered by home health agency. (219)(610) Defendant worked at a hospital (Parkland) and owned a home health care agency (DHH). He stole confidential patient information from Parkland and gave it to his employees at DHH to solicit business. Sixteen of these patients received home health services from DHH, for which Medicare paid $311,445.57. Defendant argued that the district court should have offset the value of legitimate services that DHH provided to the 16 patients. However, the government showed that the claims DHH submitted for 15 patients were fraudulent in that either (1) the patients were not eligible for Medicare-covered home health care, (2) they did not receive Medicare-covered services as billed, (3) home health care was not initiated by a physician, or (4) DHH exaggerated the patient’s health problems to increase the Medicare payment. Accordingly, the Fifth Circuit affirmed the district court’s finding that DHH was not entitled to an offset for legitimate services. U.S. v. Mathew, __ F.3d __ (5th Cir. Feb. 21, 2019) No. 17-10863.
5th Circuit reverses restitution order that exceeded temporal scope of offense. (610) Defendant, who worked at a hospital (Parkland), also owned a home health care business (DHH). He stole confidential patient information from Parkland and gave it to his employees to solicit them as patients. Medicare paid DHH a total of $311,445.57 for 16 Parkland patients. The court ordered defendant to pay $277,957.89 in restitution. The Fifth Circuit agreed with defendant that the restitution order was unlawful because it included amounts for Medicare payments that preceded the temporal scope of his offense of conviction. The offense did not involve a scheme, conspiracy or pattern, and defendant did not agree to enlarge the scope of restitution beyond the offense of conviction to include relevant conduct. Therefore, the MVRA limited restitution to the actual loss directly and proximately caused by the offense of conviction. Here, restitution included amounts for Medicare payments for claims DHH submitted both before and after September 23, 2011, the date specified in the indictment. These amounts should not have been included. U.S. v. Mathew, __ F.3d __ (5th Cir. Feb. 21, 2019) No. 17-10863.
5th Circuit agrees that defendant’s offense directly caused Medicare’s losses. (610) Defendant stole confidential patient information from a hospital (Parkland) and gave it to his employees at his home health care service (DHH) to solicit them as patients. Sixteen of these patients received home health services from DHH, and Medicare paid DHH a total of $311,445.57. The court ordered defendant to pay $277,957.89 in restitution. The Fifth Circuit rejected defendant’s claim that the restitution order exceeded the losses directly and proximately caused by the conduct underlying the offense of conviction. But for defendant’s theft of the 16 patients’ information, Medicare would not have suffered losses related to those patients’ care. The theft proximately caused Medicare’s losses because those losses were a reasonably foreseeable consequence of his theft. U.S. v. Mathew, __ F.3d __ (5th Cir. Feb. 21, 2019) No. 17-10863.
2d Circuit upholds increasing restitution order on remand. (610) At defendant’s resentencing, the district court increased defendant’s restitution obligation by about $400,000 because the government had made an error in calculating restitution before the first sentencing. The Second Circuit held that the district court had the authority to alter the restitution order on resentencing. Although the court stated that a remand is generally not for de novo sentencing, it found that the district court had authority to correct a clear legal error. U.S. v. Valente, __ F.3d __ (2d Cir. Feb. 15, 2019) No. 17-2311.
8th Circuit upholds joint and several restitution award. (610) Defendants participated in a scheme to defraud elderly victims by telling them that relatives in the Dominican Republic were in jail and needed money. At defendants’ sentencing for fraud offenses, the district ordered that they be jointly and severally liable for approximately $775,000 in restitution. The Eighth Circuit found that one defendant should be liable for restitution during a period in the scheme when he was inactive and that another defendant’s failure to cause the entire loss did not absolve him from joint and several liability for the entire amount. U.S. v. Rodriguez, __ F.3d __ (8th Cir. Feb. 7, 2019) No. 17-3807.
7th Circuit finds restitution should equal loss amount. (610) Defendant, the president of a company, defrauded investors in the company by misrepresenting the uses to which invested funds would be put. At defendant’s sentencing for wire fraud, the district court ordered restitution in the total amount received as a result of the fraud. Defendant argued that some of the funds were used for company purposes and should not be included in the restitution amount. The Seventh Circuit found that the district court had ordered the full amount of each victim’s losses and that defendant had failed to present evidence that the restitution amount should have been lower. U.S. v. Corrigan, __ F.3d __ (7th Cir. Jan. 3, 2019) No. 17-3642.
7th Circuit finds that loss caused by fraud is proper amount of restitution. (610) At defendant’s sentencing for fraud offenses, the district court set the loss caused by the fraud at $65 million. The court then used that amount as the basis for defendant’s restitution order. After upholding the loss calculation, the Seventh Circuit also upheld the district court’s restitution amount. Because there was no error in the loss calculation, the district court’s restitution order was also appropriate. U.S. v. Balsiger, __ F.3d __ (7th Cir. Dec. 10, 2018) No. 17-1708.
7th Circuit reduces restitution in false tax returns case by amount government collects from taxpayers. (610) Defendant pleaded guilty to preparing false tax returns, and was ordered to pay about $79,000 in restitution, i.e., the amount that defendant’s clients unlawfully avoided paying, minus the amount the government had already collected from the taxpayers. Defendant argued that the government should have told the district court how much more it might collect from her clients and that her restitution obligation should be reduced accordingly. The Seventh Circuit held that under 18 U.S.C. § 3664, defendant is entitled to credit for whatever the government collects from her clients, but she is not entitled to a reduction in the restitution order. U.S. v. Johnson, __ F.3d __ (7th Cir. Dec. 21, 2018) No. 18-1313.
2d Circuit reverses restitution for fraud victim’s investigation costs in light of Lagos. (610) In Lagos v. U.S., 138 S.Ct. 1684 (2018), the Supreme Court held that the Mandatory Victim Restitution Act, 18 U.S.C. § 3663A, does not authorize restitution to ordinary fraud victims for their “investigation” expenses. Only the government can obtain restitution for investigative costs. In light of Lagos, the Second Circuit reversed and remanded an order providing restitution to a fraud victim. U.S. v. Walters, __ F.3d __ (2d Cir. Dec. 4, 2018) No. 17-2373.
8th Circuit says appeal waiver did not waive challenge to restitution. (610)(790)(850) Defendant pleaded guilty to carjacking and firearms offenses pursuant to a plea agreement that waived his right to appeal his conviction and sentence. Nevertheless, defendant appealed, arguing that the district court erred in calculating his criminal history and in imposing restitution. The Eighth Circuit dismissed defendant’s attempt to challenge his criminal history, but held that his waiver of appeal did not bar him from pursuing his appeal of the restitution order. U.S. v. Bagley, __ F.3d __ (8th Cir. Nov. 6, 2018) No. 17-2382.
8th Circuit vacates $1,000 restitution for dog killed during carjacking. (610) At defendant’s sentencing for carjacking and firearms offenses, the district court ordered defendant to pay $1,000 restitution for a dog killed during the carjacking. The Mandatory Victims Restitution Act provides for restitution of “the value of the property” on the date that it is destroyed. Here, however, the government presented no evidence of the replacement cost of the dog. Accordingly, the Eighth Circuit reversed the restitution order. U.S. v. Bagley, __ F.3d __ (8th Cir. Nov. 6, 2018) No. 17-2382.
5th Circuit says defendant cannot be ordered to pay restitution while in custody. (580)(610) At defendant’s sentencing for tax offenses, the district court imposed a sentence of imprisonment and ordered defendant to begin paying restitution “immediately.” The Fifth Circuit held that a requirement that defendant began paying restitution while incarcerated was “unauthorized.” The court of appeals therefore modified defendant’s judgment to reflect that defendant does not owe restitution until his term of supervised release begins. U.S. v. Bolton, __ F.3d __ (5th Cir. Oct. 23, 2018) No. 17-60502.
7th Circuit finds bar on restitution to offense participant does not apply to participant’s family. (610) Defendant was convicted of conspiracy to distribute heroin, money laundering, and firearms possession. At sentencing, the district court found that defendant had murdered another man because defendant feared that the other man would testify against him. The district court ordered defendant to pay restitution to the girlfriend and mother of the murdered man for their funeral expenses. The Seventh Circuit held that the restitution statute’s exclusion of payments to a participant in the offense (18 U.S.C. § 3663(a)(1)(A)) did not preclude restitution to the participant’s family. For that reason, even if the man that defendant killed had participated in defendant’s offense, the district court did not err by ordering restitution to the victim’s family. U.S. v. Price, __ F.3d __ (7th Cir. Oct. 19, 2018) No. 17-3077.
1st Circuit allows court to increase restitution after notice of appeal was filed. (610)(850) At defendant’s sentencing, the district court issued a restitution order, but stated that it was provisional. Defendant filed a notice of appeal of this order. Later, after a hearing, the district court issued a new judgment that contained an increased restitution order. The First Circuit held that the notice of appeal did not divest the district court of jurisdiction to increase its provisional restitution order. U.S. Naphaeng, __ F.3d __ (1st Cir. Oct. 12, 2018) No. 17-1800.
1st Circuit holds notice of appeal filed after sentencing but before judgment was sufficient to challenge judgment. (610) (850) Defendant filed a notice of appeal after the court imposed an amended restitution order but before the judgment was entered. The First Circuit noted that in Manrique v. U.S., 137 S.Ct. 1266 (2017), the Supreme Court held that a defendant who wishes to challenge a deferred order of restitution after judgment must file new notice of appeal, or the issue is waived. The court of appeals distinguished Manrique on the ground that in this case, the defendant had simply filed his notice of appeal early, so it was sufficient to allow defendant to challenge the judgment, including the restitution order. U.S. v. Naphaeng, __ F.3d __ (1st Cir. Oct. 12, 2018) No. 17-1800.
1st Circuit upholds restitution even though some victims had not submitted claims of loss. (610) At defendant’s sentencing for fraud offenses, the district court awarded restitution for every victim that the government identified, not just to those who had submitted proof of loss. Defendant claimed that the evidence was insufficient to show that he owed restitution to anyone else. The First Circuit found that the government had provided sufficient evidence of all the victims by providing a detailed spreadsheet that listed all of them and summarized relevant information, including how much each victim had paid defendant. U.S. v. Naphaeng, __ F.3d __ (1st Cir. Oct, 12, 2018) No. 17-1800.
1st Circuit rejects claim that restitution was “punitive” response to successful appeal. (197)(610) Defendant was convicted of aiding and abetting a Hobbs Act robbery, and related firearms charges. For various reasons, the case was reversed, and remanded for resentencing. On remand following his second appeal, the district court imposed, for the first time, a restitution order. On defendant’s third appeal, the appellate court ordered a limited remand because the district court had mistakenly “continued” a restitution order that it had neglected to impose in the first instance. On remand, the district court formally ordered $30,000 restitution, a reduction from the initial order of $60,000. The First Circuit affirmed, rejecting defendant’s argument that the order was a “punitive” response to his successful appeal. Restitution is mandatory under 18 U.S.C. § 3663A(a)(1), which says the district court “shall order … restitution” for convictions for crimes of violence. Defendant he did not challenge the amount of restitution or any other aspect, other than its existence. U.S. v. García–Ortiz, __ F.3d __ (1st Cir. Sept. 17, 2018) No. 16-1405.
8th Circuit says court not bound by restitution specified in plea agreement. (610) Defendant was convicted of fraud charges. He appealed the district court’s restitution order, arguing that the amount of restitution ordered ($770,551.08) should not have exceeded the amount agreed upon in his plea agreement ($481,929.17). The Eighth Circuit disagreed. First, nothing in the text of the Mandatory Victims Restitution Act required the court to limit its order of restitution to an amount agreed upon by the parties, and the parties’ plea agreement was not binding on the district court. Second, before sentencing, defendant objected to the amount of restitution listed in his plea agreement, and the district court permitted defendant to argue that he should be responsible for a lower amount. Defendant therefore repudiated the restitution stipulation before sentencing, and the court would have been free to disregard the figure in the plea agreement even if it were ordinarily binding. Having concluded that the actual loss suffered by the victims of the scheme was $770,551.08, the district court did not clearly err by ordering defendant to pay restitution in the same amount. U.S. v. Gaye, __ F.3d __ (8th Cir. Aug. 29, 2018) No. 17-1327.
1st Circuit rules bankruptcy court can be recipient of restitution. (610) Defendant was convicted of a variety of fraud-related offenses. He challenged on appeal the district court’s order that he pay restitution to the bankruptcy court, arguing that the court was neither a proper recipient of restitution nor a victim pursuant to either 18 U.S.C. §§ 3663 or 3663A. The First Circuit disagreed, and upheld the restitution order. The federal government can be a victim for purposes of restitution. Defendant’s claim that affirming the order of restitution would allow the court to collect twice on his fines was completely without merit. First, there was no suggestion that the government had attempted to enforce the collection of the fines through the bankruptcy court. Second, once defendant paid his restitution, he could move to reopen any of the bankruptcy cases in which a fine had been imposed and request that the court enter an order stating the fines had been satisfied. U.S. v. Valdés-Ayala, __ F.3d __ (1st Cir. Aug. 15, 2018) No. 16-1002.
4th Circuit reverses where court relied on replacement costs to calculate restitution. (610) Defendant pled guilty to postal theft in connection with his theft of discs from GameFly, a video game rental service. Relying on the victim’s unsupported estimate of its replacement costs, the district court ordered defendant to pay $52,990 in restitution. Because fair market value was the appropriate measure of value for restitution and the government failed to sufficiently demonstrate the victim’s loss, the Fourth Circuit vacated the restitution order and remanded. Replacement cost may be an appropriate measure of value when the fair market value is difficult to determine or would inadequately capture the value of the victim’s actual losses. Here, however, fair market value was the appropriate measure of value. The video games that GameFly lost were fungible. Defendant’s success with selling and trading the games demonstrated that there was an active market for the used games. The district court abused its discretion by ordering restitution based on GameFly’s estimated replacement costs. Moreover, the government failed to meet its burden of establishing the amount of the victim’s loss. The government offered the victim’s unsupported statement as its principal piece of evidence supporting the amount of restitution. GameFly did not attach a single record to substantiate its loss. U.S. v. Steele, __ F.3d __ (4th Cir. July 27, 2018) No. 17-4580.
5th Circuit allows court to amend final restitution order more than 90 days after sentencing. (610) Defendant argued that the district court committed plain error by failing to finally determine the amount of restitution owed either at or before the sentencing hearing, or within 90 days thereafter. The Fifth Circuit found no error. A sentencing court that misses the 90-day deadline in 18 U.S.C. § 3664(d)(5) retains the power to order restitution, at least where the sentencing court made clear prior to the deadline’s expiration that it would order restitution, leaving open only the amount. That was precisely what happened here. At sentencing on March 24, 2017, the government argued that the court should defer a final determination of restitution because the victims’ families misunderstood their ability to seek restitution and had difficulty completing the necessary paperwork. The court then tentatively set the amount of restitution at $1,024,000 but noted that the amount was subject to change. On June 7, 2017, the government filed a motion contending that the victims’ losses were not readily ascertainable due to the families’ confusion and, therefore, the court was permitted to determine the final amount of restitution at a later date. On August 11, 2017, after considering the government’s motion and the fourth addendum to the PSR, the court increased the amount of restitution to $1,550,247.15. U.S. v. Gurrola, __ F.3d __ (5th Cir. Aug. 2, 2018) No. 17-50325.
5th Circuit finds sufficient evidence that defendant possessed pornographic files, for restitution purposes. (610) Defendant pled guilty to possessing child pornography. He challenged on appeal a requirement that he pay restitution of $50,317, arguing that the government did not produce evidence of possession, because all the files found on his computer were incomplete reconstructed files. The Fifth Circuit found sufficient evidence to prove possession. Defendant pled guilty to possessing images, and a government special agent testified that defendant shared “one hundred percent complete files” with him. U.S. v. Halverson, __ F.3d __ (5th Cir. July 30, 2018) No. 17-40661.
5th Circuit says court sufficiently followed Paroline in awarding restitution in child porn case. (610) Defendant pled guilty to possessing child pornography. The Fifth Circuit upheld a restitution order of $50,317, concluding that the district court sufficiently followed Paroline v. U.S., 572 U.S. 464 (2014), and committed no abuse of discretion in awarding the restitution. The district court relied on the following facts: (1) defendant possessed images of at least 33 victims, (2) he possessed at least 1,863 images of child pornography on two laptops and one hard drive, and (3) many of the images depicted violent sexual assault of infants, toddlers, pre-pubescents, and adolescents. Further, the court found that the formula used by the government to calculate restitution accounted for each of the victim’s total losses while tying the restitution to defendant’s conduct. The court then went through each victim and applied the formula to each one, explaining the amount that each would receive and why they requested their respective amounts. Although the district court did not make explicit findings concerning all of the Paroline factors, that determination was not necessary. U.S. v. Halverson, __ F.3d __ (5th Cir. July 30, 2018) No. 17-40661.
8th Circuit upholds restitution for broader conspiracy where plea agreement allowed considering additional criminal conduct. (610) Defendant, a physician, pleaded guilty to aiding and abetting the solicitation and receipt of kickbacks in return for referring patients to a pharmacy. 42 U.S.C. § 1320a-7b(b)(1)(A); 18 U.S.C. § 2. As part of her sentence, the district court ordered defendant to make restitution of $421,329.19 arising from the pharmacy’s broader fraud scheme to defraud Medicare and Medicaid. The offense of conviction did not authorize the amount of restitution ordered, but defendant’s plea agreement allowed the court to consider other criminal conduct that would justify restitution. The Eighth Circuit upheld the restitution award, concluding that the court did not clearly err in finding that defendant conspired with others to defraud the United States of an amount that justified the award. Defendant’s offense of conviction did not authorize this large a restitution order. However, the Victim and Witness Protection Act provides that the court can, if agreed to by the parties in a plea agreement, order restitution to persons other than the victim of the offense. 18 U.S.C. § 3663(a)(1)(A). Here, the plea agreement allowed the court to order restitution for amounts above and beyond those directly caused by the offense of conviction. U.S. v. Polukhin, __ F.3d __ (8th Cir. July 19, 2018) No. 17-1084.
8th Circuit approves $3,000 restitution order in child porn case calculated using 1/n method. (610) Defendant pleaded guilty to sexual exploitation of a child and possession of child porn. Among the pornography stored in his Dropbox account was a “Sweet Sugar” internet child pornography series. Two of the videos in the series depicted a victim known as Pia. The district court ordered defendant to pay $3,000 to Pia. The Eighth Circuit upheld the restitution order, rejecting defendant’s challenge to the use of the 1/n method for determining the amount of restitution. In the 1/n method, “n represents the number of defendants who have paid the victim restitution plus 1 (to count the defendant being sentenced).” This takes into account the number of past criminal defendants found to have contributed to the victim’s total loss, which is one of the factors to determine restitution discussed in Paroline v. U.S., 572 U.S. 464 (2014). The district court relied on additional factors as well. By adopting the government’s argument, the court considered a variety of other factors, including the egregious nature of the video and the severity of the depictions. Moreover, the $3,000 award was consistent with past decisions in child pornography restitution cases. U.S. v. Bordman, __ F.3d __ (8th Cir. July 17, 2018) No. 17-2395.
9th Circuit remands restitution order that was inconsistent in setting payment schedules. (610) At sentencing for defendant’s fraud offense, the district court ordered defendant to pay restitution but found that defendant lacked the ability to make full restitution immediately. The judgment ordered defendant to pay restitution immediately in a lump sum payment, but it also set out a schedule of payments that defendant must make during his incarceration. The Ninth Circuit found that the judgment was internally inconsistent with regard to restitution. Because the district court had already found that defendant lacked the ability to pay restitution immediately, the court of appeals remanded to allow the district court to strike the order that defendant pay immediately. U.S. v. Holden, __ F.3d __ (9th Cir. July 26, 2018) No. 16-30186.
6th Circuit allows “charge-off” method for restitution from fraudulent bank loans. (610) Defendant pled guilty to conspiring to commit bank fraud. In the plea agreement, he agreed to restitution of $2,534,912, but the PSR calculated restitution of $2,637,058.32. The district court adopted the PSR’s higher restitution amount, explaining that the number in the plea agreement was lower because one of the financial institutions was not able to sell some of the collateral for as much as it had originally agreed upon. The Sixth Circuit upheld the restitution order. The PSR detailed its methodology for calculating loss, explaining that the records provided by the victim banks specified “charge-off” amounts for each loan. “The charge-off amount for a loan is calculated by subtracting the appropriate credits against loss, including … payments made on the loan and liquidated collateral, from the principal loan balance …. The resulting difference approximates a bank’s pecuniary loss for a particular loan.” U.S. v. Sexton, __ F.3d __ (6th Cir. July 5, 2018) No. 17-5743.
7th Circuit finds court based restitution on victim’s losses, and not defendant’s financial situation. (610) Defendant pled guilty to defrauding investors in violation of the federal wire fraud statute. He obtained $680,000 from investors, invested $200,000 as promised, and pocketed the other $480,000. He argued that the court’s restitution order to repay $405,945 was clearly erroneous because the district court “simply impos[ed] the entire loss amount as restitution” and did not consider his financial situation and prospects under 18 U.S.C. § 3664(f)(2). The Seventh Circuit found this argument had no merit. Section 3664(f)(1)(A) requires courts to “order restitution to each victim in the full amount of each victim’s losses,” and the district court did that here. The fact that a defendant might never be able to satisfy a restitution award was not grounds for reversing that award. U.S. v. Moose, 893 F.3d 951 (7th Cir. June 27, 2018) No. 16-3536.
7th Circuit reverses for failure to explain why it rejected defendant’s specific objection to restitution. (610)(765) Defendant pled guilty to defrauding investors. At sentencing, he challenged the court’s restitution order and several conditions of supervised release. To each of these objections, the district judge offered the same reply: “The objection is over-ruled.” The Seventh Circuit held that the district court’s rejections of defendant’s “specific, rational objections” required further explanation. Concerning restitution, defendant made the reasonable argument that interest on the amount should be waived while he was in prison “because if the interest is growing for two years while he’s in prison and can’t afford to pay restitution, then what is a difficult amount to pay becomes an impossible amount to pay.” While stated awkwardly, it was clear that accrued interest would create a greater burden on the defendant. This greater burden might well be justified, but the district court needed to explain why it was justified. U.S. v. Moose, 893 F.3d 951 (7th Cir. June 27, 2018) No. 16-3536.
Supreme Court limits restitution for victims costs of investigating crime. (610) The Mandatory Victims Restitution Act, 18 U.S.C. § 3663A(b)(4), provides that a person convicted of certain federal offenses, including fraud, must “reimburse the victim for lost income and necessary child care, transportation, and other expenses incurred during participation in the investigation or prosecution of the offense or attendance at proceedings related to the offense.” The Supreme Court, in a unanimous opinion by Justice Breyer, held that the words “investigation” and “proceeding” in § 3663A(b)(4) are limited to government investigations and criminal proceedings and do not include private investigations and civil or bankruptcy proceedings. Under the Court’s interpretation, some victims will not be able to recover as restitution all of their losses for a crime. Lagos v. U.S., 584 U.S. __, 138 S.Ct. __ (May 29, 2018).
4th Circuit holds that appeal waiver also waived challenge to amount of restitution. (610)(780)(855) Defendant pleaded guilty to multiple counts of sexual exploitation of a child and one count of receipt and distribution of child pornography. He appealed from an order to pay $100,000 in restitution to his sole contact victim, noting that the only evidence in the record as to the victim’s anticipated loss was the counselor’s letter seeking $3,590. However, the Fourth Circuit found that defendant’s challenge to the amount of restitution fell within the scope of his appeal waiver, and dismissed the appeal. The plea agreement unequivocally stated that defendant waived “the right to appeal [his] sentence” on any grounds listed in 18 U.S.C. § 3742(a) “or on any ground.” There is a limited exception to waiver when a defendant contends that the court “exceeded the authority of the statutory source” in selecting the amount of restitution ordered. However, the source of the district court’s authority to order restitution was clear under § 2259(b). Moreover, the court found that $100,000 was a “very conservative figure” as the victim’s actual losses would likely be much higher. U.S. v. Dillard, __ F.3d __ (4th Cir. May 30, 2018) No. 17-4417.
4th Circuit reverses refusal to award restitution for non-contact child victims. (610) Defendant pleaded guilty to multiple counts of sexual exploitation of a child and one count of receipt and distribution of child pornography. The district court ordered restitution to the one contact victim, but denied the government’s request for restitution to seven non-contact victims. On appeal, the Fourth Circuit vacated that restitution order, stating that the district court misunderstood Supreme Court’s holding in Paroline v. U.S., 572 U.S. __, 134 S. Ct. 1710 (2014) regarding the government’s burden of proving causation. The district found “no evidence connecting [the non-contact victims’] significant harm to this Defendant” or that they “were actually aware that this Defendant possessed evidence of their abuse.” But Paroline expressly disavowed any such requirement. The government satisfied its burden of causation by the uncontested evidence that defendant’s offense conduct included the seven non-contact victims’ images and that these victims have “outstanding losses caused by the continuing traffic in those images.” U.S. v. Dillard, __ F.3d __ (4th Cir. May 30, 2018) No. 17-4417.
6th Circuit holds appeal waiver barred challenge to restitution. (610)(850) As part of his plea agreement, defendant pled guilty to a single count of honest services wire fraud, and waived his right to appeal his conviction and sentence, provided he was sentenced to less than 210 months. He was sentenced to 90 months. Nonetheless, he appealed the court’s restitution order. Citing U.S. v. Winans, 748 F.3d 268 (6th Cir. 2014), the Sixth Circuit found that the plea agreement’s appeal waiver barred defendant’s challenge to the amount of restitution. Although defendant disputed the government’s guidelines and loss amount calculations, defendant expressly tied his waiver to the court’s acceptance of the government’s guideline calculation, which was based on a loss between $1 million and $2.5 million. Defendant was not only on notice that the court could sentence him based on a finding that he was responsible for over $1 million in losses, he expressly agreed not to appeal even if the court did so, as long as the final sentence did not exceed 210 months. U.S. v. Grundy, 844 F.3d 613 (6th Cir. 2016).
11th Circuit upholds restitution calculation based on amounts paid by IRS on fraudulent tax returns. (610) Defendant and his wife stole identities from patients at various medical facilities to electronically file fraudulent tax returns. They used prepaid debit cards to access the refunds. Based on testimony from an IRS Special Agent who investigated the scheme, the district court calculated restitution of $1,820,759. The Eleventh Circuit affirmed. The government established by a preponderance of the evidence that defendant was accountable for 805 fraudulently-filed tax returns. The actual loss, or amount paid out by the IRS, on those 805 tax returns was $1,820,759. U.S. v. Cobb, 842 F.3d 1213 (11th Cir. 2016).
8th Circuit approves restitution based on “one-day Chicago Board of Trade high price” for commodities. (610) Defendant managed a grain elevator for Bunge of North America. He was convicted of mail and wire fraud arising from a scheme in which he overpaid for commodities to benefit certain customers, who then paid him a kickback. The PSR determined loss using a “one-day Chicago Board of Trade high price” (CBOT high price) as the number to be subtracted from the inflated price paid by defendant. The district court adopted the PSR’s one-day method to determine restitution, and set the loss for restitution purposes at $1,473,980.00. The Eighth Circuit affirmed. Defendant’s claim that the loss was impossible to calculate was belied by his admission in the plea agreement that his fraud scheme resulted in “approximately $937,000” in overpayments using the government’s more conservative two-day CBOT high price method of calculating loss. Thus, the real issue was whether the district court erred by choosing the one-day method over the two-day method. The panel found that exact precision was not necessary. Either method would have been reasonable, as both methods underestimated Bunge’s actual loss. U.S. v. Carpenter, 841 F.3d 1057 (8th Cir. 2016).
8th Circuit remands to decide if attorney’s fees incurred after investigation began were “necessary.” (610) Defendant managed a grain elevator for Bunge of North America. He was convicted of mail and wire fraud arising from a scheme in which he overpaid for commodities to benefit certain customers, who then paid him a kickback. The district court ordered him to pay $1,561,516.25 in restitution, which included $87,536.65 in attorney’s fees and expenses Bunge paid to outside counsel during the investigation of defendant’s fraudulent scheme and his prosecution. Defendant argued on appeal that the attorney’s fees incurred after the government took over the investigation were not “necessary” under 18 U.S.C. §3663A(b)(4). The record did not show that the district court ever directly addressed that claim, or made a specific finding. Therefore, the Eighth Circuit vacated the district court’s award of attorney’s fees and expenses and remanded for the district court to specifically address whether the attorney’s fees incurred after the government initiated its own investigation were “necessary.” U.S. v. Carpenter, 841 F.3d 1057 (8th Cir. 2016).
2nd Circuit upholds tax loss and restitution despite failure to obtain additional information. (370)(610) Defendant was convicted various tax-related offenses based on his failure to file income tax returns. The PSR calculated the tax loss by applying a percentage-based formula to his gross income from 2005 through 2008. Under §2T1.1(c)(2)(A), this formula should be used “unless a more accurate determination of the tax loss can be made.” Defendant argued that “a more accurate determination of tax loss” could be made based on the actual corporate and personal tax returns he filed, years after the fact, for tax years 2005 through 2008. The district court refused defendant’s alternative calculation in light of the various discrepancies the government identified in the proffered tax returns. On appeal defendant argued that the district court should have conducted a further inquiry by way of an evidentiary hearing or supplemental briefing. The Second Circuit disagreed. A district court “is not required, by either the Due Process Clause or the federal Sentencing Guidelines, to hold a full-blown evidentiary hearing in resolving sentencing disputes…. All that is required is that the court afford the defendant some opportunity to rebut the [g]overnment’s allegations.” Defendant did not respond to the many inaccuracies the government identified in the proffered tax returns. The district court did not abuse its discretion by not obtaining additional information regarding the issue. U.S. v. Marinello, 839 F.3d 209 (2d Cir. 2016).
11th Circuit reverses where court gave dispositive weight to inability to pay restitution. (610)(741) Defendant pled guilty to embezzlement by a bank officer or employee. At sentencing, she brought $45,000 in cashier’s checks to put towards restitution. She requested a downward variance based on a number of factors. The court responded that the checks defendant brought were “just a drop in in the bucket,” and that it “would be glad” to order probation if defendant “had paid back the restitution.” The court then imposed a 27-month sentence, at the bottom of her 27-33 month guideline range, and ordered her to pay restitution of $142,768.28. The court noted that if defendant, her friends and supporters “step[ped] up” and paid her restitution, it would “immediately convert [her] prison term to probation.” The Eleventh Circuit reversed. The district court most likely violated defendant’s constitutional rights by conditioning her liberty on her ability to pay restitution in full. However, the panel based its decision on defendant’s additional argument that the sentence imposed was substantively unreasonable. The district judge abused his discretion by giving dispositive weight to defendant’s inability to pay restitution. Defendant’s inability to pay restitution in full was an impermissible factor not among those listed in §3553(a). U.S. v. Plate, 839 F.3d 950 (11th Cir. 2016).
7th Circuit upholds estimate of loss from SNAP fraud based on comparison to similar stores. (219)(610) Defendant, who operated two convenience stores, was convicted of wire fraud for allowing recipients under the federal Supplemental Nutrition and Assistance Program (SNAP) to exchange the SNAP benefits for cash. The government estimated a loss of $194,869, based on a comparison of three convenience stores the same size in the same zip code that were not suspected of SNAP fraud. The analysis assumed that all transactions by his stores under $25 were legitimate, and that all transactions over $104.56 were fraudulent. Defendant argued that the loss amount should be restricted to transactions corroborated by video evidence, or $7,559.13. The Seventh Circuit upheld the loss estimate. Defendant’s stores processed $206,603.37 more SNAP benefits than the comparison stores, which supported the fraud determination. Other courts have accepted similar methods for proof of loss in SNAP fraud cases. The district court correctly ordered defendant to pay restitution of $189,576.30, which was the loss minus the amount of restitution ($5,301.70) already paid by four of his customers charged with SNAP fraud. U.S. v. Aden, __ F.3d __ (7th Cir. July 29, 2016) No. 15-2930.
9th Circuit finds plea agreement gave sufficient notice of restitution. (610)(780) Defendant’s plea agreement stated that the district court may order restitution of “no less than” $1.75 million. The agreement also stated that defendant should pay restitution for all losses caused by schemes or offenses with which he was charged and that restitution would not be limited to the loss caused by the offenses to which he was pleading guilty. At sentencing, the district court ordered defendant to pay $2.2 million in restitution. The Ninth Circuit held that the plea agreement provided a reasonably accurate estimate of the amount of restitution to which defendant was exposed. U.S. v. Lo, __ F.3d __ (9th Cir. Oct. 5, 2016) No. 15-10219.
9th Circuit finds restitution requirement is not illegal. (610) Defendant claimed that the restitution imposed on him at sentencing was illegal under the Mandatory Victims Restitution Act, 18 U.S.C. §3663A. The Ninth Circuit rejected this claim, finding that under the MVRA, restitution to “victims” of an offense was mandatory. Because defendant agreed in a plea agreement that his fraud offenses had specific victims, the Ninth Circuit held that the district court did not err in imposing restitution. U.S. v. Lo, __ F.3d __ (9th Cir. Oct. 5, 2016) No. 15-10219.
9th Circuit upholds replacement value as restitution measure. (610) In the course of manufacturing hash oil, butane fumes given off during the process exploded, and blew out the defendants’ apartment’s wall, causing fire damage to a significant portion of their building, injuring six people, and killing one person. The presentence report stated that defendants’ guidelines range did not contemplate “death, serious bodily injury, and property destruction” and that those factors may warrant a departure. At defendants’ sentencing for manufacturing hash oil, the district court ordered restitution based on the replacement cost of the items destroyed by the explosion and fire. The Ninth Circuit held that district courts have discretion to calculate restitution and that replacement value is an appropriate measure of destroyed property if the fair market value is difficult to measure or would be an inadequate measure of value. U.S. v. Kaplan, __ F.3d __ (9th Cir. Oct. 7, 2016) No. 15-30213.
9th Circuit upholds restitution for fraud not expressly mentioned in indictment. (610) Defendant pleaded guilty to an indictment alleging that he defrauded stores in California “and elsewhere.” In addition to California, defendant defrauded stores in Colorado. At defendant’s change-of-plea colloquy, the government stated that it would prove only that defendant had defrauded the California stores. At sentencing, the district court imposed restitution for both the California and the Colorado stores. Reviewing for plain error, the Ninth Circuit held that the district court properly imposed restitution for the California and Colorado stores. U.S. v. Zhou, __ F.3d __ (9th Cir. Sept. 29, 2016) No. 14-50288.
9th Circuit says restitution can be imposed as condition of supervised release. (580)(610) Defendant was convicted of transporting illegal aliens, in violation of 8 U.S.C. §1324(a). At sentencing, the district court ordered defendant to pay restitution to a rental car company whose car had been damaged during his alien smuggling offense. The Ninth Circuit held that restitution can be imposed as a condition of supervised release. The court rejected defendant’s argument that the Supreme Court in Paroline v. U.S., 134 S. Ct. 1710 (2014), held that restitution is a form of punishment that cannot be imposed as a supervised release condition. U.S. v. Alvarez, __ F.3d __ (9th Cir. Sept. 1, 2016) No. 14-50506.
2nd Circuit says court properly did not include interest in restitution order. (610) Defendants were convicted of wire fraud charges based on their involvement in a Ponzi scheme and a related fraudulent real estate scheme. The Second Circuit rejected one defendant’s argument that the district court improperly included interest in the restitution calculation with respect to the real estate scheme because the mortgage payments they made during the course of the scheme largely applied (under the terms of the mortgage) to interest rather than the principal. The district court did not include interest in its restitution calculation. Any interest previously paid by the defendants was charged by the victim-lenders while the scheme was ongoing – not by the district court in the restitution order. U.S. v. Rivernider, __ F.3d __ (2d Cir. July 7, 2016) No. 14-4865.
2nd Circuit affirms restitution of unpaid principal to downstream purchasers of fraudulent loans. (610) Defendants were convicted of wire fraud charges based on their involvement in a Ponzi scheme and a related fraudulent real estate scheme. They challenged for the first time on appeal a restitution award, arguing that the calculation for the real estate scheme did not reflect the actual losses because some of the mortgage loans involved in the scheme were sold prior to foreclosure at an unknown price. In calculating losses to downstream purchasers of the fraudulent mortgage loans, the district court relied on the unpaid principal rather than the amount downstream lenders actually paid for the mortgage loan. The Second Circuit, while “sympathetic” to defendants’ argument, found that any error was not “clear or obvious.” The argument required a complex understanding of the mortgage sales market as it existed from 2006 to 2008. Nothing in the record permitted the panel to assess the likelihood that all or any of the loans would have been sold at a discount, at face value, or at a premium. The panel could not “fault the district court for failure to consider those speculative possibilities sua sponte.” U.S. v. Rivernider, __ F.3d __ (2d Cir. July 7, 2016) No. 14-4865.
9th Circuit upholds restitution to rental car company as victim of alien smuggling. (610) Border Patrol agents observed defendant smuggling aliens and deployed a spike strip to stop the rental car that he was driving. When defendant rolled over the spike strip, he was unable to stop his car and crashed it. At defendant’s sentencing for alien smuggling, in violation of 8 U.S.C. §1324(a)(1), the district court ordered him to pay restitution to the rental car company. The Ninth Circuit agreed that the rental car company was a victim of the alien smuggling offense, and defendant could be ordered to pay restitution. U.S. v. Alvarez, __ F.3d __ (9th Cir. Sept. 1, 2016) No. 14-50506.
9th Circuit says government did not breach plea agreement by seeking restitution. (610)(790) Defendant pleaded guilty to alien smuggling pursuant to a plea agreement. The plea agreement did not specifically warn that defendant might have to pay restitution, but it did state that defendant would not attempt to reduce any term of supervised release until he had paid any restitution ordered and that he would not attempt to collaterally attack a restitution order. At a hearing, defendant acknowledged that he had to pay restitution. The Ninth Circuit held that the government did not breach the plea agreement by arguing for restitution. U.S. v. Alvarez, __ F.3d __ (9th Cir. Sept. 1, 2016) No. 14-50506.
9th Circuit finds failure to advise of restitution harmless. (610) At defendant’s change-of-plea colloquy, the district court did not inform defendant that he could be subject to restitution. The Ninth Circuit found that the district court committed error, but held that it was harmless because the district court advised defendant that he could receive a fine in excess of the amount of restitution imposed. The court of appeals noted that the district court acknowledged its mistake at sentencing and offered defendant the opportunity to withdraw his plea. U.S. v. Alvarez, __ F.3d __ (9th Cir. Sept. 1, 2016) No. 14-50506.
6th Circuit says EPA was restitution victim despite lack of possessory interest in property. (610) Defendant’s salvage company knowingly failed to comply with federal standards for removing asbestos. The EPA eventually cleaned up the site at a cost of over $16 million. Defendant pled guilty to conspiring to violate the Clean Air Act, 18 U.S.C. §371, and challenged the district court’s finding that restitution was mandatory under the MVRA, 18 U.S.C. §3663A(c), which requires restitution when a defendant is convicted of an offense against property. Defendant argued that the EPA was not a victim because it did not have a possessory interest in the asbestos-contaminated land. The Sixth Circuit disagreed, holding that a government agency can be a victim regardless of whether it has a possessory interest in the affected property, as long as the offense was a qualifying “offense against property” and the EPA was an identifiable victim of that offense. U.S. v. Sawyer, __ F.3d __ (6th Cir. June 3, 2016) No. 15-5181.
6th Circuit finds EPA’s cleanup costs were caused by defendant’s offenses. (610) Defendant’s salvage company knowingly failed to comply with federal standards for removing asbestos. The EPA eventually intervened and cleaned up the site at a cost of over $16 million. Defendant pled guilty to conspiring to violate the Clean Air Act, 18 U.S.C. section 371. The district court ordered defendant and his co-defendants, jointly and severally, to pay restitution of $10,388.57, the total cost of the EPA’s cleanup less indirect costs. Defendant argued that the government failed to establish by a preponderance of the evidence that all of the EPA’s losses were directly and proximately caused by his offense of conviction. The Sixth Circuit disagreed. The district court did not err making the defendants jointly and severally liable. The government presented a spreadsheet, known as the SCORPIUS report, showing the costs the EPA paid to contractors for the bulk of the cleanup, and an on-site supervisor testified at great length about the report. Given the ample reliable evidence, the district court did not abuse its discretion in awarding the government all of its claimed costs minus the $300,000 spent cleaning up other hazardous materials on the site. U.S. v. Sawyer, __ F.3d __ (6th Cir. June 3, 2016) No. 15-5181.
6th Circuit holds defendant had sufficient notice of restitution issues before sentencing. (610)(761) In ordering defendant to pay $10,388.57 restitution to the EPA, the district court relied on a government spreadsheet, known as a SCORPIUS report, which itemized the costs the EPA paid to contractors for the bulk of the asbestos cleanup. The Sixth Circuit rejected defendant’s argument that the government’s disclosure of the SCORPIUS report about three weeks before sentencing was too late to provide him with adequate notice and opportunity to respond. Defendant knew that restitution would be a contested issue from the outset of the case. He filed a reply five days before the hearing, addressing at some length the invoice submitted by the government. At the hearing, defendant and his co-defendant had the opportunity to present their own witnesses and to cross-examine the government witnesses. Defendant never asked the government for additional details or to provide other documents or to interview witnesses, and never sought intervention by the court. U.S. v. Sawyer, __ F.3d __ (6th Cir. June 3, 2016) No. 15-5181.
9th Circuit reverses restitution for employer’s attorneys’ fees during investigation. (610) Defendant was convicted of breaching the computer of a former employer in order to obtain proprietary information. At sentencing, the district court ordered defendant to pay $827,983 in restitution, based in part on attorney’s fees the former employer incurred during defendant’s investigation and prosecution. The Ninth Circuit reversed, holding that this was an abuse of discretion. Although restitution under the Mandatory Victims Restitution Act, 18 U.S.C. §3663A, is not limited to actual loss, the attorney’s fees were not a direct and foreseeable result of the offenses of conviction. Rather, they may have resulted from a duplication of tasks by the attorneys and the employer. U.S. v. Nosal, __ F.3d __ (9th Cir. July 5, 2016) No. 14-10037.
9th Circuit finds adequate evidence to support restitution order. (610) Defendant participated in a mortgage fraud scheme. At sentencing, the district court calculated the loss caused by defendant’s offense as the amount of the mortgage loan, less whatever was recovered in the property’s sale, or the value of the property at sentencing, if there had been no sale. Using that method, the court ordered defendant to pay $2.2 million in restitution. The Ninth Circuit held that by providing the district court with public records detailing the difference between the properties’ loan amounts and value recovered through foreclosure, the government provided adequate evidence of the current value of the properties. U.S. v. Beecroft, __ F.3d __ (9th Cir. June 13, 2016) No. 12-10175.
9th Circuit says restitution for mortgage fraud does not violate Eighth Amendment. (140)(610) Defendant participated in a mortgage fraud scheme. The presentence report calculated the loss caused by defendant’s offenses at $52 million. At sentencing, the district court imposed $2.2 million in restitution because that represented the losses proven at trial. The Ninth Circuit held that requiring defendant to repay the amount of loss she caused the victims of her offense cannot be grossly disproportionate, in violation of the Eighth Amendment. U.S. v. Beecroft, __ F.3d __ (9th Cir. June 13, 2016) No. 12-10175.
9th Circuit finds restitution schedule subject to appeal even though court could change it. (610)(850) Defendant pleaded guilty to wire fraud and other offenses. Initially, he was ordered to pay 10 percent of his gross monthly income in restitution, but he missed those payments, and the probation office initiated revocation proceedings. After a hearing, the district court set defendant’s restitution obligation at 8 percent per month of his gross monthly income. The Ninth Circuit held that the district court’s judgment was final for purposes of appeal even though the court could adjust the restitution schedule. U.S. v. Inouye, __ F.3d __ (9th Cir. May 10, 2016) No. 14-10510.
9th Circuit upholds restitution schedule. (610) After pleading guilty to wire fraud, the defendant was ordered to pay 10 percent of his gross monthly income in restitution. When he was unable to make the requisite payments, the district court reduced the obligation to 8 percent of his gross monthly income. Defendant objected on the ground that he could not pay 8 percent because he was unemployed. The Ninth Circuit found no legal or factual error in the district court’s restitution schedule. U.S. v. Inouye, __ F.3d __ (9th Cir. May 10, 2016) No. 14-10510.
Supreme Court to decide if notice of appeal preserves challenge to later-issued restitution order. (610)(850) Defendant was convicted of possessing an image of a minor engaged in sexually explicit conduct. At sentencing, the district court imposed a 72-month sentence, but deferred determination of the amount of restitution. The next day, the court filed its judgment, and defendant filed a timely notice of appeal of that judgment. The district court did not order restitution until about 90 days later. On appeal, defendant challenged his restitution order. The Supreme Court granted certiorari to decide whether a notice of appeal from a sentencing judgment is effective to challenge the validity of a later-issued restitution award. Manrique v. U.S., __ U.S. __, 136 S. Ct. __ (April 25, 2016) (granting certiorari).
5th Circuit says fraudulent hospitals were entitled to credit for fair market value of services rendered to victim patients. (219)(610) Defendant was a licensed physician who owned a number of Texas hospitals, each of which was an authorized Medicare and Medicaid provider. Following an investigation into billing practices at several of his hospitals, he was convicted of health care fraud and related counts. The district court calculated the total loss at $599,128.02, the aggregate amount that insurance companies reimbursed his hospitals. Defendant argued that the court erred in refusing to credit him for the fair market value of the services that his hospitals rendered to patients. The Fifth Circuit agreed. The amount of loss must account for “the fair market value of the … services rendered … to the victim before the offense was detected.” Note 3(E)(i) to §2B1.1. Medicare was the victim of defendant’s fraud. Medicare receives “value” under Note 3(E)(i)) when its beneficiaries receive legitimate health care services for which Medicare would pay but for a fraud. Defendant established that his hospitals rendered legitimate services to patients, and that Medicare would have paid substantial sums for those services had he not fraudulently billed them. The court made the same error in calculating restitution under the MVRA. U.S. v. Mahmood, __ F.3d __ (5th Cir. Apr. 14, 2016) No. 15-40521.
6th Circuit holds that restitution was based on clearly erroneous findings. (610) Defendant, a doctor, was convicted of conspiracy to commit healthcare fraud and related charges. The district court ordered restitution of $1,752,957, which was based on 50 percent of the value of the medication defendant billed through a co-conspirator’s pharmacy. Defendant argued that the evidence supported a finding that only 20% of the prescriptions written by defendant were illegitimate. The Sixth Circuit held that the restitution order was based on clearly erroneous factual findings, and reversed. Testimony from Shah, the manager of the pharmacy, supported defendant’s argument that only 20 percent of defendant’s total number of prescriptions was illegitimate. Moreover, though the government’s loss calculation was based on the conspiracy beginning in 2009, witnesses testified that defendant’s participation did not begin until sometime in 2010. U.S. v. Fowler, __ F.3d __ (6th Cir. Apr. 7, 2016) No. 14-2412.
2nd Circuit says judgment was “final” despite undetermined amount of restitution. (610)(850) Defendant pled guilty without a plea agreement to sexual exploitation of a minor and child pornography. The district court sentenced him to 25 years in prison and lifetime supervised release. The court ordered restitution but deferred setting the amount “for up to 90 days,” and no determination was ever made. Defendant filed a timely notice of appeal, and the Second Circuit ruled that the judgment was “final” for purposes of appeal 28 U.S.C. §1291, despite the undetermined amount of restitution Although the Supreme Court declined to answer this question in Dolan v. U.S., 560 U.S. 605 (2010), the Court noted in dicta that “strong arguments favor the appealability of” such judgments. Following Dolan, the Ninth and Eleventh Circuits have held that a judgment imposing incarceration and restitution, but not specifying the amount of restitution, is “final” for purposes of §1291. Dicta in Second Circuit cases also suggest that such judgments are final. U.S. v. Tulsiram, __ F.3d __ (2d Cir. Mar. 7, 2016) No. 14-2483-cr.
2nd Circuit holds that failure to advise defendant that offense required restitution was not plain error. (610) (790) Defendant argued for the first time on appeal that the district court violated Rule 11(b)(1)(K) by failing to inform him that his offenses required the imposition of restitution. The Second Circuit found no plain error. Although the district court erred in failing to advise defendant about restitution, defendant could not show that he would not have pleaded guilty but for the Rule 11 violation. First, the so-called Pimentel letter provided by the government to defendant warned defendant before he entered his plea that the court was required to order restitution. Second, both the Pimentel letter and the plea colloquy instructed defendant that he faced a potential fine of $1 million, far more than what he could reasonably have expected to pay in restitution. The government and the district court also informed defendant that the crimes to which he pleaded guilty carried a maximum sentence of ninety years’ imprisonment. Finally, the District Court reminded defendant that the indictment contained a forfeiture count. It was unlikely that defendant was willing to face these stiff punishments by pleading guilty, but not the mere possibility of paying restitution. U.S. v. Tulsiram, __ F.3d __ (2d Cir. Mar. 7, 2016) No. 14-2483-cr.
8th Circuit holds that corporations are “persons” who can receive restitution under MVRA. (610) Defendant burglarized various drug stores where he and others stole pharmaceutical products and cash from safes, registers, and ATMs. The district court ordered him to pay $272,561 in restitution. Defendant did not dispute that corporations were harmed by his conduct, but argued that corporations were not victims under the Mandatory Victims Restitution Act (MVRA) because they were not “persons” within the meaning of the statute. The Eighth Circuit disagreed, holding that the term “persons” in the MVRA includes corporations. Although “person” is not defined in the MVRA, the Dictionary Act defines “person” to include corporations “unless the context indicates otherwise.” 1 U.S.C. §1. The context indicated that corporations were eligible to be considered victims within the meaning of the MVRA. Section 3663A(c)(1)(A)(ii) extends the MVRA to crimes such as bank fraud under 18 U.S.C. §1344, which covers defrauding “a financial institution.” Such an inclusion would make no sense if the MVRA were intended to exclude corporations from its definition of victim. U.S. v. Benedict, __ F.3d __ (8th Cir. Mar. 2, 2016) No. 14-3412.
8th Circuit includes in restitution money taken from store safes. (610) Defendant burglarized various drug stores in Minnesota and Iowa where he and others stole pharmaceutical products and cash from safes, registers, and ATMs. Defendant argued that the district court erred in ordering $53,729 in restitution for money taken from safes and cash registers during the burglaries, as opposed to money taken from ATMs. He claimed that these sums represented money taken during the commission of state law crimes for which restitution was not appropriate. The Eighth Circuit disagreed. First, defendant’s argument that no “federally charged conspiracy existed here to steal the store’s own property and money” was contradicted by the record. The indictment specifically charged the taking of money from Walgreens safes and transporting it from Iowa to Minnesota. Moreover, even if the charged conspiracy had not included the stolen property charge, the restitution order was proper under the plain language of the MVRA. The stores were clearly victims, because they were harmed as “a result of the commission of an offense for which restitution may be ordered.” U.S. v. Benedict, __ F.3d __ (8th Cir. Mar. 2, 2016) No. 14-3412.
7th Circuit says victim letter did not adequately account for losses from trade secret theft. (610) Defendant used his position as a quantitative finance analyst with corporations to secretly download proprietary information which he used to trade stock for his personal benefit. He pled guilty to unlawful possession and transmission of trade secrets. The parties agreed, and the district court found, that there was no actual monetary loss. Defendant challenged the court’s $750,000 restitution order, which was based on a letter from the general counsel of one of the victim corporations. The letter sought $759,649.55 in restitution, stating that this was what the company spent on computer forensic analysts and outside legal counsel to conduct an internal investigation after it discovered defendant had copied data. The Seventh Circuit reversed, noting that the letter did not explain how any attorney’s time was spent on the investigation, and provided no indication that the hours were reasonable. As to the forensic analysts, they analyzed data to determine what data was taken and where it was stored, but there was no showing that over 1,800 hours of work in a one-month period was reasonable. U.S. v. Yihao Pu, __ F.3d __ (7th Cir. Feb. 24, 2016) No. 15-1180.
5th Circuit vacates unpaid restitution due to delay between remand and resentencing. (120)(610) In 2003, defendant was sentenced to 46 months in prison and three years of supervised release for bank theft. In 2005, the Fifth Circuit vacated defendant’s sentence and remanded for resentencing. Due to a clerical oversight, defendant was never informed that his sentence was vacated. He completed his 46-month sentence and term of supervised release, and made payments of $9,517.35 in partial satisfaction of a restitution order. In 2014, defendant filed a motion to dismiss the indictment, but the district court rejected the motion, and reimposed the original sentence, with the practical effect that defendant remained responsible for the amount remaining on the restitution award. The Fifth Circuit vacated the unpaid portion of his restitution, finding the extraordinary eight year delay between the time the court vacated his sentence and the time the district court re-sentenced him violated his Sixth Amendment rights. In light of the extreme delay, defendant’s lack of fault for the delay, and the completion of most of his sentence, defendant was presumptively prejudiced. Judge Haynes dissented. U.S. v. Washington, __ F.3d __ (5th Cir. Feb. 1, 2016) No. 14-10623.
1st Circuit holds defendant waived challenge to calculation of restitution. (610)(855) Defendant’s PSR proposed a loss calculation and an award of restitution. Defendant objected to both in his sentencing memorandum. With respect to the restitution, he challenged both the method of calculating the amount, and the imposition of any amount in the absence of returned victim impact statements. At sentencing, the parties discussed the method of fixing the loss calculation. The court sided with defendant, and then directly asked defense counsel if there were “any other objections.” In response, counsel raised the same methodology objection concerning the loss calculation, concluding that “we believe that the restitution is that $2,370,263.70, his portion.” The court then confirmed with all present whether that calculation was correct. After all agreed, the court again asked if there were “any other objections.” “Not to this,” replied defense counsel. On appeal, defendant sought to revive his earlier argument that the absence of any returned victim impact statements precluded an award of any restitution. The First Circuit held that counsel’s discussion with the court either waived such an argument or, by itself, provided “a rational basis in the record” to support the restitution. U.S. v. Prieto, __ F.3d __ (1st Cir. Jan. 20, 2016) No. 14-1325.
2nd Circuit says MVRA authorized restitution for future lost income of murder victim. (610) Defendant, a member of the violent Bonanno crime family, pled guilty to racketeering conspiracy charges. The district court found defendant was responsible for the murder of Pistone, and ordered restitution of $112,324.30 for income lost between 1992 and 2013 by the murder victim. Defendant argued that the Mandatory Victims Restitution Act (MVRA) did not authorize the district court to order restitution for income that Pistone may have lost as a result of his death. He contended that §3663A(b)(2)(C), requiring reimbursement for lost income, was is ambiguous as to whether it includes “lost future income,” particularly in cases of deceased victims. The Second Circuit held, as a matter of first impression, that the MVRA’s lost income provision authorized the district court to order restitution for future income lost by the murder victim. To read the statute more narrowly, as defendant urged, would yield the perverse result that a defendant who successfully killed his victim would pay less restitution for lost income than a defendant whose victim survived the attack. U.S. v. Messina, __ F.3d __ (2d Cir. Nov. 12, 2015) No. 14-1219-cr.
9th Circuit upholds restitution award of attorneys’ fees to victim of fraud. (610) Defendant pleaded guilty to bank fraud. The company for which she worked incurred attorneys’ fees in investigating her fraud, during grand jury proceedings, and after indictment in continuing to investigate defendant’s fraudulent conduct. The Ninth Circuit held that 18 U.S.C. §3663A “manifestly covers” the entirety of the company’s attorneys’ fees, not just those incurred leading up to and during the grand jury proceedings. U.S. v. Eyraud, __ F.3d __ (9th Cir. Oct. 22, 2015) No. 14-50261.
9th Circuit upholds use of information not shown to defendant in imposing restitution. (610) After defendant was convicted of bank fraud, her employer sought restitution for attorneys’ fees it had incurred during the investigation of defendant’s embezzlement from the employer. The employer submitted summaries of the attorneys’ invoices, but declined to submit the actual bills on the ground that the bills revealed attorney-client information and work product. After reviewing the invoices, the district court asked to see the actual bills, and the employer submitted them only to the court. The court of appeals held that the district court had not violated defendant’s due process rights by not allowing defendant to seek the actual bills. U.S. v. Eyraud, __ F.3d __ (9th Cir. Oct. 22, 2015) No. 14-50261.
11th Circuit says court cannot eliminate restitution in a Rule 35(b) substantial assistance motion. (610)(711) Defendant pled guilty to fraud charges, in violation of 18 U.S.C. §1349. As part of his sentence, he was required to pay $4,405,305 restitution to his victims. While in prison, he assisted authorities in an unrelated case, and the government filed a Rule 35(b) motion to reduce his sentence. The district court granted the motion and reduced defendant’s term of incarceration from 97 to 42 months, and terminated defendant’s obligation to pay restitution. The Eleventh Circuit reversed the restitution order, holding that Rule 35(b) provided no legal authority to eliminate defendant’s restitution obligation. The Mandatory Victims Restitution Act makes restitution mandatory for certain crimes, like the fraud offense to which defendant pled guilty, “[n]otwithstanding any other provision of law.” 18 U.S.C. §3663A(a)(1). The district court could not reduce defendant’s restitution as a reward for his substantial assistance. U.S. v. Puentes, __ F.3d __ (11th Cir. Oct. 5, 2015) No. 14-13587.
11th Circuit bases restitution to successor lenders on amount they paid to acquire fraudulent mortgage. (610) Defendant was convicted of charges stemming from her involvement in a mortgage fraud scheme. She was ordered to pay a total of $963,400.47 to three banks under the Mandatory Victims Restitution Act of 1996, 18 U.S.C. §3663A (MVRA). The three identified banks were not the original lenders, but were successor lenders who subsequently purchased the fraudulently procured mortgages and owned them when the properties were sold in short sales. The district court awarded each victim bank an amount totaling the difference between the outstanding principal balance of the mortgages they owned and the amount the successor lenders recouped from the short sales. The Eleventh Circuit held that the successor lenders were victims, but found that the court clearly erred in its determination of the amount of loss. Restitution to a successor lender must typically equal the sum that lender paid to acquire the mortgage less the principal payments it received and the amount it recouped in the short sale. While it might be difficult to precisely identity the proceeds a lender received for a specific mortgage loan, courts cannot simply presume that the successor lenders paid the outstanding principal balance to acquire the mortgages. U.S. v. Martin, __ F.3d __ (11th Cir. Sept. 30, 2015) No. 14-11019.
11th Circuit reverses restitution for loss not caused by offense of conviction. (610) Defendant was convicted of submitting false claims and attempted tax evasion. The district court ordered him to pay restitution to the IRS of $296,246. In defendant’s 2007 tax return, he claimed that this amount had been withheld for income taxes he would owe for that year. The Eleventh Circuit reversed. Under 18 U.S.C. §§3663 and 3663A, a district court is only authorized to order restitution in the amount of the actual losses the defendant caused in committing a Title 18 offense. After the IRS discovered the falsity of defendant’s 2007 return, it re-imposed the tax liens associated with his deficiencies for 2001–2003, thus limiting the losses caused as a result of defendant’s false filings for 2005–2007 to $123,495.18, the amount of the refund check defendant fraudulently drew against IRS’s accounts. U.S. v. Hesser, __ F.3d __ (11th Cir. Sept. 8, 2015) No. 13-11712.
8th Circuit says restitution is not criminal punishment subject to Apprendi requirements. (610) Defendant was convicted of abusive sexual contact of a child under 12 years of age. The district court imposed restitution of $14,967.47 for the cost of the victim ‘s health care. Defendant argued that restitution was criminal punishment beyond the statutory maximum, and therefore had to be proved to a jury under Apprendi v. New Jersey, 530 U.S. 466 (2000). The Eighth Circuit noted that it has repeatedly rejected this argument. Apprendi does not prohibit judicial restitution fact-finding because “it is essentially a civil remedy created by Congress and incorporated into criminal proceedings for reasons of economy and practicality.” See U.S. v. Thomas, 422 F.3d 665 (8th Cir. 2005), citing U.S. v. Carruth, 418 F.3d 900 (8th Cir. 2005). U.S. v. Thunderhawk, __ F.3d __ (8th Cir. Aug. 27, 2015), as amended Sept. 15, 2015, No. 14-3136.
6th Circuit upholds ordering defendant to pay unpaid taxes as condition of supervised release. (580)(610) Defendant, the former mayor of Detroit, was convicted of bribery, extortion, fraud, RICO conspiracy, and tax evasion. On appeal, he argued that court erred in ordering him to pay $195,403.61 as restitution to the IRS for unpaid taxes. The federal restitution statutes do not authorize restitution for tax crimes under Title 26. Nonetheless, the Sixth Circuit held that the district court properly ordered restitution to the IRS as a condition of supervised release. The law gives courts wide discretion in ordering restitution as a condition of supervised release. The supervised release statute, 18 U.S.C. § 3583(d), together with the probation statute, 18 U.S.C. § 3563, “unambiguously authorize[] federal courts to order restitution as a condition of supervised release for any criminal offense, including one under Title 26, for which supervised release is properly imposed.” U.S. v. Kilpatrick, __ F.3d __ (6th Cir. Aug. 14, 2015) No. 13-2500.
6th Circuit says court improperly used defendant’s gain, rather than victim’s loss, as restitution figure. (610) Defendant, the former mayor of Detroit, was convicted of bribery, extortion, fraud, RICO conspiracy, and tax evasion. On appeal, he argued that the district court incorrectly calculated restitution to the Detroit Water & Sewerage Department (DWSD) based on his gain rather than the DWSD’s loss. The Sixth Circuit agreed and reversed. Restitution is intended to compensate victims only for losses caused by the conduct underlying the offense of conviction. As such, a defendant’s gain was not an appropriate measure of the victim’s actual loss in MVRA calculations. Here, the court ordered defendant to pay restitution to the DWSD of $4,584,423. This figure originated from the probation department’s calculation of defendant’s profits from the contracts that underlay the RICO and extortion counts. Although the government contended that this figure was a reasonable approximation, and that the “actual loss” would be “inherently difficult to precisely quantify,” the panel rejected this argument. A district court may not use the defendant’s gain to approximate the victim’s loss unless the government establishes such a correlation that the defendant’s gain can act as a measure of, not a substitute for, the victim’s loss. U.S. v. Kilpatrick, __ F.3d __ (6th Cir. Aug. 14, 2015) No. 13-2500.
7th Circuit reverses restitution to banks for four uncharged robberies. (610) Defendant pled guilty to committing three bank robberies, and stipulated to committing another four. He argued that the district court lacked authority to order him to pay restitution to the banks in the uncharged robberies because those banks were not victims of the offenses of conviction. The Seventh Circuit agreed. The order of restitution for the uncharged robberies was not sustainable even as a special condition of supervised release. Restitution as a condition of supervised release is governed by 18 U.S.C. § 3583(d), which authorizes sentencing judges to impose conditions listed as discretionary conditions of probation in 18 U.S.C. § 3563(b)(2). Section 3563(b)(2) authorizes restitution to the extent permitted by 18 U.S.C. § 3556, which, in turn, directs sentencing courts to follow the mandates of the statutes governing mandatory and discretionary restitution, 18 U.S.C. § § 3663, 3663A. The restitution statutes authorize restitution only for victims of an offense of conviction unless the defendant consents to pay restitution to other persons as part of a plea agreement, which defendant did not do. U.S. v. Kieffer, __ F.3d __ (7th Cir. July 27, 2015) No. 14-2652.
8th Circuit reverses “financial obligation” as improper restitution rather than fine. (610)(630) Defendant pled guilty to killing a bald eagle and a rough-legged hawk. As part of his sentence, the district court imposed a $6500 “financial obligation.” It was undisputed that the district court had authority to issue a fine; however, the court did not have the authority to order restitution for defendant’s offenses. See 18 U.S.C. §§ 3663 and 3663A. The Eighth Circuit concluded that the “financial obligation,” while characterized as a fine in the court’s written judgment, was really intended as restitution, and thus the court lacked authority to impose it. A close examination of the sentencing transcript showed that the court intended to order restitution, not a fine. For instance, the government specifically requested during the hearing that the court impose “some restitution in this case.” Shortly thereafter, when the court announced defendant’s sentence, the court specified that the “financial obligation” was “[i]n lieu of a fine.” And, although the court later referred to the financial obligation in passing as a “fine,” the court further characterized the financial obligation as an “assessment for the loss of the eagle and the hawk.” U.S. v. Bertucci, __ F.3d __ (8th Cir. July 23, 2015) No. 14-3570.
10th Circuit reverses restitution of unemployment benefits unrelated to defendant’s offense. (610) Defendant was convicted of a fraud, money laundering, and tax fraud counts based on his scheme to divert federal grant money intended for the an Utah Indian tribe for his own personal use. The Tenth Circuit found that the court erred in including in its restitution order $8,339.98 in unemployment benefits the tribe paid into a state unemployment fund for benefits defendant received from the state of California after defendant’s termination from a subsequent, unrelated job in California. There was no evidence that this loss was caused by the offense of conviction. Defendant began working for an unrelated employer in California after he was terminated from employment with the tribe. A few months later, his California employer also terminated him. The California employer denied that his termination had anything to do with his background, including his fraudulent conduct during his previous employment. Following this second, unrelated termination, defendant sought and obtained unemployment benefits from California, which billed the Utah Department of Workforce Services through an interstate wage claim. The Utah agency then billed the tribe because defendant had worked there for an extended period. The government presented no evidence defendant’s crimes of conviction were the proximate cause of the tribe’s later payment of unemployment benefits from the later California termination. U.S. v. Zander, __ F.3d __ (10th Cir. July 24, 2015) No. 13-4174.
D.C. Circuit relies on unobjected-to restitution amounts. (610) Defendants participated in a massive drug organization that sold crack and other drugs, and committed numerous murders and other violent crimes. The district court ordered defendants to pay funeral expenses to the mothers of several of their murder victims. For each of the defendants, the district court ordered restitution in the amount recommended by the PSR. Defendants did not object to the restitution orders in the district court. The D.C. Circuit found no plain error. Under Fed.R.Crim. Proc. 32(i)(3)(A), the sentencing court “may accept any undisputed portion of the presentence report as a finding of fact.” The defendants did not dispute the restitution amounts set forth in their PSRs. As a result, they could not show that the district court erred, let alone plainly erred, by ordering restitution in those amounts. U.S. v. Bostick, __ F.3d __ (D.C. Cir. June 26, 2015) No. 04-3074. XE “U.S. v. Bostick, __ F.3d __ (D.C. Cir. June 26, 2015) No. 04-3074.”
10th Circuit says loss to foreign nationals was salary defendant promised to pay less amount they received. (610) Defendant recruited foreign nationals to come to the United States for specialized nursing employment, required them to work as non-specialized laborers in nursing homes, retained a portion of their wages, and threatened them with deportation and financial ruin. He was convicted of mail fraud, visa fraud, forced labor, and money laundering. The court calculated the nurses’ loss for restitution purposes by identifying the salaries defendant promised to pay them, and subtracting the money they actually made from their employment during that period. Defendant argued that the nurses were only promised up to $72,000 a year, not guaranteed $72,000. He also argued that the court improperly assumed each of the 26 nurses would have worked for the full three years of their proposed employment. The Tenth Circuit found no abuse of discretion. The government demonstrated that defendant made affirmative representations that he would pay the nurses $72,000 per year for three years, and those representations, filed in the form of visa applications, provided clear and objective evidence of the promised value of the employment. U.S. v. Kalu, __ F.3d __ (10th Cir. June 29, 2015) No. 14-1068. XE “U.S. v. Kalu, __ F.3d __ (10th Cir. June 29, 2015) No. 14-1068.”
8th Circuit reverses for failure to reduce restitution by value of recovered firearms. (610) Defendant pleaded guilty to stealing 36 firearms from a federally licensed firearms dealer. The district court ordered restitution of $18,666.62 to be paid to two victims: $2500 to 417 Guns, the licensed dealer from which the firearms were stolen, and $16,166.62 to Gibson and Associates, the amount it paid to 417 Guns for its insured loss from the theft. At sentencing, the government advised that 18 firearms had been recovered, but the district court did not reduce the amount of restitution by the value of the recovered firearms. Eight of the recovered firearms were turned over to insurer Gibson and Associates, which then sold the firearms to 417 Guns for $2,025. An additional 10 firearms were recovered and were currently in police custody. The Eighth Circuit found plain error and remanded. The statute unambiguously provides that a restitution award must be reduced by “the value (as of the date the property is returned) of any part of the property that is returned.” 18 U.S.C. §3663A(b)(1)(B)(ii). Here, the MVRA victim was 417 Guns, not its insurer, Gibson and Associates. The reduction must be based on the fair market value of the recovered property to the victim, 417 Guns, not the value to its insurer, Gibson and Associates. The ten firearms recovered but still in police custody required further inquiry by the district court before a final order of restitution could be entered. U.S. v. Fonseca, __ F.3d __ (8th Cir. June 24, 2015) No. 14-2893.
10th Circuit says restitution for foreclosed property is reduced by amount of money victim received in selling it. (610) Defendants were convicted of wire fraud and money laundering. They argued that the court erred in calculating the loss for restitution purposes by failing to offset the fair market value of the collateral real estate at the date of foreclosure when the victim-lender took title and could have sold it for cash. The Tenth Circuit noted that the Supreme Court has rejected this methodology in Robers v. U.S., __ U.S. __, 134 S. Ct. 1854 (2014) (holding that restitution under the MVRA must be reduced by the amount of money the victim received in selling the collateral, not the value of the collateral when the victim received it”). U.S. v. Zar, __ F.3d __ (10th Cir. June 23, 2015) No. 13-1111.
11th Circuit reverses restitution order that did not take into account value of collateral to victims. (610) Defendants were involved in a long-running mortgage fraud scheme. At sentencing, the district court ordered restitution of $13,229,100, which reflected the face amount of all loans for the ten properties attributed to them. Unlike the court’s loss calculation, the court’s restitution computation did not reflect any credits against loss for the proceeds of properties that had been sold or for the current fair market value of properties not yet sold. Because the loss calculation for guidelines’ purposes did properly factor in those credits, that loss figure was only $7,454,210.74, which was about $6 million less than the amount of restitution imposed. The Eleventh Circuit found this was a “striking difference” that could “not to be justified by either the law or the facts of this case.” Because the restitution ordered by the court did not take into account the value of the collateral properties to the victims, it did not represent the actual loss to the victims, but instead improperly conferred a windfall on them. The panel vacated the restitution order and remanded. U.S. v. Cavallo, __ F.3d __ (11th Cir. June 22, 2015) No. 12-15660.
1st Circuit holds that government may be victim under MVRA. (610) Defendant and her sister each managed restaurants where undocumented immigrants were employed. She pled guilty to harboring illegal aliens, money laundering, and filing false employer’s quarterly tax returns with the IRS. The tax charge was based on defendant’s failure to include the cash compensation paid to the undocumented immigrants on the restaurants’ tax returns, which in turn resulted in an underpayment of federal employment taxes to the IRS. She challenged the district court’s order to pay restitution to the IRS, arguing that the United States was not a “victim” under the MVRA, 18 U.S.C. 3663A. The First Circuit disagreed, holding that the United States was eligible for be a victim under the MVRA. The context indicated unequivocally that the word “person,” as used in the MVRA, included the government. Moreover, the enforcement provision of the MVRA explicitly recognizes the government as a possible victim. See 18 U.S.C. §3664(i). U.S. v. Mei Juan Zhang, __ F.3d __ (1st Cir. June 15, 2015) No. 14-1382.
1st Circuit says restitution obligation to IRS could not be offset by forfeiture proceeds. (610) Defendant pled guilty to harboring of illegal aliens, money laundering, and filing false tax returns with the IRS. The basis of the last charge was defendants’ failure to include cash compensation paid to the undocumented immigrants on her restaurants’ tax returns, which in turn resulted in an underpayment of federal employment taxes to the IRS. The government seized $18,529.66 from two bank accounts related to the restaurant, and the Attorney General retained those funds as forfeiture proceeds. Defendant was also ordered to pay restitution of $54,288 to the IRS. The First Circuit held that defendant’s restitution obligation to the IRS could not be offset by the forfeiture proceeds from her restaurant. Although the Attorney General and the IRS are both part of the federal government, they are distinct entities. U.S. v. Joseph, 743 F.3d 1350 (11th Cir. 2014). Moreover, a restitution order is required “in addition to … any other penalty authorized by law,” such as an order of forfeiture under 18 U.S.C. §982. U.S. v. Mei Juan Zhang, __ F.3d __ (1st Cir. June 15, 2015) No. 14-1382.
10th Circuit remands to reconsider restitution to financial institutions not listed in indictment. (610) Defendant and others “skimmed” debit card account information from convenience store gas pumps and then used that account information to make cash withdrawals from ATMs. Defendant argued that the district court, in determining the amount of restitution owed under the MVRA, erroneously took into account losses incurred by 12 financial institutions, even though Count 1 of the indictment listed only five specific financial institutions that were targets of the conspiracy. The Tenth Circuit agreed that remand was necessary for the district court to reconsider the proper amount of restitution to be awarded under the MVRA. It was possible that defendant, in the course of the conspiracy, directly harmed other financial institutions in addition to the five that were the specific targets of the conspiracy. However, neither the PSR nor the district court made any factual findings in this regard. U.S. v. Alisuretove, __ F.3d __ (10th Cir. June 8, 2015) No. 14-7050.
7th Circuit agrees that undercompensated employees were victims of defendant’s false statements to government. (610) Defendant ran a trucking business that contracted to perform hauling services on a government funded highway project. The contract required defendant to pay his truck drivers the federal prevailing wage of $35.45. He paid his drivers $15 an hour, but submitted weekly payroll certifications in which he falsely attested that he paid them $35.45 an hour. He was convicted of making false statements in submitting payroll reports on a federally funded highway improvement project. The district court ordered restitution to the truck drivers under 18 U.S.C. §3663(a)(1)(A). He argued that his employees did not constitute “victims,” because his misstatements did not directly or proximately deprive them of wages. The Seventh Circuit disagreed. The addendum to defendant’s agreement acknowledged the authority of both the federal government and the state department of transportation, upon learning of a subcontractor’s failure to pay its employees the federal prevailing wage, to intervene and divert project funds earmarked for defendant to his undercompensated employees. Defendant’s false payroll certifications deprived the government of an opportunity to invoke this diversion mechanism and make defendant’s undercompensated employees whole. U.S. v. Clark, __ F.3d __ (7th Cir. May 28, 2015) No. 14-1251.
7th Circuit rejects challenge to restitution order made over four years after sentencing. (115)(610)(850) In 2009, the district court ordered defendant to pay $900,936 in restitution to his fraud victim. While serving a term of supervised release, defendant filed a motion for early termination of supervision, but the district court denied defendant’s motion in view of his outstanding financial obligation. Defendant appealed, arguing that the district court had improperly calculated the restitution and forfeiture amounts. Without oral argument, the Seventh Circuit upheld the district court’s decision not to prematurely terminate defendant’s supervised release, noting that defendant’s challenge to the restitution and forfeiture amounts was untimely. While that appeal was pending, defendant then filed a motion to terminate the restitution and forfeiture order, again arguing that the district court incorrectly calculated the amounts he should pay. In light of the previous Seventh Circuit order, the district court denied defendant’s motion. The Seventh Circuit affirmed, finding that the district court lacked jurisdiction to entertain defendant’s motion. Rule 35, which governs motions to correct an allegedly clear error in a defendant’s sentence, must be filed within 14 days after sentencing. The four years defendant waited before acting rendered the district court powerless to hear his motion. U.S. v. Bania, __ F.3d __ (7th Cir. June 4, 2015) No. 14-2317.
8th Circuit approves restitution of $3,000 to each child porn victim. (310)(610) Defendant pled guilty to one count of possession of child pornography after having been previously sentenced for possession of child pornography in 2001. In addition to imprisonment and supervised release, the district court ordered defendant to pay $9,000 in restitution. The Eighth Circuit affirmed. Under 18 U.S.C. §2259(a), a district court must order restitution for convictions that involve sexual exploitation of children and child pornography. Paroline v. U.S., __ U.S. __, 134 S. Ct. 1710 (2014). The district court found that the government met its burden to prove an appropriate and reasonable amount of restitution based on the victim impact statements, the restitution ordered in prior cases, the number of potential defendants involved, and defendant’s relative culpability. The district court cited the appropriate law, considered appropriate factors, and properly ordered restitution in the amount of $3,000 per victim. U.S. v. Beckmann, __ F.3d __ (8th Cir. May 15, 2015) No. 14-3086.
2nd Circuit upholds restitution despite acquittal on substantive counts where defendant was convicted of conspiracy. (610) Defendant and his partner in an investment firm were convicted of multiple counts of securities fraud and related counts based on their misuse of investor funds. In one instance, the firm raised $3.2 million that investors were told would be invested in a company called Firstline Security. During the course of raising these funds, defendants learned that Firstline was threatened with and then had filed for bankruptcy, but failed to disclose this information to existing and new investors. Defendant argued for the first time on appeal that the district court improperly included in his restitution order $600,000 attributable to sales of Firstline following its bankruptcy since he was acquitted of counts relating to these sales. The Second Circuit upheld the restitution order, noting that defendant was also convicted of conspiracy, which encompassed fraud related to the post-bankruptcy Firstline sales, and of mail fraud, which pertained to a particular Firstline post-bankruptcy memorandum. Defendant’s acquittal on the substantive mail fraud charges was not inconsistent with a conclusion that he entered into a conspiracy involving these sales. U.S. v. McGinn, __ F.3d __ (2d Cir. May 22, 2015) No. 13-3164-cr(L).
2nd Circuit says restitution can only be offset by receiver’s actual distribution of funds to victims. (610) Defendant and his partner in an investment firm were convicted of multiple counts of securities fraud and related counts. At sentencing, the district court found defendants jointly and severally liable for $5,748,722 in restitution to their 841 victims. The court further stated that any restitution “collected thus far by the receiver … may be deducted from the total restitution amount and may be distributed to the victims by the receiver … as such assets are available for distribution.” The government moved to clarify the restitution order, arguing that it could be understood to provide that the restitution could be offset by the amount of money collected by the court-appointed receiver in the separate SEC action, rather than the amount that the receiver actually distributed to these victims. This reading would violate the MVRA. The Second Circuit remanded to the district court for the limited purpose of correcting the judgments to clarify that only the receiver’s actual distribution of funds to the victims could offset the defendants’ restitution obligetions. U.S. v. McGinn, __ F.3d __ (2d Cir. May 22, 2015) No. 13-3164-cr(L).
3rd Circuit says Paroline did not affect joint and several liabilities in fraud case. (610) Defendant was convicted of Medicare fraud based on a scheme to submit reimbursement claims for patients who did not qualify for hospice care. He argued that the district court erred by holding him jointly and severally liable for the full amount of loss rather than for the portion he caused. The Third Circuit found no error, noting that the language of the statute authorizing restitution, 18 U.S.C. §3664(h), explicitly provides for joint and several liability in the full amount. The Supreme Court’s recent decision in Paroline v. U.S., __ U.S. __, 134 S. Ct. 1710 (2014) did not negate this. Paroline interpreted 18 U.S.C. §2259, a mandatory restitution statute specific to sexual exploitation and abuse of children. The present case, by contrast, involved money obtained by fraud. Paroline did not alter the long-standing availability of joint-and-several liability in circumstances such as this. U.S. v. Kolodesh, __ F.3d __ (3d Cir. May 28, 2015) No. 14-2904.
9th Circuit rejects restitution to Canada in fraud prosecution. (610) Defendant pleaded guilty to fraud offenses. Before sentencing, Canada’s Department of Justice asserted in the district court that Canada was a victim of defendant’s offenses and sought restitution under the Mandatory Victims Restitution Act, 18 U.S.C. §3663A. The district court denied restitution, and Canada filed a petition for mandamus under the Crime Victims’ Rights Act, 18 U.S.C. §3771. Judges Goodwin, Farris, and Friedland (per curiam) held that Canada’s claim for restitution was based on events insufficiently related to the scheme in the indictment and the facts supporting defendant’s guilty plea. The court found that defendant pleaded guilty to a scheme revolving around false generation and use of U.S. biodiesel credits, and Canada sought restitution for a scheme involving false subsidies to a company that was supposed to produce biodiesel in Canada. The court found that the two fraudulent schemes “proceeded on parallel tracks” but “were not causally linked.” In re Her Majesty the Queen in Right of Canada, __ F.3d __ (9th Cir. May 12, 2015) No. 15-71346.
10th Circuit reverses improperly calculated restitution in mortgage fraud case. (610) Defendant participated in three mortgage-fraud schemes. The district court calculated loss for restitution purposes using the same method it used in calculating loss under §2B1.1, by adding the unpaid principal balances on each loan and subtracting the amounts recovered from sales of the properties securing the loans. Defendant argued that this methodology was incorrect for downstream lenders, i.e., lenders who purchased the mortgage loan from the original lender or an earlier downstream lender. He noted that downstream noteholders could have paid less than the unpaid balance to acquire the notes. The Tenth Circuit agreed with defendant. Although the total-loss calculation under §2B1.1 does not depend on which lender in the chain of title of a mortgage note suffered what loss, that information was necessary to avoid wind-falls in awarding restitution. The panel remanded with instructions to redetermine the amount of actual loss to downstream-noteholder victims. U.S. v. Howard, __ F.3d __ (10th Cir. Apr. 28, 2015) No. 14-1075.
10th Circuit rejects use of retail price for restitution where no evidence that victim lost sales. (610) Defendant and three co-conspirators fraudulently obtained cellular phones from Sprint stores in Arizona, California, and New Mexico, and then resold them. A Sprint officer submitted to the probation office an unsworn letter purporting to list the amount of loss Sprint sustained as a result of defendant’s fraud. The district court ordered defendant to pay Sprint $48,715.59 in restitution pursuant to the Mandatory Victims Restitution Act, 18 U.S.C. §3663A. The court calculated this amount based on the “retail unsubsidized price” of the 86 cell phones defendant fraudulently procured, plus Sprint’s shipping and investigative costs. The Tenth Circuit reversed, agreeing with defendant that the government’s proof of loss was insufficient. The district court found that if defendant had not fraudulently obtained the phones, Sprint would have had them available to sell. However, there was no evidence in the record that defendant’s theft caused Sprint to lose any retail sales. Where supported by the evidence, a district court in the case of retail theft might rely on lost sales and accompanying profits to calculate the amount of the victim’s actual loss under the MVRA. However, the government must present more than a claim that but for a defendant’s theft, the victim may have made additional sales.U.S. v. Ferdman, __ F.3d __ (10th Cir. Feb. 13, 2015) No. 13-2196.
10th Circuit rejects restitution for unverified estimate of victim’s expenses. (610) Defendant and three co-conspirators fraudulently obtained cellular phones from Sprint stores in Arizona, California, and New Mexico. A Sprint officer submitted to the probation office an unsworn letter purporting to list the losses Sprint sustained as a result of the fraud. The letter also contained an estimate of the expenses Sprint incurred as a result of defendant’s crimes. The district court included these estimated expenses in its restitution order. The Tenth Circuit reversed, finding there was insufficient evidence of Sprint’s expenses for restitution purposes. All that was presented to the court were estimates supported by the unverified signature of a Sprint officer. The record contained no actual proof, not even an affidavit, of what those expenses were. Even if those expenses appeared reasonable, that was not enough to satisfy the evidentiary dictates of the MVRA. U.S. v. Ferdman, __ F.3d __ (10th Cir. Feb. 13, 2015) No. 13-2196.
11th Circuit declines to reduce restitution for legitimate medical services allegedly provided. (610) Defendant, an attending physician at a health care center, participated in a complex scheme of Medicare fraud. He challenged the court’s order that he pay restitution of over $9 million, which represented the amount Medicare paid to the center during defendant’s involvement in the conspiracy, a period during which the center billed Medicare over $38 million. The Third Circuit affirmed. The district court was not required to offset the restitution amount by Medicare payments for legitimately rendered services because the district court determined that the pervasive absence of qualified patients or real treatment at the center. Because the district court found that the center did not render any proper treatment, defendant did not show any evidence that the services he allegedly provided could somehow offset his restitution amount. U.S. v. Moran, __ F.3d __ (11th Cir. Feb. 17, 2015) No. 12-16056.
10th Circuit vacates restitution order in child porn case based on Paroline. (610) Defendant was convicted of multiple child pornography charges. The district court ordered him to pay $583,955 in restitution to one of the victims depicted in the child porn he possessed and distributed. This amount was based on the full amount of the victim’s unpaid aggregate losses. The Tenth Circuit vacated the district court’s order and remanded for proceedings consistent with the Supreme Court’s recent decision in Paroline v. U.S., __ U.S. __, 134 S. Ct. 1710 (2014). Because of the “somewhat atypical causal process underlying the losses” in the child pornography context, the Supreme Court rejected the “traditional way to prove that one event was a factual cause of another.” Paroline held that a court should order restitution in an amount that comported with the defendant’s relative role in the causal process that underlay the victim’s general losses. The district court’s restitution order could not stand in light of Paroline. That order clearly held defendant liable for the “the conduct of thousands of geographically and temporally distant offenders acting independently, and with whom [defendant] had no contact,” in contravention of Paroline’s guidance. Although defendant distributed the images by placing them into a shared folder on a peer-to-peer network, the government did not show how many, if any, others had downloaded those images from him. U.S. v. Dunn, __ F.3d __ (10th Cir. Feb. 10, 2015) No. 13-4140.
11th Circuit upholds restitution based on reasonable estimate of loss. (610) Defendant participated in a scheme involving fraudulent tax refunds, which were deposited onto debit cards opened in the names of identity theft victims. He challenged on appeal a restitution order of $500,000, arguing that the government did not determine the amount of distributed refunds that were still recoverable from the debit card accounts. The Eleventh Circuit held that district court’s estimate was not clearly erroneous. The restitution amount was based on the difference between the total amount of refunds distributed during the course of the conspiracy ($838,000) and the total amount recoverable from the distributed refunds. The government argued that calculating the total amount recoverable from the distributed refunds would necessarily require an estimate, given the sheer number of debit card companies involved. It estimated that about one-third of the distributed tax refunds were recoverable. The one-third estimate was based on a representative sample of the debit card accounts as well as the testimony of a special agent at the IRS. It was not clear error to rely on the one-third estimate because there was evidence that it was a fair estimate, and the government reduced the total amount paid out by more than one-third, from $838,000 to $500,000. U.S. v. Baldwin, __ F.3d __ (11th Cir. Dec. 17, 2014) No. 13-12973.
Supreme Court defines extent of restitution when victim is fraudulently induced to make loan. (610) Under the Mandatory Victims Restitution Act, 18 U.S.C. § 3663A, when return of the property taken by the defendant’s conduct is impossible, impractical, or inadequate, a defendant must pay restitution in an amount equal to the value of the property lost, less the value of “any part of the property” that has been returned. The Supreme Court held that “any part of the property” is not returned when a victim takes title to collateral securing a loan that a defendant fraudulently obtained from the victim. In a unanimous decision written by Justice Breyer, the Court held that the phrase “any part of the property” refers only to the specific property lost by the victim, and no “part of the property” is returned to the victim until the collateral is sold and the victim receives money from the sale. Judge Sotomayor wrote a concurring opinion joined by Justice Ginsburg. Robers v. U.S., 134 S.Ct. 1854 (2014).
Supreme Court explains extent of restitution for child pornography victims. (310) Under 18 U.S.C. § 2259, a defendant convicted of possessing child pornography must pay restitution to identifiable victims of the offense. Defendant was convicted of possessing child pornography, including two images of a particular victim. At sentencing, the victims sought $3.5 million in restitution. The district court declined to order restitution, but the court of appeals held that the defendant was liable to pay restitution for the entire amount of the victim’s losses. Writing for the Supreme Court, Justice Kennedy, joined by four Justices, held that restitution may be ordered under § 2259 only if the defendant proximately caused the victim’s losses. The Court explained that a defendant should have to pay restitution only for the consequences of his own conduct, not the conduct of others. The Chief Justice dissented in an opinion joined by two other Justices; Justice Sotomayor also dissented. Paroline v. U.S., 134 S.Ct. 1710 (2014).
Supreme Court says restitution may be awarded more than 90 days after judgment. (610) Under 18 U.S.C. § 3664(d)(5) of the Mandatory Victims Restitution Act, a court must order restitution in certain cases, but “if the victim’s losses are not ascertainable by the date that is 10 days prior to sentencing,” the court “shall set a date for the final determination of the victim’s losses, not to exceed 90 days after sentencing.” Defendant pleaded guilty to assault resulting in serious bodily injury. At defendant’s sentencing, the district court found that defendant was required to pay restitution, but because the amount of restitution had not been determined the court did not enter a restitution order. More than 180 days later, the court held a hearing and imposed a restitution order. The Supreme Court held that a sentencing court that misses the 90-day deadline retains the power to order restitution, at least where, as here, that court made clear prior to the deadline’s expiration that it would order restitution, leaving open (for more than 90 days) only the amount. Justice Breyer delivered the Court’s opinion. The Chief Justice dissented in an opinion joined by Justices Stevens, Scalia, and Kennedy. Dolan v. U.S., 560 U.S. 605, 130 S.Ct. 2533 (2010).
Supreme Court holds that restitution under Victim and Witness Protection Act is limited to offense of conviction. (610) The Victim and Witness Protection Act of 1982 authorizes federal courts to sentence defendants convicted of certain offenses to make “restitution to any victim of such offense.” Defendant was charged with multiple counts of use of unauthorized credit cards; he pled guilty to one count in return for the government’s agreement to dismiss the other counts. The district judge ordered restitution of the entire amount lost due to defendant’s conduct, and defendant appealed on the grounds that restitution should be limited to losses suffered as a result of offenses of conviction. In an opinion by Justice Marshall, the Supreme Court agreed, stating that the plain language of the Act supported such a construction. Moreover, even if the statute were ambiguous, the Court noted that “longstanding principles of lenity” would demand resolution of the ambiguity in defendant’s favor. Justices White and Kennedy joined except as to the discussion of the lenity principle. Hughey v. U.S, 495 U.S. 411, 110 S.Ct. 1979 (1990).
Supreme Court holds restitution orders are “for the benefit of” the State and are therefore not dischargeable in bankruptcy. (610) Defendant pleaded guilty to larceny based on wrongful receipt of welfare benefits. She was placed on probation on condition that she make monthly restitution payments to the Connecticut Office of Adult probation. The probation office, under Connecticut law, would then forward the payments to the victim. Shortly thereafter, defendant filed bankruptcy, seeking to be discharged from the restitution obligation. In a 7-2 opinion written by Justice Powell, the Supreme Court held that restitution orders in criminal cases operate “for the benefit of” the State, and are not assessed “for . . . compensation” of the victim. Thus restitution is not dischargeable in bankruptcy. Justices Marshall and Stevens dissented. Kelly v. Robinson, 479 U.S. 36, 107 S.Ct. 353 (1986).
1st Circuit denies restitution offset for VA benefits defendant could have received. (610) In 2008, defendant, a Marine Corps veteran, submitted a fraudulent disability benefits application to the Veteran’s Administration. He had previously defrauded the VA by continuing to receive dependency benefits for a wife he had divorced in 2003. The court’s restitution order included both the disability payments and the dependency benefits defendant had improperly received. He challenged the restitution order, contending that he was entitled to an offset for benefits he could have received based on his 2006-2007 marriage to a second wife. However, he did not make a timely administrative claim for the second wife benefits, and chose only to assert entitlement during sentencing. The First Circuit ruled that defendant was not entitled to the offset because he did not apply for the benefits in a timely fashion. Defendant needed to submit evidence of his marital status within one year of the second marriage to qualify for the dependency benefits. Defendant failed to meet these procedural requirements, and thus had no entitlement to any benefit from the second marriage. U.S. v. Palmquist, 712 F.3d 640 (1st Cir. 2013).
1st Circuit upholds restitution to victims of child pornography. (610) Defendant was convicted of possessing and distributing child pornography. Two of the children depicted in images collected by defendant requested restitution. Each victim proffered psychological reports and other documentation in support of her claim for restitution. The claimed losses were non-pecuniary and, therefore, difficult to quantify. The district court awarded restitution of $10,000 to each claimant. Defendant argued that the government did not adequately show that his actions caused the victims’ losses. The First Circuit upheld the restitution order. The district court found that the harms suffered by the victims were the “proximate result” of the defendant’s actions. It concluded that although the defendant was “further down the food chain” than the victims’ initial abusers, his viewing and distribution of the images damaged the victims and caused them ongoing shame, humiliation, and feelings of helplessness. The record adequately supported these findings. U.S. v. Chiaradio, 684 F.3d 265 (1st Cir. July 11, 2012).
1st Circuit finds federal agencies were victims of tribal officer’s fraud. (610) Defendant, a former financial director of a tribal reservation, was convicted of fraud conspiracy charges in connection with extensive financial mismanagement of the reservation. Defendant challenged a $1.6 million restitution order, arguing that the victims were the tribal programs which did not have use of the funds. The federal agencies to whom defendant was required to make restitution were not “victims” of his conduct, he argued, because the federal government turned over the right to possess those funds when it transferred the funds to his tribe. The First Circuit found no error. If the federal agencies were harmed, it was not by losing possession of the funds, which were grants, but rather, by not having the funds go to the designated programs. Defendant could not show why that kind of frustrated expectation was not a cognizable harm under the MVRA. U.S. v. Newell, 658 F.3d 1 (1st Cir. 2011).
1st Circuit rules restitution did not violate Excessive Fines Clause. (610) Defendant, a former financial director of a tribal reservation, was convicted of fraud conspiracy charges in connection with extensive financial mismanagement of the reservation. He claimed that the $1.6 million restitution order was a violation of the Excessive Fines Clause of the Eighth Amendment because (a) the funds were spent on tribal government expenses; (b) defendant did not personally benefit from the funds in question; and (c) defendant did not have the resources to repay such an amount; and (d) the size of the order would prevent him from achieving any reasonable livelihood. The First Circuit rejected the argument. The circuits that have considered such challenges have held that where the restitution order reflects the amount of the victim’s loss, no constitutional violation has occurred. This is not surprising, since restitution is inherently proportional, since the point of restitution is to restore the victim to the his previous status. Here, the amount of restitution ordered was the sum of money that defendant was found to have misapplied or for which he submitted false claims. Even assuming the restitution orders may be challenged under the Excessive Fines Clause, the restitution ordered here would not violate defendant’s rights. U.S. v. Newell, 658 F.3d 1 (1st Cir. 2011).
1st Circuit says restitution was not plain error where defendant was convicted of a scheme to defraud. (610) Defendant pled guilty to three counts of wire fraud involving fraudulent mortgages. For the first time on appeal he argued that the court should not have ordered restitution for the sale of 22 Burr Street because the PSR did not list defendant as being involved in that sale. The First Circuit rejected the argument, noting that under the Mandatory Victim Restitution Act, 18 U.S.C. §3663A, where the defendant’s criminal conduct includes “an offense that involves as an element a scheme, conspiracy, or pattern of criminal activity,” a victim is defined as “any person directly harmed by the defendant’s criminal conduct in the course of the scheme, conspiracy, or pattern.” The court noted that the superseding indictment alleged that defendant was involved in the sale of 22 Burr Street, even though defendant did not plead guilty to that count, and found no plain error. The court also affirmed an order of restitution to one of the lenders, Equicredit, even though the counts to which defendant pled guilty did not involve Equicredit as the lender. U.S. v. Matos, 611 F3d 31 (1st Cir. 2010).
1st Circuit says absolute precision is not required in calculating restitution. (610) Defendant argued for the first time on appeal that the district court did not explain how it arrived at the restitution amount of $350,000 to Equicredit, noting that the PSR listed the amounts that Equicredit recovered in loan payments and foreclosures as “unknown.” The First Circuit found no plain error, noting that defendant made no effort to highlight any deficiencies in the court’s calculations at the time of sentencing. The court also noted that the district court apportioned liability based on each defendant’s level of contribution to the total loss, and defendant was ordered to pay substantially less than the total amount of losses claimed by Equicredit. The First Circuit suggested that it would have been preferable for the district court to explain how it arrived at the restitution figure of $350,000, but noted that “absolute precision is not required in calculating restitution under the MVRA,” and that “only a modicum of reliable evidence is required to establish a restitution award.” U.S. v. Matos, 611 F3d 31 (1st Cir. 2010).
1st Circuit holds that prosecution’s standing to seek restitution not affected by victim’s alleged waiver. (610) Defendant argued that the victim waived restitution and did not assign its interest in any restitution to the Crime Victims Fund of the U.S. Treasury, and therefore, the government had no legally cognizable interest in the restitution award. The First Circuit disagreed. First, the record did not establish that the victim in fact waived restitution. More importantly, the prosecution’s standing to seek restitution under the MVRA does not depend on a victim’s actions. Restitution ordered as part of a criminal sentence is a criminal penalty, not a civil remedy. Private parties cannot simply agree to waive the application of a criminal statute. U.S. v. Ziskind, 471 F.3d 266 (1st Cir. 2006).
1st Circuit says Booker does not apply to judicial determination of amount of restitution. (610) Defendants pled guilty to theft from an interstate shipment. They argued that the Mandatory Victims Restitution Act (MVRA), 18 U.S.C. §§ 3663A, 3664, which mandated restitution in their cases, was unconstitutional as applied to them because no loss amount was charged in the indictment or found by a jury beyond a reasonable doubt. They argued that Booker prohibited the post-conviction judicial fact-finding underlying their restitution orders. The First Circuit disagreed – Booker does not apply to judicial determinations of the amount of restitution. Post-conviction judicial fact-finding to determine loss for restitution purposes does not impose a punishment beyond that authorized by jury-found or admitted facts or beyond the statutory maximum. U.S. v. Ziskind, 471 F.3d 266 (1st Cir. 2006).
1st Circuit upholds $4 million fine despite defendant’s current indigence. (610) The district court imposed a $4 million fine, the maximum fine under the Sentencing Guidelines. Although the court did not think defendant had the current ability to pay such a fine, it found “there’s a great deal of money here and if the government can find any of it we’ll have it applied to that fine.” The First Circuit upheld the fine as proper. Although defendant might not have the present ability to pay, he did not show that he was not likely to become able to pay. The court reasonably determined that defendant might be or become in possession of some of the ill-gotten gains of the drug conspiracy. U.S. v. Yeje-Cabrera, 430 F.3d 1 (1st Cir. 2005).
1st Circuit rules defendant did not establish that court would impose more favorable sentence under advisory guidelines. (610) Because defendant did not raise his Booker claim below, to be entitled to resentencing, he was required to point to circumstances creating a reasonable probability that the district court would impose a more favorable sentence under the new advisory guidelines. The First Circuit ruled that defendant did not make this showing. Although the court’s comments reflected the reality that defendant’s sentence was shaped by the guidelines, they did not indicate that the court would impose a more favorable sentence under the advisory guidelines. There was no reason to believe the two mitigating factors cited by defendant would have led to a more favorable sentence. Defendant brought both of these factors to the court’s attention at sentencing, asking the court to impose a sentence at the bottom of the applicable range. The court instead imposed a sentence at the top of the applicable range. U.S. v. Flores-Seda, 423 F.3d 17 (1st Cir. 2005).
1st Circuit holds that defendant could not establish that restitution constituted plain error. (610) In U.S. v. Burnette, 375 F.3d 10 (1st Cir. 2005), the First Circuit affirmed defendant’s conviction and sentence, which included almost $50,000 in restitution. The Supreme Court vacated judgment and remanded for reconsideration in light of U.S. v. Booker, 543 U.S. 220 (2005). Since defendant had already finished serving her prison term, and her challenge to the conditions of supervised release was so inadequately developed that the court deemed it waived, the only remaining Booker issue was the restitution order. The First Circuit found it unnecessary to determine if Booker applies to restitution orders, since defendant was unable to meet the high burden of showing plain error. U.S. v. Burnette, 423 F.3d 22 (1st Cir. 2005).
1st Circuit upholds restitution ordered 127 days after sentencing. (610) Defendant pled guilty to numerous counts of mail fraud. The Mandatory Victims Restitution Act of 1996 provides for full restitution to certain victims, regardless of a defendant’s ability to pay. Under § 33664(d)(5), the court must set a date for the final determination of the victim’s losses, not to exceed 90 days after sentencing. The First Circuit upheld the district court’s order to pay $2.1 million in restitution, even though the order was entered 127 days after sentencing. Defendant had the opportunity to object to the court’s scheduling of a deferred restitution order but did not. When the court entered judgment on February 25, 2003, it deferred determination of restitution until May 25, 2003, and indicated it would enter an amended judgment at some time unspecified time thereafter. Even though it was a virtual certainty that the restitution order would be entered more than 90 days after sentencing, defendant did not object. Defendant cited no prejudice from the delay in entering the restitution order. Even now she did not claim that she disagreed with the government’s accounting of her victim’s losses. The 90-day requirement is not jurisdictional. U.S. v. Cheal, 389 F.3d 35 (1st Cir. 2004).
1st Circuit says restitution was insufficient to show extraordinary acceptance of responsibility. (610) The district court granted defendant a three-level reduction for acceptance of responsibility, under § 3E1.1(b), and then departed downward an additional four levels for defendant’s extraordinary acceptance of responsibility. In justifying the additional departure, the court relied primarily on the restitution defendant paid to his victims. He paid almost $270,000 more in restitution than he received from the scheme. The First Circuit found this insufficient to justify the downward departure. In addition to amount, the timing of and motivation for restitution are important factors in determining the propriety of a downward departure. Defendant’s payment of restitution came only after the scheme had been discovered and criminal prosecution appeared likely. In a taped conversation, he expressed hope that, by paying back the stolen funds, he and the other participants might avoid a criminal prosecution altogether. The timing of his change of heart did not suggest “extraordinary” acceptance of responsibility. U.S. v. Martin, 363 F.3d 25 (1st Cir. 2004).
1st Circuit holds that niece who bought house for less than market value was not entitled to restitution. (610) Defendant was convicted of making a false oath in bankruptcy and concealing assets based on his representation that he had sold his home to his niece for $40,000. He actually sold the house to her for $72,000. The First Circuit held that the court’s calculation of an intended loss between $20,000 and $40,000 was supported by the evidence. Defendant concealed from the bankruptcy court his receipt of about $32,000 when he stated in his bankruptcy petition that he sold his house for $40,000. However, the court erred in ordering restitution of $21,000 to defendant’s niece. Defendant’s misconduct underlying the offense of conviction was not the “but-for” cause of his niece’s loss. The bankruptcy trustee stated that even if the bankruptcy petition had truthfully stated that the niece had bought the house for $72,000, he still would have initiated an adversary proceeding because the sale price was still below the appraised value of $102,000. U.S. v. Cutter, 313 F.3d 1 (1st Cir. 2002).
1st Circuit upholds order to sell assets as necessary to pay restitution. (610) The district court ordered, as a condition of supervised release, that defendant sell such of his assets as necessary to pay restitution. Defendant argued that this was effectively an asset forfeiture and that the government did not comply with any of the procedures for obtaining a forfeiture order. The First Circuit found that defendant mischaracterized the order. The court had the power to order restitution under 18 U.S.C. § 3663-3664 and U.S.S.G. § 5D1.3(a)(6). Although defendant’s assets were to be surrendered to the government and sold for cash, several government agencies were defrauded by defendant and were entitled to restitution. Another branch of the government, the prosecution, was authorized to sell the assets in order to make that restitution. This was not a case of asset forfeiture, and the order was well within the district court’s discretion. U.S. v. Gallant, 306 F.3d 1181 (1st Cir. 2002).
1st Circuit upholds use of suppressed evidence to determine restitution. (610) Defendant argued that the district court erred in using suppressed evidence to calculate the restitution for his credit card fraud offense. The First Circuit joined ten other circuits in holding that the exclusionary rule does not bar the use at sentencing of evidence seized in violation of a defendant’s 4th Amendment rights. See, e.g. U.S. v. Ryan, 236 F.3d 1268 (10th Cir. 2001); U.S. v. Brimah, 214 F.3d 854 (7th Cir. 2000). Nonetheless, under the VWPA and Hughey v. U.S., 495 U.S. 411 (1990), the suppressed evidence can be included in the restitution award only if (1) the offense involved a scheme, conspiracy, or pattern of criminal activity; or (2) the evidence represented conduct that was the basis of the offense of conviction. The charged offense did not involve a scheme or pattern of criminal activity. However, defendant failed to challenge below whether the suppressed credit cards represented conduct that was the basis of the offense of conviction. The language of the indictment was broad enough to encompass defendant’s criminal conduct of using both the suppressed and unsuppressed credit cards in the 10-month period. Therefore, the district court’s use of the suppressed evidence in the restitution calculation was not plain error. U.S. v. Acosta, 303 F.3d 78 (1st Cir. 2002).
1st Circuit holds that unpaid support due after child turned 18 was properly included in loss and restitution. (610) Defendant pled guilty to willfully failing to pay child support, in violation of the Child Support Recovery Act, 18 U.S.C. § 228(a)(3) (the Act). Note 2 to § 2J1.1 says that for offenses involving the willful failure to pay court-ordered child support, the most analogous guideline is § 2B1.1, and in that transposition, “[t]he amount of loss is the amount of child support that the defendant willfully failed to pay.” The district court found a loss of $67,163, the amount of a Family Court judgment against him less $20,000 he paid after his arrest. Defendant contended that the term “child” under the Act refers to a person under the age of 18, and that loss and restitution can only be based on the support obligations applicable to a period prior to a child’s 18th birthday. The First Circuit disagreed, ruling that Congress did not intend to confine “child” to a person of a particular age – “child” refers to any child covered by the court-ordered support obligation at issue in a given case. Courts are not required to “slice and dice” state-court child support orders to determine which portions of those orders related to pre-age 18 support. Similarly, there was no basis for excluding interest and costs from the loss calculation. These were “embedded” in the Family Court order and were “part and parcel” of what was needed to put defendant’s former wife and children in the financial position that they would have been had he honored his support obligations. U.S. v. Molak, 276 F.3d 45 (1st Cir. 2002).
1st Circuit reads restitution orders as not permitting government to recover more than its total loss. (610) The district court determined that the government lost a net amount of $37,970.68 from the fraudulent tax return scheme and ordered defendant to pay this full amount in restitution. It also ordered co-defendant Morrison to pay $8,253 and co-defendant Stephens to pay $7,479. Defendant and the government agreed on appeal that any restitution obligation imposed on defendant and his co-defendants should not exceed the amount of the government’s loss. The First Circuit read the restitution order to provide that the government may hold any individual defendant liable for as much as the court ordered as to that defendant, but that the government could not collect more from all defendants together than would make it whole (that is, a total of $37,970.68 in restitution for the crime). Rather than true joint and several liability, this type of liability is a creature of the restitution statute; such an order was within the district court’s discretion. Although it would be a better practice for district courts that intend to enter such an order to refer expressly to the limit placed on the government’s total recovery, in light of the statutory scheme, the implied limit is not hard to find. U.S. v. Scott, 270 F.3d 30 (1st Cir. 2001).
1st Circuit orders restitution for all losses caused by counterfeit check conspiracy. (610) During one weekend, defendant and others cashed 224 counterfeit payroll checks at 15 different Rhode Island branches of Citizens Bank, causing a loss to Citizens of $87,586.80. In a second round, the conspirators used an identical scheme to defraud Fleet Bank. The total loss to Fleet was $20,069.85. Defendant objected to the restitution order, which required him to pay back the entire loss to both banks. Under the VWPA, restitution awards are limited to “the loss caused by the specific conduct that is the basis of the offense of convictions.” Hughey v. U.S., 495 U.S. 411 (1990). However, “in the case of an offense that involves as an element a scheme, conspiracy, or pattern of criminal activity,” a victim is defined as “any person directly harmed by the defendant’s criminal conduct in the course of the scheme, conspiracy, or pattern.” 18 U.S.C. § 3663(a)(2). A defendant in a conspiracy is liable for all reasonably foreseeable losses caused to the victims by the conspiracy. See U.S. v. Collins, 209 F.3d 1 (1st Cir. 1999). The First Circuit held that the restitution order was not plain error. The district court reasonably concluded that this was a well-organized conspiracy, and that defendant himself organized it and was deeply involved in it. Thus, he could have reasonably foreseen the losses at issue. U.S. v. Solares, 236 F.3d 24 (1st Cir. 2000).
1st Circuit holds that inclusion of attorneys’ fees in restitution was not plain error. (610) The PSR recommended restitution of almost $ 8 million pursuant to 18 U.S.C. § 3663A and USSG § 5E1.1. This amount included $355,903 for legal fees expended by the victims. Both defendants objected at sentencing to the total restitution ordered, but did not specifically object to the imposition of attorneys’ fees. A majority of circuits have held that restitution under § 3663(b)(1) cannot include consequential damages. See, e.g. Government of the Virgin Islands v. Davis, 43 F.3d 41 (3d Cir. 1994); U.S. v. Patty, 992 F.2d 1045 (10th Cir. 1993). The government contended that Congress substantially broadened the scope of § 3663 when it enacted § 3663A in 1996, rendering these cases irrelevant because they deal with § 3663(b)(1) and not § 3663A(b)(1). The First Circuit did not resolve this issue. Because the law in the First Circuit was not obvious when the district court made its decision, the inclusion of attorneys’ fees in the restitution was not plain error. U.S. v. Richard, 234 F.3d 763 (1st Cir. 2000).
1st Circuit holds that bankruptcy trustee was not victim of money laundering. (610) Defendant helped his employer commit bankruptcy fraud by concealing investment income from her creditors and the bankruptcy court. Defendant was convicted of laundering the proceeds of bankruptcy fraud. The district court ordered defendant to pay restitution to the bankruptcy trustee. Defendant argued that because the victim of money laundering is society, restitution is improper where money laundering is the only offense. The First Circuit disagreed, holding that defendant’s laundering of the proceeds of bankruptcy fraud could support a restitution order. Society was not the only victim of defendant’s money laundering. Defendant diverted funds from the bankruptcy estate that otherwise could have been available to satisfy the claims of creditors. However, the bankruptcy trustee was not a victim of defendant’s offense, since there was no evidence that the trustee was harmed as a result of defendant’s offense. Moreover, although $3 million was diverted from the estate that otherwise might have been available to pay creditors, there was no evidence of harm to creditors, i.e., no evidence of creditors who filed claims that went unpaid. Because there was no evidence of identifiable victims who suffered harm from defendant’s money laundering, the panel vacated the restitution order. U.S. v. Paradis, 219 F.3d 22 (1st Cir. 2000).
1st Circuit holds that court adequately considered defendant’s ability to pay restitution. (610) Defendant argued that the district court’s order to pay restitution was “fatally flawed” because it failed to take into account his inability to pay. However, the provision addressing restitution, [the former] 18 U.S.C. § 3664(a), “does not require an explicit finding that the defendant has the ability to pay the restitution ordered. Rather, it is sufficient if the record on appeal reveals that the judge made implicit findings or otherwise adequately evinced his consideration of those factors.” A district court adequately considers a defendant’s ability to pay if the defendant’s financial information is contained in the PSR, and the district court relies on the PSR in issuing its restitution order. Although defendant claimed to have no assets, the PSR reflected that between 1974 and 1994, he earned an aggregate salary of over $ 2 million. Moreover, as a talented software designed, defendant had substantial human capital, and there was evidence at trial that he owned stock options and had recently purchased a house in Mexico. Accordingly, the First Circuit held that the district court did not err in ordering restitution. U.S. v. Hughes, 211 F.3d 676 (1st Cir. 2000).
1st Circuit says seizure of money in civil case did not constitute restitution. (610) Defendant argued that a restitution order was unfair because the government, in a civil in rem action, seized the money he embezzled. The Circuit held that restitution was required, since the seizure of money did not constitute restitution. Guideline § 5E1.1(a)(1) says that the court “shall” order restitution if authorized under 18 U.S.C. §§ 3663-3664. Section 3664 likewise states that “the court shall order restitution to each victim in the full amount of each victim’s losses …” Although restitution may not be ordered if full restitution has been made, seizure of money in a civil in rem proceeding does not constitute restitution. Even though money that might belong to the government was seized from defendant, the final adjudication of whether that money in fact belonged to the government or to defendant had not been made, and the money had not been released to the government. U.S. v. Leon-Delfis, 203 F.3d 103 (1st Cir. 2000).
1st Circuit holds that restitution and civil forfeiture did not violate double jeopardy. (610) Defendant argued that the district court’s restitution order violated double jeopardy because the government already seized the money from him in a civil forfeiture action. The First Circuit held that the restitution did not violate double jeopardy. The Supreme Court has consistently concluded that the double jeopardy clause “does not apply to [civil forfeitures] because they do not impose punishment.” U.S. v. Ursery, 518 U.S. 267 (1996). “A completed civil forfeiture of property does not constitute ‘jeopardy’ under the double jeopardy clause, and does not bar the subsequent criminal prosecution and punishment of the defendant whose property was forfeited.” U.S. v. Leon-Delfis, 203 F.3d 103 (1st Cir. 2000).
1st Circuit upholds $70,000 restitution order despite defendant’s limited earning history. (610) Defendant argued that the district court erred in ordering $70,000 in restitution, without first considering his ability to pay. He noted that his reported income for the preceding 10 years totaled only $1383, he had serious medical and emotional problems, and had little education or vocational training. The First Circuit held that the restitution order was not an abuse of discretion. First, the district court specifically stated that it had reviewed the PSR, which included a detailed outline of defendant’s financial prospects. Significantly, it reflected that defendant would be relatively young when he completed his five-year prison sentence and would have the opportunity to work at his father’s business. Finally, defendant was ordered to repay a mere 20% of the losses sustained by his victims. U.S. v. Balsam, 203 F.3d 72 (1st Cir. 2000).
1st Circuit refuses to reconsider restitution where defendant presented no new evidence. (610) Defendant executed an elaborate airline ticket ruse. The district court ordered him to pay $77,623 in restitution, i.e., the net difference between the credits and debits on 12 different credit cards accounts in defendant’s name, less finance charges. Defendant had other credit cards, but no records could be obtained for them. The judge left the window open to modify the restitution order, stating that the restitution could be remitted if defendant submitted to the probation department additional factual evidence supporting such an adjustment. Several months later defendant filed a motion for review of restitution, which the district court summarily denied. The First Circuit affirmed the denial of defendant’s motion to reconsider the original restitution order, since defendant presented no new evidence to support his request. The court stated that it would entertain remitting the restitution if defendant presented evidence that he had paid the costs of the airline tickets through his credit card payments. Defendant did not present new evidence, but merely reassessed the data used to establish the original restitution order. U.S. v. Podolsky, 158 F.3d 12 (1st Cir. 1998).
1st Circuit refuses to consider civil settlement in determining loss. (610) Defendant was convicted of conspiracy to commit bank fraud in connection with the fraudulent procurement of a loan. He argued that the loss to the bank was zero because the bank’s receiver, the FDIC, had reached a civil settlement with him. The First Circuit held that the civil settlement did not reduce the loss under § 2F1.1 because loss is a proxy for the seriousness of the offense. A loss of zero is presumptively wrong in this case because it did not remotely approximate defendant’s wrongdoing. Defendant intentionally diverted $1.6 million. The settlement was made well after the fraud was known. In addition, the FDIC knew little about defendant’s criminal behavior when it made the settlement. The settlement also did not affect the restitution order, although restitution is not appropriate when it would represent a double recovery. However, the settlement did not compensate the bank for the $1.6 million loss reflecting the funds diverted from the loan. U.S. v. Parsons, 141 F.3d 386 (1st Cir. 1998).
1st Circuit upholds restitution in cloned phone case for amount phone companies would have received for legitimate calls. (610) Defendants were convicted of taking part in a cellular telephone “cloning” operation. The First Circuit affirmed a restitution order in the amount of $190,275.33, which represented the amount that the defrauded telephone companies would have been paid if the calls had been made legitimately. Defendants asserted that the amount used was erroneous because it reflected both the costs associated with processing the calls and a profit margin for the various cellular phone carriers and providers. However, they cited no cases for this “novel proposition.” Profit cannot be equated with interest. Profit is an ingredient of the fair market value of goods or services that can be sold and purchased. U.S. v. Pervaz, 118 F.3d 1 (1st Cir. 1997).
1st Circuit upholds $2.2 million restitution where court considered all factors. (610) Defendant argued that it was virtually impossible for him to pay his $2.2 million restitution order. The First Circuit affirmed the restitution order because the sentencing court considered all of the relevant factors. The court is not required to base its restitution on a finding that the defendant has the ability to repay the amount ordered. All that is required is an indication that the sentencing court considered defendant’s financial situation in arriving at its figure. The court did that here, noting that the $2.2 million was probably unrealistic, but that it would make defendant aware of his obligation and ensure that any earnings he made would go toward restitution. U.S. v. D’Andrea, 107 F.3d 949 (1st Cir. 1997).
1st Circuit permits restitution for all reasonably foreseeable losses caused by co‑conspirators. (610) Defendant worked for a distributorship that recruited students for a correspondence school. The school and the distributorship committed numerous frauds involving student financial aid programs. Defendant argued that a $30,000 restitution order attributed more losses to him than were alleged in the counts of conviction—four counts of mail fraud relating to the mailing of four loan checks totaling $9,870. The First Circuit held that because defendant was also convicted of conspiracy, the district court could properly order restitution for all reasonably foreseeable losses caused by the co‑conspirators in furtherance of the conspiracy. Although the total loss was $500,000, the court only ordered defendant to pay $30,000 because of his lack of resources. Defendant argued for the first time on appeal that the court improperly ordered restitution for losses before he became involved in the conspiracy. However, even if the court had excluded these losses, it was implausible that the total restitution figure would drop from $500,000 to less than $30,000. U.S. v. Royal, 100 F.3d 1019 (1st Cir. 1996).
1st Circuit holds defendant may not challenge restitution in § 2255 motion. (610) In a 28 U.S.C. § 2255 motion, defendant argued that his counsel was ineffective for failing to challenge a restitution order that included losses outside the time period of his offense of conviction. The First Circuit held that a defendant may not challenge a restitution order in a § 2255 action. Section 2255 provides relief to petitioners “in custody” who claim the right to be released from custody. Although defendant was in custody, he was not claiming the right to be released, but was merely claiming the right to a reduced restitution order. Smullen v. U.S., 94 F.3d 20 (1st Cir. 1996).
1st Circuit holds that fraud was part of unitary scheme for restitution purposes. (610) Using a alias, defendant rented a mail box, placed orders for computer equipment and paid for the equipment with forged checks. After he pled guilty to this scheme, the government learned that he had committed the same scheme at the same time using a different alias and a different mail box to defraud a California software company. Under the VWPA, the district court may order restitution to every victim directly harmed by the defendant’s conduct “in the course of the scheme, conspiracy, or pattern of criminal activity,” without regard to whether the victim was named in a count of conviction. The First Circuit held that the fraudulent order defendant placed with the California software company using the second alias was within the same scheme as the offense of conviction for restitution purposes. There were common victims, timing and modus operandi. U.S. v. Hensley, 91 F.3d 274 (1st Cir. 1996).
1st Circuit holds probation department may substitute receiver for restitution purposes. (610) Defendant fraudulently obtained numerous credit cards, used them, and then reported them as stolen. He argued that the court erred in ordering restitution to be paid to the bank issuing the credit card, since the bank had failed and the FDIC had been appointed its receiver. The First Circuit affirmed, holding that probation department could substitute the FDIC as a “victim” under the VWPA. The bank was a victim of defendant’s fraud when committed. The failure of the bank and the appointment of the FDIC as its receiver had not been brought to the court’s attention when it entered its order. There was no reason why the probation department could not substitute the FDIC for the failed bank as the “victim” of defendant’s fraud. U.S. v. Phaneuf, 91 F.3d 255 (1st Cir. 1996).
1st Circuit says restitution error not plain. (610) Defendant ran a scheme to defraud investors by obtaining their funds through false representations. He was convicted of mail fraud. He challenged, for the first time on appeal, a restitution order that included losses to investors other than those involved in the mail fraud counts. Under Hughey v. U.S., 495 U.S. 411 (1990), restitution may only be ordered for losses caused by the offense of conviction. The government pointed to counts charging defendant with mailings by his lawyer to the state authorities. These mailings delayed the discovery and termination of the scheme and therefore might have caused the losses from the later investments. The First Circuit exercised its discretion under U.S. v. Olano, 113 S.Ct. 1770 (1983) to disregard the alleged error. The government’s causation argument, and defendant’s response, was largely fact‑bound. To resolve the dispute would require a remand to the district court to develop further facts. Since defendant failed to raise the issue in a timely fashion and it was not certain that the restitution was substantially excessive, the court disregarded any error. U.S. v. Camuti, 78 F.3d 738 (1st Cir. 1996).
1st Circuit says applying restitution amendment retroactively violated ex post facto clause. (610) The district court ordered defendant to make restitution for 31 loans, even though the indictment charged only 21 loans. In Hughey v. U.S., 495 U.S. 411 (1990), the Supreme Court held that the Victim and Witness Protection Act (VWPA) permitted restitution only to victims of the offenses of conviction. Congress responded in November, 1990 by broadening the definition to include all victims of offenses that involve “as an element a scheme, conspiracy or pattern.” 18 U.S.C. § 3663(a)(2). But in this case, defendant’s conduct preceded the amendment. The First Circuit held that retroactive application of the amendment violated the ex post facto clause because it made more burdensome the punishment for defendant’s crimes. The error was “obvious” and resulted in a “miscarriage of justice.” U.S. v. Gilberg, 75 F.3d 15 (1st Cir. 1996).
1st Circuit limits restitution to harm caused by the conduct for which defendant was convicted. (610) The Defendant argued that district court erred in ordering restitution of $489,179, because the indictment only charged him with diverting $184,300. The Second Circuit agreed, holding that restitution was limited to $184,300, the loss caused by the conduct for which the defendant was convicted. Circuit precedent prohibits a court from awarding restitution for all of the harm caused by a scheme to defraud. U.S. v. Newman, 49 F.3d 1 (1st Cir. 1995), superseded on other grounds by statute as stated in U.S. v. Hensley, 91 F.3d 274 (1st Cir. 1996).
1st Circuit approves restitution up to $10 million for defendant with no money. (610) Defendant argued that the district court abused its discretion when it ordered him to pay restitution not to exceed $10 million. The Second Circuit affirmed the order. Although the court found that defendant did have any money, it also noted that defendant had kept his ill-gotten gains. In his allocution, defendant attested to his past success as a developer of multi-million dollar properties. This implied substantial, although now diminished, earning capacity. Significantly, the exact amount and schedule of restitution were left open by the district court. The district court framed a flexible order that could respond to defendant’s financial status. U.S. v. Smith, 46 F.3d 1223 (1st Cir. 1995).
1st Circuit remands for hearing on whether losses were caused by conduct underlying convictions. (610) Defendant was convicted of money laundering and being an accessory after the fact to a bank robbery. The district court ordered defendant and his co-defendants who had committed the robbery to each pay $266,500 in restitution to the bank. The 1st Circuit remanded for a hearing on how much of the bank’s losses were caused by the conduct underlying defendant’s convictions. The VWPA generally does not require explicit findings. However, given the disparate nature of defendant’s conduct, as compared to that of his co-defendants who were convicted of bank robbery and firearms charges, there was an insufficient basis to decide whether the full amount of the bank’s losses was caused by conduct underlying defendant’s convictions. U.S. v. Neal, 36 F.3d 1190 (1st Cir. 1994).
1st Circuit does not require reduction in restitution where no showing of value of property given to victim. (610) Defendant was convicted of embezzling $460,000. His relevant conduct caused an additional $205,000 loss. Under a civil agreement between defendant and the victim, defendant conveyed his residence and land to the victim. The agreement required the victim to sell the property to recover the embezzled money. However, the bank which held the mortgage on the property foreclosed, and the victim received no compensation. Defendant argued that it was unfair to require him to pay full restitution because the victim’s own negligence in failing to sell the property prior to foreclosure contributed to the loss. The 1st Circuit found no abuse of discretion. The district court considered the appropriate factors and correctly limited the restitution to $460,000, the amount involved in the offense of conviction. Defendant presented no evidence as to the amount of restitution that might have been available had the property been sold. U.S. v. Benjamin, 30 F.3d 196 (1st Cir. 1994).
1st Circuit says court considered defendant’s ability to pay million dollar restitution order. (610) The sentencing court ordered defendant to pay restitution of $1,018,347. Defendant claimed he was unable to pay it because he was a college dropout with a sporadic work history, no assets, and more than $900,000 in liabilities. The 1st Circuit held that the district court adequately considered defendant’s ability to pay the restitution. The district court believed defendant eventually would be able to meet his obligations. Defendant was a talented individual who could be successful if he redirected his energies to lawful activities. The court had the relevant information before it and considered the appropriate factors in making its restitution order. U.S. v. Springer, 28 F.3d 236 (1st Cir. 1994).
1st Circuit holds government is not a victim when it provokes crime during investigation. (610) Undercover agents sold defendant foods stamps at about one-fourth their face value. The 1st Circuit held that the government is not a “victim” under the VWPA, and thus not entitled to restitution, when it has lost money as a consequence of a crime that it actively provoked during the investigation. Legislative history shows that “victim” should be given its ordinary meaning—a passive sufferer of harm. The 1990 amendment to the VWPA clarified that in appropriate cases, where a government entity is a passive sufferer of harm, the government can be a victim. The rule of lenity also suggests that doubts about the meaning of the VWPA be resolved in favor of the defendant. U.S. v. Gibbens, 25 F.3d 28 (1st Cir. 1994).
1st Circuit rejects fine but upholds $500,000 restitution order for indigent defendant. (610) Defendant argued that because he was indigent, the district court erroneously imposed a cost of supervised release fine and a $500,000 restitution order. The 1st Circuit struck down the costs of supervised release, but upheld up the restitution order. U.S. v. Corral, 964 F.2d 83 (1st Cir. 1992) holds that the costs of supervised release may not be imposed on a defendant found to be indigent for purposes of a punitive fine. However, this ban does not apply to restitution orders. Restitution is imposed under a separate statutory scheme with its own independent considerations of defendant’s ability to pay. Here, the judge properly considered the statutory factors, and concluded that although defendant might not have a present ability to pay, he had the prospect of receiving or inheriting assets in the future, and the ability to obtain gainful employment. U.S. v. Brandon, 17 F.3d 409 (1st Cir. 1994).
1st Circuit uses cost of valid bond to approximate loss from forged bond. (610) Defendant was awarded a government contract on the basis of his low bid of $1,000,200. However, he was convicted of fraud charges because the bid was accompanied by several improper and counterfeit surety bonds. The district court calculated loss under section 2F1.1 as the difference between defendant’s bid price and the price at which the contract was eventually awarded. The 1st Circuit rejected this calculation, since the government never showed that it could have secured a bid from a properly bonded contractor at the price offered by defendant. A more accurate estimate was the cost of a valid bond. However, restitution was a different matter. Intended or probable loss cannot be the measure of restitution. The only actual loss was the $250 administrative cost of reawarding the contract. U.S. v. Stern, 13 F.3d 489 (1st Cir. 1994).
1st Circuit upholds $190,000 restitution order despite lack of assets. (610) Defendant challenged a $190,000 restitution order on the grounds that the court made no explicit findings of his financial condition and there was little evidence of actual assets or future earning power. The 1st Circuit upheld the order, even though it agreed that there was no basis for finding that defendant would have $190,000 available. No record basis was required. Defendant did not deny that he obtained $190,000 from his insurers by fraud, and that the whereabouts of the entire $190,000 was at least uncertain, as were his future prospects of income. While the restitution order might prove fruitless, it might also be of some use if defendant ever secured new assets or the insurance companies wished to prove that assets held nominally by family members were really defendant’s. The statute merely requires the court to “consider” financial condition among other factors. There is no requirement that the defendant be able to pay now. U.S. v. Lombardi, 5 F.3d 568 (1st Cir. 1993), superseded on other grounds by statute as stated in U.S. v. Martin, 363 F.3d 25 (1st Cir. 2004).
1st Circuit rejects need for findings on restitution factors if record shows factors were considered. (610) The 1st Circuit held that a district judge need not make open-court findings on the statutory factors when issuing a restitution order so long as the record on appeal reveals that the judge made implicit findings or otherwise adequately indicated his consideration of those factors. The Victim and Witness Protection Act demands no more than that the district court consider the enumerated factors, it makes no mention of mandatory findings. Here, the court duly considered the statutory factors. It explicitly adopted the findings in the presentence report, which contained a lengthy discussion of the factors. U.S. v. Savoie, 985 F.2d 612 (1st Cir. 1993).
1st Circuit finds plausible basis for restitution calculation in extortion scheme. (610) The 1st Circuit upheld the district court’s calculation of restitution in a racketeering and bribery case. Since criminals rarely keep detailed records of their lawless dealings, the preponderance of the evidence standard must be applied in a practical way. So long as the basis for reasonable approximation is present, difficulties in making exact measurements will not preclude a restitution order. Here, the racketeering count to which defendant pled guilty involved 24 racketeering acts. The computation of victim loss followed this roadmap. The district court scrutinized transcripts of grand jury testimony designed to document the aggregate amount of money involved in each episode. In some instances, there were specific percentages or amounts described in the testimony. In other instances, the testimony established the conspirators’ general intent about how the spoils should be divided. In every case, there was a plausible basis on which to predicate reasonable estimates. U.S. v. Savoie, 985 F.2d 612 (1st Cir. 1993).
1st Circuit rejects use of civil settlement to limit restitution order. (610) Three days before sentencing, defendant signed an agreement with his extortion victim, settling its claims against him for $52,000 payable over time. The 1st Circuit rejected defendant’s claim that the civil settlement agreement fulfilled or set a ceiling on his restitutionary obligations to this victim. The settlement concerned potential civil liability. Restitution is a criminal penalty meant to have deterrent and rehabilitative effects. Private parties cannot simply agree to waive the application of a criminal statute. The settlement amount should not be set off against the district court’s restitution figure. The Victim and Witness Protection Act contemplated setting off amounts already paid under a restitution order against amounts later recovered in civil proceedings. There is no mention of set offs operating in the opposite direction. Moreover, the set off provision is based upon actual payments rather than promises to pay at some future date. U.S. v. Savoie, 985 F.2d 612 (1st Cir. 1993).
2nd Circuit reverses using company’s plea agreements to determine restitution owed by its employees. (610) A jury found defendants, an asbestos air monitoring company and its employees, and employees of asbestos abatement contractor, guilty of violations of Clean Air Act. The government argued that the district court erred in relying on the companies’ plea agreements to determine the restitution necessary to cover cleanup costs. The court appeared to believe that the government was “estopped” from seeking restitution in excess of the earlier stipulations. It relied on the doctrine of nonmutual collateral estoppel, in which “one party is barred from relitigating an issue decided in a previous proceeding, where the parties were not the same in the prior proceeding.” The Second Circuit held that the district court’s apparent reliance on this doctrine in setting restitution was erroneous. First, nonmutual collateral estoppel is generally unavailable against the government, see U.S. v. Mendoza, 464 U.S. 154 (1984), and the Supreme Court has long rejected application of nonmutual collateral estoppel against the government in criminal trials. See Standefer v. U.S., 447 U.S. 10 (1980). Moreover, the court was “simply mistaken” in finding the plea agreements with two defendant companies had “accepted $87,345.00 as being the amount of loss these victims suffered.” In fact, the record showed that the losses stipulated in the plea agreements and the losses caused by the defendants were different. U.S. v. Certified Environmental Services, Inc., 753 F.3d 72 (2d Cir. 2014).
2nd Circuit reverses restitution for losses child porn defendant could not have proximately caused. (610) Defendant was convicted of receiving and possessing child pornography. Among the images in his possession was one of “Amy,” the pseudonym for a young woman who was sexually abused by her uncle when she was four years old. Amy was now in her twenties, and the pornographic images her uncle took of her continue to be traded on the Internet. The district court ruled that defendant proximately caused $29,754.19 of Amy’s losses, but decided he should be held jointly and severally liable, along with all others convicted of possessing Amy’s images, for her total losses of $3,381,159. The Second Circuit upheld restitution for losses defendant proximately caused, based on the district court’s estimate of the share of Amy’s losses to be attributed to defendant as her total loss divided by the number of persons convicted of possessing her images at the time of the restitution request. However, the district court abused its discretion by including losses that defendant could not have proximately caused, and by holding defendant jointly and severally liable for harm caused by defendants who were not before the court. U.S. v. Lundquist, 731 F.3d 124 (2d Cir. 2013).
2nd Circuit upholds restitution calculation in complex stock price manipulation case. (610) Defendant was convicted of securities fraud arising from his involvement in a scheme to manipulate the price of GBNE, a publicly traded security. The Second Circuit upheld a restitution order of $17,492,817.45. The district court relied on defendant’s allocution and affidavits from co-conspirators and an FBI agent to find that the conspirators used manipulative practices through the summer of 2000 to keep GBNE’s stock price inflated. For a number of reasons, GBNE’s inflated price could not be sustained, which showed this was not a relatively simple situation in which the fraudulent conduct was revealed all at once. The balance of the district court’s findings were drawn from the expert report and testimony of DeRosa, a graduate school instructor and president of a financial consulting firm. He sought to calculate the “fair market price” of GBNE during the period in which the price had been manipulated to isolate that part of the price that was the result of fraud. The district court properly credited the government expert’s well-supported proffer, which was tailored to the particular circumstances of the case. U.S. v. Gushlak, 728 F.3d 184 (2d Cir. 2013).
2nd Circuit upholds restitution despite greater than 90-day delay in determining amount. (610) Under 18 U.S.C. § 3664(d)(5) “[i]f the victim’s losses are not ascertainable by the date that is 10 days prior to sentencing, … the court shall set a date for the final determination of the victim’s losses, not to exceed 90 days after sentencing.” Defendant argued that the district court violated this provision because although it stated its intention at sentencing to enter a final restitution order within 90 days, it did not actually enter one until well past that deadline. The Second Circuit disagreed. In Dolan v. U.S., 560 U.S. 605 (2010), the Supreme Court concluded that “a sentencing court that misses the 90-day deadline nonetheless retains the power to order restitution – at least where, as here, the sentencing court made clear prior to the deadline’s expiration that it would order restitution, leaving open (for more than 90 days) only the amount.” That was the case here. It was implausible that the 18-month delay in determining the amount of restitution, when tacked on to the decade that had elapsed between the conduct that caused the victims’ losses and defendant’s sentencing, somehow hampered defendant’s ability to collect victim information, causing him prejudice. U.S. v. Gushlak, 728 F.3d 184 (2d Cir. 2013).
2nd Circuit says court properly ordered restitution despite complexity of loss calculation. (610) Defendant argued that the district court should have declined to order restitution under 18 U.S.C. § 3663A(c)(3)(B). This section provides that the MVRA shall not apply if “determining complex issues of fact related to the cause or amount of the victim’s losses would complicate or prolong the sentencing process to a degree that the need to provide restitution to any victim is outweighed by the burden on the sentencing process.” The Second Circuit held that the district court did not abuse its discretion in ordering restitution, despite the complexity of the loss calculation. The record made clear that the district court was keenly aware of the difficulties of calculating restitution in this case. It was also of the view, however, based on its decade-long supervision of the matter, that the need to compensate victims outweighed challenges of measurement. Moreover, the district court entered an appealable judgment while restitution proceedings were pending, so as to enable defendant to appeal from his conviction and sentence as quickly as possible. U.S. v. Gushlak, 728 F.3d 184 (2d Cir. 2013).
2nd Circuit upholds use of affidavits to determine restitution. (610) Defendant was convicted of securities fraud and money laundering counts arising from his involvement in a scheme to manipulate the price of a publicly traded security. The district court relied on three affidavits – two of them by co-conspirators, and one by an FBI agent – to determine an overall view of the timing and manner of the fraudulent scheme. Defendant argued that the affidavits lacked the “indicia of reliability” required for use of hearsay evidence during sentencing proceedings. The Second Circuit upheld the court’s reliance on the affidavits. Defendant was given an adequate opportunity to present his position. Given the slight weight the affidavits were given, the district court’s decision not to expand the evidentiary hearing to include live testimony and cross-examination of the affiants was within its discretion. U.S. v. Gushlak, 728 F.3d 184 (2d Cir. 2013).
2nd Circuit remands for findings on scope of conspiracy and foreseeability of co-conspirator’s conduct. (610) Defendant, an American citizen, was convicted of fraud conspiracy charges stemming from his involvement in a scheme that defrauded American victims through a lottery telemarketing scheme operated out of three so-called “boiler rooms” at different locations in Israel. The district court sentenced him to 150 months and restitution of $8.2 million, a sum based on the loss amount and the number of victims swindled by workers in all three boiler rooms. The Second Circuit remanded for resentencing, finding that the court failed to make particularized findings regarding the scope of the activity or the foreseeability of the co-conspirators’ conduct to defendant. U.S. v. Getto, 729 F.3d 221 (2d Cir. 2013).
2nd Circuit affirms refusal to consider newly-submitted costs where government failed to include then at first sentencing. (610) Defendant was convicted by a jury of five Clean Air Act violations arising from his malfeasance as an air monitor for asbestos removal projects. The district court vacated one conviction, but on the government’s initial appeal, the Second Circuit reinstated the jury verdict, and remanded. The government argued that the district court erred at resentencing by refusing to consider newly-submitted clean-up costs for the projects underlying Counts V and VI in calculating restitution. Under 18 U.S.C. § 3664(d)(5), “[i]f the victim subsequently discovers further losses, the victim shall have 60 days after discovery of those losses in which to petition the court for an amended restitution order.” The government never showed that the victims in Counts V or VI petitioned the court within 60 days after discovering the additional losses; nor did the government demonstrate good cause for failing to include the losses at the first sentence. The Second Circuit therefore affirmed the restitution calculation for Counts V and VI. U.S. v. Desnoyers, 708 F.3d 378 (2d Cir. 2013).
2nd Circuit says cost of sampling should have been included in restitution for fraudulent asbestos abatement. (610) Defendant was convicted by a jury of five Clean Air Act violations arising from his malfeasance as an air monitor for asbestos removal projects. Under New York law, the person conducting air monitoring for certain asbestos abatement projects is required to take samples before abatement begins, after abatement is complete, and, for some projects, while abatement is taking place. See N.Y. Indus. Code Rule 56–17. In calculating the restitution amount, the district court refused to include the payments victims made for pre-abatement samplings and for samples taken while abatement was taking place, reasoning that these “were services unrelated to the offense of conviction, final clearances.” The Second Circuit disagreed and reversed. Although there was no finding that these samples were themselves conducted improperly, they were an integral part of the overall scheme. The victims here would not have paid for the sampling had they known that the asbestos removal would be fraudulent. U.S. v. Desnoyers, 708 F.3d 378 (2d Cir. 2013).
2nd Circuit says defendant’s gain could not be used as proxy for victims’ losses for restitution under MVRA. (610) While employed as a securities broker, defendant and a co-worker caused their employer to enter into stock-loan transactions that resulted in kickbacks of $65,600 to defendant. The district court substituted the amount of defendant’s gain, $65,600, for the amount of the victims’ losses, and also found without explanation that defendant was liable for restitution of $65,600 to the employers. The Second Circuit held that the district court erred in using defendant’s gain as a proxy for the victims’ losses for restitution purposes. Because the MVRA limits restitution to “the full amount of each victim’s loss,” 18 U.S.C. § 3664(f)(1)(A), a restitution order must be tied to the victim’s actual probable loss. Unlike the guidelines’ loss provisions, there is no provision in the guidelines or in the MVRA that allows the defendant’s gain to be substituted for the victim’s loss. Although the district court’s error in using defendant’s actual gain was plain, the Second Circuit declined to exercise its discretion to correct the error. Defendant failed to show that the court’s error prejudiced him or resulted in a miscarriage of justice. U.S. v. Zangari, 677 F.3d 86 (2d Cir. 2012).
2nd Circuit remands for court to clarify victims for restitution purposes. (610) Defendant was convicted of multiple counts of aiding and abetting the preparation of false tax returns. The district court did not explicitly find that the State and City of New York were proper victims entitled to restitution. However, the court’s $104,243 restitution award included $14,974 in losses suffered by the State of New York, and $10,809 in losses suffered by the City of New York, even though the court ordered defendant to pay the entire amount to the IRS. The Second Circuit remanded for the court to clarify whether it intended to include losses to the State and City of New York, or only the IRS. In addition, the court was instructed to reduce the total restitution by the amount paid by the taxpayer-clients to the IRS in settlement of their outstanding tax assessments. Finally, the district court was ordered to exclude from its calculation the loss associated with a 2001 tax return that defendant filed on behalf of taxpayer-client Barton. Barton’s tax return was not charged specifically as a separate count of the indictment. U.S. v. Cadet, 664 F.3d 27 (2d Cir. 2011).
2nd Circuit approves restitution for U.N.’s outside counsel fees. (610) During defendant’s employment as a chief within the U.N. Procurement Division, he improperly assisted a longtime friend in becoming a United Nations supplier, in violation of United Nations rules and federal law. The district court ordered defendant to reimburse the United Nations for $846,067 worth of legal fees incurred in bringing the case, as well as the $86,098 in salary defendant was paid while he was suspended following the indictment The Second Circuit ruled that the district court did not commit any error in awarding the United Nations legal fees or defendant’s salary. Although the United Nations had in-house counsel, nothing limits restitution to the cost of in-house counsel. Moreover, the law firm represented the United Nations for 25-40 percent below its normal billing rates, and defendant did not contend that the fees were unreasonable. Defendant’s salary was not beyond the scope of the MVRA. The money the United Nations paid in the form of defendant’s salary was plainly “property” that belonged to the United Nations, at least some of which the United Nations lost as a result of defendant’s offense, since the United Nations paid him for his honest services, which he failed to provide. U.S. v. Bahel, 662 F.3d 610 (2d Cir. 2011).
2nd Circuit says not all of lawyers’ clients were victims of visa fraud. (610) Defendant, formerly an immigration lawyer, was convicted of visa fraud and conspiracy to commit visa fraud. The district court ordered him to pay $309,500 in restitution to 234 clients, representing a refund of the estimated fees paid by those clients for their I-687 cases. The Second Circuit remanded for clarification. The facts suggested that at least some of the applicants knew that their papers contained falsehoods. Filing a false but plausible I-687 application still gave the clients the ability to obtain a temporary work permit, and all four clients who testified at trial said they did receive such a permit. The government bore the burden of demonstrating that each individual it claimed was entitled to restitution was actually a “victim.” The government here only showed that 234 clients paid defendant a fee. However, a client would not be entitled to restitution if the client paid a fee with knowledge of the fraud, or if the client would have paid the fee had the client known of defendant’s plan to submit a fraudulent visa application. On remand, the district court can reconsider which of defendant’s clients were entitled to restitution. U.S. v. Archer, 671 F.3d 149 (2d Cir. 2011).
2nd Circuit upholds consideration of faxes sent before start of conspiracy. (610) Defendant participated in a hedge fund group, which actually operated as a classic Ponzi scheme. He argued that the district court erred by relying upon events that took place outside the relevant time period. For example, he asserted that fraudulent faxes he sent in 2003 should not have been considered because they were sent before the relevant time period of the offense for which he was convicted (January through August 2005). The Second Circuit found no error. The district court considered defendant’s 2003 faxes only to show knowledge of the consequences of his acts during the period of his criminal activity. The 2003 faxes established that defendant had knowledge of the severity of potential investor losses at stake in the fraud during the relevant time period in 2005. U.S. v. Marino, 654 F.3d 310 (2d Cir. 2011).
2nd Circuit holds that defendant who concealed fraud was liable for restitution to investors. (610) Defendant participated in a hedge fund group, which actually operated as a classic Ponzi scheme. Defendant was convicted of having knowledge of, failing to report, and taking affirmative steps to conceal, the fraud. He challenged a $60 million restitution order, arguing that, because he was not directly engaged in the operational activity of the fraud, his conduct in concealing the fraud was not the direct cause that the MVRA requires. The Second Circuit disagreed. First, an investor could meet the causation requirement of the statutory definition of “victim” without showing individual reliance. The very nature of the crime – concealment – indicated the harm resulted from public ignorance in the securities fraud context. During the relevant time period, investors entrusted over $60 million with the company in reliance on the false representations that the company was a legitimate investment firm that was audited by an independent accounting firm. But for defendant’s role in affirmatively concealing the falsity of this representation, these investors would certainly not have invested in the company, since no reasonable investor would invest in a known Ponzi scheme. Moreover, defendant not only failed to disclose the fraud, but also took affirmative steps to conceal it. His conduct was, therefore, a cause in fact. U.S. v. Marino, 654 F.3d 310 (2d Cir. 2011).
2nd Circuit includes prejudgment interest in restitution to ensure full compensation of victim’s losses. (610) Defendant twice faked his brother’s death to collect millions of dollars in life insurance. Defendant argued that the court erred by including prejudgment interest in its restitution award, claiming that it compensated the insurers for more than their actual losses. The Second Circuit held that the Mandatory Victims Restitution Act (MVRA) allows a sentencing court to award prejudgment interest to ensure compensation “in the full amount of each victim’s losses.” 18 U.S.C. § 3664(f)(1)(A). The court acted within its discretion in awarding prejudgment interest on funds that it determined the insurers would have otherwise put to productive use. The panel said that it would be sensible to adopt a rule requiring prejudgment interest absent evidence that the victim would not have put the funds to productive use, but found it unnecessary to decide when an order of prejudgment interest would be an abuse of discretion. U.S. v. Qurashi, 634 F.3d 699 (2d Cir. 2011).
2nd Circuit upholds restitution ordered outside 90-day period after judgment. (610) When a victim’s losses are not ascertainable 10 days prior to sentencing, the Mandatory Victims Restitution Act (MVRA) provides that the court shall set a date for the final determination of the victim’s losses, not to exceed 90 days after sentencing. Defendant objected that the district court’s restitution was untimely, since the restitution hearing was held more than 90 days after his sentencing, and the restitution order was entered 11 months after sentencing. While defendant’s appeal was pending, the Supreme Court decided Dolan v. U.S., 130 S.Ct. 2533 (2010), which held that even if a court misses the 90-day deadline, it nonetheless retains the power to order restitution, if the court makes it clear prior to the deadline’s expiration that it would order restitution, leaving open only the amount. The Second Circuit upheld the restitution order, since the district court made clear at sentencing that it would order restitution, and therefore retained the power to do so. Although defendant argued that he was prejudiced by the delay, there was no evidence of prejudice. U.S. v. Qurashi, 634 F.3d 699 (2d Cir. 2011).
2nd Circuit holds that court had authority to modify defendant’s restitution payment schedule. (610) As a special condition of his supervised release, defendant was directed to pay $4,133 in restitution on a schedule to be determined by the probation office. Over the next 13 years, the district court entered various orders specifying the schedule under which defendant was to pay the specified restitution while incarcerated, requiring first that he pay $2 per month, then that he pay $25 per month, and finally that he pay such amount as was determined under the Inmate Financial Responsibility Program (IFRP). Defendant challenged the last two amendments. The Second Circuit held that the court had the authority to modify defendant’s restitution payment scheme while he was incarcerated. Modification of the schedule for payment of restitution, without any change in the total amount of restitution ordered, is not a change in sentence. The first two orders did not alter the restitution component of defendant’s sentence, merely his payment schedule. However, the last challenged order, directing that defendant’s payment schedule be increased as warranted by IFRP, constituted an impermissible delegation of judicial power to the Bureau of Prisons. U.S. v. Kyles, 601 F.3d 78 (2d Cir. 2010).
2nd Circuit allows restitution for victims’ estimated future medical expenses, but remands. (610) Defendant was convicted of multiple counts of producing, receiving and possessing child pornography. The district court ordered defendant to pay restitution to the child victims in the amount of $974,902. This included an estimate of the victims’ future medical expenses. The Second Circuit held that restitution ordered pursuant to 18 U.S.C. § 2259 may include restitution for estimated future medical expenses, such as counseling. However, an order of restitution for future losses may be inappropriate where the amount of loss is too difficult to confirm or calculate. Here, the district court did not explain how it estimated the victims’ future expenses. It clearly was not persuaded that the defense expert reliably predicted future loss, and it ordered restitution in a substantially lower amount. However, without more information as to how the district court reached the lower figure, the appellate court could not conduct even deferential review of whether the final restitution order reflected a reasonable estimate of the cost of future counseling. U.S. v. Pearson, 570 F.3d 480 (2d Cir. 2009).
2nd Circuit says waiver of right to appeal “full restitution” did not waive appeal of how “full restitution” is calculated. (610) Defendant was convicted of multiple counts of producing, receiving and possessing child pornography. In his plea agreement, defendant agreed to pay “restitution in full to any person who would qualify as a victim …” Defendant also waived his right to appeal any sentence “incorporating the agreed disposition specified herein …” Defendant challenged on appeal the district court’s calculation of his restitution. The Second Circuit ruled that while defendant waived the right to appeal “full restitution,” he did not waive appeal of possible errors in the determination of what amount constituted full restitution. U.S. v. Pearson, 570 F.3d 480 (2d Cir. 2009).
2nd Circuit says labor union was not a “victim” of money laundering conspiracy. (610) As part of a money laundering scheme, the president of a corporation used cash to pay union employees off the books. A local labor union moved for restitution pursuant to the MVRA, contending that the collective bargaining agreements between itself and the corporation required the corporation to make payments to union funds, and that by paying employees in cash, the company had evaded that requirement. The Second Circuit held that the union was not a “victim” of the money laundering conspiracy, and thus was not entitled to restitution. The union argued that it was a victim of defendant’s scheme to get cash to pay union workers, thus avoiding an obligation to pay monies owed to the union under collective bargaining agreement. This was not the case. While the president admittedly had a plan to obtain laundered money and then use that money to pay his employees in cash while simultaneously avoid paying taxes and union obligations, the only criminal charge that defendant stood convicted of was conspiracy to engage in money laundering. The crime of conspiracy to launder money had already been committed by the time the cash was given to the union workers. In re Local #46 Metallic Lathers Union and Reinforcing Iron Workers, 568 F.3d 81 (2d Cir. 2009).
2nd Circuit holds that victims of Nigerian fraud scheme were not co-conspirators even if motivated by greed. (610) Defendant ran an “advance fees” scam that tricked victims into paying defendant and his confederates to release large sums of money supposedly held in Nigeria. Defendant challenged the restitution order, arguing that the “victims” identified by the court were “too dirty” to claim restitution, since they all participated in what they thought was a fraudulent scheme to obtain money from Nigeria, and thus were, in effect, co-conspirators. The Second Circuit held that restitution under the MVRA may not be denied simply because the victim had greedy or dishonest motives, where those intentions were not the same as those of the defendant. Thus, a would-be burglar who is robbed by a potential accomplice before the planned crime may be entitled to restitution. Restitution would not be appropriate if one burglar were to rob another of the proceeds of the heist they had just committed. U.S. v. Ojeikere, 545 F.3d 220 (2d Cir. 2008).
2nd Circuit holds that appeal waiver did not cover restitution order. (610) Defendant’s plea agreement noted that restitution was “mandated” by 18 U.S.C. § 3663A. The agreement also included an appeal-waiver which stated that defendant “will not file an appeal or otherwise challenge the conviction or sentence … in the event the Court imposes a total term of imprisonment of 114 months … or below.” The Second Circuit held that the appeal waiver did not apply to the appeal of the restitution order. Without a doubt, a restitution order is part of the sentence, and the defendant made a commitment not to challenge his sentence. However, it was not self-evident that the agreement was intended to waive appellate review of any restitution, without limit, that the court might order. Appeal waivers are to be construed “narrowly” and “strictly against the Government.” Although a broad and literal reading of the agreement would bar appeal of any aspect of the sentence, the agreement could also be reasonably construed to bar challenges to the conviction and to the duration of confinement, but not to cover determinations of restitution. This interpretation was reinforced by the agreement referring to the fact that defendant’s “sentence” in one case would run consecutively with the “sentence” imposed in a second case. This made sense only if “sentence” referred to the period of imprisonment. U.S. v. Oladimeji, 463 F.3d 152 (2d Cir. 2006).
2nd Circuit orders defendant convicted of fraudulent possession of credit cards to pay restitution for fraudulent use of credit cards. (610) Defendant pled guilty to fraudulently possessing unauthorized access devices. He challenged an order to pay over $42,000 in restitution, since these damages arose not from his possession of those unauthorized access devices (the crime of conviction), but from their use. The Second Circuit held that the restitution was proper. A “victim” is defined as “a person directly and proximately harmed as a result of the commission of an offense for which restitution may be ordered including, in the case of an offense that involves as an element a scheme, conspiracy, or pattern of criminal activity, any person directly harmed by the defendant’s criminal conduct in the course of the scheme, conspiracy, or pattern.” This language made clear Congress’s intent to include losses resulting from harmful acts committed in the course of inchoate crimes. The statute of conviction, 18 U.S.C. § 1029(a)(3), includes as an element that the possession be “with intent to defraud.” Intent to defraud is a “scheme,” as used in § 3663A, and thus losses suffered as the result of the fraudulent use of a credit card whose illegal possession with intent to defraud is charged under § 1029(a)(3) are compensable by restitution under § 3663A (a)(1). U.S. v. Oladimeji, 463 F.3d 152 (2d Cir. 2006).
2nd Circuit holds that loss offset should not be based on nominal sale price of recouped property. (610) Defendant was convicted of making false statements in connection with loans guaranteed by the Department of Housing and Urban Development (HUD). The district court ordered defendant to pay over $18 million in restitution to HUD, the guarantor on various defaulted loans obtained under the scheme. Defendant argued that HUD was not entitled to restitution because its loss was fully compensated by the fair market value of the foreclosure properties to which it acquired title. The Second Circuit held that the nominal sale price of property with a higher fair market value cannot be used to calculate offset value because such a calculation impermissibly awards a victim restitution in excess of its compensable loss. The plain language of the MVRA does not mandate a single measure of property value. However, the fair market determination will generally best serve the MVRA’s statutory purpose of making victims “whole.” When recouped property is resold at a nominal price, a court abuses its discretion in using that price to calculate offset value because such a calculation necessarily exceeds the amount necessary to make the victim whole. It effectively awards the victim both restitution in the full amount of loss offset only by the nominal sale price and the benefit of the recouped property. U.S. v. Boccagna, 450 F.3d 107 (2d Cir. 2006).
2nd Circuit says dependent under MVRA is someone defendant has legal obligation to support. (610) The Mandatory Victims Restitution Act of 1996 (MVRA) directs court to order restitution in full without consideration of the economic circumstances of the defendant. However, in fashioning the payment schedule, the court must consider various factors, including “any financial obligation of the defendant; including obligations to dependents.” 18 U.S.C. § 3664(f)(2)(C). The Second Circuit held that for purposes of § 3664, a “dependent” is someone that the defendant has a legal obligation to support. Because defendant was not legally obligated to support his adult daughter, even though she suffered from depression and cancer, it was not error for the court to decline to consider her circumstances in setting a restitution schedule. U.S. v. Jaffe, 417 F.3d 259 (2d Cir. 2005).
2nd Circuit holds that restitution order was not garnishment and did not violate CCPA (610) Garnishment is defined by the Consumer Credit Protection Act (CCPA) as “any legal or equitable procedure through which the earnings of any individuals are required to be withheld for payment of any debt.” 15 U.S.C. § 1672(c). Section 303 of the CCPA restricts garnishment to 25 percent of a debtor’s weekly disposable earning, or the amount by which his other disposable earnings exceed 30 times the federal minimum hourly wage, whichever is less. Defendant argued that the restitution schedule ordered by the district court violated the CCPA because, although his annual net income was allegedly $139,000, the schedule required him to make payments of $150,000 per year. The Second Circuit held that because the district court never entered an order of garnishment, the restitution order could not violate the CCPA. The panel refused to hold that an order to pay money is a garnishment. U.S. v. Jaffe, 417 F.3d 259 (2d Cir. 2005).
2nd Circuit holds that restitution order did not violate non-alienation provision of ERISA. (610) Defendant argued that the district court improperly ordered him to pay restitution that would required him to alienate all of his pension and retirement distributions including an ERISA-qualified pension. ERISA mandates that benefits provided under a pension pan may not be assigned or alienated. 29 U.S. § 1056(D)(1). The Second Circuit held that the restitution order did not violate the non-alienation provision of ERISA. The restitution order here placed no restraint on funds in the custody of an ERISA plan administrator. The order did not even specifically direct that restitution payments be from a distribution by the administrator to defendant. The order simply directs payments by defendant from whatever source he chooses. U.S. v. Jaffe, 417 F.3d 259 (2d Cir. 2005).
2nd Circuit holds that court had authority on remand to order mandatory restitution required by MVRA. (610) Defendants argued that the district court exceeded the scope of its mandate by ordering, for the first time at resentencing following remand, the payment of restitution. The appellate court’s opinion did not direct the district court to order restitution. However, a district court may resentence beyond the scope of the mandate, or may resentence on a limited remand using fresh considerations, if it has “cogent” or “compelling” reasons, including the need to correct a clear error. Here, it was indisputable that the MVRA required the district court at the initial sentencing to order restitution, and that the court failed to do so. Because it was error for the district court to have failed during the initial sentencing to order the mandatory restitution, the district court did not err by ordering restitution on remand. Restitution is mandatory under the MVRA even if the victim declined to receive restitution. The district court did not err in directing that, if the victim renounced its interest in the restitution payments, those funds would be assigned to the Crime Victims Fund. U.S. v. Johnson, 378 F.3d 230 (2d Cir. 2004).
2nd Circuit upholds restitution for victim losses identified outside 90-day period. (610) The Mandatory Victims Restitution Act of 1996 requires a court to order full restitution to the identifiable victims of certain crimes. However, such mandatory restitution “can only be imposed to the extent that the victims of a crime are actually identified.” U.S. v. Catoggio, 326 F.3d 323 (2d Cir. 2003). The government conceded on appeal that it did not supply the probation office or the court with a list of victims’ losses attributable to defendant either before sentencing or 90 days thereafter, as required by 18 U.S.C. 3664(d)(5). Defendant argued that the appellate court should limit the district court’s authority, on remand, to order restitution of $1145 in favor the only victim loss that was determined at the original sentence. However, the purpose behind the statutory 90-day limit on determining victims’ losses is not to protect defendants from drawn out sentencing proceedings or to establish finality; rather it is to protect crime victims from the willful dissipation of defendants’ assets. Thus, a district court’s failure to determine identifiable victims’ losses within 90 days after sentencing will be deemed harmless error unless the defendant can show actual prejudice from the omission. The Second Circuit declined to limit harmless error review of 3664(d)(5) delays in which a defendant causes or consents to the delay. It directed the district court, on remand, to resentence defendant only with respect to restitution, because defendant failed to show prejudice. U.S. v. Zakhary, 357 F.3d 186 (2d Cir. 2004).
2nd Circuit holds that error in advising defendant of penalties was not harmless. (610) During defendant’s plea colloquy, the court told him that he faced a mandatory minimum sentence of 20 years and a maximum sentence of life imprisonment on the drug counts. In fact, since no drug quantity had been charged, under Apprendi the actual sentencing range was zero to 30 years. The Second Circuit held that the error was not harmless. Although defendant had a two-year delay in presenting his challenge to the court, the critical factor was not the delay, but the gap between the practical effect of a district court informing a defendant of the wrong minimum penalty and the effect of the court informing him of the wrong maximum penalty. The district court informed defendant that a mandatory minimum sentence applied when one did not. Since § 5K1.1 motions are virtually the only mechanism for bypassing statutory minimum sentences, a mandatory minimum sentence represents a strong inducement to plead guilty. Thus, where a defendant has been told that he is facing such a sentence, that information is presumptively significant in the defendant’s decision making. Moreover, the difference between the sentencing range that the court described and the actual range he faced was substantial. Further, there was “the impression of sufficient confusion.” For example, it was unclear whether defendant admitted the drug quantities alleged by the government, or whether he was acknowledging that this was the quantity the government had accused him of dealing in. This combination of factors “tipped the scales” in defendant’s favor. U.S. v. Harrington, 354 F.3d 178 (2d Cir. 2004).
2nd Circuit says court properly followed MVRA in ordering restitution. (610) Defendant was convicted of federal health care fraud in connection with a series of staged automobile accidents. He claimed that a $46,701 restitution order was in error because it was made without consideration of statutorily mandated factors such as financial resources, financial needs, earning ability and dependents. The Second Circuit held that the district court properly followed the mandates of the Mandatory Victims Restitution Act of 1995 (MVRA), which is effective for sentencing of defendants convicted on or after April 24, 1996. Section 3663A of the MVRA, in contrast to the former restitution statute, makes restitution mandatory for losses suffered by victims of certain crimes, including defendant’s crimes of fraud, and directs that restitution orders be issued and enforced in accordance with § 3664. Section 3664(f)(1)(A) states that “the court shall order restitution to each victim in the full amount of each victim’s losses as determined by the court and without consideration of the economic circumstances of the defendant.” (emphasis added). The district court was bound to consider only the victims’ losses and was precluded from considering the other factors suggested by defendant. U.S. v. Lucien, 347 F.3d 45 (2d Cir. 2003).
2nd Circuit upholds scope of restitution order. (610) Defendant was convicted of federal health care fraud in connection with a series of staged automobile accidents. The restitution order against defendant was based on the money paid to his medical providers, the monies paid to the medical providers of his fellow passengers, and the monies paid to him and his fellow passengers in civil settlements. Defendant argued that the amount of restitution should have been limited to either the amount of his civil settlement or to that amount plus the amounts paid to medical providers for his treatment. In addition, he believed that his liability should be made joint and several with his co-defendant and with the medical care providers who received the no-fault reimbursements. The Second Circuit found these arguments without merit. First, the district court found that defendant participated in a jointly undertaken criminal activity and that the fraudulent medical expenses and civil settlements of each passenger were foreseeable by the other passengers in the vehicle. Because all of the passengers contributed jointly to the loss of each victim, it was not an abuse of discretion for the district court to find that both defendant and another convicted passenger involved in the same staged accident, liable for payment of the full amount of loss occasioned by the accident. The government conceded that the district court intended for them to be held jointly and severally liable for this loss. The medical service providers who received reimbursement were not liable, since they were not charged in the indictment or tried with these defendants. U.S. v. Lucien, 347 F.3d 45 (2d Cir. 2003).
2nd Circuit refuses to modify fine and restitution where defendant did not disclose financial information. (610) Defendant was convicted of charges relating to a conspiracy to bomb U.S. commercial airliners in Asia, and on charges relating to the 1993 bombing of the World Trade Center. In a related case, the Second Circuit held that it was not an abuse of discretion for a court to impose $250 million in restitution and a $250,000 fine on each indigent defendant where defendants had failed to present evidence that future income from media contacts was not a substantial possibility. U.S. v. Salameh, 261 F.3d 271 (2d Cir. 2001). The court did, however, modify the judgments so that each defendant’s fine and restitution obligations would become payable only if he received income from the sale of his account of the World Trade Center bombing or the events leading up to it. The same modification was proper for defendant Ismoil. However, the Second Circuit did not order such a modification for defendant Yousef because he refused to disclose his financial resources to the probation department. Moreover, Yousef always had funds to travel, purchase bomb ingredients, and flee from authorities. The district court therefore assumed that he would be able to pay the $4.5 million fine. Given his refusal to provide financial information, the court would not limit the source of income from which the fine and restitution could be paid. U.S. v. Yousef, 327 F.3d 56 (2d Cir. 2003).
2nd Circuit remands to determine victims and actual losses. (610) Defendant pled guilty to racketeering charges. The court ordered restitution of $80 million under the MVRA, 18 U.S.C. § 3663A. Because the government had not yet provided the court with a list of identified victims and their actual loss, the court ordered the names of the victims to whom restitution was owed and the losses sustained by each individual to be set forth in a separate order at such time (which could exceed 90 days from the date of the order) as that information could be ascertained by the court. Defendant argued that restitution should not have been ordered under the MVRA because that statute specifically does not apply where the victims of a crime and their losses are unidentifiable or their numbers are too large for restitution to be practical. The Second Circuit agreed that court did not follow the procedures outlined in the MVRA, but rejected defendant’s claim that the victims of his crime were unidentifiable or that the number of victims was too large for restitution to be practicable. While the it would be impractical to request affidavits of loss from each victim, the government was in possession of trading records which identified the victims and their respective losses. The case was remanded to determine the victims and their actual losses. U.S. v. Catoggio, 326 F.3d 323 (2nd Cir. 2003).
2nd Circuit remands for determination of defendant’s ability to pay restitution. (610) Defendant was convicted of converting to her own use social security funds intended for another. See 42 U.S.C. § 1383a(a)(4). In sentencing defendant to make restitution, the court did not indicate which statute it relied upon. The government contended the order was authorized by either 42 U.S.C. § 1383a(b)(1), which pertains specifically to cases of SSI fraud, or the more general restitution provision of 18 U.S.C. § 3663. The Second Circuit found that remand was required under either of the statutes. The court’s statements lacked the specificity required to be sure that it considered the mandatory § 3663 factors. Nonetheless, the panel believed that on remand the court would be able to support its current restitution order. Although the judge used the phrase “strike it rich,” the context of this reference suggested that he did not rely on this remote possibility as a reason for imposing restitution. The court did not abuse its discretion by considering the moral value of using restitution as a tool to encourage defendant to get a job. In addition to the mandatory § 3663 factors, a court may consider “such other factors as the court deems appropriate.” The fact that defendant never held a job did not make it unrealistic to expect her to pay back the money she stole. Even if the court ordered restitution under § 1383a, the district court was required to consider the defendant’s ability to pay restitution. Because the record was unclear with regard to whether the court determined that defendant had the ability to pay restitution, the panel remanded for resentencing. U.S. v. Jacques, 321 F.3d 255 (2d Cir. 2003).
2nd Circuit finds no error in restitution authorized by plea agreement. (610) Defendant operated a fraudulent telemarketing scheme that victimized elderly persons who had previously been victimized by other telemarketing scams. He was convicted of conspiracy to commit tax fraud for failing to report any of his fraudulent income. He argued that the district court lacked authority to order restitution to the victims of the telemarketing scheme because they were not victims of the offense of conviction, i.e. conspiracy to commit tax fraud. However, such an order of restitution is expressly authorized by statute when the defendant’s plea bargain includes an agreement for such restitution. See 18 U.S.C. § 3663(a)(1)(A). Here, defendant’s plea agreement stated that the court could order restitution up to $46,465, and that “[t]he parties also agree[d] that the order of restitution should state that amounts paid in this criminal case will go to the victims of the telemarketing operations in which the defendant participated.” Thus, the Second Circuit ruled that the district court did not err in ordering restitution to the victims of the telemarketing scheme. U.S. v. Firment, 296 F.3d 118 (2d Cir. 2002).
2nd Circuit approves fine and restitution based upon potential earnings from future media contracts. (610) Defendants, convicted of offenses relating to their involvement in the 1993 World Trade Center bombing, argued that the $250,000 fine and $250,000 in restitution imposed upon each of them failed to take account of their indigency. It was undisputed that defendants were indigent at the time of sentencing, but the judge determined that the level of media interest in the bombing was such that there was a “real possibility” that they could receive large amounts of money from books or television accounts of the crime. The Second Circuit ruled that the district court acted within its discretion in basing the fines on defendant’s future earning potential. Although fines may not be based on the “remote fortuity” that a defendant would win the lottery, this situation, involving a highly publicized crime, was distinguishable. See U.S. v. Wong, 40 F.3d 1347 (2d Cir. 1994). The parties stipulated that the entire amount of fines and restitution should be made contingent upon the realization of future earnings from media contracts and that, in the absence of such earnings, defendants would not be required to pay any fines or restitution, even though they might have minor earnings from other sources. U.S. v. Salameh, 261 F.3d 271 (2d Cir. 2001).
2nd Circuit holds that court not required to identify each victim underwriter of insurance policy. (610) Defendant and her brother staged a robbery of their own jewelry store for insurance proceeds. Following the robbery, they filed an insurance claim with Lloyd’s of London for almost $4 million, the value of the “stolen” jewelry. Defendant challenged the district court’s restitution order because the judge did not identify each of the underwriters of Lloyd’s insurance policy and did not make precise findings as to the amounts each was owed. Lloyd’s acted as a unified entity with respect to this insurance claim. The government argued that it was a “collective Lloyd’s” that issued the payment from its central funds. The Second Circuit found that this obviated any need for the sentencing judge to expressly identify each underwriter. Similarly, the sentencing judge acted within the bounds of his discretion in not making detailed findings with respect to whether Lloyd’s underwriters received compensation from other sources for their losses in light of the sworn affidavit of Lloyd’s New York counsel that attested to the fact that no such compensation was received. U.S. v. Ben Zvi, 242 F.3d 89 (2d Cir. 2001).
2nd Circuit holds that record did not reflect consideration of statutory restitution factors. (610) Defendant argued that the district court failed in its duty to consider certain statutory factors, including his earning capacity, before determining a payment schedule for his restitution. The Second Circuit noted that the court was not required to determine his earning ability before imposing restitution; however, the court was required to consider certain statutory factors. See 18 U.S.C. § 3664(f)(2). “The threshold issue … is whether the record reflects that the district court engaged in the factor analysis which Congress has mandated….” The Second Circuit found that the record did not reflect this, and vacated the restitution order. Although a court need not make any particular recitation of fact or references to the record, the record must adequately indicate that the court considered the statutory factors. In this case, the restitution order merely stated the amount of defendant’s monthly payments. Although the court stated that it had reviewed the PSR in detail in the context of determining the applicable offense level, and the PSR contained detailed findings about defendant’s ability to work, this was not enough to indicate that the court considered the specific statutory factors in imposing the restitution payment schedule. U.S. v. Tran, 234 F.3d 798 (2d Cir. 2000), overruled on other grounds, U.S. v. Thomas, 274 F.3d 655 (2nd Cir. 2001).
2nd Circuit upholds procedure used by district court to determine restitution. (610) Defendant argued that the district court erred by failing to conduct a hearing on the restitution issue. The Second Circuit disagreed, finding defendant was given an adequate opportunity to present his position as to restitution. The trial record shed substantial light on the propriety of the restitution award, and the record revealed that defendant had ample opportunity to present his views. At trial and prior to sentencing, the court convened a special conference for the purpose of determining the correct amount of loss for both sentencing and restitution purposes and allowed extensive argument from both parties. The court then delayed its restitution decision for 90 days to give defendant an opportunity to present his arguments. After sentencing and prior to issuing the restitution order, the court held a conference devoted solely to restitution issues. The district court’s findings were not inadequate. The court gave proper consideration under 18 U.S.C. § 3664(f)(2) to all of the required factors; detailed findings were not required. Finally, defendant was not entitled to an offset for amounts he claimed to be owed by one of his victims. The district court properly declined to attempt to adjudicate defendant’s civil claims in this criminal proceeding to which the victims were not parties. U.S. v. Maurer, 226 F.3d 150 (2d Cir. 2000).
2nd Circuit orders full restitution where defendant’s conviction implicated her as co-conspirator. (610) Defendant and other salespersons made false statements and representations to induce customers to purchase and invest in gemstones at vastly inflated prices. Although the jury acquitted defendant of a conspiracy count, the counts of conviction included one mail fraud count and one wire fraud count in which defendant had no direct dealings with the victims. On these latter two counts, the jury necessarily convicted defendant on a theory of co-conspirator liability, under Pinkerton v. U.S., 328 U.S. 640 (1946). The Second Circuit ruled that because defendant’s counts of conviction implicated her as a co-conspirator, she could be required to pay restitution up to the full amount of loss caused by the conspiracy as a whole. The definition of “victim” in the MVRA traces verbatim the amended language of the VWPA, which courts have uniformly read to provide for restitution by all convicted co-conspirators for damages suffered by all victims of a conspiracy, regardless of the facts underlying counts of conviction in individual prosecutions. See U.S. v. Collins, 209 F.3d 1 (1st Cir. 1999). Although the jury acquitted defendant of conspiracy charges, the jury necessarily found that defendant was liable for substantive crimes committed by co-conspirators under Pinkerton, which subsumes the findings that defendant was a member of the conspiracy, that her offense was committed pursuant to the common plan of the conspiracy, and that she could reasonably have foreseen that a co-conspirator would commit the substantive offense. U.S. v. Boyd, 222 F.3d 47 (2d Cir. 2000).
2nd Circuit upholds denial of minimal participant reduction and full restitution. (610) Defendant noted that in calculating restitution, the court evaluated the damage suffered by victims of the conspiracy as a whole, including counts as to which defendant was acquitted. However, in denying defendant’s motion for a minimal participant reduction, the court evaluated her role in terms of the counts of conviction alone. She argued that if she was financially responsible for the losses caused by the entire conspiracy, then she should be deemed a small cog in the big conspiracy for purposes of determining her role in the offense. The Second Circuit found that any inconsistency between the denial of the minimal participant reduction and the order of full restitution was not plain error. Neither ruling was inconsistent with the authority on which it was based. The restitution statute provides that every member of a conspiracy be liable for full restitution, regardless of the role that each may have performed. See 18 U.S.C. § 2327(b)(4)(A). Guideline § 3B1.2 is just as clear and provides that a minimal participant reduction is rare and should only be based on the particular defendant’s individual acts as they relate to the counts of conviction. Under the plain error approach, it was enough that the sentencing court did not deviate from settled law in either of the two rulings. Error, if any, was not “clear” or “obvious” under current law. U.S. v. Boyd, 222 F.3d 47 (2d Cir. 2000).
2nd Circuit says potential loss cannot be included in restitution. (610) In calculating the loss from defendant’s various misrepresentations to its lender, the district court included $80,000 lost from one misstatement and a potential $115,000 that the lender could have lost if it had made advances to defendant based on a second misstatement. Although both actual and potential loss were properly included in the loss calculation, the Second Circuit held that the restitution order must be limited to actual loss. In the present case, the district court’s restitution order almost certainly included potential loss. Thus, the appellate court vacated that award. On remand, the court must consider the facts that are mandatory in setting restitution, including the financial need of defendant’s dependents. 18 U.S.C. § 3663(a)(1) (B)(i). The PSR suggested that during defendant’s incarceration, his wife might not have sufficient funds to maintain her household. The court’s failure to mention this in its original consideration of restitution suggested that the court may have failed to consider the mandatory factors. U.S. v. Carboni, 204 F.3d 39 (2d Cir. 2000).
2nd Circuit vacates restitution where court did not consider statutory factors. (610) The restitution statute, 18 U.S.C. § 3664(a), requires that before restitution may be ordered, the district court must give adequate consideration to “the amount of the loss sustained by any victim … the financial resources of the defendant, the financial needs and earning ability of the defendant and the defendant’s dependents, and such other factors as the court deems appropriate.” The present record did not reflect that the court considered any of these mandatory factors. Although the court explained that it would not impose a fine because of defendant’s financial condition, the Second Circuit ruled that a determination not to impose a fine is not an adequate substitute for express compliance with § 3664(a) when ordering restitution of $1.8 million. The court remanded for further consideration. U.S. v. Joyner, 201 F.3d 61 (2d Cir. 2000).
2nd Circuit upholds restitution from plea agreement. (610) Defendant claimed that the district court erred in issuing a restitution order which, while consistent with her plea agreement, exceeded her ability to pay. The Second Circuit found no error. Title 18 U.S.C. § 3663(a)(3) expressly provides that a court may order restitution “in any criminal case to the extent agreed by the parties in a plea agreement.” In her plea agreement, defendant expressly agreed to pay “at least” $260,854, and acknowledged that the court could make the amount greater “depending upon the proof available at the time of sentencing.” Defendant’s claim that the order was improper because she would not be able to pay the full amount within five years was misguided. Although § 3663 requires courts to consider a defendant’s financial resources and earning ability, the judge satisfied this requirement by creating a monthly payment schedule that accounted for defendant’s low earning potential during her incarceration and upon her release. U.S. v. Allen, 201 F.3d 163 (2d Cir. 1999).
2nd Circuit says restitution for social security fraud permitted as condition of supervised release. (610) The district court ordered defendant to pay $66,086.40 in restitution to the Social Security Administration for defendant’s violations of 42 U.S.C. § 408. Under 18 U.S.C. § 3663(a)(1), a court may order restitution when sentencing a defendant convicted of certain offenses under titles 18, 21 and 49 of the United States Code. Because the court’s authority to order restitution depends upon the statute, the omission in § 3663(a)(1) deprived the district court of the power to order restitution for defendant’s social security fraud. However, if restitution is ordered as a special condition of supervised release, then the order is permissible even if the conviction does not rest upon a conviction specified in § 3663(a)(1). Because the record below supported either view of the district judge’s restitution order, and the parties agreed that the judge imposed restitution at least in part as a special condition of supervised release, the Second Circuit affirmed the order only insofar as the judge imposed restitution payments to the SSA as a condition of defendant’s supervised release. The appellate court vacated the restitution order to the extent that it reflected a statutory restitution order. U.S. v. Fore, 169 F.3d 104 (2d Cir. 1999).
2nd Circuit abates restitution order for dead defendant. (610) Defendant pled guilty to embezzlement and was sentenced to 37 months’ imprisonment and ordered to make restitution of $377,818.03. Defendant then died before his appeal could be heard. The Second Circuit ordered the restitution abated since retention of the restitutionary order would be futile. The district court made the restitution obligation effective immediately, but stated that there was to be no immediate payment because defendant was financially unable to pay a fine. The court set a payment schedule to begin after defendant’s completion of his prison term and upon the commencement of his term of supervised release. Since defendant’s payments were not now due, his obligation could not be accelerated, and the time for him to commence making payments could never arrive, the retention of the restitution order would be futile. The court did not decide whether an order that makes restitution payable immediately should survive the death of a defendant during the pendency of his direct appeal. U.S. v. Wright, 160 F.3d 905 (2d Cir. 1998).
2nd Circuit requires payment of tax liability as condition of supervised release. (610) Defendant was convicted of tax evasion. The Second Circuit upheld the requiring defendant to contribute 10 percent of his gross monthly income to his tax liability as a condition of supervised release. This condition does not violate 28 U.S.C. § 3663, which provides for restitution only when the defendant is convicted under certain specified statutes, none applicable here. However, a plain reading of § 3583(d) and § 3563(b) permits a judge to award restitution as a condition of supervised release without regard to the limitations in § 3663(a). Moreover, the 1990 version of § 5E1.1(a) in effect when defendant committed his offense specifically authorized a court to order restitution as a condition of supervised release in all cases, without reference to the limitations in § 3663(a). Recent revisions have been clearer, requiring the judge to order restitution as a condition of supervised release or probation where restitution would be available under § 3663(a) but for the fact that the offense is not within the category of offenses listed in the statute. U.S. v. Bok, 156 F.3d 157 (2d Cir. 1998).
2nd Circuit approves subjecting defendant to search as supervised release condition. (610) Defendant was convicted of fraud and ordered to pay more than $1 million in restitution. The Second Circuit upheld a condition of supervised release subjecting defendant to searches of his person and property by the probation department to secure information regarding defendant’s finances. The judge stated that she had never seen a defendant obstruct justice more than defendant by consistently lying about records and other information. He concealed documents by stating that they had been stolen, only to present the documents in court. He also posed as an attorney on multiple occasions. To frustrate the investigation of the instant offense, he filed a false complaint against a postal inspector. The judge was appropriately skeptical of defendant’s future willingness to satisfy the restitution order or to disclose accurate and complete financial information upon request. Because defendant’s candor on financial matters was demonstratively untrustworthy, a condition requiring that he submit to searches of his property was reasonable. Searches of defendant’s person might disclose items relevant to his financial condition such as credit cards, checkbooks, receipts, car keys or business cards. U.S. v. Germosen, 139 F.3d 120 (2d Cir. 1998).
2nd Circuit finds defendant could pay full restitution despite PSR’s contrary recommendation. (610) Defendant participated in several fraud schemes in which travel agencies sold airline tickets to customers and then failed to remit the proceeds to the airlines. The district court ordered him to pay $1.6 million in restitution, and the Second Circuit affirmed, holding that the district court properly considered defendant’s ability to pay. Although the PSR concluded that he could only pay partial restitution, the district court at sentencing spent a considerable amount of time discussing defendant’s assets. It concluded that, in light of the facts that his 3 children were in parochial school, he owned several pieces of real estate and at least one Jaguar, and properties held in his wife’s name were “a charade,” defendant had available the assets to pay restitution in full. The government conceded, however, that the district court did err in finding that losses from two travel agency defaults were not part of the offense of conviction. Absent a stipulation in a plea agreement, a sentencing court may award restitution only for losses directly resulting from the “conduct forming the basis for the offense of conviction.” U.S. v. Germosen, 139 F.3d 120 (2d Cir. 1998).
2nd Circuit remands to consider restitution under new Mandatory Victims Restitution Act of 1996. (610) Defendant, an executive vice president of a jet engine repair company, was convicted of fraud based on misrepresentations the company made about the nature of repairs it made to jet engines. The district court ordered defendant to pay restitution of $35,628 to one airline for certain repairs or to any person who paid the airline for these repairs. Defendant’s company paid the airline and therefore the district court’s order required defendant to repay his company. The government and defendant disputed on appeal whether defendant could be forced to repay the company under 18 U.S.C. § 3663(e)(1). The Second Circuit remanded for the court to consider the effects of the Mandatory Victims Restitution Act of 1996, which was enacted two weeks before defendant was convicted. The MVRA repealed § 3663(e)(1) and enacted or amended numerous other sections relating to victim restitution. U.S. v. Gabriel, 125 F.3d 89 (2d Cir. 1997), overruling on other grounds recognized by U.S. v. Quattrone, 441 F.3d 153 (2d Cir. 2006).
2nd Circuit holds court lacked power to order restitution in tax case. (610) Defendant pled guilty to failing to file income tax returns for 1988 through 1991. His plea agreement provided that defendant would pay to the IRS past due taxes for the years 1986 through 1991 “on such terms and conditions as will be agreed upon” by defendant and the IRS. The district court ordered defendant to pay full restitution of $249,442. The Second Circuit held that the district court lacked the power to order restitution. Federal courts have no inherent power to order restitution; such authority must be conferred by Congress. The statute that empowers a sentencing court to order restitution, 18 U.S.C. § 3663, does not list the tax crimes of Title 26 as crimes for which a court may order restitution. The language of the plea agreement was not sufficient under § 3663(a)(3) to empower the court to order restitution. Defendant only agreed to pay back taxes according to a plan later to be negotiated between himself and the IRS—not as ordered by a court. The agreement reserved for defendant the right to negotiate a method of payment with the IRS. Court-ordered restitution, with a court-devised payment plan, was not part of the bargain. U.S. v. Gottesman, 122 F.3d 150 (2d Cir. 1997).
2nd Circuit says § 3583(e)(2) does not permit restitution to be modified for claimed illegality. (610) Defendant was convicted of 17 counts of bank fraud. On direct appeal, he did not dispute the restitution order, and his conviction and sentence were affirmed. He then filed a motion to rescind the restitution order claiming it was improperly based on conduct outside the offenses of conviction. He argued the court had jurisdiction to entertain this motion because restitution was a condition of his supervised release under § 3663(g), and under 3583(e)(2), the sentencing court may modify the conditions of supervised release at any time. The Second Circuit held that illegality of a condition of supervised release is not a basis for modifying supervised release under §§ 3583(e)(2) or 3663(g). A court may modify a condition of release only after considering the factors set forth in § 3553(a). Defendant’s interpretation of § 3583(e)(2) was inconsistent with the scheme of appellate and collateral review established by the Sentencing Reform Act of 1984. U.S. v. Lussier, 104 F.3d 32 (2d Cir. 1997).
2nd Circuit says wholesaler who accepted food stamps from restaurants caused loss. (610) Defendant owned a business that supplied wholesale food to Chinese restaurants. Over several years, some of the restaurants paid for defendant’s supplies with food stamps. Defendant had no authority to receive food stamps. Wholesalers and most restaurants are prohibited from accepting them. Under note 7(d) to § 2F1.1, in a case involving diversion of government program benefits, loss is the value of the benefits diverted from the intended recipients or uses. Defendant argued that only those who illegally obtain food stamps from the original recipients divert the stamps from their intended recipients. The Second Circuit found a loss under note 7(d) because, by accepting the stamps, defendant helped the initial wrongdoer convert the stamps to cash, thereby causing a loss much like someone who receives stolen property from a thief. The district court’s decision to order restitution was also proper. Although defendant may have bought and sold the stamps at a discount, it was highly probable that a later holder redeemed them at full value, causing the government the actual loss of the full value of the stamps. U.S. v. Cheng, 96 F.3d 654 (2d Cir. 1996).
2nd Circuit upholds restitution where defendant could not account for stolen money. (610) While working for a brokerage firm, defendant deposited $170,000 of customers’ funds into her own personal checking account. The district court ordered restitution of $170,000, payable immediately, but stayed the execution as long as she made monthly installments of $25 while on supervised release. Defendant protested that she was unable to pay the restitution, claiming she was indigent, her expenses exceeded her income, and she owed more than $10,000 on her credit card bills. The Second Circuit affirmed, since defendant was unable to account for the funds she fraudulently obtained. Defendant had the burden of establishing her financial condition and the needs of her dependents by a preponderance of the evidence. Her handwritten summary of checks did not persuade the district judge that she had dissipated all of the fraudulently obtained funds. The court had a grounded suspicion that defendant might actually have the present means to make full restitution. If defendant was unable to pay full restitution upon expiration of her three‑year term of supervised release, then she had the statutory protection afforded judgment debtors. U.S. v. Porter, 90 F.3d 64 (2d Cir. 1996).
2nd Circuit remands for failure to consider defendant’s obligations in ordering $200 million restitution. (610) Defendant argued that in ordering $200 million in restitution, the district court failed to consider his financial needs and earning potential, and placed an undue burden on him and his dependents. The Second Circuit remanded with instructions for the district court to consider the financial needs and earning ability of defendant and his dependents. Here, the district court based its restitution order on the possibility that defendant could earn $200 million in the future. The court concluded that the victim banks should not have to risk not recovering simply because it was unlikely that defendant would make this amount of money. The court did not discuss defendant’s obligations to his dependents or his own financial needs. The record must show that the court has considered the statutory factors in ordering restitution. U.S. v. Harris, 79 F.3d 223 (2d Cir. 1996).
2nd Circuit reverses for failure to advise of restitution despite plea agreement. (610) Defendant agreed in his plea agreement to pay restitution. However, at his plea hearing, there was no mention of restitution. The prosecutor who summarized the plea agreement did not mention restitution and the judge did not discuss the possibility with defendant. The PSR prepared after his plea noted that defendant agreed to pay restitution, and defendant did not object to the recommended order of restitution. Nonetheless, the Second Circuit held that the court’s failure to discuss restitution at the plea hearing was not harmless error. An understatement of the maximum authorized penalty, combined with the sentencing of the defendant to a penalty greater than that of which he was advised, is generally not a harmless error. Although defendant’s counsel was aware of the restitution, the record did not show that defendant himself understood that the court could include restitution in his sentence. The court did not mention restitution and the punishments listed in the plea agreement did not mention restitution. A separate paragraph dealt with defendant’s agreement to make restitution, but made no reference to the court’s power to order restitution. U.S. v. Showerman, 68 F.3d 1524 (2d Cir. 1995).
2nd Circuit vacates restitution for failure to consider defendants’ financial resources and needs of dependents. (610) Defendants were involved in a Medicaid fraud scheme. The district court ordered restitution in the amount of loss caused by each defendant. The Second Circuit vacated the restitution order because the district court failed to consider the financial resources of the defendants and the needs of defendants’ dependents as required by 18 U.S.C. § 3664. Although there is no requirement of specific findings on each factor listed in § 3664(a), the record must demonstrate that the court considered the factors in ordering restitution. The court also erroneously ordered the restitution payments to be made according to a schedule determined by the probation department. A court cannot authorize a probation officer to make post-sentencing decisions as to either the amount of restitution or the scheduling of installment payments. U.S. v. Khan, 53 F.3d 507 (2d Cir. 1995).
2nd Circuit vacates restitution for failure to consider ability to pay immediately. (610) The Second Circuit held that the court adequately considered defendant’s financial status in ordering $28,000 in restitution, but erred by failing to consider (1) his ability to pay the restitution immediately, and (2) payments made by third parties to the victims. In declining to impose a fine, the court noted that it had considered defendant’s present financial condition. This suggested it had considered his financial condition before imposing restitution, since defendant had consented in his plea agreement to pay up to $56,000 in restitution. Since defendant had no assets, he should not have been ordered to pay the restitution immediately. The court also failed to consider compensation that the victims already received from third parties. Although defendant would still be obliged to compensate the third parties for such payments, the order directed that the payments be made to the victims. U.S. v. Mortimer, 52 F.3d 429 (2d Cir. 1995).
2nd Circuit rejects need for specific findings as to each restitution factor. (610) Defendant challenged the district court’s $4.1 million restitution order. The Second Circuit upheld the restitution. Although a court must consider factors like financial resources and the needs of dependents, specific findings as to each factor are not required. Defendant’s PSR, which the district court considered, detailed defendant’s financial condition, and the needs of his dependents. The district court expressly discussed these issues in the course of considering whether to impose a fine or costs of incarceration. Moreover, defendant agreed to make full restitution in a written plea agreement. U.S. v. Mizrachi, 48 F.3d 651 (2d Cir. 1995).
2nd Circuit limits restitution to losses occurring within five-year statute of limitations. (610) Defendant fraudulently received social security benefits from May 1979 until November 1991. The 2nd Circuit held that restitution is limited to losses that defendant either expressly agreed to repay or losses directly caused by the offense of conviction. Here, there was no evidence that defendant agreed to repay an amount that exceeded the loss caused by the offense of conviction. Conduct within the offense of conviction was limited by the five-year statute of limitations. Defendant could be ordered to reimburse the government for only the amount of loss caused by conduct that occurred during the five year period before the date of his information and waiver of indictment. U.S. v. Silkowski, 32 F.3d 682 (2nd Cir. 1994).
2nd Circuit says restitution order may exceed amount charged in indictment. (610) Defendant argued that his restitution order should not have exceeded the amount charged in his indictment. The 2nd Circuit held that the amount of restitution may be either the loss charged in the count of conviction or a greater amount agreed to by the parties in a plea agreement. The plea agreement noted that there was a dispute between defendant and the government over the amount of the fraud. The parties agreed that the amount of loss was an issue for the court to decide at sentencing. U.S. v. Lavin, 27 F.3d 40 (2nd Cir. 1994).
2nd Circuit upholds restitution order to be paid according to defendant’s ability to pay and full financial disclosure. (610) The 2nd Circuit upheld a restitution order, even though the court did not expressly state that it had considered the factors in 18 U.S.C. §3664(a). The court did state that the restitution was to be paid “according to [defendant’s] ability to pay, and full financial disclosure.” Thus, the government could not take any action against defendant for failing to pay restitution if defendant could show he was unable to pay. Any such action would have to follow a proceeding in the district court finally setting the amount of restitution and a subsequent failure by defendant to make the requisite payments. Except for the amount of loss sustained by the victim, all of the factors enumerated in §3664(a) would be considered in such an action. The final amount of restitution, if disputed, must be determined by the district court and not by the probation office. U.S. v. Broyde, 22 F.3d 441 (2nd Cir. 1994).
2nd Circuit affirms that departure based on refusal to make restitution and concealment of assets did not violate 5th Amendment. (610) The district court departed upward based upon defendant’s false claim that he had disbursed most of the proceeds of his fraud and his concealment of other assets. The 2nd Circuit rejected the claim that the departure violated defendant’s 5th Amendment rights by penalizing him for refusing to incriminate himself by returning the proceeds of his crime. First, defendant waived his 5th Amendment privilege as to information regarding his funds by agreeing, as part of his plea bargain, to disclose all his financial information to the government and the court. Second, since money is fungible, the production of funds for restitution does not implicitly acknowledge defendant’s possession of the stolen funds, especially when the defendant is a substantial businessman. U.S. v. Merritt, 988 F.2d 1298 (2nd Cir. 1993).
2nd Circuit vacates invalid restitution order. (610) The order to pay $20,400 restitution to three victims was invalid because defendant had not been advised at the time of his plea that restitution could be ordered, and the amount of restitution exceeded the $5,500 in the offense of conviction. As a remedy, defendant sought only to have the restitution reduced to $5,500, thereby waiving the Rule 11 defect. The government agreed to the reduction, but contended that on remand, the judge should have discretion to impose a fine. The district court had found defendant’s financial condition was insufficient to warrant both, and declined to order a fine to “give priority to” the victims. The 2nd Circuit found that it would be proper on remand for the district court to impose a fine, now that the restitution order was invalidated. On remand, if the government agreed to forego restitution, the guilty plea would stand. If the government wished to obtain restitution (limited to $5,500), defendant must be given an opportunity to withdraw his plea. If restitution was not sought, or if defendant did not withdraw his plea and accepted a reduction in restitution to $5,500, the judge would be free to impose a fine up to an amount that, when added to the amount of restitution, did not exceed the original $20,400. U.S. v. Young, 932 F.2d 1035 (2nd Cir. 1991).
2nd Circuit finds that addition of restitution upon resentencing did not violate double jeopardy. (610) To correct an illegal sentence, the district court resentenced defendant 11 days after the original sentence. Upon resentencing, the district court added a restitution order. The 2nd Circuit rejected defendant’s argument that this violated double jeopardy. There was no evidence that the court’s failure to impose restitution at the original sentencing was a conscious decision. “Moreover, when it is necessary to correct a sentence to make it lawful, the corrected sentence may be greater than the sentence originally imposed without violating the Double Jeopardy Clause.” U.S. v. Uccio, 917 F.2d 80 (2nd Cir. 1990).
3rd Circuit reaffirms prejudgment interest on restitution under VWPA. (610) Defendant, a former state senator, was convicted of fraud, tax evasion, and obstruction of justice. He challenged an order to pay pre-judgment interest on the restitution awarded, arguing that Gov’t of Virgin islands v. Davis, 43 F.3d 41 (3d Cir. 1994), which approved such an order, was overturned sub silentio by U.S. v. Leahy, 438 F.3d 328 (3d Cir. 2006) (en banc). The Third Circuit disagreed, reaffirmed its holding in Davis that pre-judgment interest is available under the VWPA and MVRA. Davis held that the inclusion of pre-judgment interest on restitution under the VWPA, as amended by the MVRA, was proper because the restitution is compensatory rather than punitive. Leahy recognized that restitution combines features of both criminal and civil penalties. However, Leahy did not involve restitution under the VWPA. Its characterization of restitution as a criminal penalty came in the context of whether it was the type of award to which the Sixth Amendment right to a jury trial applied. U.S. v. Fumo, 655 F.3d 288 (3d Cir. 2011).
3rd Circuit holds that court improperly delegated to BOP duty to set restitution payments while defendant was in prison. (610) The district court ordered defendant to pay restitution of $47,532.36. The court ordered payment to begin immediately subject to the following additional instruction: “The defendant shall make restitution and fine payments from any wages he may earn in prison in accordance with the Bureau of Prisons Inmate Responsibility Program. The restitution and fine shall be due immediately. Any balance remaining upon release from custody shall be paid at a rate of no less than $100.00 per month.” The Third Circuit found that this was an impermissible delegation to the BOP. Although the court discharged its responsibility to fix the amount of restitution and the schedule of payments once defendant is released, by its terms the order delegates how defendant will pay his obligations while he is in prison. Thus, a remand was necessary. U.S. v. Corley, 500 F.3d 210 (3d Cir. 2007).
3rd Circuit says applying post-Hughey amendments to VWPA would violate ex post facto clause. (610) In Hughey v. U.S., 495 U.S. 411 (1990), the Supreme Court held that a restitution order under the VWPA must be based only on the loss caused by the conduct that formed the basis of the conviction. After Hughey, Congress amended the VWPA to provide that (a) when an offense involves a pattern of criminal activity, “victim” means a person who is directly harmed by that pattern, and (b) the court is authorized to order restitution to the extent that the parties have agreed to it in a plea agreement. These amendments became effective after defendants committed their offense but before they entered plea agreements. The 3rd Circuit held that because these amendments worked to the detriment of defendants by enlarging a court’s power to order restitution, application of the amendments to defendants was prohibited by the ex post facto clause. ), superseded by guideline on other grounds as state in U.S. v. Corrado, 53 F.3d 620 (3d cir. 1995).
3rd Circuit remands for restitution to be recalculated based on loss from counts of conviction. (610) Defendants pled guilty to various counts of consumer fraud, bribery, conspiracy and tax evasion resulting from their operation of a roofing business. The 3rd Circuit remanded for recalculation of restitution based upon Hughey v. U.S., 495 U.S. 411 (1990). The court must make findings as to (1) the amount of loss actually sustained by the victim, (2), how the loss is connected to the offense of conviction, and (3) the defendant’s financial needs and resources. Although it was proper to weigh the loss caused by the entire scheme when calculating defendants’ terms of imprisonment, Hughey does not allow a court to use that sum as a basis for restitution. The court must designate recipients of the restitution. Although a court may properly direct that payments be made to the U.S. Attorney, unguided discretion to determine who are “victims” may not be entrusted to either the U.S. Attorney or the Probation Office. ), superseded by guideline on other grounds as state in U.S. v. Corrado, 53 F.3d 620 (3d cir. 1995).
3rd Circuit rejects restitution order based upon defendant’s gain rather than victim’s loss. (610) In his capacity as bank president, defendant approved loans to several real estate developers on condition that the developers use on their construction projects one or more electrical companies in which defendant or his family had an interest. The district court ordered restitution equal to the sum of the three electrical contracts awarded to the family companies by the developers. The 3rd Circuit reversed, ruling that the restitution figure must be based on the losses actually suffered by the bank as a result of defendant’s fraud, rather than defendant’s gain from the fraud. Since this constituted plain error, the court did not need to decide whether defendant waived the issue by not raising it below. U.S. v. Badaracco, 954 F.2d 928 (3rd Cir. 1992).
3rd Circuit, en banc, holds that Booker does not apply to restitution or forfeiture. (610) In three separate cases, defendants challenged their respective restitution orders on Sixth Amendment grounds, arguing that under U.S. v. Booker, 543 U.S. 230 (2005), the facts underlying the orders should have been submitted to a jury and established by proof beyond a reasonable doubt. Several defendants also challenged their orders of forfeiture. The Third Circuit, en banc, held that the amount a defendant must restore to his or her victim as restitution need not be admitted by the defendant or proved to a jury beyond a reasonable doubt. Restitution under the VWPA and the MVRA is not the type of criminal punishment that evokes Sixth Amendment protection under Booker. Restitution is authorized “in the full amount of each victim’s losses.” Thus, a restitution order does not punish a defendant beyond the “statutory maximum.” In addition, based on the Supreme Court’s decision in Libretti v. U.S., 516 U.S. 29 (1995), the en banc court held that the amount of restitution also need not be admitted or proved to a jury beyond a reasonable doubt. Libretti flatly holds that the Sixth Amendment is not implicated in the forfeiture context. U.S. v. Leahy, 445 F.3d 634 (3d Cir. 2006) (en banc).
3rd Circuit upholds restitution to parents of teens victimized by chaperone during trip to Europe. (610) Defendant led a group of teenaged cheerleaders to a competition in Europe. During the trip, he attempted to sexually molest the girls, and was convicted of transportation of a minor with intent to engage in criminal sexual activity. The Third Circuit held that the district court properly ordered defendant to pay restitution to the cheerleader’s parents. They incurred reasonable costs in obtaining the return of their victimized children from London and in making their children available to participate in the investigation and trial. U.S. v. Hayward, 359 F.3d 631 (3d Cir. 2004).
3rd Circuit upholds restitution based on cost of condo less amount victim received from later resale. (610) Defendant purchased a condominium using two counterfeit cashier’s checks totaling $195,000. The district court ordered him to pay restitution of $193,833, the amount he paid for the condominium, to be reduced by the ultimate net proceeds from the sale of the condo. Defendant argued that because he deeded the condo to the settlement company that handled the closing before sentencing as part of the settlement of a civil lawsuit, the condominium was not “later recovered as compensatory damages for the same loss.” 18 U.S.C. § 3664(j)(2). The Third Circuit concluded that even though the property was deeded back to the settlement company, that return did not adequately compensate it for its loss and the district court was entitled to enter the restitution order as a matter of law. The settlement company was not the original seller of the condo who was returned to his pre-crime position upon re-obtaining title to the condo. The court did not improperly postpone the final determination of the amount of restitution; rather, it ordered defendant to pay full restitution in the amount of $193,833, allowing for reduction in that amount when the property sold. This actually worked in defendant’s favor because the condo sold for $181,000, even though at the time of sentencing similar units were selling for $150,000. U.S. v. Himler, 355 F.3d 735 (3d Cir. 2004).
3rd Circuit says loss of exemption during bankruptcy proceeding does not impact actual loss. (610) Defendant filed a bankruptcy petition in which he vastly understated the property he owned. Defendant argued that his creditors incurred no actual loss because the property that he did not report would not have been reachable by his creditors even if he had disclosed it because it was held by him and his wife as tenants by the entireties. Instead of holding a hearing to determine whether or not the property would have been exempt if defendant had acted lawfully, the court accepted the government’s position that in bankruptcy proceedings a debtor is not entitled to claim an exemption for property that he fraudulently concealed. Thus, the court determined that the calculation of actual loss would not exclude the property defendant claimed was exempt. The Third Circuit found this reasoning flawed, because the loss of an exception during a bankruptcy proceeding does not impact upon the determination of actual loss (for restitution or sentencing purposes). The bankruptcy court, unlike the district court, is not calculating the harm caused by the defendant’s crime. To determine harm, and thus actual loss, the court must compare what actually happened with what would have happened if the defendant had acted lawfully. The panel remanded so that the district court could determine actual loss and thus the proper amount of restitution, if any. However, the loss calculation under § 2F1.1 could be upheld if defendant intended a loss greater than the amount of actual loss determined by the court. Although defendant claimed that he intended no loss and merely wanted to expedite the bankruptcy process, defendant’s intent could be inferred from the fact that he concealed a large amount of assets, and two of the vehicles he concealed were not even arguably exempt. Thus, even though the court erred in determining actual loss, the § 2F1.1 loss enhancement could be upheld on the basis of the court’s implied finding as to defendant’s intended loss. U.S. v. Feldman, 338 F.3d 212 (3d Cir. 2003).
3rd Circuit holds that Apprendi does not apply to restitution under the VWPA. (610) The district court ordered defendant to pay $100,000 in restitution ($300,000 restitution order less a $200,000 credit) pursuant to the Victim and Witness Protection Act (VWPA), 18 U.S.C. § 3663. Defendant argued that the restitution order violated Apprendi v. New Jersey, 530 U.S. 466 (2000). The Third Circuit agreed that restitution ordered under the VWPA constitutes “the penalty for a crime” within the meaning of Apprendi. However, the appropriate place to look for the “statutory maximum,” as used in Apprendi, is the restitution statute itself. Section 3663 does not specify a maximum amount of restitution that a court may order. The statute provides guidelines that a sentencing judge may use to determine the amount of restitution, but does not prescribe a maximum amount. The Apprendi rules therefore does not apply to restitution made pursuant to the VWPA, because Apprendi applies only to criminal penalties that increase a defendant’s sentence “beyond the prescribed statutory maximum.” U.S. v. Syme, 276 F.3d 131 (3d Cir. 2002).
3rd Circuit holds that failure to advise of restitution was harmless error. (610) For the first time on appeal, defendant sought to withdraw his guilty plea, claiming that the court failed to inform him that restitution could be ordered as part of the sentence. However, although the word “restitution” was never used during defendant’s plea colloquy, the government did inform defendant that he could be fined $1,260,000 plus twice the amount involved in the money laundering scheme. While restitution is not the same as a fine, the distinction was irrelevant here. See U.S. v. Electrodyne Systems, 147 F.3d 250 (3d Cir. 1998). The Third Circuit ruled that defendant’s substantial rights were not affected by the district court’s failure to specifically mention restitution or inform defendant that he could be ordered to compensate the victims for any financial loss. Defendant was informed of the potential financial exposure that his plea subjected him to, and the amount he was ordered to pay was far less than the maximum that he could have been ordered to pay. U.S. v. Mustafa, 238 F.3d 485 (3d Cir. 2001).
3rd Circuit rejects restitution for insurance discount lost as a result of claim caused by arson. (610) After discovering the house they were burglarizing belonged to an assistant U.S. attorney, defendants attempted to set the house on fire, damaging furniture. In ordering defendants to pay restitution for the damaged furniture, the district court included an amount representing the “clean renewal discount” and “no claim discount” the victims lost as a result of the insurance claim they filed. The Third Circuit reversed, since these discounts were consequential damages that could not be included in restitution under 18 U.S.C. § 3663(b)(1). See Government of the Virgin Islands v. Davis, 43 F.3d 41 (3d Cir. 1994). Although the victims’ lost insurance discounts were unquestionably a result of the defendant’s criminal conduct, they were consequential damages and did not in any way constitute “the value of the property” lost, damaged or destroyed as a result of defendant’s crimes. U.S. v. Simmonds, 235 F.3d 826 (3d Cir. 2000).
3rd Circuit upholds restitution for replacement value of furniture damaged in arson attempt. (610) After discovering the house they were burglarizing belonged to an assistant U.S. attorney, defendants attempted to set the house on fire, damaging furniture. The district court ordered defendants to pay restitution for the damaged furniture based on its replacement value (the amount of money necessary to replace the furniture), rather than at its market value (the actual price that the furniture would have commanded in the open market on the date of destruction). The MVRA states that the court must order restitution equal to “the value of the property on the date of … destruction.” 18 U.S.C. § 3663A(b)(1)(B)(i)(I). The statute does not expressly define “value.” However, the statute’s primary goal is to fully compensate crime victims to their original state of well-being. Relying on U.S. v. Shugart, 176 F.3d 1373 (11th Cir. 1999), the Third Circuit held that the district court did not err in ordering restitution for the replacement value of the damaged furniture. Furniture often has a personal value to its owners that cannot be captured by simply determining its market value. Replacing familiar furniture with furniture that others have already used may be difficult to accept. Thus, replacement value may be an appropriate measure of the value of personal items of furniture. U.S. v. Simmonds, 235 F.3d 826 (3d Cir. 2000).
3rd Circuit holds that district court should have considered defendant’s ability to pay restitution. (610) Defendant, the government and the Third Circuit agreed that the district court erred by imposing restitution without determining defendant’s ability to pay. The provisions of 18 U.S.C. § 3663 in effect at the time of defendant’s offenses required sentencing courts to make findings concerning a defendant’s present and future ability to pay restitution. The district court should have followed § 3663 when it ordered restitution, despite changes made to the law after defendant committed the robberies. See U.S. v. Edwards, 162 F.3d 87 (3d Cir. 1998) (ex post facto clause applies to Mandatory Victims Restitution Act of 1996). U.S. v. Beckett, 208 F.3d 140 (3d Cir. 2000).
3rd Circuit rejects restitution for conduct that occurred before date of offense. (610) Defendant pled guilty to a credit card fraud conspiracy. The probation officer included in its loss calculation two instances of fraud predating December 31, 1997: one on November 27, 1997 and the other on November 20, 1997. Defendant argued that restitution was due only for conduct occurring on or after December 31, 1997, while the government argued that the activity was part of the charged conspiracy. Under Hughey v. United States, 495 U.S. 411 (1990), restitution is permissible only for the loss caused by the specific conduct that is the basis of the offense of conviction. The Third Circuit held that the “offense of conviction,” for restitution purposes, is temporally defined by the period specified in the indictment or information. Although a recent amendment to the VWPA expanded who could receive restitution, it did not extend the length of the period attributable to the offense of conviction. The fact that the indictment stated that the conspiracy began “on or about” December 31, 1997 did not stretch the timeline to include the two November transactions. The fact that the November events were factually connected to the later conspiracy also did not make them part of the offense of conviction. U.S. v. Akande, 200 F.3d 136 (3d Cir. 1999).
3rd Circuit remands for findings on defendant’s ability to pay restitution. (610) The district court ordered defendant to pay restitution of $1,899,784.80 for all the offenses he committed between 1994 and 1996. Defendant argued that under the VWPA, 18 U.S.C. § 3664, the statute applicable to all offenses occurring before April 24, 1986, the district court was required to make a determination of defendant’s ability to pay. All but one of defendant’s schemes took place before April 24, 1996. The government agreed with the need for a remand, reading the district court’s order as $1,320,872.59 in restitution under the MVRA for one scheme, and restitution of $578,912.30 under the VWPA. Because the court did not undertake the factual inquiry required before determining the amount of restitution under the VWPA, the Third Circuit vacated the restitution order and remanded for the necessary factual findings on defendant’s ability to pay. U.S. v. Holmes, 193 F.3d 200 (3d Cir. 1999).
3rd Circuit orders restitution for psychiatric medical expenses of child pornography victim. (610) Defendant, a 39-year old New Jersey resident, met a 14-year old girl from Minnesota on the Internet. He traveled to Minnesota, engaged in sexual relations with her, and took about 48 photos of her two of which were sexually explicit. About three weeks after this incident, the girl was admitted to a hospital psychiatric ward for suicidal ideation. She remained in the hospital for 50 days before being transferred to a long-term, in-patient psychiatric facility where she remained until sentencing. The Third Circuit upheld an order requiring defendant to pay restitution for the victim’s psychiatric medical expenses. The district court properly found that defendant’s conduct was the proximate cause of the victim’s losses. The court relied on the expert opinion of the social worker/treatment coordinator at the psychiatric facility where the girl was treated. A psychiatrist also reported that defendant’s conduct “exacerbated” the girl’s depression and led to her hospitalization. The fact that the victim had never been treated for a mental health problem before the incident, required hospitalization shortly after the incident, and had been placed in a long-term psychiatric treatment center, also supported the court’s conclusion. U.S. v. Crandon, 173 F.3d 122 (3d Cir. 1999).
3rd Circuit orders defendant with college education to pay full restitution. (610) The district court ordered defendant to pay full restitution of $57,050.96 for his victim’s psychiatric medical expenses. Defendant argued that because of his current and foreseeable financial circumstances, the district court should have imposed only “nominal periodic payments.” The Third Circuit held that 18 U.S.C. § 2259 required the district court to impose mandatory restitution. The court was not permitted to consider defendant’s economic circumstances. 18 U.S.C. § 2259(b)(4)(B). After ordering full restitution, the court must set a payment schedule and may only order nominal periodic payments if the defendant proves indigency. In this case, the court noted that defendant had a college education with some master’s points, and that his financial future was “not bereft of hope.” These findings, which were not disputed, suggested that defendant’s potential earning capacity precluded a determination of indigency. U.S. v. Crandon, 173 F.3d 122 (3d Cir. 1999).
3rd Circuit awards restitution for lost wages where assault victim used annual leave for time off from work. (610) Defendant pled guilty to an aggravated assault on his former girlfriend. The district court ordered defendant pay her full restitution of $27,470.17. Defendant argued that the amount of restitution that represented lost wages was erroneous because the victim had been fully paid by her employer for time off from work. He also claimed that the statute permitted an award of partial restitution. The Third Circuit held that the statute clearly authorized full, rather than partial, restitution. A 1996 amendment to the MVRA, 18 U.S.C. § 3664(f)(1)(A), says that “the court shall order restitution to each victim in the full amount of each victim’s losses …” The Third Circuit also held that the court properly included lost wages in the restitution order, even though the victim was paid by her employer during her leave. The victim used annual and “restored leave” so that she could be paid during the time she could not work. Had the victim not been forced to use her annual and restored leave, she would have been entitled to a lump-sum cash payment for any unused leave at the time of resignation or retirement. U.S. v. Jacobs, 167 F.3d 792 (3d Cir. 1999).
3rd Circuit rejects restitution of buy money to FBI. (610) On three occasions, defendant sold a total of 231 stolen cable boxes to an undercover agent. The district court ordered defendant to pay as restitution the $32,420 expended by the FBI to acquire the stolen cable boxes from him. The Third Circuit held that when the government chooses to apprehend offenders through a sting operation, the government is not a “victim” under the provisions of the VWPA, and the investigative costs and voluntary expenditures by the government to procure evidence are not losses. The district court awarded restitution, not under the VWPA, but under the “any other condition it considers appropriate” language of 18 U.S.C. 3563(d) as a condition of supervised release. Nonetheless, § 3563(b) still requires restitution to be made to a “victim,” and the FBI is not a victim under either § 3563(b) or the VWPA. U.S. v. Cottman, 142 F.3d 160 (3d Cir. 1998).
3rd Circuit upholds restitution where each Title 33 offense also charged a violation of 18 U.S.C. § 2. (610) Defendant companies and their chief operating officer were convicted of visa fraud, environmental crimes, conspiracy and racketeering. The district court ordered defendants to pay restitution to offset the costs of cleaning up their environmental damage. Restitution is only authorized for violations of Title 18 and some Title 49 provisions. Defendants contended that the trial court erred by ordered restitution for Title 33 offenses. The Third Circuit found the argument meritless, since each Title 33 offense also charged a violation of 18 U.S.C. § 2. Restitution is authorized for violation of 18 U.S.C. § 2. The amount of restitution ordered was not excessive since it was based on Coast Guard estimates of the costs required to clean up the environmental damage. The district court also ordered that if the ultimate cost of the clean-up is lower than the estimate, any amount over actual costs shall be returned to the defendants. U.S. v. West Indies Transport, 127 F.3d 299 (3d Cir. 1997).
3rd Circuit reverses for insufficient findings of ability to pay restitution. (610) Defendant alleged that the district court failed to make the required findings of fact that she had the ability to pay before it entered a restitution order against her. The Third Circuit agreed. At sentencing, defendant raised doubts concerning her ability to pay restitution. The district court settled the issue by agreeing to a proposal by the government that the amount of restitution could be remitted at a later date. Specific findings of fact regarding a defendant’s ability to pay are required before a restitution order may be imposed. Deferring such findings until some time after a restitution order has already been entered does not satisfy this requirement. U.S. v. Gaydos, 108 F.3d 505 (3d Cir. 1997).
3rd Circuit holds that patient was not “victim” of doctor’s insurance fraud. (610) Defendant, a medical doctor, submitted over $1 million in false insurance claims for services that he never provided. Before sentencing, one patient filed a claim for $1 million in restitution, alleging that defendant prescribed excessive amounts of a pain killer, which caused her to become addicted, lose her job, and need psychiatric care. She alleged that defendant did this in furtherance of his scheme to control her and carry out his scheme. The Third Circuit held that the patient was not a “victim” of defendant’s insurance fraud within the meaning of 18 U.S.C. § 3663(a). The VWPA, as amended in 1990, allows restitution for any harm directly caused by the defendant’s criminal conduct in the course of a scheme, conspiracy, or pattern. But the harm must be closely related to the scheme. Here, the patient’s alleged injuries were wholly unrelated to the conduct that violated the mail fraud offense. She did not allege that she was injured by the submission of the insurance claims. She alleged she was injured by faulty medical services. U.S. v. Kones, 77 F.3d 66 (3d Cir. 1996).
3rd Circuit says record did not support $4 million restitution award. (610) Defendant was convicted of multiple counts of mail fraud and income tax evasion. The loss was over $4 million, and the bankruptcy trustee was able to account for only a limited amount of these assets. The Third Circuit found that a $4 million restitution order was excessive. Defendant’s family was in dire financial straits. The court did not explain how defendant, by virtue of his college education and business acumen, could earn enough to support his family, pay back taxes and clear over $4 million for restitution in five years. Although there was some suggestion that defendant had hidden some assets, these only amounted to $600,000. The court could account for them by requiring defendant to prove that he did not possess them. If unable to do so, the court could properly consider these assets in the “financial resources of the defendant.” A restitution order should be based on a realistic prospect that defendant will be able to pay the required amount within five years. U.S. v. Copple, 74 F.3d 479 (3d Cir. 1996).
3rd Circuit upholds reliance on probation officer’s calculation of loss where supported by FBI. (610) Defendant argued that the district court improperly relied on the probation officer’s calculations of loss for restitution purposes, rather than personally reviewing or examining the underlying evidence. The Third Circuit upheld the reliance on the probation officer’s calculation, since it was based on documentation that the probation department had received from the financial institutions that suffered loss. This information had previously been supplied to and verified by the FBI. U.S. v. Graham, 72 F.3d 352 (3d Cir. 1995).
3rd Circuit says court may not delegate timing and amount of restitution to probation office. (610) The government conceded that the district court failed to make specific findings on defendant’s ability to pay restitution. The Third Circuit remanded so these findings could be made. On remand, the court also directed the district court to designate the timing and amount of the restitution payments. The court improperly used current AO Form 245B to delegate to the probation officer the timing of the restitution installation payments. While the court is always free to receive and consider recommendations from the probation officer in this regard, § 3663 does not permit a district judge to delegate to the administrative staff these specifications. The court also must determine the extent to which the payments may be deferred. U.S. v. Graham, 72 F.3d 352 (3d Cir. 1995).
3rd Circuit says court failed to consider defendant’s ability to pay $75,000 in restitution. (610) The district court ordered defendant to pay $75,000 in restitution in installments over her three-year period of supervised release. The Third Circuit reversed, finding no reasonable basis to believe that defendant would be able to meet her restitution obligation. Restitution is only appropriate in an amount that the defendant can realistically be expected to pay. The fact that defendant was now working, and could be expected to pay “some portion” of her restitution obligation was insufficient. Given defendant’s salary (a net monthly amount of $1,806) and reasonable living expenses, there was no possibility that she would be able to pay $75,000 over the three-year period. It was also unclear what the court meant by stating that her restitution obligation was joint and several with those of her co-defendants, since the amount of restitution ordered for each defendant was different. U.S. v. Hunter, 52 F.3d 489 (3d Cir. 1995).
3rd Circuit remands for factual findings to support $650,000 restitution order. (610) Although defendant had no assets to pay restitution, he had filed claims with insurance companies seeking funds with which to repay his embezzlement victims. The district court ordered him to pay $650,000 restitution, but added that defendant would be credited for payments made by insurance companies or third parties. The Third Circuit remanded for factual findings to support the restitution order. The district court did not make specific findings on whether third-party payers exist or whether defendant was able to pay without them. Moreover, the order should expressly state whether the restitution was to be conditioned on payments from insurance companies or third party payers, or if defendant’s liability had an upper limit. Finally, the court should structure the award so that no portion of defendant’s restitutionary burden was relieved by payments from insurance companies. U.S. v. Carrara, 49 F.3d 105 (3d Cir. 1995).
3rd Circuit holds that court did not make proper fact-finding to support restitution. (610) The district court originally ordered defendant to pay $102,137.99 in restitution. It later reduced the amount to $85,835.99 after further calculations by the probation department. The 3rd Circuit held that the district court did not make proper findings to support the restitution order. Under Circuit law, a district court must make factual findings of (1) the amount of loss, (2) defendant’s ability to pay, and (3) the relationship between the restitution imposed and the loss caused by defendant’s conduct. The district court made no findings. It failed to find to whom the payments should be made, and in what amount, and failed to make any findings regarding defendant’s ability to pay. This failure amounted to plain error. U.S. v. Turcks, 41 F.3d 893 (3rd Cir. 1994).
3rd Circuit says check kiting loss is measured at time of offense rather than at sentencing. (610) Defendant was convicted of bank fraud as a result of his check kiting scheme. Sentencing was delayed to permit defendant to get his business affairs in order and to attempt to make restitution. By the time of sentencing, defendant had settlement agreements with three of the four victim banks. The district court found that the actual loss at the time of sentencing was the total loss of $462,309, less the amounts under the settlement agreements. There was no intended loss. The 3rd Circuit reversed, holding that the victims’ loss in a check kiting scheme should be calculated when the offense is detected, rather than at the time of sentencing. U.S. v. Kopp, 951 F.2d 521 (3rd Cir. 1991), disapproval recognized by U.S. v. Wood, 486 F.3d 781 (3d Cir. 2007), which says that loss should be calculated at the time of sentencing, applies to secured loan frauds. Check kiting is more akin to theft than a secured loan frauds. A reduction in sentence because of restitution would unfairly discriminate in favor of those with greater financial resources. U.S. v. Shaffer, 35 F.3d 110 (3rd Cir. 1994).
3rd Circuit holds loss is not reduced by restitution offered after crime is discovered. (610) Defendant, a former executive officer of a bank, fraudulently caused the bank to loan $95,000 to finance construction of a house for a partnership. Defendant argued that the bank suffered no loss under § 2F1.1, because after the fraud was discovered, one of the partners offered to sign the property over to the bank if the property was not sold. The 3rd Circuit held that the court properly refused to reduce the loss by the amount of restitution offered after the crime was discovered. Under note 7(b) the loss is the actual loss to the bank at the time of sentencing ($95,000) reduced by the amount the bank has recovered or can expect to recover from any assets pledged to secure the loan ($0). The fact that the partner offered, after defendant’s crime was detected, to make a gratuitous transfer of the property did not alter this calculation. U.S. v. Mummert, 34 F.3d 201 (3rd Cir. 1994).
3rd Circuit vacates restitution order because court made no findings on ability to pay. (610) The 3rd Circuit vacated a $4 million restitution order because the district court made no findings about defendant’s ability to pay the restitution, or his financial needs, or his ability to support himself and his wife and two children. The district court was not permitted to delegate its role with respect to restitution to the bankruptcy court or the bankruptcy trustee. U.S. v. Copple, 24 F.3d 535 (3rd Cir 1994).
3rd Circuit upholds $34,282 restitution order even though defendant was unable to pay a fine. (610) Defendant argued that a $34,282 restitution order was an abuse of discretion because the district court failed to make specific factual findings as to defendant’s ability to pay. The 3rd Circuit found that the record supported defendant’s ability to pay the restitution order, even though the district court found defendant did not have the ability to pay a fine. Indigency at the time of sentencing is not a bar to ordering restitution. The restitution order was based on the presentence report. The report analyzed the financial impact on the victim, the details of defendant’s physical and mental health, education, vocational skills, and financial ability to pay. The district court stated at sentencing that defendant by education and natural ability had the capacity to earn lawful income. U.S. v. Hallman, 23 F.3d 821 (3rd Cir. 1994).
4th Circuit rejects restitution to those who were not victims of offense of conviction. (610) Defendant, a purported minister, used church funds to accumulate substantial assets, including a $1.75 million dollar residence and luxury autos, purchased in the names of members of the church. For each of these purchases, the church members understood that although their names were on the loan documents, defendant and/or the church would take care of the appropriate payments. Defendant and his spouse ultimately filed for bankruptcy. He was convicted of obstructing federal bankruptcy proceedings based on numerous misrepresentations he made to the court and to creditors. He challenged an order directing him to pay $631,050.52 in restitution to four church members who suffered losses when defendant caused them to take out significant loans for the benefit of the church. The Fourth Circuit reversed, holding that because the specific conduct that was the basis for defendant’s conviction did not cause the purported victims’ losses, they were not entitled to restitution. Awards of restitution ordered as a condition of supervised release must compensate “only for the loss caused by the specific conduct that is the basis of the offense of conviction.” U.S. v. Freeman, 741 F.3d 426 (4th Cir. 2014).
4th Circuit holds that victim of burglary was not victim of stolen firearm offense. (610) After breaking into a house and stealing a firearm and other valuables, defendant pled guilty to possession of a stolen firearm. The victim of the burglary, the homeowner, requested restitution of $500 for his insurance deductible for the unrecovered stolen firearm, and $185 of damage defendant caused when he broke a window to enter the residence. The Fourth Circuit rejected the court’s order to pay restitution of $685 to the homeowner. Under Hughey v. U.S., 495 U.S. 411 (1990), restitution under 18 U.S.C. § 3663 is limited to the count of conviction, unless specifically agreed upon by both parties in the plea agreement. The homeowner was not a “victim” of the offense of conviction (felon in possession). Defendant’s plea agreement could not serve as the basis for the restitution order. Although defendant did not object to the restitution order in the district court, the court’s error was plain, and seriously affected the fairness, integrity, or public reputation of the judicial proceedings. U.S. v. Davis, 714 F.3d 809 (4th Cir. 2013).
4th Circuit holds that mandate rule barred court from revisiting restitution on remand. (610) Defendant was convicted of numerous counts of fraud, and was sentenced to 600 months’ imprisonment and ordered to pay $3,952,985 in restitution. In his first appeal, the Fourth Circuit held that the court erred in sentencing defendant to 600 months, and remanded. At resentencing, the district court imposed a sentence of 300 months, and ordered defendant to pay restitution of $4,274,078. At a second hearing, the court increased the restitution to $20,726,005. The Fourth Circuit agreed with defendant that the mandate rule barred the district court from revisiting the restitution order on remand. The opinion vacated only defendant’s 600-month sentence, and limited the district court to correcting only the incarceration portion of defendant’s sentence. U.S. v. Pileggi, 703 F.3d 675 (4th Cir. 2013).
4th Circuit says restitution order did not implicate Apprendi. (610) Defendant defrauded the government by supplying defective and nonconforming spare parts for U.S. military aircraft, vehicles, and weapons systems. He argued for the first time on appeal that the restitution order in excess of $6 million violated Apprendi, because the jury did not find facts giving rise to that amount. The Fourth Circuit ruled that Apprendi was not implicated by the restitution order because there is no prescribed statutory maximum in the restitution context. The amount of restitution that a court may order is indeterminate and varies based on the amount of damage and injury caused by the offense. See 18 U.S.C. §§ 3663(b), 3663A(b). U.S. v. Day, 700 F.3d 713 (4th Cir. 2012).
4th Circuit limits restitution for child porn defendant to harm that he proximately caused. (610) Defendant was convicted of child pornography charges. The district court ordered him to pay, among other things, restitution of $305,219.86 under the Mandatory Restitution for Sexual Exploitation of Children Act, for losses suffered by “Vicky,” a child victim portrayed in defendant’s pornographic material. Defendant argued that the district court erred in ordering him to pay restitution to Vicky because the court did not determine that his conduct proximately caused harm to the victim. The Fourth Circuit agreed that defendant was responsible under the MVRA only for the losses that he proximately caused. However, this need not be unworkably narrow. It is well established that children featured in child pornography are harmed by the continuing dissemination and possession of that pornography. Given the nature of the harm inflicted by purveyors and viewers of child pornography on their victims, using a proximate causation analysis effectuates the intent of the restitution statute. U.S. v. Burgess, 684 F.3d 445 (4th Cir. 2012).
4th Circuit upholds restitution for prior years’ tax losses where conspiracy extended back to 1991. (610) Defendant and her husband, former co-pastors of a church, were convicted of charges arising from a tax evasion scheme in which they omitted millions of dollars of taxable income from their jointly filed tax returns. Defendant’s husband was ordered to pay restitution based on tax loss amounts for 1991-1993 and 1998-2008, and defendant was ordered to pay based on tax loss amounts for 1998-2008. They argued that the district court erred when it ordered them to pay restitution based on losses prior to the years for which they were convicted of criminal conduct. The Fourth Circuit found no error. The conduct underlying defendants’ conspiracy convicted extended back to 1991, the year the indictment alleged that acts in furtherance of the conspiracy began. The district court found that defendant participated in the conspiracy, and could reasonably foresee acts in furtherance of it, as early as 1998. As for defendant’s husband, the court credited trial evidence that his pattern of fraudulent conduct began in 1991. U.S. v. Jinwright, 683 F.3d 109 (4th Cir. 2012).
4th Circuit reverses order of restitution for losses caused by similar fraud schemes. (610) Defendant was involved in a fraudulent sweepstakes scheme centered in Costa Rica. He challenged the district court’s restitution order of more than $4.2 million, contending that the court erred in finding him jointly and severally liable for losses caused by other Costa Rican fraud schemes. The government conceded on appeal that the court erred in this respect. The Fourth Circuit agreed. Because the restitution order was not limited to losses attributed to defendant’s call center, the government properly conceded the legal error underlying the restitution order. U.S. v. Llamas, 599 F.3d 381 (4th Cir. 2010).
4th Circuit remands where court’s rationale for “no loss” finding was unclear. (610) Defendant participated in a government procurement fraud scheme involving aviation fuel contracts. The district court found that DESC, an agency responsible for procuring the aviation fuel supply contracts, suffered no actual pecuniary loss from defendant’s fraud. The Fourth Circuit remanded, finding that the district court did not provide a sufficient explanation that would enable the appellate court to review the loss finding. For example, the court gave no explanation for its seemingly inconsistent position in finding the government’s expert witness regarding DESC’s actual pecuniary loss knowledgeable and credible, but nonetheless rejecting his loss calculation in its entirety. In addition, it was unclear whether the district court accepted defendant’s argument that the government had to prove that DESC employees worked overtime in resoliciting bids and re-awarding tainted contracts (which was at odds with the plain language of Note 3(A)(v)(II) to § 2B1.1), or defendant’s alternative argument that the government failed to prove DESC’s administrative costs. The court also instructed the district court to “reconsider with care” its finding that DESC was not entitled to any restitution under the MVRA. U.S. v. Wilkinson, 590 F.3d 259 (4th Cir. 2010).
4th Circuit says accessories-after-the-fact not liable for restitution to murder victim’s estate. (610) After defendants pled guilty to being accessories-after-the-fact to first-degree murder, the district court ordered that each defendant be jointly and severally liable for restitution to the victim’s estate in the amount of $1,459,854 for lost future income and wages. The Fourth Circuit reversed, holding that the district court erred in holding defendants liable to the victim’s estate under the MVRA for her lost future income and lost future wages. Defendants’ criminal activity occurred after the victim’s murder, not before, and did nothing to cause or increase the financial harm to the victim’s estate. Neither defendant planned or actively participated in the murder. Defendants’ plea agreement did not provide a valid basis for holding them jointly and severally liable for the restitution. U.S. v. Squirrel, 588 F.3d 207 (4th Cir. 2009).
4th Circuit rejects defendant’s profit as restitution amount. (610) Defendant was convicted of wire fraud and bribery for engineering the award of a military contract to a co-defendant’s company. The district court ordered restitution of $383,621, an amount equal to the eight percent profit margin in the contract. The Fourth Circuit reversed, ruling that the government failed to present sufficient evidence of actual loss at trial or sentencing. The district court relied on testimony indicating that the company had failed to comply with certain aspects of its contract, for example, by failing to hire the contractually required number of employees, and employing individuals who lacked the requisite security clearance. While these violations may have seriously impaired the company’s performance of the contract, they did not establish the amount of loss the government actually suffered. The district court erroneously used gain to approximate the amount of actual loss. While the government was a victim, any order of restitution must be based on sufficient evidence of the amount of actual loss incurred. Profit gained by the defendants may not be used in its stead. U.S. v. Harvey, 532 F.3d 326 (4th Cir. 2008).
4th Circuit holds that appeal waiver covered restitution order. (610) Defendant waived, as part of his plea agreement, the right to appeal “whatever sentence is imposed.” He argued that his challenge to the court’s restitution order fell outside the scope of his appeal waiver because “restitution” was not part of his “sentence.” The Fourth Circuit disagreed. Although restitution enables victims to recover losses that might be available in civil litigation, restitution is nonetheless part of the criminal defendant’s sentence. A defendant who has agreed to waive all rights under 18 U.S.C. § 3742 has waived his right to appeal a restitution order. Defendant also argued that the appeal waiver did not preclude his appeal from the restitution portion of his sentence because the amount of the restitution obligation exceeded the court’s authority under the MVRA. He contended that the court exceeded its authority under the MVRA by ordering him to pay restitution to all victims of the conspiracy, when his role in the conspiracy was limited in the plea agreement. The panel rejected this claim as well. Defendant pled guilty to a count that charged an overarching conspiracy encompassing a wide array of fraudulent conduct. The district court complied with its mandatory statutory obligation to order restitution to all “victims” of the conspiracy to which defendant pled, even if defendant did not expressly admit to each and every overt act alleged to support it. U.S. v. Cohen, 459 F.3d 490 (4th Cir. 2006).
4th Circuit upholds restitution to mental health agency that provided counseling to defendant’s victim. (610) The district court ordered defendant to pay restitution to defendant’s kidnapping victim and to Family & Child Services, a mental health agency that provided counseling to the victim at a reduced rate. Defendant argued that third parties are not eligible for restitution under the Mandatory Victims Restitution Act, 18 U.S.C. § 3663A. However, when a crime results “in bodily injury to a victim,” the MVRA does not limit restitution for medical or psychological costs to those expenses incurred by the victim. 18 U.S.C. § 3663A(b)(2). The statute provides that a court shall order the defendant to “pay an amount equal to the cost of necessary medical and related professional services and devices relating to physical, psychiatric and psychological care…” § 3663A(a)(1) and (b)(2)(A). Unlike subsection (b)(2)(C) of the same statute, which require the defendant to reimburse the victim, subsection (b)(2)(A) does not require reimbursement for medical expenses be made to the victim. The Fourth Circuit ruled that the district court did not abuse its discretion in ordering defendant to pay restitution to the agency that provided necessary psychological counseling to defendant’s victim. U.S. v. Johnson, 400 F.3d 187 (4th Cir. 2005).
4th Circuit holds that court properly ordered restitution for loss caused by entire conspiracy. (610) Defendants participated in a conspiracy to cut down and steal black cherry trees from a national forest, causing the U.S. a total loss of $248,459.53. He argued that, based on a special interrogatory answered by the jury, the loss attributable to him could be no more than $1000, both for purposes of sentencing and restitution. The Fourth Circuit disagreed. Although the special interrogatory stated that the value of the property that defendant stole involved $1000 or less, this finding did not contradict the jury’s finding that defendant was guilty of conspiracy to steal. The district court properly ordered restitution with respect to the loss caused by the conspiracy as a whole. U.S. v. Newsome, 322 F.3d 328 (4th Cir. 2003).
4th Circuit says firearms offenses were crimes of violence under definition in federal rules of procedure. (610) Defendant accused Shilot of stealing some of his crack, and then shot him in the head. He was convicted of a variety of charges, including being a felon in possession of a firearm and possessing and using a firearm in furtherance of drug trafficking. Defendant argued that the district court erred in allowing victim allocution testimony from Shilot’s wife and mother, and in ordering restitution, because he was not convicted of a “crime of violence” within the meaning of Fed. R. Crim. P. 32(c)(3)(E). The rule allows victim allocution testimony at a defendant’s sentencing “for a crime of violence,” which is defined as “a crime that involved the use or attempted or threatened use of physical force….” Rule 32(f)(2). The Fourth Circuit found no error, concluding that the offenses of conviction “involved the use or attempted or threatened use of physical force.” The use of force need not be an element of the crime of conviction. The plain language of the rule uses the word “involved” and is silent on the elements of the crime. The definition here is different than the definition of crimes of violence in the Career Offender guidelines, §§ 4B1.1 and 4B1.2(a)(1), where reference is made to the use of physical force as an element of the offense. U.S. v. Myers, 280 F.3d 407 (4th Cir. 2002).
4th Circuit says harboring alien was crime of violence for restitution purposes. (610) For almost 19 years, Dos Santos worked for defendant in slavery-like conditions, performing arduous tasks for many hours a day, never receiving payment for her work, living in deplorable conditions, and being physically abused by defendant’s wife. Defendant pled guilty to conspiracy and harboring an illegal alien. The district court refused to order restitution of the wages defendant should have paid to Dos Santos, finding that the MVRA did not apply because defendant did not commit a crime of violence. The Fourth Circuit disagreed, finding that defendant’s violation of 8 U.S.C. § 1324(a)(1)(B) (iii) (causing serious bodily injury to, or placing in jeopardy the life of any person during a harboring offense) constituted a crime of violence under 18 U.S.C. § 16(b). The offense entails at least a “substantial risk” that physical force “may” be used because, in order for § 1324(a)(1)(B)(iii) to be violated, the defendant must either cause serious bodily injury or place in jeopardy a person’s life. Dos Santos, the alien harbored, was a victim of the offense and thus eligible for restitution under the MVRA. The lost income need not be a result of the bodily injury. U.S. v. Bonetti, 277 F.3d 441 (4th Cir. 2002).
4th Circuit rules court adequately considered defendant’s financial status in setting payment schedule. (610) The court ordered defendant to pay $1,418,419.65 in restitution and, after finding that his net worth was $638,700, directed defendant to pay the outstanding balance at the rate of $5,000 per month, beginning 30 days after his release from prison. Although not disputing the magnitude of the restitution award, defendant contended that the court did not adequately consider his financial status and earning potential in structuring his payment schedule, as required by the Mandatory Victim Restitution Act. The Fourth Circuit found no abuse of discretion. Although a restitution order that required defendant to pay $60,000 a year in restitution might seem excessive for a 62-year old lawyer convicted of mail fraud, the court made substantial findings regarding defendant’s assets and earning capacity. Moreover, the court’s sentencing order specifically directed that it be kept continuously apprised of defendant’s financial status, and the court reserved the right to modify the restitution payment schedule if defendant’s status changed. U.S. v. Vinyard, 266 F.3d 320 (4th Cir. 2001).
4th Circuit says VWPA does not authorize general restitution order to government. (610) Defendants fraudulently solicited investments in a fictitious contract with the Nigerian government. Defendants argued that a restitution order to the government was unlawful, because the government was not a victim of the fraud scheme. The Fourth Circuit agreed that the restitution order was plain error, since the VWPA only authorizes restitution to a victim of the offense of conviction, or victim’s estate, if deceased. See 18 U.S.C. § 3663(a)(1)(A). The district court failed to make the statutorily mandated findings of the actual losses suffered by the victim(s) of the offense of conviction, or to make any specific finding on defendants’ assets. A general restitution order payable to the government is contrary to the provisions of the VWPA. U.S. v. Ubakanma, 215 F.3d 421 (4th Cir. 2000).
4th Circuit holds that court satisfied obligation to set payment schedule for restitution. (610) Defendant argued that the district court did not satisfy its statutory obligation to specify the manner and schedule by which he was to pay restitution because the court ordered the entire restitution immediately due. The Fourth Circuit ruled that the district court effectively discharged its responsibility to set a payment schedule when it instructed that if defendant were unable to pay full restitution immediately, he could pay $200 per months beginning 60 days after his release. The court did not illegally delegate its judicial authority by allowing the probation office to adjust the restitution schedule after considering defendant’s economic status. The district court ordered the probation officer to take defendant’s financial situation into consideration and “notify the Court of any changes that may need to be made to the payment schedule.” Thus, the court retained both the right to review the probation officer’s findings and to exercise ultimate authority regarding the payment of restitution. Therefore, the court did not illegally delegate its authority. U.S. v. Dawkins, 202 F.3d 711 (4th Cir. 2000).
4th Circuit holds that court did not make adequate findings under MVRA. (610) The MVRA requires a sentencing court to consider the factors listed in 18 U.S.C. § 3664(f)(2) when determining how restitution is to be paid. Additionally, a sentencing court must make a factual finding keying the statutory factors to the type and manner of restitution ordered and it must find that the manner of restitution ordered is feasible. The Fourth Circuit held that the district court did not make all of the necessary factual findings required by the MVRA. The court adopted the proposed findings of the PSR, which contained a section concerning defendant’s financial condition. The PSR adequately described defendant’s financial resources and assets and his projected earning. Although the PSR did not offer a tremendous breadth of information regarding defendant’s financial obligations, it did note that defendant owed no money on his vehicles or home and that he had no financial dependents. Adopting these facts adequately discharged the statutory obligation of the district court. § 3664(f)(2)(C). However, the record was devoid of any factual finding that keyed defendant’s financial situation to the restitution schedule ordered or finding that the order was feasible. U.S. v. Dawkins, 202 F.3d 711 (4th Cir. 2000).
4th Circuit holds that loans were part of scheme for restitution purposes. (610) Defendant embezzled money from FAA, a group of physicians, and used the money to fund Tyra, a company in which he controlled a majority of stock. Defendant later invited individual FAA doctors to “defer” their FAA bonuses and invest in Tyra. Fourteen physicians decided to invest about $903,000 in Tyra. Each doctor received a promissory note from Tyra bearing a 15% interest rate. At the time these investment decisions were made, the FAA physicians did not know that FAA had insufficient funds in its account to pay their bonuses because defendant had stolen FAA funds. The Fourth Circuit held that the Tyra loans were directly related to the conduct underlying defendant’s conviction, and thus were properly included in the restitution award. The loans were part of defendant’s “massive scheme” to defraud FAA. By pleading guilty, defendant admitted that he “obtained promissory notes from clients and others by means of false and fraudulent representations and promises, which he used to conceal and perpetuate his criminal conduct.” U.S. v. Karam, 201 F.3d 320 (4th Cir. 2000).
4th Circuit holds that defendant failed to prove that embezzlement victims did not suffer loss. (610) Defendant embezzled money from FAA, a group of physicians, and used the money to fund Tyra, a company in which he controlled a majority of stock. Defendant later invited individual FAA doctors to “defer” their FAA bonuses and invest in Tyra. Fourteen FAA physicians decided to invest about $903,000 in Tyra. At the time these investment decisions were made, the FAA physicians did not know that FAA had insufficient funds in its account to pay their bonuses because defendant had stolen FAA funds. Defendant argued that the government failed to establish that the Tyra loans resulted in an actual loss to FAA because (1) the physicians who made the loans agreed the cancel the underlying debt for tax reasons, and (2) any loss suffered by individuals physicians was not suffered by FAA. The Fourth Circuit disagreed. After the government proved that the loans were never repaid, the burden of proving any impermissible double counting fell on defendant. Defendant failed to meet this burden–he did not present any evidence that FAA physicians actually claimed the losses on their tax returns. Contrary to defendant’s claim, FAA did suffer a loss, since it did not have money to pay physicians their bonuses at the time they were supposedly “deferred.” U.S. v. Karam, 201 F.3d 320 (4th Cir. 2000).
4th Circuit holds that defendant did not prove that civil settlement compensated victims for losses. (610) Defendant, a certified public accountant, embezzled money from his clients. He argued that personal guarantees executed in the form of promissory notes constituted full and complete compensation for his victims and thus, should have counted as an offset against the $1.7 million restitution ordered by the district court. The Fourth Circuit held that the burden of proving an offset lies with the defendant. The court further held that a voluntarily executed promissory note does not necessarily constitute full and complete restitution under the VWPA. A civil settlement does not preclude restitution under the VWPA because restitution is primarily penal in nature. Such restitution is designed to serve the rehabilitative and retributive purposes of the criminal law, rather than merely compensate the victim. The fact that defendant’s victims accepted promissory notes as full compensation did not necessarily determine whether these victims were entitled to restitution under the VWPA. Rather, the critical question was whether the victims had actually been compensated for their losses. Defendant failed to meet his burden of proving that the promissory notes fully compensated his victims. U.S. v. Karam, 201 F.3d 320 (4th Cir. 2000).
4th Circuit refuses to offset restitution by losses assumed by defendant’s uncle. (610) Defendant, a certified public accountant, embezzled money from several clients, including a pension and profit sharing plan in which defendant’s uncle was a trustee and major participant. After the discovery of defendant’s scheme, plan participants thought the uncle should bear any loss caused by defendant’s unauthorized transfer of funds. Thus, at the time of the plan’s liquidation, the uncle accepted “loans” to defendant as part of his personal portfolio, thereby absorbing any loss caused by defendant’s misconduct. The Fourth Circuit refused to reduce the restitution due the plan based on the uncle’s restructuring of his personal portfolio. Although the restructuring may have focused the entire loss on one of its members, the fact remained that the pension and profit sharing plan was never made whole for the loss caused by the “loans” to defendant. Despite the uncle’s assumption of the loans, the loss remained entirely within the ranks of the plan membership. U.S. v. Karam, 201 F.3d 320 (4th Cir. 2000).
4th Circuit holds that failure to make findings on ability to pay restitution was not plain error. (610) Defendant argued for the first time on appeal that the district court erred in not making specific factual findings regarding his ability to pay before ordering him to pay full restitution. The Fourth Circuit held that the district court’s failure to make findings on defendant’s ability to pay restitution was not plain error. Defendant did not show that the court’s failure to make specific factual findings prejudiced his rights in any way. The court found defendant was in a position to pay “some restitution.” Although the court did not make independent findings regarding defendant’s ability to pay, it adopted the findings in the PSR. The PSR showed that defendant was well-educated with extensive experience in managerial and entrepreneurial endeavors. Despite defendant’s negative net worth at sentencing, the district court could have concluded that this setback was temporary, given defendant’s knowledge and skills in the areas of financial planning, business administration and corporate strategies. Because defendant’s PSR contained sufficient facts to support the imposition of restitution, the restitution order was not plain error. U.S. v. Karam, 201 F.3d 320 (4th Cir. 2000).
4th Circuit says restitution was not extraordinary enough to warrant departure. (610) Defendant embezzled $607,777.08 from the bank where she worked. She reached a civil settlement with the bank under which she repaid the bank $250,000. The money came from the generosity of her friends and church. The district court departed downward based on defendant’s “extraordinary restitution.” The Fourth Circuit ruled that under these circumstances, restitution of less than half of the amount embezzled was not extraordinary. Since the guidelines consider restitution a form of acceptance of responsibility, restitution can provide a ground for departure only when it indicates an extraordinary acceptance of responsibility. Defendant did not make restitution until after she had been criminally indicted, in order to settle her civil liability, and in the hope of receiving a reduced sentence. Also, the generosity of defendant’s friends indicated little about defendant’s acceptance of responsibility for her conduct. U.S. v. Hairston, 96 F.3d 102 (4th Cir. 1996).
4th Circuit holds victims of wallet theft were not victims of credit card offense for restitution purposes. (610) Defendant pled guilty to using unauthorized credit cards. He obtained the credit cards by stealing pocketbooks and wallets from elderly women while they were shopping. Defendant contended that the losses to the persons from whom he stole the credit cards (replacement costs of pocketbooks, wallets, etc.) should not have been included in the restitution order because they were not victims of his offense of conviction. The Fourth Circuit agreed that the robbery victims were not victims of the offense of conviction for restitution purposes, even though they were “victims” for § 3A1.1 (vulnerable victim) purposes. Defendant’s theft of the credit cards was a necessary step in the accomplishment of his objective—the use of stolen credit cards. However, the factual connection between his conduct and the offense of conviction was legally irrelevant for restitution purposes. The specific conduct underlying the offense of conviction did not include the theft of the credit cards. As a result, the loss to the robbery victims was not caused by defendant’s offense of conviction. U.S. v. Blake, 81 F.3d 498 (4th Cir. 1996).
4th Circuit remands because court failed to articulate findings on defendant’s earning ability or financial needs. (610) Defendant challenged the district court’s decision to order restitution under the Victim and Witness Protection Act. The Fourth Circuit remanded because the district court failed to articulate on the record specific findings with respect to defendant’s earning ability or financial needs. It also completely failed to make a factual determination that defendant could make the necessary restitution payments without undue hardship to himself or his teenage daughter. U.S. v. Blake, 81 F.3d 498 (4th Cir. 1996).
4th Circuit approves restitution for victims not named fraud indictment. (610) Defendant was convicted of conspiracy and fraud in connection with an overseas call‑selling scheme and ordered to pay restitution to the local and long distance companies he defrauded. He complained that the district court improperly awarded restitution for losses outside the offense of conviction. The Fourth Circuit upheld the restitution order, even though some of the victims of his offense were not named in the indictment. To convict defendant, the government had to prove a scheme to defraud, not just specific incidents of fraud perpetrated on individual companies. The acts comprising the scheme to defraud constituted the conduct underlying the offense of conviction and established the outer limits of the restitution order. Although some of the long distance carriers to whom restitution was ordered were not named in the indictment, they were victims because they were directly harmed by defendant’s criminal conduct in the course of the conspiracy. The government adequately proved the amounts of restitution due to each victim. U.S. v. Henoud, 81 F.3d 484 (4th Cir. 1996).
4th Circuit holds that restitution related to fraud scheme was not authorized by VWPA. (610) Defendant ran a financial services company that purported to help individuals obtain business financing. She received $25,000 from one client and provided him with fictitious sight drafts to make him believe that approval of his financing was imminent. He never received the financing and she never returned his $25,000. During a grand jury hearing, she denied knowing anything about the sight drafts. She was indicted on perjury and wire fraud counts but pled guilty to only one count of perjury. The Fourth Circuit rejected a $25,000 restitution order since it was not caused by defendant’s perjury, the offense of conviction. Title 18 U.S.C. § 3663(a) only authorizes restitution for losses traceable to a defendant’s offense of conviction, unless an element of the offense is a scheme. conspiracy or pattern of criminal activity, or defendant agrees to pay more as part of a plea agreement. Defendant’s acknowledgment at the Rule 11 colloquy that she might be ordered to pay restitution did not independently invoke the court’s authority to order restitution under 18 U.S.C. § 3663(a)(3). U.S. v. Broughton-Jones, 71 F.3d 1143 (4th Cir. 1995).
4th Circuit says waiver of appeal did not bar argument that restitution was not authorized. (610) In her plea agreement, defendant waived the right to appeal her sentence on the grounds listed in 18 U.S.C. § 3742(a). The Fourth Circuit held that the waiver did not bar defendant from appealing a restitution order on the ground that it was not authorized by the Victim and Witness Protection Act. The waiver was valid, but a defendant who waives his right to appeal does not waive his right to review a sentence imposed in excess of the maximum penalty provided by statute. With limited exceptions, the VWPA only authorizes restitution for losses traceable to a defendant’s offense of conviction. Restitution for conduct outside the offense of conviction is no less illegal than a sentence of imprisonment that exceeds the statutory maximum. Appeals challenging the legality of restitution orders are similarly outside the scope of a defendant’s appeal waiver. U.S. v. Broughton-Jones, 71 F.3d 1143 (4th Cir. 1995).
4th Circuit upholds defendants’ ability to pay restitution and fine. (610) Defendants argued for the first time on appeal that the district court failed to make specific findings of fact concerning each defendant’s ability to pay a fine and restitution. The Fourth Circuit held that the PSRs, which were adopted by the district court, contained sufficient facts to support the fines and restitution. The reports described excellent job histories, earning records, and skill levels in the computer field, and indicated that each defendant had a future earning potential. Both defendants had founded their own businesses and had a history of success in business management. Although both defendants filed for bankruptcy before sentencing and had a negative monthly cash flow at the time of sentencing, these were temporary setbacks due to the prosecution. U.S. v. Castner, 50 F.3d 1267 (4th Cir. 1995).
4th Circuit prohibits delegating amount of restitution to probation department. (610) The district court ordered the defendant to pay restitution of between $6,000 and $35,069, in such amounts as directed by the Bureau of Prisons or defendant’s probation officer. The court ordered defendant to pay at least $100 a month, but payments could be greater if the probation officer determined defendant was capable of paying more. The Fourth Circuit held that a court may not delegate to a probation officer the authority to determine, within a range, the amount of restitution or the amount of installment payments of a restitution order. Such a delegation violates Article III of the Constitution. A court has the duty under 18 U.S.C. 3663 and 3664 to fix terms of restitution. This grant of authority is exclusive, since imposition of sentence is a core judicial function. Although a court may order the probation officer to perform certain duties, the type of duty is limited by Article III. U.S. v. Johnson, 48 F.3d 806 (4th Cir. 1995).
4th Circuit excludes interest from loss calculation, but includes it in restitution order. (610) Defendant submitted false loan applications to obtain low interest student loans. The 4th Circuit held that the district court should not have included interest in its loss calculation. Note 7 to § 2F1.1 states that loss is the value of money taken, and does not include interest the victim could have earned on the funds if the offense had not occurred. However, the interest could properly be considered in the restitution order. Finally, the district court’s use of the principal figures set forth in the Bill of Information was proper. U.S. v. Hoyle, 33 F.3d 415 (4th Cir. 1994).
4th Circuit remands for specific factual findings to support restitution order. (610) The 4th Circuit remanded for the district court to make specific factual findings in support of a $209,421 restitution order. The VWPA requires a court to consider various factors, including the defendant’s financial resources and his financial needs and earning ability. Under Circuit law, a sentencing court must make specific, explicit findings of fact on each of the factors in 18 U.S.C. § 3664(a). The court may also adopt the presentence report if it recites adequate recommended factual findings, but here the presentence report was inadequate. It did not contain recommended findings as to defendants’ individual or their families’ financial needs or what hardship might result from the restitution order. U.S. v. Molen, 9 F.3d 1084 (4th Cir. 1993).
4th Circuit rules findings were inadequate to support restitution order. (610) Notwithstanding the PSI’s determination that defendant had a negative net worth and a negative monthly cash flow, the district court ordered her to pay $10,700 in restitution, concluding that she “should be able to make payments” during the period of her supervised release. The 4th Circuit ruled the court failed to make adequate findings to support the restitution order. In ordering restitution, the court must consider the defendant’s financial resources, financial needs and earning ability, and her dependents. The court must make explicit findings as to those factors and the findings should be keyed to the specific type and amount of restitution ordered. U.S. v. Plumley, 993 F.2d 1140 (4th Cir. 1993).
4th Circuit upholds restitution order for member of robbery conspiracy. (610) Defendant pled guilty to conspiracy to commit bank robbery. She argued that a $10,700 restitution order to the bank was inappropriate under the Victim and Witness Protection Act since she did not actually rob the bank; her boyfriend did. The 4th Circuit upheld the restitution order, since as a member of the conspiracy, defendant was liable for all of the actions of her co-conspirators in furtherance of the conspiracy. Her conduct during the course of the conspiracy caused direct harm to the bank. U.S. v. Plumley, 993 F.2d 1140 (4th Cir. 1993).
4th Circuit rules district court improperly failed to consider defendant’s ability to pay $16 million restitution order. (610) The 4th Circuit held that the district court violated the VWPA by ordering defendant to make restitution of $16 million without sufficiently inquiring into his ability to comply. In fashioning a restitution order, a trial court must consider the amount of loss sustained by the victims, the financial resources of the defendant, the financial needs and earning ability of the defendant and the defendant’s dependents. Defendant had a net worth of $41,000. When engaged in his concert promotion business, his business was worth $200,000 annually, and he held a 25 percent interest in another promotions firm. However, defendant would be unable to engage in his business during his prison term or during his three years of supervised release. The only comment on the record suggesting that the district court considered defendant’s financial ability to pay the $16 million order was “I wouldn’t count on them getting [the $16 million], but that’s what we’re going to impose anyway.” U.S. v. Bailey, 975 F.2d 1028 (4th Cir. 1992), abrogated on other grounds by U.S. v. Williams, 81 F.3d 1321 (4th Cir. 1996).
4th Circuit holds that restitution to investors not named in indictment does not violate Hughey v. U.S.. (610) The 4th Circuit held that the requirement that defendant pay restitution to defrauded investors other than those specifically named in the indictment did not violate Hughey v. U.S., 495 U.S. 411 (1990). Hughey held that restitution may be imposed only for losses caused by the offense of conviction. Here, unlike Hughey, defendant pled guilty to a broad indictment charging him with defrauding investors of monies in excess of $15 million. The only monetary amount listed in the indictment was in excess of $15 million, and the trial court’s award of $16 million in restitution did not violate that provision (nor significantly exceed the floor amount specifically identified). The names listed in the indictment only represented contacts defendant made through the mail or the telephone system; the individuals counts did not mention monetary amounts allegedly obtained through each specific contact. U.S. v. Bailey, 975 F.2d 1028 (4th Cir. 1992), abrogated on other grounds by U.S. v. Williams, 81 F.3d 1321 (4th Cir. 1996).
4th Circuit holds that restitution under VWPA cannot include consequential damages such as attorneys’ fees. (610) As a result of defendant’s fraudulent misrepresentations to his brother’s creditor, the creditor delayed repossessing $45,000 worth of equipment which it had sold to the brother. By the time the creditor attempted to repossess the equipment, the brother had disposed of much of the property and most of it had to be sold at auction. The creditor also incurred legal expenses in repossessing the equipment and liquidating it. The 4th Circuit reversed a $42,500 restitution award, holding that an award of restitution under the Victim and Witness Protection Act (VWPA) cannot include consequential damages such as attorneys’ and investigators fees expended to recover the property. Moreover, an award of restitution under the VWPA must be based on findings as to the value of the property as of the date of loss or the date of sentencing, and as to the value of any part of the property that is returned, as of the date of return. No such factual findings were made by the district court. U.S. v. Mullins, 971 F.2d 1138 (4th Cir. 1992).
4th Circuit reverses restitution order based upon lost profits. (610) Nine former miners were ordered to pay restitution in excess of $112,000 as a result of their involvement in bombing a mine. The 4th Circuit found that this figure improperly included $28,200 in lost profits. Section 3663(b) of the Victim and Witness Protection Act does not provide for the recovery of lost profits. Although § 3663(a) does provide for the recovery of lost income, this section only applies to an offense involving bodily injury to a victim. The inclusion of the cost of repairing the mine was proper. The VWPA also requires the district judge to balance the victim’s interest in compensation against the financial resources and circumstances of the defendant. On remand, the district court was also ordered to make clear findings of fact as to the defendants’ resources and financial needs. U.S. v. Sharp, 927 F.2d 170 (4th Cir. 1991).
5th Circuit includes in restitution fraudulent transaction where defendant was attorney of record. (610) Defendant was convicted of fraud and money laundering charges based on his involvement in a mortgage fraud scheme. He challenged the inclusion $140,000 from one transaction in the restitution order, arguing that there was no evidence that he was criminally involved in this transaction. However, defendant did not contest that the transaction was illegal or that he participated as an attorney for the title company involved in the transaction. In U.S. v. Arledge, 553 F.3d 881 (5th Cir.2008), the court held in similar circumstances that when a transaction is shown to be fraudulent and the defendant was involved as the attorney of record, the district court did not abuse its discretion by awarding restitution based on losses resulting from the fraud. Accordingly, the Fifth Circuit held that the district court did not abuse its discretion in calculating defendant’s restitution award. U.S. v. Isgar, 739 F.3d 829 (5th Cir. 2014).
5th Circuit reverses restitution for relevant conduct beyond offense of conviction. (610) Defendant argued for the first time on appeal that the district court erred in awarding restitution based on losses caused by relevant conduct. The general rule is that a district court can award restitution to victims of the offense, but the restitution award can encompass only those losses that resulted directly from the offense for which the defendant was convicted. The Fifth Circuit agreed that the district court erred by awarding restitution based on relevant conduct that went beyond defendant’s offense of conviction. Awarding restitution for losses outside the offense of conviction is an error that is clear and obvious. U.S. v. Benns, 740 F.3d 370 (5th Cir. 2014).
5th Circuit reverses loss from later-in-time transaction unrelated to counts of conviction. (610) Defendant and eight others were convicted of charges arising from their participation in a complex mortgage fraud scheme. Defendant had a relatively minor role in the scheme; he recruited individuals to invest in the scheme and brokered loans for two properties, Creek Bend and Appalachia. He was acquitted of most charges, including a conspiracy charge, and was convicted only of two counts connected to the Creek Bend property. He was ordered to pay $108,659.15 in mandatory restitution, and to forfeit $121,434.64. The district court, in calculating the losses for restitution purposes, included the loss from a later-in-time transaction, the Appalachian transaction, which was unrelated to his counts of conviction. The Fifth Circuit held that this was plain error. The MVRA limits restitution to the actual loss directly and proximately caused by the offense of conviction. A restitution award cannot compensate a victim for losses caused by conduct that falls outside the temporal scope of the acts of conviction. The Appalachian transaction was not part of defendant’s offense of conviction. U.S. v. Mason, 722 F.3d 691 (5th Cir. 2013).
5th Circuit reverses portion of restitution order not related to offense of conviction. (610) Defendants, who operated two medical clinics, pleaded guilty to defrauding health care insurers by billing for pain injections that they never administered. They argued that the court’s restitution order, taken from the PSRs, erroneously included restitution for payments not related to the injection-billing fraud. The Fifth Circuit agreed. The Probation Office failed to scrutinize the amounts claimed by the insurers and recommended restitution for more than the insurers’ actual losses. For example, one insurer claimed as loss all of its payments to defendants dating back to 1997, even though the charged conspiracy did not begin until 1998. A second insurer reported that it paid defendants $650,775.01 for injections, out of a total of $929,884.55 paid to them for all treatments. Yet the Probation Office listed the larger figure as actual loss. A third insurer attached a spreadsheet of all of its payments to defendants, but expressly stated that it was “not sure which claims relate to the guilty plea.” The Probation Office nevertheless reported all of those payments as actual loss. These obvious mistakes undermined any confidence that the probation office gave any meaningful scrutiny to the remaining claims. U.S. v. Sharma, 703 F.3d 318 (5th Cir. 2012).
5th Circuit refuses to give credit for cheaper procedures medical clinic actually performed. (610) Defendants, who operated two medical clinics, pleaded guilty to defrauding health care insurers by billing for pain injections that they never administered. Sometimes, defendants actually administered a cheaper, faster, “trigger-point injection” but would “upcode” the procedure and bill insurers for the more expensive facet-point injection. They argued that the court’s restitution order improperly failed to give them credit for amounts that the insurers would have paid for the trigger-point injections. The Fifth Circuit held that the district court did not abuse its discretion in declining to give defendants credit for injections that were not shown to be medically necessary or reimbursable by the insurers. Patients who later went to different physicians were “universally” taken off trigger-point injections. Defendants offered little to rebut the government’s contentions. They did not produce competent evidence suggesting that even one injection to even one patient was medically necessary and met the insurer’s reimbursement standards. U.S. v. Sharma, 703 F.3d 318 (5th Cir. 2012).
5th Circuit requires viewer of child pornography to pay restitution to depicted child. (310) “Amy,” the victim of childhood sexual abuse and of a widely broadcast set of photos depicting her abuse, sought restitution from defendants who viewed her photos on the internet. The district court denied restitution on the ground that the defendants, by merely viewing the photos, did not “proximately” cause Amy’s injuries. The en banc Fifth Circuit granted Amy’s mandamus petition, holding that the district court clearly erred in requiring a showing of proximate cause. The court ruled that 18 U.S.C. § 2259 only has a proximate result requirement in § 2259(b)(3)(F); it does not require the government to show proximate cause to trigger a defendant’s restitution obligations for the categories of losses in § 2259(b)(3)(A)-(E). With respect to those categories, the plain language of the statute dictates that a district court must award restitution for the full amount of those losses. The case was remanded to determine the amount of restitution. In re Amy Unknown, 701 F.3d 749 (5th Cir. 2012), certiorari granted by Paroline v. U.S., 133 S.Ct. 2886 (2013).
5th Circuit approves $10,000 daily fine for environmental violations. (610) Defendants, who owned and operated numerous wastewater treatment facilities, were convicted of knowingly violating the Clean Water Act. Under 33 U.S.C. § 1319(c)(2), a court may impose fine of $5,000 to $50,000 per day of violation. The district court imposed a fine of $10,000 per knowing records violation, for a total of $60,000. Defendants argued that they should not have been fined six different times for the same records violation, and that the court should have imposed the statutory minimum per violation ($5,000) rather than $10,000. The Fifth Circuit found no error. Section 1319(c)(2) authorizes a fine to be imposed “per day of violation,” and the district court therefore did not err in imposing six separate fines corresponding to knowing violations at the six separate facilities. Further, the record demonstrated that the court fully considered the statutory factors provided by 18 U.S.C. §§ 3553(a)(2) and 3572, and the fines were not unreasonable in light of those factors. The choice between a $5,000 and $10,000 fine was well within the district court’s discretion. U.S. v. Pruett, 681 F.3d 232 (5th Cir. 2012).
5th Circuit rejects restitution to pawn shop that purchased stolen guns from defendant. (610) Defendant pled guilty to being a felon in possession of a firearm after selling stolen firearms to a pawn shop. The district court ordered defendant to pay $525 in restitution to the pawn shop, since the stolen firearms were seized and returned to their owner. The Fifth Circuit held that the district court erred in ordering restitution to the pawn shop. The court believed that defendant’s possession of the firearms was part of a scheme in which he would steal and then sell property, including firearms. However, acts in furtherance of a conspiracy or scheme can only support restitution if the conspiracy or scheme is an element of the offense. Defendant’s offense, being a felon in possession of a firearm, did not involve as an element a scheme, conspiracy, or pattern of criminal activity. Therefore, the only ground for restitution under 18 U.S.C. §3663 was if the pawn shop was directly and proximately harmed as a result of defendant’s possession of the firearms. Here, the harm to the pawn shop was not based on the conduct underlying defendant’s offense, possession of a firearm, but rather the theft and subsequent sale of stolen firearms. U.S. v. Espinoza, 677 F.3d 730 (5th Cir. 2012).
5th Circuit requires viewer of child pornography to pay restitution to depicted child. (610) “Amy,” the victim of childhood sexual abuse and of a widely broadcast set of photos depicting her abuse, sought restitution from defendants who viewed her photos on the internet. The district court denied restitution on the ground that the defendants, by merely viewing the photos, did not “proximately” cause Amy’s injuries. The Fifth Circuit granted Amy’s mandamus petition, holding that the district court clearly erred in grafting a proximate cause requirement onto the Crime Victims Rights’ Act, 18 U.S.C. § 3771(a)(6). As for actual causation the court held that consumers of pornographic materials cause the children depicted in those materials to suffer because (1) the fact that the images have been disseminated perpetuates the abuse, (2) the mere existence of child pornography represents an invasion of the privacy of the child depicted, and (3) the consumer of child pornography instigates its production by providing an economic motive for its creation and distribution. The case was remanded to determine the amount of restitution. In re Amy Unknown, 636 F.3d 190 (5th Cir. 2011).
5th Circuit says government failed to prove that defendant proximately caused damages to child porn victim. (610) Petitioner was the child victim of various images of child pornography that were widely distributed via the Internet. Defendant pled guilty to possessing child pornography, stemming from a large number of images found on his computer, including two images of petitioner. The government and petitioner moved for restitution pursuant to 18 U.S.C. § 2259, but the district court ruled that the government failed to establish that any of defendant’s conduct proximately caused petitioner’s damages. Petitioner sought a writ of mandamus, arguing that § 2259 permits a victim to receive mandatory restitution regardless of whether the victim’s harm was proximately caused by the defendant. The Fifth Circuit denied the petition for a writ of mandamus. Section 2259(b)(3) arguably requires the government to establish that recoverable damages proximately resulted from the offense. The district court’s conclusion that the government failed to establish that any of the defendant’s conduct caused petitioner’s damages was not indisputably wrong. In re: Amy, 591 F.3d 792 (5th Cir. 2009).
5th Circuit reverses restitution for unproven losses, rejecting harmless error analysis. (610) Defendant, an attorney, was convicted of conspiracy and fraud for his involvement in filing fraudulent claims to recover from the settlement funds set up to compensate victims of the diet drug Fen Phen. The district court ordered defendant to pay restitution of $5.8 million to the settlement fund. Defendant argued that the government did not sufficiently prove that the settlement funds had paid false claims arising from defendant’s illegal conduct. The Fifth Circuit upheld the court’s findings for all but three claims. For these three claims totaling $54,000, the government conceded that there was no proof of falsity. The government argued that the error was harmless because it was less than 1% of the total restitution order. It also claimed to have proof of an additional false claim that was not originally included in the district court’s restitution order, which resulted in a loss of $488,000. The Fifth Circuit refused to adopt a harmless error analysis for the calculation of loss for restitution purposes. U.S. v. Arledge, 553 F.3d 881 (5th Cir. 2008).
5th Circuit says restitution for all losses was not disproportionate. (610) Defendant, an attorney, was convicted of conspiracy and fraud for his involvement in filing fraudulent claims to recover from the settlement funds set up for victims of the diet drug Fen Phen. He argued that the restitution award (over $5.8 million) violated the Eighth Amendment, because it was disproportionate to require him to pay the full amount of the calculated loss attributable to the fraud when he received only about 12.5% of the total attorney’s fees. The Fifth Circuit held that because the restitution order was tied directly to losses sustained by the victim, it was proportional. The amount of restitution must be tied to the losses suffered by victims of the defendant’s crime, not the defendant’s gain from his illegal conduct. Further, the court ordered defendant’s restitution to be “joint and several” with 11 other persons who had already been convicted of fraud related to the Fen Phen settlements. Thus, defendant could seek contribution from his co-conspirators to pay off the restitution order and reduce the amount he personally owes. U.S. v. Arledge, 553 F.3d 881 (5th Cir. 2008).
5th Circuit orders restitution of salary and pension defendant received as fraudulently elected as union president. (610) Defendant was convicted of several crimes relating to voter fraud in connection with his election as president of a local teamsters union. He contested the ordered restitution of $121,478.86 (salary and pension paid him to in 2003, together with a $20,000 kickback), arguing that the union suffered no actual loss because it would have paid an honest union president the same amount. The Fifth Circuit disagreed. It was not possible to ascertain, to the degree necessary, the value of any services defendant provided under the contract. Moreover, defendant’s analysis conflicted with the plain language of the MVRA, which requires the defendant to return any ill-gotten property which has been acquitted by fraud on the victim. The salary and pension received by defendant in connection with his 2002 voter fraud met this requirement. U.S. v. Crawley, 533 F.3d 349 (5th Cir. 2008).
5th Circuit holds that government did not establish victim’s actual loss to support restitution. (610) Defendant conspired with others to import cigarette rolling papers falsely trademarked as “Zig-Zags” for resale in the U.S. The conspirators used prison inmates in Mexico to produce over one million counterfeit booklets. The district court ordered defendant to pay $566,267 in restitution based on the amount of the lost profits for one million counterfeit books. The Fifth Circuit remanded, holding that the government did not sufficiently establish the victim’s actual loss to support the restitution award. The government did not contend that all one million booklets were distributed or sold. The government’s proof was sufficient to establish a violation of the trafficking statute and to support a sentence enhancement based on intended loss, but it was insufficient to establish that the actions caused the victims an actual loss. The district court did not believe it was necessary to calculate the actual amount placed into commerce and sold to determine the amount of restitution. However, if the booklets were never placed into commerce and sold, there would have been no actual loss, and thus no restitution. Because the purpose of the MVRA is to compensate a victim for its losses, the appropriate measure of restitution was the net profits the legitimate sellers lost as a result of defendant’s actions. U.S. v. Beydoun, 469 F.3d 102 (5th Cir. 2006).
5th Circuit upholds condition of supervised release requiring defendant to pay previously ordered, but unpaid, restitution. (610) On revocation of defendant’s supervised release, the district court sentenced her to imprisonment followed by another term of supervised release. As a condition of this release, the judge ordered not only that defendant pay the remaining restitution previously ordered in this case, but also that she should pay about $50,000 in unpaid restitution ordered by a different federal court following a 1993 fraud conviction. The Fifth Circuit found no error. The order was not a new order of restitution, and thus was proper under the catch-all provision of § 3583(d) (the court may impose “any other condition it considers to be appropriate”). While the catch-all provision might not allow a court to order restitution that Congress has specifically denied, it does allow a court to order compliance with a previously existing order. U.S. v. Love, 431 F.3d 477 (5th Cir. 2005).
5th Circuit holds that restitution under MVRA did not violate Booker. (610) Defendant argued that the court committed Booker error by ordering restitution under the Mandatory Victims Restitution Act of 1996 (MVRA). The Fifth Circuit found no error. Booker’s holding that the Sentencing Guidelines are advisory does not directly affect the MVRA since it is a statute separate from the Sentencing Guidelines. The judicial fact-finding supporting restitution orders does not violate the Sixth Amendment. U.S. v. Garza, 429 F.3d 165 (5th Cir. 2005).
5th Circuit holds that $70,000 error in restitution affected substantial rights. (610) Defendant argued for the first time on appeal that the trial court’s restitution order was improper because it exceeded the temporal scope of the indictment. The Fifth Circuit agreed. The indictment charged defendant with actions occurring from March 2000 to February 2001. The amount of loss resulting from actions during that time period totaled $64,501.97. However, the district court calculated defendant’s restitution of over $135,000 based on actions occurring between November 1997 and February 2001. The Fifth Circuit held that defendant established plain error. A defendant sentenced under the Mandatory Victim Restitution Act (MVRA) is only responsible for paying restitution for the conduct underlying the offense of conviction. The order here was based in part on transactions that were not alleged in the indictment and occurred over two years before the specified temporal scope of the indictment. The restitution affected defendant’s substantial rights because the outcome of the proceedings would have been different if the error had not occurred. The variance of over $70,000 merits correction. U.S. v. Inman, 411 F.3d 591 (5th Cir. 2005).
5th Circuit rejects challenges to restitution order. (610) The Fifth Circuit rejected numerous challenges to the district court’s restitution order. The schedule was not improperly unrealistic. Although the restitution was payable immediately, defendant was not ordered to make full restitution at once. Rather, the forfeiture will commence immediately, and he will begin making monthly payments after his release. While the court erred by not reducing the restitution by tax payments defendant made, the evidence supported a much higher number. Therefore, the failure to deduct the taxes he paid one year was not plain error. The fact that one of the entities to which he was ordered to pay restitution had changed corporate structure did not make the restitution order plain error, because defendant could not show that the error affected his substantial rights. U.S. v. Miller, 406 F.3d 323 (5th Cir. 2005).
5th Circuit says failure to advise that defendant was subject to mandatory restitution was harmless error. (610) Rule 11 requires a district court during the plea colloquy to inform the defendant about any mandatory minimum penalty and about the court’s authority to order restitution. Although defendant’s plea agreement and PSR both discussed restitution, the district court made no mention of the restitution during the plea colloquy. In U.S. v. Glinsey, 209 F.3d 386 (5th Cir. 2000), the court held that a defendant’s substantial rights are not infringed when the district court, contrary to Rule 11, fails to inform him of the court’s authority to order restitution as a penalty where the court did inform him of the maximum possible fine. Defendant contended that Glinsey was distinguishable because the restitution there was discretionary, not mandatory. However, Glinsey seemed to base its decision on the amount of financial exposure of which the defendant had notice, so the proper course to avoid infringing substantial rights is to set liability no higher than the defendant’s level of notice. Here, the court warned defendant that she faced fines up to $500,000, while the restitution was over $300,000 lower than the total possible fines. Therefore, the Fifth Circuit ruled that the court’s Rule 11 error was not harmful. U.S. v. Powell, 354 F.3d 362 (5th Cir. 2003).
5th Circuit agrees that state was victim of fraud for restitution purposes. (610) Defendant was convicted of mail fraud and money laundering in connection with his operation of a number of corporate entities formed by the state of Mississippi to stimulate business development. Defendant challenged the order to pay restitution to the state of Mississippi, arguing that the state was not a “victim” entitled to restitution under applicable law. The Fifth Circuit disagreed. Defendant’s argument appeared to be based on the assumption that his actions as CEO and chairman of the board of one corporation, Magnolia Venture, could only have harmed that corporation, which according to defendant was a private, and not a state entity. However, it was undisputed that Magnolia Venture was created by state statute and funded by state bonds. The bond director for the Mississippi State Treasury testified at defendant’s trial that the interest on the Magnolia Venture bonds was paid out of the state treasury’s general fund. Furthermore, Magnolia Venture was created, and the money from the bond issue provided to Magnolia Venture, for the statutory purposes of “creating new jobs for Mississippi” and “enhancing tax revenue for the state.” U.S. v. Caldwell, 302 F.3d 399 (5th Cir. 2002).
5th Circuit holds that defendant did not prove inability to pay ordered restitution. (610) The district court ordered defendant to pay restitution of $1,377,830 “during incarceration, with any remaining balance to be paid in thirty-two equal monthly installments during supervised release, beginning the first full month of supervision.” The Fifth Circuit ruled that defendant did not meet his burden of showing that he was unable to pay the restitution. The court relied on the financial information in defendant’s PSR, including that the majority of defendant’s assets were jointly owned with his wife, that he had been the sole financial provider for his wife and two children in recent years, and that despite considerable income from 1994 through 1996, he and his wife had accumulated a fairly substantial amount of personal debt and had little equity in their home. The payment schedule, although stringent, did not indicate a probability that the district court failed to consider defendant’s financial situation. The schedule did not require any specific amounts to be paid while defendant was incarcerated, but only that “the balance” be paid in 32 equal monthly installments after he was released. Moreover, after his employment was terminated as a result of the offense of conviction, defendant obtained employment at a computer resale company where he earned a salary of $97,000 in 1997. It was reasonable to assume that he would have a significant earning potential after his release from prison. U.S. v. Caldwell, 302 F.3d 399 (5th Cir. 2002).
5th Circuit holds that plea agreement permitted court to order restitution to victims of broader fraud scheme. (610) Defendant defrauded his company’s suppliers by making underpayments on invoices, paying with checks drawn on a closed account, and forging vendor authorizations for delivery. He argued that under Hughey v. U.S., 495 U.S. 420 (1990), because the bill of information listed only a single fraudulent transaction, his restitution should be limited to the consequences of that transaction. However, after Hughey, Congress amended the VWPA to provide that where a defendant pleads guilty to an offense involving a scheme, conspiracy, or pattern of criminal activity, the court may award restitution to any person directly harmed by the course of conduct. 18 U.S.C. § 3663(a)(2). While the bill of informant suggested that the scheme was limited to a single fraud in June 1998, defendant’s the plea agreement provided that “the Court may order [defendant] to make restitution to the victims of his scheme to defraud and to other computer and delivery companies as set out in the superceding indictment to whom the Defendant is indebted.” Because defendant’s plea agreement contemplated a scheme that went beyond the June 1998 fraud to the other frauds alleged in the indictment, the Fifth Circuit interpreted the conviction as part of this broader scheme. Thus, the district court could award restitution to all of the victims of the broader scheme. U.S. v. Cothran, 302 F.3d 279 (5th Cir. 2002).
5th Circuit rejects restitution for legal fees victim incurred defending lawsuits. (610) Defendant was involved in a conspiracy to traffic in stolen airline tickets. The district court ordered defendant to pay restitution that included $23,063.98 in legal fees incurred when the victim travel agency was forced to defend actions instituted by the airlines seeking to collect on the stolen tickets. Defendant argued that these legal fees were not recoverable because they were not directly and proximately incurred as a result of the crime. The Fifth Circuit agreed. Previous cases have interpreted 18 U.S.C. § 3663(b) to preclude the award of consequential damages. See U.S. v. Mitchell, 876 F.2d 1178 (5th Cir. 1989). The losses here were akin to losses incurred by a victim attempting to recover stolen property. Such “recovery” losses cannot be included in a restitution award under § 3663(b)(1). U.S. v. Onyiego, 286 F.3d 249 (5th Cir. 2002).
5th Circuit holds that restitution order requiring use of retirement funds did not constitute plain error. (610) The district court ordered defendant to pay a total of $250,000 in restitution to his victim and the United States. He contended that the court erred in ordering him to pay the full $2800 of his § 401K retirement plan towards restitution because this order was in violation of ERISA’s anti-alienation clause. Although defendant did not waive this issue, he also made no objection to the surrender of his § 401K account, and thus, the plain error standard of review applied. In U.S. v. Gaudet, 966 F.2d 959 (5th Cir. 1992), the court held that an order to relinquish a defendant’s pension to satisfy a restitution obligation was not an “obvious” error and thus did not constitute plain error. Because defendant was presenting the same argument under the same standard, the Fifth Circuit held that he was not entitled to relief here. U.S. v. Calbat, 266 F.3d 358 (5th Cir. 2001).
5th Circuit holds that defendant did not prove entitlement to offset from insurance proceeds. (610) Defendant challenged the district court’s decision not to credit him for the insurance proceeds received by his victim. Under § 3664(j)(2) of the Victim and Witness Protection Act, any “amount paid to a victim under an order of restitution shall be reduced by any amount later recovered as compensatory damages for the same loss by the victim” in any state or federal civil proceeding. However, it is the defendant’s burden to establish an offset to a restitution order. The Fifth Circuit found that defendant did not meet this burden. The record contained no documentation to detail the terms of the settlement. The only mention of these insurance proceeds was the victim’s testimony at sentencing that defendant’s insurance company offered him $25,000, which was defendant’s policy limit. Further, even if defendant had met this burden, the record showed that the victim’s medical bills exceeded the amount of restitution imposed. Defendant did not show that the restitution order was illegal. U.S. v. Calbat, 266 F.3d 358 (5th Cir. 2001).
5th Circuit holds that unrealistic restitution payment schedule was abuse of discretion. (610) Defendant argued that the district court erred in ordering him to pay the full amount of his $250,000 restitution over the course of his three-year term of imprisonment and his three-year term of supervised release. According to the PSR, at the time of the offense, defendant was employed as a purchasing manager and earned about $39,000 a year. His only assets were a car valued at $4800 and a § 401K account valued at $2800. Under the payment schedule imposed by the court, the average yearly payment was over $41,000, which was greater than his yearly income at the time of his offense. The court noted at sentencing that “I frankly do not anticipate that he would ever be able to pay the full $250,000.” The Fifth Circuit ruled that the district court abused its discretion in setting the payment schedule for the restitution order. The unrealistic payment schedule was particularly troubling in light of the fact that payment of restitution was one of the conditions of defendant’s supervised release. U.S. v. Calbat, 266 F.3d 358 (5th Cir. 2001).
5th Circuit refuses to provide offset where defendant provided no reliable evidence of loss mitigation. (610) Defendants operated a large marina. They were convicted of failing to report millions in boat sales to the IRS and of having defrauded their insurers, who collectively suffered millions of dollars in damage due to their submission of altered or fabricated invoices for losses and mitigation costs. The district court ordered restitution of the entire value of the fraudulent invoices submitted to the insurers, with no reduction to reflect the actual costs that the marina occurred in mitigating losses. It was undisputed that the marina expended substantial sums in mitigating damage from a flood. Defendant argued that the court abused its discretion in failing to offset the marina’s expenses from the restitution amount. The Fifth Circuit found no error. The district court found that neither the fraudulent invoices nor other evidence credibly reflected the actual expenses incurred by the marina. Defendants were unable to provide reliable evidence supporting their claims. Although a defendant would normally be entitled to a reduction in the restitution award, the absence of credible evidence to support a claim of mitigation loss would preclude such an offset. U.S. v. Loe, 248 F.3d 449 (5th Cir. 2001).
5th Circuit says embezzlement victims did not suffer loss from perjury at bankruptcy proceeding. (610) After a business dispute with his law partners, defendant disbursed $500,000 from the partnership’s money market account, converted the money to cash, and placed it in a safe deposit box. After the partners obtained a civil judgment against him, defendant withdrew all of the cash from the safe deposit box. Defendant testified at a judgment debtor examination that he had “spent” the money. The partners then filed an involuntary bankruptcy proceeding against him. Defendant testified under oath at the bankruptcy proceedings that he had incinerated the money he had withdrawn from the safe deposit box. Defendant was convicted of perjury, and ordered to pay restitution to his former law partners. The Fifth Circuit reversed, ruling that defendant’s former law partners suffered no losses as a result of defendant’s perjury before the bankruptcy court. Defendant’s statement that he burned the currency did not place his former partners in any worse position than if he had not made them, because no evidence suggested that the bankruptcy trustee, the partners themselves, the court or the authorities actually believed defendant’s claim. U.S. v. Norris, 217 F.3d 262 (5th Cir. 2000) No. 99-30689.
5th Circuit reduces restitution to maximum fine amount included in court’s warning. (610) Defendant challenged a $1,266,317.06 restitution order, since neither the plea agreement nor the rearraignment colloquy mentioned the possibility of restitution, although he was told he could face a fine of up to $1 million. The Fifth Circuit agreed that the district court violated Rule 11 by not informing defendant of the possibility of paying restitution at the rearraignment colloquy. However, to be entitled to relief, defendant must also show that this variance affected his substantial rights. Given that defendant was warned that he could face a $1 million fine, the question was whether knowing about the $266,000 difference would have affected his willingness to plead guilty. However, even if it did, defendant was not prejudiced so long as his liability did not exceed the maximum amount that the court informed him could be imposed as a fine. Following the First Circuit’s approach in U.S. v. Padin-Torres, 988 F.3d 280 (1st Cir. 1993), the Fifth Circuit reduced the restitution order to $1 million, the maximum fine amount that defendant was warned about at his plea hearing. Having to pay restitution of $1 million, instead of a fine of $1 million, would not have affected defendant’s willingness to plead guilty so long as his total liability did not exceed the maximum fine that could have been imposed. U.S. v. Glinsey, 209 F.3d 386 (5th Cir. 2000).
5th Circuit says court erred in ordering immediate restitution. (610) The Fifth Circuit ruled that the district court did not err in ordering defendant to pay $40,256 in restitution without inquiring into defendant’s financial circumstances. The Mandatory Victims Restitution Act (MVRA) provides that restitution is mandatory when certain offenses are involved, including offenses against property, as involved here. The $40,256.02 restitution reflected the damage that was done to an RV that defendant stole. The MVRA required the district court to order the full amount of restitution, without regard for defendant’s economic circumstances and ability to pay. However, the district court erred in ordering immediate restitution. The MVRA requires that the court consider the “financial resources of the defendant” in determining the schedule under which the restitution is to be paid. The PSR said that defendant had a negative net worth of $55,000, and no income or expenses. This clearly suggested that defendant had no assets and absolutely no ability to pay the restitution immediately. U.S. v. Myers, 198 F.3d 160 (5th Cir. 1999).
5th Circuit says conspiracy count alone provided sufficient basis for restitution. (610) Defendant was convicted of a conspiracy to defraud Medicare. She argued that because she was acquitted of all substantive counts, she could not be required to pay restitution on the conspiracy count. The Fifth Circuit disagreed, holding that the conspiracy count was an adequate basis for the restitution order. The court based the restitution order on the amount that Medicare paid on the fraudulent billings. U.S. v. Gieger, 190 F.3d 661 (5th Cir. 1999).
5th Circuit order restitution for common scheme to defraud. (610) Defendant and his daughter were convicted of various securities law violations in connection with their solicitation of investors for their corporation. The district court ordered them to each pay almost $ 2 million in restitution fees. In response to their challenge to the restitution order, the government argued that the Victim and Witness Protection Act, 18 U.S.C. § 3663, authorized restitution when the subject offense involved a scheme, conspiracy, or pattern of criminal activity. The Fifth Circuit affirmed the restitution, since the record showed that all of the corporation’s investors were victims of a common scheme of fraud. Since all of the investors shared a common interest in the corporation and the evidence was sufficient to establish that defendant’s actions affected all of their investments, a common plan to defraud was established. Moreover, the daughter was subject to supervised release as part of her sentence. Although restitution may not be directly permitted under § 3663(a), a district court may order restitution as a condition of supervised release. See U.S. v. Bok, 156 F.3d 157 (2d Cir. 1998) (§§ 3583(d) and 3563(b) permits a restitution award regardless of the limitations in § 3663(a)). U.S. v. Dahlstrom, 180 F.3d 677 (5th Cir. 1999).
5th Circuit orders restitution for common 6th Circuit orders restitution for all losses from telemarketing scheme. (610) Defendant was employed as a telemarketer for a firm that defrauded numerous victims out of a large amount of money. He argued that under Hughey v. United States, 495 U.S. 411 (1990), his restitution must be limited to the victims of the counts for which he was found guilty, which amounted to only $7,940.05. The Sixth Circuit held that defendant was properly ordered to pay restitution to all victims of his telemarketing scheme. Hughey is no longer controlling because of a 1992 amendment redefining the conduct relevant to a restitution award. The amendment provides that a victim of an offense includes “any persons directly harmed by the defendant’s criminal conduct in the course of the scheme, conspiracy, or pattern.” The Sixth Circuit relied upon this amendment in U.S. v. Jewett, 978 F.2d 248 (6th Cir. 1992) to hold that all losses resulting from a mail fraud scheme may be included in a restitution order. The district court’s order of restitution properly included all those victimized by defendant in the course of his scheme to defraud. U.S. v. Davis, 170 F.3d 617 (6th Cir. 1999).
5th Circuit affirms restitution where court considered mandatory factors. (610) Defendant challenged a $50,000 restitution order. The Fifth Circuit ruled that the restitution was not an abuse of discretion. An order of restitution will be reversed on appeal only when the defendant shows that it is probable that the court failed to consider a mandatory factor and that failure influenced the court. Defendant did not argue that the court failed to consider a mandatory factor, but only challenged the court’s ultimate determination. U.S. v. Hull, 160 F.3d 265 (5th Cir. 1998).
5th Circuit uses entire amount as value of laundered funds and basis for restitution. (610) Defendant, a bank executive, hired a co-conspirator as a consultant to the bank. The co-conspirator hired subcontractors to do the actual work on the bank’s projects and then charged a markup on the amount the subcontractors charged him. Over a several-year period, the co-conspirator charged the bank approximately $10.5 million in consulting fees. The invoices that the co-conspirator received from the subcontractors totaled only $2.8 million. Defendant received about $2 million in kickbacks funneled through his attorney. The Fifth Circuit used the total amount of funds transferred from the bank to the co-conspirator as the “value of the funds” involved in the money laundering under § 2S1.1. All of the funds became “proceeds” of the criminal activity once they left the bank’s control. The court also properly ordered restitution for the entire amount of consulting fees the bank paid to the co-conspirator. Because of defendant’s fraud, it was not possible to determine how much of the fees paid to the consulting firm were for actual value. Thus, the court’s use of the total amount of the consulting fees was not clearly erroneous. U.S. v. Cihak, 137 F.3d 252 (5th Cir. 1998).
5th Circuit upholds discretion to order restitution despite civil settlement. (610) Defendants were partners in a real estate limited partnership that went bankrupt. They were convicted of bankruptcy fraud for mischaracterizing payments totaling $498,995 that the partnership had paid to them in the year before the bankruptcy petition was filed. They argued that they should not owe any restitution because prior to their conviction they entered into a civil settlement with their creditor. The Fifth Circuit held that district courts have discretion to impose restitution orders in spite of civil settlements. The fact that the victim has agreed in a civil proceeding that it has been compensated fully does not prevent a district court from pursuing the rehabilitative and retributive functions of the criminal law served by restitution. However, to avoid double-counting, a district court must reduce the size of its restitution order by any amount received by the victim as part of a civil settlement. The burden of proving an offset lies with the defendant. Here, defendants failed to present any evidence as to the value of the consideration they provided in exchange for the release, and thereby waived their offset claim. U.S. v. Sheinbaum, 136 F.3d 443 (5th Cir. 1998).
5th Circuit remands for hearing on whether defendant hid assets. (610) Defendant was convicted of multiple counts of bank fraud and money laundering. At sentencing the government sought to present evidence that defendant had concealed assets from the district court. The district court refused to consider the evidence, stating that it would “unduly complicate and prolong the sentencing process.” The court also refused to determine the total amount of restitution possible and instead ordered defendant to pay partial restitution of $2 million. The Fifth Circuit remanded for the court to consider the government’s request for an evidentiary hearing. Under § 3663(a), a court may decline to order restitution to the extent “the complication and prolongation of the sentencing process” necessary to determine restitution outweighs “the need to provide restitution to any victims.” This language may encompass cases where the assessment of full restitution requires extensive hearings to determine a defendant’s financial resources. Because the record here did not indicate the level of complexity involved, the appellate court was unable to review the court’s refusal to consider relevant evidence for restitution purposes. Judge Dennis dissented. U.S. v. Dupre, 117 F.3d 810 (5th Cir. 1997).
5th Circuit finds sufficient evidence of insurance fraud to uphold restitution. (610) Defendant, a licensed chiropractor, submitted false insurance claims and collected proceeds for patients who were not treated at all or who received only minimal treatment. Although defendant provided some legitimate services, many patients testified that they received either no treatment or only cursory treatment. Defendant argued that the $451,969.60 restitution included claims paid on behalf of one family as to which there was no evidence of fraud. The Fifth Circuit found sufficient evidence of fraud in connection with these claims to support the restitution order. A co-worker of a family member testified that he was recruited into the scheme by the family member and later paid by the family member for his participation in the fraud. This supported a finding that the claim forms submitted in connection with this family were fraudulent. Moreover, while some patients did testify that they received treatment, no patient testified that the cursory treatment they received was beneficial or designed to improve their health. U.S. v. Tencer, 107 F.3d 1120 (5th Cir. 1997).
5th Circuit limits restitution to count of conviction, relying on Hughey. (610) When defendant began to have financial difficulties, he obtained a $90,000 loan from a bank where he had 11 other unsecured loans. He pledged as collateral for all the loans property owned by a company in which he was an officer. However, no corporate resolution was obtained and defendant falsely signed the mortgage as the president of the company. When defendant filed for bankruptcy, the company sold the property and the bank received $123,917.82. The district court ordered restitution in the amount of $211,082.18, to cover the other loans. The Fifth Circuit held that this violated Hughey v. U.S., 495 U.S. 411 (1990), which limited restitution under the VWPA for loss caused by the specific offense that is the basis of the conviction. The loss attributed to defendant’s offense of conviction (making a false entry in a bank record) was the $90,000 loan. Because the bank already received value in excess of the loss attributed to defendant’s false statement, they were not entitled to an award of restitution. The other outstanding loans were not procured by fraud. U.S. v. Campbell, 106 F.3d 64 (5th Cir. 1997).
5th Circuit holds that record supported $5 million restitution order. (610) Defendant claimed he lacked the future ability to pay restitution of $5,708,051 as ordered by the district court. The Fifth Circuit held that the record supported the restitution order. During the sentencing hearing, the district court expressly stated that it had considered the loss sustained by the victims, defendant’s financial resources as listed in the PSR, and defendant’s financial needs. The court then concluded that defendant did not have the ability to pay a fine and full restitution. The court therefore did not impose a fine but imposed partial restitution. The record provided an adequate basis for this. Defendant had a degree in accounting and no dependents. Defendant stated on the personal financial statement that if he was able to work, and did not go to jail, he could earn about $100,000 annually for his services. U.S. v. Blocker, 104 F.3d 720 (5th Cir. 1997).
5th Circuit holds that adoption of PSR resolved factual dispute regarding restitution. (610) Defendant challenged a $111,008 restitution order, arguing that the court failed to resolve all factual disputes regarding the amount of restitution, failed to consider his indigence, and incorrectly held him jointly and severally liable for the entire amount of loss. The Fifth Circuit disagreed. The factual findings by the district court were sufficient because the court adopted the findings of the PSR, which expressly evaluated defendant’s financial condition. As a participant in the conspiracy, defendant was legally liable for all the actions of his co‑conspirators in furtherance of the crime. U.S. v. Ismoila, 100 F.3d 380 (5th Cir. 1996).
5th Circuit says contractor’s suppliers were not victims of fraudulent reimbursement scheme. (610) Defendant owned a small construction company that made a successful bid on two Air Force roofing contracts. The company knowingly submitted fraudulent performance and payment bonds, and then submitted fraudulent reimbursement claims relating to the bond fees. Defendant and the company never completed the roofing jobs. The Fifth Circuit held that the district court erred in ordering restitution to material men and supplier “victims” not named in the indictment. Although restitution may be ordered for unnamed victims of a crime when the scheme is specifically defined in the indictment, the “scheme” here was limited to obtaining two roofing contracts. The material men and suppliers were not victims of the scheme but were victims of defendant’s failure to complete the roofing jobs. U.S. v. Upton, 91 F.3d 677 (5th Cir. 1996).
5th Circuit rejects restitution where no loss under VWPA. (610) Defendant worked for a company that sold oil drilling equipment to a supply company. He and a buyer for the supply company formed companies under fictitious names and addresses to sell equipment to the supplier. They were convicted of mail fraud. In determining restitution, the district court found that the supplier suffered a loss equal to defendant’s gain from sales to the supplier. Defendant contended that because the prices of the equipment sold to the supplier were at or below market value, the supplier did not suffer a loss. The Fifth Circuit agreed that no restitution could be awarded because the supplier, the victim of the fraud, did not suffer a loss under the Victim and Witness Protection Act. While gain to a defendant is sufficient to show an intent to defraud, the VWPA requires a real or actual loss to a victim. U.S. v. Jimenez, 77 F.3d 95 (5th Cir. 1996).
5th Circuit says bankruptcy discharge does not limit court’s power to order restitution. (610) Defendant contended that the district court could not order restitution because his debts to some of his victims had been discharged in bankruptcy. The Fifth Circuit disagreed, concluding that a bankruptcy discharge does not effect a district court’s power to order restitution in a criminal case. Bankruptcy proceedings and criminal prosecutions are fundamentally different proceedings, and the causes of actions resolved by each are totally different. Defendant’s bankruptcy discharge did nothing to relieve the losses suffered by his fraud victims. U.S. v. Pepper, 51 F.3d 469 (5th Cir. 1995).
5th Circuit approves restitution for victims not in indictment where scheme to defraud was charged. (610) Defendant argued that the district court erred in ordering restitution for victims of his fraud scheme that were not named in the indictment. Under the VWPA, restitution for victims can only be awarded for the loss caused by the specific offense that is the basis of the offense of conviction. The Fifth Circuit held that because the indictment described the scheme to defraud, restitution could be ordered for all losses from that scheme. The indictment described the duration of the scheme and the method used, and therefore was specific enough to satisfy Hughey v. United States, 495 U.S. 411 (1990). U.S. v. Pepper, 51 F.3d 469 (5th Cir. 1995).
5th Circuit vacates restitution order where offense was under Title 26. (610) Defendant did not file tax returns or pay taxes from 1982 to 1989. He pled guilty to failing to file a timely tax return for 1988. The district court ordered defendant to pay $20,189 in restitution, which was defendant’s tax liability for 1988, and ordered him to reach a repayment schedule with the IRS to pay the remaining back taxes for 1982-87 and 1989. The 5th Circuit held that the restitution order for defendant’s 1988 tax liability was improper, because the restitution statute permits such orders only when the defendant’s offense is under Title 18 or Title 49. Defendant’s offense was under Title 26. U.S. v. Stout, 32 F.3d 901 (5th Cir. 1994).
5th Circuit holds that foreclosure costs cannot be included in restitution order. (610) In order to obtain a bank loan, defendant pledged as collateral a CD equal to 10 percent of the loan balance. When the loan went into default, defendant filed a civil suit against the bank to recover the CD, claiming he believed the CD was merely a cash deposit without a pledge. Defendant argued that the court erred by including in the restitution order the bank’s attorneys’ fees incurred in defending the civil suit and the bank’s total loss on the defaulted loan. The 5th Circuit held that the attorneys’ fees were properly included because they were a direct result of defendant’s offense. However, the foreclosure expenses were not caused by defendant’s scheme and should not have been included in the restitution order. U.S. v. Blackburn, 9 F.3d 353 (5th Cir. 1993).
5th Circuit affirms that defendant had ability to pay substantial restitution. (610) The 5th Circuit affirmed that defendant had adequate means to pay a $85,000 restitution order. Between January 1990 and May 1991, defendant wrote several six-figure checks and numerous five-figure checks on his personal checking account. Defendant testified that over a period of time he had paid a co-defendant about $200,000 for stolen farm equipment and subsequently resold it at a profit. He also testified that he controlled his family’s several thousand acre ranch. U.S. v. Payan, 992 F.2d 1387 (5th Cir. 1993).
5th Circuit reverses restitution order based on potential income from book or movie about crime. (610) One defendant was ordered to pay $250,000 and the other $1,000,000 in restitution to the estate of a woman they had kidnapped and killed. Since this was a highly publicized case, the district court reasoned that defendants might someday receive income from a book or movie about the kidnapping, and that victim of the crime should benefit from that income. The 5th Circuit vacated the restitution order since it appeared to be based on the defendants’ income instead of the victim’s losses. The district court had the authority to order defendants to pay the victim’s estate an amount equal to the lost income and funeral expenses. In this case, the court did not make any factual findings concerning the amount of losses. Moreover, the court must take into account certain constitutional rights of defendants as recognized in Simon & Schuster, Inc. v. Members of the New York State Crimes Bd., 112 S.Ct. 501 (1991). U.S. v. Jackson, 978 F.2d 903 (5th Cir. 1992).
5th Circuit affirms order to relinquish personal pension to satisfy restitution order. (610) Defendant was convicted of embezzling from an employee pension plan. He asserted for the first time on appeal that the district court erred in ordering him to relinquish his personal pension to satisfy the restitution order, since the anti-alienation provision of ERISA precluded such an order. The 5th Circuit affirmed that the order was not plain error. Defendant’s failure to object below precluded his relief. No judge can be expected to know every obscure rule of law. Thus, even if ERISA’s anti-alienation provision preclude the use of his pension to satisfy his restitution obligation, the error was not obvious. U.S. v. Gaudet, 966 F.2d 959 (5th Cir. 1992).
5th Circuit holds that notice requirement for upward departures does not apply to restitution order. (610) The 5th Circuit rejected defendant’s claim that he received inadequate notice of the government’s intent to seek restitution from him. First, the notice requirements in Burns v. U.S., 111 S.Ct. 2182 (1991) do not apply where the defendant’s term of confinement is not an issue. Restitution is authorized by the guidelines and is not an upward departure. Second, although the notice received here was quite short, it was not per se inadequate. At best, defense counsel received notice of the restitution issue a day or two prior to sentencing. However, at the sentencing hearing, although counsel protested the late notice, he did not specify when he received notice and did not advise the court what evidence he would adduce at a hearing on the restitution issue. U.S. v. Razo-Leora, 961 F.2d 1140 (5th Cir. 1992).
5th Circuit upholds $100,000 restitution for murder victim’s widow. (610) The 5th Circuit affirmed a 100,000 restitution order for the widow of defendant’s murder victim. The prosecution has the burden of demonstrating the amount of loss sustained by the victim and proving this loss by a preponderance of the evidence. Here, the prosecutor introduced a statement by the widow that her husband would have legally earned $950,000 over the next 20 years. Other evidence indicated that the victim received some income from a small trucking business and rent. At the time of his death, the victim was in his twenties. The $100,000 award to his widow was thus relatively conservative and assumed legitimate income by the victim of only $5000 a year with a work life expectancy of only 20 years. U.S. v. Razo-Leora, 961 F.2d 1140 (5th Cir. 1992).
5th Circuit limits restitution to offense of conviction in light of Hughey v. U.S. (610) Defendant stole copper wire from a communications line located on an Army missile range three separate times, and sold the copper wire to a scrap metal dealer. Defendant pled guilty to unlawfully selling the wire on one occasion. The 5th Circuit found that in light of the Supreme Court’s decision in Hughey v. U.S, 495 U.S. 411 (1990), it was error for the district court to calculate the amount of restitution based on the total amount of wire that defendant stole on all three occasions. The case was remanded for the district court to recalculate the restitution based on the amount that defendant sold in the offense of conviction. The 5th Circuit also suggested that since the government had recovered certain of the stolen wire, in calculating restitution, the district court should consider whether the Army could mitigate its damages by restringing the seized wire. It was improper to calculate the Army’s damages by the cost of installing an upgraded communications system, even if the wire defendant stole was no longer available. U.S. v. Barndt, 913 F.2d 201 (5th Cir. 1990).
5th Circuit finds that defendant who failed to object at sentencing hearing to restitution order waived his objection. (610) Defendant argued that the district court erroneously awarded restitution to individuals not named in the presentence report. The 5th Circuit found that defendant failed to object at the sentencing hearing to the ordered restitution, and therefore waived his objection. Defendant also alleged the district court erred in concluding that he was capable of making restitution. The district court found that defendant had an earning capacity of $500 per week. The 5th Circuit found that it was not an abuse of discretion for the district court to determine that restitution payments of $250 per week were well within defendant’s earning potential. U.S. v. Paden, 908 F.2d 1229 (5th Cir. 1990).
6th Circuit holds defendant liable for Coast Guard’s full costs for false report of boat in distress. (610) Defendant pled guilty to making a false report of a boat in distress, in violation of 14 U.S.C. § 88(c). He was ordered to pay restitution of $489,007.70, which included $277,257.70 to the United States Coast Guard. The Sixth Circuit agreed that defendant was liable under § 88(c) for the full cost of the service rendered by the Coast Guard. There was no dispute that defendant’s false report caused the mobilization of one Coast Guard aircraft and four vessels, together with their crews and related onshore personnel during a 21-hour period. Nor was there any dispute about the full cost of these resources to the Coast Guard, as measured in hourly reimbursable rates in accordance with federal accounting standards. Nor was there any dispute that these accounting standards defined “full cost” as the total amount of resources used, including direct and indirect costs. Although a Coast Guard Commander conceded that defendant’s false report did not result in increased indirect costs, recovery under § 88(c) was not limited to increased costs. Section 88(c) made defendant liable for all costs associated with resources mobilized as a result of his false report. U.S. v. Kumar, 750 F.3d 563 (6th Cir. 2014).
6th Circuit upholds restitution to Canadian Armed Forces. (610) Defendant pled guilty to making a false report of a boat in distress, in violation of 14 U.S.C. § 88(c), and was ordered to pay $489,007.70 in restitution, including $211,750.00 to the Canadian Armed Forces. The district court recognized that § 88(c) does not confer authority to order reimbursement to any party other than the United States Coast Guard. However, it ruled that it had discretion under 18 U.S.C. § 3583(d) to order restitution as a condition of supervised release. The Sixth Circuit rejected defendant’s argument that 14 U.S.C. § 88(c) controlled over the more general provision of 18 U.S.C. § 3583(d). There was no conflict between the two statutes, and no reason why they could not coexist and co-operate. U.S. v. Kumar, 750 F.3d 563 (6th Cir. 2014).
6th Circuit upholds restitution to BOP as third-party medical provider. (610) Defendant, a federal prisoner, pled guilty to assaulting an inmate resulting in serious bodily harm. The victim of the assault suffered severe brain damage, was unconscious, and likely would never wake up. Defendant challenged an order to pay $124,396.56 in restitution to the Bureau of Prisons (BOP), pursuant to 18 U.S.C. § 3663A, arguing that BOP was not a victim of his offense. The Sixth Circuit upheld the restitution order. Although BOP was not a victim, it was forced to expend significant resources providing the victim with medical care. Under 18 U.S.C. § 3663A(b) (2), where there is bodily injury to the victim, the order of restitution shall require the defendant to pay the cost of the victim’s necessary medical and related professional services. Section 3664(j) provides that when a victim has received compensation from insurance or any other source, the court shall order that restitution be paid to that source. Defendant was obligated under the statute to pay restitution to the BOP for the necessary medical expenses that it occurred on the victim’s behalf. U.S. v. Church, 731 F.3d 530 (6th Cir. 2013).
6th Circuit remands where court failed to show proximate cause between victim’s losses and child porn offense. (610) In two unrelated child pornography cases, defendants were ordered to pay over $1,000,000 in restitution to “Vicky,” the pseudonym of one of the individuals depicted in the child porn they possessed or received. Because the district courts did not require a showing of proximate cause between the losses and the defendants’ offenses, the Sixth Circuit remanded. See U.S. v. Evers, 669 F.3d 645 (6th Cir.2012). Defendant were part of a group of defendants who collectively caused the harm for which Vicky sought restitution. However, the extent to which each individual defendant specifically contributed to Vicky’s harm was not knowable. The government advocated an apportionment formula that involved determining (1) the pool of a victim’s provable losses not traceable to a single defendant, and (2) how much of the pool a given defendant caused. Here, the court might allocate losses by dividing the pool by the number of defendants convicted of possessing the victim’s image. However, the court noted that different divisors, and different apportionment formulas, might be reasonable. U.S. v. Gamble, 709 F.3d 541 (6th Cir. 2013).
6th Circuit affirms restitution for legal guardian’s lost income under Mandatory Restitution for Sexual Exploitation of Children Act. (610) Defendant sexually assaulted and exploited his 13-year old niece, and was convicted of production and possession of child pornography. The district court awarded restitution to the victim’s legal guardian for $1,500 in lost wages incurred as a result of his attending court proceedings, and child care expenses of $140. The Sixth Circuit held that the legal guardian’s lost income was a covered loss under the Mandatory Restitution for Sexual Exploitation of Children Act, 18 U.S.C. § 2259. The legal guardian of the victim fell within the definition of a “victim” under § 2259(c). In addition, the costs sought by the guardian, lost income and child care, are expressly included in the category of recoverable losses listed in § 2259(b)(3). However, the panel vacated the award of child care expenses. Defendant had been providing free babysitting to the guardian, a service that the guardian would otherwise have had to pay for. Absent additional evidence, the link between the child care costs and defendant’s crimes was too attenuated to support the restitution award. U.S. v. Evers, 669 F.3d 645 (6th Cir. 2012).
6th Circuit holds fair market value of destroyed property is not proper measure of restitution for non-fungible property. (610) Defendant was convicted of destroying trees on a reservation and stealing tribal property for his own use. The district court awarded restitution in the amount of $47,200 to account for the value of the removed timber and the cost of restoring the property. Defendant argued that the restitution award ought to reflect the property’s current fair market value. The Sixth Circuit held that the court properly included in the restitution order the cost of restoring the property to its former condition. The court agreed with the Eleventh Circuit that fair market value is not an appropriate measure for restitution when the commodity damaged is not fungible. See U.S. v. Shugart, 176 F.3d 1373 (11th Cir. 1999) (rejecting use of fair market value where vandals destroyed century-old church cherished by its congregation). Tribal land similarly holds unique value because its pristine, natural condition allows tribes to partake in and to preserve tribal traditions. When destroyed property is unique or lacks an active market such that the actual cash value is unreliable or unavailable, using replacement value as a measure for restitution is proper under the MVRA. U.S. v. Genschow, 645 F.3d 803 (6th Cir. 2011).
6th Circuit approves restitution for acquitted counts that were part of same fraud scheme as convicted counts. (610) Defendant, a podiatrist, was convicted of billing Medicare for services that he did not actually perform for two patients. In addition, a jury acquitted him of charges of “up-coding,” i.e., performing non-reimbursable services, and then billing Medicare and Medicaid for reimbursable services. The district court ordered defendant to pay restitution for both the counts of conviction and the acquitted counts. The Sixth Circuit held that the district court could properly order defendant to pay restitution for the acquitted counts, provided the acquitted counts were part of the same fraud scheme. The Mandatory Restitution Act of 1996 allows restitution to all of the victims of a defendant’s scheme to defraud, even when the defendant was not indicted or convicted of fraud with respect to each victim. Defendant’s indictment defined his scheme as a broad, over-arching plan “to defraud and to obtain money by means of false and fraudulent pretenses, representations and promises.” The indictment listed as components specific acts falling under that plan both the up-coding and the billing for services. Thus, his scheme included both the acts of which he was convicted and the ones of which he was acquitted. U.S. v. Jones, 641 F.3d 706 (6th Cir. 2011).
6th Circuit orders restitution to insurance carriers of unpaid insurance premiums. (610) For several years, defendant underreported payroll information for his businesses to his workers’ compensation insurance carriers. The district court ordered defendant to pay restitution to the insurance carriers in the amount of the additional premiums that defendant should have paid. Defendant argued that the loss was not suffered by the insurance carriers, but by the Commonwealth of Kentucky, since when the carriers would have rescinded the insurance contracts had they discovered his fraud. The Sixth Circuit affirmed the restitution order. Under its reading of Kentucky insurance law, the insurance companies would have to pay on claims submitted by employees of defendant who were injured on the job even if defendant had fraudulently misrepresented the number of employees covered. U.S. v. Simpson, 538 F.3d 459 (6th Cir. 2008).
6th Circuit upholds restitution for all predicate acts of RICO conviction. (610) Defendant was convicted by a general guilty verdict of violating RICO and of conspiring to violate RICO. The jury did not specify which of four predicate acts they found that defendant had committed. However, the district court stated that it found by a preponderance of the evidence that defendant had a committed all four predicate acts, and ordered restitution to each of the four victims (three insurance companies and one individual). Defendant argued that he was not convicted of all four predicate acts, so the proper amount of restitution should only take into account the injuries to the victims of the two most minor offenses. The Sixth Circuit disagreed. Defendant was convicted of RICO and RICO-conspiracy offenses. The statute defining the “victims” who are entitled to restitution includes “in the case of an offense that involves as an element a scheme conspiracy, or pattern of criminal activity any person directly harmed by the defendant’s criminal conduct in the course of the scheme, conspiracy or pattern.” 18 U.S.C. § 3663(a)(2). In addition, one element of a RICO offense and a RICO conspiracy is a pattern of criminal activity. 18 U.S.C. § 1962(c). The district court could therefore award restitution to any victim harmed by the defendant’s criminal conduct in the course of the RICO activity. The district court was entitled to make factual determinations regarding restitution, and defendant gave no reason such findings were an abuse of discretion. U.S. v. U.S. v. Johnson, 440 F.3d 832 (6th Cir. 2005).
6th Circuit says victim of fraud conspiracy was victim of defendant who pled guilty to misprision of a felony. (610) Defendant was involved in a conspiracy to defraud a pharmaceutical manufacturer. The conspirators’ drug supply company misrepresented to the manufacturer that numerous sales they made were to federal facilities eligible for a reduced price, and the manufacturer credited the company’s account with the difference between the discounted price and the contract price. Defendant argued that restitution to the manufacturer was improper because it was not a victim of her offense of conviction, misprision of a felony. The Sixth Circuit found no merit to this argument. There was no question that the pharmaceutical company was a victim of fraud and conspiracy. Defendant knew of the fraud while the conspiracy was in progress, perhaps even from the beginning, and concealed the scheme while it was in progress. Defendant’s misprision of the felony involved in this case was a direct and proximate cause of some or all of the victim’s losses, even if it was not the sole cause. U.S. v. Sosebee, 419 F.3d 451 (6th Cir. 2005).
6th Circuit holds that Booker does not apply to restitution. (610) Defendant challenged the validity of the restitution order against her in light of U.S. v. Booker, 543 U.S. 220 (2005). Given existing precedent and recent decisions of the other circuits on this issue, the Sixth Circuit concluded that Booker does not apply to restitution. Because restitution statutes do not specify a statutory maximum, restitution orders are not affected by the Apprendi v. New Jersey, 530 U.S. 466 (2000). Restitution orders are authorized by statute, and are distinct and separate from the Sentencing Guidelines. U.S. v. Sosebee, 419 F.3d 451 (6th Cir. 2005).
6th Circuit holds that failure to provide detailed analysis of ability to pay restitution was not plain error. (610) Defendant argued that the district court erred in imposing over $95,000 in restitution without considering his ability to pay. At sentencing, the district court made no reference to defendant’s ability to pay the restitution order in full. However, while a court must have some indication that a defendant will be able to pay the amount of restitution ordered in order to comply with 18 U.S.C. § 3664(a), “specific findings in the imposition of restitution are not required.” U.S. v. Jackson-Randolph, 282 F.3d 369 (6th Cir. 2002). Given the findings in the PSR that defendant had an Associate Degree in Applied Science, lived with his parents when in the United States, and had only a very small amount of debt, the amount of restitution ordered by the district court was not clear error. Moreover, the district court did not order that the restitution be paid during any particular period of time. Accordingly, the Sixth Circuit found that the court’s failure to provide a more explicit analysis of defendant’s ability to pay was not plain error. U.S. v. Reaume, 338 F.3d 577 (6th Cir. 2003).
6th Circuit remands where court based restitution on intended rather than actual loss. (610) The government conceded that by ordering the defendants to make restitution in the amount of the “intended” loss as determined by the court under U.S.S.G. § 2F1.1, the district court erred because defendants were impermissibly ordered to pay more than the actual losses sustained by the government. Accordingly, the Sixth Circuit remanded the restitution portion of defendants’ judgment so that the amount of restitution could be recalculated according to the amount of actual loss sustained. U.S. v. Finkley, 324 F.3d 401 (6th Cir. 2003).
6th Circuit holds that court erred in failing to set payment schedule for restitution. (610) Defendant complained that the court failed to set forth a schedule of payments for his restitution, but allowed the Bureau of Prisons to do so instead, and thus his sentence was illegal. The Mandatory Victims Restitution Act of 1996 (MVRA), states that “the court shall … specify in the restitution order the manner in which, and the schedule according to which, the restitution is to be paid.” Agreeing with U.S. v. Coates, 178 F.3d 681 (3d Cir. 1999), the Sixth Circuit held that the district court erred in failing to set defendant’s restitution payment schedule, which is mandatory under the MVRA. However, the district court may elicit the assistance of others in setting such a schedule. U.S. v. Davis, 306 F.3d 398 (6th Cir. 2002).
6th Circuit holds that court erred in ordering amount of restitution to be determined by tax court or IRS. (610) Defendant was convicted of tax evasion in connection with his failure to pay withholding taxes for his employees. The district court sentenced defendant to make restitution to the IRS in an amount “To be determined thru tax court or IRS.” Defendant argued that the district court erred by failing to specify the amount of restitution, and did not have authority to order restitution under the VWPA, as codified at 18 U.S.C. §§ 3663, 3664. The Sixth Circuit concluded that the court had the authority to order restitution. Although the VWPA does not apply to Title 26 offenses such as tax evasion, the district court did not order restitution under the VWPA; the court ordered defendant to make restitution as a condition of supervised release under 18 U.S.C. § 3563(b)(3) and § 3583(d). However, the district court plainly erred in ordering the restitution to be in an amount “To be determined thru tax court or IRS.” Although the district court ordered restitution pursuant to § 3563(b)(3) and § 3583 (d), such restitution was required nonetheless to conform to the provisions of the VWPA. Under the VWPA, a district court may not delegate the determination of the amount of restitution. The delegation here was impermissible as an abrogation of the court’s judicial authority, and it affected the fairness, integrity, and public reputation of the judicial proceedings. U.S. v. Butler, 297 F.3d 505 (6th Cir. 2002).
6th Circuit upholds $13.5 million restitution despite defendant’s claim of negative net worth. (610) Defendant was convicted of fraud, embezzlement and money laundering stemming from her scheme to overcharge the federal government for serving meals to economically disadvantaged children. At trial, the government estimated that defendant’s non-profit corporation received between $13.5 and $15.5 million more than it was entitled to during the scheme. The judgment against defendant included a restitution award of $13.5 million. Although the PSR indicated that defendant had a negative net worth of $1,413,716, the district court stated its belief “that the funds are there somewhere.” Defendant argued that she was unable to pay the restitution. The Sixth Circuit found no error in the restitution order. The burden of proving lack of financial resources to pay restitution is on the defendant. 18 U.S.C. § 3664(c). Although defendant argued that the PSR showed that she did not have the ability to pay restitution, the sources of income and statements of assets reviewed by the PSR came from defendant herself, and there was no reason for the court to have accepted these statements at face value. The court was fully aware of defendant’s extensive and sophisticated scheme to defraud, to launder money, and to hide money in a foreign bank. Defendant’s extraordinarily extravagant lifestyle did not explain where the $13 million went. The district court had no further obligation to launch another investigation to try to find out exactly where defendant was hiding assets. U.S. v. Jackson-Randolph, 282 F.3d 369 (6th Cir. 2002).
6th Circuit says victim impact statement not necessary because defendant sentenced under 1998 guidelines. (610) Citing only the commentary to § 5E1.1, defendant argued that a victim impact statement regarding the crime’s financial impact on the victim should have been included in the PSR, and that the failure to do so mandated a remand. However, defendant was sentenced under the 1998 guidelines, not the 1995 guidelines. The commentary to § 5E1.1 of the 1998 guidelines lacks the provision of the 1995 sentencing guidelines cited by defendant, and nothing else in the section requires that a victim impact statement be included in the PSR. Accordingly, the 7th Circuit rejected this challenge. The panel also rejected defendant’s claim that the district court should have considered his modest financial condition revealed in the PSR before imposing the restitution order. Defendant’s crime was a crime against property covered by the Mandatory Victim Restitution Act (MVRA), 18 U.S.C. § 3663A, which prohibits the court from examining the defendant’s ability to pay restitution. U.S. v. Chay, 281 F.3d 682 (6th Cir. 2002).
6th Circuit bases restitution on gross sales of pirated software. (610) Defendant illegally copied newly released computer games and resold them. The counterfeits were so realistic that some of his customers could not distinguish them from the real products. The government computed losses for each company by multiplying the number of that company’s pirated programs that defendant sold by the actual price he received for them. Defendant argued that his restitution amount should have been reduced by the costs of his piracy because his “gain” consisted of only his profits, not gross sales. The Sixth Circuit upheld the use of defendant’s gross sales as the amount of restitution. The holder of the copyright ought not be required to subsidize the cost of defendant’s illegal activity. U.S. v. Chay, 281 F.3d 682 (6th Cir. 2002).
6th Circuit holds that release did not bar further restitution. (610) Defendant’s insurer reached a settlement with defendant prior to sentencing which released defendant from all further liability to the insurer upon his payment of $47,000. Based on this release, defendant argued that the district court erred in ordering him to pay further restitution to the insurer. The Sixth Circuit held that a private settlement between a criminal wrongdoer and his victim releasing the wrongdoer from further liability does not preclude a district court from imposing a restitution order for the same underlying wrong. The purposes of criminal restitution include punishment. It would be improper to permit private parties to release criminal wrongdoers from punishment. The $161,590 restitution order was not excessive. The PSR listed stolen assets totaling $161,590, and defendant did not make any specific argument calling into question this amount. U.S. v. Bearden, 274 F.3d 1031 (6th Cir. 2001).
6th Circuit permits probation officer and IFRP program to determine restitution payment schedule. (610) The district court ordered defendant to pay restitution of $1.2 million to his fraud victims. Assuming that this amount would not be paid immediately, the court ordered that defendant make payments initially through the Inmate Financial Responsibility Program of the Bureau of Prisons (IFRP), and thereafter, according to an installment plan developed by defendant and his probation officer. Defendant argued that these were improper delegations to the Bureau of Prisons and his probation officer. The Sixth Circuit disagreed. Under the VWPA, the district court can delegate to a probation officer the determination of the “rate” of installment restitution payments as long as the district court sets the total amount of restitution that must be paid. The sentencing court does not abrogate its judicial authority when it delegates the setting of a restitution-payment schedule to the defendant’s probation officer, provided that the court first establishes the amount of restitution. The order that defendant pay restitution through the IFRP while in prison also did not constitute an improper delegation of authority. Weinberger v. U.S., 268 F.3d 346 (6th Cir. 2001).
6th Circuit holds that court failed to adequately consider all restitution factors under VWPA. (610) Defendant challenged the district court’s restitution order, arguing that (1) to the extent the district court applied the MVRA, its application violated the ex post facto clause, and (2) to the extent the court applied the VWPA, the court failed to adequately consider defendant’s inability to pay the amount of restitution ordered. The Sixth Circuit concluded that the district court applied the VWPA. The court made clear that its restitution order was not made solely on the basis of MVRA, stating that “an order of restitution is appropriate in this case whether it be mandatory or not.” However, the court did not adequately consider the financial needs and earning ability of defendant and his dependents. Although defendant earned $68,000 in legitimate income in 1988, defendant had been disbarred, which would affect his ability to pay the restitution order. Moreover, the $257,000 a year that defendant was ordered to pay far exceeded his previous high income, and did not account for taxes that defendant would have to pay and for the necessary subsistence costs for defendant and his dependents. The district court abused its discretion by failing to consider adequately all of the factors necessary under the VWPA. Weinberger v. U.S., 268 F.3d 346 (6th Cir. 2001).
6th Circuit holds that counsel’s failure to challenge improper restitution constituted ineffective assistance. (610) Defendant was charged with tax evasion in connection with his 1990-1994 federal income tax returns. He pled guilty only to the count relating to 1993, and the remaining four counts were dismissed. The district court ordered, as a condition of supervised release, that defendant pay $370,624 in restitution, the total tax loss for all five years. In a § 2255 petition, defendant argued, in part, that his counsel was ineffective in failing to challenge and appeal the restitution order. The Sixth Circuit agreed. Absent a specific provision in the plea agreement to pay full restitution, the district court could only order restitution for the tax loss related to the offense of conviction. A refusal to appeal an erroneous restitution award, which award would have been subject to reversal on appeal, would meet the Strickland test and clearly constitute cause for [petitioner’s] failure to appeal the award.” Ratliff v. U.S., 999 F.2d 1023, 1026 (6th Cir. 1993). Here, not only did trial counsel refuse to appeal the erroneous restitution order, but he compounded the problem by objecting that the guilty plea did not include the 1994 tax year. Thus, this objection appeared to concede that defendant was liable for tax years 1990-1993. The deficiencies in counsel’s performance not only met, but went beyond, the standard set forth in Ratliff. Weinberger v. U.S., 268 F.3d 346 (6th Cir. 2001).
6th Circuit holds that application of MVRA to defendant violated ex post facto clause. (610) The district court determined the restitution was mandatory and that the Mandatory Victims Restitution Act of 1996 (MVRA) applied to defendant rather than the Victim Witness Protection Act of 1982 (VWPA). The MVRA is to be applied to the extent constitutionally possible for sentencings in cases in which the defendant is convicted on or after April 24, 1996. Defendant’s conviction occurred after the MVRA’s effective date, but his crime occurred before this date. The Sixth Circuit joined the majority of circuits which have held that restitution under the MVRA is punishment for purposes of the ex post facto clause. Therefore, where an act is committed prior to the effective date of the MVRA, the retroactive application of the MVRA to that act violates the ex post facto clause. As a result, the district court here committed plain error in applying the MVRA to the determination of defendant’s restitution. U.S. v. Schulte, 264 F.3d 656 (6th Cir. 2001).
6th Circuit holds that failure to discuss restitution was harmless error. (610) Defendant argued that his guilty plea was not voluntary because the district court failed to advise him of the particular amount of restitution for which he would be held responsible. The Sixth Circuit held that any error was harmless. Defendant was informed by the court that he could be subject to a fine of $250,000, which was clearly in excess of the $14,369 restitution order and $100 fine actually imposed on the defendant. U.S. v. Hodge, 259 F.3d 549 (6th Cir. 2001).
6th Circuit holds that restitution for undetermined amount was void and unenforceable. (610) The court ordered defendant to make restitution in an amount to be set upon receipt of a report from the probation officer. Title 18 U.S.C. § 3664(d)(1)(5) provides that if a victim’s losses are not ascertainable 10 days prior to sentencing, the court shall set a date within 90 days after the sentencing for the final determination of losses. Here, more than 90 days passed and no final determination of loss was made by the district court. The Sixth Circuit held that the restitution provision was void and that the remainder of the sentence was a final appealable order. When the 90-day clock runs out, the judgment of conviction and sentence, including the restitution provision, becomes final by operation of law. Therefore, it had jurisdiction to review the judgment of conviction and sentence. However, because there was no timely judicial determination of the restitution amount, the judgment contained no enforceable restitution provision. U.S. v. Jolivette, 257 F.3d 581 (6th Cir. 2001).
6th Circuit holds that court’s failure to follow MVRA’s procedures for determining restitution was harmless error. (610) Under the MVRA, if the victim’s losses are not ascertainable by 10 days before sentencing, the district court shall set a date for the final determination of loss, not to exceed 90 days after sentencing. 18 U.S.C. § 3664(d)(5). The Sixth Circuit rejected defendant’s argument that § 3664(d)(5) requires a district court to conduct a restitution hearing within the 90-day period. First, § 3664(d)(5) does not specifically mention the need for a hearing or any other kind of proceeding. While in many cases a court might want to conduct a hearing to obtain relevant evidence, § 3664(d)(5) does not mandate that such an evidentiary hearing. However, § 3664(d) (5) does require the sentencing court to resolve the restitution question within 90 days of the sentencing hearing. Since § 3664(c) says that Fed. R. Crim. Proc. 32(c) applies to the MVRA, the court must give the parties an opportunity to be heard on any disputed sentencing issue. In the present case, the district court erred by failing to resolve the restitution amount, and by failing to give defendant an opportunity to object to that amount, within 90 days after the sentencing hearing. However, the error was harmless, since the court provided defendant with ample opportunity to be heard after the 90-day period elapsed, and based on his objection, reduced the restitution amount from $165,000 to $100,000. Section 3664(d)(5) is not a jurisdictional statute, so the expiration of the 90-day period did not terminate the court’s jurisdiction to modify the restitution order. U.S. v. Vandeberg, 201 F.3d 805 (6th Cir. 2000).
6th Circuit says ordering restitution that defendant cannot possibly pay is abuse of discretion. (610) Defendant organized a scheme that involved filing false refund claims with the IRS. He netted $319,171, of which the IRS was only able to recover $7566. Defendant owed the remaining $311,605 to the IRS and to three banks who made refund anticipation loans. The Sixth Circuit held that the district court’s order of full restitution was an abuse of discretion because the court did not adequately consider defendant’s ability to pay. Although the court noted that defendant was intelligent and capable of employment, there was no basis in the record for concluding that he would be able to pay in excess of $8000 per month. In fact, the court expressed considerable doubt as to whether defendant ever would be able to pay. Ordering restitution in an amount that a defendant cannot possibly pay is an abuse of discretion. The district court must have, at a minimum, some indication that a defendant will be able to pay the amount of restitution ordered in order to comply with 18 U.S.C. § 3664(a). U.S. v. Dunigan, 163 F.3d 979 (6th Cir. 1999).
6th Circuit holds that restitution for relevant conduct not plain error. (610) Defendant pled guilty to interstate transportation of stolen property. His plea agreement contemplated a restitution order of $7,532.79. However, the PSR recommended restitution of $168,195.15 based on losses caused by defendant’s relevant conduct. The district court, without objection from defendant, ordered restitution of $168,195.15. In Hughey v. United States, 495 U.S. 411 (1990), the Supreme Court held that the VWPA only authorizes restitution for losses caused by the offense of conviction. A court may also order restitution to the extent agreed by the parties in a plea agreement. The Sixth Circuit held that the restitution for relevant conduct was not plain error. Even if some error occurred, the error was not plain. Defendant was provided in advance of sentencing with a recommended restitution order at odds with that contemplated by his plea agreement and yet chose not to object. This met the requirement of basic fairness applicable to plain error review. U.S. v. Koeberlein 161 F.3d 946 (6th Cir. 1998).
6th Circuit says court not “required” to order restitution. (610) Defendant challenged a restitution order on the ground that the court had found that he could not pay a fine, but erroneously believed it was “required” to order restitution. The Sixth Circuit held that restitution can be proper even when a defendant is unable to pay a fine, but the district court erred in believing that restitution was required. Guideline § 5E1.1(a)(1) states that the court shall enter a restitution order if such order is authorized under 18 U.S.C. §§ 3663-64. The language of § 3663 is clearly permissive and grants the court discretion to order restitution. Under § 3664(a), the court is required to consider several factors in deciding whether to order restitution. Here, the court said it was “required” to order restitution, and there was no on-the-record consideration of the statutory factors. U.S. v. Sanders, 95 F.3d 449 (6th Cir. 1996).
6th Circuit rejects restitution based in part on uncharged and acquitted conduct. (610) Defendant, a postal employee, repeatedly stole articles from registered parcels. The district court ordered restitution of $142,108.38, which included losses related to an acquitted count and more than $10,000 relating to losses from uncharged conduct. The Sixth Circuit reversed, since restitution may not be ordered under the VWPA for losses caused by uncharged and acquitted conduct. The VWPA only authorizes restitution for losses caused by the conduct underlying the offense of conviction. U.S. v. Comer, 93 F.3d 1271 (6th Cir. 1996).
6th Circuit rejects restitution to government to recover “buy money” and investigative costs. (610) The 6th Circuit held that the district court erred by ordering defendant to pay restitution to the government to reimburse it for “buy money” given to defendant by undercover agents as part of their investigation. Such investigative costs are not losses, but voluntary expenditures by the government for the procurement of evidence. Where a restitution order is based solely on the costs of the government’s investigation and prosecution of the defendant, it is not a direct loss resulting from defendant’s illegal conduct for which restitution may be ordered pursuant to the VWPA. Judge Jones concurred separated to note his disagreement with a 7th Circuit case, U.S. v. Daddato, 996 F.2d 903 (7th Cir. 1993), which held that 18 U.S.C. § 3583(d) authorizes restitution for government “buy money.” Gall v. U.S., 21 F.3d 107 (6th Cir. 1994).
6th Circuit rules that restitution conditioned on supervised release may be ordered only for offense of conviction. (610) Defendant argued that his restitution violated Hughey v. U.S., 495 U.S. 411 (1990), which holds that the VWPA authorizes restitution only for losses related to an offense of conviction. The government claimed that Hughey did not apply because the restitution was a condition of supervised release pursuant to 18 U.S.C. § 3583(d) and § 5E1.1(a). The 6th Circuit held that restitution ordered as a condition of supervised release falls within the purview of the VWPA, and therefore Hughey applies. 18 U.S.C. § 3583(d) permits a court to order as a further condition of supervised release any condition in § 3563(b)(1) through (b)(10). Although 18 U.S.C. § 3663(a) mandates the application of the VWPA only to certain offenses, § 3563(b)(3) expressly negates this limitation where restitution is ordered as a condition of probation or supervised release. Gall v. U.S., 21 F.3d 107 (6th Cir. 1994).
6th Circuit bases restitution on retail value of goods defendant fraudulently obtained. (610) Defendant fraudulently obtained mail order merchandise with a retail value of $31,000. The 6th Circuit upheld the use of the retail value of the goods fraudulently obtained, rather than the seller’s out-of-pocket loss, as the basis for a restitution order. Neither the Victim and Witness Protection Act nor its legislative history expressly foreclosed the district court from ordering restitution in the amount that would cover a company’s actual losses. Moreover, in order to restore the mail order companies to their prior state of well-being the restitution had to include their lost profits. However, the restitution order was vacated, and the issue of whether defendant had the ability to pay the restitution order was remanded to the court for further findings. U.S. v. Lively, 20 F.3d 193 (6th Cir. 1994).
6th Circuit uses medical bills as loss even though hospital would have given same care to uninsured patient. (610) Defendant and his wife were covered by a generous health insurance plan. Their co-defendant was uninsured. One day the co-defendant was seriously injured. Defendant and his wife took co-defendant to the hospital, and identified the co-defendant as defendant. The co-defendant was hospitalized for several weeks, using defendant’s name and health insurance. The district court used the medical bills of $41,000 to calculate the estimated loss and restitution under § 2F1.1. Defendants argued there was no actual loss since the health care providers claimed they would have rendered the same care regardless of ability to pay. The 6th Circuit upheld the use of the medical bills to calculate the loss and restitution figures. The district court found the defendant intended to obtain medical services regardless of cost, and thus the loss equaled the cost of equivalent medical services to general paying consumers, rather than the amounts paid by indigents. U.S. v. Milligan, 17 F.3d 177 (6th Cir. 1994).
6th Circuit finds no abuse of discretion where restitution was tailored to ability to pay. (610) The 6th Circuit upheld a $41,000 restitution order, finding it was tailored to defendants’ ability to pay. The district court recognized that defendants were young, regularly employed and capable of earning a living, and stated that they were required to pay only that which they were capable of paying and were not to be deprived of the necessities of life. The district court delayed restitution payments until one defendant’s release from incarceration. U.S. v. Milligan, 17 F.3d 177 (6th Cir. 1994).
6th Circuit reduces restitution by amount of commission the victim retained. (610) Defendant, a bank officer, committed bank fraud totaling $75,546.22. After the indictment was filed, defendant’s employment was terminated. Defendant informed the bank that he was negotiating a $2.6 million lease transaction for which the bank stood to make $250,000, and defendant would have been entitled to a commission of $64,712.40. Defendant offered to complete the transaction and allow the bank to keep the commission to offset losses. Defendant then closed the deal. However, the client later wrote a letter to the bank expressing disappointment at defendant’s “decision to leave” the bank, and noted that it cast doubt on the future of its relationship with the bank. The district court ordered defendant to pay $74,547 in restitution. The Sixth Circuit held that the restitution should have been reduced by the amount of defendant’s commission that the victim bank retained. It was the bank’s decision to retain defendant’s commission after he closed the deal and to therefore accept this as compensation for its loss. U.S. v. Scott, 74 F.3d 107 (6th Cir. 1996).
6th Circuit upholds restitution despite court’s failure to make findings on defendant’s financial condition. (610) Defendant challenged a $27,500 restitution order since she had few financial resources and bleak potential for future earnings. The Sixth Circuit held that the restitution was not plain error, even though the court did not make findings on the defendant’s financial condition. The presentence report, as well as other documents before the court, contained information related to defendant’s financial position and earning ability. U.S. v. Hall, 71 F.3d 569 (6th Cir. 1995).
6th Circuit upholds $2 million restitution order for defendant with current negative net worth. (610) Defendant, Detroit’s chief of police, embezzled large sums of money from the city’s fund for financing covert police operations. The Sixth Circuit upheld a $2,347,710.90 restitution order, even though defendant had a negative net worth. In addition to the assets noted in the PSR, the district court determined that defendant was entitled to $118,590.34 in accrued sick and vacation pay, $66,400.44 per year in pension benefits, and $675 per month from rental properties. Thus, defendant had significant income from which to pay restitution. U.S. v. Hart, 70 F.3d 854 (6th Cir. 1995).
6th Circuit rejects restitution outside offense of conviction. (610) After vacating defendant’s conviction, the Sixth Circuit noted, in dictum, that the district court committed plain error when it ordered defendant to pay restitution for conduct outside the offense of conviction. The amount was calculated by totaling the losses from three different credit cards; however, defendant only pled guilty to the fraudulent use of one of the cards. Since the district court did not state under which statute it is ordering restitution, the appellate court assumed that restitution was ordered under the Victim and Witness Protection Act. The VWPA only permits restitution for losses caused by the offense of conviction, unless the defendant agreed to additional restitution as part of a plea agreement. Defendant did not have a plea agreement. U.S. v. Tunning, 69 F.3d 107 (6th Cir. 1995).
6th Circuit holds that defendant waived right to appeal stipulated restitution. (610) In her plea agreement, defendant acknowledged that the court could order restitution of up to $454,477.82. The PSR also stated that restitution was applicable. Although it stated that she was probably unable to pay a fine, it did not make such a statement about restitution. Defendant never objected to the report, never argued in opposition to restitution, and never objected after the court announced restitution at sentencing. Moreover, defendant agreed not to appeal any matter stipulated to by the parties. The Sixth Circuit held that under these circumstances, defendant had waived her right to challenge the restitution order. U.S. v. Allison, 59 F.3d 43 (6th Cir. 1995).
6th Circuit upholds restitution despite defendant’s inability to pay fine. (610) Defendant argued that the court should have made findings as to his ability to pay restitution, particularly in light of its finding that he could not pay a fine. The 6th Circuit upheld the restitution order, even though defendant was not able to pay a fine. Defendant’s indigency was but one factor for the court to consider. Numerous other factors justified the court’s order: defendant’s intelligence and relatively extensive academic background, and his likely ability to secure a job and repay the small amount at issue ($4,700). U.S. v. Bondurant, 39 F.3d 665 (6th Cir. 1994).
6th Circuit says revocation of supervised release did not eliminate restitution obligation. (610) The 6th Circuit held that the revocation of supervised release does not affect the obligation to pay restitution if restitution was authorized under 18 U.S.C. § 3551 or 3556. The Victim and Witness Protection Act makes clear that restitution is an independent term of the sentence of conviction, without regard to whether incarceration, probation or supervised release are ordered. Although 18 U.S.C. § 3663(g) provides that restitution shall be a condition of supervised release or probation, this is merely an enforcement provision for restitution orders. It does not mean that restitution is a term of supervised release. Judge Jones dissented. U.S. v. Webb, 30 F.3d 687 (6th Cir. 1994).
6th Circuit bars restitution to government for drug “buy money” despite plea agreement. (610) The district court ordered defendant to reimburse the local narcotics team for the money undercover officers used to purchase drugs from defendant’s conspiracy. The 6th Circuit held that a restitution order under the Victim and Witness Protection Act may not include the government’s costs of investigation, even if the parties expressly agreed to such a payment in a plea agreement. Recent 6th Circuit cases have held that the government is not entitled to recoup drug “buy money” from a defendant. The fact that the defendant may have entered into an agreement to pay the costs of investigation to the government did not change this conclusion. U.S. v. Meacham, 27 F.3d 214 (6th Cir. 1994).
6th Circuit prohibits departure for prompt liquidation of assets to pay restitution. (610) The district court directed defendant to liquidate his assets and pay the proceeds to the government within two weeks as restitution. At sentencing a month later, defendant had liquidated all his assets except the clothes he was wearing and $20 in his pocket. The 6th Circuit rejected a downward departure based in part upon defendant’s prompt liquidation of assets. Defendant’s restitutionary payments were not made voluntarily before adjudication of guilt, but pursuant to a court order after adjudication of guilt. The court expressly demanded prompt compliance. A downward departure based on the ability to make restitution conflicts with § 5H1.10, which prohibits a departure based on socio-economic status. Senior Judge Celebrezze dissented. U.S. v. DeMonte, 25 F.3d 343 (6th Cir. 1994).
6th Circuit upholds restitution order where district court considered proper factors by inference. (610) The 6th Circuit upheld a restitution order even though the district court did not expressly discuss the statutory factors, because the court took the proper factors into account by inference. The information available to the district court demonstrated that defendant had a “ready ability to attain high earnings.” Although defendant’s obligations were considerable, the district court was aware of other factors pertinent to its restitution decision. It would have been helpful for the court to have set out the specifics of “other appropriate factors” it considered in ordering restitution, but the burden of proving the lack of financial resources and financial needs was on the defendant. U.S. v. Blanchard, 9 F.3d 22 (6th Cir. 1993).
6th Circuit reverses restitution order which included amounts for uncharged stolen cars. (610) Defendant was convicted of stealing an FBI vehicle and unlawfully converting a second FBI vehicle. While en route to steal one of the vehicles, defendant also stole several other vehicles. The 6th Circuit reversed a restitution order based on all of the vehicles. Under Hughey v. U.S., 110 S.Ct. 1979 (1990), the Victim and Witness Protection Act authorizes restitution only for the offense of conviction. The indictment was limited to the two FBI vehicles, under 18 U.S.C. section 641. The FBI was the only “victim” entitled to restitution. That defendant may have been involved in a pattern of stealing vehicles was irrelevant. The court also held that because the FBI recovered its stolen vehicles, it was only entitled to recover the value of the damage to the vehicles. It was unclear whether the district court’s order was based on the full value of the vehicles or the damage to the vehicles. U.S. v. Clark, 957 F.2d 248 (6th Cir. 1992).
6th Circuit reverses restitution order which included amounts for additional civil liabilities. (610) Defendant failed to file federal tax returns for the years 1982 to 1987, resulting in a criminal tax liability for the years 1985 through 1987 in the amount of $40,969. The 6th Circuit reversed a $154,353 restitution order which included defendant’s criminal tax liability plus defendant’s total civil liability including statutory penalties. The appropriate restitution was $40,969, and restitution above this amount for additional “civil liabilities” was improper. U.S. v. Daniel, 956 F.2d 540 (6th Cir. 1992).
7th Circuit says refinancing banks were not victims because they did not rely on fraudulent information. (610) Defendants fraudulently purchased properties from the Department of Housing and Urban Development (HUD), and then resold the property to investors. The investors had little or no money, and defendants obtained mortgages for them by submitting false information to banks, and bribing loan officers and appraisers. Several of the loans had been refinanced by the time the housing market collapsed and the loans went into default. The judge included as victims for restitution purposes banks that had refinanced the mortgages, but deemed them entitled to restitution only for the initial loss, i.e., the loss the first tier of banks would have borne had their loans not been repaid. The Seventh Circuit held that the refinancing banks could not be counted as victims. These banks may have been caught up in the housing bubble and willing therefore to make “liars’ loans,” i.e. loans made without requiring proof of ability to repay. But banks making such loans would be coauthors of their loss, because if they had required proof of financial soundness from the borrowers they would not have refinanced the properties. There was no evidence here that the refinancing banks relied on the fraudulent information provided to the original lenders. U.S. v. Farano, 749 F.3d 658 (7th Cir. 2014).
7th Circuit upholds restitution in mortgage fraud scheme. (610) Defendant was convicted of wire fraud based on his involvement in a mortgage fraud scheme encompassing at least 10 different loans and seven different properties in the Chicago area. The PSR, which was adopted by the district court, recommended restitution of $956,300 to compensate Long Beach Mortgage, a lender, for its losses. Defendant challenged the restitution amount for the first time on appeal. The Seventh Circuit reviewed for plain error, and found none. Defendant failed to produce any evidence contradicting either the PSR’s restitution amount or methodology. The loss amount was calculated by subtracting the sale price after the lender recovered the property from the amount of the loan. The court also did not improperly fail to inquire into the identity of the victims. Defendant did not object to the identification of the victim at trial and failed to provide any indication that Long Beach Mortgage was not the victim. Defendant did not argue that Long Beach Mortgage did not make the loans to him, but simply argued that Long Beach Mortgage did not initiate the foreclosure process. The district court did not err in adopting the identification of the victim in the PSR. U.S. v. Walker, 746 F.3d 300 (7th Cir. 2014).
7th Circuit upholds restitution order in counterfeit artwork scheme. (610) Defendant was involved in a scheme to sell counterfeit fine art prints of well-known artists. He pled guilty to various counts of fraud, and was sentenced to imprisonment and ordered to pay $316,425.25 in restitution. He argued that the district court’s restitution order lacked sufficient evidentiary support, pointing to the dwindling nature of the government’s request for restitution over the course of the sentencing and restitution proceedings. The government’s request for restitution fell from $821,714.65 for 135 victims, to $468,131.65 for 41 victims, and the district court ultimately ordered $316,425.65 paid to 21 victims. The Seventh Circuit agreed that the government’s handling of its restitution request was “difficult to follow,” but nonetheless upheld the restitution order. While one victim, Linden, offered various “approximations” of what he paid defendant, the final amount reached by the court was supported by the fax defendant sent Linden, which listed $247,000 in money and goods Linden paid defendant. Defendant failed to demonstrate that the district court erred in relying on the fax in determining that Linden paid defendant $247,000 for artwork that turned out to be fraudulent. U.S. v. Kennedy, 722 F.3d 439 (D.C. Cir. 2013).
7th Circuit affirms increased restitution where court indicated that all transactions were part of single scheme. (610) Defendant, a lawyer who worked for a title insurance company, facilitated fraudulent real estate transfers in a mortgage fraud scheme. The PSR recommended restitution of $714,000, the amount involved in the three transactions that were part of the offenses of conviction. At sentencing, the court increased the restitution to $916,300, to include losses from all five transactions that defendant facilitated. Defendant did not object. The Seventh Circuit held that the decision to increase restitution under the Mandatory Victims Restitution Act (MVRA) was not plain error. If a conviction involves a scheme, the MVRA requires restitution for “any person directly harmed by the defendant’s criminal conduct in the course of the scheme….” § 3663A(a)(2). Because the district court had already indicated that the five transactions would be treated as a single scheme in its earlier relevant conduct discussion, the district court did not commit plain error by increasing the restitution value to $916,300. U.S. v. Westerfield, 714 F.3d 480 (7th Cir. 2013).
7th Circuit includes in restitution losses attributable to interference with Internal Revenue laws. (610) In 1998, defendant stopped paying federal income tax. He purchased a sham tax avoidance system, and then lied to the IRS about his use of the scheme. In 2004, the IRS informed him that he may have been involved in an abusive tax scheme, and instructed him to file an accurate 2003 return. Defendant failed to filed his federal tax return for 2003, 2004 and 2005, and refused to cooperate with an IRS audit of his finances. He was convicted of three counts of tax evasion, in violation of 26 U.S.C. § 7201, and one count of interference with the Internal Revenue laws, in violation of 26 U.S.C. § 7212(a). He argued for the first time on appeal that the district court improperly ordered him to pay restitution for the 2000-2002 tax losses because it was not part of his offenses of conviction. The Seventh Circuit disagreed, holding that the 2000-2002 losses were properly included because they were directly attributable to his conviction for interference with administration of the Internal Revenue laws. The government established a direct nexus between defendant’s years of obstruction and the losses it sustained as a result of defendant’s failure to pay taxes from 2000–2002. U.S. v. Scheuneman, 712 F.3d 372 (7th Cir. 2013).
7th Circuit remands to determine defendant’s portion of child porn victims’ damages. (610) Defendant pled guilty to seven child pornography counts. In addition to imprisonment and a lifetime term of supervised release, defendant was ordered to pay restitution to two women, identified as Amy and Vicky, in the amount of $3.3 million and $965,000, respectively. Pornographic images of them, as girls, were found in defendant’s possession. The Seventh Circuit remanded to the district court to determine the portion of the victims’ damages allocable to defendant. Both women were the subjects of child pornography that was widely disseminated online. The judge assessed Vicky’s loss as $1,224,697.04, but because she had already recovered $258,869.40 from other defendants, he ordered the defendant to pay only the unpaid balance of $965,827.64. He awarded the entirety of Amy’s losses, calculated at $3,367,854, even though her lawyer acknowledged that she had already recovered about half those losses. The lawyer should have specified the entire amount recovered, and the district court should then have subtracted that amount, as he did with Vicky. In addition, the court must determine whether the defendant uploaded any of Amy’s or Vicky’s images. Defendant will not be permitted to seek contribution from other defendants convicted of crimes involving pornographic images of the two girls. U.S. v. Laraneta, 700 F.3d 983 (7th Cir. 2012).
7th Circuit holds that offset value in mortgage fraud case is cash proceeds following foreclosure sale. (610) Defendant pled guilty to fraud based on his role as a straw buyer in a mortgage fraud scheme. The loans went into default and the real estate which served as collateral for the loans was later foreclosed upon and resold. The district court ordered defendant to pay $218,952 in restitution. Defendant argued that the Mandatory Victims Restitution Act (MVRA) required the court to determine the “offset value” based on the fair market value of the real estate collateral on the date the victim lenders obtained title to the houses following foreclosure. The government contended that money was the property stolen in the mortgage fraud scheme, and that foreclosure of the collateral real estate was not a return of the property stolen; rather, only when the collateral real estate was resold did the victims receive money, which was the type of property stolen. The Seventh Circuit acknowledged a circuit split on the issue, eventually siding with the Third, Eighth and Tenth Circuits – that the offset value is the eventual cash proceeds recouped following a foreclosure sale. The property originally stolen was cash, not the real estate which served as collateral. The property stolen was only returned upon the resale of the collateral real estate. U.S. v. Robers, 698 F.3d 937 (7th Cir. 2012).
7th Circuit affirms restitution even without evidence of victim’s physical injuries. (610) Defendant was convicted of kidnapping and interference with commerce by robbery based on robbery of a consumer loan business. Defendant challenged for the first time on appeal the court’s restitution to The Hartford, the company’s worker’s compensation carrier, and T.A., one of the kidnapping victims, arguing that neither was authorized under the MVRA because they did not suffer physical injury. The Seventh Circuit found no plain error. A plain reading of the statute did not support defendant’s argument that the MVRA authorizes payment based only on the victim’s physical, as opposed to mental, injuries. Other circuits have held that physical injuries are required before the court may order restitution for mental treatment. See U.S. v. Reichow, 416 F.3d 802 (8th Cir. 2005); U.S. v. Hicks, 997 F.2d 594 (9th Cir. 1993). However, neither of these cases was decided on plain error review. U.S. v. Breshers, 684 F.3d 699 (7th Cir. July 5, 2012).
7th Circuit orders restitution where defendant admitted that losses were part of scheme. (610) Defendant participated in a scheme to commit bank fraud by knowingly obtaining multiple equity lines of credit secured by the same property. He argued on appeal that the district court erroneously ordered him to pay restitution for the relevant conduct of other co-defendants. The Seventh Circuit disagreed. Defendant claimed on appeal that the loss from the Countrywide mortgage was relevant conduct of his co-defendant. However, he relinquished his right to make this argument when he made the tactical choice below to admit that the Countrywide mortgage was properly included in his loss computation. Failure to raise this argument before the district court resulted in waiver of that argument on appeal. Moreover, even if the argument had not been waived, defendant would lose on the merits. Although the loss to Countrywide was not specifically set forth in Counts 7 and 8 of the Indictment, fraud causing a loss to Countrywide was expressly stated in the description of the scheme in Count 1, which was incorporated by reference in Counts 7 and 8. Moreover, in his plea declaration, admitted losses that included amounts for the initial purchase mortgage from Countrywide. U.S. v. Jin Hua Dong, 675 F.3d 698 (7th Cir. 2012).
7th Circuit says waiver of appeal barred challenge to restitution order. (610) Defendant’s plea agreement stated, in part: “I expressly waive my right to appeal or to contest my conviction and my sentence imposed or the manner in which my conviction or my sentence was determined or imposed.” He also agreed to pay restitution “for the full amount of any victims’ losses in this case as determined by the Court.” On appeal, defendant challenged the district court’s restitution order. The Seventh Circuit held that restitution was part of his criminal sentence, and because defendant agreed not to challenge his sentence, he could not appeal the restitution order. The broad language of the waiver established that defendant waived his right to appeal the amount of restitution as well as the order itself. The court’s “determin[ation]” or “impos[ition]” of defendant’s sentence would logically include the calculation of the amount of restitution to be awarded. U.S. v. Worden, 646 F.3d 499 (7th Cir. 2011).
7th Circuit reverses restitution to victims not harmed by conduct in counts of conviction. (610) Defendant, a real estate agent, was convicted of five counts of wire fraud. The district court ordered her to pay restitution to 13 payees in the amount of $2.3 million, while her five counts involved only seven victims and totaled $1.3 million. On appeal, the Seventh Circuit reversed. The crime comprehended by the mail and wire fraud statutes is the scheme to defraud, not just the isolated wire transmissions or mailings, so restitution for victims of the overall scheme is required. To comply with the MVRA, the district court should have made specific findings regarding defendant’s scheme or schemes. The district court’s findings were insufficient to determine whether the counts of conviction comprised a unitary scheme. Therefore the court erred in ordering restitution to victims not clearly harmed by the conduct in the counts of conviction. U.S. v. Locke, 643 F.3d 235 (7th Cir. 2011).
7th Circuit says possible error in restitution was not plain. (610) The district court ordered defendant to pay almost $56 million in restitution, jointly and severally with two co-conspirators. Defendant did not object to the restitution order at sentencing, but he argued on appeal that the court plainly erred by failing to make a finding that the victims suffered almost $56 million in losses. It was difficult to tell whether the $56 million restitution figure represented actual loss suffered by defendant’s victims or the intended loss that the scheme intended to inflict. The court based the loss, for sentencing purposes, on a guideline calculation of $20-50 million. Nonetheless, the Seventh Circuit held that the district court did not plainly err when it included a requirement that defendant pay almost $56 million in restitution to his victims. By deliberately basing its guidelines calculation on a lower amount of loss, the court, may have been trying to give defendant a break. Moreover, remanding the case to re-evaluate the amount of restitution would likely not make any practical difference. The odds that defendant would be able to pay his debt appeared to be slim. U.S. v. Dokich, 614 F.3d 314 (7th Cir. 2010).
7th Circuit orders restitution for amount defendant received from painting contract. (610) Defendant worked for a company that provided housing for low income families. He was convicted of fraud for orchestrating a painting contract for the housing units without disclosing his interest in the painting contractor. He challenged the $41,000 restitution order, claiming that the government suffered no loss. His company received the painting contract because it was the low bidder. The company painted the apartments and the housing authority paid the contract price, which was by definition, the fair market value of the services. The Seventh Circuit disagreed and upheld the restitution order. The court calculated the $41,000 in restitution by adding up the $38,000 that defendant had received in the scheme and an additional $3,000 that the housing authority had to pay for the audit that uncovered the wrongdoing. The housing authority paid $70,000 for the painting contract. The woman who did all of the painting got about $29,000. Thus, defendant pocketed about $38,000 for doing nothing. U.S. v. Adcock, 534 F.3d 635 (7th Cir. 2008).
7th Circuit says court plainly erred in refusing to deduct from restitution the value fraud victims may have obtained from defendant. (610) Defendant, who held himself out as a mold-testing and remediation expert, contracted with an Indian tribe to provide mold-testing services. He took samples from the tribe’s buildings, sent the mold samples to a lab, collected full payment from the tribe, and then fled the country with the cash. At sentencing, in calculating restitution, the district court refused to reduce the amount by the value of the services the tribe received from defendant, both because the task of calculating that value would be burdensome, and because it found he was not eligible to such a reduction under Note 3(F)(v) to § 2B1.1. The Seventh Circuit ruled that it was plain error for the district court not to calculate the actual loss suffered by the tribe, and remanded. Note 3(F)(v), which provides that in calculating loss from fraudulently rendered services, no credit shall be provided for the value of those services, applies to the calculation of loss for sentencing purposes, not for restitution purposes. For restitution purposes under 18 U.S.C. § 3663, the amount of loss sustained by victims is synonymous with “actual loss,” and its calculation must taken into account (and deduct) pecuniary value the victims gained by way of the defendant’s conduct. U.S. v. Allen, 529 F.3d 390 (7th Cir. 2008).
7th Circuit says restitution must be based on actual price paid by defrauded customers. (610) Defendant sold medical sterilizer devices without FDA approval. The district court calculated the loss at about $17 million, the list price for all the devices that defendant’s company delivered. Note 3(F) to § 2B1.1 says that defendants who sell goods without required approvals receive no credit for their value, if any, to the customers. Thus, list price was the right starting price. Defendants argued that some machines were sold at a discount and a few given away as demonstrators, and thus the judge should have used actual transaction prices rather than list prices. The Seventh Circuit agreed in principle, but since the loss would have to be reduced to less than $7 million to affect defendant’s offense level, there was no need to determine with precision where within that span the loss fell. However, actual transaction prices were necessary to determine the amount of restitution. Restitution requires an exact figure, not an estimate. The restitution for a machine with a list price of $100,000 that is sold at a $20,000 discount is only $80,0000. Restitution for a machine that was never paid for due to a recall is zero. Thus, to determine restitution, the district court must determine these figures, one customer at a time, and not use the list price shortcut. However, as to those hospitals who continued to use the sterilizers after the recall, with full knowledge of the recall and the reasons behind it, no restitution was owed (unless they were simply retaining the sterilizers until they could secure new, approved equipment). U.S. v. Caputo, 517 F.3d 935 (7th Cir. 2008).
7th Circuit vacates restitution where government failed to link amount to specific counts of conviction. (610) Defendant was convicted of two securities laws violations for operating his registered broker-dealership without enough money in its reserve accounts. The Seventh Circuit vacated a restitution order, finding the government failed to link the restitution amount to the specific counts of conviction. Defendant’s crimes of conviction were highly specific – on September 30, 1997 he violated the net capital and Special Reserve requirements of the federal securities laws. Although the government argued that all the losses attributable to defendant’s conduct over the course of 1996 and 1997 could be considered part of the crimes for which defendant was convicted, the jury only found defendant guilty of the two discrete offenses, and acquitted him of the balance of the counts covering the longer time period. However, there was no showing by the government and no finding by the district court that the entire $1.2 million in losses could be attributed to defendant’s crimes on September 30. U.S. v. Frith, 461 F.3d 914 (7th Cir. 2006).
7th Circuit upholds restitution to intermediary in kickback scheme rather than ultimate victim. (610) An insurance agency overcharged a city for its services and kicked back part of the excess to defendant, who helped the agency secure the business. The district court ordered defendant to make restitution to the insurance agency. Defendant argued that the city, rather than the insurance company, was the victim, and that the insurance company employee who conspired with defendant obtained that money in the first place by overcharging the city. The Seventh Circuit found no error. Once defendant reimburses the immediate victim, the insurance company will be able to repay the city. Instead of determining the ultimate incidence of costs created by criminal activity, judges should direct restitution to the immediate victim; other persons rights in the funds then may be sorted out under normal rules of contract and property laws. U.S. v. Boscarino, 437 F.3d 634 (7th Cir. 2006).
7th Circuit remands to determine amount of identity theft victim’s losses were directly caused by defendant’s conduct. (610) Defendant pled guilty to various offenses relating to identity theft. She was sentenced to 12 months in prison and ordered to pay $30,000 in restitution to the person whose identifying information she stole. The victim had obtained a $30,000 state civil judgment against defendant. The Seventh Circuit remanded because it could not tell from the face of the district court’s order which losses reflected in the state court judgment were recoverable and which were not. On remand, the court will need to determine the diminution in value of the victim’s property caused by defendant’s conduct. The victim was not required to pay the debts incurred by defendant in the victim’s name and credit, so those amounts are not losses. The victim’s time might be compensated, to the extent that she spent time that otherwise would have been compensated because she had to miss work and forego hourly compensation, or had to turn away clients because she was occupied with her credit restoration activities. Time spent for which the opportunity cost was zero, however, cannot be the subject of compensation, because the loss to the victim is zero. Fees paid to counsel or other experts for dealing with the banks and credit agencies in an effort to correct her credit rating are also properly included in a restitution order. The costs associate with the lawsuit to recover damages under state law are not recoverable because they do not reflect the losses the victim suffered as a direct result of defendant’s conduct. U.S. v. Havens, 424 F.3d 535 (7th Cir. 2005).
7th Circuit says below-guideline range sentence was reasonable but remands for restitution findings. (610) Defendant argued that his 48-month sentence violated the Sixth Amendment. However, the district judge sentenced defendant as if the guidelines were defunct so that he had discretion to select any term within the statutory limits of zero to 60 months (the guideline range was 63-78 months). The Seventh Circuit found the 48-month term of imprisonment reasonable – “it is hard to conceive of below-range sentences that would be unreasonably high.” As to his restitution, the record was unclear. Although Booker does not require juries to determine restitution, it must be calculated in accord with statutory rules. The district judge chose $613,746 as the amount of restitution but did not make findings of fact or articulate his reasons. The case was remanded with instructions to receive written submission from the parties addressing the restitution issues raised. U.S. v. George, 403 F.3d 470 (7th Cir. 2005).
7th Circuit holds that defendant waived objection to restitution amount. (610) Defendants successfully negotiated 157 checks totaling $88,456.74 obtained from their employer by fraud. One defendant produced evidence that about $3,760 was recovered by state police. Thus, the court held, and the prosecutors agreed, that the total amount obtained by defendants was $84,696.74. The Seventh Circuit held that defendant waived his objection to the $84,696.74 restitution order. In response to defendant’s argument at sentencing that restitution should be reduced by value allegedly obtained by the victim, the government presented evidence of additional checks negotiated by defendant and discovered after the preparation of the PSR. Defendant’s counsel agreed they would “at this point call it even” and had no other comments. This was an acceptance of the $84,696.74 restitution figure, and clearly constituted a waiver. U.S. v. Sensmeier, 361 F.3d 982 (7th Cir. 2004).
7th Circuit orders bank robber to pay restitution for damage to police car during high-speed chase. (610) Defendant participated in the planning and execution of a bank robbery. During a high-speed chase, the vehicle driven by police suffered $526.14 in damages. The district court ordered restitution to the city police department based on the damage inflicted to the police vehicle during the getaway. Defendant argued that the police department was not a “victim” of his offense under the Mandatory Victims Restitution Act (MVRA). A “victim” under the MVRA means “a person directly and proximately harmed as a result of the commission of an offense for which restitution may be ordered ….” 18 U.S.C. § 3663A(a)(2). Despite the delay between the acts satisfying the criminal elements of bank robbery and the damage to the police vehicle, the Seventh Circuit concluded the police department was a victim of the bank robbery because defendant and his friends directly and proximately caused the damage to the police car by committing the bank robbery. U.S. v. Donaby, 349 F.3d 1046 (7th Cir. 2003).
7th Circuit upholds restitution to former employer who liquidated improper investments and reimbursed victims. (610) While working as an investment representative for a brokerage firm, defendant defrauded his customers by placing their money in his own account and by diverting their money from investments they had chosen to riskier investments that paid a higher commission. The district court ordered defendant to pay restitution to his former employer, who had reimbursed the direct victims of defendant’s fraud. Defendant argued on appeal that his former employer overcompensated the victims of his fraud, and that it should have waited until interest rates had changed before liquidating the riskier investments defendant had purchased. The Seventh Circuit found no plain error. The judge found that the investors defendant defrauded “suffered an actual loss of $1,104,557.39 because that was the amount of money [defendant’s former employer] had to dole out in order to make its customers whole as a result of [defendant’s] fraud.” The panel refused to set this finding aside. The fact that some losses were caused by the liquidation of some investments before their maturation date did not matter. The victims had asked defendant to place their money in short-term, relatively risk free investments, and he had placed them in long-term, riskier investments in order to receive a greater profit for himself. Defendant, rather than the victim, bore the risk of forces beyond his control. U.S. v. Rhodes, 330 F.3d 949 (7th Cir. 2003).
7th Circuit holds that defendant waived right to challenge to whom restitution would be paid and lack of payment schedule. (610) The district court ordered defendant to make restitution of over one million dollars, due and payable “immediately,” to defendant’s former employer, relying on the fact that the employer had reimbursed the direct victims of defendant’s fraud. Although defendant waived his right to appeal his conviction in his plea agreement, he reserved the right to appeal the amount of restitution. On appeal, defendant objected to the fact that the restitution order directed him to pay his former employer, and argued that the court erred by not establishing a payment schedule for the restitution. The Seventh Circuit held that defendant waived his right to make these arguments. Defendant only reserved the right to appeal one aspect of the restitution order – the amount owed. He did not preserve the right to challenge the identity of the party to whom he was ordered to make restitution or the lack of a payment schedule. U.S. v. Rhodes, 330 F.3d 949 (7th Cir. 2003).
7th Circuit rejects restitution for victims outside count of conviction. (610) Defendant was convicted of one count of bankruptcy fraud and was ordered to pay restitution to three victims of his scheme. Defendant argued, and the government conceded, that the district court erred in calculating its restitution, as it had no authority to order restitution with respect to the two victims not affected by the bankruptcy fraud to which defendant pleaded guilty. These two victims were not directly harmed by the bankruptcy fraud involved in the offense of conviction. In addition, the government conceded that proof of a scheme, conspiracy or pattern was not an element of the offense of bankruptcy fraud. Finally, the written agreement said nothing about defendant agreeing to pay restitution to specific persons, and the Seventh Circuit declined to infer such an agreement. The absence of any explicit language in the written plea agreement incorporating an agreement on restitution to persons beyond the victim precluded the invocation of § 3663A(a)(3) to authorize restitution to the other victims. U.S. v. Randle, 324 F.3d 550 (7th Cir. 2003).
7th Circuit holds that voluntary payment of restitution was not sufficiently exceptional for departure. (610) The district court departed downward from a sentencing range of 18-24 months to a sentence of four months, citing defendant’s “exceptional acceptance of responsibility.” The basis for this was defendant’s partial payment of restitution before she was sentenced. The court also cited defendant’s family situation and her “horrible sexual abuse as a child.” The Seventh Circuit found that while defendant’s voluntary payment of partial restitution might support a reduction for acceptance of responsibility (which she received), it was not sufficiently extraordinary to warrant a downward departure. On the day of her sentencing, defendant pledged, in settling the victim’s civil suit, about $33,000, and paid roughly $4000 towards an $87,991 bill, just 42 percent of the amount she owed, not counting interest. There was nothing extraordinary about this or about the circumstances under which it was paid. U.S. v. Grasser, 312 F.3d 336 (7th Cir. 2002).
7th Circuit rejects community restitution where court did not order fine. (610) In drug prosecutions, in which there is no identifiable victim of the offense, 18 U.S.C. § 3663(c) permits the sentencing judge to order the payment of restitution commensurate with the public harm caused by the crimes. However, § 3663(c)(2)(B) provides that the amount of restitution ordered in such a case shall not exceed the amount of the fine imposed for the offense. The district court ordered both defendants to pay community restitution. However, because the court did not order either of them to pay a fine, the Seventh Circuit held that the restitution order was plainly erroneous. U.S. v. Mansoori, 304 F.3d 635 (7th Cir. 2002).
7th Circuit approves restitution for future costs of therapy for child sexual abuse victim. (610) Defendant was convicted of three counts relating to his sexual abuse of his nine-year old daughter. He challenged the district court’s decision to ordered restitution to cover the anticipated costs of the girl’s future therapy, noting that 18 U.S.C. § 2259 describes the costs for “losses suffered.” The Seventh Circuit held that the statute permits restitutionary damages for future costs of therapy. In enacting § 2259, it was clear that Congress intended to provide victims of sexual abuse with expansive relief for “the full amount of …[their] losses” suffered as a result of abuse. § 2259(b)(3)(B). Congress cited New York v. Ferber, 458 U.S. 747 (1982), in which the court discussed at great length the devastating and long-term effects that sexual exploitation of children can have upon the victims of that abuse and greater society. Moreover, there was sufficient evidence to establish that his daughter would require a lifetime of counseling. The district court held a hearing on this matter, and used figures proffered by the girl’s treating psychiatrist to determine the costs of future counseling. U.S. v. Danser, 270 F.3d 451 (7th Cir. 2001).
7th Circuit holds that bankruptcy trustee was “victim” of bankruptcy fraud. (610) Defendant falsified his company’s bankruptcy petition. After hearing evidence of the tremendous amount of unnecessary effort expended by the bankruptcy trustee as a result of defendant’s attempt to cover up his crime, the judge ordered restitution to compensate the trustee for her additional unnecessary labor. The Seventh Circuit held that the bankruptcy trustee was a “victim” of defendant’s fraud within the meaning of the MVRA. The trustee, a private attorney, was a chapter 7 “panel bankruptcy trustee” called into service by the United States Trustee’s Office. In addition to her duties as a panel trustee, she retained her private bankruptcy practice. Panel trustees are paid a $60 fee, plus a percentage of the value of the assets liquidated and disbursed to the estate’s creditors. Therefore, when defendant fraudulently misstated the extent of his company’s assets, he “directly and proximately harmed” the trustee herself. The judge did not abuse his discretion in settling on $25,906.25 as the amount of restitution due the trustee. The trustee was required to spend about 207 unnecessary hours as a direct result of defendant’s fraudulent statements on the bankruptcy petition. The trustee received $125 per hour for out-of-court work and $150 per hour for in-court work in her private practice. U.S. v. Lowell, 256 F.3d 463 (7th Cir. 2001).
7th Circuit holds that court failed to determine amount of loss attributable to offense of conviction. (610) Defendant’s plea agreement provided that “the loss to the victim banks was caused by a number of factors in this case, not all of which can be attributable to the fraudulent conduct of defendants. Therefore the actual loss for restitution purposes is greater than the guidelines ‘valuation of loss’ for sentencing purposes.” The FBI investigation revealed that $243,894 of the total loss was attributable to defendant’s fraud, but that the victims reported a total loss for restitution purposes of $602,997.85. The restitution statute, 18 U.S.C. § 3663A, authorizes restitution for harm directly caused by the offense of convictions. Restitution tracks “the recovery to which [the victim] would have been entitled in a civil suit against the criminal.” U.S. v. Martin, 195 F.3d 961 (7th Cir. 1999). Without carrying out the inquiry required by § 3663(a) and Martin, the district court directed defendant to pay as restitution whatever sums the victim banks claimed as their losses, or $603,000. The Seventh Circuit found this was in error. The district court must carry out the inquiry and make the findings required by the statute and Martin. The plea agreement’s stipulation was not a promise by defendant to pay $603,000 in restitution. U.S. v. Behrman, 235 F.3d 1049 (7th Cir. 2000).
7th Circuit holds that waiver of appeal did not bar appeal of restitution portion of sentence. (610) Defendant waived, as part of his plea agreement, the right to appeal “any sentence within the maximum provided in the statute(s) of conviction ….” The Seventh Circuit ruled that this waiver did not bar defendant’s appeal of the restitution portion of his sentence, since such restitution was not provided in the “statute of conviction,” 18 U.S.C. § 1344. Section 1344 provides for a maximum term of imprisonment and a maximum fine for defendants convicted of bank fraud. It does not mention restitution. Rather, restitution is authorized by 18 U.S.C. § 3663(a). Because the agreement waived appeal with respect to fines and imprisonment, and not with respect to restitution, defendant was entitled to present any kind of argument—procedural, statutory, or constitutional. An agreement that waived appeal from “any sentence within the maximum provided in Title 18” or similar language would foreclose the argument. U.S. v. Behrman, 235 F.3d 1049 (7th Cir. 2000).
7th Circuit holds that Apprendi does not apply to restitution. (610) Defendant argued that under Apprendi v. New Jersey, 530 U.S. 466, 120 S.Ct. 2348 (2000), the amount of restitution was an essential fact that a jury must find beyond a reasonable doubt. The Seventh Circuit held that Apprendi was not applicable to restitution orders. Apprendi says that “[o]ther than the fact of a criminal conviction, any fact that increases the penalty for a crime beyond the prescribed statutory maximum must be submitted to a jury, and proved beyond a reasonable doubt.” Restitution is not a penalty for a crime, but a classic civil remedy. See U.S. v. Szarwark, 168 F.3d 993 (7th Cir. 1999). Congress required judges to include this remedy in a criminal judgment to avoid the need for the victims of crime to file separate civil suits. A civil remedy included with a criminal judgment does not make it a “penalty for a crime” that must be established beyond a reasonable doubt. In addition, § 35663A does not include a “statutory maximum” that could be “increased” by a given finding. U.S. v. Behrman, 235 F.3d 1049 (7th Cir. 2000).
7th Circuit reaffirms that retroactive application of MVRA does not violate ex post facto clause. (610) Unlike the Victim and Witness Protection Act, the Mandatory Victim Restitution Act, 18 U.S.C. § 3663A (MVRA), requires restitution be ordered “without consideration of the economic circumstances of the defendant.” § 3664(f)(1)(A). In U.S. v. Newman, 144 F.3d 531 (7th Cir. 1998), the court held that the MVRA applied to cases in which a defendant is convicted on or after April 24, 1996, the date of the enactment of the MVRA, even if the criminal conduct occurred before that date. Newman held that the application of the MVRA to such earlier cases did not violate the ex post facto clause because restitution does not qualify as punishment. In the current case, the Seventh Circuit declined to reconsider the holding in Newman, although it recognized the circuit split on this issue. U.S. v. Lopez, 222 F.3d 428 (7th Cir. 2000).
7th Circuit upholds joint and several liability for restitution. (610) The district court ordered defendant to pay restitution of $13,951.40, the full amount of loss. Defendant pointed out that both of his co-conspirators were also ordered to make restitution in the same amount, thus raising the possibility of excessive restitution. However, the judgment made clear that defendant’s obligation would be discharged once payment by any or all of the defendants reached $13,951.40. Congress has specifically authorized joint and several liability in cases involving joint criminal endeavors. Accordingly, the Seventh Circuit affirmed the restitution order. U.S. v. Adeniji, 221 F.3d 1020 (7th Cir. 2000).
7th Circuit rejects restitution for acquitted conduct. (610) Defendant was convicted of counts involving a total of $75,000; his relevant conduct included fraud involving more than $10 million. Defendant argued that the district court erred in holding him jointly and severally liable for restitution of $10 million. The Seventh Circuit agreed that restitution could not be ordered for losses relating to acquitted conduct. The court remanded for the recalculation of restitution, with directions that the district court follow the provisions of the Mandatory Victim Restitution Act of 1996, 18 U.S.C. § 3663A. Further, the order may not take into account defendant’s own economic circumstances. 18 U.S.C. § 3664(f)(1) (A). However, the burden is on the government to prove the amount of loss sustained “as a result of the offense.” U.S. v. Polichemi, 219 F.3d 698 (7th Cir. 2000).
7th Circuit says defendant has burden of proving restitution is abuse of discretion. (610) Defendant argued that there was inadequate justification for the sentencing court to order restitution without citing any legal authority in support of his contention. Defendant did not provide the appellate court with any evidence that the sentencing court abused its discretion in ordering restitution. The guidelines contemplate full restitution whenever possible and a defendant has the burden of establishing that full restitution is unwarranted under the circumstances. Given this, the Seventh Circuit affirmed the district court’s restitution order. The lack of documentation that defendant benefited from the unreported illegal income was irrelevant. U.S. v. Lanzotti, 205 F.3d 951 (7th Cir. 2000).
7th Circuit upholds “immediate” payment of restitution despite waiver of fine. (610) Defendant argued that the district court did not provide an explanation for why it ordered restitution when it chose to waive a fine. The Seventh Circuit found no error. Under the VWPA, a court has discretion when ordering restitution. Thus, when a court imposes restitution and simultaneously waives a fine because of the defendant’s economic circumstances, the court must explain its reasoning. This is not true under the MVRA, enacted in 1996. The imposition of an order of restitution is mandatory under the MVRA, but the decision to waive a fine is discretionary. By imposing mandatory restitution and waiving the fine, the district court was merely following Congress’s mandates. The court’s decision to require defendant to pay the restitution “immediately,” was not an abuse of discretion. “Immediate payment” does not mean “immediate payment in full.” Instead, it means payment to the extent that the defendant can make it in good faith, beginning immediately. The district court ordered that defendant should “notify the probation officer of any material changes and economic circumstances [that] might affect his ability to pay restitution.” Thus, the court gave defendant the opportunity to explain his financial circumstances to the probation officer if problems arise. U.S. v. McIntosh, 198 F.3d 995 (7th Cir. 2000).
7th Circuit says defendant forfeited right to challenge loss for restitution purposes. (610) Defendant challenged a restitution order for the first time on appeal by arguing that the government presented no evidence as to the amount of loss the victim bank incurred. Defendant did not object to the lack of evidence on this point either in his written objections to the PSR or during the sentencing hearing. Because he failed to contest the amount initially, the Seventh Circuit ruled that defendant forfeited the right to challenge its accuracy. Moreover, even if he had not forfeited this issue, defendant’s challenge would fall short. At sentencing, the district court referred to the PSR, which contained information regarding the bank’s losses and defendant’s financial circumstances. A court may accept the facts in a PSR as true, unless the defendant produces some evidence, more than mere denials, questioning the PSR’s accuracy. Defendant did not make such a challenge. U.S. v. McIntosh, 198 F.3d 995 (7th Cir. 2000).
7th Circuit directs court to reconsider loss caused by defendant’s illegal conduct. (610) Defendant’s company contracted with the Illinois Department of Public Aid to reduce the Department’s Medicaid costs by collecting private health insurance proceeds that Medicaid recipients might be entitled to receive. Defendant was convicted of bribing Lowder, an employee of the Department of Public Aid, to get favorable terms for his company in its dealing with the Department. In 1993, the company successfully obtained an amended contract that ultimately caused the Department a net loss of $12.3 million. The Seventh Circuit reversed a $12.3 million restitution order, finding an insufficient causal connection between defendant’s conduct and the $12.3 million loss. Most of defendant’s efforts to obtain the amended contract, such as making large campaign contributions to Lowder’s superiors, were legal (though ethically questionable), and so could not support a finding that the illegal scheme caused the amended contract and resulting $12.3 million loss. A reassessment of the amount (if any) of the loss that was reasonably attributable to the illegal scheme was necessary on remand. U.S. v. Martin, 195 F.3d 961 (7th Cir. 1999).
7th Circuit orders restitution for damage caused by fleeing co-conspirators. (610) Defendant and others invaded a home, bound up residents, stole $2,000, and held the residents at gunpoint. After police were alerted, defendant’s companions fled in a van, but the police caught them. Defendant was found hiding in a ditch near the house. The district court ordered defendant to pay restitution for the damage to a car and truck that two of the co-defendants commandeered after police disabled their fleeing van. The Seventh Circuit rejected defendant’s claim that the vehicle chase was not foreseeable to defendant and that he had withdrawn from the conspiracy by the time it occurred. Defendant admitted that he heard the police shoot at one of his co-conspirators as he scrambled away from the residence, which indicated that he had decided to flee rather than surrender. Defendant was not hauled from his hiding place until after his co-conspirators had been arrested. Moreover, an arrest alone is insufficient to withdraw from a conspiracy. Withdrawal also requires an affirmative act to defeat or disavow the purpose of the conspiracy. Hiding in a ditch while seeking to evade detention is not an affirmative act of withdrawal. U.S. v. Pandiello, 184 F.3d 682 (7th Cir. 1999).
7th Circuit bars delegation of authority to set amount or timing of restitution payments. (610) The restitution order directed that “[t]he restitution shall be paid in equal monthly installments during the period of incarceration through the Inmate Financial Responsibility Program” and in installments of $200 per month during the period of supervised release. Though this order made clear that defendant was to make monthly payments and set the amount of these payments once defendant left prison, it did not specify how much must be paid monthly while defendant was incarcerated. Accordingly, the Seventh Circuit ruled that this order improperly delegated to the Inmate Financial Responsibility Program the determination of the amount to be paid monthly. A well-developed body of law holds that a court may not delegate to another, usually a probation officer, its judicial authority to set the amount or timing of restitution or fine payments. See, e.g. U.S. v. Arellano, 137 F.3d 982 (7th Cir. 1998). This defect was significant enough to constitute plain error. U.S. v. Pandiello, 184 F.3d 682 (7th Cir. 1999).
7th Circuit holds that judge properly considered defendant’s ability to pay restitution. (610) Defendant claimed that the district court improperly failed to consider his ability to pay a $141,000 restitution order. Specifically, he contended that because of his poor health he lacked the earning ability to pay restitution. The Seventh Circuit found that the district judge considered the relevant mandatory factors, including defendant’s ability to earn income in light of his alleged health problems. The judge heard the testimony of defendant’s doctor and acknowledged defense counsel’s characterization of defendant as “totally disabled.” The judge also analyzed other factors listed in § 3663. At sentencing, defendant’s probation officer advised the court that it was difficult to conceive how defendant could currently be without assets, yet have owned two businesses, received more than $300,000 in income in 1989, not filed tax returns from 1990-92, and had $105,000 cash in his possession when he was arrested attempting to flee to country. Under these circumstances, the district court properly concluded that despite defendant’s health problems, there was a sufficiently likelihood that defendant would generate sufficient income in the future to pay restitution. U.S. v. Wells, 177 F.3d 603 (7th Cir. 1999).
7th Circuit rules restitution permitted by plea agreement did not violate ex post facto clause. (610) In a 1993 plea agreement, defendant agreed to pay restitution of up to $2.7 million to an insurance company he defrauded in 1980. Defendant later argued that the district court’s $1.5 million restitution order was improper under the 1980 law in effect at the time he committed the arson. The government contended that restitution was permissible under 18 U.S.C. § 3663(a)(3), which was not in effect in 1980 but was in effect in 1993 when defendant signed the plea agreement. Section 3663(a) authorizes a court to “order restitution in any criminal case to the extent agreed to by the parties in a plea agreement.” The Seventh Circuit held that because § 3663(a)(3) was part of the governing law at the time of defendant’s sentencing, it was applicable to defendant’s case. The district court was statutorily authorized to order the restitution agreed to by defendant in his plea agreement. The application of § 3663 to defendant did not violate the ex post facto clause. First, restitution is not criminal punishment. Second, § 3663 did not increase defendant’s punishment for the charged crime. It simply gave defendant another option in the plea process, an option which he was free to ignore. U.S. v. Wells, 177 F.3d 603 (7th Cir. 1999).
7th Circuit rules restitution permitted by plea agreement did not violate ex post facto clause. (610) In a 1993 plea agreement, defendant agreed to pay restitution of up to $2.7 million to an insurance company he defrauded in 1980. Defendant later argued that the district court’s $1.5 million restitution order was improper under the 1980 law in effect at the time he committed the arson. The government contended that restitution was permissible under 18 U.S.C. § 3663(a)(3), which was not in effect in 1980 but was in effect in 1993 when defendant signed the plea agreement. Section 3663(a) authorizes a court to “order restitution in any criminal case to the extent agreed to by the parties in a plea agreement.” The Seventh Circuit held that because § 3663(a)(3) was part of the governing law at the time of defendant’s sentencing, it was applicable to defendant’s case. The district court was statutorily authorized to order the restitution agreed to by defendant in his plea agreement. The application of § 3663 to defendant did not violate the ex post facto clause. First, restitution is not criminal punishment. Second, § 3663 did not increase defendant’s punishment for the charged crime. It simply gave defendant another option in the plea process, an option which he was free to ignore. U.S. v. Wells, 177 F.3d 603 (7th Cir. 1999).
7th Circuit says court cannot order restitution to pay tax liability. (610) Defendant was convicted of filing false income tax returns and making a false statement on a college financial aid application. The Seventh Circuit held that the district court exceeded its authority in ordering defendant to pay restitution to pay his tax liability. In U.S. v. Minneman, 143 F.3d 274 (7th Cir. 1998), the court ruled that the VWPA does not authorize restitution for Title 26 tax offenses. However, the district court did have statutory authority to order restitution to Purdue University, who provided financial aid to defendant’s son, and for the cost of court-appointed counsel. Defendant was convicted in 1998, after the MVRA became effective. The MVRA specifically authorizes restitution to the victims of criminal conduct. Reimbursement for the cost of court-appointed counsel is governed by the Criminal Justice Act, 18 U.S.C. § 3006A(f). Reimbursement of attorney’s fees is a matter within the discretion of the district court.” The court is empowered to direct that reimbursement for representation under the CJA come from specific funds. U.S. v. Hoover, 175 F.3d 564 (7th Cir. 1999).
7th Circuit says MVRA limits restitution to identifiable victims. (610) Defendant operated an advance fee loan scam in which he defrauded thousands of persons. The district court ordered restitution of $500,000. However, at the time of sentencing, the government had not compiled a complete list of the victims of defendant’s fraud. The total amount due to the listed persons was only $345,000. The Seventh Circuit held that the district court failed to follow 18 U.S.C. § 3664(d)(5), which provides that if the victims’ losses are not ascertainable by 10 days before the defendant is sentenced, the judge shall defer the entry of restitution until up to 90 days after imposing the rest of the sentence. The MVRA limits the order of restitution to the sum of losses to identifiable victims. The 90-day period for deferral of the order and the provision for amendment later are the chosen method of dealing with the problem of unascertained victims. The district court should have deferred the entry of the restitution order for 90 days and then limited the order to the amounts lost by all victims identified within that period. The judge exceeded his authority. U.S. v. Grimes, 173 F.3d 634 (7th Cir. 1999).
7th Circuit reaffirms that restitution under MVRA is not subject to ex post facto clause. (610) In U.S. v. Newman, 144 F.3d 531 (7th Cir. 1998), the Seventh Circuit held that the Mandatory Victims Restitution Act, 18 U.S.C. § 3663A, is not subject to the ex post facto clause because it is not penal. In the present case, the Seventh Circuit declined defendant’s invitation to overrule Newman. Even though Newman is a minority view, it was decided correctly. Functionally, the MVRA is a tort statute. It is irrelevant from a defendant’s standpoint whether he is ordered to make good his victims’ losses in a tort suit or in the sentencing phase of a criminal prosecution. It would be different if the order of restitution required the defendant to pay the victims’ losses to the government rather than the victim. U.S. v. Bach, 172 F.3d 520 (7th Cir. 1999).
7th Circuit holds that restitution under MVRA not punishment for ex post facto purposes. (610) The Mandatory Victim Restitution Act (MVRA), 18 U.S.C. § 3663A, replaced the Victim and Witness Protection Act for cases in which the defendant is convicted after April 24, 1996. Under the MVRA, restitution is mandatory rather than discretionary for certain offenses. In addition, court are no longer permitted to consider a defendant’s financial circumstances when determining the amount of restitution to be paid. The district court held that the retroactive application of the MVRA to defendant would violate the ex post facto clause. The Seventh Circuit held that under U.S. v. Newman, 144 F.3d 531 (7th Cir. 1998), decided shortly after the judge sentenced defendant, restitution does not constitute criminal punishment within the meaning of the ex post facto clause. Restitution is “an equitable device for restoring victims to the position they had occupied prior to a wrongdoer’s actions … and operates to ensure that a wrongdoer does not procure any benefit through his conduct at the others’ expense.” Thus, the district court erred in concluding that the MVRA increased the punishment for defendant’s criminal conduct in violation of the ex post facto clause. U.S. v. Szarwark, 168 F.3d 993 (7th Cir. 1999).
7th Circuit rules court improperly included losses from related conduct in restitution order. (610) Defendant, the president of a credit union, pled guilty to charges stemming from her creation of a fictitious loan to cover up the existence of an account with a negative balance. The Seventh Circuit ruled that the district court improperly attributed financial losses from defendant’s related conduct to arrive at its restitution figure. The proper amount of restitution is the amount wrongfully taken by the defendant. The government did not prove by a preponderance of the evidence, as required by 18 U.S.C. § 3664(e), that defendant was responsible for the losses that resulted from her related conduct. In fact, some of the financial losses clearly were not defendant’s sole responsibility, but were considered as part of her related conduct because she attempted to cover up the existence of those losses. The district court abused its discretion in awarding restitution for the full amount of these financial transactions. U.S. v. Brierton, 165 F.3d 1133 (7th Cir. 1999).
7th Circuit orders corrupt police chief to pay restitution of one year’s salary. (610) Defendant was the police chief of a suburb of Chicago. During his entire four-year tenure, he accepted $500 a month from organized crime to protect illegal gambling in the town’s bars and restaurants. The Seventh Circuit upheld an order requiring defendant to pay restitution to the community equal to one year’s salary as police chief. The town obviously would not have hired defendant had they known of his intentions. However, they still would have needed to hire a police chief. What the town lost as a result of defendant’s actions was not his salary, but the difference in the value of the services he rendered and the value of the services that an honest police chief would have rendered. The government, which had the burden of proof, made no effort to estimate this value. Given the difficulty in estimating actual loss, the judge acted within her discretion in ordering defendant to pay back one-quarter of the total salary he received. Seventy five percent of defendant’s salary was cushion enough to keep the court’s approximation within reasonable bounds. U.S. v. Sapoznik, 161 F.3d 1117 (7th Cir. 1998).
7th Circuit holds that restitution is not punishment for ex post facto purposes. (610) Defendant was convicted of armed bank robbery. He argued that the district court’s application of the Mandatory Victims Restitution Act, enacted five days after he committed his crime, violated the ex post facto clause. Under the previous version of the Victim Witness Restitution Act, courts balanced various factors to determine how much, if any, restitution to order. The MVRA made restitution mandatory. A defendant’s financial status is relevant only to fixing a payment schedule for the mandated restitution. The Seventh Circuit held that restitution under the VWPA is not criminal punishment for ex post facto purposes. Thus, although the new statute operated to defendant’s detriment, it did not retroactively increase his punishment and thus did not violate the ex post facto clause. U.S. v. Newman, 144 F.3d 531 (7th Cir. 1998).
7th Circuit upholds restitution where defendants were convicted of conspiracy to impede the IRS. (610) Defendant, with the assistance of his attorney, hid over $700,000 from the IRS. He challenged a restitution order, claiming that the government lacked authority to seek the order without first providing a notice of tax deficiency under the tax laws. He further claimed that the government obtained an impermissible declaratory ruling on a tax matter by bringing a criminal suit. The Seventh Circuit disagreed. Defendant misperceived the essential difference between limitations on a government’s power to proceed civilly against violators of the tax laws and the government’s power to seek criminal convictions of those who violate the criminal laws. The judge ordered restitution under the VWPA. Under circuit precedent, a government agency, such as the IRS, qualifies as a victim under the VWPA. Although the VWPA does not authorize a court to order restitution for Title 26 tax offenses, the jury here convicted defendant and his attorney of conspiracy under 18 U.S.C. § 371. The VWPA applies because conspiracy is a separate crime from the underlying predicate act, and nothing in the statute limits a court’s power to order restitution after a conspiracy conviction. U.S. v. Minneman, 143 F.3d 274 (7th Cir. 1998).
7th Circuit holds restitution may be reduced if money recovered by police is returned to victim. (610) Defendants robbed a bank of $133,000. They contended that the $50,000 restitution order entered against each of them was too high because the police already recovered $40,000 from them. The Seventh Circuit affirmed the restitution order, because the money recovered had not been returned to the bank, nor even proved to be part of the proceeds of the robbery. Once it is returned, defendants may seek an offset, if the government does not. U.S. v. Taylor, 128 F.3d 1105 (7th Cir. 1997).
7th Circuit refuses to offset value of forfeited properties against amount of restitution owed. (610) Defendant was convicted of mail fraud and money laundering. The district court ordered restitution of $349,000 to the Postal Service. The Seventh Circuit upheld the district court’s refusal to set-off the value of properties he forfeited to the government against the restitution. Nothing prevents both restitution and forfeiture. The Postal Service is an entity distinct from the Department of Justice. The district court properly rejected defendant’s argument that his alleged indigency barred restitution. First, $144,550 of the restitution was owned jointly and severally by defendant and his co-conspirator. Second, defendant had the ability to earn income in the future, as exhibited by his rise through the ranks of the Postal Service. U.S. v. Emerson, 128 F.3d 557 (7th Cir. 1997).
7th Circuit upholds $7,500 restitution order where court considered statutory factors. (610) Defendant argued that the district court erred in ordering her to pay restitution of $7,500. The Seventh Circuit found no abuse of discretion because the court properly considered the statutory factors. The court found that defendant was only 44 years old and could be expected to maintain gainful employment while on supervised release. In addition, the court only ordered defendant to pay $7,500, while the total amount of uncompensated loss was $349,000. The court further ordered her to make monthly installment payments, which showed its awareness of her ability to pay and her overall situation. U.S. v. Yoon, 128 F.3d 515 (7th Cir. 1997).
7th Circuit finds court considered defendant’s financial ability in ordering full restitution. (610) Defendant was arrested in possession of numerous false identifications and a book containing 96 credit card numbers. He had used the fake ID and credit cards numbers to purchase goods totaling $28,000. The district court ordered defendant to pay full restitution at the rate of $200 per month, commencing two months after his release from prison. The Seventh Circuit affirmed. The record showed that the district court considered defendant’s financial potential when it determined the amount of payments that could be expected during the period of supervised release. It also ordered the probation officer to advise the court if defendant’s circumstances turned out to be different. The court decided not to fine defendant because it doubted his ability to pay both restitution and a fine. U.S. v. Moore, 127 F.3d 635 (7th Cir. 1997).
7th Circuit remands to allocate remaining restitution among victims. (610) The district court’s judgment listed 16 victims to whom defendant owed restitution. For 11 of those victims, the judgment stated the amount of restitution each one was owed, but for the remaining five, the judgment listed the amount owed as “unknown.” The sum of the restitution owed to the 11 victims was $214,377.50, but the judgment stated that defendant must pay total restitution of $252,377.50. The Seventh Circuit remanded for the district court to specify the amount of restitution owed to each of the five remaining victims. Defendant’s claim that he only owed restitution of $214,377.50 was wrong. The $252,377.50 figure was based on the U.S. Attorney’s oral representation at sentencing that this was the full amount owed to all 16 victims. It was clear from the record that the court intended for defendant to repay all 16 victims. Defendant’s claim that the court failed to establish a payment schedule for the restitution was also wrong. The judgment called for immediate payment, which does not mean “immediate payment in full,” but “payment to the extent that the defendant can make it in good faith, beginning immediately.” U.S. v. Burke, 125 F.3d 401 (7th Cir. 1997).
7th Circuit amends restitution order to provide that total amount paid by all defendants cannot exceed victim’s loss. (610) Defendant was involved in a conspiracy that stole, transported and sold computer equipment. The total loss to the retailer involved was $795,824, but the total amount of restitution ordered for all the defendants was $886,383.14. The Seventh Circuit modified the restitution orders to explicitly state that the retailer’s recovery was limited to the amount of its loss, and that each defendant’s liability for restitution ceases if and when the retailer receives full restitution. U.S. v. Trigg, 119 F.3d 493 (7th Cir. 1997).
7th Circuit says immediate restitution does not necessarily mean payment in full. (610) Defendant’s restitution order stated that defendant’s 79,582.40 restitution was due immediately. However, his supervised release provided that he could not incur credit charges or open new lines of credit without the probation officer’s approval unless defendant was in compliance with any installment schedule upon which defendant and the probation officer might agree for the payment of restitution. Defendant argued that the district court gave too much discretion to the probation officer to set a schedule for the payment of his $79,582.40 restitution order. The Seventh Circuit held that the court’s reference to a payment schedule did not imply that the court’s order for immediate restitution was a “sham” order. Immediate payment does not mean immediate payment in full. It means payment to the extent that the defendant can make it in good faith, beginning immediately. The probation officer will assess the defendant’s progress toward satisfaction of his debt and if the defendant is not paying what he can the probation officer will ask the judge to revoke or alter the terms of release. Then the judge may make the order more specific or, if the defendant has not paid what he can in good faith, may send him back to prison. U.S. v. Trigg, 119 F.3d 493 (7th Cir. 1997).
7th Circuit upholds restitution even though court found defendant could not pay fine. (610) Defendant was involved in a conspiracy that stole, transported and sold computer equipment. Although the loss was $795,824, the district court only ordered him to pay 1/10 of the loss as restitution, or $79,582.40. Defendant argued that the court failed to adequately consider his financial ability to pay restitution. The Seventh Circuit found that the court adequately considered defendant’s ability to pay restitution, even though the court found defendant could not pay a fine. The district court explicitly mentioned the factors listed in § 3663(a). This was not a “sham” restitution that the indigent defendant had no hopes of paying. The court knew that defendant had few assets or job skills, but also found that defendant had only minimum financial needs and no dependents. The court believed that defendant could apply his criminal ingenuity toward legitimate employment and become able to make partial restitution in the future. If the court was wrong, defendant could seek modification of the restitution order in the future. The fact that the court did not impose a fine was not dispositive. The court decided that defendant could not pay both a fine and partial restitution and gave a preference to the victim. Such a preference is permissible. U.S. v. Trigg, 119 F.3d 493 (7th Cir. 1997).
7th Circuit says court may consider defendant’s access to hidden proceeds in determining restitution. (610) Defendants fraudulently procured unemployment compensation checks for fictitious employees of the bar and restaurant they owned. The district court ordered defendants to pay full restitution despite their lack of a present ability to pay because the government was unable to account for most of the scheme’s proceeds. There was a “reasonable possibility” that defendants had control over hidden funds. The Seventh Circuit held that in determining restitution, the district court properly considered defendants’ access to their ill-gotten gains. The judge’s finding that it was reasonably probable that these defendants had access to and control over the missing proceeds countered their assertions that they were unable to pay restitution. Full restitution is the norm and defendants bore the burden of establishing that they lacked the ability to pay it. U.S. v. Zaragoza, 117 F.3d 342 (7th Cir. 1997).
7th Circuit approves order to repay drug buy money as condition of supervised release. (610) The Seventh Circuit, following U.S. v. Daddato, 996 F.2d 903 (7th Cir. 1993), affirmed the district court’s order that defendant repay drug buy money as a condition of supervised release. Although a court cannot order such money be repaid as “restitution” under the Victim and Witness Protection Act, a court may order repayment as a condition of supervised release. U.S. v. Brooks, 114 F.3d 106 (7th Cir. 1997).
7th Circuit upholds $3 million restitution order for indigent defendant. (610) Defendant conducted a Ponzi scheme and the court ordered him to pay $3 million in restitution. Defendant contended that he could not possibly comply with such an order. The Seventh Circuit held that defendant did not prove he was unable to pay the $3 million restitution order. A defendant has the burden of showing that there is not even some hope of complying with a restitution order; it is not the government’s burden or the court’s to prove the contrary. Defendant’s current indigence alone did not preclude the order, and he pointed to nothing in the record demonstrating that his earning capacity made restitution impossible. U.S. v. Wilson, 98 F.3d 281 (7th Cir. 1996).
7th Circuit vacates for failure to consider defendant’s ability to pay full restitution. (610) At sentencing, defendant expressed a willingness to make full restitution even if it took the rest of her life. Perhaps relying on this willingness, the district court ordered her to make full restitution of $224,000. Payment was to being immediately and be completed by the end of her period of supervised release. The Seventh Circuit vacated because the court failed to consider defendant’s ability to pay the restitution it ordered. The record suggested that defendant had no resources to repay $224,000 since she already liquidated a substantial portion of her assets in repaying $100,000. Moreover, neither she nor her family members were likely to acquire such resources before the end of the period of supervised release. Although defendant might eventually make full restitution, either voluntarily or under the force of a civil judgment, the record did not suggest that she could possibly do so within the time prescribed by the district court. U.S. v. Jaroszenko, 92 F.3d 486 (7th Cir. 1996).
7th Circuit holds that court properly considered mandatory restitution factors. (610) Defendant pled guilty to wire fraud. The district court ordered $200,000 restitution, the full amount of the loss. The PSR noted that while defendant had a negative net worth, he had a college education, a good earning history, an employed spouse, and no dependent children. The Seventh Circuit held that the district court considered the mandatory factors in 18 U.S.C. § 3664 before ordering restitution. The court reviewed and adopted the PSR, which included a review of defendant’s current financial position, the suspension of his securities license, his wife’s income, his own reduced income and the fact that he had no dependents. A more detailed explanation by the court would have been advisable, especially because the court ordered full restitution, while the PSR opined that defendant would only be able to pay a substantial portion of the loss. The lack of a detailed explanation was not fatal, however. U.S. v. Viemont, 91 F.3d 946 (7th Cir. 1996).
7th Circuit upholds restitution despite defendant’s present indigency. (610) Defendant, the founder and officer of a business school, converted federal financial aid funds and student loans for his own use. The Seventh Circuit upheld a restitution order despite defendant’s current indigency. Defendant’s victims had very low earning potential, and defendant was a well-educated man with entrepreneurial experience who might be able to once again become personally profitable. U.S. v. Ross, 77 F.3d 1525 (7th Cir. 1996).
7th Circuit remands because court delegated payment schedule for fine and restitution. (610) Defendant argued, and the government conceded, that the district court erred in delegating to the probation office the establishment of a payment schedule for the fine and restitution. The Seventh Circuit agreed, and remanded with directions for the district court to set the payment schedule. U.S. v. Yahne, 64 F.3d 1091 (7th Cir. 1995).
7th Circuit remands where court delegated restitution schedule to probation department. (610) Defendant, the president of a union, was involved in a scheme to divert funds from the union’s bank account. He challenged a $345,000 restitution order, arguing that he did not benefit from the full $345,000. The Seventh Circuit affirmed the amount of restitution, but remanded because the sentencing court inappropriately delegated to the probation department the authority to establish a payment schedule for restitution. The amount of restitution was proper. The court did not order defendant to pay the full amount of loss to the victims, but rather the amount of cash he personally received, the funds diverted to the union’s operating account and the third party checks he converted. U.S. v. Reynolds, 64 F.3d 292 (7th Cir. 1995).
7th Circuit finds that court adequately considered defendant’s financial resources. (610) Defendant argued that the district court failed to consider his financial resources and the needs of his dependents before ordering him to pay $200,000 in restitution over a five-year period. The Seventh Circuit upheld the restitution order. Although the judge did not set forth in detail his consideration of these factors, the presentence report contained this information. A sentencing judge is not required to explicitly enumerate the factors that were considered, and restitution may be based on the likelihood defendant will acquire resources in the future. The judge specifically noted defendant’s ability to make money, and remarked that defendant was young and had great selling skills. Thus, although the court expressed some doubts that the restitution would ever be paid, he did consider defendant’s ability to pay and stated its basis for finding some likelihood that defendant would acquire the resources in the future. U.S. v. Clemmons, 48 F.3d 1020 (7th Cir. 1995), overruled on other grounds by U.S. v. Allender, 62 F.3d 909 (7th Cir. 1995).
7th Circuit bars court from delegating payment schedule for restitution to probation department. (610) The district court ordered each defendant to pay restitution of $3.2 million “in a manner to be determined by the probation officer.” The Seventh Circuit vacated, finding the sentencing court inappropriately delegated to the probation department its authority to establish a payment schedule for the restitution. The fixing of restitution payments is a judicial act that cannot be delegated. However, once a court establishes the method of restitution and a payment schedule, the probation officer may administer and enforce the order. U.S. v. Mohammad, 53 F.3d 1426 (7th Cir. 1995).
7th Circuit approves restitution for all losses despite conviction on only one fraud count. (610) Defendants engaged in a fraudulent “Ponzi” scheme. They pled guilty to a single count of mail fraud based on a mailing to one investor. Restitution under the VWPA can be awarded only for the loss caused by the specific conduct that is the basis of the offense of conviction. Defendants argued that they could only be required to pay restitution to the named investor. The Seventh Circuit approved a restitution order covering all of the losses from the fraud scheme, rather than just the one named investor. Because a scheme to defraud is an element of the offense of mail fraud, a mail fraud conviction allows restitution for all victims of that scheme. Actions pursuant to that scheme are considered conduct that is the basis of the offense of conviction. U.S. v. Brown, 47 F.3d 198 (7th Cir. 1995).
7th Circuit upholds $24,358 restitution order for law student. (610) Defendant, a third-year law student, pled guilty to robbing six banks. She argued that the sentencing court abused its discretion in ordering restitution in addition to a prison sentence. The 7th Circuit affirmed. The district court properly adopted the PSR’s conclusion that, given defendant’s educational level, she would have the ability to secure legitimate employment and make complete restitution of $24,358. U.S. v. Robinson, 30 F.3d 774 (7th Cir. 1994).
7th Circuit remands because court did not explain why it excused fine but imposed restitution. (610) Defendant argued that it was inconsistent for the court to order him to pay restitution when it had waived a fine due to his inability to pay. The 7th Circuit remanded for an explanation. Under U.S. v. Berman, 21 F.3d 753 (7th Cir. 1994), superseded by statute as stated in U.S. v. McIntosh, 198 F.3d 958 (7th Cir. 2000), there are a number of reasons why a court might excuse a fine while still ordering restitution. However, the reasons must be furnished by the district judge. U.S. v. Korando, 29 F.3d 1114 (7th Cir. 1994).
7th Circuit upholds $100 a month restitution order for defendant unable to pay fine. (610) The district court ordered defendant to pay restitution of $109,477 in monthly $100 installments, but did not impose a fine. The 7th Circuit affirmed. The district court considered the factors required by 18 U.S.C. § 3664(a). The court adopted the PSR, which detailed defendant’s education and work history and his financial status. The court tailored the restitution order to meet defendant’s situation by ordering it payable in $100 monthly installments. The PSR demonstrated that defendant had earned substantial money in the past and had a substantial work history. The court could properly conclude that defendant could and would do the same in the future. Finally, the fact that he was unable to pay a fine did not mean he was unable to pay restitution. Fines and restitution are treated differently by the guidelines. Restitution is preferred because it directly compensates the victim of the crime. U.S. v. Dorsey, 27 F.3d 285 (7th Cir 1994).
7th Circuit upholds full restitution despite defendant’s current indigency. (610) Defendant argued that the district court failed to consider his indigency in ordering him to make full restitution for his crimes. The 7th Circuit upheld the restitution order despite defendant’s indigency. A district court is only required to make findings on the record when it refuses to order full restitution, and here the court ordered full restitution. The court considered defendant’s financial condition and properly exercised its discretion. Although defendant had a negative net worth, he also had some business interests to which he could return. Defendant could make restitution over time despite his health problems. U.S. v. Lesperance, 25 F.3d 553 (7th Cir. 1994), abrogated on other grounds by U.S. v. Gaudin, 515 U.S. 506 (1995).
7th Circuit upholds restitution order based on FBI agent’s testimony of loss suffered by victims. (610) Defendant, the president of an armored car company, misappropriated customer funds. His insurance company reimbursed his customers for their loss, and defendant was ordered to pay restitution to his insurance company. The 7th Circuit held that an FBI agent’s testimony concerning the amount of loss suffered by defendant’s victims sufficiently supported the restitution order. The agent knew the amount of missing funds and how the audits were performed. The defendant’s insurer was obligated to pay the victim’s losses. The court also rejected defendant’s claim that the government was required to prove that the money was not stolen by others who had access to it. Finally, the court rejected the contention that the district court did not consider defendant’s financial resources. The district court could conclude that defendant still had access to $1.7 million of the missing funds. U.S. v. Boyle, 10 F.3d 485 (7th Cir. 1993).
7th Circuit remands where restitution order gave probation office too much discretion. (610) Defendant challenged a restitution order where the court imposed full restitution of $65,509 despite finding that defendant had few assets and substantial liabilities. The 7th Circuit found that the court considered the mandatory factors in 18 U.S.C. § 3664 and fashioned an appropriate restitution order. However, remand was necessary because the court granted the probation office too much discretion in managing the restitution order. The order required defendant to pay in installments in “amounts determined by the Probation Department.” Under U.S. v. Boula, 997 F.2d 263 (7th Cir. 1993), this was improper. A sentencing court must retain supervision and control over the payment of restitution, and any problems in the enforcement of the order must be brought to the sentencing judge’s attention for resolution. U.S. v. Gio, 7 F.3d 1279 (7th Cir. 1993).
7th Circuit upholds $2 million restitution order for defendant with negative net worth. (610) Defendant challenged a $2 million restitution order based on an alleged inability to pay. The 7th Circuit upheld the order, despite defendant’s negative net worth. The restitution statute does not say that indigency is a defense, only that it is a factor the judge is required to take into account in fashioning a restitution order. The judge clearly took defendant’s financial ability into account, waiving interest on the fine, costs of incarceration, community confinement and supervision. Defendant demonstrated “considerable talent” in perpetrating his crime. The restitution order gave defendant an incentive to apply these talents in a lawful manner upon release. U.S. v. Nelson, 5 F.3d 254 (7th Cir. 1993).
7th Circuit permits $5 million restitution despite net worth of $28,000, but forbids undue delegation to probation office. (610) Defendants were convicted of a massive fraud. They were ordered to pay restitution in the amount of $5 million if they earned sufficient money after their release from prison to so permit. The 7th Circuit upheld the district court’s order notwithstanding that the defendants’ combined net worth equaled $28,000. The district court took into account defendants’ assets and responsibilities and ordered that restitution be made in accordance with defendants’ abilities to pay. However, the court should have left less discretion for the management of the restitution order in the hands of the probation department. It should have ordered the defendants to begin paying restitution upon release from prison, with the understanding that the defendants and the probation office should return to court if the original order proves insurmountable. U.S. v. Boula, 997 F.2d 263 (7th Cir. 1993).
7th Circuit says court did not condition sentence reduction on paying back taxes. (610) Defendant argued that the district court erred by making payment of his tax liability a prerequisite to consideration of a future Rule 35 motion for reduction of his pre-guidelines sentence. The court had said that it “may, repeat may,” take efforts to satisfy tax liability into account. The 7th Circuit concluded that this statement did not support defendant’s claim, and that the court had not abused its discretion in sentencing defendant. U.S. v. Lerch, 996 F.2d 158 (7th Cir. 1993).
7th Circuit affirms loss estimate notwithstanding tension with findings in related sentencing. (610) Defendant, a fare collector, bribed a supervisor to be assigned to a high-traffic position and then misrepresented the fares she collected, keeping some for herself. She argued that her restitution order was based on an unreliable estimate that she was responsible for $25,000 in losses. The 7th Circuit affirmed the determination even though the $25,000, when added to the $42,000 attributed to another defendant in a related case, exceeded the estimated total loss of $62,000. The district court had reached its conclusion by relying on evidence indicating that defendant usually stole over $100 per day, sometimes stealing as much as $300. The district court multiplied $100 by the number of days defendant worked during the scheme. U.S. v. Narvaez, 995 F.2d 759 (7th Cir. 1993).
7th Circuit concludes lack of assets does not preclude restitution order. (610) Defendant claimed to have no assets, but was nevertheless ordered to pay $25,000 in restitution. The 7th Circuit concluded that the district court’s order was not an abuse of discretion. The district court considered defendant’s financial condition in ordering restitution. Defendant had secured fulltime employment prior to sentencing. The restitution was to take place at the discretion of the probation department, not in a lump sum that might cause hardship to someone in defendant’s position. U.S. v. Narvaez, 995 F.2d 759 (7th Cir. 1993).
7th Circuit notes possibility of revision in upholding restitution order. (610) Defendant objected to the district court’s order that he pay $215,000 in restitution to a bank in installments after his release from prison, with payment amounts to be determined by the probation officer based on defendant’s ability to pay and employment status after release. The 7th Circuit upheld the order. Leaving the payment schedule to determination by the probation officer permitted consideration of the possibility that defendant would be unable to pay upon release, and the district court had stated that it would resolve any disputes. Accordingly, the court did not abuse its discretion. U.S. v. White, 993 F.2d 147 (7th Cir. 1993).
7th Circuit finds $7,100 restitution order presumptively valid. (610) Defendant complained that the district court’s $7,100 restitution order was issued without consideration of the factors listed as relevant in 18 U.S.C. section 3580(a). The 7th Circuit noted that a restitution order will be reversed when the defendant can show that it was “not improbable” that the judge failed to consider the factors. However, the court did not view defendant’s evidence as sufficient to raise that inference. It distinguished the case from a previous one in which the court had reversed a restitution order of $288,000 that had been entered against a defendant who earned $30,000 a year. U.S. v. Brocksmith, 991 F.2d 1363 (7th Cir. 1993).
7th Circuit upholds restitution based on fraud scheme broader than offense of conviction. (610) Defendant was originally charged with 35 counts of fraud as a result of his involvement in a scheme to defraud 120 investors through the operation of an commodity brokerage company. He pled guilty to two counts of fraud. These counts, although incorporating by reference the general fraudulent scheme outlined in Count One, specifically targeted only one investor. The 7th Circuit affirmed a restitution order based on the amount by which defendant had benefited from the entire scheme. Under Hughey v. U.S., 495 U.S. 411 (1990), the VWPA limits restitution to the loss caused by the specific conduct that is the basis of the offense of conviction. However, proof of a scheme is an element of the offense of mail fraud, and actions pursuant to that scheme should be considered conduct that is the basis of the offense of conviction. U.S. v. Turino, 978 F.2d 315 (7th Cir. 1992).
7th Circuit affirms full restitution order despite defendant’s negative net worth. (610) The 7th Circuit upheld an order requiring defendant to pay in excess of $100,000 in full restitution to his fraud victims. The district court properly considered all of the mandatory factors set forth in 18 U.S.C. section 3664(a). Although defendant had a current negative net worth of $21,000, he had the possibility of making restitution in the future. He was hard-working and told the court he hoped to become a productive member of society again. The court fully considered defendant’s financial resources as well as his financial needs and earning ability. The amount of restitution was not improperly calculated. Although defendant claimed that the value of the stolen seed recovered from him equaled the value of the seed he fraudulently obtained, the court was permitted to rely on probation officer’s figures, which were obtained from the victims. U.S. v. Helton, 975 F.2d 430 (7th Cir. 1992).
7th Circuit says no restitution for amounts outside offense of conviction even if defendant agrees. (610) Defendant pled guilty to one count of theft involving property valued at $13,364. At sentencing, the government presented a letter which calculated the total amount stolen at $84,175.18, and then divided this by three in order to apportion the damages between defendant and the two co-conspirators. According to the letter, its purpose was “to afford the Court the opportunity to hold [defendant] accountable for one-third of the value of the property stolen” ($28,058.40). The 7th Circuit held that the $28,058.40 restitution order violated the Supreme Court’s decision in Hughey v. U.S., 110 S.Ct. 1979 (1990), because it exceeded the damages involved in the offense of conviction. This was not a case in which the defendant agreed to pay a specific sum of money. At the most, defense counsel’s agreement with the letter was an acknowledgement of the accuracy of the government’s figures. Moreover, even if the letter was an agreement by defendant to pay $28,058.40, parties cannot agree to waive the statutory restitution limits. U.S. v. Braslawsky, 951 F.2d 149 (7th Cir. 1991).
7th Circuit reverses order of restitution where court failed to explain basis for computation. (610) The 7th Circuit ruled that “[a]n order of restitution must be ascertained and delineated with an accurate computation, cannot exceed the loss actually caused, and must be set out with specific findings.” Since the district court here did not explain how it computed the $3,300 in restitution, other than bifurcating the amount into “buy money” and lab fees, the restitution order was reversed. U.S. v. Brick, 905 F.2d 1092 (7th Cir. 1990).
7th Circuit reverses downward departure based on age, physical condition, restitution and “single act of aberrant behavior.” (610) Defendant was convicted of bank fraud and was sentenced below the applicable guideline range. After the government filed its notice of appeal, the court filed a memorandum stating that the downward departure was based on the defendant’s age and physical condition, the fact that the offense was a “single act of aberrant behavior,” and the fact that the dollar loss overstated the seriousness of the offense because a plan of restitution had been undertaken prior to indictment. The 7th Circuit reversed, finding these reasons were either improper or insufficiently articulated to justify departure. U.S. v. Carey, 895 F.2d 318 (7th Cir. 1990).
8th Circuit says lenders were victims of mortgage fraud scheme. (610) Defendant was involved in a “dual price” real estate purchase scheme. Buyers and sellers in the scheme provided lenders with inflated sales prices to secure higher loan amounts, and then the buyers pocketed the difference between the inflated and actual amounts. Defendant argued that the district court erred in ordering restitution to three financial institutions, arguing that they were not “victims” under the MVRA because they were bad actors whose conduct caused the sub-prime mortgage crisis. However, one lender was the original lender on seven of the nine loans, and the other two lenders each directly or indirectly acquired the remaining two loans from the original lender. Thus, all three entities fell within the MVRA’s definition of “victim” as a party “directly and proximately harmed” by the mortgage fraud conspiracy. See 18 U.S.C. § 3663A (a)(2). The Eighth Circuit found no error in calculating restitution. U.S. v. Engelmann, 720 F.3d 1005 (8th Cir. 2013).
8th Circuit denies restitution setoff for uncompensated services to victim. (610) Defendant was convicted of mail fraud, for collecting proceeds from the milling of pine saw logs that he diverted from their intended mill. The fair market value of the diverted timber was $228,463.80. Defendant argued that he was entitled to offset $41,890.00 for uncompensated services to the timber company that hired defendant’s company to deliver the harvested logs. The Eighth Circuit held that the district court properly denied defendant a setoff for uncompensated services. Defendant retained his claims against the timber company and could pursue those claims in a separate proceeding. U.S. v. Clemons, 721 F.3d 563 (8th Cir. 2013).
8th Circuit says summary tables were insufficient to support restitution order. (610) Defendant was involved in an extensive credit card and identity theft scam. The government sought restitution of $743,948.42, based on two summary tables. The tables included columns indicating the date of first and last account activity, amount of loss and, in some cases, a brief note describing the loss. The tables, however, did not include further explanation or itemization. The district court rejected these summary tables as insufficiently specific. On appeal, the government contended that the summary tables were based on evidence previously in the record, noting that the parties stipulated to the accuracy of Exhibit 207, a master table of bank accounts and loss amounts compiled from thousands of bank documents. The Eighth Circuit found the record regarding the stipulation unclear. Despite the government’s failure to produce documentation with the required specificity and reliability, the district court should have postponed the restitution proceedings to allow for the gathering and presentation of additional evidence. The panel remanded to allow the parties to present additional evidence regarding the losses the victims sustained. U.S. v. Adetiloye, 716 F.3d 1030 (8th Cir. 2013).
8th Circuit approves restitution to IRS as condition of supervised release. (610) Defendant, a manager at an car assembly plant, was convicted of four counts of willful income tax evasion for failing to report and then concealing kickbacks he received from vendors. As a special condition of supervised release, he was ordered to pay restitution to the IRS. Defendant contended the restitution order was improper because the Victim and Witness Protection Act and the Mandatory Victims Restitution Act do not apply to Title 26 offenses. See 18 U.S.C. §§ 3663(a) (1)(A), 3663A(c)(1). The Eighth Circuit upheld the restitution order. Congress has explicitly granted district courts discretionary authority to “make restitution to a victim of the offense” a condition of supervised release, regardless of whether the defendant committed an offense enumerated in §§ 3663(a)(1)(A) or 3663A(c)(1). The court made clear that restitution was being ordered as a condition of defendant’s supervised release, not pursuant to the VWPA or the MVPA. The court did not abuse its discretion by including interest in a restitution order intended to compensate the IRS as a victim for the full amount of its losses from defendant’s evasion of income taxes owed. U.S. v. Perry, 714 F.3d 570 (8th Cir. 2013).
8th Circuit reverses order of restitution that did not give defendant opportunity to object. (610) Defendant was convicted of various fraud charges. His PSR noted that there were about 100 separate victims, and listed eight victims making claims for restitution of over $ 6 million. The court instructed that restitution would be “deferred 90 days.” See 18 U.S.C. § 3664(d)(5). Six weeks later, without prior notice and without scheduling a hearing or inviting written comments or objections by the parties, the court entered an Order of Restitution making defendant and a co-defendant jointly and severally liable for restitution of $7,430,858.30. The Eighth Circuit reversed. First, review of the restitution order was not limited to plain error. The PSR did not recommend the award of any restitution; thus, defendant did not need to “object” to its recitation to preserve restitution issues. Second, although the district court properly deferred restitution issues for 90 days pursuant to § 3664(d)(5), it committed reversible error by entering a final restitution order without giving defendant an opportunity to object to restitution claims being awarded. U.S. v. Chaika, 695 F.3d 741 (8th Cir. 2012).
8th Circuit upholds inclusion of interest and foreclosure costs in restitution. (610) Defendant was convicted of making false statements in connection with her mortgage loan. She challenged the district court’s order that she pay restitution of $113,113.68 to HUD, which had guaranteed defendant’s loan. The restitution amount included sums paid by HUD for the unpaid principal, interest owed on the loan, the amount expended to obtain and acquire the property, and other remaining costs associated with the sale of property. The sum total of these costs, less the amount that HUD ultimately sold the house for, equaled $113,113.68. The Eighth Circuit rejected defendant’s argument that the interest payments and other reasonably foreseeable expenses incurred by HUD were not compensable under the MVRA, 18 U.S.C. § 3663. Although interest costs are to be excluded for purposes of the loss amount, see § 2B1.1, Note 3(D)(i), courts have upheld restitution that included interest and other foreclosure expenses. More importantly, the interest payment did not result in any windfall to HUD, as it was responsible for making such a payment to the lender based on its guarantee of the mortgage loan. U.S. v. Alexander, 679 F.3d 721 (8th Cir. 2012).
8th Circuit says restitution was not double recovery where defendants failed to pay civil judgment. (610) Defendants were convicted of charges stemming from a fraudulent scheme involving a website offering a sham tutorial program, CyberStudy. As part of the fraud, CyberStudy contracted with K-Mart to purchase 4000 computers, and ultimately received 2284 computers. K-Mart never received payment for the computers. Defendants argued that the district court’s restitution order improperly included restitution to K-Mart, which was already receiving compensation from a settlement agreement. The Eighth Circuit rejected defendant’s argument, since he admitted on cross-examination that defendants had not paid any amount on the civil judgment. Therefore, defendant failed to show that enforcement of the restitution order would result in double recovery for K-Mart. If either defendant began to make payments on the civil judgment, either he or she could seek a reduction of the restitution order to credit or offset amounts recovered by K–Mart. U.S. v. Louper-Morris, 672 F.3d 539 (8th Cir. 2012).
8th Circuit says MVRA did not cover restitution for aiding and abetting kickback scheme. (610) Defendant was convicted of two federal offenses: (1) aiding and abetting a violation of the Medicare anti-kickback statute, in violation of 42 U.S.C. § 1320a-7(b)(2) and 18 U.S.C. § 2; and (2) aiding and abetting the falsification of a document, in violation of 18 U.S.C. §§ 1519 and 2. The Eighth Circuit reversed a restitution order, holding that it was not authorized by the Mandatory Victims Restitution Act (MVRA), 18 U.S.C. § 3663A. Section 3663A(c) identifies three types of offenses that trigger mandatory restitution under the MVRA: (1) crimes of violence, as defined in 18 U.S.C. § 16; (2) offenses against property under Title 18 or 21 U.S.C. § 856(a), including any offense committed by fraud or deceit; and (3) offenses described in 18 U.S.C. § 856(a). Defendant was not convicted of a Title 18 offense as an aider and abettor, pursuant to 18 U.S.C. § 2. Defendant’s conviction for aiding and abetting a Title 42 offense was a conviction under Title 42. U.S. v. Yielding, 657 F.3d 688 (8th Cir. 2011).
8th Circuit upholds restitution of funeral expenses to estate of person who died from heroin overdose. (610) Gunderson was found dead in his apartment, and an autopsy indicated he died of heroin toxicity. Defendant had mailed two packages of heroin to Gunderson, and he was convicted of distributing heroin. The district court ordered defendant to pay restitution to Gunderson’s estate for costs associated with Gunderson’s funeral and burial. Defendant argued that Gunderson was not a victim, but a participant in the crime, and restitution to his estate was not permitted under the statute. The Eighth Circuit disagreed, and upheld the restitution order. Although Gunderson might have been guilty of other crimes, such as possession of heroin, he did not commit the offense of distributing a controlled substance. He was therefore not a participant in the offense and his estate was eligible for restitution. U.S. v. Nossan, 647 F.3d 822 (8th Cir. 2011.
8th Circuit rejects restitution condition that required depositing funds as victim incurred expenses. (610) Defendant and a co-defendant trained defendant’s 12-year- old daughter to become a dominatrix, and sold the girl’s services to customers on the Internet. The court ordered defendant to pay $200,000 in restitution to the girl to cover future counseling sessions. The court then added a special condition requiring defendant to make the payments into an account until the account reached $5,000. Thereafter, defendant was to maintain the account at $5,000 so that counseling expenses actually incurred could be paid from the account for the victim. The Eighth Circuit held that the special condition failed to comply with the MVRA. The MVRA authorizes the court to direct the defendant to make “partial payments at specified intervals.” 18 U.S.C. § 3664(f)(3)(A). The district court’s special conditions lacked “specified intervals” because defendant’s payments were tied to a future contingency and were not set at predetermined moments in time. Moreover, the special condition required the child to incur out-of-pocket expenses and seek reimbursement each time she needed counseling, which could deter or discourage her from receiving help. U.S. v. Palmer, 643 F.3d 1060 (8th Cir. 2011).
8th Circuit rejects alternative restitution as impinging on government’s right to appeal. (610) Defendant and a co-defendant trained defendant’s 12-year old daughter to become a dominatrix, and sold the girl’s services to customers on the Internet. The court ordered defendant to pay $200,00 in restitution to the girl to cover future counseling sessions. However, it set up a special condition requiring defendant only to maintain the restitution account at $5,000 so that only counseling expenses actually incurred could be paid from the account for the victim. If this special condition was not valid, then as an alternative, the court issued an “alternative judgment” in which it would not impose restitution at all, because it felt that there was insufficient evidence to show what counseling was needed. After rejecting the special condition as violating the MVRA, the Eighth Circuit also rejected the alternate restitution order as an unenforceable attempt to impinge on the government’s right to appeal. Restitution is mandatory, and the evidence in the record sufficiently supported the $200,000 assessment. U.S. v. Palmer, 643 F.3d 1060 (8th Cir. 2011).
8th Circuit upholds restitution based on sexual abuse victim’s future psychological treatment. (610) Defendant and a co-defendant trained defendant’s 12-year old daughter to become a dominatrix, and sold the girl’s services to customers on the Internet. The court ordered defendant to pay $200,00 in restitution to the girl to cover future counseling sessions. The Eighth Circuit rejected defendant’s argument that the expert’s estimate of the victim’s future psychological treatment was too speculative to fix at $200,000. The doctor’s expert opinion provided the court with a reasonable estimate of the child’s future costs of psychological treatment, and the opinion was unrebutted in the record. The court considered, and found partially valid, defendants’ concerns about the lack of a formal interview and resiliency variances. For that reason, the court declined to award the child any restitution for future psychiatric treatment or medical expenses. But, the court found that was “no question,” the victim would incur future psychological treatment costs. The harm to the victim here was undeniable and considerable. Now a young adult, the victim left little doubt that she would seek psychological treatment she could afford. U.S. v. Palmer, 643 F.3d 1060 (8th Cir. 2011).
8th Circuit upholds restitution to insurance company that improperly reimbursed defendant. (610) Defendant submitted false claims for reimbursement for care of his mother under her long-term care insurance policy. He appealed the court’s award of $29,444 in restitution to the insurance company, arguing that a portion of the restitution should be paid to his mother’s estate as she would now qualify for few benefits because of his fraud. The Eighth Circuit disagreed. Defendant’s mother’s policy provided for reimbursement of caregiver services paid by his mother (or defendant, her agent). Because defendant did not actually pay for the services, defendant was not legally entitled to any reimbursement from the insurance company. However, because the insurance company reimbursed defendant under these fraudulent claims, it was “directly and proximately harmed” as a result of defendant’s offense. The insurance company, not defendant’s mother, was the victim and the proper recipient of the restitution. Further, if the restitution was paid to his mother’s estate, defendant could inappropriately benefit as a potential beneficiary of his mother’s estate. U.S. v. Bryant, 606 F.3d 912 (8th Cir. 2010).
8th Circuit upholds condition of release to pay $2,000 a month toward IRS obligation. (610) Defendant was sentenced to five years probation after being convicted of failing to file employment tax returns or pay employment taxes. Special conditions of release required defendant to “cooperate fully” with the IRS in filing “all tax returns required by law,” and to “pay all amounts due to the IRS as finally determined.” The district court later revoked defendant’s supervised release and sentenced her to 32 months of supervised release. The court re-imposed the special conditions, and added a new special condition requiring defendant to pay $2,000 per month towards her IRS obligations beginning 30 days after her release from prison. The Eighth Circuit held that the new condition of release was not an abuse of discretion. The new special condition was not required to comport with the Mandatory Victims Restitution Act, because it did not impose a restitution requirement. It was merely a requirement that defendant comply with the tax laws, including the payment of her outstanding tax obligations. U.S. v. Miller, 557 F.3d 919 (8th Cir. 2009).
8th Circuit rules restitution should be limited to offense of conviction. (610) Defendant hired Romero to start a fire at the home of a woman he believed had damaged his vehicle. On two separate occasions, Romero mistakenly targeted the wrong home, and set fire to cars and home of neighbors of the intended victim He also started a fire at the victim’s home by placing an incendiary device in the doorway of the residence. He was convicted of arson and making false statements. The district court ordered defendant to pay over $73,000 in restitution, which included money to the neighbors and the neighbor’s insurance company for damage to their home. The Eighth Circuit agreed with defendant that restitution should have been limited to $1200 for the damage to the home rented by the intended victim. If the jury had convicted defendant of conspiracy to commit arson, then the district court’s entire restitution order would have been appropriate. In the absence of a conviction for an offense that involves as an element a scheme, conspiracy or pattern of criminal activity, restitution is limited to the offense of conviction. U.S. v. Farish, 535 F.3d 815 (8th Cir. 2008).
8th Circuit allows revocation of supervised release for willful failure to pay restitution. (610) While on supervised release, defendant failed to pay ordered restitution. The district court found that this was willful, and that her failure to find and keep a job reflected a willful failure “to acquire the resources to pay” her restitution obligation. The district court revoked defendant’s supervised release and sentenced her to 11 months in prison. Defendant argued that the court abused its discretion by imposing a prison sentence without expressly considering alternative punishments. The Eighth Circuit noted that this constitutional requirement applies only if the failure to pay restitution was not willful. When the violation was willful, neither the applicable statute nor applicable require a court to consider alternative punishments. U.S. v. Montgomery, 532 F.3d 811 (8th Cir. 2008).
8th Circuit holds minor was not participant in offense of providing drugs to a minor. (610) Defendant pled guilty to a single count of distributing a controlled substance to a minor. The minor died after ingesting the substance. Defendant challenged a restitution order, contending that the minor’s illegal use of a controlled substance made him a “participant” in the offense, and thus not a victim entitled to restitution under 18 U.S.C. § 3663(a)(1)(A). The Eighth Circuit disagreed. Defendant was found guilty of providing a controlled substance to a minor, an offense the minor did not commit. Because the minor did not provide a controlled substance to a minor, the minor was not a participant in the offense. The restitution order was proper. U.S. v. Mousseau, 517 F.3d 1044 (8th Cir. 2008).
8th Circuit rejects restitution to minor victim’s mother for lost wages. (610) A jury convicted defendant of sexual abuse of a minor. The district court awarded restitution of $5,678.70 to the minor’s mother. Of this amount, $4,957.80 was awarded under § 3663A(b)(2)(C) to reimburse the mom for lost income, and the remaining $720.90 was awarded under § 3663A(b)(2)(A) for the cost of transporting the minor to healing ceremonies. The Eighth Circuit held that the district court erred in awarding the mother restitution as a “victim” under § 3663A(b)(2)(C). While the statute defines “victim” as “a person directly and proximately harmed as a result of the commission of an offense for which restitution may be ordered,” § 3663A(a)(2), the subsection concerning reimbursement for lost income refers to a specific victim. It states that in the case of an offense resulting in bodily injury to a victim, the defendant shall “reimburse the victim for income lost by such victim as result of such offense.” § 3663A(b)(2)(C). The use of the definite article indicates that “the victim” who may be reimbursed is the victim described at the beginning of the subsection, i.e., the victim who suffered bodily injury. However, the court’s award of $720.90 for transportation of the minor to healing ceremonies under § 3663A(b)(2)(A) was proper. The court found that visits to a healer or medicine man constituted “treatment” under § 3663A(b)(2) (A). U.S. v. Wilcox, 487 F.3d 1163 (1st Cir. 2007).
8th Circuit holds that loss was amount of subsidies government paid less amount it would have paid if truth had been known. (610) Defendant qualified for Social Security disability and Section 8 federal housing subsidies. She certified to the government annually that her household comprised only herself and her two children. However, Stevenson, her landlord and her boyfriend, also lived with defendant “at times.” The district court held that defendant and her boyfriend were jointly and severally liable for restitution to the government for $45,441, the aggregate subsidies paid during the conspiracy period, December 1987 to August 2001. The Eighth Circuit held that the government’s actual loss was the amount of subsidies paid minus the amount HUD would have paid had defendant and her boyfriend timely and truthfully disclosed the relevant circumstances. Because the record confirmed that no subsidies would have been paid, the panel affirmed. Had defendant disclosed that her boyfriend, the owner of the rental unit, was a member of the tenant family, that disclosure would have automatically disqualified defendant from any subsidies. U.S. v. Petruk, 484 F.3d 1035 (8th Cir. 2007).
8th Circuit upholds restitution to state and private lenders harmed by tax fraud conspiracy. (610) Defendant and his brother were involved in a scheme that recruited persons to file fraudulent federal and state income tax returns. He challenged the district court’s order of restitution to the State of Minnesota and the private financial institutions from whom the conspirators obtained refund anticipation loans. They contended that because the offense of conviction was limited to a conspiracy to defraud the United States, the court was only authorized to order restitution to the federal government. The Eighth Circuit held that the Mandatory Victims Restitution Act (MVRA) authorized restitution to these parties. Defendants pled guilty to an offense that involved a conspiracy as an element. The MVRA authorizes restitution to any person “directly and proximately harmed” as a result of the conspiracy, even if the offense of conviction did not require proof of an agreement to defraud those particular victims. Defendants admitted that obtaining state tax refunds and loans from private financial institutions based on false tax returns was part of the conspiracy to which they pled guilty. The harm to the State of Minnesota and private financial institutions was directly and proximately caused by the offense, and the district court did not err in finding that the MVRA authorized restitution to these parties. U.S. v. Mickle, 464 F.3d 804 (8th Cir. 2006).
8th Circuit holds that IRS was an victim under MVRA. (610) Defendant pled guilty to five counts of filing false tax claims and conspiracy to defraud the government. As part of his sentence, the district court ordered defendant to pay the Internal Revenue Service (IRS) $71,610.90 in restitution. The Mandatory Victims Restitution Act of 1996 directs a court to order restitution to a “victim of any covered offense. 18 U.S.C. § 3663A(a)(1). A “victim” is “a person directly and proximately harmed as a result of the commission of an offense … “ Defendant argued that the government was not a “person” and therefore the IRS could not be a victim under the MVRA. The Eighth Circuit disagreed, holding that the IRS was a victim and the restitution order was proper. U.S. v. Senty-Haugen, 449 F.3d 862 (8th Cir. 2006).
8th Circuit holds that defendant’s waiver of appeal of all issues but jurisdiction barred appeal of restitution. (610) As part of his plea agreement, defendant and the government waived all right to appeal “all non-jurisdictional issues… including … whatever sentence is imposed…” The Eighth Circuit held that this waiver of appeal precluded defendant’s appeal of the court’s restitution order. Although a waiver limited to “whatever sentence is imposed” does not foreclose an appeal of a restitution order, a waiver like this one, that includes all issues except jurisdiction, does cover restitution. Enforcement of this waiver would not result in a miscarriage of justice. U.S. v. Schulte, 436 F.3d 849 (8th Cir. 2006).
8th Circuit rejects restitution where no loss from threatening phone call. (610) Defendant made two phone calls to his stepfather, threatening harm unless the stepfather paid money he owed defendant’s mother from a divorce settlement. In between the two calls, a residence and 250 bales of hay owned by the stepfather were destroyed by suspicious fires. Defendant pled guilty to making a willful threat by telephone, in violation of 18 U.S.C. § 844(e). Defendant challenged a $45,000 restitution order, arguing that no loss resulted from his threatening phone call, that restitution may only be awarded “for the loss caused by the specific conduct that is the basis of the offense of conviction.” The Eighth Circuit agreed. Restitution may be awarded only for the amount of loss caused by the threatening phone call that violated § 844(e), which was zero, unless defendant agreed to pay restitution in the plea agreement. See Hughey v. U.S., 495 U.S. 411 (1990). Defendant’s acknowledgment in the plea agreement that restitution might be awarded fell well short of an agreement. U.S. v. Reynolds, 432 F.3d 821 (8th Cir. 2005).
8th Circuit holds that restitution order did not violate defendant’s right to trial by jury. (610) Defendant pled guilty to conspiracy to make and possess counterfeit checks. The district court ordered him to pay $26,400 in restitution. Defendant argued that the restitution order violated his Sixth Amendment rights because all but $8000 of it was based on judge found facts. The Eighth Circuit held that neither Apprendi v. New Jersey, 530 U.S. 466 (2000), nor Blakely v. Washington, 542 U.S. 296 (2004), prohibit judicial fact finding for restitution orders. Under the MVRA there is no specific or set upper limit for the amount of restitution. The MVRA does not have a statutory maximum that could be increased by a given finding. Judge Bye dissented. U.S. v. Carruth, 418 F.3d 900 (8th Cir. 2005).
8th Circuit upholds restitution for damage to sheriff’s patrol car and medical bills for sheriff’s deputy. (610) After robbing a bank, the police followed defendant’s car. While police were trying to apprehend him, defendant fired several rounds into two squad cars, and injured a deputy. The Eighth Circuit held that the district court properly ordered restitution for damage to the sheriff’s squad cars and the medical injuries to the sheriff’s deputy. The escape phase of a crime is part of the robbery and occurs “during” it. The damage defendant caused to the squad card and the deputy occurred “during” the robbery. However, the court erred in ordering restitution of $525 for the bank employees’ psychological treatment expenses. The plain language of MVRA, 18 U.S.C. § 3663(b) (2)(A), requires evidence of bodily injury to victims before restitution can be ordered for their psychological treatment expenses. U.S. v. Reichow, 416 F.3d 802 (8th Cir. 2005).
8th Circuit says court properly adopted restitution amount in PSR where defendant did not object until sentencing hearing. (610) Defendant was convicted of assault with intent to commit murder. The district court adopted the PSR’s recommended restitution of $39,368.20, which was based on a Victim Impact Statement. Defendant objected to this amount for the first time at sentencing. The Eighth Circuit held that because defendant did not timely object to the restitution amount contained in the PSR, the district court did not err in adopting it. Under Rule 32(f)(1), a defendant must provide written objection to a PSR within 14 days after receiving it. A district court may regard as true facts contained in the PSR to which no specific objection is made. An untimely objection to a fact in the PSR does not change the fact’s “undisputed” status. U.S. v. May, 413 F.3d 841 (8th Cir. 2005).
8th Circuit holds that HIV diagnosis did not constitute “material change in economic circumstances.” (610) The Mandatory Victims Restitution Act provides that, upon notice of any material change in the defendant’s economic circumstances, the sentencing court may “adjust the payment schedule, or require immediate payment in full, as the interests of justice require.” 18 U.S.C. § 3664(k). While serving his prison sentence, defendant was diagnosed as HIV positive, and prison physicians prescribed as a life-saving pharmaceutical cocktail of expensive drugs to treat his condition. Defendant then filed a § 3664(k) motion asking the court to adjust or eliminate his current schedule of restitution payments, claiming that his medical condition caused a material change in economic circumstances because he needed to save money while in prison so that he could maintain this expensive drug regimen after his release. The Eighth Circuit held that defendant’s HIV diagnosis did not constitute a material change in his economic circumstances. There was no immediate change in his economic circumstances. The cost of his HIV treatments were being paid by the government while he was incarcerated, leaving funds available to him in prison unaffected. While his future economic circumstances might be materially adversely affected, the court did not abuse its discretion in concluding that this factor did not require an adjustment to the payments defendant was currently required to pay. U.S. v. Vanhorn, 399 F.3d 884 (8th Cir. 2005).
8th Circuit reverses downward departure based on payment of full restitution, overstated role, and economic impact on community. (610) The court cited three reasons for its decision to depart downwards: (1) defendant’s extraordinary restitution effort in taking out a bank loan to pay full restitution immediately; (2) defendant’s role in the offense had been overstated; and (3) the economic impact on the community if defendant were to be absent from his businesses. The Eighth Circuit reversed. Although defendant went to great lengths to have a cashier’s check for over $450,000 available at sentencing, to treat such efforts as warranting a departure would differentiate defendants on the basis of their economic resources. A defendant’s minor or minimal role in the offense is already considered in the guidelines in § 3B1.2; thus, a departure is proper only if the guideline level attached to that factor was inadequate. Defendant did not receive a § 3B1.2 mitigating role reduction, and did not object to the PSR for its lack of such a recommendation. There was nothing unusual in defendant’s case to warrant a downward departure on this basis. Section 5H1.6 expressly discourages community ties as a ground for departure; thus, a departure is permitted only if defendant’s community ties are truly exceptional. The mere fact that a business faces likely failure and innocent others will be disadvantaged when its key person goes to jail its not by itself unusual enough to warrant a departure. U.S. v. O’Malley, 364 F.3d 974 (8th Cir. 2004).
8th Circuit holds that restitution order was supported by evidence from victim bank. (610) Defendant was convicted of two counts related to bank fraud and three counts related to embezzlement from his company’s pension fund. The Eighth Circuit held that the district court did not clearly err in ordering the restitution. The court ordered restitution in the amount that an executive from the bank provided as the amount that it had lost on the loan. Moreover, the court chose the lowest of several loss totals provided. U.S. v. Moyer, 313 F.3d 1082 (8th Cir. 2002).
8th Circuit says $3000 for traditional Native American giveaway ceremony was “necessary funeral or related services” expense under MVRA. (610) Defendant pled guilty to voluntary manslaughter in Indian country. The district court included in its restitution order $3000 to the victim’s father for a traditional Native American giveaway ceremony to commemorate the victim. The victim’s father testified that he followed Native American religious customs, that religious items such as medicine wheels put by the family at the site of the crime had been vandalized, and that a giveaway ceremony would be a memorial for his daughter to show how much she was loved and that its purpose was to “help bury my daughter.” He further testified that the family would need to make or buy items to be used in the giveaway, like star quilts and beadwork, and that this type of ceremony would cost between $3000 and $10,000. Defendant offered no evidence to challenge that of the victim’s father, nor did he cross examine him about his characterization of the ceremony, its purpose, or cost. The Eighth Circuit found that the evidence supported the finding that the $3000 for a giveaway ceremony was a “necessary funeral or related services” expense under the Mandatory Victims Restitution Act. U.S. v. Iron Cloud, 312 F.3d 379 (8th Cir. 2002).
8th Circuit holds that investigation costs and fines were not incidental or consequential damages. (610) Over a several year period, defendant assembled elite high school basketball players and compensated them for their participation on his traveling basketball team. Players submitted statements to universities where they were to play basketball that falsely certified they had not previously received payments to play basketball. These schools awarded scholarships to these athletes, enrolled them in classes, and allowed them to play on NCAA basketball teams. Defendant argued for the first time on appeal that the district court committed plain error in including the investigative and NCAA fines in the calculation of the restitution order. The Eighth Circuit held that investigation costs and fines were not incidental or consequential damages. These damages were “caused by the specific conduct that is the basis for the offense of conviction.” Therefore, they were properly included in the restitution order. U.S. v. Piggie, 303 F.3d 923 (8th Cir. 2002).
8th Circuit rejects restitution for loss caused by woman with whom defendant had no contact. (610) Defendant was a leader of a counterfeit check cashing scheme. The district court ordered him to pay restitution of $166,015.30. The Eighth Circuit affirmed most of the restitution order. Defendant was responsible for his own check-cashing activity, and well as that of two others he admitted supervising, for a total of $17,146.29. He also was responsible for checks cashed by Cole and Hayes, because he provided them with the counterfeit checks. These checks totaled $25,407,10. Additionally, because the logo for United Rental was found on defendant’s computer, it was not error to hold defendant responsible for the $24,713.72 drawn on the United Rental account. Defendant also had telephone contact with four persons who cashed checks totaling $11,636.90. Four other individuals cashed counterfeit checks drawn on one of the five bank accounted involved. The inferences were substantial, although not compelling, that defendant was connected with all of the checks as to which the court heard testimony, except for the $5,707.29 in checks cashed by Giles. There was no evidence that defendant had any contact with her, by telephone or otherwise. The restitution order should be reduced by $5,707.29. U.S. v. Tucker, 286 F.3d 505 (8th Cir. 2002).
8th Circuit holds that restitution fell within scope of indictment for Apprendi purposes. (610) Defendant argued that the order requiring him to pay $2.7 million in restitution violated Apprendi because the district court ordered restitution to victims beyond those affected by the specific wire transaction submitted to the jury to prove wire fraud. Although some cases have held that Apprendi does not apply to restitution orders, the Eighth Circuit found it unnecessary to decide that issue. Even if Apprendi applies to restitution orders, it would not limit restitution in a wire fraud case only to those losses stemming directly from the wire transactions submitted to the jury. The full amount of restitution authorized by statute is determined by looking to the scope of the indictment, which in turn defines the scope of the criminal scheme for restitution purposes. The restitution order here fell within the scope of the indictment, and thus was authorized by the statute. In a wire fraud case, the jury must consider the existence of the fraudulent scheme as part of the charged conduct. Thus, the fraud scheme was an element of the conduct charged in the indictment. Here, the entirety of the $2.7 million in restitution related to the “advance fee” scheme alleged in the indictment, not some other or broader scheme. U.S. v. Ross, 279 F.3d 600 (8th Cir. 2002).
8th Circuit reverses restitution for lost profits as too speculative. (610) Defendant stole American Indian merchandise from a nearby trading post. The district court ordered restitution of $9,700, which included $5,450.08 owed to the victim’s insurer for claims paid, $250 owed to the victim for her insurance deductible, and $3,999.92 owed to the victim for lost profits. The Eighth Circuit reversed the restitution for lost profits, finding that it was based entirely upon speculation. The government presented no evidence to prove the amount of lost profits sustained by the store owner. The government counsel told the court that he had warned the owner if she did not appear at the sentencing hearing to testify to lost profits, she risked not receiving restitution, and the owner had elected not to testify. The PSR contained no specific factual allegations substantiating the victim’s request for lost profits. The report acknowledged “the entire amount of restitution owed is uncertain.” The district court’s reliance on the victim’s “uncertain” estimate of lost profits was clear error. U.S. v. Young, 272 F.3d 1052 (8th Cir. 2001).
8th Circuit refuses to offset restitution without proper proof. (610) At sentencing, defendant presented copies of personal checks supposedly documenting his partial repayments to some of the victims of his fraud. The district court refused to give defendant credit for the amount of these checks because it was unable to determine what the checks were for. Because defendant only provided the court with ambiguous evidence of repayment, the Eighth Circuit upheld the court’s refusal to reduce the restitution by the amount of these checks. A defendant ordered to make restitution is not entitled to credit if he fails to offer proof of his repayment. The district court was unable to determine whether defendant had repaid some of his victims because the checks that he provided as proof contained no facial indication of their purpose. The court offered to hold a hearing the consider the evidence further, but defendant turned down the opportunity to substantiate his allegations. U.S. v. Bush, 252 F.3d 959 (8th Cir. 2001).
8th Circuit rejects restitution to investors who were not victims of offense of conviction. (610) Defendant was charged with a fraud conspiracy involving his sale of unregistered promissory notes issued by his company, Global Productions. The district court included in its restitution order losses to Stigger, an investment counselor who encouraged some of his clients to do business with defendant. Although Stigger never directly gave any money to defendant for the notes, he paid money from his own pocket to cover some of the losses that his clients incurred from their dealings with defendant. The Eighth Circuit found no error in this; the situation simply involved a substitution of one victim for another. However, the district court erred in ordering defendant to pay restitution to others who gave money to defendant but did not purchase promissory notes. These frauds were not committed pursuant to the conspiracy for which defendant was charged and convicted. Although similar in purpose and design, these offenses were different from the offense in the indictment. U.S. v. Bush, 252 F.3d 959 (8th Cir. 2001).
8th Circuit says court must designate specific portion of prison earnings towards restitution. (610) Under the Mandatory Victims Restitution Act of 1996 (MVRA), the offender’s ability to pay is relevant only in determining whether restitution should be paid by lump sum or a schedule of payments. At sentencing, the district court acknowledged defendant’s financial circumstances, but imposed immediate payment of the full $97,000 in restitution, even though it doubted that he would ever be pay it. The PSR noted that defendant had no income and no assets. The Eighth Circuit remanded so that the district court could craft a payment plan commensurate with defendant’s ability to pay. The court was correct that restitution was statutorily mandated, but instead of demanding immediate payment, which it acknowledged was not feasible, the court should have fashioned a payment schedule that designated a specific percentage of defendant’s monthly earnings while incarcerated toward his restitution obligations. Although the court seemed to think that the Bureau of Prisons would collect restitution through its Inmate Financial Responsibility Plan, the MVRA provides that the manner of payments and “the length of time over which scheduled payments will be made shall be set by the court.” 18 U.S.C. § 3572(d)(2). This statement requires the district court to set a detailed payment schedule at sentencing. U.S. v. McGlothlin, 249 F.3d 783 (8th Cir. 2001).
8th Circuit awards restitution even though agreement with defendant did not guarantee funding. (610) Defendant operated a Consortium, a corporation that purported to finance business transactions. Prospective borrowers paid Consortium a $10,000 expense retainer and the parties entered into a preliminary commitment agreement (PCA), which expressly disclaimed any guarantee of funding. If the parties proceeded beyond the evaluation phrase, a formal commitment agreement (FCA) was prepared under which the potential borrower paid Consortium an additional non-refundable fee. The FCA did not contain a disclaimer of funding, but instead “approved” the loan subject to certain conditions. Consortium collected in excess of $3.3 million in fees, but never fully funded a loan. The Eighth Circuit held that the court properly awarded restitution under the MVRA to the 173 persons who executed PCAs but never proceeded to a FCA, even though the PCAs expressly disclaimed any guarantee of funding. Victim restitution may be ordered for criminal conduct that is part of a broad scheme to defraud, without regard to whether the defendant is convicted of each fraudulent act in the scheme. The wire fraud and money laundering indictment alleged a broad scheme to defraud. Each of the persons who executed PCAs, paid a $10,000 retainer, and were thereafter rejected for a loan were directly and proximately harmed by the scheme and thus fell within Congress’ definition of a “victim” under the MVRA. U.S. v. Ross, 210 F.3d 916 (8th Cir. 2000).
8th Circuit rejects restitution to earlier investors who were not part of current fraud scheme. (610) In 1993, defendant solicited $1,540,000 from Minnesota investors to produce an electric car, and then converted the money for his own use. The district court ordered restitution of $3,089,000, including in the order an additional $1,549,000 in restitution to different investors from other electric-car investments made as early as 1975. The Eighth Circuit held that the restitution order, which exceeded that authorized by the Victim and Witness Protection Act, 18 U.S.C. § 3663(a)(1)(A), was plain error. Under the VWPA, as amended by 18 U.S.C. § 3663(a)(2), the district court had discretion to order restitution to all the victims of defendant’s scheme to defraud, whether or not their transactions were specifically named in the indictment. However, the indictment defines the scope of the criminal scheme for restitution purposes. In the present case, the indictment was limited to the 1993 fraud and did not state or even imply that the scheme was part of a broader, ongoing scheme of any kind. Defendant was not charged with nor convicted of defrauding investors in other projects. The fact that the government allowed other investors to file claims against his forfeited assets did not expand the universe of persons who could be awarded restitution under 18 U.S.C. § 3663(a). U.S. v. Ramirez, 196 F.3d 895 (8th Cir. 1999).
8th Circuit orders restitution to witness of attempted bank robbery. (610) Defendant attempted to rob a bank, but left when the teller and the bank’s only customer ignored him because they thought he was joking. The district court ordered defendant to pay $528 in restitution to the bank customer for lost wages incurred as a result of time spent giving statements, identifying the suspects, and preparing for and testifying at trial. Defendant claimed that the customer was not a victim of the attempted bank robbery, and that any loss the customer suffered was not caused by the robbery attempt but by his being subpoenaed to testify in court. The Eighth Circuit upheld the restitution order. Section 3663A(b)(4) plainly allows a victim to recover loss stemming from his duties as a witness. The customer clearly qualified as a victim. Defendant pointed what appeared to be a sawed-off shotgun at the only two people in the bank and demanded money. According to the teller’s testimony, defendant was about six feet away from her and the customer at the time, and she and the customer were within two feet of each other. Moore v. U.S., 178 F.3d 994 (8th Cir. 1999).
8th Circuit refuses to reduce restitution by unrelated amount victim allegedly owed defendant. (610) Defendant pled guilty to two counts of making a false statement in connection with a loan application. The district court ordered defendant to pay restitution of $150,000 to two victims who guaranteed the corporate loans defendant fraudulently obtained. Defendant asserted that he had legitimate claims against the corporation and that he was entitled to offset those claims, as to at least one of the victims, who was a part owner of the corporation. The Eighth Circuit found no error. Defendant mistakenly relied on U.S. v. Wells, 127 F.3d 739 (8th Cir. Feb. 25, 1997), which reduced the loss by the amount that the victim lender expected to recover from a stream of lease payments that the defendant had sold to the bank in exchange for financing. Wells hinged on the direct benefit the victim bank would receive from the stream of lease payments. In contrast, there was no showing here that defendant’s claims produced an actual benefit to either of the victims. Defendant sought to reduce the calculated loss by the amount of monies allegedly owed to him by the corporation on unrelated claims. U.S. v. Cupit, 169 F.3d 536 (8th Cir. 1999).
8th Circuit holds that defendant waived the right to challenge restitution order. (610) The district court imposed restitution of $7,151.68, to be paid in full by defendant during his one-year period of supervised release. Defendant argued that it was economically impossible for him to pay the restitution within one year since he earned only $6.00 an hour and had to devote the majority of his wages to living expenses. The Eighth Circuit refused to review the matter because defendant waived the right to appeal the amount and terms of restitution in his plea agreement. In addition, defendant did not object to the restitution amount or time table at the sentencing hearing. U.S. v. Yankton, 168 F.3d 1096 (8th Cir. 1999).
8th Circuit says full restitution did not warrant four- level departure. (610) Defendant, the assistant manager of a grocery store, ordered large volumes of baseball cards on the store account, intercepted the shipments, took them home, sold some cards, and kept the remainder. As part of the plea agreement, he agreed to forfeit the sports cards still in his possession, the money gained from selling the cards, and other personal property, as well as a large portion of an employee retirement account he had through the grocery. As a result, by the time he entered his plea of guilty, he had made complete restitution. The district court granted a three-level § 3E1.1(b) reduction and then departed down four more levels for unusual acceptance of responsibility. The Eighth Circuit reversed, holding that although restitution can warrant a departure, defendant’s circumstances were not sufficiently extraordinary. Defendant was actively involved in plea negotiations for over a year, and the government dropped 23 of 25 charges against him. Further, although defendant stipulated to the amount of restitution in the plea agreement, he disputed it at sentencing and again in his briefs. Finally, although he admitted much of his conduct to investigators, he did not voluntarily disclose the largest purchaser of his stolen merchandise. U.S. v. O’Kane, 155 F.3d 969 (8th Cir. 1998).
8th Circuit says people whose i.d. and checks were stolen were victims of fraudulent check scheme. (610) Defendant orchestrated a fraudulent check writing scheme in which he purchased the contents of stolen purses, replaced the photos in the driver’s licenses with pictures of accomplices, provided the accomplices with counterfeit payroll checks and stolen personal checks that matched the names on the driver’s licenses, and helped them cash the fraudulent checks. The Eighth Circuit held that the people whose checkbooks, driver’s licenses, and other identification were stolen in furtherance of the scheme were “victims” for restitution purposes. Section 3663(a)(2) includes in its definition of a victim any person directly harmed by a defendant “in the course of the scheme, conspiracy, or pattern.” Those whose purses were stolen were directly harmed by the loss of their possessions. U.S. v. Jackson, 155 F.3d 942 (8th Cir. 1998).
8th Circuit allows restitution for conduct that was part of scheme alleged in indictment. (610) Defendant orchestrated a fraudulent check writing scheme. He argued that under Hughey v. U.S., 495 U.S. 411 (1990), restitution must be limited to loss caused by the specific conduct which formed the basis for the conviction. The Eighth Circuit ruled that under an amendment to 18 U.S.C. § 3663, the restitution could include all the acts encompassed in the conspiracy, not just the specific acts alleged in the indictment. The amendment allows restitution to every victim directly harmed by the defendant’s conduct in the course of the scheme without regard to whether the particular criminal conduct was alleged in the indictment. Defendant’s fraud scheme encompassed checks beyond the payroll checks listed in the indictment and caused losses to retail stores beyond those alleged in the indictment. U.S. v. Jackson, 155 F.3d 942 (8th Cir. 1998).
8th Circuit approves attorneys’ fees in restitution where no damage or loss of property. (610) Defendant executed a check-kiting scheme using two separate checking accounts at different banks. He argued that restitution cannot include consequential damages such as attorneys’ fees. The Eighth Circuit held that the VWPA does not prohibit including attorneys’ fees in restitution for offenses that do not result in damage or loss of property. The cases cited by defendant were inapposite because they involved damage or loss of property. The VWPA restricts restitution in such cases to the replacement value of the property. There is no similar restriction for cases like this. The VWPA requires only that the restitution ordered by the court be based on losses “caused by the specific conduct that is the basis for the offense of conviction.” U.S. v. Akbani, 151 F.3d 774 (8th Cir. 1998).
8th Circuit says full restitution was mandatory for crime of violence. (610) Defendant pled guilty to burglarizing an occupied dwelling. The district court sentenced him to probation and ordered restitution payments. Defendant contended that the court improperly ordered full restitution without examining his financial resources. The Eighth Circuit held that full restitution was mandatory because defendant pled guilty to a crime of violence. Burglary of a dwelling is a crime of violence. Full restitution is mandatory, not discretionary, for crimes of violence. The district court was compelled to order full restitution without considering defendant’s economic circumstances. U.S. v. Juvenile G.Z., 144 F.3d 1148 (8th Cir. 1998)
8th Circuit holds restitution order did not violate ex post facto clause despite change in law. (610) Defendant trafficked in cloned cellular telephones. He argued for the first time on appeal that applying the Mandatory Victim’s Restitution Act (MVRA) to him violated the ex post facto clause by increasing his punishment for illegal phone sales he made before the MVRA’s effective date of April 24, 1996. The Eighth Circuit held that the restitution order did not violate the ex post facto clause because the date of the offense to which defendant pled guilty was May 30, 1996, more than a month after the MVRA took effect. When defendant trafficked in cloned phones on that date, he had fair warning that his criminal conduct could trigger mandatory restitution to persons other than the victim of his May 30 offense. The MVRA does not violate the Eighth Amendment. U.S. v. Williams, 128 F.3d 1239 (8th Cir. 1997).
8th Circuit vacates restitution and fine for insufficient findings. (610) Defendant, the senior vice president of a bank, helped the bank president and others conceal a scheme to defraud the bank. Although she received no monetary profit from the scheme and participated out of a misguided loyalty to the president, the district court ordered her to pay $250,000 restitution and a $10,000 fine. The Eighth Circuit vacated the restitution and fine since the district court did not make the required findings. Sentencing courts are required to consider a number of factors under 18 U.S.C. § 3664(a) in determining whether to order restitution, and should make specific findings of fact in regard to those factors. The district court made no findings that showed it considered these factors, including whether defendant had the ability to pay restitution. Similarly, the court did not make the required findings showing that it considered the relevant factors under § 5E1.2, including ability to pay, in imposing a fine. Such findings are mandatory. U.S. v. Van Brocklin, 115 F.3d 587 (8th Cir. 1997).
8th Circuit holds court may not leave designation of restitution payees to probation office. (610) The restitution section of each defendant’s written judgment stated that the name of the payee was to be submitted by the probation office.” The Eighth Circuit held that the district court lacked authority to leave the designation of the payee or payees entirely to the discretion of the probation office. District courts should designate the recipients when ordering restitution under 18 U.S.C. § 3663. The amount of restitution, although low (only $40,000 restitution despite a loss of over $500,000 and a gain to defendant of over $250,000), did not constitute an abuse of discretion. A district court is afforded wide discretion in determining the amount of restitution. Judge Lay dissented, believing that the court should require defendant to pay restitution either in the full amount of the loss or the amount of her ill‑gotten gain. U.S. v. Stover, 93 F.3d 1379 (8th Cir. 1996).
8th Circuit says restitution may be based on overall scheme to defraud. (610) Defendant ran a business that modified and sold units that descrambled premium channel TV broadcasts. The district court based its restitution order on the estimated 270 units that defendant sold to satellite dealers and individuals customers. Because he was convicted of only two counts of mail fraud, two counts of wire fraud, and one count of copyright infringement, defendant argued that his restitution should have been limited to the losses caused by these specific transactions alone. The Eighth Circuit held that restitution could be based on defendant’s overall scheme to defraud. Because of scheme to defraud is an essential element of both wire and mail fraud, a conviction for mail or wire fraud can support a conviction for a broad scheme regardless of whether the defendant is convicted for each fraudulent act within that scheme. Defendant’s indictment detailed a wide-ranging scheme to defraud sufficient to encompass the sale of at least 270 units. The amount of the restitution order was proper, even if defendant was an indigent at the time of sentencing. The court relied on defendant’s high earning potential, proven business acumen, and history of successful entrepreneurship. U.S. v. Manzer, 69 F.3d 222 (8th Cir. 1995).
8th Circuit holds that adoption of PSR showed consideration of statutory restitution factors. (610) Defendant claimed that the district court failed to make specific findings on the factors listed in 18 U.S.C. § 3664(a) before ordering restitution. Given the lack of findings, he argued that restitution was improper since the court declined to impose a fine due to his indigency. The Eighth Circuit upheld the restitution order, finding that the district court considered the factors listed in the statute. The presentence report contained information about defendant’s family history, health, education, employment and financial condition. The district court adopted the facts as contained in the PSR. Moreover, in his plea agreement, defendant agreed to an order of restitution. Given this, and the fact that defendant did not object to the restitution order, there was no error. U.S. v. Osborn, 58 F.3d 387 (8th Cir. 1995).
8th Circuit says defendant agreed to restitution for related conduct in plea agreement. (610) Defendant was indicted on ten counts of bank fraud relating to his theft or alteration of checks that either he or his wife deposited into various bank accounts. He eventually pled guilty, under a plea agreement, to one count. He argued that he should only have to pay restitution for the check related to the count to which he pled guilty. The Eighth Circuit disagreed, since defendant agreed in his plea agreement to pay restitution for amounts involved in the additional counts if the court found that those checks were attributable to him as relevant conduct. At sentencing, the court ordered defendant to make restitution for half of the loss incurred with his wife, and all of the remaining loss. It would have been better if the court had expressly found that all counts were part of the same scheme, but this was implicit in the decision to order restitution on all counts. Defendant did not object at the time. U.S. v. Osborn, 58 F.3d 387 (8th Cir. 1995).
8th Circuit finds court considered proper factors in imposing $50,000 restitution. (610) Defendant failed to report to his lender the sale of collateral worth $331,000. The Eighth Circuit held that the district court did not abuse its discretion in ordering $50,000 restitution. The court considered the loss due to defendant’s sale of the collateral, and discounted this because defendant did not owe the full amount on loans secured solely by the collateral. Thus, the district court arrived at a figure in excess of $100,000. The court also considered factors relating to defendant’s financial status, age, health, and his potential recovery. After considering these factors, the court ordered only $50,000 restitution, which was less than the loss due to defendant’s conduct. U.S. v. French, 46 F.3d 710 (8th Cir. 1995).
8th Circuit upholds restitution order to indirect victim of false financial statements to bank. (610) Defendant, the controller of a corporation, altered the company’s financial records and submitted false financial statements to the company’s bank. As a result, the bank continued to increase the company’s line of credit. In addition, in reliance on the false statements, the company paid bonuses to defendant and three other employees. Defendant argued that no restitution should have been awarded to the company because the company was not a victim of the offense of conviction (false statements to a bank). The 8th Circuit upheld the restitution order. As a result of defendant’s offense, the company paid bonuses to defendant and three other employees. Although the bank was the direct victim of the false statements, defendant also injured the company. Kok v. U.S., 17 F.3d 247 (8th Cir. 1994).
8th Circuit affirms that restitution was within terms of plea agreement. (610) Defendant argued that he should have been credited with $400,000 he allegedly paid on his embezzlement victim’s behalf to maintain property. The 8th Circuit affirmed the restitution order because it was within the terms of defendant’s plea agreement. Defendant signed a plea agreement that stated that the court could enter restitution in an amount up to $1.5 million. Defendant urged the court to include the audit as part of the plea agreement, which revealed that a total of $1,564,517 was misappropriated by defendant. The court gave defendant a $500,000 credit for a fidelity bond he forfeited and ordered defendant to pay $1,064,517. The court did not err in ordering restitution within the terms of the plea agreement. Although the court did not make any findings about his ability to pay, there was no error, since defendant was sentenced under the terms of a plea agreement and defendant did not object at sentencing. U.S. v. Bartsh, 985 F.2d 930 (8th Cir. 1993).
8th Circuit rules district court may not leave open restitution question until uncertain date. (610) The district court determined that defendant did not have the present financial ability to pay restitution, but that because he could later develop an ability to pay it, it was leaving the issue of restitution open. The 8th Circuit held that this was an abuse of discretion. There is no provision authorizing a sentencing court to leave the question of restitution open to an uncertain date. Under 18 U.S.C. section 3663(a)(1), if the court elects to impose restitution, it must be ordered at the time the defendant is sentenced. U.S. v. Prendergast, 979 F.2d 1289 (8th Cir. 1992).
8th Circuit holds court may depart downward for extraordinary restitution. (480) Before learning of the FBI’s investigation into his fraudulent activities, defendant discussed a settlement under which he would give the banks which he defrauded all of his assets, totaling $1.4 million. The loss attributable to defendant’s scheme was $253,000. Before he was indicted, defendant entered into the settlement with both banks. The district court denied defendant’s request for a downward departure. The 8th Circuit remanded for resentencing because it was not clear that the district court knew it could depart downward based on defendant’s extraordinary restitution. On the other hand, the district court correctly determined that it lacked discretion to depart downward based on defendant’s guilty plea, employment record, community ties and family responsibilities. Defendant’s actions took place over a one-year period, and thus did not constitute an act of aberrant behavior. U.S. v. Garlich, 951 F.2d 161 (8th Cir. 1991).
8th Circuit rules district court did not properly consider defendant’s ability to pay restitution order. (610) Under 18 U.S.C. § 3664, the court must consider the amount of the loss and the financial resources and needs of defendant and his dependents. The 8th Circuit found that the district court did not give proper consideration to these factors, or articulate any findings. Defendant had a net worth of minus $2700, income of $1200 per month, and total expenditures of $974 per month. He was responsible for the support of a wife and a two-year-old child. The restitution order was one-third of the $285,188 loss he caused the state of Missouri by selling it adulterated meat. This restitution was all to be paid in the first year of defendant’s supervised release. Given the discrepancy between the restitution order and defendant’s ability to pay, the district court did not properly consider defendant’s financial ability. Moreover, defendant should also have received credit for the $20,000 which the state received in settlement of a civil suit, and the amount of payments that the state withheld from defendant. U.S. v. West, 942 F.2d 528 (8th Cir. 1991).
8th Circuit upholds restitution order where defendant did not object at sentencing hearing. (610) The 8th Circuit upheld a restitution order despite defendant’s argument that she did not have the financial resources. The district court’s order was based upon the plea agreement, and defendant did not object to it at the sentencing hearing. U.S. v. Andersen, 928 F.2d 243 (8th Cir. 1991).
8th Circuit remands for district court to consider restitution order. (610) Defendant was ordered to pay restitution in the amount of $1,927. The penitentiary in which defendant served took one-half of his income each month as a restitution payment, which defendant claimed left him with insufficient funds. After defendant’s appeal was filed, he filed a motion with the district court for a more lenient restitution schedule. The district court informed him that because of his appeal, it no longer had jurisdiction to consider the matter. The 8th Circuit remanded this issue to the district court for consideration, since it was more likely to be familiar with defendant’s family needs and terms and conditions of his punishment and restitution. U.S. v. Hankins, 913 F.2d 1256 (8th Cir. 1991).
8th Circuit holds that restitution may be imposed on indigent, but is not mandatory. (610) The 8th Circuit noted that although the restitution § 5E4.1(a) uses mandatory language, it refers to the Victim and Witness Protection Act, 18 U.S.C. § 3663(a), which does not mandate restitution in all circumstances. Thus the court read the mandatory language of § 5E4.1(a) to require only that “restitution orders be imposed in accordance with the [Act] and not that restitution shall be ordered in every case.” The court added, however, that an indigent may be ordered to pay restitution. Indigency is only one of the factors to be considered. The restitution order here was vacated. U.S. v. Owens, 901 F.2d 1457 (8th Cir. 1990).
8th Circuit holds restitution order must be based on defendant’s ability to repay. (610) Defendant pled guilty to one count of embezzlement and was ordered to pay $45,000 in restitution by the district court, despite a probation office report that defendant would be unable to pay any amount of restitution. After the defense objected the amount was reduced to $22,000. The district court did not make any finding or receive any evidence that defendant could pay this amount. The 8th Circuit held that the failure of the district court to make an “informed decision” about defendant’s ability to pay restitution was an abuse of discretion. While a court has a great deal of discretion in ordering restitution the order of restitution must be consistent with defendant’s ability to repay (citing guideline 5E4.1). If the defendant’s financial situation changed the order could be modified by the sentencing court at a later time. U.S. v. Mitchell, 893 F.2d 935 (8th Cir. 1990).
9th Circuit finds restitution satisfied by forfeiture of assets. (610) At defendant’s sentencing for wire fraud and other offenses, the district court ordered defendant and his codefendants to pay about $505,000 in restitution. At the same time, defendant forfeited the assets believed to worth that amount, and the presentence report stated that the forfeited assets would be used to pay restitution. After defendant had served his prison sentence, the Probation Officer informed defendant that he still owed restitution, even though his assets had been forfeited. The government informed defendant that the sale of the assets had yielded $440,000 and that defendant owed $65,000 in restitution. The district court agreed with the government and held that defendant owed $65,000 in restitution. The Ninth Circuit held that parties intended that the district court’s restitution order would be fulfilled by the forfeiture and therefore that the amount obtained through the sale of the forfeited assets satisfied defendant’s restitution obligation. U.S. v. Carter, 742 F.3d 440 (9th Cir. 2014).
9th Circuit allows court to order restitution even if not a supervised release condition. (610) Defendant pleaded guilty to wire fraud. At sentencing, the district court ordered defendant to pay restitution. The parties believed that the restitution owed would be paid out of the forfeiture of defendant’s assets. The sale of the assets did not cover the amount of restitution ordered, however, and the district court then ordered defendant to pay the remainder. The Ninth Circuit held that because restitution was not made a condition of supervised release, defendant could not challenge the restitution order under 18 U.S.C. § 3583(e)(2), which allows a court to modify the conditions of supervised release. The court of appeals held, however, that the district court had the authority to enforce the order of restitution and that authority allowed the district court to set the amount of restitution. U.S. v. Carter, 742 F.3d 440 (9th Cir. 2014).
9th Circuit reverses restitution for investments in unrelated fraudulent scheme. (610) Defendant and two other men ran a fraudulent investment scheme. During that scheme, defendant introduced one of his accomplices to a fourth man, Schultz. When defendant’s scheme ceased operating, one of his accomplices set up a new fraudulent investment scheme, and Schultz, who was running a separate fraudulent investment scheme, invested some of his investors’ money in the new scheme. At defendant’s sentencing for fraud offenses, the district court ordered him to pay restitution for the amounts that Schultz gave to defendant’s accomplice after defendant’s scheme had come to an end. The Ninth Circuit held that defendant’s introducing Schultz to his accomplice was not a sufficient basis to order him to pay restitution to the investors whose money Schultz gave to defendant’s accomplice. U.S. v. Swor, 728 F.3d 971 (9th Cir. 2013).
9th Circuit says Apprendi does not apply to facts that trigger restitution. (610) In Southern Union Co. v. U.S., 132 S.Ct. 2344 (2012), the Supreme Court stated that the rule it announced in Apprendi v. New Jersey, 530 U.S. 466 (2000), which held that a fact that increases a defendant’s maximum sentence must be alleged in the indictment and proved at trial, applies to facts that increase the amount of a fine imposed on a corporation. The Ninth Circuit held that Southern Union does not require the government to allege and prove the facts that trigger restitution under 18 U.S.C. § 3663A. U.S. v. Green, 722 F.3d 1146 (9th Cir. 2013).
9th Circuit rejects joint and several liability for restitution to child porn victims. (610) In In re Amy, 710 F.3d 985 (9th Cir. 2013), the court held that child pornography victims had shown a causal connection between defendant’s child pornography offense and the victims’ losses. On remand, the district court awarded the victims restitution of a portion of their damages without making the defendant who caused the losses joint and severally liable. Judges Trott, Paez, and Nguyen (per curiam) held that the district court did not abuse its discretion in declining to make restitution joint and several. In re Amy, 714 F.3d 1165 (9th Cir. 2013).
9th Circuit reverses court’s refusal to order restitution to fraud victims. (610) At sentencing for an offense involving “fraud or deceit,” the district court declined to order restitution, explaining that defendant would be unable to pay restitution, the victims could pursue relief through civil actions, and assessing restitution would be unduly complex and time-consuming. The Ninth Circuit held that although a court determining whether to order restitution could consider whether assessing restitution would be unduly time-consuming, it could not rely on defendant’s inability to pay or the availability of relief through civil actions. In re MorningStar Packing Co. LP, 711 F.3d 1142 (9th Cir. 2013).
9th Circuit holds that restitution for mail theft may not include cost of theft prevention. (610) Defendants pleaded guilty to stealing mail on a particular day. At defendants’ sentencing, the district court ordered them to pay restitution for costs associated with steps the Postal Service took in response to defendants’ theft of mailed packages before the day of the defendants’ offense but while the defendants were engaged in stealing mail. The Ninth Circuit held that because the costs of prevention did not flow directly from defendants’ offense, the district court erred in ordering restitution to the Postal Service for those costs. U.S. v. May, 706 F.3d 1209 (9th Cir. 2013).
9th Circuit upholds forfeiture and restitution to the government. (610) Defendant laundered money for undercover FBI agents and took a percentage of the laundered funds as compensation. At his sentencing for money laundering, the district court ordered defendant to forfeit the entire amount that defendant laundered and to pay the FBI restitution for the costs of investigation. Judge Wallace, joined by Judges Thomas and Berzon, rejected defendant’s contention that the forfeiture amount should be offset by his restitution obligation to avoid a double recovery by the government. The court held that forfeiture and restitution represent payments of two different kinds of funds and would not represent double recovery by the government. Judge Berzon, joined by Judge Thomas, concurred, noting that the court was not endorsing the district court’s order directing defendant to forfeit funds that he simply laundered. U.S. v. Davis, 706 F.3d 1081 (9th Cir. 2013).
9th Circuit reverses restitution award for insufficient justification. (610) Before sentencing on defendants’ convictions for RICO, the presentence report calculated the restitution amount as $482 million. Defendants challenged this amount, but at sentencing the district court ordered them to pay $482 million in restitution. The court rejected the presentence report’s factual findings to the extent they were inconsistent with the court’s, but it did not make factual findings to support its restitution award. The Ninth Circuit held that the district court’s “cursory analysis of the legal and factual basis for the restitution award” was insufficient to justify the restitution order. U.S. v. Chao Fan Xu, 706 F.3d 965 (9th Cir. 2013).
9th Circuit declines to revisit case requiring proximate cause for child porn restitution. (610) In the Ninth Circuit, a person is entitled to restitution only if the court can identify a “causal connection between the defendant’s offense conduct and the victim’s specific losses.” Applying that standard, the district court awarded restitution to one victim of the defendant’s possession and transportation of child pornography and denied it to another victim. Proceeding under the Crime Victims’ Rights Act, 18 U.S.C. § 3771, the victims filed a petition for mandamus, relying on a recent Fifth Circuit en banc decision rejecting a proximate cause requirement for child pornography offenses. The Ninth Circuit acknowledged the Fifth Circuit decision, but held that a panel could not revisit prior decisions requiring a showing of cause. In re Amy, 698 F.3d 1151 (9th Cir. 2012).
9th Circuit says judge did not increase sentence because defendant couldn’t pay restitution. (610) Defendant was convicted of fraud offenses. At sentencing, the district court said it was ordering restitution but that it recognized that the long sentence would mean that defendant would probably not be able to pay restitution. The court added that imposing a lesser sentence probably would not result in greater restitution. The Ninth Circuit held that the district court’s comments did not show that it had increased defendant’s sentence based on his inability to pay restitution. Rather, it considered a lower sentence to enable defendant to pay restitution. U.S. v. Anekwu, 695 F.3d 967 (9th Cir. 2012).
9th Circuit says court may rely on victims’ financial loss in imposing sentence. (610) At defendant’s sentencing for committing fraud and money laundering, the district court imposed an above-guidelines sentence. In explaining the sentence, the district court said that it had not taken defendant’s inability to pay restitution into consideration. On appeal, defendant argued that the district court had relied on his inability to pay restitution in imposing sentence. The Ninth Circuit held that the district court may rely on the financial impact that a defendant’s offenses cause his victims and that the court may consider the defendant’s inability to pay restitution in assessing that impact. U.S. v. Rangel, 697 F.3d 795 (9th Cir. 2012).
9th Circuit says district court may not delegate restitution schedule to Bureau of Prisons. (610) Under 18 U.S.C. § 3664(f)(2), a district court must specify the schedule for paying restitution. At defendant’s sentencing, the district court ordered defendant to pay restitution immediately and did not specify a payment schedule. The Bureau of Prisons deducted a portion of defendant’s prison wages to satisfy his restitution obligation. The Ninth Circuit held that by failing to set a restitution schedule, the district court impermissibly delegated to the BOP the task of setting the actual schedule. Ward v. Chavez, 678 F.3d 1042 (9th Cir. 2012).
9th Circuit says banks that bought fraudulent mortgages were “victims” for restitution purposes. (610) Defendant was convicted of various charges arising out of a conspiracy to obtain fraudulent real estate mortgage loans. She argued that because the original mortgagors had sold the mortgages to third parties, the third parties were not “victims” of the fraudulent scheme. The Ninth Circuit rejected the argument, noting that the Mandatory Victim Restitution Act defines a victim as a person “proximately harmed” as a result of the crime. 18 U.S.C. § 3663(a)(2). When the third parties purchased the loans without knowledge that the mortgages had been fraudulently obtained, they were proximately harmed and were therefore “victims.” U.S. v. Yeung, 672 F.3d 594 (9th Cir. 2012).
9th Circuit reverses restitution where court failed to value collateral on date bank purchased loan. (610) In determining the amount of restitution in a fraudulent loan case, the district court started with the amount of the loan and subtracted the value of the collateral at the time the property was sold at foreclosure several months after the bank purchased the loan. The Ninth Circuit reversed, holding that the court should have determined the value of the collateral on the date the loan was purchased by the bank. Moreover, the record suggested that the bank acquired the loan at a discount, and therefore its actual loss would have been less. Unlike the sentencing guidelines, the restitution statute, 18 U.S.C. § 3663A, requires the court to find the actual loss, not the intended loss. U.S. v. U.S. v. Yeung, 672 F.3d 594 (9th Cir. 2012).
9th Circuit says civil settlement did not preclude restitution. (610) Defendant was convicted of bank fraud arising out of a scheme to obtain loans from mortgage lenders by appraising real estate at substantially inflated values. At sentencing, the district court ordered defendant to pay $46 million in restitution to the banks. In a prior civil action, the victim banks had settled with defendant for about $1 million, which represented the limits of her errors and omissions insurance policy. In the civil settlement agreement, the victim banks released all claims against defendant. Judge Gould, joined by Judge Schroeder and Central Illinois District Judge McCuskey, held that the prior civil settlement did not preclude the court’s restitution order but that the restitution should be reduced by the amount the banks obtained from defendant’s insurance. U.S. v. Rizk, 660 F.3d 1125 (9th Cir. 2011).
9th Circuit rules that child support cannot be used to pay parent’s restitution obligation. (610) Defendant kept a woman in involuntary servitude for two years without paying her. Based on that conduct, defendant was convicted of violating 18 U.S.C. § 1589. At sentencing, the district court ordered defendant to pay the woman restitution. As part of the restitution order, the court ordered defendant to pay the woman any amounts defendant received in child support for her minor children. The Ninth Circuit held that child support arrearages must be paid to a minor child and may not be used to satisfy a restitution obligation owed by the parent. U.S. v. Dann, 652 F.3d 1160 (9th Cir. 2011).
9th Circuit says restitution to child porn victims requires finding that defendant harmed victims. (610) At defendant’s sentencing for transportation of child pornography, two of the girls depicted in images that defendant possessed sought restitution from defendant. In support of their requests, the victims averred that the dissemination on the Internet of images depicting them caused them ongoing psychological trauma. The district court ordered defendant to pay restitution to both girls. The Ninth Circuit held that although the two girls were victims of defendant’s offense, the government had failed to prove that defendant’s offense caused the harm suffered by the victims. The court added that the government had not provided any basis to calculate the amount of loss caused the victims by defendant’s conduct. U.S. v. Kennedy, 643 F.3d 1251 (9th Cir. 2011).
9th Circuit upholds restitution for travel expenses of mother of sexual abuse victim. (610) Under 18 U.S.C. § 2248, a court must order a defendant convicted of sexual abuse to pay restitution to the victim. Section 2248(c) defines “victim” to include the legal guardian of a victim. Defendant was convicted of abusive sexual conduct, in violation of 18 U.S.C. § 2244(a)(1). At sentencing, the minor victim’s mother sought restitution for driving to the victim’s boarding school each weekend to visit her daughter. The mother supported the request with a declaration from a mental health professional stating that the mother’s visits provided necessary emotional support to the victim. The Ninth Circuit held that the mother’s expenses in traveling to the victim’s boarding school could properly form the basis for a restitution order under § 2248. U.S. v. Tsosie, 639 F.3d 1213 (9th Cir. 2011).
9th Circuit finds procedural flaws in restitution award. (610) At defendant’s sentencing for abusive sexual contact, the victim’s mother sought restitution for trips she had made to the victim’s boarding school after the conduct that led to defendant’s conviction. In support of the restitution request, the victim’s mother submitted a spreadsheet listing the trips and a statement from a mental health counselor saying that the trips were necessary to the victim’s emotional recovery. Defendant argued that the spreadsheet did not establish that all of the trips were necessary to a mental health treatment plan, and he asked for further documentation and a hearing. The district court denied defendant’s request and imposed a restitution order in the amount sought by the victim. The Ninth Circuit held that the spreadsheet was insufficient to support the restitution award. U.S. v. Tsosie, 639 F.3d 1213 (9th Cir. 2011).
9th Circuit says plea agreement did not waive appeal of restitution award. (610) Defendant entered into a plea agreement in which he pleaded guilty to abusive sexual contact and waived “any right to appeal the imposition of sentence under” 18 U.S.C. § 3742. The plea agreement did not set forth or estimate the amount of restitution that defendant could be required to pay. After the district court ordered defendant to pay $32,000 in restitution, defendant appealed. The Ninth Circuit held that because defendant lacked sufficient notice to waive his right to appeal the restitution award, the plea agreement did not waive defendant’s right to appeal that award. U.S. v. Tsosie, 639 F.3d 1213 (9th Cir. 2011).
9th Circuit holds that coconspirator who is also a victim cannot obtain restitution. (610) Defendant was convicted of money laundering and other offenses. The evidence at trial showed that he extorted money from another man but that defendant also conspired with the same man to engage in fraud and money laundering. The district court found that the coconspirator was a victim of that offense and ordered defendant to pay restitution to the coconspirator. Noting that this situation is “exceedingly rare,” the Ninth Circuit held that in the absence of exceptional circumstances, a coconspirator cannot obtain restitution. The court found that no exceptional circumstances existed here, and reversed the district court’s restitution order. U.S. v. Lazarenko, 624 F.3d 1247 (9th Cir. 2010).
9th Circuit says adequate notice given that restitution would be ordered more than 90 days after sentencing. (610) Under 18 U.S.C. § 3664(d)(5), a district court must enter a restitution order within 90 days of sentencing. In Dolan v. U.S., 130 S.Ct. 2533 (2010), the Supreme Court held that a sentencing court may enter a restitution order after the 90-day deadline as long as the court made clear prior to the expiration of the deadline that it intended to order restitution. At defendants’ sentencing, the court said that it intended to enter restitution orders against both defendants, but it did not state how restitution would be calculated or set a deadline for the government to file a restitution motion. The court entered its final restitution order more than 90 days after sentencing. The Ninth Circuit held that the district court adequately made clear to defendants at sentencing that it would order restitution and therefore did not violate § 3664 by entering its restitution order more than 90 days after sentencing. U.S. v. Fu Sheng Kuo, 620 F.3d 1158 (9th Cir. 2010).
9th Circuit says restitution for civil rights violation may not include ill-gotten gains. (610) Defendants forced two women to engage in prostitution. Based on that conduct, they were convicted of depriving the victims of their civil rights, in violation of 18 U.S.C. § 241. At sentencing, the district court ordered defendants to pay the victims restitution in the amount that they had earned from the victim’s unlawful prostitution. The Ninth Circuit held that 18 U.S.C. § 3663, the statute governing restitution for violations of § 241, did not authorize the court to order restitution in an amount equal to the ill-gotten gains of the defendant. Instead, the court held, restitution for a violation of § 241 is limited to the victims’ actual losses. U.S. v. Fu Sheng Kuo, 620 F.3d 1158 (9th Cir. 2010).
9th Circuit finds adequate notice that restitution would be ordered more than 90 days after sentencing. (610) Under 18 U.S.C. § 3664(d)(5), a district court must enter a restitution order within 90 days of sentencing. In Dolan v. U.S., 130 S.Ct. 2533 (2010), the Supreme Court held that a sentencing court may enter a restitution order after the 90-day deadline as long as the court makes clear prior to the expiration of the deadline that it intends to order restitution. At defendants’ sentencing, the court said that it intended to enter restitution orders against both defendants, but it did not state how restitution would be calculated or set a deadline for the government to file a restitution motion. The court entered its final restitution order more than 90 days after sentencing. The Ninth Circuit held that the district court adequately made clear to defendants at sentencing that it would order restitution and therefore did not violate § 3664 by ordering restitution more than 90 days after sentencing. U.S. v. Fu Sheng Kuo, 620 F.3d 1158 (9th Cir. 2010).
9th Circuit says restitution for civil rights violation may not include ill-gotten gains. (610) Defendants forced two women to engage in prostitution. Based on that conduct, they were convicted of depriving the victims of their civil rights, in violation of 18 U.S.C. § 241. At sentencing, the district court ordered defendants to pay the victims restitution in the amount that they had earned from the victim’s unlawful prostitution. The Ninth Circuit held that 18 U.S.C. § 3663, the statute governing restitution for violations of § 241, did not authorize the court to order restitution in an amount equal to the ill-gotten gains of the defendant. Instead, the court held, restitution for a violation of § 241 is limited to the victims’ actual losses. U.S. v. Fu Sheng Kuo, 620 F.3d 1158 (9th Cir. 2010).
9th Circuit says restitution properly included wages for fraudulently-obtained employment. (610) Defendant used false documents to obtain employment as a nurse. While working as a nurse, she received about $18,000 in wages. Based on her use of the false documentation, defendant was convicted of mail fraud. At sentencing, the district court ordered defendant to pay restitution to her former employers in the amount of wages she received. On appeal, defendant argued that she should not have to repay wages for work that she actually performed. The Ninth Circuit held that because defendant would not have been able to obtain employment as a nurse without the false documentation, the district court properly ordered her to pay restitution for the wages she was paid. U.S. v. Hunter, 618 F.3d 1062 (9th Cir. 2010).
9th Circuit says restitution as condition of supervised release was limited to offense of conviction. (610) Defendant pleaded guilty to preparing a single fraudulent tax return, in violation of 26 U.S.C. § 7206(2). At sentencing, the district court ordered her to pay restitution to the IRS for unpaid taxes for persons for whom the defendant prepared false tax returns beyond the taxpayer whose return provided the basis for the count on which defendant pleaded guilty. The Ninth Circuit held that the district court had the authority only to order restitution for the loss caused by the conduct underlying the offense of conviction. U.S. v. Batson, 608 F.3d 630 (9th Cir. 2010).
9th Circuit allows restitution as condition of supervised release for tax offense. (610) Defendant pleaded guilty to assisting in the preparation of fraudulent tax returns, in violation of 26 U.S.C. § 7206(2). At sentencing, the district court ordered defendant to pay restitution to the IRS as a condition of supervised release. On appeal, defendant argued that the district court lacked authority to order restitution as a condition of supervised release for a defendant convicted of a tax offense defined in Title 26. The Ninth Circuit held that the district court properly ordered restitution as a condition of supervised release under 18 U.S.C. § 3583(d), which allows a court to order as a condition of supervised release any condition that may be ordered as a condition of probation. U.S. v. Batson, 608 F.3d 630 (9th Cir. 2010).
9th Circuit says returned property should be valued as of date of return. (610) Defendant pleaded guilty to mail fraud in connection with a fraudulent loan on a house. To determine restitution, the district court used the amount that defendant owed on the property on the date the bank foreclosed on it plus the bank’s fees minus the appraised value of the property when the bank foreclosed. Defendant argued that the court should have valued the property on the date that the victim bank could have foreclosed, not the date on which it actually foreclosed. The Ninth Circuit affirmed the restitution calculation, holding that property obtained by fraud but returned to the victim should be valued as of the date it is returned. U.S. v. Gossi, 608 F.3d 574 (9th Cir. 2010).
9th Circuit finds codefendants’ restitution obligations irrelevant to defendant’s obligation. (610) Defendant pleaded guilty to mail fraud and was ordered to pay restitution. On appeal, he challenged the restitution order on the ground that his codefendants had been ordered to pay less in restitution. The Ninth Circuit held that defendant’s codefendants had pleaded guilty to different counts and that, in any event, the restitution obligations of defendant’s codefendants are irrelevant to defendant’s restitution obligations. U.S. v. Gossi, 608 F.3d 574 (9th Cir. 2010).
9th Circuit holds that restitution amount need not correspond to loss amount. (610) Defendant pleaded guilty to mail fraud in connection with a fraudulent loan application. At sentencing, the district court ordered him to pay restitution for the value of the property minus its appraised value on the date the bank foreclosed. Defendant argued that the amount that a defendant is ordered to pay in restitution for a fraud offense should be governed by the same principles that control the determination of loss under the Guidelines. In particular, he contended that the court could order restitution only for reasonably foreseeable harm, and not direct and proximate harm. The Ninth Circuit held that the loss calculation under the Guidelines does not necessarily determine the amount of restitution. U.S. v. Gossi, 608 F.3d 574 (9th Cir. 2010).
9th Circuit says that 18-month delay in determining restitution did not abrogate restitution order. (610) Under 18 U.S.C. § 3664, the probation office must determine the identities of any victims of the offense and the amount of loss each victim suffered prior to sentencing. When the victims’ losses are not ascertainable before sentencing, the court may set a date up to 90 days after sentence is imposed for the final determination of the victim’s losses and the defendant’s restitution obligation. At defendant’s sentencing, the district court deferred the issue of restitution pending a determination of the identities of the victims and the amount of their losses. That determination was not completed until more than 18 months after the sentencing hearing. In the meantime, defendant had appealed his conviction and sentence, and the court of appeals vacated defendant’s sentence and remanded. At defendant’s resentencing, the district court imposed a restitution order. The Ninth Circuit held that the 90-day deadline for determining restitution is not jurisdictional and that the district court’s failure to determine defendant’s restitution obligation within 90 days did not abrogate the restitution order. U.S. v. Moreland, 622 F.3d 1147 (9th Cir. 2010).
9th Circuit says defendant’s death abates restitution order but not receivership. (610) After defendant was indicted on various fraud offenses, he agreed to the appointment of a receiver for his assets. By recovering and disposing of property that defendant accumulated as a result of the fraud, the receiver returned nearly $5 million to defendant’s victims before defendant’s trial and sentencing. At trial, defendant was convicted on 26 counts of fraud. At sentencing, the district court ordered defendant to pay $10 million in restitution. Defendant appealed, but he died before his appeal could be heard. His estate then sought abatement of the restitution order and the return of all property that had been distributed to his victims by the receiver. The Ninth Circuit held that defendant’s death did not extinguish the receivership order, but that it did abate the restitution order. U.S. v. Rich, 603 F.3d 722 (9th Cir. 2010).
9th Circuit upholds payment of restitution for lost income to reimburse third party. (610) At defendant’s sentencing for assault, the district court ordered defendant to pay restitution directly to a crime victims fund that had compensated the victim for the income he had lost as a result of the injuries suffered in the assault. The Ninth Circuit held that the district court had the authority under 18 U.S.C. § 3664(j)(1) to order payment of restitution for loss of income directly to a third party. The court rejected the argument that another statute, 18 U.S.C. § 3663A(b)(2)(C) barred payment of restitution for lost income to a third party. U.S. v. Andrews, 600 F.3d 1167 (9th Cir. 2010).
9th Circuit finds expert testimony on source of injuries admissible to decide restitution. (610) Defendant was convicted of assault. His victim received compensation from a state crime victims fund for his medical bills and his injury-related loss of income. At sentencing, defendant sought to introduce expert testimony showing that the assault did not directly result in the disability for which the victims fund paid compensation. The district court declined to allow the expert to testify, ruling that it could not second-guess the victims fund’s decision that the victim was entitled to compensation. The Ninth Circuit held that the district court abused its discretion in refusing to allow defendant to present expert testimony that defendant’s conduct was not the sole cause of the victim’s mental and physical condition. U.S. v. Andrews, 600 F.3d 1167 (9th Cir. 2010).
9th Circuit rules bankruptcy award to victims did not preclude restitution. (610) Defendant pleaded guilty to bankruptcy fraud. At sentencing, the district court sentenced defendant to pay restitution of about $100,000. Defendant appealed, arguing that the district court was collaterally estopped from imposing restitution because compensation to defendant’s victims had already been determined in the bankruptcy proceeding. The Ninth Circuit held that the compensation to defendant’s victims ordered in the bankruptcy proceeding had been based in part on the parties’ interest in settling that proceeding, not on an actual assessment of the losses to defendant’s victims. For that reason, the court held, the determination of the amount that defendant owed in the bankruptcy proceeding did not collaterally estop the district court from imposing restitution at defendant’s sentencing. U.S. v. Edwards, 595 F.3d 1004 (9th Cir. 2010).
9th Circuit says high restitution order does not justify lower prison sentence. (610) Defendant executed a Ponzi scheme that defrauded about 1,700 investors or about $38 million. At sentencing, the district court imposed a sentence of 300 months and ordered defendant to pay a large amount of restitution. On appeal, defendant argued that the district court abused its discretion by imposing a prison sentence that assured that restitution would never be paid. The Ninth Circuit held that defendant’s argument “borders on the frivolous,” because it would result in the lowest sentences for the offenses causing the greatest loss. U.S. v. Treadwell, 593 F.3d 990 (9th Cir. 2010).
9th Circuit finds defendant lacked ability to pay restitution. (610) Defendant was convicted of mail fraud and money laundering based on his operation of a Ponzi scheme. At sentencing, the district court ordered defendant to pay $10,000 per month in restitution after his release from prison, but it also found that defendant’s economic circumstances did not allow for immediate or future payment of the full amount of restitution owed. The Ninth Circuit held that the record in the district court failed to show that defendant was able to pay $10,000 per month in restitution and vacated the order. U.S. v. Van Alstyne, 584 F.3d 803 (9th Cir. 2009).
9th Circuit finds no plain error in restitution when defendant failed to provide financial information. (610) Prior to sentencing on defendant’s conviction for securities fraud, defendant failed to provide financial information requested by the Probation Office. At sentencing, the district court was aware, however, that defendant had paid $1.1 million in an SEC enforcement action after insisting that he was unable to pay. The district court ordered defendant to pay restitution of $5,000 per month while incarcerated and $500,000 per month upon release. Defendant did not object to the restitution order. The Ninth Circuit noted that defendant was arguing that his own noncompliance with presentencing procedure meant that the district court had committed plain error. The panel found no plain error in the restitution order. U.S. v. Hickey, 580 F.3d 922 (9th Cir. 2009).
9th Circuit allows community property to be used to satisfy restitution. (610) Defendant was convicted of various fraud offenses. At sentencing, he was ordered to pay restitution out of funds generated by the sale of assets that he accumulated during his marriage. Defendant’s wife, who was not involved in defendant’s offenses, objected to the restitution order, arguing that as a resident of a community property state, she was entitled to half the proceeds of the sale. The Ninth Circuit held that community property is available to satisfy a restitution judgment entered under the Mandatory Victim Restitution Act, 18 U.S.C. § 3663(a). U.S. v. Berger, 574 F.3d 1202 (9th Cir. 2009).
9th Circuit upholds redaction of Unabomber’s writings as part of restitution sale. (610) The district court ordered the sale of the personal writings of Theodore Kaczynski, the so-called Unabomber, to satisfy a restitution order entered against Kaczynski at his sentencing. The court directed that the writings be redacted to delete names of Kaczynski’s victims and recognizable descriptions of the victims and their injuries. Kaczynski challenged the redaction order on the ground that it hindered his right of expression and would result in the suppression of information valuable to the public. The Ninth Circuit held that any diminution in the writings’ value caused by the redactions was justified by the importance of protecting the privacy of the victims. U.S. v. Kaczynski, 551 F.3d 1120 (9th Cir. 2009).
9th Circuit says selling Unabomber’s writings for restitution does not violate First Amendment. (610) At his sentencing, Theodore Kaczynski, the so-called Unabomber, was ordered to pay $15,026,000 in restitution to four of his victims. To satisfy that restitution order, the district court approved a plan for the sale of Kaczynski’s personal property on the Internet. Kaczynski challenged the plan as a violation of his First Amendment rights to the extent that it allowed the sale of original versions of his personal writings. The Ninth Circuit held that the plan did not violate Kaczynski’s First Amendment rights because the plan allowed Kaczynski to retain copies of his writings and he could use the copies to communicate his ideas. U.S. v. Kaczynski, 551 F.3d 1120 (9th Cir. 2009).
9th Circuit upholds restitution lien statute against facial First Amendment challenge. (610) Under 18 U.S.C. §3613, an order of restitution creates a lien in favor of the government on the property of the defendant. Defendant, the so-called Unabomber, argued that §3613 violated the First Amendment to the extent that it authorized the government to deprive a defendant of property protected by the First Amendment. The Ninth Circuit construed defendant’s claim as a facial challenge to the statute that required defendant to show that §3613 was unconstitutional in every conceivable application. Because, the court found, a restitution lien can be constitutionally applied in many cases, the court upheld the statute against defendant’s facial challenge. U.S. v. Kaczynski, 551 F.3d 1120 (9th Cir. 2009).
9th Circuit upholds Inmate Financial Responsibility Program. (610) Under 18 U.S.C. § 3664(f)(1)(B)(2), a sentencing court must specify the manner in which restitution will be made and the schedule according to which it must be paid. The Ninth Circuit has held that under § 3664(f), a court may not delegate the scheduling of restitution payments. The Bureau of Prisons offers inmates an opportunity to participate in the Inmate Financial Responsibility Plan, under which an inmate may make restitution payments at a higher or faster rate than ordered by the court. Participation in the IFRP is voluntary, but an eligible inmate who declines to participate is denied certain privileges and benefits while in federal prison. The Ninth Circuit held that the IFRP does not constitute an unlawful delegation of the court’s authority to set a restitution repayment schedule. The court also held that the consequences of declining to participate in the IFRP are reasonably related to the legitimate penological interest in rehabilitation. U.S. v. Lemoine, 546 F.3d 1042 (9th Cir. 2008).
9th Circuit says victims’ travel expenses and attorneys’ fees incurred in investigating offense may be part of restitution. (610) Defendant pleaded guilty to operating a RICO enterprise, in violation of 18 U.S.C. § 1962(d), based on his laundering of proceeds obtained by embezzling funds and brokering loans through extortion. At sentencing, the district court ordered defendant to pay restitution to the victims for the costs they incurred in investigating defendant’s conduct, including travel expenses and attorneys’ and investigators’ fees. The Ninth Circuit held that travel expenses and attorneys’ and investigators’ fees may be part of a restitution order, but remanded because the district court did not adequately find that the victims incurred the fees or that the fees were reasonably necessary. U.S. v. Waknine, 543 F.3d 546 (9th Cir. 2008).
9th Circuit vacates restitution order not supported by findings or trial evidence. (610) Under 18 U.S.C. § 3664, a court must resolve disputes over the amount of restitution by a preponderance of the evidence, and the government bears the burden of proving that a person is entitled to restitution. Defendant was convicted of RICO violations. At sentencing, the government asked the court to impose restitution in the amount of $131,000. The district court ordered restitution of $371,000 without explaining how it arrived at that figure, and the testimony at trial did not support that figure. The Ninth Circuit vacated the restitution order and remanded to allow the district court to provide an explanation of its restitution figure. U.S. v. Waknine, 543 F.3d 546 (9th Cir. 2008).
9th Circuit says that even if defendant could collaterally attack his restitution order, there was no injustice. (610) The Ninth Circuit noted that even though the defendant had not asserted any authority under which he might bring a collateral attack on his restitution order, in the somewhat analogous context of federal habeas relief under 28 U.S.C. §2255, “an error of law [or facts] does not provide a basis for collateral attack unless the claimed error constituted a fundamental defect which inherently results in a complete miscarriage of justice.” The defendant could not make that showing here because the parties stipulated that if the district court found that the restitution order was not time-barred, the funds that the government had already seized would be applied and fully satisfy defendant’s restitution debt. Because the Ninth Circuit held that the judgment was not time-barred, the court found that it would not be a “complete miscarriage of justice” if the defendant were precluded from collaterally attacking the amount of his restitution obligation. U.S. v. Gianelli, 543 F.3d 1178 (9th Cir. 2008).
9th Circuit says defendant waived appeal of restitution by failing to file notice. (610) Defendant never appealed from the sentence in which restitution was ordered, even though years later, he appealed from the district court’s order imposing him to make installment fees. The Ninth Circuit held that his failure to appeal the original judgment was a waiver of his right to challenge the restitution order. U.S. v. Gianelli, 543 F.3d 1178 (9th Cir. 2008).
9th Circuit enforces restitution order despite 10-year statute of limitations. (610) Defendant argued that the government was barred from enforcing its $125,000 restitution order because ten years had passed since the date of the judgment and California state law precludes enforcement of a judgment after ten years. The Ninth Circuit rejected the argument ruling that as a sovereign, the United States is subject to a limitations period only when Congress has expressly created one. Because no federal statute expressly permitted state statutes of limitations to constrain the government’s ability to enforce a judgment granted under the Victim Witness Protection Act, the judgment was enforceable. U.S. v. Gianelli, 543 F.3d 1178 (9th Cir. 2008).
9th Circuit says that false statements that resulted in insurance coverage justified restitution in amount of insurance payment. (610) HUD will not provide mortgage insurance for a home unless the buyer makes a three percent down payment, and the seller may not provide the down payment funds directly to the buyer. Defendants were home builders who provided buyers with the down payment and then created false documents stating that the down payments were gifts from the buyers’ relatives. The buyers of some of the homes defaulted, and HUD had to pay on its mortgage insurance policies. At sentencing on defendants’ convictions for making false statements to HUD, the district court ordered defendants to pay restitution in the amount that HUD was required to pay to make good on the lender’s mortgage insurance claim. The Ninth Circuit held that the evidence sufficiently showed that defendants’ offense caused the loss to HUD, because if defendants had not falsified the source of the down payments, the mortgages would not have been insured and HUD would not have had to pay on the mortgage insurance claims. U.S. v. Peterson, 538 F.3d 1064 (9th Cir. 2008).
9th Circuit upholds restitution of amount sex trafficking victims would have made if they received regular wages. (610) Defendant recruited women in China to come to the Northern Mariana Islands by falsely telling the women that they would work as waitresses. Each woman had to pay a $6,000 processing fee to obtain the job. When the women arrived in the Northern Marianas, they were coerced into being prostitutes. Although the women were paid for serving as prostitutes, they were not paid regularly and did not receive overtime. At defendant’s sentencing for transporting persons in furtherance of a fraud and sex trafficking, the district court ordered defendant to pay restitution to the women in part based on the amount the women would have made if they had been paid regularly and for overtime. The Ninth Circuit found that the district court used a “sound valuation methodology” to calculate the restitution award. U.S. v. Chang Da Liu, 538 F.3d 1078 (9th Cir. 2008).
9th Circuit says defendant’s absence when restitution order was entered was at most harmless error. (610) A district court may delay entry of a final order of restitution for up to 90 days after sentencing when the court is unable to ascertain the victim’s losses before sentencing. In defendant’s case, the district court relied on this provision, and entered a restitution order after sentencing without having the defendant present in court. Defendant argued that his failure to be present when the court entered the restitution order violated his right to be present at every critical stage of the prosecution, including sentencing. The Ninth Circuit assumed without deciding that the district court’s failure to provide defendant with an opportunity to speak on his own behalf when the court entered the restitution order violated defendant’s right to be present, but held that any error was harmless because defendant had the opportunity to contest the restitution amount. U.S. v. Marks, 530 F.3d 799 (9th Cir. 2008).
9th Circuit upholds untimely restitution order. (610) Under 18 U.S.C. § 3664, a district court may delay entering a restitution order for up to 90 days after sentencing if the victim’s losses are not ascertainable before the sentencing hearing. In defendant’s case, the court failed to comply with the 90-day deadline, and defendant claimed that he was prejudiced because he was not present when the court entered the restitution order. The Ninth Circuit found that defendant had failed to show prejudice and upheld the untimely restitution order. U.S. v. Marks, 530 F.3d 799 (9th Cir. 2008).
9th Circuit reverses restitution award to company that was not a victim of fraud. (610) At defendants’ sentencing on a real estate fraud scheme, the district court found that the title company whose employee had assisted the fraud was not a victim of the scheme. Nevertheless, the probation office listed the title company as a victim and calculated the amount of restitution defendants owed as being equal to the loss suffered by the title company. The Ninth Circuit vacated the restitution order, finding that the district court had not adequately explained its reasons for imposing the order. U.S. v. Crandall, 525 F.3d 907 (9th Cir. 2008).
9th Circuit holds that restitution for meth manufacturing included cost of decontaminating lab site. (610) Defendant participated in manufacturing methamphetamine in a motel room. At her sentencing for conspiracy to manufacture methamphetamine, the court ordered her to pay restitution to another motel where defendant manufactured methamphetamine to cover the cost of decontamination measures required by state authorities, as well as the revenue lost by the motel during the decontamination. The Ninth Circuit held that a court could properly order a defendant to pay restitution under the Mandatory Victim Restitution Act, 18 U.S.C. § 3663A, for the costs of returning property damaged by the defendant’s offense to its pre-offense condition and that the motel was a “victim” of defendant’s conspiracy. The court also held that the state-mandated decontamination measures were not an intervening cause of the costs incurred by the motel. The court held, however, that lost revenue is a consequential damage that cannot form part of a restitution award. U.S. v. Brock-Davis, 504 F.3d 991 (9th Cir. 2007).
9th Circuit holds that restitution for bankruptcy fraud may be based on all concealed assets. (610) Defendant was convicted of bankruptcy fraud for concealing two assets from creditors during her bankruptcy. At sentencing, the district court ordered her to pay restitution for the entire amount of the debt that she discharged in bankruptcy, including losses caused by the concealment of assets on which she was not found guilty. The Ninth Circuit held that the district court correctly ordered defendant to pay restitution for the losses caused by the entire fraudulent scheme, including restitution for concealed assets other than those for which she was found guilty. U.S. v. Bussell, 504 F.3d 956 (9th Cir. 2007).
9th Circuit upholds restitution to pay for schooling for foreign child sex abuse victims. (610) Defendant traveled to a foreign country to have sex with minors. At his sentencing for offenses arising out of this conduct, the district court ordered him to pay restitution to cover the cost of schooling and vocational training for the victims of his offenses, including costs related to assistance from a social worker. Defendant objected that his conduct was not the cause of the victims’ need for schooling or training. The Ninth Circuit held that the district court acted within its discretion in calculating the restitution award. The court noted that as a result of defendant’s conduct, many of the victims stopped attending school or started cutting classes and that the embarrassment suffered by the children in their community required special educational arrangements. U.S. v. Doe, 488 F.3d 1154 (9th Cir. 2007).
9th Circuit holds that retirement benefits may be used to pay restitution. (610) The Mandatory Victims Restitution Act makes a restitution order enforceable against all of a defendant’s property. The Employee Retirement Income Security Act protects covered retirement benefits from being assigned or alienated, with only narrow exceptions. Resolving an “apparent tension” between the MVRA and ERISA, the Ninth Circuit, sitting en banc, held that the government may garnish a retirement plan protected by ERISA to enforce a criminal restitution order if the defendant has a current, unilateral right to receive payments under the terms of the retirement plan. U.S. v. Novak, 476 F.3d 1041 (9th Cir. 2007).
9th Circuit upholds restitution award based on loss caused by fraudulent statements to banks. (610) Defendant was convicted of conspiracy, loan fraud, falsifying corporate books, and securities fraud in connection with a scheme to defraud banks. Defendant repeatedly falsified documents that determined the amount that he could borrow from the banks using a revolving line of credit. The district court calculated defendant’s restitution obligation by determining the total amount borrowed by defendant through legitimate and illegitimate means and subtracting the amount that the banks recovered when they foreclosed on defendant’s collateral. Because this sum was less than the total that defendant obtained through the false documents, it used that to calculate defendant’s restitution. The Ninth Circuit held that the court’s approach to calculating restitution was proper. U.S. v. Berger, 473 F.3d 1080 (9th Cir. 2007).
9th Circuit holds that restitution may be ordered of future lost income of deceased victim. (610) The Mandatory Victims Restitution Act, 18 U.S.C. § 3663A, requires a defendant to make restitution to the victim or, if the victim, is deceased, the victim’s estate. The statute also requires a restitution award to include “income lost” by the victim as a result of the offense. Defendant was convicted of assault and involuntary manslaughter. At sentencing, the district court refused to order defendant to pay restitution for his deceased victim’s future lost income on the ground that the victim’s estate should seek that recompense in a civil tort action. The Ninth Circuit held that the MVRA permits a court to order a defendant to pay restitution for future lost income and that the district court erred in refusing outright to order that defendant pay restitution for the victim’s future lost earnings. U.S. v. Cienfuegos, 462 F.3d 1160 (9th Cir. 2006).
9th Circuit says failure to give notice of restitution amounts was harmless error. (610) Under 18 U.S.C. § 3664, the government is required to provide the probation officer with a list of the amounts subject to restitution at least 60 days prior to sentencing. The government did not move for restitution from defendant, who was convicted of manslaughter, for his victim’s future lost income until 21 days prior to sentencing, and it did not specify the amount of restitution until five days prior to sentencing. At sentencing, the district court held that the victim’s future lost income was not a proper subject of restitution. The Ninth Circuit held that because defendant received the functional equivalent of notice in his plea agreement and was not ordered to pay restitution for future lost income, the government’s failure to abide by the statutory deadlines was harmless. U.S. v. Cienfuegos, 462 F.3d 1160 (9th Cir. 2006).
9th Circuit holds that government need not initiate civil action to collect restitution through garnishment. (610) As part of defendant’s sentence on a mail fraud conviction, defendant was ordered to pay restitution. When defendant failed to make timely payments, the government filed a motion under the docket number of defendant’s criminal case seeking to garnish defendant’s wages. The Ninth Circuit held that the government was not required to file a separate civil action to enforce a prior judgment of restitution and that the district court therefore could act on the government’s motion filed in the criminal case. U.S. v. Mays, 430 F.3d 963 (9th Cir. 2005).
9th Circuit holds that defendant may appeal order granting garnishment to satisfy restitution order. (610) When defendant failed to pay restitution ordered as a condition of supervised release, the government filed a garnishment action under the docket number assigned to his criminal case. Defendant moved to dismiss the action, but the district court granted the garnishment request, and defendant appealed. The Ninth Circuit held that the denial of a motion to dismiss a writ of garnishment is a final judgment subject to appeal. U.S. v. Mays, 430 F.3d 963 (9th Cir. 2005).
9th Circuit finds that government may collect restitution even if defendant is no longer on supervised release. (610) While defendant was on supervised release, the government filed an action to garnish his wages to satisfy his restitution obligation. While the garnishment action was pending, defendant’s supervised release ended. The Ninth Circuit held that the existence or non-existence of supervised release has no bearing on the district court’s jurisdiction to enter a post-judgment garnishment order. U.S. v. Mays, 430 F.3d 963 (9th Cir. 2005).
9th Circuit says government must try to sell Unabomber’s property to satisfy restitution award. (610) Theodore Kaczynski, the convicted Unabomber, entered into a plea agreement that barred him from profiting from his crimes and required that any money he earned be paid as restitution for his victims. After his conviction became final, Kaczynski moved under Federal Rule of Criminal Procedure 41(g) for the return of property seized from his cabin pursuant to a search warrant. In the motion, Kaczynski, who is serving a life sentence, asked that his papers be donated to a university. In opposing the motion, the government argued that Kaczynski’s property was worthless but that it should be allowed to keep the property. The Ninth Circuit held that the government’s position was “untenable” and that it could not rely on the restitution order to defeat Kaczynski’s motion for return of property that could not used to satisfy the restitution order. The court remanded to allow the government to formulate a “commercially reasonable plan” to dispose of the property and obtain funds to pay in restitution to the Unabomber’s victims. U.S. v. Kaczynski, 416 F.3d 971 (9th Cir. 2005).
9th Circuit vacates restitution order based on intended losses. (610) In sentencing defendant for bankruptcy fraud, the district court ordered her to pay restitution based on the losses intended by her scheme. The Ninth Circuit vacated the restitution order because restitution may only be ordered for actual losses, not intended ones. U.S. v. Bussell, 414 F.3d 1048 (9th Cir. 2005).
9th Circuit finds error in allowing BOP to set restitution schedule during incarceration. (610) Defendant, convicted of wire fraud, was ordered to pay restitution. On appeal, the Ninth Circuit held that the district court had erred in delegating to the probation office the responsibility of scheduling restitution payments. On remand, the district court ordered the restitution payable immediately, but specified that the unpaid amount was to be paid during defendant’s incarceration through the Inmate Financial Responsibility Program. The Ninth Circuit held that the district court had again erred by delegating to the Bureau of Prisons the schedule for defendant’s restitution payments during his period of incarceration. U.S. v. Gunning, 401 F.3d 1145 (9th Cir. 2005).
9th Circuit finds error in allowing BOP to set restitution schedule during incarceration. (610) Defendant, convicted of wire fraud, was ordered to pay restitution. On appeal, the Ninth Circuit held that the district court had erred in delegating to the probation office the responsibility of scheduling restitution payments. On remand, the district court ordered the restitution payable immediately, but specified that the unpaid amount was to be paid during defendant’s incarceration through the Inmate Financial Responsibility Program. The Ninth Circuit held that the district court had again erred by delegating to the Bureau of Prisons the schedule for defendant’s restitution payments during his period of incarceration. U.S. v. Gunning, 401 F.3d 1145 (9th Cir. 2005).
9th Circuit says that “date of loss” is not necessarily date of defendant’s theft. (610) Defendant embezzled from his employer shares of stock in another company that his employer owned. Defendant later sold the embezzled shares. Before defendant’s embezzlement was discovered, defendant’s employer sold its remaining shares of stock in the company. The Ninth Circuit held that defendant was properly ordered to make restitution for the amount for which defendant’s employer could have sold the shares if defendant had not embezzled them, not the value that defendant received for them. To calculate the loss to defendant’s employer, the court held that it was proper to average the value of the company’s shares over the period of time in which defendant’s employer sold the shares that had not been embezzled. U.S. v. Gordon, 393 F.3d 1044 (9th Cir. 2004).
9th Circuit holds that fraud that increases value of property that defendant embezzled does not bar restitution at higher value. (610) After defendant embezzled from his employer shares of stock in another company that the employer owned, the value of the shares rose dramatically. The company sold the shares in the company that defendant had not embezzled at the higher price. Later, allegations were made that the company’s stock price had been fraudulently inflated by its management. The Ninth Circuit held that the defendant was properly ordered to make restitution at the price that his employer sold the shares, even if the increased price was caused by fraud. U.S. v. Gordon, 393 F.3d 1044 (9th Cir. 2004).
9th Circuit says restitution can include employer’s investigation costs. (610) Defendant’s employer incurred costs, including attorney’s fees, in investigating defendant’s embezzlement from the company. The Ninth Circuit held that the employer’s costs, including the attorney’s fees, were reasonably included in the restitution award that defendant was ordered to pay. U.S. v. Gordon, 393 F.3d 1044 (9th Cir. 2004).
9th Circuit upholds prejudgment interest in restitution award for embezzlement of stock. (610) Defendant embezzled from his employer, a computer products company, by stealing stock in other companies that the employer owned. In reviewing the restitution that defendant was ordered to pay, the Ninth Circuit held that the employer was not barred from receiving prejudgment interest because it was not a financial institution and that defendant was properly ordered to pay prejudgment interest on the value of the shares that the employer would have sold if defendant had not embezzled them. The court held that prejudgment interest was not available for shares of stock that the employer would not have sold. U.S. v. Gordon, 393 F.3d 1044 (9th Cir. 2004).
9th Circuit holds that waiver of right to appeal did not waive right to appeal restitution order. (610) Defendant’s plea agreement did not resolve the amount of restitution that he was obligated to pay. The plea agreement provided, however, that defendant waived the right to appeal his “conviction, the judgment, and the orders of the court,” as well as his right to appeal his sentence. After sentence was imposed, defendant sought to appeal the restitution order imposed as part of that sentence. The Ninth Circuit held that the plea agreement did not give defendant sufficient notice that it waived his right to appeal the restitution award and therefore that he had not waived his right to appeal that order. U.S. v. Gordon, 393 F.3d 1044 (9th Cir. 2004).
9th Circuit says government must return fines but not restitution, when defendant successfully collaterally attacks conviction. (610) In 1993, defendant was convicted of fraud based on his operation of a Ponzi scheme. As part of his sentence, he was ordered to pay restitution. In 2000, the Ninth Circuit granted defendant’s habeas petition, vacated his conviction, and ordered a new trial. The government elected to dismiss the case because it had not retained the evidence against defendant. Defendant then sought return of the restitution he had paid. The Ninth Circuit held that a defendant who has successfully attacked his conviction collaterally may obtain the return of funds that the government retains, such as fines, special assessments, and costs, but that a defendant may not obtain the return of restitution that the government has collected and distributed to victims. U.S. v. Hayes, 385 F.3d 1226 (9th Cir. 2004).
9th Circuit says pre-MVRA restitution order without finding of ability to pay was plain error. (610) Prior to the Mandatory Victim Restitution Act of 1996, a district court had discretion to decide the amount of restitution; after passage of the MVRA, restitution became mandatory. The Ninth Circuit has held that applying the MVRA to offenses that occurred before its enactment violates the Ex Post Facto Clause. In a fraud prosecution arising out of events that occurred prior to the MVRA’s passage, the presentence report stated that defendant had no assets or any ability to pay a fine. Believing that restitution was mandatory, the district court nevertheless ordered restitution, and defendant did not object. The Ninth Circuit held that because defendant was insolvent, the restitution order constituted plain error. U.S. v. Montgomery, 384 F.3d 1050 (9th Cir. 2004).
9th Circuit includes costs of defending coverage litigation as proper restitution award in insurance fraud case. (610) Defendant was convicted of perjury and mail fraud based on an insurance fraud scheme. The district court ordered him to pay restitution to the insurance company in an amount equal to the company’s cost in defending the civil case that defendant brought in an effort to obtain the insurance proceeds. The Ninth Circuit upheld the restitution award against defendant’s contention that the company’s losses were too remote from the insurance fraud scheme. The court held that restitution was proper because defendant was convicted of a conspiracy that included his perjury during the civil trial as overt acts. U.S. v. DeGeorge, 380 F.3d 1203 (9th Cir. 2004).
9th Circuit says restitution decisions are unaffected by Blakely. (610) In reviewing a challenge to a restitution order, the Ninth Circuit summarily observed that restitution orders pursuant to the Victim and Witness Protection Act, 18 U.S.C. §§ 3663-64, are unaffected by the Supreme Court’s decision in Blakely v. Washington, 124 S.Ct. 2531 (2004), which held that facts that increase a defendant’s sentencing range under Sentencing Guidelines must be proved to a jury beyond a reasonable doubt. U.S. v. DeGeorge, 380 F.3d 1203 (9th Cir. 2004).
9th Circuit holds that restitution for bank fraud may include interest and finance charges. (610) Defendants engaged in a bank fraud scheme in which they used false identities to obtain lines of credit, then ran up large expenses on the credit lines. The district court ordered restitution that included interest and finance charges imposed by the bank on the lines of credit. The Ninth Circuit held that the interest and finance charges “directly resulted” from defendants’ offense and therefore were a proper subject of restitution. U.S. v. Morgan, 376 F.3d 1002 (9th Cir. 2004).
9th Circuit says that counsel’s possible confusion requires remand of restitution order. (610) Defendant was convicted of fraudulent activity in three different states. Although the government conceded that it could not prove specific losses by specific investors in the Michigan scheme, defendant’s counsel agreed that defendant should pay a specific amount of restitution for that scheme. Because the record suggested that counsel might have confused the Michigan scheme with one of the other schemes, the Ninth Circuit rejected the government’s argument that defendant waived his right to challenge the Michigan restitution amount by agreeing to a specific sum. The case was remanded for resentencing. U.S. v. Doe, 374 F.3d 851 (9th Cir. 2004).
9th Circuit holds that restitution should not be offset by value of forfeited property. (610) At his sentencing for fraud offenses, defendant sought to offset the amount of restitution he was required to pay by the value of a home that he had purchased with fraudulently obtained funds, which had been forfeited to the government. Defendant did not allege that any of the forfeited property was used to recompense his victims. The Ninth Circuit held that under the current version of the Victim and Witness Protection Act, 18 U.S.C. § 3664(f), a defendant is not entitled to an offset of a restitution obligation for forfeited property unless the victims have received compensation from that property. U.S. v. Doe, 374 F.3d 851 (9th Cir. 2004).
9th Circuit says restitution for child support violation may be paid to state and may include interest. (610) Defendant was convicted under 18 U.S.C. § 228 of failure to pay a child support obligation. Section 228 requires a defendant convicted under that statute to pay restitution in an amount equal to the “total unpaid support obligation.” The district court ordered defendant to pay restitution in an amount that included interest on the unpaid child support. The court also ordered defendant to repay the state of Georgia for child support that it paid during the period that defendant failed to pay child support. The Ninth Circuit upheld the order, finding that a restitution order in a case involving a violation of § 228 may include interest, that the court properly required defendant to pay restitution to the state, and that the state should be paid only after the child’s mother is paid the child support owed to her. U.S. v. Stephens, 374 F.3d 867 (9th Cir. 2004).
9th Circuit allows restitution for costs of investigating damage caused by environmental offense. (610) Defendant was convicted of violations of the Clean Water Act based on his illegal diversion of a waterway. At sentencing, the district court held that defendant could not be ordered to pay restitution for the costs the government incurred in investigating the site. The Ninth Circuit reversed, holding that the government may be a victim for purposes of restitution and that, although criminal investigation costs may not be the subject of restitution, a defendant may be ordered to repay the government for the costs of investigating a site to determine the appropriate cleanup plan. U.S. v. Phillips, 367 F.3d 846 (9th Cir. 2004).
9th Circuit holds that mailing threatening communications is a crime of violence and that restitution is proper for losses caused by false anthrax threat. (610) Defendant mailed letters to a former boss and a former girlfriend containing white powder and notes saying that the powder was anthrax. One letter broke open in a U.S. Postal Service processing facility, resulting in the evacuation of 229 employees, a loss to the postal service in employee work hours, and costs incurred by hazardous material response teams. He was convicted of mailing threats to injure, in violation of 18 U.S.C. § 876(c). Under 18 U.S.C. § 3663A(a)(1), a court must order restitution for losses caused by any “crime of violence.” That term is defined in part to include crimes that have as an element the threatened use of force. The Ninth Circuit held that mailing threatening communications is a crime of violence. The court also held that the postal service and the HAZMAT teams were victims of defendant’s offense entitled to restitution because their losses were directly related to defendant’s offense conduct. U.S. v. De la Fuente, 353 F.3d 766 (9th Cir. 2003).
9th Circuit finds that restitution need not be offset by funds seized from defendant. (610) Under 18 U.S.C. § 3664(f)(1)(B), a court must order a defendant to pay restitution to victims of certain crimes without regard to other sources of compensation for the victims. The Ninth Circuit held that this statute requires a district court to set the amount of the restitution according to the amount of the victims’ loss without regard to any funds seized and forfeited from the defendant in connection with his offense. The court also held that defendant’s restitution obligation should not be reduced by any amounts seized from defendant that were not paid to the victims. U.S. v. Bright, 353 F.3d 1114 (9th Cir. 2004).
9th Circuit holds that corrupt city official should pay restitution in amount of bribes received. (610) Defendant, the mayor and a city council member in a California city, accepted bribes in return for his vote on certain land use issues. At his sentencing for bribery, in violation of 18 U.S.C. § 666, the district court ordered defendant to pay restitution to the city for the amount of bribe money he received. The Ninth Circuit affirmed, holding that the city suffered an actual loss in the amount of defendant’s bribes. U.S. v. Gaytan, 342 F.3d 1010 (9th Cir. 2003).
9th Circuit says third party that provided free medical care to victim may receive restitution. (610) The Mandatory Victims Restitution Act, 18 U.S.C. § 3663A(b)(2), provides for restitution in an amount equal to the cost of a victim’s necessary medical services. The Ninth Circuit held that this provision authorized a district court to order a defendant to reimburse a U.S. Army medical center that provided free medical care to defendant’s victim because the victim was an active duty member of the Army. U.S. v. Cliatt, 338 F.3d 1089 (9th Cir. 2003).
9th Circuit says court may not delegate restitution schedule to probation office. (610) The Mandatory Victim Restitution Act, 18 U.S.C. § 3664(f)(2), says that the district court “shall . . . specify in the restitution order the manner in which, and the schedule according to which, restitution is to be paid.” The Ninth Circuit held that § 3664(f)(2) bars the court from delegating to the probation office the responsibility to set a restitution schedule. In this case, the district court ordered defendant to pay the full amount of restitution immediately but added that any unpaid amount should be paid during defendant’s supervised release “as directed by” the probation officer. The Ninth Circuit held that the district court improperly assigned the probation officer “full control of subsequent payment.” U.S. v. Gunning, 339 F.3d 948 (9th Cir. 2003).
9th Circuit holds that defendant’s absence from co-defendant’s hearing did not violate his rights regarding restitution. (610) Defendant argued that if he had been present at his co-defendant’s sentencing he could have argued that the co-defendant was equally culpable and should have been liable for the full amount of restitution. However, the Ninth Circuit noted that defendant did not ask to be present at the codefendant’s hearing and he had the opportunity to present evidence on comparative culpability at his own sentencing. Thus the court held that “[t]he district court did not violate any right [defendant] may have had to be present at a codefendant’s sentencing hearing.” U.S. v. Foreman, 329 F.3d 1037 (9th Cir. 2003).
9th Circuit upholds imposing restitution jointly and severally to reflect defendant’s contribution to the loss. (610) Defendant argued that because his co-defendant was held responsible for only one third of the victims’ losses, defendant should have to pay restitution for only one third of the amount of losses for which the district court found him responsible. The Ninth Circuit rejected the argument, noting that defendant’s restitution reflected his level of contribution to the victim’s losses. The district court did not impose responsibility on defendant for the full amount of the victim’s losses, but rather only for those checks defendant acknowledged he helped cash. The district court had discretion to structure payment of this restitution jointly and severally, and the Ninth Circuit concluded that the district court did not abuse its discretion. U.S. v. Foreman, 329 F.3d 1037 (9th Cir. 2003).
9th Circuit permits restitution under MVRA for uncharged conduct in scheme that began before statute’s enactment. (610) Defendant engaged in a scheme to defraud that began before the 1996 enactment of the Mandatory Victim Restitution Act, 18 U.S.C. § 3663. She was convicted of only four of the 90 acts of fraud in which she engaged because the others were barred by the statute of limitations. The district court nevertheless relied on the MVRA to impose restitution for the losses caused by the entire scheme. The Ninth Circuit upheld the order, finding that the ex post facto clause is not violated when a district court orders restitution under the MVRA for related but uncharged conduct that is part of a mail fraud scheme beginning prior to and continuing past the MVRA’s effective date. U.S. v. Grice, 319 F.3d 1174 (9th Cir. 2003).
9th Circuit says friend’s purchase of defendant’s restitution obligation did not violate supervised release. (610) As a condition of supervised release, defendant was ordered to pay restitution to two banks. Defendant’s friend then purchased the restitution obligation from the banks – at a big discount because the banks had written off the debt as uncollectible. Defendant made one payment to the friend, but the probation officer ordered that future payments should be made to the court, and directed defendant to reimburse the court for the payment made to the friend. Defendant complied, but 18 months later, the district court revoked defendant’s supervised release on the ground that he had violated conditions requiring him to make restitution payments to the probation office and barring him from incurring new credit charges. The district court then rescinded the restitution order, and sentenced defendant to pay a $100,000 fine. The Ninth Circuit reversed, holding that the friend’s purchase of the restitution obligation was not a violation of defendant’s supervised release. The court also held that the court lacked authority to rescind its restitution order and impose a fine. U.S. v. Turner, 312 F.3d 1137 (9th Cir. 2002).
9th Circuit finds that involuntary servitude is a crime of violence requiring restitution. (610) Under 18 U.S.C. § 3663A(a)(1), a court must order restitution to the victims of “crimes of violence.” A crime of violence is defined in part as “an offense that has an element the use, attempted use, or threatened use of physical force.” The Ninth Circuit held that holding another in involuntary servitude, in violation of 18 U.S.C. § 1584, is a crime of violence because it requires proof that the defendant coerced the victim into working against the victim’s will. . U.S. v. Veerapol, 312 F.3d 1128 (9th Cir. 2002).
9th Circuit requires defendant who supplied meth lab to pay restitution for damages caused by lab fire. (610) Defendant provided supplies for a methamphetamine lab. While defendants’ accomplices were manufacturing methamphetamine, the lab caught fire and damaged the house where it was located. As part of his sentence on his conviction for aiding and abetting the manufacture of methamphetamine, defendant was ordered to pay restitution to the house’s owner. The Ninth Circuit affirmed the restitution order. It noted that 21 U.S.C. § 853(q)(3) requires a defendant convicted of an offense involving methamphetamine manufacture to pay restitution to a “person injured as a result of the offense,” and it held that a “person injured” includes a person who suffers financial loss. The court also held that the loss was sufficiently related to defendant’s conduct to justify the restitution award. U.S. v. Hackett, 311 F.3d 989 (9th Cir. 2002).
9th Circuit finds no error in decision not to apportion restitution among defendants. (610) Defendant, who played a smaller role in a fraudulent scheme than his co-defendant, argued that the district court should have apportioned the defendants’ restitution obligations to reflect their respective roles in the scheme. The Ninth Circuit held that although the district court had discretion to apportion restitution, there was sufficient evidence to support the district court’s finding that defendant played an “essential role” in the scheme. U.S. v. Booth, 309 F.3d 566 (9th Cir. 2002).
9th Circuit holds co-defendants’ restitution payments offset total loss, not defendant’s restitution obligation. (610) Defendant’s fraudulent scheme caused a loss of $900,000 to his victims. Defendant’s co-defendants paid more than $300,000 in restitution for this loss. Defendant argued that his restitution obligation of $500,000 should be offset by the $300,000 paid by his co-defendants. The Ninth Circuit rejected that contention, holding that the co-defendants’ restitution payments offset the total loss. Because the loss remaining after deduction of the co-defendants’ payments was greater than the amount defendant was ordered to pay, defendant remained liable for the full amount of his obligation. U.S. v. Stanley, 309 F.3d 611 (9th Cir. 2002).
9th Circuit finds restitution mandatory in telemarketing fraud case. (610) In 18 U.S.C. § 2327(a), Congress provided that a court shall order full restitution to all victims in cases involving mail and wire fraud if the offense was committed in connection with telemarketing. The Ninth Circuit held that this provision was mandatory and that a court must order defendants convicted of telemarketing fraud to pay restitution regardless of their ability to pay. U.S. v. Johnson, 297 F.3d 845 (9th Cir. 2002).
9th Circuit upholds restitution in parental kidnapping case of attorney’s fees incurred in related efforts to obtain return of children. (610) Defendant was convicted under the International Parental Kidnapping Crime Act, 18 U.S.C. § 1204, of illegally retaining his children outside of the U.S. with the intent to obstruct the children’s mother’s parental rights. The district court ordered him to pay restitution to the children’s mother for attorney’s fees she incurred in a related state court civil contempt proceeding and in proceedings under an international convention to recover custody of her children. The Ninth Circuit held that the attorney’s fees were a direct and foreseeable result of defendant’s criminal conduct and thus that the district court properly ordered restitution of those fees. U.S. v. Cummings, 281 F.3d. 1046 (9th Cir. 2002).
9th Circuit finds no error in requiring immediate restitution payment. (610) Under 18 U.S.C. § 3572(d), a district court must order immediate payment of restitution “unless, in the interests of justice, the court provides for payment on a date certain in installments.” Applying this statute, the Ninth Circuit held that immediate payment is the “general rule,” and that a district court had not abused its discretion in ordering immediate payment when the “court had before it information regarding Defendant’s financial resources that it presumably considered and found insufficient to warrant periodic payments.” U.S. v. Martin, 278 F.3d 988 (9th Cir. 2002).
9th Circuit says federal government may be a victim entitled to restitution. (610) The Mandatory Victim Restitution Act requires a court to order a defendant to make restitution to any “person directly and proximately harmed as a result of the commission of an offense for which restitution may be ordered.” The Ninth Circuit held that the federal government may be a victim for purposes of this statute and thus in an appropriate case a defendant must be ordered to make restitution to the government. U.S. v. Lincoln, 277 F.3d 1112 (9th Cir. 2002).
9th Circuit upholds restitution to victim’s mother for stolen funds and family’s travel and funeral expenses. (610) Defendant was convicted of Hobbs Act robbery based on his participation in disposing of the victim’s body and his theft of money from the victim’s bank account. He was ordered to pay restitution to the victim’s mother for the stolen funds, as well as for the victim’s funeral expenses and the family’s expenses for lost wages and travel to trial and sentencing. The Ninth Circuit found no error in imposing restitution without finding that defendant had the ability to pay because restitution to victims of violent crimes is mandatory under 18 U.S.C. §§ 3663(a)(1) and 3664(f)(1)(A). The court also held that defendant could be ordered to pay the victim’s mother regardless of whether she was a “victim” as defined by the restitution statute, because the statute provides for restitution of “necessary funeral and related expenses” and of repayment of stolen funds to the representatives of the victim’s estate. U.S. v. Pizzichiello, 272 F.3d 1232 (9th Cir. 2001).
9th Circuit bars restitution for Title 42 offenses, and holds false statement did not injure private victim. (610) Defendant was convicted of improperly storing and disposing of hazardous waste, in violation of 42 U.S.C. § 6928. Relying on 18 U.S.C. § 3663, the district court ordered him to pay restitution to a worker who was seriously injured during the improper waste disposal. The Ninth Circuit held that the restitution order constituted plain error because § 3663 authorizes restitution only for violations of Title 18. The indictment’s reference to the aiding and abetting statute, 18 U.S.C. § 2, did not bring the Title 42 offenses within the restitution statute. The court also held that the restitution order could not be upheld based on the defendant’s false statements conviction under 18 U.S.C. § 1001 because the worker was not a victim of that offense. Nevertheless, the panel later amended this opinion to state that the district court “may consider further amending the sentence by imposing a term of supervised release with a condition requiring restitution, pursuant to … § 5E1.1(a)(2).” U.S. v. Elias, 269 F.3d 1003 (9th Cir. 2001).
9th Circuit reverses restitution to crisis center that provided free counseling to sexual abuse victim. (610) Defendant pleaded guilty to sexual abuse of a minor. Under 18 U.S.C. § 2248, a defendant convicted of that offense may be ordered to pay restitution to the victim for psychological care needed because of the offense. At sentencing, the district court ordered defendant to pay restitution to a crisis center that provided free counseling to the victim and to pay the costs of any counseling that the victim needed in the future. The Ninth Circuit held that the crisis center was not a victim even though it bore some of the cost of the harm the defendant caused. The court also vacated the order of restitution for future counseling costs because the district court did not find that the victim would need such services or have to bear their costs. The court remanded to allow the district court to determine if the victim could seek restitution under 18 U.S.C. § 3664(d)(5) for counseling that actually occurred after sentencing. U.S. v. Follet, 269 F.3d 996 (9th Cir. 2001).
9th Circuit holds restitution does not include receiver’s expenses and must be offset by the value of assets when received and by funds obtained from a co-defendant. (610) While defendant’s prosecution for fraud and money laundering was pending, his victims obtained a civil judgment against him in state court. The state court appointed a receiver for defendant’s company and authorized the receiver to incur expenses in liquidating the company. At sentencing, the district court offset defendant’s restitution obligation by the amount of the assets the receiver recovered, but reduced the offset by the receiver’s expenses. The Ninth Circuit held that the receiver’s expenses were not a direct result of defendant’s fraudulent conduct and therefore could not be included in his restitution obligation. It also concluded that defendant was entitled to have his restitution obligation reduced by the value of the assets when the receiver took control of them, not the price at which the receiver sold them. The court further held that defendant’s restitution obligation should have been offset under 18 U.S.C. 3664(j)(2) by sums that his victim obtained during civil litigation from a co-defendant. That statute requires reduction of a restitution order for any amount obtained for the “same loss” in civil proceedings. U.S. v. Lomow, 266 F.3d 1013 (9th Cir. 2001).
9th Circuit says government objection did not bar restitution from kickback payers and employee who received payments. (610) Defendants participated in a scheme to obtain subcontracts to repair U.S. Navy vessels by paying kickbacks to an employee of the prime contractor. Over the objection of defendants and the government, the district court allowed the prime contractor to present evidence at sentencing concerning its losses from the scheme. The court then ordered defendants to pay restitution to the prime contractor. The Ninth Circuit found that although the statutes authorizing the district court to order restitution, 18 U.S.C. §§ 3663 and 3664, contemplate that the government will prove the amount of restitution, the district court has discretion to identify victims and order restitution by a preponderance of the evidence. The district court did not violate separation of powers clause by refusing to follow the terms of a plea agreement between the government and the defendant that did not provide for restitution. The district court properly ordered the prime contractor’s employee (who received the kickbacks) to pay the prime contractor restitution in the amount of the kickbacks he received from two unindicted companies on the theory that the employee acted as the prime contractor’s agent in these transactions. U.S. v. Gamma Tech Indus. Inc., 265 F.3d 917 (9th Cir. 2001).
9th Circuit says restitution under Child Support Recovery Act must include interest on delinquent payments that is mandatory under state law. (610) Defendant was convicted of willfully failing to pay child support, in violation of 18 U.S.C. § 228(a)(1). Under 18 U.S.C. § 228(d), a defendant convicted of this offense must be ordered to pay “restitution … in an amount equal to the total unpaid support obligation as it exists at sentencing.” The term “support obligation” is defined in § 228(f)(3) to mean the amount of unpaid child support as “determined under a court order … pursuant to the law of a State.” California law requires the addition of interest to unpaid child support obligations, but the order that defendant failed to pay did not include interest. Defendant was ordered to pay restitution of his unpaid child support plus accrued interest. The Ninth Circuit upheld the restitution order, finding that the state court order did not mention interest only because California law automatically imposes interest on delinquent support payments. U.S. v. Gill, 264 F.3d 929 (9th Cir. 2001).
9th Circuit finds “some evidence” of defendant’s ability to pay (non-mandatory) restitution. (610) Defendant was convicted of mail fraud and ordered to pay full restitution under 18 U.S.C. § 3663. On appeal, he argued that the court failed to consider his ability to pay. The Ninth Circuit upheld the restitution order, noting that the ability to pay is only one factor in setting the amount of restitution. The standard is fairly lenient: “[A]t the time restitution is ordered the record must reflect some evidence the defendant may be able to pay restitution in the amount ordered in the future.” U.S. v. Ramilo, 986 F.2d 333, 336 (9th Cir. 1993). Here the defendant had some college education, a background in accounting and extensive business experience, which should allow him to obtain gainful employment after prison. Moreover, the district court did not impose a fine. U.S. v. King, 257 F.3d 1013 (9th Cir. 2001).
9th Circuit finds clear error in failing to consider all evidence before ordering restitution. (610) “A restitution order is reviewed for abuse of discretion, provided that it is within the bounds of the statutory framework.” U.S. v. Lawrence, 189 F.3d 838, 846 (9th Cir. 1999). The factual findings underlying these orders are reviewed for clear error. Id. Here the Ninth Circuit found that the district court clearly erred when it failed to consider all of the evidence before ordering restitution of $2.19 million. At the sentencing hearing, the court said it was willing to hear defendant’s objections, and set the case for another hearing, but in the meantime the court adopted the probation officer’s calculation and imposed judgment. At the later hearing, the court admitted that it “wasn’t satisfied completely with the probation office’s calculations,” but agreed with the government that it lacked jurisdiction to reconsider the sentence. The Ninth Circuit reversed the restitution order because the district court failed to make an independent determination of the actual loss suffered by the bank as a result of defendant’s conduct. U.S. v. Najjor, 255 F.3d 979 (9th Cir. 2001).
9th Circuit says restitution order could not be modified after notice of appeal was filed. (610) At the sentencing hearing, the district court said it would listen to defendant’s argument about the amount of restitution at a later date, but in the meantime the judgment would stand. Defendant did not file a motion to modify pursuant to Fed. R. Crim. P. 35(c) which would have extended the time for filing the notice of appeal. See U.S. v. Barragan-Mendoza, 174 F.3d 1024, 1026 (9th Cir. 1999). Instead, he filed a notice of appeal, which the Ninth Circuit held divested the district court of its control over those aspects of the case involved in the appeal. See U.S. v. Ortega-Lopez, 988 F.2d 70, 72 (9th Cir. 1993). Thus, although the district court believed it retained jurisdiction to reconsider the restitution issue, the Ninth Circuit held it lacked jurisdiction over defendant’s later appeal from the district court’s refusal to reconsider its restitution order. U.S. v. Najjor, 255 F.3d 979 (9th Cir. 2001).
9th Circuit says 2255 certificate of appealability cannot be issued for statutory claims. (610) Under 28 U.S.C. § 2253(c)(2), a certificate of appealability (COA) from a § 2255 order may issue “only if the applicant has made a substantial showing of the denial of a constitutional right.” In the present case, defendant only challenged his restitution order, arguing that the bank had relinquished its right to restitution in a civil settlement. Because this did not allege the violation of a constitutional right, the Ninth Circuit held that no COA could properly be issued, and therefore it lacked jurisdiction over defendant’s appeal. Although the Ninth Circuit’s rules require the district court to rule on the COA in the first instance, the rules do not “deny the circuit court jurisdiction to dismiss an appeal where no certificate has been issued or could be issued.” U.S. v. Mikels, 236 F.3d 550 (9th Cir., 2001).
9th Circuit holds pre-1990 VWPA did not allow restitution for lost corporate opportunities. (610) Resolving a question left open in U.S. v. Stoddard, 150 F.3d 1140, 1147 (9th Cir. 1998), the Ninth Circuit held that the pre-1990 version of the Victim and Witness Protection Act did not allow restitution for lost corporate opportunities. The panel thus reversed an order of restitution for the former Chairman of the Board of Saratoga Savings who had taken investment opportunities presented to Saratoga, and instead invested in the properties himself. The panel held that Saratoga’s expectancy interest in these ventures had not matured into the type of “vested, direct property interest” for which the VWPA allowed restitution. However, the case was remanded as to one venture for a finding on whether defendant usurped Saratoga’s “vested contractual interest” in the property, in which case restitution for that interest would be proper. The court also upheld $200,000 in restitution for a fee owed to Saratoga that defendant cancelled and converted to his own personal gain. U.S. v. Rodrigues, 229 F.3d 842 (9th Cir. 2000).
9th Circuit remands restitution for failure to consider that RICO victims might also seek compensation from forfeiture. (610) At the time of this telemarketing offense in 1991-1993, the Victim and Witness Protection Act, 18 U.S.C. § 3663(e)(1), prohibited courts from “impos[ing] restitution with respect to a loss for which the victim has received or is to receive compensation.” The VWPA also states that restitution shall be set off against damages in civil proceedings. In a footnote, the Ninth Circuit suggested that the set-off provisions also apply to forfeiture proceeds. Thus, victims of RICO crimes can petition for compensation out of forfeiture proceeds under 18 U.S.C. § 1963(h)(3) and 28 C.F.R. § 9.1-9. Because the district court failed to consider this possibility, the case was remanded to reconsider the restitution order. U.S. v. Johnston, 199 F.3d 1015 (9th Cir. 1999).
9th Circuit holds waiver of appeal did not bar claim that restitution violated statute. (610) In U.S. v. Bolinger, 940 F.2d 478 (9th Cir. 1991), the Ninth Circuit held that a defendant cannot circumvent an express waiver of appeal by alleging a misapplication of the sentencing guidelines. However, “this principle does not extend to statutory violations.” Thus, in U.S. v. Phillips, 174 F.3d 1074 (9th Cir. 1999), the Ninth Circuit held that restitution that exceeded the statutory authority of the VWPA was the equivalent of an illegal sentence to which a waiver of the right to appeal could not apply. In the present case, the Ninth Circuit held that the restitution order violated the VWPA because the district court failed to consider the possibility that the victims of defendant’s RICO offense could petition for compensation from forfeiture proceeds under 18 U.S.C. § 1963(h)(3) and 28 C.F.R. § 9.1-9, thereby possibly obtaining double compensation. U.S. v. Johnston, 199 F.3d 1015 (9th Cir. 1999).
9th Circuit says restitution cannot be challenged on habeas because it does not affect custody. (610) The Ninth Circuit held that a defendant seeking relief under 28 U.S.C. § 2255 must not only be in custody, he must also claim the right to be released from custody. In this case, defendant’s motion sought only to vacate the restitution order. Accordingly, the district court ruled that § 2255 relief was not available to him. On appeal, the Ninth Circuit affirmed, ruling that by its clear terms, 28 U.S.C. § 2255 is applicable only to prisoners in custody claiming the right to be released. The court thus agreed with decisions in the First, Fifth, Sixth, Seventh and Eleventh Circuits. U.S. v. Kramer, 195 F.3d 1129 (9th Cir. 1999).
9th Circuit says extent of restitution depends on whether the crime is a scheme or conspiracy. (610) In 1990, Congress amended the Victim Witness Protection Act, 18 U.S.C. § 3663, to provide for restitution to “any person directly harmed by the defendant’s criminal conduct in the course of a scheme, conspiracy or pattern.” Thus, when the crime of conviction includes a scheme, conspiracy, or pattern of criminal activity as an element of the offense, the restitution order may include acts of related conduct for which the defendant was not convicted. In this case, only count I, the mail fraud count, alleged a “scheme.” But that count was reversed on appeal. Accordingly, the Ninth Circuit held that the scope of the restitution depended on whether, on remand, defendant was again convicted of mail fraud. U.S. v. Lawrence, 189 F.3d 838 (9th Cir. 1999).
9th Circuit reverses where district court failed to consider defendant’s ability to pay restitution. (610) In response to the government’s request to make a finding on defendant’s ability to pay restitution, the district court stated that “I simply do not have sufficient information.” While the court is not required to make an express finding, it cannot completely defer to the monitoring capabilities of the probation officer. Thus, the Ninth Circuit held that the district court erred by failing to consider defendant’s ability to pay as a factor in issuing its restitution order. U.S. v. Lawrence, 189 F.3d 838 (9th Cir. 1999).
9th Circuit says special restitution statute for abuse of children requires a “causal connection.” (610) A special restitution statute, 18 U.S.C. § 2259, requires mandatory restitution in all cases involving sexual exploitation or abuse of children. The Ninth Circuit held that the statutory language, which speaks of losses that are the “proximate result” of the offense, means that restitution cannot be awarded for all relevant conduct. However, when the offense of conviction is conspiracy, “the harms the offense caused may include not only those resulting from the defendant’s individual actions, but also others caused by the conspiracy itself.” See U.S. v. Fonseca-Caro, 114 F.3d 906, 907 (9th Cir. 1997), relying on Pinkerton v. U.S., 328 U.S. 640 (1946). Because the defendant in this case pled guilty to conspiracy and the reasonably foreseeable actions taken by his co-conspirators in furtherance of the conspiracy injured the victim, the district court properly ordered restitution. U.S. v. Laney, 189 F.3d 954 (9th Cir. 1999).
9th Circuit upholds restitution based on estimates of amounts victims would spend on future counseling. (610) Under the special restitution statute for sexual exploitation and abuse of children, 18 U.S.C. § 2259, compensable losses include the cost of the victim’s “medical services relating to physical, psychiatric, or psychological care.” Courts are to issue and enforce restitution orders in accordance with 18 U.S.C. § 3664. Section 3664(d)(5), in turn, provides a mechanism for a victim to request restitution after sentencing for losses that were not ascertainable at the time of sentencing. In the present case, the Ninth Circuit agreed with the district court that the statute allows restitution for future counseling. The district court did not abuse its broad discretion in estimating that the cost of such future counseling would be $60,000 based on a psychiatrist’s estimate that the treatment would last six years. U.S. v. Laney, 189 F.3d 954 (9th Cir. 1999).
9th Circuit says restitution under Child Support Act includes entire past due amount, regardless of ability to pay. (610) The Ninth Circuit held that restitution under the Child Support and Recovery Act, 18 U.S.C. § 228, is not limited to the time period charged in the indictment but should include the entire past due support obligation. Moreover, the district court need not inquire into the defendant’s ability to pay. In U.S. v. Ballek, 170 F.3d 871 (9th Cir. 1999), the Ninth Circuit made it clear that a parent who considers himself or herself unable to pay an order of child support must seek a modification from the order from the state court and not from the federal district court in a criminal prosecution. The court also held that the restitution order did not violate the commerce clause or due process. U.S. v. Craig, 181 F.3d 1124 (9th Cir. 1999).
9th Circuit refuses to enforce waiver of appeal of restitution because plea agreement was ambiguous. (610) Defendant pled guilty to two counts of tax fraud in exchange for dismissal of several securities fraud charges. The plea agreement allowed the district court to order restitution for the “full loss,” adding that restitution was not limited to the counts of conviction, and that the amount of restitution would be determined at sentencing. As part of the agreement, defendant waived appeal. At sentencing, the court ordered restitution to the victims of the stock fraud scheme, relying on defendant’s agreement that restitution was not “restricted to the amounts alleged in the counts to which you are pleading guilty.” Despite his waiver, defendant appealed, and the Ninth Circuit held that the plea agreement was “ambiguous regarding the amount of restitution, and therefore, the waiver of appeal of the restitution order cannot be held to have been voluntarily and knowingly entered into.” The court acknowledged that restitution can be imposed when the plea agreement is silent as to the amount of restitution as long as the amount is based on actual damages. But allocating actual damages “carries with it a requirement of notice to the defendant.” “Notice was absent in this case due to the ambiguous nature of the plea agreement.” Therefore, the district court erred in ordering restitution beyond the amounts directly related to the tax fraud counts. U.S. v. Phillips, 174 F.3d 1074 (9th Cir. 1999).
9th Circuit says waiver of appeal does not apply to illegal restitution sentence. (610) The Ninth Circuit said that even if defendant had knowingly waived his “general right” to appeal, this would not affect his ability to appeal a violation of the Victim Witness Protection Act. As the Fourth Circuit stated in U.S. v. Broughton-Jones, 71 F.3d 1143, 1147 (4th Cir. 1995), “a defendant could not be said to have waived his right to appellate review of a sentence imposed in excess of the maximum penalty provided by statute or based on a constitutionally impermissible factor such as race.” The Fourth Circuit reasoned that a restitution order which exceeded its authority under the VWPA is equivalent to an illegal sentence. The court then held that such a restitution order was “in excess of the maximum penalty provided by statute.” And therefore, the waiver of appeal was inapplicable. In the present case, the Ninth Circuit agreed with this reasoning. U.S. v. Phillips, 174 F.3d 1074 (9th Cir. 1999).
9th Circuit treats interest the same for restitution and fraud loss purposes. (610) The Ninth Circuit held that interest should be treated the same whether calculating restitution under 18 U.S.C. § 3663 or fraud loss under guideline section 2F1.1. However, interest is “an all or nothing proposition. Either both the interest due and the interest paid at the time the offense is discovered should be considered, or neither should be considered.” Thus, the district court properly refused to offset defendant’s loss by over $100,000 in interest that he paid to the bank before defaulting on the loan, because the court did not include in the loss calculation the interest still due when the offense was discovered. The court found it unnecessary to decide how late fees should be treated. U.S. v. Davoudi, 172 F.3d 1130 (9th Cir. 1999).
9th Circuit calculates sentencing loss differently than restitution. (610) Defendant made false statements on a loan application to obtain a $318,700 mortgage to refinance his property. He defaulted on the loan almost immediately and the bank eventually foreclosed and sold the property four years later for $180,000. For purposes of both custodial sentencing and restitution, the district court gave defendant credit for the $180,000 recovered by the bank. On appeal, the Ninth Circuit affirmed this credit in calculating the loss for sentencing purposes, but held that for restitution purposes, the court should have deducted the value of the property as of the date the bank foreclosed on it. See U.S. v. Smith, 944 F.2d 618, 624-625 (9th Cir. 1991). The case was remanded to decide whether this would have reduced defendant’s restitution obligation. However, for purposes of calculating the sentence under § 2F1.1, the defendant was properly held responsible for consequential losses due to a falling market or even due to the bank’s own improvident management after the fraud was discovered. U.S. v. Davoudi, 172 F.3d 1130 (9th Cir. 1999).
9th Circuit reverses restitution where loss to bank was not proximately caused by false statements. (610) Defendant made false statements on his application for a loan to buy a gas station. Before granting the loan, the bank independently obtained an inaccurate environmental assessment report, which failed to show that the property was worthless due to contamination. Shortly after the loan was approved, defendant was convicted of a drug offense, defaulted on the loan to the bank, and thereafter was convicted of making a false statement to the bank in violation of 18 U.S.C. § 1014. The district court ordered restitution of the full amount of the loan. On appeal, the Ninth Circuit reversed the restitution order, holding that the loss was not proximately caused by the false statements that defendant made to the bank. Rather, it was caused by the contaminated nature of the loan property. If the bank had known that the property was contaminated it would never have used the property as collateral for the loan. The Ninth Circuit reconciled several earlier cases, holding that the main inquiry for causation in restitution cases is whether there was an intervening cause, and if so, whether the intervening cause was directly related to the offense conduct. Here, defendant’s conduct “had nothing to do with the bank’s loss.” U.S. v. Meksian, 170 F.3d 1260 (9th Cir. 1999).
9th Circuit says failure to advise defendant of restitution was harmless where he was told of fine. (610) In U.S. v. Pomazi, 851 F.2d 244, 248 (9th Cir. 1988), overruled on other grounds by Hughey v. U.S., 495 U.S. 411 (1990), the Ninth Circuit held that a district court’s failure to advise the defendant of the possibility of restitution did not constitute reversible error where the defendant was advised he was subject to a fine in an amount in excess of the restitution imposed. In the present case, the Ninth Circuit applied Pomazi to uphold a $2500 restitution order where defendant was informed, at the time of his plea, that he was subject to a fine of up to $250,000. “The fact that the monetary obligation took the form of restitution rather than a fine is irrelevant to the question of whether his plea was voluntary.” Like the defendant in Pomazi, the defendant here was not prejudiced. “He owed in the form of restitution only a small fraction of what he was informed he might owe as a fine. Because he was ultimately required to pay less than what he had been advised he might actually owe, the error is harmless under Rule 11.” U.S. v. Crawford, 169 F.3d 590 (9th Cir. 1998).
9th Circuit holds that defendant has the burden of establishing an offset from restitution. (610) Defendant argued that because his insurance company paid $15,000 to the victim’s family, he was entitled to offset this against an order to pay $2500 in restitution for the victim’s funeral expenses. Although insurance settlements are excluded in the initial computation of the amount of restitution owed, once that total amount is determined, the defendant is entitled to have the amount of restitution reduced by any amount later recovered by the victim as compensatory damages for the same loss. The Ninth Circuit held that the defendant has the burden of establishing that the earlier compensation was for the “same loss,” so as to be entitled to an offset. The Fifth Circuit also placed the burden on the defendant in U.S. v. Sheinbaum, 136 F.3d 443, 449 (5th Cir. 1998). Because the defendant failed to show that the $15,000 was intended to cover the victim’s funeral expenses, the Ninth Circuit affirmed the district court’s conclusion that there was no statutory basis for reducing the disputed restitution order. U.S. v. Crawford, 169 F.3d 590 (9th Cir. 1998).
9th Circuit vacates restitution order for failure to consider future ability to pay. (610) The PSR found that defendant did not have the ability to pay restitution. At the sentencing hearing, however, the government submitted evidence of other assets and earlier large financial transactions not identified in defendant’s affidavit. After discussion, the court ordered restitution of $2,435,280 (the amount of the taxes evaded), jointly and severally with the other defendants. The court added that the probation officer could determine whether the defendant had the ability to pay restitution and could “make such adjustments in the restitution amount as is appropriate under the circumstances.” The Ninth Circuit held that the district court abused its discretion because there was no indication in the record that the court considered defendant’s future ability to pay any significant amount of restitution. Moreover, the district court “may not delegate to the probation officer the determination of the amount of restitution owed.” That responsibility is squarely placed on the sentencing court. U.S. v. Mikaelian, 168 F.3d 380 (9th Cir. 1999).
9th Circuit says consequential expenses may not be included in restitution. (610) The district court ordered restitution of $116,223, because this was the amount of money that defendant made in the real estate market with the $30,000 that he misappropriated from the bank. The Ninth Circuit reversed, relying on U.S. v. Sablan, 92 F.3d 865, 870 (9th Cir. 1996) for the proposition that “restitution can only include losses directly resulting from defendant’s offense.” For that reason, a restitution order must be based on losses “directly resulting from the defendant’s criminal conduct.” Id. at 870. “Consequential expenses may not be legally included in an order of restitution.” As noted in U.S. v. Catherine, 55 F.3d 1452, 1464 (9th Cir. 1995), loss under 18 U.S.C. § 3663 is the “actual loss.” Judge Ferguson dissented, arguing that defendant “deliberately took away a business opportunity” from the bank and therefore should be required to make restitution of the profit he made with the misappropriated funds. U.S. v. Stoddard, 150 F.3d 1140 (9th Cir. 1998).
9th Circuit upholds constitutionality of Mandatory Victim’s Restitution Act. (610) The Mandatory Victim’s Restitution Act of 1996, 18 U.S.C. §§ 3663(A)-3664, makes restitution mandatory, without regard to a defendant’s economic situation, to identifiable victims who have suffered physical injury or pecuniary loss from crimes of violence, crimes against property, and crimes related to tampering with consumer products. In these two consolidated cases, one defendant was ordered to pay restitution for burning down a church and the other for bank robbery. They argued that the requirement of full restitution violated the Eighth Amendment’s proscription against excessive monetary sanctions and that the act resulted in discrimination based on wealth in violation of equal protection. They further argued that the imposition of a restitution obligation enforceable for twenty years after their release from prison constituted cruel and unusual punishment. Finally, they argued that the Seventh Amendment requires a jury trial before imposing a restitution debt obligation that is enforceable as a civil judgment lien. The Ninth Circuit rejected each of these arguments in turn, holding that the act was constitutional both facially and as applied to these defendants. U.S. v. Dubose, 146 F.3d 1141 (9th Cir. 1998).
9th Circuit reverses restitution for car loan only “tangentially linked” to tax fraud scheme. (610) Defendant filed false tax refund claims, and cashed the refund checks at Seafirst Bank. He then used some of the money as down payment on an $85,000 corvette, obtaining the rest of the money from Seafirst Bank on a car loan. When the fraud was discovered, he de faulted on the loan. He was convicted of conspiracy to commit tax fraud and at sentencing, the judge ordered restitution for the car loan as well. On appeal, the Ninth Circuit reversed, holding that under the Victim and Witness Protection Act, 18 U.S.C. § 3663(a)(1) restitution can only be made to a “victim.” In a conspiracy case, a victim includes “any person directly harmed by the defendant’s criminal conduct in the course of the scheme, conspiracy or pattern.” 18 U.S.C. § 3663(a)(2). Here, there was nothing tying the car loan to the tax fraud scheme beyond the fact that money from the scheme was used as the down payment for the loan. The fact that the same bank cashed the checks and made the loan established at most, a “tenuous relationship” between the loan and the scheme. Because the loan was “only tangentially linked” to the tax fraud scheme, the district court was without authority to order restitution of the loan proceeds. U.S. v. Riley, 142 F.3d 1254 (11th Cir. 1998).
9th Circuit upholds restitution beyond counts of conviction where offense involved a “scheme.” (610) In Hughey v. U.S., 495 U.S. 411 (1990), the Supreme Court held that the “loss caused by the conduct underlying the offense of conviction establishes the outer limits of the restitution order” under the Victim and Witness Protection Act, 18 U.S.C. §§ 3663-64. Id. at 420. However, after Hughey was decided, Congress amended the act to provide that “when someone is convicted of a crime that includes a scheme, conspiracy, or pattern of criminal activity as an element of the offense, the court can order restitution for losses resulting from any conduct that was part of the scheme, conspiracy, or pattern of criminal activity.” This was designed in part to overrule Hughey. See U.S. v. Rutgard, 116 F.3d 1270, 1294 (9th Cir. 1997). Thus in the present case it was proper for the district court to order restitution for all of the losses caused by defendant’s wire fraud scheme, even those counts dismissed pursuant to the plea agreement. U.S. v. Johnson, 132 F.3d 1279 (9th Cir. 1997).
9th Circuit reverses restitution for losses before 1990 beyond the counts of conviction. (610) In Hughey v. U.S., 495 U.S. 411, 413 (1990), the Supreme Court held that under the Victim and Witness Protection Act, 18 U.S.C. § 3663, restitution could only be ordered for “the loss caused by the specific conduct that is the basis of the offense of conviction.” Effective November 29, 1990, the VWPA was amended to provide that “a victim” under the act was “any person directly harmed by the defendant’s criminal conduct in the course of the scheme, conspiracy or pattern.” This amendment undermined Hughey, so that after the amendment, restitution may be ordered for losses to persons harmed in the course of the defendant’s scheme even beyond the counts of conviction. However, the amendment cannot be applied retroactively without violating the ex post facto clause. Accordingly, the Ninth Circuit held that on resentencing, restitution could be ordered for losses prior to November 29, 1990 only on specific counts of conviction, but after that date all losses could be considered that directly harmed an insurer. U.S. v. Rutgard, 116 F.3d 1270 (9th Cir. 1997).
9th Circuit upholds restitution where defendant never completed financial statement. (610) The district court ordered restitution totaling $893,979 under 18 U.S.C. § 3664. Defendant had the burden of showing his financial resources, but he never completed the financial statement for the presentence report. In particular, he left blank the sections requesting information about his real estate holdings, mortgages, life insurance and motor vehicles. As a result, the Ninth Circuit ruled that he did not meet his burden to show his inability to pay restitution. “Given this lack of cooperation at sentencing, the district court was entitled to disbelieve his claims of indigence.” U.S. v. Nash, 115 F.3d 1431 (9th Cir. 1997).
9th Circuit upholds calculation of loss from cloning cellular telephones. (610) Defendant was convicted of cloning cellular telephones in violation of 18 U.S.C. § 1029(a). The district court arrived at a loss figure of $50,000 based on the amount of loss that two telephone companies reported from the 29 cellular telephone ID numbers found in defendant’s possession. Defendant argued that there was no evidence linking him with the entire $50,000 loss, because only a fraction of the illicit calls could be traced to him. He argued that other people could have obtained the same ID numbers and cloned them. The Ninth Circuit found this argument unpersuasive. The district court could have arrived at similar loss figures using several different methods, and each of these methods would have resulted in the same or a higher offense level U.S. v. Clayton, 108 F.3d 1114 (9th Cir. 1997).
9th Circuit says waiver of appeal did not waive appeal of restitution order. (610) As part of the plea agreement, defendant waived his right to appeal “any sentence” as long as it was “within the statutory maximum specified above.” The statutory maximum “specified above” referred to sentencing guideline range calculations. There was no reference to restitution. Accordingly, relying on its earlier decision in U.S. v. Catherine, 55 F.3d 1462 (9th Cir. 1995), the Ninth Circuit held that this wavier language was insufficient to waive the right to appeal a restitution order. Nevertheless, on the merits, the court found no plain error. U.S. v. Zink, 107 F.3d 716 (9th Cir. 1997).
9th Circuit finds no plain error where defendant agreed to restitution amount in plea agreement. (610) Defendant specifically agreed in his plea agreement to “pay the full amount of restitution to be determined by the court at the time of sentencing.” He also acknowledged this agreement in his Rule 11 colloquy, knowing full well that the amount of proposed restitution was $5.8 million. At the sentencing hearing, the district court imposed the $5.8 million restitution order. Once again, defendant did not object. Accordingly, on appeal, the Ninth Circuit found it unnecessary to consider defendant’s argument that this amount exceeded his ability to repay, finding no plain error. Defendant’s clear acquiescence in the restitution order relieved the district court of any independent obligation to determine his ability to pay restitution. U.S. v. Zink, 107 F.3d 716 (9th Cir. 1997).
9th Circuit orders restitution of fraudulently obtained prize money in radio station contest. (610) Defendant, a computer hacker, obtained a computer program to “rig” radio station promotional contests by seizing control of the telephone lines leading to the radio station to insure that he was the correct caller to win various prizes. He used this information to call a radio station and “win” a $10,000 cash prize. He argued that he should not have to make restitution because the station suffered no loss because it would have paid some other caller the prize if he had not rigged the system. The Ninth Circuit rejected the argument, holding that the radio station still suffered a loss by paying out $10,000 under false pretenses. U.S. v. Petersen, 98 F.3d 502 (9th Cir. 1996).
9th Circuit upholds $40,000 restitution even though defendant had no assets or income. (610) The district court may order an indigent defendant to pay restitution if there is sufficient evidence in the record demonstrating that he will have a future ability to make restitution. In this case, although defendant could conceivably have some difficulties in obtaining employment due to his felony convictions, the court found a reasonable possibility that he would be able to pay restitution in the amount of $40,000. The defendant had strong computer skills and was “articulate, gutsy, smart, resourceful, creative,” and “probably could be a pretty successful, productive person” in the future. The court found no support for defendant’s argument that he was required, as part of the plea agreement, to assign his future earnings to the government. U.S. v. Petersen, 98 F.3d 502 (9th Cir. 1996).
9th Circuit says using fines for judicial building fund did not create improper incentive to impose fines. (610) A statute earmarked civil and criminal fines for a judicial building fund. Defendant challenged his $1,000 fine on the ground that the statute created an improper incentive for the court to levy fines and called into question the impartiality of the trial judge in violation of due process. The Ninth Circuit found no merit in the argument. It is true that in Tumey v. Ohio, 273 U.S. 510 (1927), the Supreme Court held that due process was violated by a fine imposed by a judge whose compensation as judge was derived from revenue from fines. But here, the revenue from fines was expected to be a relatively small part of the total amount needed for new judicial buildings and in any event the fact that the judge might someday occupy a new building was “too contingent and speculative and insubstantial” to constitute a direct stake in the outcome of the case. Commonwealth of the Northern Mariana Islands v. Kaipat, 94 F.3d 574 (9th Cir. 1996).
9th Circuit says consequential expenses may not be included in restitution order. (610) The Ninth Circuit held that consequential expenses incurred by the bank because of meetings with the FBI, a staff meeting to discuss the defendant’s computer fraud, and the handling of crank calls were not expenses necessary to repair the computer files damaged by defendant’s criminal conduct. These expenses should have been excluded from the restitution order. U.S. v. Sablan (Bernadette), 92 F.3d 865 (9th Cir. 1996).
9th Circuit says defendant’s present indigence is not sufficient to preclude a restitution order. (610) The district court found that defendant had the capability of providing restitution even though she was indigent at the time of sentencing. It noted that she was “a trained person, she has an education, and she has, therefore, skills which can still be used on the job market.” Because defendant had a computer science degree, the court determined that she would have the ability to pay a restitution order. The Ninth Circuit found no abuse of discretion. U.S. v. Sablan (Bernadette), 92 F.3d 865 (9th Cir. 1996).
9th Circuit upholds $881,000 restitution order for indigent defendant. (610) Although defendant claimed indigency at sentencing, the district court noted that he had a history of being able to raise large sums of money. He had raised over forty-two million dollars in a little over a year and one of his investments had generated a profit of over eight million dollars. Moreover, in a written statement to the probation officer, defendant indicated that the “prospect of an increase in value of assets or in present income” was “excellent if not incarcerated.” Thus, the record provided ample support for the district court’s decision to impose restitution despite defendant’s indigence. U.S. v. English, 92 F.3d 909 (9th Cir. 1996).
9th Circuit reverses departure that was intended to facilitate payment of restitution. (610) The Ninth Circuit joined the Second, Fourth, Sixth, and Seventh Circuits in holding that a sentencing judge may not depart to facilitate payment of restitution. Payment of restitution is not an appropriate basis for departure because it is adequately taken into account by Guideline 3E1.1, dealing with acceptance of responsibility. Allowing a judge to reduce a defendant’s sentence to preserve a defendant’s job and facilitate restitution “would introduce precisely the type of socio-economic disparity into sentencing that the guidelines were designed to eliminate.” U.S. v. Chastain, 84 F.3d 321 (9th Cir. 1996).
9th Circuit limits “scheme” restitution to crimes where the scheme is an element of the offense. (610) While fleeing from arrest, defendant crashed into several cars. He pled guilty to being a felon in possession of a firearm in violation of 18 U.S.C. § 922(g)(1). The district court ordered him to make restitution to the people he crashed into. On appeal, defendant challenged the restitution order under Hughey v. U.S., 110 S.Ct. 1979, 1981 (1990) arguing that because fleeing the police was not part of the conduct underlying his offense of conviction, it could not serve as the basis for a restitution order. The Ninth Circuit agreed. The court acknowledged that after Hughey was decided, the Victim and Witness Protection Act, 18 U.S.C. § 3663(a)(2), was amended to permit restitution beyond the offense of conviction if the offense involved “as an element” a scheme, conspiracy, or pattern of criminal activity. In this case, however, the crime of being a felon in possession of a firearm under 18 U.S.C. § 922(g)(1) did not include a scheme, conspiracy, or pattern of criminal activity as an element of the offense. Therefore the restitution order was improper. U.S. v. Reed, 80 F.3d 1419 (9th Cir. 1996).
9th Circuit holds crime victim lacks standing to challenge order rescinding restitution. (610) Defendant was convicted of fifteen counts of mail fraud. At sentencing, the district court ordered him to pay $780,000 to a group of victims represented by an attorney who had obtained a settlement with the defendant for that amount. Two years later, defendant filed a motion to modify the restitution order. In hearings following this motion, the district court found that defendant had already paid $535,000 to the group of investors and his ability to pay had substantially decreased since the time of the original order, partly as a result of the attorney’s “overreaching.” Accordingly, the district court modified the original restitution order by rescinding defendant’s obligation to make any further payments to the victims represented by the attorney. The group of victims appealed, and on appeal the Ninth Circuit held that they had no standing to challenge the district court’s order. The court agreed with the Eleventh Circuit in U.S. v. Johnson, 983 F.2d 216, 217 (11th Cir. 1993) that the Victim and Witness Protection Act does not give private parties the right to appeal. U.S. v. Mindel, 80 F.3d 394 (9th Cir. 1996).
9th Circuit upholds restitution despite defendant’s present insolvency. (610) A defendant’s insolvency does not bar restitution where the district court finds that he will have a future ability to make restitution. Here, the district court expressly found that defendant’s business acumen and education were such as to justify the restitution imposed irrespective of future licensing difficulties. Defendant pointed to no evidence that would lead the court to conclude that this finding of fact was clearly erroneous. The restitution order therefore lay within the district court’s discretion. U.S. v. Sarno, 73 F.3d 1470 (9th Cir. 1995).
9th Circuit says widow of man who was killed by drunk driver was not a “victim” for restitution purposes. (610) The district court awarded restitution to the widow of an Arizona police officer who was killed when defendant drove drunk and crashed into him. On appeal, the Ninth Circuit reversed, holding that the decedent’s widow was not entitled to restitution because she was not a “victim of the offense of conviction” under the Victim and Witness Protection Act, 18 U.S.C. § 3663(b). It is true that the Act authorizes restitution for lost income where a “victim” suffers bodily injury. But since the widow did not suffer any bodily injury, she was not a “victim” under the Act. Nor did she stand in the legal shoes of a victim, such as the FSLIC in the event of a collapse by an insured savings and loan association. U.S. v. Dayea, 73 F.3d 229 (9th Cir. 1995).
9th Circuit holds restitution cannot exceed loss from count of conviction. (610) In Hughey v. U.S., 495 U.S. 411, 413 (1990), the Supreme Court held that, under the Victim and Witness Protection Act, 18 U.S.C. § 3663, restitution must be limited “to the loss caused by the specific conduct that is the basis of the offense of conviction.” Thus, it was improper to order restitution that exceeded the loss attributable to the single count to which defendant pled guilty. Although the parties may agree to a greater amount in a plea agreement, the defendant did not agree to the higher amount here. [Ed. Note: After the conduct at issue here, 18 U.S.C. § 3663(a) was amended to permit restitution if an element of the offense of conviction involves a scheme, conspiracy or pattern of criminal activity]. U.S. v. Lorenzini, 71 F.3d 1489 (9th Cir. 1995).
9th Circuit upholds restitution order based on some evidence of ability to pay in the future. (610) Defendant argued that the district court erred in finding she had the capability in the future of paying $994,005.65 restitution. The Ninth Circuit rejected the argument, holding that a restitution order “will not be vacated as long as the district court considered the circumstances affecting defendant’s ability to pay and the record reflects some evidence that the defendant may be able to pay the amount in the future.” Here the district court considered the liquidation value of all of defendant’s husband’s assets that would go through receivership. The court also considered the value of the defendant’s vacation homes, business, stocks, etc. There was no abuse of discretion. U.S. v. Pappadopoulos, 64 F.3d 522 (9th Cir. 1995), abrogated on other grounds by Jones v. U.S., 529 U.S. 848 (2000).
9th Circuit says waiver of appeal of sentence did not waive appeal of restitution. (610) In the plea agreement, defendant agreed that if he received a sentence “within the range of offense level 13 or less, Criminal History Category One, (12-18 months) or less, he hereby waives any right to appeal from that sentence.” (Emphasis added.) The Ninth Circuit held that “that sentence” did not include restitution because restitution is not calculated under the guidelines, but under a separate statute, 18 U.S.C. § 3663. Accordingly, defendant was permitted to appeal the restitution order. U.S. v. Catherine, 55 F.3d 1462 (9th Cir. 1995).
9th Circuit values property as of date it is returned to owner, not date it is later sold. (610) Reaffirming earlier cases, the Ninth Circuit held that in calculating the amount of restitution for making false statements in a loan application, the value of the collateral property is its value when the bank regained control of it, not its value when it is ultimately disposed of by the bank. Thus, in this case, the restitution order was reversed and the case remanded with directions to base restitution on the value of the property when the bank regained control of it. U.S. v. Catherine, 55 F.3d 1462 (9th Cir. 1995).
9th Circuit orders restitution for misdemeanor. (610) 18 U.S.C. § 3663(a)(1) provides that the court may order restitution “in addition to, or in the case of a misdemeanor, in lieu of any other penalty authorized by law.” Defendant argued that since he was convicted of a misdemeanor and sentenced to custody, he could not also be ordered to make restitution, because the statute allows for restitution in misdemeanor cases only when no other penalty is imposed. The Ninth Circuit rejected this argument, noting that defendant’s interpretation would completely undercut the purpose of the statute, which was to expand the availability of restitution. Although the statute was ambiguous, the “rule of lenity” did not require an interpretation contrary to the purpose of the statute. U.S. v. Miguel, 49 F.3d 505 (9th Cir. 1995).
9th Circuit says restitution is not limited to victims named in counts of conviction. (610) Title 18 U.S.C. § 3663(a)(2) states that “[f]or the purposes of restitution, a victim of an offense that involves as an element a scheme, a conspiracy, or a pattern of criminal activity means any person directly harmed by the defendant’s criminal conduct in the course of the scheme, conspiracy, or pattern.” The 9th Circuit noted that nothing in this section restricts the availability of restitution to the victim specified in the offense of conviction. In the present case, defendant “deliberately” targeted and unsuspecting family as the victim of his crimes of obstructing the FBI and grand jury. Therefore it was proper to award $6,836 restitution for the mother’s loss of income when she lost her job and went on disability as a result of becoming distraught over defendant’s lies. U.S. v. Haggard, 41 F.3d 1320 (9th Cir. 1994).
9th Circuit reverses restitution that was based on ability to defraud people rather than ability to earn money lawfully. (610) In support of its restitution order, the district court noted that defendant was “very able and capable human being” as demonstrated by her fraud, and because “[s]he has lots of ability” she should use those talents “in a legal way.” The 9th Circuit held that a district court may not base its restitution order on irrelevant or illegitimate criteria. “Here the district court erred by basing its restitution solely on [defendant’s] ability to defraud people rather than on her ability to earn money lawfully.” U.S. v. Myers, 41 F.3d 531 (9th Cir. 1994).
9th Circuit says failure to object to restitution order does not waive pure issues of law. (610) Purely legal issues are exempted from the general rule that failure to object waives an issue on appeal. The 9th Circuit noted that the claim that a restitution order violated the ex post facto clause was a purely legal issue and was therefore not waived by the failure to object below. U.S. v. DeSalvo, 41 F.3d 505 (9th Cir. 1994).
9th Circuit says applying amended restitution statute violated ex post facto clause. (610) A 1990 amendment expanded the Victim and Witness Protection Act, 18 U.S.C. § 3663(a)(2) by including losses attributable to the entire criminal course of conduct. Since the indictment did not clearly show that defendant’s conduct continued past the effective date of the 1990 amendment, the Ninth Circuit held that a restitution order based on the amendment violated the ex post facto clause. U.S. v. DeSalvo, 41 F.3d 505 (9th Cir. 1994).
9th Circuit says restitution awards were not clear error. (610) Rejecting defendants’ arguments that victim losses were not related to the offense of conviction, were too speculative and remote, were based on irrelevant evidence and occurred after the date of the conspiracy, the 9th Circuit upheld the restitution awards because the district court’s factual findings to the contrary were not plain error. U.S. v. Rice, 38 F.3d 1536 (9th Cir. 1994).
9th Circuit upholds government’s restitution motion as timely. (610) The government’s restitution motion was timely even though it was filed 32 months after sentencing. The 9th Circuit held the district court properly delayed resolution of the issue pending defendant’s appeal to the Ninth Circuit and petition to the Supreme Court. Defendant failed to show the delay was unreasonable or prejudicial. U.S. v. Rice, 38 F.3d 1536 (9th Cir. 1994).
9th Circuit rules court need not hold evidentiary hearing on restitution. (610) Neither the Victim and Witness Protection act nor Fed. R. Crim. P. 32 requires the sentencing court hold an evidentiary hearing on the issue of restitution, according to the 9th Circuit. Defendant need only be afforded notice and an opportunity to be heard. Defendant knew restitution was an issue when his plea bargain limited his liability. He had three months to respond and vigorously argued the restitution issue using numerous documents, a written answer and oral argument. Therefore the district court did not abuse its discretion in declining to hold an additional evidentiary hearing. U.S. v. Rice, 38 F.3d 1536 (9th Cir. 1994).
9th Circuit permits restitution for victim not named in the indictment or information. (610) Under the Federal Probation Act, the sentencing court can order restitution for a victim not named in the information or indictment as long as it makes a finding of fact that the claimant was a victim. U.S. v. Rice, 38 F.3d 1536 (9th Cir. 1994).
9th Circuit upholds restitution order based on unpaid rents. (610) The district court ordered restitution based on the amount of rent and mortgage payments defendant failed to pay to the victims of his bankruptcy fraud. The Ninth Circuit upheld the restitution order finding defendant was financially capable of complying with the order. The unpaid rent and mortgage payments were the actual damages in the case. Defendant’s payment of storage costs for his personal property and the negotiations to get defendant off the property were not settlements affecting restitution. U.S. v. Lindholm, 24 F.3d 1078 (9th Cir. 1994).
9th Circuit reverses restitution order where court did not consider defendant’s ability to pay. (610) A sentencing court is not prohibited from imposing restitution even on a defendant who is indigent at the time of sentencing, so long as the record indicates that the court considered the defendant’s future ability to pay. Here, the court ordered defendant to pay restitution in the amount of $55,173 within three years from his release from prison. But there was no indication that the district court considered defendant’s future ability to pay. The case was remanded for the district court to make that determination. U.S. v. Newman, 6 F.3d 623 (9th Cir. 1993).
9th Circuit upholds restitution order where conduct underlying conviction caused loss. (610) Defendant was convicted of possession of stolen goods from interstate commerce based on his possession of stolen cartons of gloves. The district court ordered defendant to pay restitution for 180 missing cartons. Defendant challenged the order, arguing that mere possession of the stolen merchandise did not “cause” the loss. The Ninth Circuit affirmed because the specific conduct underlying defendant’s conviction for possession of stolen goods caused the victim’s loss. The evidence showed that the only gloves that were not recovered were in the control and possession of defendant. The court did not address the question of whether or when a restitution amount need be apportioned between the individual who steals the goods and the individual who possesses them thereafter. U.S. v. Bachsian, 4 F.3d 796 (9th Cir. 1993).
9th Circuit sustains restitution order without specific finding of ability to pay. (610) The district court ordered the defendant to pay restitution without making a specific finding he had the ability to pay. The Ninth Circuit affirmed because no such finding is necessary where there is evidence in the record the defendant may be able to pay. Here, the presentence report contained information regarding defendant’s financial condition and future ability to pay and the district court did not err in ordering restitution. U.S. v. Bachsian, 4 F.3d 796 (9th Cir. 1993).
9th Circuit reverses restitution for psychological counseling where no physical injury to victim. (610) Defendant was convicted of various offenses for launching of mortar attacks and planting car bombs designed to damage government buildings in three California cities. The district court included the cost of psychological counseling for IRS employees in its restitution order. The Ninth Circuit reversed, finding that 18 U.S.C. §3663 only authorizes restitution for the cost of counseling where the victim has suffered a physical injury. The court may only award restitution for the categories enumerated in §3663. Here, no IRS employee suffered physical injury and it was error to include the cost of counseling in the restitution order. U.S. v. Hicks, 997 F.2d 594 (9th Cir. 1993).
9th Circuit reverses restitution for amount outside the offense of conviction. (610) In this habeas corpus case, defendant had been charged with fraud totaling approximately $350,000, but had pled guilty to only two counts alleging $103,400. The district court ordered restitution in the total amount of $350,000, but later modified it to $103.400. On appeal, the 9th Circuit affirmed the modification. The court noted that for crimes committed between 1983 and 1987, a district court may order restitution under either the Federal Probation Act (18 U.S.C. section 3651), or the Victim and Witness Protection Act, (18 U.S.C. section 3663). However, under either act, in the absence of a plea agreement stipulating an amount of restitution, or a judicial determination of the facts by a preponderance of the evidence, no more than $103,400 in restitution could have been ordered. The court reached this conclusion even though, as the government pointed out, defendant admitted to a “scheme” of conduct. “The scheme admitted by the defendant involved losses of only $103,400, not the $350,000 alleged in the indictment.” U.S. v. Parrott, 992 F.2d 914 (9th Cir. 1993).
9th Circuit upholds restitution order without specific factual findings. (610) Defendant pled guilty to five counts of bank robbery and the court ordered that restitution be made to the banks and that the $2,400 seized at the time of defendant’s arrest be applied to the restitution obligation. Defendant argued the restitution order was invalid because the court failed to consider the needs of his dependent child. The Ninth Circuit upheld the restitution order, finding the trial judge was aware of defendant’s financial circumstances and of the dependent child. While the district court must consider the factors in the restitution statute, 18 U.S.C. § 3664(a), it is not required to make findings of fact or even discuss the factors on the record. Here, the presentence report contained information bearing on the § 3664(a) factors and the court commented on defendant’s arguments prior to sentencing. U.S. v. Mills, 991 F.2d 609 (9th Cir. 1993).
9th Circuit finds valid restitution order defeats motion to return seized property. (610) Defendant pled guilty to five counts of bank robbery and the court ordered that the $2,400 seized at the time of defendant’s arrest be applied to restitution to the banks. Defendant filed a motion under Fed. R. Crim. P. 41(e) seeking return of the cash and the district court found that the money belonged to defendant at the time it was seized. However, rather than returning the cash, the court denied the motion and ordered it be applied to the restitution obligation. The Ninth Circuit affirmed, finding that a valid restitution order under the Victim Witness Protection Act gives the government a cognizable claim of ownership sufficient to defeat a Rule 41(e) motion. A restitution order is enforceable as a lien upon all of defendant’s property at the time judgment is entered. U.S. v. Mills, 991 F.2d 609 (9th Cir. 1993).
9th Circuit remands for explanation of reasons for departure based on restitution. (610) One reason the district court gave for departing was that defendant paid $58,000 restitution, which was, in the court’s view, substantially more than the amount for which she was responsible. The 9th Circuit noted that departure for restitution was constrained in three ways. First, the departure must show acceptance of responsibility under section 3E1.1 note 1(b). Second, the court may depart only for extraordinary acceptance of responsibility. Third, the magnitude of the departure must be commensurate with the level of the defendant’s acceptance of responsibility. The case was remanded for the district court to reconsider its decision to depart. Judge Tang dissented, arguing that the departure was not clearly erroneous given the combination of factors here. U.S. v. Miller, 991 F.2d 552 (9th Cir. 1993).
9th Circuit finds restitution order invalid where defendant had no future ability to pay. (610) Defendant pled guilty to wire fraud and related offenses and the district court ordered him to pay $454,841 in restitution during his three year term of supervised release. Because the record did not suggest any possibility that defendant could pay that restitution within three years of completion of his prison sentence, the 9th Circuit vacated and remanded the case for further consideration. At the time restitution is ordered, the record must reflect some evidence the defendant may be able to pay the amount ordered in the future. While a district court may impose restitution on a presently indigent defendant, there must be consideration of the defendant’s future ability to pay. Here, even the U.S. Attorney told the court that defendant faced exclusion from the country upon release and appeared to be without funds to make restitution or pay a fine. U.S. v. Ramilo, 986 F.2d 333 (9th Cir. 1993).
9th Circuit finds notice of restitution in plea agreement was not agreement to pay. (610) Defendant was ordered to pay $454,841 in restitution as a result of his conviction of wire fraud and related charges. He challenged the restitution order on the ground that he was unable to pay. The government argued the plea agreement precluded a challenge to the restitution order. The 9th Circuit found that the notice of the restitution in the plea agreement was not an agreement that defendant would pay restitution in the listed amounts. The plea agreement did no more than specify the amount of loss sustained and the amount the court might order. The apparent purpose of the provision was to make the guilty plea knowing and voluntary. U.S. v. Ramilo, 986 F.2d 333 (9th Cir. 1993).
9th Circuit permits resentencing without restitution where no restitution advice at plea. (610) In violation of Rule 11, Fed. R. Crim. P., the district court failed to advise defendant at the time of his plea that restitution might be ordered. At sentencing, the government recommended, and the court ordered, $70 million in restitution. Defendant argued that this violated the plea agreement, entitling him to have his plea set aside. The 9th Circuit disagreed, noting that this might provide a windfall to defendant if the government were forced by the passage of time to drop its case against him. Rather, the court held that it was preferable to allow the district court to “decide in the first instance whether the interests of justice . . . are better served by merely resentencing without restitution or by allowing [defendant] to withdraw his plea.” U.S. v. Rogers, 984 F.2d 314 (9th Cir. 1993).
9th Circuit holds that restitution in mail fraud case is not limited to amount of check mailed, but includes entire scheme. (610) Relying on Hughey v. U.S., 495 U.S. 411 (1990), and U.S. v. Snider, 957 F.2d 703 (1992), defendant argued that the restitution exceeded that permitted by the Victim Witness Protection Act, 18 U.S.C. section 3579. Hughey interpreted that Act as limiting restitution only to losses underlying the offense of conviction, and not for related conduct. Snider concluded that a defendant could not be required to pay restitution beyond the offense of conviction even if the plea agreement so provided. In this case, the 9th Circuit held that the restitution did not go beyond the offense of conviction because “the fraud charged, and the restitution permitted, is clearly not limited to the amount of [the] check” in count one. Similarly, count two alleged a scheme to defraud an insurance company of $102,163.72 and alleged that in furtherance of that fraud, defendant caused a statement of his physical condition to be placed in the mail. The 9th Circuit held that the “valueless physical statement does not limit the amount of the fraud charged.” U.S. v. Scarano, 975 F.2d 580 (9th Cir. 1992).
9th Circuit reiterates that mail fraud is not a continuing offense under guidelines, despite contrary ruling as to restitution. (610) In U.S. v. Niven, 952 F.2d 289, 293 (9th Cir. 1991), the 9th Circuit held that mail and wire fraud are not continuing offenses: “Each offense is complete when the fraudulent matter is placed in the mail or transmitted by wire, respectively.” Defendant argued that Niven conflicted with U.S. v. Angelica, 859 F.2d 1390, 1393 (9th Cir. 1988) which held that a defendant could be required to pay restitution under the Victim and Witness Protection Act for all losses caused by his mail fraud scheme even though most of the fraudulent transactions occurred prior to the effective date of the act. The 9th Circuit found no conflict between the two cases, noting that Angelica was interpreting the Victim and Witness Protection Act, whereas Niven was interpreting the Sentencing Guidelines. Accordingly, the district court did not err in sentencing the defendant without resort to the guidelines. U.S. v. Scarano, 975 F.2d 580 (9th Cir. 1992).
9th Circuit permits restitution in conspiracy only for acts specifically found by the jury. (610) In Hughey v. U.S., 110 S. Ct. 1979 (1990), the Supreme Court held that restitution under the Victim and Witness Protection Act, 18 U.S.C. section 3663(a)(1) must be limited to the loss caused by the offense of conviction. Here the defendants were convicted of conspiracy to commit mail and wire fraud and the district court awarded restitution to all “victims” of the conspiracy. The 9th Circuit reversed, holding that in a conspiracy, “a loss must result from the act or acts done in furtherance of the conspiracy, as specifically found by the jury.” Because the verdict did not specify which acts the jury believed were committed, the court held that it was impossible to award restitution for the losses stemming from the conspiracy. U.S. v. McHenry, 974 F.2d 1031 (9th Cir. 1992).
9th Circuit upholds pre-1990 plea agreement for restitution outside offense of conviction. (610) Following 9th Circuit cases holding that the now-repealed Federal Probation Act allowed restitution beyond the offense of conviction as part of a plea bargain, the 9th Circuit held that the Victim-Witness Protection Act, 18 U.S.C. section 3663, also permits such plea bargains. The VWPA was amended in 1990 to expressly permit such restitution, but the 9th Circuit held that even before the amendment, the VWPA permitted the parties to agree to restitution beyond the offense of conviction. The court recognized that its opinion was contrary to decisions in the 5th, 7th, 8th and 11th Circuits and the Eastern District of Virginia, as well as U.S. v. Snider, 945 F.2d 1108 (9th Cir. 1991) which had been vacated on motion of the government. But it saw “no principled way” to distinguish its prior precedents. U.S. v. Soderling, 970 F.2d 529 (9th Cir. 1992).
9th Circuit says victim has no obligation to mitigate damages for restitution. (610) Defendants argued that the district court should not have ordered restitution for losses that could have been avoided had the FDIC properly mitigated damages. The 9th Circuit rejected the argument, finding “no support in the VWPA or our caselaw for the proposition that the victim of a criminal offense is required to mitigate damages.” The court expressed no opinion, however, on “whether the VWPA permits a district court to limit damages due to a victim’s failure to mitigate properly.” U.S. v. Soderling, 970 F.2d 529 (9th Cir. 1992).
9th Circuit reverses contempt restitution where defendant was already obligated to make restitution. (610) Defendants pled guilty to bank misapplication and were ordered to pay restitution. When it became apparent that they were wasting assets and avoiding restitution, they were convicted of criminal contempt and again ordered to make restitution in the full amount. On appeal, the 9th Circuit reversed, holding that the second restitution order served no purpose. The court added, however, that on remand, the district court would be free to order restitution for any actual loss suffered by the FDIC for the defendants’ contumacious acts. U.S. v. Soderling, 970 F.2d 529 (9th Cir. 1992).
9th Circuit holds that Federal Probation Act restitution may include all the victims of the fraud, unlike VWPA. (610) In Hughey v. U.S. 495 U.S. 411 (1990), the Supreme Court held that under the Victim and Witness Protection Act of 1982 (VWPA), 18 U.S.C. section 3663, restitution may be ordered only for losses caused by the specific conduct that is the basis of the offense of conviction. Here, however, The defendant’s mail fraud was committed while the Federal Probation Act, 18 U.S.C. section 3651, was in effect, before the VWPA was passed in 1982. The Federal Probation Act did not limit restitution. Nevertheless the district court treated the case as if the VWPA applied, and limited restitution to the counts of conviction. The government appealed, and the 9th Circuit reversed, holding that the restitution should include all victims of the fraud. U.S. v. Hammer, 967 F.2d 339 (9th Cir. 1992).
9th Circuit holds that victim was not a coconspirator and therefore was entitled to restitution. (610) Defendant was convicted of conspiracy to smuggle the victim into Guam for illegal employment. The 9th Circuit rejected defendant’s claim that the victim was a co-conspirator. Defendant and his wife employed the victim for approximately two years. Her lost wages were a direct consequence of the defendant’s conspiracy. Under the Victim and Witness Protection Act, 18 U.S.C. section 3663, a person directly harmed by the defendant’s criminal activity is properly awarded restitution for the loss caused. The court rejected defendant’s claim that his wife would receive a double benefit if she were not forced to also pay the amount of restitution to the victim. U.S. v. Sanga, 967 F.2d 1332 (9th Cir. 1992).
9th Circuit affirms restitution schedule despite claim of inability to pay. (610) Defendant was ordered to pay restitution within 30 days of judgment. He argued that he could not pay the money unless he were put on probation so he could obtain it. The 9th Circuit rejected this argument, noting that the District Court had a complete accounting of the defendant’s finances, which contradicted his claim of poverty. Defendant had combined assets of $162,000 and had he offered to make the $5,000 initial payment before any negotiations about a probationary sentence. Therefore, there was sufficient evidence that the $5,000 restitution was not contingent on a probationary sentence. It was not a clear error to order the payment within thirty days of judgment. U.S. v. Sanga, 967 F.2d 1332 (9th Cir. 1992).
9th Circuit vacates restitution award where court delegated its authority to the probation office. (610) At sentencing, the court said it was unable to set the exact amount of restitution, but was going to accept the probation officer’s estimate of $1,008,000 as the loss. “The restitution will be that figure minus the recovery, the value of all properties recovered.” Although this order did not delegate “unlimited discretion” to the probation office, the 9th Circuit noted that it was “apparent at the time of sentencing that the restitution award would be substantially reduced. The government had recovered and valued a considerable amount of stolen property.” The district court committed plain error in not determining the value of this recovered property and deducting it from the restitution amount. In a footnote, the court noted that it was not presented with a situation involving how much credit a defendant should receive for property recovered after restitution is ordered. U.S. v. Clack, 957 F.2d 659 (9th Cir. 1992).
9th Circuit holds that applying amended restitution statute to defendant would violate the ex post facto clause. (610) Nearly a year after defendant’s sentencing, Congress added a provision to the Victim and Witness Protection Act allowing courts to order restitution “in any criminal case” pursuant to a plea agreement. 18 U.S.C. section 3663(a)(3)(1990). In a footnote, the 9th Circuit held that applying this amendment to the defendant “would violate the ex post facto clause of the Constitution. U.S. v. Snider, 957 F.2d 703 (9th Cir. 1992).
9th Circuit holds that plea agreement cannot authorize restitution in absence of statutory authority. (610) The government argued that even in the absence of any statutory authority, the restitution order could be upheld on the basis of the plea agreement. The argument was based on the assumption that pleas are governed by the dictates of contract law and that a restitution order is in the nature of a settlement for civil damages. The 9th Circuit rejected the argument, ruling that restitution “is a criminal penalty, not a civil remedy.” U.S. v. Snider, 957 F.2d 703 (9th Cir. 1992).
9th Circuit holds that prior to 1990 Amendment restitution could not be ordered for Title 31 violations. (610) Defendant pled guilty to “structuring” a financial transaction in violation of 31 U.S.C. sections 5322(a) and 5324. Pursuant to a plea agreement, the district court imposed restitution totaling $183,250. On appeal, the 9th Circuit reversed, holding that the restitution could not have been imposed under the Federal Probation Act, 18 U.S.C. section 3651, repealed in 1987, because the Act authorizes restitution only as a condition of probation. Nor could restitution be upheld under the Victim and Witness Protection Act of 1982, 18 U.S.C. section 3663-64 because, at the time of the plea and sentencing, that Act provided restitution only for Title 18 offenses and Title 49 U.S.C. section 1472. Although the Act was amended in 1990 to permit restitution “in any criminal case,” the amendment did not apply to defendant. Moreover, charging “aiding and abetting” under 18 U.S.C. section 2 did not make the restitution valid because that section does not establish “an offense.” The restitution order was reversed. U.S. v. Snider, 957 F.2d 703 (9th Cir. 1992).
9th Circuit holds that improper restitution required entire sentence to be vacated. (610) In Hughey v. U.S., 110 S.Ct. 1979 (1990) the Supreme Court held that restitution under the Victim Witness Protection Act must be limited to the offense of conviction. Since the restitution order here exceeded that authorized by the Victim Witness Protection Act, the sentence was vacated. The court held that the appropriate remedy was to vacate the entire sentence even where only the restitution part of the sentence was invalid. U.S. v. Niven, 952 F.2d 289 (9th Cir. 1991), overruling on other grounds recognized by U.S. v. Ortland, 109 F.3d 539 (9th Cir. 1997).
9th Circuit upholds restitution to bank for expenses in reprogramming ATM information. (610) The defendants discovered a way to decode ATM information and gained access to account numbers and personal identification numbers. The district judge ordered the conspirators to pay restitution to the Bank of America for expenses in reprogramming the ATM account information. On appeal, the 9th Circuit affirmed, ruling that the restitution order reflected losses to the bank resulting directly from the decoding of the stolen information and the manufacturing of the counterfeit ATM cards. “The award did not cover expenses ancillary to the actual loss, such as the salaries of witnesses.” U.S. v. Koenig, 952 F.2d 267 (9th Cir. 1991).
9th Circuit remands for resentencing in light of Hughey v. U.S. (610) In U.S. v. Angelica, 859 F.2d 1390 (9th Cir. 1988) the 9th Circuit remanded defendant’s case for resentencing after holding that restitution could be based on losses by all victims of defendant’s fraudulent scheme, rather than merely on losses by victims named in the indictment. Thereafter, in Hughey v. U.S., 110 S.Ct. 1979 (1990), the Supreme Court held that a court cannot order restitution under the Victim and Witness Protection Act for acts other than those underlying the offense of conviction. Accordingly, on defendant’s second appeal, the 9th Circuit ordered that defendant’s restitution order be modified to conform with Hughey, and that on remand, the district court should include in its restitution order only the losses sustained by the eight victims named in the indictment. The court also directed the district court to consider on remand whether a payment period, rather than immediate restitution, would be appropriate. U.S. v. Angelica, 951 F.2d 1007 (9th Cir. 1991).
9th Circuit affirms restitution order based on retail value of converted diamonds. (610) Defendant participated in a fraudulent trading business which persuaded customers to send their diamonds in for resale, and then misappropriated the proceeds. Defendant contended that the victims of his scheme were “investors” who would purchase diamonds not at retail but at wholesale prices substantially lower than the prices stated by the government expert. The 9th Circuit found no abuse of discretion in the district court’s adoption of the government expert’s contrary valuation. U.S. v. Angelica, 951 F.2d 1007 (9th Cir. 1991).
9th Circuit upholds joint and several liability for restitution. (610) Defendant contended that the district court erred in ordering joint and several liability in resentencing him because at his original sentencing, the court had foreclosed such liability. The 9th Circuit upheld the joint and several liability order, finding defendant’s interpretation of the district judge’s original comments to be exaggerated. The judge’s suggestion that its order requiring defendant to make full restitution might be reduced to a sum that “fairly represent[ed] everyone’s involvement and a balance of contribution” may have led defendant to believe that his restitution liability would eventually be reduced. However, the district court ultimately ordered defendant to make restitution of the entire amount of his victims’ losses, with credit given for restitution amounts other defendants made. The court did not foreclose joint and several liability. U.S. v. Angelica, 951 F.2d 1007 (9th Cir. 1991).
9th Circuit upholds $12.8 million restitution order despite claim of inability to pay. (610) Circuit Judge Wallace and District Judge Burns found no abuse of discretion in ordering a formerly wealthy but now indigent defendant to pay nearly $12.8 million to the FSLIC within five years of his release from prison. The court noted that if the defendant “has not paid the full amount at the end of the five year period but can demonstrate that he has made a diligent, good faith effort to do so, he may petition the district court at that time for either an extension of time period for payment or a remittitur.” The court also held that it was proper to include prejudgment interest in the restitution award. However the case was remanded for a new determination of the value of the collateral property. Judge O’Scannlain dissented. U.S. v. Smith, 944 F.2d 618 (9th Cir. 1991).
9th Circuit upholds restitution to FSLIC for losses in a scheme that began before effective date of VWPA. (610) Relying on U.S. v. Angelica, 859 F.2d 1390, 1392 (9th Cir. 1988), Circuit Judges Wallace and O’Scannlain and District Judge Burns held that the restitution provisions of the Victim and Witness Protection Act, 18 U.S.C. section 3663-3664, apply to all losses resulting from a fraud scheme that begins before and continues beyond January 1, 1983, the effective date of the Act. Moreover, although “it was not directly harmed, the FSLIC did suffer as a result of [defendant’s] conduct and the Act’s legislative history makes it clear that the statute is intended to encompass both direct and indirect victims of criminal acts.” The panel also rejected defendant’s due process argument, noting that the judge held two lengthy restitution hearings and provided funds for defendant to hire appraisal experts for both hearings. Although “this was a complicated case, the procedures used in entering the restitution order were constitutionally sufficient.” U.S. v. Smith, 944 F.2d 618 (9th Cir. 1991).
9th Circuit holds that restitution under VWPA is limited to offenses of conviction even when the conviction involves a conspiracy or scheme. (610) In Hughey v. U.S., 495 U.S. 411, 110 S.Ct. 1979 (1990), the Supreme Court limited restitution under the Victim and Witness Protection Act, (VWPA) to the offense of conviction. Although the 9th Circuit had previously held that a single count of wire fraud encompassed liability for the entire scheme, see U.S. v. Pomazi, 851 F.2d 244 (9th Cir. 1988), the court in this case read Hughey to overrule Pomazi and “limited restitution in a wire fraud scheme to the amount specified in the count to which the guilty plea was made.” The court rejected the government’s attempt to distinguish Hughey on the ground that the count to which defendant pleaded nolo contendere charged that a $3,000 fraudulent transfer was part of an overall scheme which defrauded various victims of $8.5 million. The court said that “even when the offense of conviction involves a conspiracy or scheme, restitution must be limited to the loss attributable to the specific conduct underlying the conviction.” U.S. v. Sharp, 927 F.2d 170 (4th Cir. 1991).
9th Circuit holds that limit on restitution to count of conviction applies only to restitution under VWPA. (610) In Hughey v. U.S, 495 U.S. 411, 110 S.Ct. 1979 (1990), the Supreme Court held that the language of the Victim Witness Protection Act, 18 U.S.C. § 3663 evidenced “Congress’ intent to authorize an award of restitution only for the loss caused by the specific conduct that is the basis of the offense of conviction.” Based on Hughey, the defendant here argued that his restitution should have been limited to the amount of the loss suffered by persons in the counts to which he pled guilty. The 9th Circuit rejected the argument, holding that Hughey applied only to restitution under the Victim and Witness Protection Act. In the present case, restitution was imposed as a special condition of probation under 18 U.S.C. § 3651. The 9th Circuit upheld the order to pay $1.7 million in restitution, declining to extend the Hughey decision to cases where restitution is imposed as a special condition of probation. U.S. v. Duvall, 926 F.2d 876 (9th Cir. 1991).
9th Circuit holds that state criminal restitution obligation is dischargeable in bankruptcy under Chapter 13. (610) In a brief one sentence order, the 9th Circuit held that “on the authority of Pennsylvania Dept. of Public Welfare v. Davenport, 495 U.S. 552 (1990), we affirm the decision of the district court that a state criminal restitution obligation is dischargeable under Chapter 13 of the bankruptcy code.” In re Price, 920 F.2d 562 (9th Cir. 1990).
9th Circuit holds that restitution is limited to offense of conviction. (610) In Hughey v. U.S., 495 U.S. 411, 110 S.Ct. 1979 (1990), the Supreme Court held that the Victim and Witness Protection Act, 18 U.S.C. § 3663(d), limits an order of restitution to “the loss caused by the specific conduct that is the basis of the offense of conviction.” Since guideline section 5E1.1(a) provides that restitution shall be ordered in accordance with the act, restitution under the guidelines is similarly limited to the offense of conviction. Here the district court had ordered restitution of funds taken from a robbery of another bank which was dismissed as part of a plea bargain. Pursuant to the stipulation of the parties, the 9th Circuit reversed the order of restitution. U.S. v. Garcia, 916 F.2d 566 (9th Cir. 1990).
9th Circuit holds victim act inapplicable to costs in government sting operation. (610) A sentencing court may order that a defendant provide restitution to a victim of the crime under 18 U.S.C. sections 3663-64. To make a case against defendant for transferring false identification documents, a government informant paid defendant $100 for a set of false documents. The sentencing court ordered defendant to reimburse the government the amount spent for the documents. In a per curiam opinion, The 9th Circuit reversed. While noting that the government might qualify as a “victim” under the restitution statute when it loses money as a direct result of a crime, the court concluded that the government’s loss from defendant’s crime ÄÄ payment for the documents ÄÄ was essentially an investigative cost that was too indirect to qualify the government as a victim. The court suggested that the proper way to deprive defendant of his criminal profits was to fine him. U.S. v. Salcedo-Lopez, 907 F.2d 97 (9th Cir. 1990).
9th Circuit holds that defendant’s gift to victim must be credited toward restitution. (610) Before sentencing, defendant offered a gift of twenty acres of his property to the victim, the National Park Service. At sentencing, the district court ordered restitution in the amount of $272,000 but refused to apply the “gift” toward this amount. The 9th Circuit reversed, holding that 18 U.S.C. § 3579 authorizes restitution only to the extent that the Park Service’s loss exceeds the value of any gift that it accepts from the defendant. “The gift clearly would result in at least partial compensation,” and therefore must be deducted from the restitution owed. U.S. v. Oren, 893 F.2d 1057 (9th Cir. 1990).
9th Circuit holds criminal court cannot include attorney’s fees arising from civil case in restitution. (610) Defendant was convicted of defrauding her insurance company. The presentence report, in calculating restitution, included the insurance company’s attorney’s fees in a wholly separate state court civil suit defendant had filed. The 9th Circuit held the fees were too remote to serve as a basis for restitution. Moreover, a district court in a criminal case has no authority to award attorney’s fees in a separate civil suit pending in state court. U.S. v. Barany, 884 F.2d 1255 (9th Cir. 1989).
9th Circuit rules probation officer cannot set restitution amount under probation act. (610) A defendant convicted of mail fraud committed between 1983 and 1987 was ordered to pay restitution in an amount set by the probation officer. Defendant appealed, arguing that the order was impermissibly vague. The 9th Circuit agreed, ruling that the probation act (former 18 U.S.C. § 651) required the district court to determine with certainty actual damages from the amount of the offense, as well as the maximum amount of restitution. Under the act, the district court could only delegate timing and manner of payment, not the amount. U.S. v. Barany, 884 F.2d 1255 (9th Cir. 1989). The 9th Circuit holds restitution to government for tax loss cannot exceed “actual” tax loss. (610) The district court’s sentence of restitution was reversed by the Ninth Circuit. The 9th Circuit held that on remand the government could not collect more than its total tax loss as restitution. Judge Wallace concurred. U.S. v. Jenkins, 884 F.2d 433 (9th Cir. 1989).
9th Circuit holds that on remand court can resentence on all counts which are part of a single sentence package. (610) Defendant challenged only the restitution portion of his sentence and argued that on remand the probation portion should not be reconsidered. The 9th Circuit held that because the sentences may have been a “package” the district court could reconsider the probation portion of the sentence. The court also held that because another count for which he was sentenced involved closely related misconduct, the district court could reconsider its sentence on that count. Judge Wallace dissented. U.S. v. Jenkins, 884 F.2d 433 (9th Cir. 1989).
9th Circuit holds restitution can only be mandated for losses related to offenses for which defendant is convicted. (610) Defendant’s probation was made conditional on payment of money equal to the sum awarded defrauded investors in an unrelated civil suit. The 9th Circuit reversed, holding that the court exceeded its authority because the sum was not a loss caused by the offense charged. Judge Wallace concurred. U.S. v. Jenkins, 884 F.2d 433 (9th Cir. 1989).
9th Circuit holds denial of motion to quash writ of execution to collect restitution is not appealable. (610) Defendant was convicted of credit card fraud and was ordered to pay $62,864.82 in restitution. The U.S. Attorney’s Office then obtained a writ of execution and a memorandum of garnishment to collect the restitution. Defendant filed a motion to discharge or quash the writ, which was denied. Defendant appealed, but the 9th Circuit dismissed the appeal, holding that an order denying motion to quash a writ of execution is not appealable. U.S. v. Moore, 878 F.2d 331 (9th Cir. 1989).
9th Circuit rules order to pay full restitution to insurer was proper even though defendant had already settled with insurer. (610) Prior to sentencing, the defendant paid the bank’s insurance company $1.5 million in full settlement for the $7.5 million the insurance company paid to the bank for the loss caused by the defendant. Rejecting dicta in a Fourth Circuit case, the 9th Circuit held that the fact that the defendant had settled with the insurance company did not preclude the court from ordering the full $7.5 million restitution to the insurance company. The victim cannot waive restitution because he has no “right” to it. Rather, restitution is a “means of achieving penal objectives such as deterrence, rehabilitation and retribution.” U.S. v. Cloud, 872 F.2d 846 (9th Cir. 1989).
9th Circuit holds restitution order need not consider the “relative culpability” of the defendants. (610) Rejecting decisions from the Sixth Circuit and elsewhere, the 9th Circuit held that in imposing restitution, the district court need not consider the relative culpability of the defendants for the losses caused to the victims. Relative culpability is not among those factors mandated by Congress in 18 U.S.C. § 3664(a) for consideration by the district court. U.S. v. Cloud, 872 F.2d 846 (9th Cir. 1989).
9th Circuit rules victims of offense should be allowed to participate in sentencing hearing as to restitution. (610) The 9th Circuit held that the district court may order restitution to any positively identifiable victim of a fraudulent scheme in a definite amount that is supported by the evidence. The amount of restitution is limited by the victim’s actual loss, and must be judicially established in a proceeding in which the defendant has the opportunity to refute the amount ordered. “In addition, the victims of the offense should be allowed to participate in the sentencing hearing so that their losses can be accurately determined.” U.S. v. Cloud, 872 F.2d 846 (9th Cir. 1989).
9th Circuit holds monetary benefit to the defendant is not a factor in awarding restitution. (610) Defendant claimed that the $7.5 million restitution was excessive in that he only “netted” $2.9 million on the sale. The 9th Circuit rejected the argument, noting that the benefit to the defendant is not one of the factors the district court was required to consider under 18 U.S.C. § 3664(a). In any event the district court properly found that the defendant received a net benefit of over $7 million from the sale. There was no abuse of discretion in ordering $7.5 million restitution. U.S. v. Cloud, 872 F.2d 846 (9th Cir. 1989).
9th Circuit rules defendant waived objection to making restitution due and payable upon his death. (610) Before it was repealed effective November 1, 1987, 18 U.S.C. § 3565(h) provided that an obligation to pay a fine or penalty ceases upon the death of the defendant. The 9th Circuit found it unnecessary to rule on whether this voided the order making restitution due and payable upon the death of the defendant because the defendant waived the argument by failing to raise it in the district court. The panel also found inapplicable the “abatement rule”–that death pending appeal of a criminal conviction abates not only the appeal but all proceedings in the prosecution from its inception. The defendant did not die during the pendency of this appeal. U.S. v. Cloud, 872 F.2d 846 (9th Cir. 1989).
9th Circuit holds district courts need not make factual findings to insure “meaningful appellate review” of restitution orders. (610) The Ninth Circuit, rejecting decisions from the Third, Fourth and Tenth Circuits, held that district courts are not required to make findings of fact as to each of the 18 U.S.C. § 3664(a) factors in order to assure “meaningful appellate review” of their restitution orders. This does not leave the district court free to disregard the statutory requirements, however. The record must reflect that the district judge had at his disposal information bearing on the considerations enumerated in § 3664. U.S. v. Cannizzaro, 871 F.2d 809 (9th Cir. 1989).
9th Circuit holds failure to determine whether victim was compensated for losses by third party required remand. (610) 18 U.S.C. § 3663(e)(1) requires the court, in ordering restitution, to determine the extent to which the victim has already been compensated for its losses. The court’s failure to do so here required a remand. On remand, the court may modify the order to provide for payment directly to the party who compensated the victim for its losses. U.S. v. Cannizzaro, 871 F.2d 809 (9th Cir. 1989).
9th Circuit rules restitution properly ordered though not mentioned in plea agreement. (610) The plea agreement provided for no specific sentence. The government agreed only to argue for a term of imprisonment no greater than ten years. The Ninth Circuit held that such agreements are authorized by Fed. R. Crim. P. 11(e)(1)(B) and neither bind the court “nor state the complete terms of the sentence.” U.S. v. Cannizzaro, 871 F.2d 809 (9th Cir. 1989).
10th Circuit reverses belated reduction in restitution. (610) Defendant concealed from the Federal Transportation Security Administration (TSA) that he was working full-time for the Utah Department of Public Safety (DPS) while also employed full time by TSA. In his plea agreement and at his plea hearing, defendant agreed he owed DPS $188,548.92 in restitution. However, 40 months after sentencing, defendant asked the court to give him credit for annual, sick, and holiday leave he earned while at DPS. The district court reduced the amount of restitution, finding that 18 U.S.C. § 3563(c) authorized modification of defendant’s conditions of probation, including “changes in the amount of restitution.” The Tenth Circuit reversed, holding that 18 U.S.C. § 3563(c) did not authorize the district court to modify the order of restitution over three years after the sentence became final. Section 3563(c) cannot be read in a vacuum. Apart from § 3563, MVRA contains a specific and detailed schedule addressing modification of restitution orders arising out of criminal prosecutions. Section 3664(o) lists various means by which an order of restitution may be altered, none of which authorized the court to reduce defendant’s restitution over three years after his sentencing. U.S. v. Wyss, 744 F.3d 1214 (10th Cir. 2014).
10th Circuit upholds restitution to Department of Agriculture for subsidies based on defendant’s misrepresentations. (610) Defendant was convicted of various tax offenses, and seven counts of making false statements to the Department of Agriculture. He challenged an order to pay restitution in the amount of the agricultural subsidies he received from the Department of Agriculture, arguing he would have qualified for the subsidies even if he had provided the correct identifying information to the Department of Agriculture. The Tenth Circuit disagreed. The director of the Farm Service Agency of the USDA testified that by making misrepresentations on the subsidy applications, defendant became ineligible to receive the subsidies. Thus, the district court did not err when it ordered defendant to pay restitution to the United States Department of Agriculture. U.S. v. Melot, 732 F.3d 1234 (10th Cir. 2013).
10th Circuit upholds restitution for manufacturer’s efforts to protect name and reputation. (610) Defendant sold counterfeit versions of various weight-loss products. The district court ordered him to pay restitution of $417,396.39 under the Mandatory Victims Restitution Act, 18 U.S.C. § 3663A, to Glaxo Smith Kline (GSK), the manufacturer of the weight loss product Alli. Defendant appealed $385,216.75 of this amount for expenses incurred by GSK in responding to the counterfeit Alli. These efforts included: alerting consumers to the dangers posed by, and how to identify, the fraudulent drugs; monitoring and tracking consumer reports of the counterfeit product; and retaining the services of a public relations firm to assist in crisis management. The Tenth Circuit upheld the restitution order. Restitution under § 3663A(b)(1)(B) is not limited to damage done to a victim’s tangible property; it also includes damage to intangible property, such as the registered trademarks for Alli and the reputation and goodwill of GSK. Although the expenses incurred by GSK in mitigating and repairing the damage done by defendant were not an exact measure of the harm he caused, they were an acceptable proxy for the actual damage to GSK’s trademarks, reputation, and goodwill. U.S. v. Shengyang Zhou, 717 F.3d 1139 (10th Cir. 2013).
10th Circuit limits child porn restitution to victim’s losses proximately caused by defendant. (610) Defendant was convicted of child pornography charges, and ordered to pay $11,466 restitution. The Tenth Circuit held that 18 U.S.C. § 2259 requires a showing that a victim’s losses were proximately caused by the defendant’s conduct. The evidence presented at defendant’s sentencing hearing suggested that Vicky, the victim, suffered losses based on her knowledge that individuals received and possessed visual depictions of her exploitation. However, the evidence that defendant was specifically responsible for any of these losses was relatively thin. The district court divided the total loss claimed by Vicky, $1,224,694.04, by 222, the number of restitution judgments Vicky had received at the time of the hearing. This implicit calculation did not meet the proximate cause standard. Because the district court did not explain whether specific losses suffered by the victim were proximately caused by defendant’s actions, the panel remanded for a redetermination of the portion of damages allocable to defendant. U.S. v. Benoit,713 F.3d 1 (10th Cir. 2013).
10th Circuit upholds restitution to Kansas for defendant’s poaching activities. (610) Defendants sold guided deer hunts to out-of-state hunters, and encouraged their clients to violate state hunting laws. They pled guilty to conspiring to sell and transport poached deer in violation of the Lacey Act, 16 U.S.C. §§ 3372(a)(2)(A) and 3373(d). The district court ordered defendants to pay $25,000 in restitution to the Kansas Department of Wildlife and Parks. The Tenth Circuit affirmed, agreeing that conspiracies to violate the Lacey Act qualify as offenses against property for the purposes of the MVRA. Because wildlife is property of the state, and the state can be a victim under the MVRA, the court properly designated the state of Kansas as the victim of defendant’s poaching. Kansas suffered a loss from defendant’s poaching. The deer were not tagged immediately or not tagged at all during defendants’ guided hunts. Such failures prevented Kansas from accurately managing its deer population and could lead to overharvesting. U.S. v. Butler, 694 F.3d 1177 (10th Cir. 2012).
10th Circuit holds that court had discretion at resentencing to reconsider restitution. (610) On defendant’s first appeal, the Tenth Circuit found that the court erred by failing to address defendant’s objections to the PSR, and remanded with instructions to resolve the factual disputes defendant raised. On remand, defendant challenged for the first time the district court’s restitution order. The court concluded that it lacked the power to revisit the restitution issue as it was not the issue prompting the remand. The Tenth Circuit held that consideration of defendant’s challenge to the restitution order was within the permissible scope of the remand. Some circuits use a “waiver” approaching, reasoning that issues not previously raised have been waived. However, in the Tenth Circuit, the scope of the mandate on remand is carved out by exclusion: unless the district court’s discretion is specifically cabined, it may exercise discretion on what may be heard. Here, the mandate did not limit the scope of resentencing. The court remanded “for the district court to conduct proceedings consistent with this decision.” The district court erred when it determined that it lacked authority to reconsider the restitution obligation. U.S. v. West, 646 F.3d 745 (10th Cir. 2011).
10th Circuit holds that restitution obligation should not be offset by value of forfeited property. (610) Defendant participated in a scheme to defraud a state government by overbilling the government for a new state building. As part of his agreement to plead guilty to fraud offenses, defendant agreed to forfeit property. Defendant argued that his restitution obligation should be reduced by the amount of property forfeited. The Tenth Circuit held that a district court may not consider the value of property forfeited by the defendant in setting the defendant’s restitution obligation, but the court did not decide whether a defendant’s restitution obligation could be offset by the value of forfeited property a victim has received. U.S. v. Martinez, 610 F.3d 1216 (10th Cir. 2010).
10th Circuit says restitution should not be offset by taxes paid on illicit gains. (610) Defendant obtained substantial amounts of money by participating in a scheme to overbill the state government for the construction of a new state building. Defendant funneled some of the fraudulently obtained funds into a shell corporation, which then paid federal and state income taxes on the funds. Defendant argued that his restitution obligation should be offset by the taxes that his shell corporation paid. The Tenth Circuit rejected this argument, holding that a defendant is not entitled to an offset of his restitution obligation based on the income taxes paid on illicit gains. U.S. v. Martinez, 610 F.3d 1216 (10th Cir. 2010).
10th Circuit upholds joint and several liability for restitution obligation. (610) Defendant and several others executed a scheme to defraud a state government in connection with the construction of a county courthouse. Investigators were able to determine that each conspirator received specific amounts of money from the scheme, but they could not determine who received approximately $500,000 dollars produced by the scheme. At defendant’s sentencing, the district court imposed joint and several liability for the unaccounted-for $500,000. The Tenth Circuit held that the district court properly made defendant liable for the entire amount because he was integral to the success of the entire scheme. U.S. v. Martinez, 610 F.3d 1216 (10th Cir. 2010).
10th Circuit upholds court’s finding that fraudulently sold engines had no offsetting value. (610) Defendant and two co-defendants improperly overhauled small aircraft engines and falsely represented to customers that the engines met FAA requirements. He argued that a restitution order of $378,633 miscalculated the actual loss because the court did not deduct the core-value (the base value of the engine before overhaul) for the engines sold to the victims. The Tenth Circuit held that the district court did not abuse its discretion in concluding the engines had no offsetting core value. Relying on testimony at trial, including testimony of the victims and multiple independent mechanics, the district court decided not to attribute any value to the cores other than scrap value. The court also found that under the unique facts of the case and the types of victims of defendant’s fraud, the victims were not in a position to sell the scrap engine parts. A few victims did pay other mechanics to make their engines airworthy, at considerable cost. The evidence showed that an overhaul of the deficient engines to proper working condition would cost as much as the total purchase price paid to defendant. U.S. v. Parker, 553 F.3d 1309 (10th Cir. 2009).
10th Circuit approves restitution for loss of employee work hours during evacuation caused by bomb threat. (610) Defendant made a bomb threat against an air force base, which resulted in the evacuation of a building on the base for several hours. As part of his plea, defendant agreed to pay restitution to the government. The Tenth Circuit held that defendant was responsible, under the Mandatory Victim Restitution Act (MVRA), for the loss of employee work hours incurred during the evacuation and inspection of the building. An employee’s work time is the property of the employer. When defendant made the bomb threat and the building was evacuated, the air force base lost the value of this “property.” Awarding restitution for lost employee work time was not, as defendant contended, economically equivalent to compensating for lost profits or income. The restitution award did nothing more than give the government compensation for the cost of the property that was destroyed by defendant’s actions. The restitution did not amount to consequential or incidental damages. The causation here was both proximate and direct. U.S. v. Wilfong, 551 F.3d 1182 (10th Cir. 2008).
10th Circuit allows restitution for due diligence expenses caused by defendant’s fraud. (610) Defendants were convicted of a variety of fraud-related crimes arising from the operation of a credit card portfolio financed by an FDIC-insured bank. When the bank’s capital steadily declined, defendants had attempted to sell a 60 percent controlling interest in the bank to Cerberus Partners. Cerberus decided not to purchase a controlling interest in the bank after learning that the FDIC was investigating the bank. The district court refused to award restitution to Cerberus, finding that the acts of wire fraud did not cause direct harm to Cerberus. The Tenth Circuit reversed, holding that Cerberus was a victim. Cerberus incurred expenses performing due diligence on the purchase. These expenses could have been avoided if defendants had provided accurate financial information to Cerberus. The settlement agreement between all of the defendants and Cerberus did not bar restitution to Cerberus. The MVRA requires the sentencing court to provide restitution to victims, and a private settlement cannot abrogate that language. U.S. v. Gallant, 537 F.3d 1202 (10th Cir. 2008).
10th Circuit holds that man hired to market fraudulent credit-card portfolio was victim. (610) Defendants were convicted of a variety of fraud-related crimes arising from the operation of a credit card portfolio financed by an FDIC-insured bank. The government sought restitution for Taffet based on the expenses he incurred during his effort to market the credit card portfolio, but the district court found that Taffet was not a victim and refused to order restitution. The Tenth Circuit found the court’s explanation “cryptic” and reversed. The decision suggested that inconsistency between verdicts in two of the trials on wire fraud counts placed defendant outside the MVRA’s definition of a victim because the government failed to sufficiently establish the existence of a scheme to defraud Taffet. This reasoning conflated the separate notions of culpability and causation. It was also possible the court found that defendant was not directly harmed by the acts of wire fraud. Such a finding would be clearly erroneous. When defendants hired Taffet to market and sell the credit card portfolio, their acts of wire fraud directly led him to conclude that the portfolio had no delinquency risk. The expenses he incurred in marketing the portfolio were incurred because of these misrepresentations. U.S. v. Gallant, 537 F.3d 1202 (10th Cir. 2008).
10th Circuit holds that court erred in using defendant’s gain for restitution purposes. (610) Defendant participated in a scheme to obtain mortgages and mortgage insurance for unqualified home buyers. The district court found that defendant’s fraudulent conduct caused a loss to HUD, but that it could not reasonably quantify the precise amount of loss given the conflicting data submitted by the government. The court chose to estimate the loss using defendant’s total gain (his commissions) of $29,359.20, an undisputed amount. The court then ordered restitution in this amount as well. The Tenth Circuit held that the district court abused its discretion in using the gain to impose restitution, because restitution must be based on actual loss. Although gain may be used to determine a defendant’s offense level under the guidelines (if it more closely reflects actual harm than actual loss does), it is not an appropriate estimate of loss when determining the amount of restitution under USSG § 5E1.1 or the MVRA. U.S. v. Galloway, 509 F.3d 1246 (10th Cir. 2007).
10th Circuit holds that challenge to restitution fell within scope of appeal waiver. (610) Defendant waived, as part of his plea agreement, his right to challenge the “sentence as imposed by the court and the manner in which the sentence is determined.” The government argued that defendant’s challenge on appeal to his restitution award fell within the scope of this waiver. A majority of circuits have concluded that such language does not include a general waiver of the right to appeal a restitution award. Here, however, the plea agreement made clear that the parties considered a restitution award for victims of defendant’s related conduct to be part of his “sentence.” The plea agreement stated: “[T]he parties further agree that, as part of the sentence resulting from the defendant’s plea, the Court will enter an order of restitution for all losses caused to the victims of the defendant’s relevant conduct ….” This provision of the plea agreement formed the basis of the court’s $135,000 restitution award. Accordingly, the Tenth Circuit ruled that defendant’s challenge to the amount of restitution fell within the scope of his waiver of the right to appeal. U.S. v. Cooper, 498 F.3d 1156 (10th Cir. 2007).
10th Circuit holds that restitution for amount exceeding count of conviction was improper. (610) Defendant pled guilty to a single count of credit card fraud, in violation of 18 U.S.C. § 1029(a)(2). The loss associated with the count was $7,950.98. She argued that the court’s order requiring her to pay restitution of $68,698 for credit card fraud exceeded the statutory limits set forth in the Mandatory Victim Restitution Act, 18 U.S.C. § 3663A. The Tenth Circuit agreed that restitution was improper; the district court was only authorized under the MVRA to order restitution in the amount casually related to the offense of conviction. The only two exceptions were not applicable. First, the offense of conviction did not contain as an element a scheme, conspiracy, or pattern of criminal activity. Second, defendant did not promise to make such additional restitution as part of her plea agreement. U.S. v. Gordon, 480 F.3d 1205 (10th Cir. 2006).
10th Circuit finds defendant did not waive right to challenge unlawful restitution order. (610) Defendant argued that the court’s order requiring her to pay restitution of $68,698 for credit card fraud exceeded the statutory limits set forth in the Mandatory Victim Restitution Act, 18 U.S.C. § 3663A. The government argued that the waiver of appellate rights in defendant’s plea agreement barred her from challenging the restitution order. The Tenth Circuit held that defendant did not waive her right to challenge an unlawful restitution order. The plea agreement, read in its entirety, suggested the parties only intended that defendant would waive the right to appeal aspects of her sentence and restitution that were imposed within the authority granted to the district court by relevant statutes. Moreover, the panel questioned whether defendant could have waived her right to appeal an unlawful restitution order, even if she had wanted to do so. A plea agreement permitting a court to impose restitution beyond that authorized by statute might be unenforceable on grounds of public policy. U.S. v. Gordon, 480 F.3d 1205 (10th Cir. 2006).
10th Circuit remands for court to set restitution payment schedule. (610) Pursuant to the Mandatory Victims Restitution Act of 1996, 18 U.S.C. § 3663A, the district court found that restitution of $1,794,469 was appropriate. The Tenth Circuit held that the court properly ordered restitution without regard to defendant’s indigence, see 18 U.S.C. § 3664(f)(1)(A), but that the court erred in failing to set forth an appropriate payment schedule. Section 3664(f)(2) provides that, after determining the amount of restitution owed to each victim, the court shall “specify in the restitution order the manner in which, and the schedule according to which, the restitution is to be paid.” When setting a schedule of payments, the court must consider “the financial resources and other assets of the defendant ….” The court remanded for the district court to set an appropriate payment schedule in light of the statutory factors. U.S. v. Zunie, 444 F.3d 1230 (10th Cir. 2006).
10th Circuit holds that Booker not applicable to restitution order. (610) Defendant argued that the district court’s amended restitution award pursuant to the Mandatory Victims Restitution Act (MVRA) was “unreasonable” under U.S. v. Booker, 543 U.S. 220 (2005). The Tenth Circuit noted that Blakely and Booker only apply to judicial fact-finding that increases a criminal punishment in violation of the Sixth Amendment. In the Tenth Circuit, restitution is not criminal punishment. See U.S. v. Nichols, 169 F.3d 1255 (10th Cir. 1999). U.S. v. Visinaiz, 428 F.3d 1300 (10th Cir. 2005).
10th Circuit holds that court was not authorized to re-open restitution order. (610) At sentencing, the judge indicated that he wished the compensate the victim’s mother for her loss of financial support from the victim and for the victim’s lost income, but that the restitution order did not authorize such an order. Seven days after sentencing, the judge revoked his previous judgment, stating that upon further reflection, he found that the previous restitution order did not satisfy 18 U.S.C. § 3663A, and that, in fact, the court was “legally obligated” by the MVRA to order restitution for the victim’s future lost income and the transportation expenses of the victim’s representative. He concluded that the failure to order this restitution constituted “clear error” and amended the judgment under Fed. R. Crim. Proc. 35(a). The Tenth Circuit held that the district court lacked authority to re-open the restitution order. Rule 35(a) only allows a court to re-open its sentencing judgment when doing so would correct a clear error. Any alleged error committed here was not clear. The court’s reopening of the judgment was to consider the possibility that some as-of-yet unestablished loss might warrant restitution pursuant to the MVRA. However, no previous court had ever ordered lost income restitution in this situation and one could easily interpret the statute to allow for lost income restitution only for surviving victims. It was not even clear whether involuntary manslaughter, the offense of conviction, would qualify as a crime of violence and trigger the provisions of the MVRA. U.S. v. Bedonie, 413 F.3d 1126 (10th Cir. 2005).
10th Circuit says restitution order did not violate Apprendi or Blakely. (610) Defendant was convicted of assault and kidnapping based on an incident in which he chased and rammed a car carrying his ex-wife and a friend, causing it to crash. The district court imposed a restitution order of $17,751.58, which accounted for the damage caused to the two vehicles involved in the accident. Defendant he argued that the restitution order violated Apprendi v. New Jersey, 530 U.S. 466 (2000). However, because defendant did not contend that any of the restitution amounts exceeded the damage to the crime victims’ property, the Tenth Circuit ruled that Apprendi was inapplicable to the restitution order. Defendant submitted a supplemental authority letter in which he contended that the restitution order also violated Blakely. Defendant’s Blakely argument “fail[ed] for the same reason as his Apprendi argument, which is that the amount of the restitution award does not exceed any prescribed statutory maximum.” U.S. v. Wooten, 377 F.3d 1134 (10th Cir. 2004).
10th Circuit holds that court erred in not ordering restitution under MVRA. (610) Defendant, a forest service employee, started a wildfire after using a campfire ring to burn a letter from her estranged husband. She pled guilty to setting fire to inflammable materials on federal lands. The parties stipulated that the damage to timber on federal lands was about $38 million. The government urged restitution of $14.7 million to the United States Forest Service, the amount expended by the government to implement emergency revegetation in the fire area. The district court refused to order restitution, finding it would sentence defendant to a lifetime of poverty. The Tenth Circuit held that the district court erred in not ordering restitution under the MVRA. The MVRA applied to defendant, and thus, barring two narrow exceptions outlined in § 3663A(c)(3), the district court was required to impose restitution. The panel rejected the court’s invocation of § 3663A(c)(3)(B)’s “complexity” exception. Where, as here, the PSR recommends restitution for an actual recoverable loss incurred by a victim of the defendant’s crime, and the defendant does not object to that request, there is no need under the MVRA for the district court to engage in any additional fact finding to determine the amount of restitution, and thus no basis to invoke this exception. Moreover, the district court considered defendant’s financial situation and was deeply concerned about the effect a restitution order would have on her. Neither statutory exception takes into account a defendant’s financial circumstances. The government’s proposed loss formula was proper. U.S. v. Barton, 366 F.3d 1160 (10th Cir. 2004).
10th Circuit holds that restitution order was supported by co-participants’ statements. (610) Defendant was convicted of theft from an automatic teller machine. The district court ordered defendant to pay $34,699.51 in restitution, which included $9,000 payable to the convenience store where the ATM had been located. At trial, the owner of the store testified that defendant and his co-participants had taken $16,500 out of the store’s safe. The probation office revised the figure down to $9,000 based on the statements of defendant’s co-participants in the theft and information gathered during the investigation. The Tenth Circuit ruled that there was sufficient evidence to support using the $9,000 figure at sentencing. Based on the testimony of defendant’s co-participants at trial about the amount of money each of them had kept from the crime, this was a reasonable estimate of what defendant may have taken from the safe. U.S. v. Kravchuk, 335 F.3d 1147 (10th Cir. 2003).
10th Circuit holds that restitution properly included all losses during defendant’s participation in counterfeiting scheme. (610) Defendant was involved in a three-tier check-counterfeiting scheme. The district court ordered defendant to pay restitution of $67,648, the amount of counterfeit checks cashed during the period defendant was found to be active in the conspiracy, rather than the $28,388 that he and the casher he employed obtained. The Tenth Circuit found no abuse of discretion. Defendant did not challenge the district court’s conclusion that his relevant conduct included actual losses from checks negotiated by the organization while he participated in it. U.S. v. Osborne, 332 F.3d 1307 (10th Cir. 2003).
10th Circuit approves restitution for unpaid amount of child support. (610) Defendant was convicted of two counts of failure to pay child support obligations in violation of the Child Support Recovery Act, 18 U.S.C. § 228(a)(1), and the Deadbeat Parents Punishment Act, 18 U.S.C. § 228(a)(3). The district court ordered restitution from defendant in the amount of $66,415.56, the amount determined by Virginia Division of Child Support Enforcement (“Virginia DCSE”) as the total unpaid obligation at the time of sentencing. Section 228(d) provides that upon a conviction for failing to pay support, “the court shall order restitution under section 3663A in an amount equal to the total unpaid support obligation as it exists at the time of sentencing.” The Tenth Circuit held that the district court did not err in relying on the amount determined by the Virginia DCSE as the total unpaid support obligation. U.S. v. Monts, 311 F.3d 993 (10th Cir. 2002).
10th Circuit rejects restitution under MVRA based on loss of archaeological value. (610) Defendants were convicted of violating the Archaeological Resources Protection Act (ARPA), 16 U.S.C. §§ 470aa et seq., and conspiring to violate ARPA, pursuant to 18 U.S.C. § 371. The Tenth Circuit held that the district court properly ordered defendants to pay restitution to the government pursuant to the MVRA, 18 U.S.C. § 3663A. The fact that Congress did not provide for restitution under ARPA’s criminal penalties did not preclude the court from ordering restitution pursuant to the more general provisions of the MVRA. The court rejected defendant’s claim that this case did not involve an “identifiable victim” – the government can be a victim under the MVRA. Although a violation of ARPA is not an offense “under this title,” referring to Title 18, defendants were also convicted of conspiracy 18 U.S.C. § 371. However, the court erred in including in the restitution $15,253 toward the total cost of archaeological damage to the site. A restitution order must be based on actual loss. Archaeological value requires the court to speculate on the cost of a hypothetical dig that may never have occurred. Although this cost is recoverable under ARPA’s civil penalties provision, this was a criminal case, and restitution was ordered under the MVRA. U.S. v. Quarrell, 310 F.3d 664 (10th Cir. 2002).
10th Circuit rules court erred in failing to set payment schedule for restitution. (610) Defendant argued that the court erred by failing to set a reasonable schedule for payment of the restitution award, as required by 18 U.S.C. § 3664(f)(2). Instead, the district court ordered that the restitution be paid in full immediately while in custody through Bureau of Prisons’ Inmate Financial Responsibility Program, and that any unpaid balance be paid as a condition of supervised release. The district court knew that defendant could not immediately pay the full amount of restitution. Thus, it was essentially delegating the preparation of a payment schedule to the Bureau of Prisons and the probation office. Although recognizing authority to the contrary, The Tenth Circuit ruled that the delegation was improper, and the error was plain. The governing statute, 18 U.S.C. § 3664, as amended by the Anti-terrorism and Effective Death Penalty Act in 1996 (AEDPA), clearly contemplates judicial control of restitution payment schedules. Cases to the contrary in other circuits either predated the AEDPA amendments to § 3664 or the present provision of § 3664 were not brought to the attention of the court. U.S. v. Overholt, 307 F.3d 1231 (10th Cir. 2002).
10th Circuit says restitution for non-property owner’s cost of clean-up was not plain error. (610) Defendant, who had been hired to properly dispose of petroleum-impacted wastewater from government property, instead injected the wastewater into disposal wells and tried to cover up the crime. He was ordered to pay restitution of $1.2 million, the cost to the Coast Guard of removing the storage tanks from the property and cleaning up the area. Defendant argued for the first time on appeal that the restitution was limited to the value of that property. However, the Coast Guard’s loss was not as an owner of the property; its loss was purely financial. Under a “perverse reading” the restitution statute could be read to say that where then is physical damage to property, the only permissible restitution is payment to the property owner of the amount, regardless of any financial loss to another victim. However, the Tenth Circuit found that such a reading was certainly not “clear or obvious under current law.” Thus, there was no plain error. U.S. v. Overholt, 307 F.3d 1231 (10th Cir. 2002).
10th Circuit reaffirms that ex post facto does not apply to restitution. (610) Defendant argued that his restitution award violated the ex post facto clause, because his crime predated the enactment of the MVRA. However, the ex post facto clause does not apply to restitution, because the purpose of restitution is not punishment. See U.S. v. Nichols, 169 F.3d 1255 (10th Cir. 1999). Therefore, the Tenth Circuit rejected this argument. U.S. v. Overholt, 307 F.3d 1231 (10th Cir. 2002).
10th Circuit upholds restitution to uncharged victim of fraud scheme. (610) Defendant was convicted of making false statements to two banks when he obtained loans secured by the title to his Jaguar automobile based on false title documents. In calculating restitution under the Mandatory Victims’ Restitution Act, 18 U.S.C. § 3663(A), the district court included restitution to a private lender who had also loaned money to the defendant based on false title documents for the same Jaguar. The Tenth Circuit held that the private lender was directly harmed in the course of the defendant’s “scheme to defraud” creditors through misrepresentations about the Jaguar, and therefore the restitution order was proper. Nevertheless, the case was remanded because the district court failed to consider the value of some tools which had been pledged as collateral, in calculating restitution. U.S. v. Williams, 292 F.3d 681 (10th Cir. 2002).
10th Circuit says that restitution without consideration of defendant’s ability to pay was not plain error. (610) Defendant pled guilty to coercion and enticement of a minor, 18 U.S.C. § 2422(b), and interstate travel for the purpose of engaging in sexual acts with a minor, 18 U.S.C. § 2423(b). Defendant argued for the first time on appeal that because these crimes are not governed by the Mandatory Victim Restitution Act (MVRA), 18 U.S.C. § 3663A, the district court could not order restitution without considering his ability to pay. The MVRA requires federal district courts to order restitution to the victim of an offense described in 18 U.S.C. § 16 as a crime of violence, regardless of the defendant’s ability to pay. The question of whether § 2423(b) or § 2422(b) constitutes a crime of violence has not been addressed in any circuit. The only decision coming close to deciding this issue, U.S. v. Butler, 92 F.3d 960 (9th Cir. 1996) (stating that § 2423(b) is, by nature, a crime of violence), was contrary to defendant’s position. Because only one court had addressed this issue and reached a result contrary to defendant’s position of appeal, The Tenth Circuit held defendant failed to show plain error. U.S. v. Johnson, 183 F.3d 1175 (10th Cir. 1999).
10th Circuit rejects restitution to child services agency since not legal guardian of victim’s children. (610) Defendant pled guilty to voluntary manslaughter. The district court ordered that he pay $5,000 in restitution to the Utah State Division of Child and Family Services. The victim had two minor sons from a prior marriage that were in foster placement. The expense of their upbringing was being borne by the State of Utah., but the victim had been making child support payments. The Tenth Circuit found insufficient evidence to support the decision to order restitution to Child and Family Services. The victim’s sons were victims within the meaning of 18 U.S.C. § 3663A. Section 3663A (a)(2) says that if the victim is under 18 years of age, the legal guardian of the victim, another family member, or any other person appointed as suitable by the court, may assume the victim’s rights under § 3663A(a)(2). The district court made no finding that the Child and Family Services agency served as legal guardian of the two boys; nor did the court appoint the agency as a suitable proxy. U.S. v. Checora, 175 F.3d 782 (10th Cir. 1999).
10th Circuit holds that restitution is not criminal punishment for ex post facto purposes. (610) Defendant conspired with Timothy McVeigh in the planning and subsequent bombing of the Alfred P. Murrah Building in Oklahoma City. The district court ordered restitution of $14.5 million, the original cost of the building, payable to the building’s owner, the General Services Administration (GSA). Defendant claimed that restitution was improper because the district court did not consider his ability to pay and his conduct did not directly harm GSA. The Tenth Circuit held that as a conspirator, defendant was responsible for all losses caused by the entire conspiracy, not just losses caused by his own acts. Because defendant was convicted of conspiring to use a weapon of mass destruction against the federal building and the persons inside, the order of restitution to the building owner was correct. However, the district court erroneously found that the ex post facto clause barred it from awarding restitution under the Mandatory Victim’s Restitution Act (MVRA). Restitution under the MVRA is not criminal punishment, and thus it does not implicate the ex post facto clause. Because the MVRA does not require a court to consider a defendant’s financial condition, defendant’s argument that he was unable to pay the restitution was moot. U.S. v. Nichols, 169 F.3d 1255 (10th Cir. 1999).
10th Circuit remands where unclear whether court intended joint and several restitution. (610) Defendant argued that the district court should have made his restitution obligation joint and several with a co-defendant who was also ordered to make full restitution. The government agreed that the court intended a joint and several restitution order. However, the box labeled “joint and several” on the district court’s judgment was not checked. The Tenth Circuit vacated the restitution order for the court to clarify what it intended. If the court ordered defendant and his co-defendant each to pay the full amount of the loss suffered by the bank victim, then the court exceeded its statutory authority. However, if the court intended the restitution obligation to be joint and several, the court acted within its authority. U.S. v. Gottlieb, 140 F.3d 865 (10th Cir. 1998).
10th Circuit vacates restitution to reflect payments made as result of civil litigation. (610) Defendant borrowed money from a bank to finance his farming and ranching activities. He was convicted of making a false statement to a bank after he misrepresented the number of cattle he owned during a later bank inspection. The Tenth Circuit vacated a restitution order since it was closely related to the amount of loss incurred, and the court had previously found the loss was not correctly calculated. Moreover, restitution to the bank must reflect any payments defendant made as a result of civil litigation. U.S. v. Copus, 110 F.3d 1529 (10th Cir. 1997).
10th Circuit holds that restitution must be based on actual loss. (610) Defendant concealed various assets from the bankruptcy court. He argued that in determining the amount of restitution, the district court improperly considered acts that did not result in any actual loss. Although defendant initially failed to disclose a partnership interest in commercial property, he disclosed the interest before confirmation of his plan. That disclosure resulted in the sale of the property for the benefit of his creditors. Similarly, a promissory note he failed to disclose was ultimately assigned to the bankruptcy trustee who sold it for the benefit of the estate. The Tenth Circuit held that restitution for the concealment of these assets was improper, because no actual loss to creditors occurred from the acts. Unlike the guideline § 2F1.1, which allows a court to consider actual or intended loss, 18 U.S.C. § 3663 requires restitution to be based on the amount of loss actually caused. The government has the burden of demonstrating the amount of loss sustained. U.S. v. Messner, 107 F.3d 1448 (10th Cir. 1997).
10th Circuit limits joint restitution to banks that both defendants robbed. (610) Defendant and a co‑conspirator committed a series of bank robberies. The district court ordered defendant and the co‑defendant to make restitution jointly and severally to the victim banks. However, the court assessed against defendant alone the full amount of restitution ordered to one bank. Defendant sought to reduce this restitution order to one‑half of the amount to be paid to this one bank. The Tenth Circuit affirmed the full restitution order, since the co‑defendant was not convicted of that bank robbery or of a conspiracy involving that bank. U.S. v. Spring, 80 F.3d 1450 (10th Cir. 1996).
10th Circuit rejects restitution for losses from dismissed counts that defendant did not agree to pay. (610) Defendant provided kickbacks on a government contract, in violation of 41 U.S.C. § 53, and the court ordered him to pay $27,600 in restitution under the Victim and Witness Protection Act, 18 U.S.C. §§ 3663-3664. The Tenth Circuit reversed because offenses under Title 41 do not fall within the general purview of the Act. The Act was amended in 1990 to allow restitution in any criminal case to the extent agreed to by the parties in a plea agreement. But here, defendant agreed to pay restitution only to victims of the offenses to which he was pleading guilty. He never agreed to pay losses stemming from dismissed counts. The district court also applied the wrong standard for determining the amount of restitution. The proper inquiry under the VWPA is the amount of loss sustained by the victim, not the amount received by the defendant. U.S. v. Guthrie, 64 F.3d 1510 (10th Cir. 1995).
10th Circuit upholds reliance on formula to calculate restitution. (610) Defendant challenged the district court’s use of a formula to determine restitution, but did not challenge the court’s factual findings or the application of the formula to those findings of fact. The Tenth Circuit refused to hold that the use of a formula to calculate restitution is impermissible per se. The commentary to § 5E1.1 suggests that where the amount of restitution cannot easily be calculated, the touchstone inquiry is whether the amount of restitution ordered was “reasonable.” Defendant did not argue that the restitution was unreasonable or cite any cases prohibiting reliance on a formula to calculate restitution. U.S. v. Davis, 60 F.3d 1479 (10th Cir. 1995).
10th Circuit upholds $331,756 restitution order based on past business success. (610) Defendant argued that he was unable to pay a $331,756 restitution order because he was 55 years old, about to serve a six-year sentence, and was bankrupt. The Tenth Circuit upheld the restitution because defendant had been a successful businessman in the past and had the potential to be financially successful in the future. He was a high school graduate with some college credit who had earned about $50,000 per year as a salesman. The restitution was to be paid in installments only after defendant was released from prison. U.S. v. Kunzman, 54 F.3d 1522 (10th Cir. 1995).
10th Circuit upholds restitution equal to amount by which lender was induced to discount loan. (610) Defendants defaulted on some bank loans. The lender agreed to discount the outstanding loans by $279,000 leaving defendants $280,000 debt. At the same time, defendants negotiated with a second lender to receive up to $850,000 to settle their indebtedness. Defendants then forged a letter from the first lender to the second lender, requesting payments of $405,000 to settle their debts to the first lender–$125,000 more than defendants actually owed. Before disbursing the loan monies, the second lender discovered the fraud. The Tenth Circuit approved a $279,000 restitution order to the first lender. The first lender would never have agreed to discount the loans if defendants had not misrepresented their capacity to borrow from the second lender. The forged letter underlying the bank fraud conviction provided the “link for the common scheme and plan of the two simultaneous sets of negotiations” resulting in the actual loss to the first lender. U.S. v. Sapp, 53 F.3d 1100 (10th Cir. 1995).
10th Circuit permits bank that purchased assets and claims of defrauded bank to receive restitution. (610) Defendant committed bank fraud. The district court ordered him to pay restitution to the bank that purchased the assets of the bank defendant defrauded. The Tenth Circuit held that the purchasing bank could properly receive the restitution payments since it acquired the claims of the defunct bank. U.S. v. Haddock, 50 F.3d 835 (10th Cir. 1995).
10th Circuit finds insufficient evidence that court considered defendant’s ability to pay restitution. (610) The district court ordered defendant to pay $76,732 in restitution. The Tenth Circuit found insufficient evidence that the district court adequately considered defendant’s ability to pay. The presentence report, prepared several years earlier, contained conflicting statements regarding defendant’s financial condition. As revised for the 1994 sentencing, the report acknowledged the staleness of its information and noted that significant changes had occurred in the interim. In particular, defendant was convicted of murdering his wife and had been imprisoned since 1992. The report concluded that defendant’s current financial condition was unknown. There was no reliable basis for the sentencing court to conclude that defendant had assets from which to pay the restitution. There was no evidence concerning defendant’s future earning ability, which would be limited given his life sentence for the murder conviction. Although the court stated that it considered the needs of defendant’s dependent children, the record was devoid of information on which such consideration could be given. U.S. v. Haddock, 50 F.3d 835 (10th Cir. 1995).
10th Circuit vacates restitution where unclear whether it was total loss or amount invested. (610) Defendant fraudulently induced investors to buy interests in oil and gas leases and properties. The 10th Circuit vacated a restitution order because it was unclear whether the figures underlying the restitution order represented the loss suffered by the victims or merely the amount they invested in the schemes. U.S. v. McAlpine, 32 F.3d 484 (10th Cir. 1994).
10th Circuit upholds $100,000 restitution despite failure to cite statute or make loss finding. (610) The 10th Circuit held that defendant’s $100,000 restitution order was not an abuse of discretion. When a district court fails to specify whether a restitution order is made pursuant to the Federal Probation Act or the Victim and Witness Protection Act (VWPA), it is treated as if made pursuant to VWPA. The restitution order was not internally inconsistent or uncertain. Partial payment during incarceration, with the rest to be paid as a condition of probation, was proper under the VWPA. The district court was not required to make specific findings as to the amount of loss since defendant made no objection at sentencing. Finally, a sentencing court is not required to make specific findings as to a defendant’s ability to pay, if sufficient information is made available to the court. Here, the judge stated that he had reviewed the PSR, which detailed defendant’s financial condition, educational background and employment history. U.S. v. Gabriele, 24 F.3d 68 (10th Cir. 1994).
10th Circuit finds failure to advise of restitution harmless where defendant was advised of possibility of higher fine. (610) Defendant was not informed at his plea hearing, as required by Rule 11, of the $100,000 restitution. The 10th Circuit held that this was harmless error because he was advised that a $750,000 fine could be imposed. Although the underlying penal philosophy for restitution is different than that for a fine, the monetary impact is the same to the defendant receiving the sentence. U.S. v. Gabriele, 24 F.3d 68 (10th Cir. 1994).
10th Circuit rejects restitution based on future illegal income. (610) Although defendant had no assets and no vocational skills, the district court ordered $35,000 in restitution based on evidence that defendant earned considerable income running an illegal loan sharking operation in prison. The 10th Circuit reversed, ruling that a restitution order which would be paid from the proceeds of future illegal activity frustrates the goals of deterrence and rehabilitation. It would be another matter if the order were to be satisfied with money defendant had already obtained. But it appeared from the record that the district court anticipated the restitution would be satisfied from future loan sharking activities. U.S. v. Gilbreath, 9 F.3d 85 (10th Cir. 1993).
10th Circuit finds court considered defendant’s ability to pay despite lack of written findings. (610) Defendant argued that the district court did not adequately consider his ability to pay restitution because it made no oral or written findings. The 10th Circuit rejected the argument, noting that the appropriate factors have been considered when they are detailed in the presentence report, and the district court’s consideration is implicit in the record. Here, the presentence report stated that defendant had no financial assets or liabilities, a “poor” employment history, he faced long-term incarceration and was in no position to pay a fine. At sentencing, the district court told defendant that he was not in a financial condition to pay a fine, but nevertheless ordered restitution. Thus, the court considered defendant’s financial condition. The restitution order was not an abuse of discretion. Defendant had up to 32 years to pay $5,528 in restitution. U.S. v. Coleman, 7 F.3d 1500 (10th Cir. 1993).
10th Circuit forbids ordering restitution from multiple defendants that would exceed total loss. (610) Defendants were convicted of defrauding investors. The district court ordered one defendant to pay restitution in the amount of the total loss and ordered the other defendants to pay lesser amounts. The 10th Circuit concluded that the sentences violated 18 U.S.C. section 3663 by creating the possibility that the victims of the fraud would recover more than they had lost. The purpose of restitution is compensation, not punishment. U.S. v. Arutunoff, 1 F.3d 1112 (10th Cir. 1993).
10th Circuit upholds restitution order based on potential earnings while serving lengthy prison term. (610) Defendant was indigent with a common law wife and two small children. Nevertheless, the 10th Circuit upheld a $13,000 restitution order based on defendant’s earnings during his 20-year prison term. Under the Inmate Financial Responsibility Program, up to 50 percent of the funds a prisoner earns can be accessed for payment of fines. On average, federal inmates that work can earn $1,000 a year. Theoretically, defendant could pay up to $10,000 of his obligation while in prison, with the remaining $3,000 payable over his five year term of supervised release. Judge Seymour dissented, believing the majority did not adequately consider the needs of defendant’s dependents. U.S. v. Williams, 996 F.2d 231 (10th Cir. 1993).
10th Circuit limits restitution to the loss caused by the offenses of conviction. (610) Defendant pled guilty to only two counts of a six count indictment, and the other counts were dismissed. Though the district court imposed a restitution order covering all the losses caused by defendant’s conduct, the 10th Circuit reversed, noting that the Victim and Witness Protection Act authorizes restitution orders only for losses caused by the offenses of conviction. U.S. v. Levy, 992 F.2d 1081 (10th Cir. 1993).
10th Circuit reverses restitution order as contrary to Hughey. (610) Defendant was convicted of altering and removing motor vehicle identification numbers. The district court ordered defendant to pay restitution based on the loss suffered by the victims as a result of the theft of the truck. The 10th Circuit reversed, ruling that the restitution order violated Hughey v. U.S., 495 U.S. 411 (1990). Hughey requires a restitution order under the VWPA to be based only on the loss caused by the conduct that formed the basis of the conviction, in this case the alteration of the stolen truck’s VIN. The government bears the burden of demonstrating that a defendant’s conduct resulted in a loss that would not have otherwise occurred. Here, the government offered no evidence that the alteration of the VINs caused the loss of the full value of the truck. The damage suffered by the victims here could have occurred regardless of whether defendant altered the truck’s VIN. U.S. v. Herndon, 982 F.2d 1411 (10th Cir. 1992).
10th Circuit reverses restitution order which defendant lacked ability to pay. (610) The 10th Circuit reversed a $160,248 restitution order, finding that the district court improperly failed to consider defendant’s financial condition and present and future ability to pay. Both defendant and the government conceded that defendant did not have a present ability to pay the restitution and that he did not have significant future earning capacity. Defendant had no assets, no steady employment, no source of income, a high school education, and debt of $700. Defendant had sought Aid to Families with Dependent Children and lived with his mother. U.S. v. McIlvain, 967 F.2d 1479 (10th Cir. 1992).
10th Circuit reverses restitution order because of defendants’ inability to pay. (610) The district court ordered defendants to pay restitution of $128,279.05 in three annual payments of $42,000 following release. The 10th Circuit vacated the restitution order, since there was no evidence in the presentence reports indicating that either defendant had the capacity to earn sufficient income following release to pay that amount. In one defendant’s case, the district court had said that it was “doubtful” that she could pay much of the restitution. Given one defendant’s financial status and six dependent children, the likelihood of her earning sufficient income to meet her financial responsibilities and pay the restitution was slight. The other defendant’s earning capacity was no less dismal. U.S. v. Grimes, 967 F.2d 1468 (10th Cir. 1992).
10th Circuit reverses $192,000 restitution order. (610) The 10th Circuit found there was no indication that defendant had the present ability to pay anything, and no indication that upon release from prison, she would have an earning potential which would enable her to comply with the restitution order. Accordingly, the $192,000 restitution order was reversed. U.S. v. Dunning, 929 F.2d 579 (10th Cir. 1991).
10th Circuit finds 60-year old woman unable to pay restitution. (610) The 10th Circuit reversed a $192,000 restitution order imposed upon a 60-year-old woman. Although present indigency is not a bar to restitution, the court saw no evidence that defendant had any assets, hidden or otherwise, to make such a payment, or that she had the earning potential to support a restitution order of that magnitude. U.S. v. Kelley, 929 F.2d 582 (10th Cir. 1991).
10th Circuit remands for district court to clarify restitution order. (610) Defendant contended that the district court improperly imposed restitution for losses resulting from acts other than those for which he was convicted. Although defendant had failed to object below to the restitution order, the 10th Circuit reviewed the issue because the Supreme Court’s decision in Hughey v. U.S., 495 U.S. 411, 110 S.Ct. 1979 (1990), changed the law in this area while the appeal was pending. The appellate court found that the record did not clearly establish whether the restitution order was based on losses caused by the conduct underlying the offense of conviction, and remanded the case for further fact-finding. U.S. v. Novey, 922 F.2d 624 (10th Cir. 1991), overruled on other grounds by U.S. v. Flowers, 441 F.3d 900 (10th Cir. 2006).
10th Circuit vacates restitution order where defendant had no ability to pay. (610) Despite evidence that the defendant was an indigent, the district court ordered her to pay $153,762 to the victim immediately. The 10th Circuit vacated the order as an abuse of discretion, noting that “no facts exist in the present record to support the district court’s finding the [defendant] is able to pay her victim the imposed restitution immediately.” U.S. v. Clark, 901 F.2d 855 (10th Cir. 1990).
11th Circuit reverses oral sentence offsetting restitution by amount of forfeited funds. (610) Defendant pled guilty to various fraud offenses. Before sentencing, the district court entered a preliminary order of forfeiture for $29,514.91 in currency seized by the government. The PSR concluded that under the MVRA, defendant should pay $37,196.27 in restitution to the IRS. At sentencing, the court stated that defendant’s restitution obligation would be offset by the $29,514.91 already forfeited to the government. However, the court’s written judgment ordered defendant to pay $37,196.27 in restitution to the IRS and directed the forfeiture of the $29,514.91 seized by government officials, with no mention of the restitution amount being offset by the forfeited funds. The Eleventh Circuit held that the district court lacked authority to offset the restitution by the amount of forfeited funds. The MVRA requires a court to order full restitution of a victim’s losses. A defendant is not entitled to offset the amount of restitution owed to a victim by the value of property forfeited to the government, or vice versa, because restitution and forfeiture serve distinct purposes. U.S. v. Joseph, 743 F.3d 1350 (11th Cir. 2014).
11th Circuit holds that victims were not entitled to restitution for medically necessary oxygen. (610) Defendant was convicted of health care fraud arising out of his operation of two companies that provided portable oxygen to Medicare patients. To qualify for reimbursement, equipment providers must ensure the oxygen is medically necessary by sending patients to an independent laboratory for testing. Instead of referring patients to independent labs, defendant’s companies conducted the tests themselves, and then falsified test results. Defendant argued that the court should not have included in its restitution order the amounts Medicare, patients, and supplemental insurers paid for medically necessary oxygen. The Eleventh Circuit agreed. At sentencing, the district court found that 80 to 90 percent of the services defendant provided were medically necessary. The court erred when it failed to exclude from its restitution calculation the value of medically necessary goods the victims actually received. U.S. v. Bane, 720 F.3d 818 (11th Cir. 2013).
11th Circuit requires restitution to child porn victim for damages defendant proximately caused. (610) Defendant was part of an international child pornography ring, and was convicted of engaging in a child exploitation enterprise, in violation of 18 U.S.C. § 2252A(g). The government identified a certain known victim, “Amy,” in the pornography possessed by the defendant. Based on 18 U.S.C. § 2259(C), the district court ordered defendant to pay restitution to Amy of over $3.2 million. The Eleventh Circuit rejected defendant’s argument that Amy was not a victim under § 2259, but remanded for an evidentiary hearing to determine whether Amy’s harm was proximately caused by defendant’s actions, and if so, to determine a reasonable amount of damages resulting from defendant’s conduct. The panel rejected defendant’s argument that mere possession of child porn is insufficient to constitute proximate cause of injury. Previous cases have upheld a § 2259 order for restitution, but this is only appropriate where the government can demonstrate the harm that a particular defendant’s actions had upon the victim. U.S. v. McGarity, 669 F.3d 1218 (11th Cir. 2012).
11th Circuit reverses restitution where court did not identify fraudulent mortgages. (610) Defendants were convicted of a conspiracy to defraud purchasers of residential property and mortgage lenders, and making false statements to the Department of Housing and Urban Development. At sentencing, the government undertook to establish the loss in the foreclosure of 56 of the 89 mortgages listed in the PSR. The district court then pegged the loss at $1 million, giving no explanation as to what made up its estimate or which of the 56 foreclosure created such loss. The court then used that figure in awarding restitution. The Eleventh Circuit held that the restitution order was an abuse of discretion. The government had the burden of proving, with respect to each of the mortgages for which it sought restitution, that the mortgage was the product of a fraudulent misrepresentation. The district court’s statement that “restitution of at least $1,000,000 has been established by the Government,” did not identify the mortgages that had been fraudulently obtained and caused losses totaling that sum. U.S. v. Singletary, 649 F.3d 1212 (11th Cir. 2011).
11th Circuit holds that government was “victim” of health care fraud. (610) Defendant was a doctor who worked for a clinic that ostensibly operated as an HIV treatment center, but was in reality a front for a massive Medicare scam. She argued that the district court was not authorized to order her to pay restitution to the United States government, because the government was not a “victim” or a “person” under the plain terms of the Mandatory Victims Restitution Act (MVRA). The Eleventh Circuit ruled that the term “victim” as used in the MVRA, includes the government. The MVRA defines “victim” in pertinent part as a “person directly and proximately harmed as a result of the commission of an offense ….” It was dispositive that the enforcement provisions of the Act explicitly recognize the government as a possible victim. See 18 U.S.C. § 3664(i). U.S. v. Mateos, 623 F.3d 1350 (11th Cir. 2010).
11th Circuit says amount of kickbacks is not necessarily amount of restitution. (610) Defendant participated in a fraudulent scheme in which he obtained kickbacks in return for causing the military to pay for goods. The military never received most of these goods, but some of the orders for which defendant received kickbacks were partially filled. At sentencing, the district court calculated the loss caused by defendant based on the amount of kickbacks that defendant and his accomplice received. It then ordered defendant to pay restitution in the amount of the loss caused by the scheme. On appeal, defendant argued that he should be required to pay restitution only in the amount of kickbacks he actually received. The Eleventh Circuit noted that the amount of loss does not always equal the amount of restitution and vacated the restitution amount because the district court did not explain whether the restitution amount included kickbacks that defendant received for orders that were partially filled. U.S. v. Huff, 609 F.3d 1240 (11th Cir. 2010).
11th Circuit upholds intended loss that was more than double the amount of ordered restitution. (610) Defendant participated in a sophisticated conspiracy to provide counterfeit vehicle titles and false VINs for stolen vehicles that were later sold or restolen in staged thefts to collect insurance proceed. His PSR determined that the intended loss, based on the fair market value of the stolen vehicles, was $1,199,106.92. The report also calculated a restitution amount of $425,770.99, the sum of the loss each identified victim had suffered. The district court adopted the PSR without objection, and the sentence included restitution of $410,105.45. Defendant argued for the first time on appeal that it was plain error for the district court to find that the total loss exceeded $1,000,000, and that the loss should equal the restitution. The Eleventh Circuit found no error. While the MVRA requires a judge to order restitution to compensate the full amount of each victim’s loses, it does not require restitution to match the loss figure used in sentencing. The amount of loss and restitution can and do differ. U.S. v. Patterson, 595 F.3d 1324 (11th Cir. 2010).
11th Circuit reverses where court declined to order restitution. (610) Defendant, a private health care consultant, several others, and ten home healthcare agencies were convicted of multiple counts of Medicare fraud. At his initial resentencing, the district court found no loss and also declined to order restitution. At resentencing, the court found a loss of $1.5 million, but declined to order restitution on the ground that the issue would be decided by the Provider Reimbursement Review Board. The Eleventh Circuit held that the district court erred by failing to order restitution. Defendant’s conduct was covered by the Mandatory Victims Restitution Act of 1996, 18 U.S.C. 3663A, which requires district courts to order restitution without regard for a defendant’s ability to pay when an identifiable victim suffers a pecuniary loss. U.S. v. Gupta, 572 F.3d 878 (11th Cir. 2009).
11th Circuit bars prisoner from using § 2255 motion to challenge restitution despite challenge to custody. (610) Defendant moved under 28 U.S.C. § 2255 to vacate his sentence. Section 2255 applies to a prisoner “under sentence of a court …claiming the right to be released upon the ground that the sentence was imposed in violation of the Constitution or laws of the United States.” In Blaik v. U.S., 161 F.3d 1341 (11th Cir. 1998), the Eleventh Circuit held that § 2255 cannot be used by a federal prisoner who challenges only the restitution portion of his sentence, because a restitution reduction is not a release from custody. Here, defendant brought a § 2255 petition to vacate his sentence, challenging both his custody and his restitution. The Eleventh Circuit held that the district court properly refused to address defendant’s restitution challenge. The presence of a cognizable challenge to the custodial portion of defendant’s sentence did not make his challenge to the restitution portion cognizable. Mamone v. U.S., 559 F.3d 1209 (11th Cir. 2009).
11th Circuit includes loss from relevant conduct in restitution order. (610) Defendant bribed doctors and Medicare beneficiaries to obtain prescriptions that allowed pharmacies to obtain fraudulent Medicare reimbursements. Defendant received kickbacks from the pharmacies. Although it was not charged in the indictment, defendant was independently submitting similar, fraudulent Medicare claims on behalf of her own company, PRN Home Health Care, which provided medical equipment to Medicare beneficiaries. The Eleventh Circuit held that the district court did not err in including all of the money that Medicare paid to PRN in its restitution order, even though the PRN scheme was not charged in the indictment. When the crime of conviction includes a scheme, conspiracy, or pattern of criminal activity as an element of the offense, the court may order restitution for acts of related conduct for which the defendant was not convicted. Because the PRN scheme could be considered relevant conduct, the district court was permitted to consider the losses Medicare incurred from that scheme. U.S. v. Valladares, 544 F.3d 1257 (11th Cir. 2008).
11th Circuit holds that waiver of appeal barred challenge to restitution ordered 36 months after sentencing. (610) Defendant’s plea agreement provided that he waived the right to appeal his sentence on any ground, except in limited circumstances or in the event the restitution amount exceeded $30,000. The district court sentenced him to a term of imprisonment, supervised release, and an amount of restitution to be determined. Over three years later, the district court amended the judgment and ordered defendant to pay restitution of $21,593. Defendant appealed the restitution order as well past the 90-day period required by 18 U.S.C. §3664(d)(5). The Eleventh Circuit held that defendant waived her right to appeal the restitution order. The court noted that its decision should not be construed as providing “free reign” to district courts to disregard the 90-day period where a defendant has executed an appeal waiver. Here, defendant knowingly and voluntarily waived an appeal of restitution that did not exceed $30,000, and the court imposed an amount less than $30,000. The delay, while not a trivial amount of time, was 36 months. U.S. v. Johnson, 541 F.3d 1064 (11th Cir. 2008).
11th Circuit holds restitution could include loss from acquitted conduct. (610) Defendant was convicted of fraud and money laundering for his participation in a Ponzi-type investment scheme. He argued that the district court erred when it calculated restitution based in part on acquitted conduct. The Eleventh Circuit held that the district court was correct to award restitution to any victim of the scheme furthered by defendant’s offense of mail fraud. The Mandatory Victims Restitution Act, 18 U.S.C. §§ 3663A says that restitution for mail or wire fraud is not “limited to the specific act of fraud underlying the mailing or use of the wires for which the defendant is convicted,” but is available for any victim of “the entire scheme or artifice to defraud furthered by the mailing or use of the wires.” Defendant relied on a case interpreting an earlier provision of the Victim and Witness Protection Act, 18 U.S.C. §§ 3663-3664, which allowed a court to order restitution “to any victim of such offense” for which the defendant was convicted. U.S. v. Foley, 508 F.3d 627 (11th Cir. 2007).
11th Circuit holds restitution could include loss from acquitted conduct. (610) Defendant was convicted of fraud and money laundering for his participation in a Ponzi-type investment scheme. He argued that the district court erred when it calculated restitution based in part on acquitted conduct. The Eleventh Circuit held that the district court was correct to award restitution to any victim of the scheme furthered by defendant’s offense of mail fraud. The Mandatory Victims Restitution Act, 18 U.S.C. §§ 3663A says that restitution for mail or wire fraud is not “limited to the specific act of fraud underlying the mailing or use of the wires for which the defendant is convicted,” but is available for any victim of “the entire scheme or artifice to defraud furthered by the mailing or use of the wires.” Defendant relied on a case interpreting an earlier provision of the Victim and Witness Protection Act, 18 U.S.C. §§ 3663-3664, which allowed a court to order restitution “to any victim of such offense” for which the defendant was convicted. U.S. v. Foley, 508 F.3d 627 (11th Cir. 2007).
11th Circuit upholds restitution for damage caused by flight from bank robbery. (610) During a police pursuant from his bank robbery, defendant drove into the parking garage of a condominium association. The police officers did not clear the closing security gate in time, and the collision caused damage to both the police cars and the gate. Defendant challenged a restitution order to the police department and the condominium association, arguing that they were not “victims” of his bank robbery under the Mandatory Victims Restitution Act, 18 U.S.C. § 3663A. The Eleventh Circuit found this argument contrary to the plain language of the Restitution Act, which covers harm that “directly and proximately” results for the commission of the offense. Although flight is not an element of bank robbery, its harm may directly and proximately result from the robbery. U.S. v. Washington, 434 F.3d 1265 (11th Cir. 2006).
11th Circuit upholds downward departure for extraordinary restitution. (610) Defendant and her husband were retailers who defrauded the federal government by purchasing federal WIC vouchers at a discount and depositing the full amount of the voucher into their bank accounts. They agreed to pay $268,237 as restitution, even though their share of the fraud was about 2/3 of this. On the same day defendant and her husband pled guilty, they tendered $50,000 in personal funds as restitution. They paid the balance at sentencing, borrowing large amounts from friends and family. The district court granted their motion for a downward departure based on extraordinary restitution. The Eleventh Circuit affirmed the departure, holding that extraordinary restitution is merely a discouraged, and not a prohibited, factor for departure. Further, the court properly found defendants’ payment of restitution extraordinary enough to justify a downward departure. First, defendants benefited from only about 2/3 of the $268,037 loss, yet provided restitution for the entire loss. Second, they came up with this money by liquidating most of their life savings and obtaining almost $200,000 in loans from friends and family. Third, defendant passed a lie detector test and would not have pled guilty and borrowed so much money except to show her extreme remorse. Fourth, defendants began making restitution on the same day they pled guilty and paid the rest before sentencing. Fifth, defendants’ reason for making restitution was sincere remorse. U.S. v. Kim, 364 F.3d 1235 (11th Cir. 2004).
11th Circuit says court need not identify victim in restitution order where only one victim. (610) Defendant challenged the district court’s order of restitution on the grounds that the court failed to specify the manner of repayment and failed to make any findings about his ability to pay. The Eleventh Circuit found no error. Although the MVRA requires that the court establish the restitution amount for each victim, the bank was the only victim in this case and therefore, the court did not err in failing to identify the victim in the restitution order. The court did not improperly delegate the establishment of the payment schedule because the court ordered immediate payment. Finally, there was no error in the court’s failure to consider defendant’s ability to pay. The MVRA mandates that the court consider a defendant’s financial condition when setting a restitution payment schedule and grants the court discretion to allow payment over time. Although the district court did not expressly adopt the findings of the PSR, it could have reached its conclusion based on the PSR recommendations because no other information was provided, and defendant did not object to the PSR’s findings. The court fulfilled its statutory obligations. U.S. v. Martinez, 320 F.3d 1285 (11th Cir. 2003), vacated, and on rehearing, U.S. v. Martinez, 99 Fed. Appx. 885 (11th Cir. 2004) (Table No. 02-14267).
11th Circuit holds that court could not delegate restitution payment scheme to probation office. (610) The district court ordered defendant to pay restitution of over $ 5 million “due and payable immediately.” After the defense protested that defendant would be unable to pay such a large amount immediately, the court said “I will leave that to the discretion of the Probation Office or whoever does that.” When defense counsel said that the statute did not allow that, the court said “I will tell you what. He will pay what he could pay. That’s the reality of it.” The Eleventh Circuit held that the MVRA does not permit a district court to delegate discretion to set the schedule for a prisoner to pay restitution or a fine. If the statute does not permit delegation to the probation office, then a restitution order requiring “immediate” payment with an informal understanding that the probation office will set a payment schedule is also improper. U.S. v. Prouty, 303 F.3d 1249 (11th Cir. 2002).
11th Circuit holds that PSR adequately supported immediate lump sum payment of restitution. (610) Defendant acknowledged that the Mandatory Victims Restitution Act (MVRA), 18 U.S.C. §§ 3663A-3664, required the district court to order full restitution without regard to his economic circumstances. He contended, however, that under the MVRA the court must have considered his financial resources, projected earnings, and fiscal obligations before specifying the manner in which he would pay restitution. Thus, he contended that the district court committed plain error when it failed to consider or make any factual findings as to whether he had the financial ability to pay an immediate lump sum restitution. In U.S. v. Coates, 178 F.3d 681 (3d Cir. 1999), the Third Circuit interpreted the MVRA to require factual findings on the record. The Eleventh Circuit rejected Coates, holding that the information in the PSR sufficiently supported the court’s decision to order restitution in an immediate lump sum payment. The court did not plainly err when it ordered such payment without making factual findings on the record as to defendant’s financial status. U.S. v. Jones, 289 F.3d 1260 (11th Cir. 2002).
11th Circuit holds that failure to advise of restitution did not violate substantial rights. (610) The district court violated Fed. R. Crim. P. 11 by ordering restitution after failing to advise him before he pled guilty of the possibility that restitution might be ordered. The Eleventh Circuit held that the error did not violate defendant’s substantial rights. Both the plea agreement and the plea colloquy informed defendant that he faced a maximum fine of $250,000 on the fraud conspiracy count, and a fine of the greater of $500,000 or twice the value of the transaction on the money laundering count. The panel agreed with seven of the eight circuits to have ruled on this question that a defendant “is not prejudiced so long as his liability does not exceed the maximum amount that the court informed him could be imposed as a fine. It is the amount of liability, rather than the label ‘restitution,’ that affects [a defendant’s] substantial rights.” U.S. v. Glinsey, 209 F.3d 386 (5th Cir. 2000). U.S. v. Morris, 286 F.3d 1291 (11th Cir. 2002).
11th Circuit rejects restitution where there was no loss from doctor’s receipt of kickbacks. (610) A Florida lab developed a scheme to defraud Medicare by paying doctors to refer their Medicare patients to the lab in return for kickbacks from the lab. Defendant was one of those doctors. The government conceded that all of the referrals made by defendant were for legitimate medical reasons. The Eleventh Circuit reversed the district court’s restitution order because the government did not offer any evidence that the Medicare program suffered any loss attributable to defendant’s receipt of the kickbacks. Medicare paid the lab a fixed amount for its tests. The amount paid was not affected by what the lab did with the money it received. Although the lab might owe restitution if it fraudulently billed for the services allegedly referred by defendant, billing fraud was not part of defendant’s offense conduct. U.S. v. Liss, 265 F.3d 1220 (11th Cir. 2001).
11th Circuit holds that MVRA permits court to base restitution amount on estimate. (610) While receiving long-term federal disability benefits, defendant falsely reported that he had not worked for anyone and had not received income from self-employment. The Office of Worker’s Compensation Programs (OWCP) incorrectly calculated the government’s loss using defendant’s gross income instead of his net income. Rather than recalculating the amounts, the government asked the OWCP employee to estimate the loss. The Eleventh Circuit held that the district court did not err in basing the restitution amount on an estimate. The use of an estimate under the MVRA is justified where it is impossible to determine an exact restitution amount. That was the case here. There were no records that reflected defendant’s actual earned income and the extent of his ability to work during the time he received federal disability benefits. Given the fraud, it was reasonable to think that the amounts he reported on his tax returns might not accurately reflect his actual earnings. Similarly, because defendant’s statements regarding his ability to work were fraudulent, they could not be used to determine his earning capacity. U.S. v. Futrell, 209 F.3d 1286 (11th Cir. 2000).
11th Circuit holds that MVRA applies to conspiracy that straddled effective date. (610) A jury convicted defendants of participating in a conspiracy that ran from October 1992 until March 1998. The district court ordered restitution under the Mandatory Victims Restitution Act (MVRA), which went into effect April 24, 1996. The MVRA does not apply to a defendant whose criminal conduct occurred and ceased prior to April 24, 1996. U.S. v. Siegel, 153 F.3d 1256 (11th Cir. 1998). The Eleventh Circuit held that the MVRA applies to acts in an ongoing conspiracy that began before the MVRA’s date of enactment but concluded after the MVRA’s enactment. The ongoing nature of the conspiracy enables application of the new statute without violating the ex post facto clause. U.S. v. Futrell, 209 F.3d 1286 (11th Cir. 2000).
11th Circuit finds it unlikely defendant could pay $91,000 restitution order. (610) Defendant argued that the sentencing court erred in ordering restitution in an amount that the record showed he was unlikely to be able to pay either at sentencing or in the future. The Eleventh Circuit agreed and vacated the restitution order. Under the VWPA, awarding restitution is discretionary and the court is required to consider factors such as the financial resources of the defendant and the financial needs and earning ability of the defendant and defendant’s dependents. Although the MVRA, effective April 24, 1996, made restitution mandatory, defendant’s fraudulent activities took place before the MVRA took effect. Therefore, the district court was required to consider defendant’s ability to pay when setting restitution. The record showed that defendant might be unable to pay $91,397.05 in restitution. Defendant had a negative net worth, a low monthly income, a disabled wife, and a daughter who relied on him for support. The district court acknowledged that defendant would probably be unable to pay the restitution. On remand, the district court must consider defendant’s financial resources, financial needs, and earning ability. U.S. v. Thayer, 204 F.3d 1352 (11th Cir. 2000).
11th Circuit directs court to consider financial resources and need before setting restitution. (610) The government conceded that the restitution order was not appropriate because the district court did not consider defendants’ ability to pay when setting the restitution amount. The PSR showed one defendant had a negative net worth and worked sporadically bringing in a minimal income. The second defendant also had a negative net worth, several debts, very little cash, and a rented residence in which he lived with his wife and three young children. Accordingly, the Eleventh Circuit vacated and remanded for the court to consider the financial resources, financial needs and earning abilities of defendants. U.S. v. Thayer, 204 F.3d 1352 (11th Cir. 2000).
11th Circuit says defendant liable for checks cashed by co-conspirators during his incarceration. (610) Defendant and others were involved in a “check washing” scheme where they stole checks from mailboxes, chemically treated the checks, rewrote the checks for larger amounts, made the checks payable to themselves, and then cashed the checks. The district court ordered restitution based on the value of all the checks cashed during the conspiracy, which ran from October 10, 1996 until March 23, 1998. Defendant claimed that because he was imprisoned for an unrelated offense from February 28, 1997 to May 3, 1997, he was not responsible for the value of the checks cashed during that time period. The Eleventh Circuit held that under 18 U.S.C. § 3663 and USSG § 1B1.3, defendant was jointly and severally liable for the total value of the checks cashed during the duration of the conspiracy, regardless of his temporary incarceration. There was no evidence that defendant attempted to withdraw from the conspiracy during his short stint in prison. In fact, he was photographed at a bank cashing stolen checks with a co-conspirator shortly after his release from prison. U.S. v. Alas, 196 F.3d 1250 (11th Cir. 1999).
11th Circuit holds that defendant waived objection to restitution. (610) Defendant argued that the district court abused its discretion and violated his due process rights by ordering him to pay $156,029.51 in restitution without considering his financial situation and ability to pay. The Eleventh Circuit ruled that defendant waived any right to contest the amount of restitution by expressly agreeing to the amount of restitution ordered. At sentencing, the district court announced that the amount of restitution was $156,029.51, rather than $248,000, and asked defendant’s counsel if he wished to be heard on the issue. Defendant’s lawyer agreed that “the one fifty-six amount is the appropriate amount.” Defendant also did not object generally to the award of restitution. U.S. v. Gregg, 179 F.3d 1312 (11th Cir. 1999).
11th Circuit orders arsonists to pay restitution based on replacement cost of church. (610) Defendant set fire to a century-old church, which burned to the ground. Under 18 U.S.C. § 3663A(b)(1), defendants were required to pay restitution in an amount equal to the “value” of the church on the day they burned it down. Defendants contended that § 3663A limited restitution to the actual cash value of the church on the date of the offense. The Eleventh Circuit found that because of the unique value of the church to its members, the district court properly ordered the arsonists to pay restitution equal to the cost of rebuilding the church using modern construction methods and materials. For fungible commodities, value is easy to determine – it is the actual cash or fair market value of the item. However, fair market value may not be an accurate measure of the value of property where the item is unique. In such a case, replacement cost may be a better measure of value. A church is unique, and is valued by its members, precisely because of its location, its design, and the memories it evokes. None of these characteristics can be recreated by purchasing an alternative structure in another neighborhood. Thus, actual cash value was not an appropriate measure of value in this case. U.S. v. Shugart, 176 F.3d 1373 (11th Cir. 1999).
11th Circuit holds applying Mandatory Victims Restitution Act was ex post facto. (610) Defendant committed the instant fraud offenses between February 1988 and May 1990. The Mandatory Victims Restitution Act of 1996 became effective April 24, 1996. Under the MVRA, the district court must order the payment of restitution in the full amount of the victim’s loss without considering the defendant’s ability to pay. Prior to enactment of the MVRA, the district court was required to consider, among other factors, the defendant’s ability to pay in fixing the amount of restitution. Agreeing with the Ninth Circuit and disagreeing with the Seventh Circuit, the Eleventh Circuit held that the MVRA cannot be applied to a person whose criminal conduct occurred prior to April 24, 1996. Application of the MVRA to defendant violated the ex post facto clause. Restitution under the MVRA is a penalty. The MVRA increased this penalty by making full restitution mandatory, without consideration of the defendant’s economic circumstances. U.S. v. Siegel, 153 F.3d 1256 (11th Cir. 1998).
11th Circuit finds abuse of discretion in ordering restitution without considering ability to pay. (610) Defendant argued that he was unable to pay the $1.2 million restitution ordered by the district court. The Eleventh Circuit held that the district court abused its discretion in ordering restitution without considering defendant’s ability to pay. The only evidence in the record regarding defendant’s financial ability to pay restitution was the PSR’s findings adopted by the district court. The PSR, however, showed that defendant had no assets and that he had debts of $7500. Defendant’s income varied from $400 to $1000 a month, and his expenses totaled $250 a month. Also, defendant was born with spina bifida, a congenital defect that defendant argued would limit his earning capacity. Thus, the record did not support a finding that defendant would be able to pay $1.2 million in restitution. Given the disparity between the amount of restitution ordered and defendant’s ability to pay, it was “not improbable that the judge failed to consider the mandatory factor and was influenced thereby.” U.S. v. Siegel, 153 F.3d 1256 (11th Cir. 1998).
11th Circuit holds defendant preserved objection to restitution order. (610) Defendant argued that the court erred in ordering $1.2 restitution where the PSR said he was unable to pay that amount of restitution. The Eleventh Circuit found that the government’s claim that defendant failed to object in compliance with local rules was not apposite. In the PSR, the probation officer informed the court that it did not appear that defendant had the ability to pay a fine. Defendant had no reason to object to the PSR because he believed the findings accurately reflected his financial circumstances. The objection made by defense counsel at sentencing adequately pointed out the disparity between the restitution ordered and the undisputed facts in the PSR. The lawyer’s response “All right” to the court’s statement that defendant could “pay what he can pay” was not a withdrawal of that objection. U.S. v. Siegel, 153 F.3d 1256 (11th Cir. 1998).
11th Circuit upholds $120,000 fine despite current financial problems. (610) Defendants were involved in a conspiracy to possess stolen vehicles and parts and remove or alter their VINs. They argued that the district court failed to make specific findings in support of its joint and several order obligating them to pay restitution of $120,000. The Eleventh Circuit found no error. The first defendant waived his argument by not presenting it at the sentencing hearing. There was substantial evidence that the second defendant was the leader of both the sophisticated scheme to dismantle and reassemble expensive cars and the ring dealing in stolen parts, and there was evidence that he caused losses exceeding $500,000 to various parties by the thefts and other illegal activities. Despite this, the court relieved the second defendant of any obligation to pay a fine. The court had before it information about extensive losses to victims, defendant’s limited resources and inability to pay, his past employment and uncertainties about the extent of the losses. While the court might have made more detailed findings, the court did at least “consider” the necessary factors, and it made a decision, which was not unreasonable under the circumstances, to impose restitution that was considerably lower than the victims’ losses from the scheme. U.S. v. Exarhos, 135 F.3d 723 (11th Cir. 1998).
11th Circuit upholds $593,456 restitution for defendant with $120,000 net worth. (610) Defendant argued that the district court erred in ordering him to pay $593,456 in joint and several restitution. The Eleventh Circuit upheld the restitution because it was not manifestly unjust. Defendant did not object to the PSR’s restitution recommendation or contest it in response to the PSR’s Jones inquiry. A defendant’s failure to challenge a restitution order at sentencing constitutes a waiver of the objection. The restitution order was not manifestly unjust. Defendant had a net worth of over $120,000 and as recently as 1989 earned more than $61,000. Thus, he was not without means to compensate the bank for its losses. Although the court failed to make the requisite inquiries before imposing restitution, the record was not devoid of any evidence that the defendant was able to satisfy the restitution order. U.S. v. Dabbs, 134 F.3d 1071 (11th Cir. 1998).
11th Circuit finds no error in using agent’s hearsay testimony concerning bank’s loss. (610) Defendant robbed three banks. The Eleventh Circuit found no error in the district court’s reliance on the hearsay testimony of a special agent as to the amount of loss suffered by one of the banks. Defendant did not show that the testimony was materially false or unreliable. The special agent based his testimony on his recollection of the bank auditor’s report prepared on the day of the robbery. It is the type of evidence routinely relied upon by the FBI in determining amounts stolen from banks. However, since the matter was being remanded for other reasons, the district court could revisit the amount of restitution, since it would be a simple matter for the special agent to obtain the auditor’s report or for the auditor to testify. U.S. v. Bourne, 130 F.3d 1444 (11th Cir. 1997).
11th Circuit reverses restitution to government for commissions paid to money launderers. (610) Defendants laundered money for an undercover agent posing as an accountant and financial advisor for a fictitious cocaine trafficker. The district court ordered defendant to pay restitution to the IRS in the amount of $36,312.50, which represented the total commissions the IRS paid to members of the conspiracy to launder the purported drug proceeds. The Eleventh Circuit held that the government was not a “victim” entitled to restitution under the VWPA for the commissions it paid. The VWPA aims to protect victims, not to safeguard the government’s financial interest in funds used as bait to apprehend offenders. When the IRS paid commissions to compensate defendants for their money laundering services, the government did not “lose” the money. The IRS got what it paid for—money laundering services. U.S. v. Khawaja, 118 F.3d 1454 (11th Cir. 1997).
11th Circuit holds restitution can only be based on harm from offense of conviction. (610) Defendant argued with another man at a club. Defendant left the club, retrieved a gun from the trunk of his car and placed in on the front seat. In the parking lot later that evening, defendant pulled his car in front of the other man. The man approached defendant’s car and defendant shot him. Defendant was acquitted of assault and carrying a firearm in relation of a crime of violence, but was convicted of illegally possessing the firearm. The district court ordered defendant to pay restitution to the injured man for his hospital costs. The Eleventh Circuit reversed, because restitution under the VWPA can only be based on harm resulting from the offense of conviction. Restitution based on acquitted charges is inappropriate. Defendant was only convicted of possessing the firearm. However, it was his use of the firearm that caused the victim’s injuries. U.S. v. McArthur, 108 F.3d 1350 (11th Cir. 1997).
11th Circuit directs court to reconsider defendant’s ability to pay restitution. (610) The Eleventh Circuit directed the district court to reconsider the order to pay restitution of $357,281 because the district court appeared to find that defendant was not likely to be able to pay the full amount. The Victim and Witness Protection Act requires sentencing courts to “consider” the financial resources of the defendant, and the financial needs and earning ability of defendant and defendant’s dependents. Although a court may order restitution even if the defendant is indigent at the time of sentencing, it may not order restitution in an amount that the defendant cannot repay. Although the court made no explicit findings regarding defendant’s ability to pay restitution, the court apparently believed that defendant was not likely to be able to pay the ordered restitution. Restitution cannot be based on the speculation that a defendant might unexpectedly acquire a large sum of money. U.S. v. Fuentes, 107 F.3d 1515 (11th Cir. 1997).
11th Circuit outlines procedure for determining ability to pay restitution. (610) The Eleventh Circuit outlined the proper procedure for determining restitution when a defendant alleges that he or she is unable to pay. The government must prove the amount of loss by a preponderance of the evidence, and the defendant must establish his financial resources and needs by a preponderance of the evidence. There is a presumption that the defendant can pay full restitution. The defendant must present some evidence that he cannot pay before ability to pay becomes an issue. If the court is not persuaded by defendant’s evidence, it is free to order full restitution. Where the crime resulted in substantial financial gain for the defendant, a strong inference may arise that the defendant has access to the fruits of the crime. If the defendant shows that it is more likely than not that he cannot pay full restitution at the time of sentencing, the court may order less than full restitution, decline to order restitution, or set up a payment schedule over time. The court is free to modify its order in the future if the defendant’s financial condition changes. U.S. v. Fuentes, 107 F.3d 1515 (11th Cir. 1997).
11th Circuit holds that defendant’s suicide rendered restitution order void. (610) Defendant was convicted of mail and securities fraud. He was sentenced to imprisonment, supervised release, a fine, and $21,586,487 in restitution pursuant to the VWPA. Defendant filed a notice of appeal, but the day before he was to begin serving his sentence, he committed suicide. The Eleventh Circuit held that defendant’s death rendered the entire conviction and sentence, including the restitution order, void ab initio. Under Circuit law, the death of a defendant during the pendency of his direct appeal renders his conviction and sentence void. Some circuits have recognized an exception in cases in which the sentence includes restitution. This is premised on the assumption that restitution is compensatory in nature. However, under 11th Circuit law, restitution is penal, rather than compensatory. A criminal conviction is not final until resolution of the defendant’s appeal as a matter of right. To uphold the restitution order against defendant, who was denied the opportunity to properly contest his conviction, violates the finality principle. Judge Cohill dissented, believing that there should be an exception to the general abatement rule where a defendant takes his own life. U.S. v. Logal, 106 F.3d 1547 (11th Cir. 1997).
11th Circuit finds failure to mention restitution at plea hearing was harmless error. (610) Defendant argued that he should be permitted to withdraw his plea because the district court ordered $64,740 in restitution but failed to mention restitution in the Rule 11 plea colloquy. The Eleventh Circuit held that the failure to mention restitution at the plea hearing was harmless error. Defendant was fully apprised of his obligation to make restitution in his plea and cooperation agreement. The PSR also specifically provided that restitution would be ordered. Defendant was notified by the district court at the plea hearing that he faced a possible fine of $250,000 on his conviction. The fine was waived; therefore defendant’s total monetary liability was significantly less than the maximum monetary exposure specified in the plea colloquy. U.S. v. McCarty, 99 F.3d 383 (11th Cir. 1996).
11th Circuit upholds restitution for acts that were part of conspiracy for which defendant was convicted. (610) Defendant pled guilty to conspiracy to traffic in counterfeit access devices. During his plea colloquy, defendant admitted picking up one fraudulent credit card at the post office. He argued that the district court could not order restitution for losses resulting from acts other than the one fraudulent card. He contended that he was charged and convicted only of conspiracy to obtain the one card. The Eleventh Circuit held that a district court may order a defendant convicted of conspiracy to pay restitution for losses resulting from acts in furtherance of the conspiracy. U.S. v. Obasohan, 73 F.3d 309 (11th Cir. 1996).
11th Circuit says adoption of PSR did not satisfy need to make findings on defendant’s ability to pay restitution. (610) Defendant argued that the district court erred in ordering her to pay restitution of $106,000, jointly and severally with her co-defendants, without considering her financial means. The Eleventh Circuit agreed that the restitution was improper in light of the court’s failure to consider each defendant’s ability to pay. Under U.S. v. Remillong, 55 F.3d 572 (11th Cir. 1995), the record must reveal that the district court considered the defendant’s ability to pay prior to imposing the amount of restitution. The court’s wholesale adoption of the PSR at the beginning of the sentencing hearing, without more, did not meet this obligation. The PSR did not take into consideration the objections to the PSR or the arguments made by both parties during the hearing. The court must also clarify the order. All of the defendants were required, jointly and severally, to pay restitution in the amount of $106,000. However, the court also said that several of defendants’ obligations would not be affected by any restitution payments made by the other defendants. These two requirements were inconsistent. U.S. v. Page, 69 F.3d 482 (11th Cir. 1995).
11th Circuit remands where basis of restitution order was unclear. (610) Defendant operated a Ponzi scheme that fraudulently collected $27 million from investors. The presentence report found that approximately $19 million was owed to investors at the time of sentencing. The Eleventh Circuit vacated the $27 million restitution order, since it was unclear how or why the court ordered $27 million restitution over defendant’s objection. There also was no evidence about defendant’s financial condition or ability to pay restitution. U.S. v. Mullens, 65 F.3d 1560 (11th Cir. 1995).
11th Circuit holds that counsel’s admission at sentencing was agreement to pay full amount of restitution. (610) Defendant was charged with three counts of possessing a stolen motor vehicle and he pled guilty to one of those counts. At sentencing, defense counsel said defendant had agreed to pay restitution for the three cars. The district court ordered restitution for all three cars. The Eleventh Circuit held that counsel’s admission at sentencing was an agreement to pay restitution for all three cars. Under a 1990 amendment to the VWPA, a sentencing judge may order restitution commensurate with the terms of a plea agreement. U.S. v. Schrimsher, 58 F.3d 608 (11th Cir. 1995).
11th Circuit criticizes judge who defied earlier mandate to evaluate defendant’s ability to pay restitution. (610) Defendant appealed an order to pay restitution of $29,251 to the banks that he robbed. This was defendant’s third appeal. In the first appeal, the Eleventh Circuit reversed an express threat of death enhancement. In the second appeal, it reversed a dangerous weapon enhancement and found that the district court erred in ordering restitution without fully considering defendant’s ability to pay. On remand, the district court wrote a handwritten note across defendant’s motion saying that restitution was appropriate because defendant once had physical possession of the money. For the third time, the Eleventh Circuit reversed, holding that the district court again abused its discretion by failing to consider defendant’s ability to pay. It sharply criticized the district judge’s “deliberate defiance” of its earlier mandate, noting that on several previous occasions this judge has failed to provide factual or legal explanations for his actions. The appellate court remanded to a new judge, since it had no confidence that the district judge would perform an appropriate evaluation of defendant’s financial conditions on remand. U.S. v. Remillong, 55 F.3d 572 (11th Cir. 1995).
11th Circuit rejects restitution where Navy suffered no actual loss from false statements. (610) Defendant and her company obtained a Navy contract to repair the roofs on two buildings. The Navy paid defendant as the work progressed. To receive a progress payment, defendant falsely certified that the company’s subcontractors and suppliers had been paid. Because of financial difficulties, defendant only completed 75% of the project. Defendant was convicted of making false statements to the Navy. The district court ordered defendant to pay restitution of $37,704 (the amount defendant’s bonding company and suppliers lost) to the Navy, which was the only victim of defendant’s false statement crime. The Eleventh Circuit reversed because the Navy did not suffer a loss from defendant’s offense. The Navy only paid defendant for the portion of the work she completed. The Navy completed the project using its own personnel and materials defendant left at the site. Moreover, even if restitution was appropriate, the district court erroneously failed to evaluate defendant’s financial condition. U.S. v. Apex Roofing of Tallahassee, 49 F.3d 1509 (11th Cir. 1995).
11th Circuit holds that money paid by defendant must be applied first to restitution and then to fine. (610) The district court ordered defendant to pay a $100,000 fine within 30 days and make restitution of $400,000 after his release from prison. The Eleventh Circuit remanded for the district court to order the restitution to be paid before the fine. Section 5E1.2(c) states that if a defendant is ordered to make restitution and pay a fine, the court shall order that any money paid by the defendant shall first be applied to satisfy the order of restitution. On remand, because the defendant would no longer be paying the fine immediately, the court could order the restitution payments accelerated. U.S. v. Lombardo, 35 F.3d 526 (11th Cir. 1994).
11th Circuit upholds restitution to businesses forced to reimburse post office for stolen money orders. (610) Defendant robbed a post office of cash, a money order imprinter and blank money orders. He used the money orders to obtain goods and services from various businesses. After defendant was arrested, these businesses were forced to repay the post office for the amount of the money orders. The 11th Circuit upheld a restitution order to these businesses for the amount they were forced to pay the post office, even though they were not “victims” of his robbery offense. The Victim and Witness Protection Act, 18 U.S.C. section 3663(e)(1) provides that a court may, in the interest of justice, order restitution to any person who has compensated the victim for a loss caused by defendant’s crime. U.S. v. Koonce, 991 F.2d 693 (11th Cir. 1993).
11th Circuit reverses restitution order based upon dismissed counts. (610) Pursuant to a plea agreement, defendant pled guilty to one charge of embezzling a postal money order and three other counts were dismissed. The district court imposed a restitution order of $6,698.18 even though the count of conviction involved only $140. The 11th Circuit vacated the restitution order, based upon the Supreme Court’s decision in Hughey v. U.S, 495 U.S. 411, 110 S.Ct. 1979 (1990), which limits restitution awards to the loss caused by the conduct underlying the offense of conviction. U.S. v. Epperson, 938 F.2d 1230 (11th Cir. 1991).
11th Circuit says sentencing court cannot leave restitution issue open. (610) At sentencing, the district court determined that defendant did not have the present financial ability to make restitution. However, in light of the possibility that he could earn money in the future, the court stated that the issue of restitution could be reopened at such time as defendant might begin earning money. The 11th Circuit found no authority for a sentencing court to leave the question of restitution open until an uncertain date, and remanded for an immediate determination as to restitution. U.S. v. Sasnett, 925 F.2d 392 (11th Cir. 1991).
11th Circuit holds district court cannot order restitution to compensate victim for mental suffering. (610) Defendant was convicted of raping and sodomizing a female correctional officer in his prison cell. Defendant contended that the district court improperly ordered that he pay $500,000 restitution to the victim to compensate for psychological and mental suffering from post-traumatic stress. The 11th Circuit found that the restitution order was an improper attempt to compensate the victim for her mental suffering. Agreeing with the 9th and 2nd Circuits, the court found that the list of compensable harms set forth in 18 U.S.C. § 3663 is exclusive. Therefore, the district court lacked the authority to order the defendant to pay restitution to compensate the victim for mental anguish. U.S. v. Husky, 924 F.2d 223 (11th Cir. 1991).
D.C. Circuit says restitution for acquitted counts was not plain error. (610) While working as an accountant for a credit union, defendant stole thousands of dollars from his employer by manipulating its accounting system. He was convicted of bank and wire fraud. The district court ordered him to make restitution for the approximately $219,000 loss alleged in the indictment, which included losses from a bank fraud count on which defendant was acquitted. Defendant argued for the first time on appeal that the court’s inclusion of losses flowing from the acquitted count violated Supreme Court and D.C. Circuit decisions that limit restitution orders to “the offense of conviction.” See Hughey v. U.S., 495 U.S. 411 (1990); U.S. v. Dorcely, 454 F.3d 366 (D.C. Cir. 2006). The D.C. Circuit held the restitution order did not constitute plain error. Neither of the decisions defendant cited foreclosed including acquitted conduct in restitution orders. Although the two decisions limited restitution to the “offense of conviction,” neither resolved the question of whether restitution is appropriate for acquitted conduct that falls within the scope of other scheme-based offenses of conviction. The district court did not commit plain error. U.S. v. Clark, 747 F.3d 890 (D.C. Cir. 2014).
D.C. Circuit says court did not lengthen sentence to allow defendant to pay restitution. (610) Defendant argued that the district court lengthened his time in prison so he could earn funds to speed the restitution payments he owed his victims. The D.C Circuit found no support for this argument. The court never drew any link between the goal of restitution and defendant’s prison time. The first time the district court even mentioned restitution was after it had offered a litany of reasons justifying the length of defendant’s prison term It was absurd to think defendant’s meager earning potential in the Bureau of Prisons Inmate Financial Responsibility Program (IFRP) could motivate the district court to keep him in prison. Defendant would need to work more than 20 years of 40-hour weeks, keeping not a cent for himself, to pay off his restitution order. The panel did find that the court erred by stating that defendant would be required to enroll in the Bureau of Prisons IFRP. The government conceded at oral argument that defendant could not be ordered to enroll in the IFRP, and so the panel modified his sentence to reflect the fact that enrollment was voluntary. U.S. v. Godoy, 706 F.3d 493 (D.C. Cir. 2013).
D.C. Circuit finds plea agreement required restitution to all victims, not just offenses of conviction. (610) Defendant pled guilty to three counts of fraud. He challenged on appeal the amount of restitution ordered by the district court, both in the aggregate and to numerous specific victims. The D.C. Circuit rejected the challenge, ruling that defendant’s plea agreement authorized the district court to set the amounts of restitution, and explicitly provided that restitution would be due to victims of all of defendant’s criminal conduct, not just his offenses of conviction. A court may order, if agreed to by the parties in a plea agreement, restitution to persons other than the victim of the offense. See 18 U.S.C. § 3663(a)(1)(A). The plea agreement clearly delegated authority to the district court to resolve any differences between the parties regarding the amount of restitution to be paid and to whom. This delegation of authority eliminated any potential ambiguity in the parties’ agreement on restitution. U.S. v. Moore, 703 F.3d 562 (D.C. Cir. 2012).
D.C. Circuit upholds large restitution order for child victims of sex trafficking. (610) Defendant pled guilty to four counts of sex trafficking of children, 18 U.S.C. § 1591(a)(1). The district court ordered defendant to pay almost $4 million in restitution to the four victims. The D.C. Circuit held that the district court did not abuse its discretion in making the restitution order. Although the victims had suffered trauma before being prostituted by defendant, the government psychologist stated that defendant’s abuse was the “proximate” or “most significant cause,” and that the treatment he recommended would be necessary even if the victim had had no previous trauma. The court was not required to find that the victims were in fact interested in seeking the recommended treatment. The court compensates a victim with restitution; whether the victim chooses to use the money in a particular way is up to her. In re Sealed Case, 702 F.3d 59 (D.C. Cir. 2012).
D.C. Circuit says waiver of right to appeal sentence did not apply to restitution. (610) Defendant pled guilty to four counts of sex trafficking of children, 18 U.S.C. § 1591(a)(1). In additional to imprisonment, the district court ordered defendant to pay almost $4 million in restitution to the four victims. The government argued that defendant waived, as part of his plea agreement, the right to appeal the restitution order. The D.C. Circuit disagreed. The agreement stated that defendant was waiving the right to appeal his “sentence or the manner in which it was determined.” However, the remainder of this paragraph referred only to “a period of imprisonment” and “the applicable Sentencing Guidelines range.” The paragraph also referenced the section of the plea agreement which defined “sentence” as simply the period of incarceration, and mentioned “other sentencing incidents” such as “fines and terms of supervised release,” but did not include restitution. Because the plea agreement cited only § 3742, which does not mention restitution, the panel concluded that defendant did not knowingly waive his right to appeal the restitution award. In re Sealed Case, 702 F.3d 59 (D.C. Cir. 2012).
D.C. Circuit reverses where restitution was based on defendant’s gain rather than victim’s loss. (610) Defendant pled guilty to copyright infringement and mail fraud. Pursuant to the Mandatory Victim Restitution Act (MVRA), 18 U.S.C. § 3663A, the district court ordered him to pay restitution to Adobe Systems, Inc. in an amount equivalent to the revenue he received from his sales of the pirated products. He argued that the court abused its discretion because the government failed to offer evidence of the victim’s actual loss, instead offering evidence only of his gain. Because the government did not meet its burden to present evidence from which the district court could determine the victim’s actual loss as a result of the pirate sales, the D.C. Circuit vacated the restitution order. The MVRA places the burden on the government to prove the victim’s loss by a preponderance of the evidence. 18 U.S.C. § 3664(e). The defendant’s gain is not an appropriate measure of the victim’s actual loss in MVRA calculations. In cases involving copyright infringement and fraudulent sales, the victim’s actual loss typically equals the profit the victim lost on the sales that were diverted from the victim as a result of the defendant’s infringing sales. The government must offer sufficient evidence to establish both the profit margin per sale and the number of sales lost. Here, the government failed to present evidence from which the district court could either determine Adobe Systems’ actual loss, or find that defendant’s gain was a reasonable measure of that loss. U.S. v. Fair, 699 F.3d 508 (D.C. Cir. 2012).
D.C. Circuit says restitution by viewer of child pornography is limited by proximate cause. (610) A victim of child pornography, “Amy” sought restitution from a defendant who possessed, but did not distribute, pornographic photos of her. The district court ordered nominal restitution, but on mandamus review, the D.C. Circuit held that a viewer of child pornography is liable for restitution only if the victim can show that his viewing of the materials was the “proximate cause” of her injuries. The D.C. Circuit thus disagreed with the Fifth Circuit’s opinion in In re Amy Unknown, 636 F.3d 190, 198-99 (5th Cir. 2011), which held that restitution could be awarded without showing “proximate cause.” The D.C Circuit agreed with Third, Fifth and Eleventh Circuits that the proximate cause requirement in the catch-all category of the Crime Victims Rights’ Act, 18 U.S.C. § 3771(a)(6), also applies to the other categories. See U.S. v. McDaniel, 631 F.3d 1204, 1208–09 (11th Cir. 2011); U.S. v. Laney, 189 F.3d 954, 965 (9th Cir.1999); U.S. v. Crandon, 173 F.3d 122, 125 (3d Cir. 1999). In addition, the D.C. Circuit relied on the “bedrock rule” of both tort and criminal law that a defendant is only liable for harms he proximately causes. The case was remanded to determine the dollar amount of any injuries the defendant proximately caused. U.S. v. Monzel, 641 F.3d 528 (D.C. Cir. 2011).
D.C. Circuit permits probation office to modify monthly restitution payments. (610) The judgment against defendant provided that during her incarceration, defendant could make payment of the special assessment and restitution through the U.S. Bureau of Prisons’ Inmate Financial Responsibility Program. Any balance remaining after her release was to be paid at a rate of $200 per month, but the U.S. Probation Office could “revise the amount of monthly payments in its discretion.” Citing U.S. v. Braxtonbrown-Smith, 278 F.3d 1348 (D.C. Cir. 2002), defendant argued for the first time on appeal that the district court could not give the Probation Office the authority to modify her monthly restitution payments while she was on supervised release. Braxtonbrown-Smith did not contain any analysis, and there is now a circuit split on the issue of the Probation Office’s authority to make such a modification. Moreover, one of the cases relied upon by Braxtonbrown-Smith has been overruled. Given the divergent views of the courts of appeals and the shift in the authority on which it relied in Braxtonbrown-Smith, the D.C. Circuit found no plain error in the restitution order. U.S. v. Baldwin, 563 F.3d 490 (D.C. Cir. 2009).
D.C. Circuit holds that incorrect citation in plea agreement did not bar agreed-upon restitution. (610) Defendant pled guilty to federal income tax evasion and fraud. As part of the plea agreement, the parties agreed that the federal tax loss exceeded $100 million under the Guidelines, and defendant agreed that the government could order restitution under 18 U.S.C. §3572 and 16 D.C. §711. The district court found that it could not order restitution on the federal count because the plea agreement referenced 18 U.S.C.§3572, which covers fines, and not 18 U.S.C. §3663, which covers restitution. The D.C. Circuit held that the district court was authorized to order restitution to the federal government pursuant to 18 U.S.C. §3663(a)(3). The parties intended to authorize restitution to the U.S. for the federal tax counts. The parties’ citation to 18 U.S.C. §3572, instead of 18 U.S.C. §3663(a)(3), in the plea agreement did not preclude the finding that the parties nonetheless agreed that restitution could be ordered on the federal counts. Section 3663(a)(3) does not require that the plea agreement expressly include the statutory basis for restitution. U.S. v. Anderson, 545 F.3d 1072 (D.C. Cir. 2008).
D.C. Circuit holds that jury’s forfeiture verdict did not limit loss determination. (610) Defendant contended that the jury’s forfeiture verdict should control the district court’s loss determination under § 2B1.1. The district court disagreed, and independently calculated the loss to be $74,588.42, which was higher than the jury’s forfeiture verdict and resulted in an additional two-level enhancement. The D.C. Circuit found no error. The forfeiture verdict did not collaterally estop the court from recalculating the loss amount at sentencing. Forfeiture and loss calculations are distinct. Forfeiture is a means for forcing a criminal defendant to disgorge ill-gotten profits. Loss involves the “reasonably foreseeable pecuniary harm that results from the offense.” U.S. v. Hoover-Hankerson, 511 F.3d 164 (D.C. Cir. 2007).
D.C. Circuit rejects restitution for loss outside offense of conviction. (610) Defendant was convicted of making a false statement to the FBI and acquitted of conspiracy to commit money laundering and conspiracy to defraud the government. The district court incorrectly ordered restitution under 18 U.S.C. § 3663A(a)(1), which requires restitution only if the defendant is convicted of an offense described in § 3663A (c)(1). Defendant’s false statement offense was not covered by § 3663A(c)(1). The order was also improper under § 3663. Relying on Hughey v. U.S., 495 U.S. 411 (1990), the D.C. Circuit interpreted § 3663 to permit a court to order restitution for loss caused by the “specific conduct that is the basis of the offense of conviction.” Although it was unclear what the restitution amount of $63,315.51 represented, it was highly unlikely that it properly reflect the loss caused solely by the false statement. U.S. v. Dorcely, 454 F.3d 366 (D.C. Cir. 2006).
D.C. Circuit rejects excessive term of supervised release and clarifies restitution order. (610) The government conceded on appeal that the district court erred in sentencing defendant to five years of supervised release on all counts. Counts 1, 3-12 and 15 were either Class C or Class D felonies subject to three years of supervised release. The D.C. Circuit remanded for the district court to correct the judgment. In addition, assuming ambiguity in the restitution order, on remand the district court must clarify that the phrase “not less than $250 as directed by the probation office” does not give the Probation Office authority to modify the monthly amount of restitution that defendant was required to make upon release from custody. The court was also directed to strike from the judgment the special condition regarding defendant’s participation in a mental health treatment program for anger control that appeared to have been inadvertently carried over from another case. Finally, defendant’s contention that the district court’s order to pay back taxes was an improper restitution order was meritless, as her obligation to pay back taxes is established by the relevant provisions of the Internal Revenue Code. U.S. v. Braxtonbrown-Smith, 278 F.3d 1348 (D.C. Cir. 2002).
D.C. Circuit says restitution to other creditors should not be paid out of restitution due victim. (610) Defendant, the president of a school for emotionally disturbed students, misappropriated money from the District of Columbia Public Schools (DCPS) for the school. The district court awarded restitution of $301,910.63 to compensate DCPS and 13 individuals. Defendant argued for the first time on appeal that money owed the school employees and vendors of the school should be paid out of the restitution awarded to DCPS, otherwise, the court double counted these expenses. The D.C. Circuit found no plain error. The DCPS contract was for educational services; hiring staff and procuring supplies was defendant’s responsibilities. By violating the contract, defendant owed DCPS the amount it paid that was not used to provide the contracted-for services. In other words, defendant had to reimburse DCPS for all funds not used to educate students. DCPS had no obligation to the school staff or vendors. U.S. v. Robinson, 198 F.3d 973 (D.C. Cir. 2000).
D.C. Circuit finds no plain error in restitution order. (610) The VWPA requires a district court to consider a defendant’s financial resources and earning ability before ordering restitution. 18 U.S.C. § 3664(a). The district court ordered restitution of almost $2000, stating that it had considered the information in defendant’s PSR. However, defendant’s PSR concluded that defendant did not have the ability to pay a fine or restitution. It also stated that defendant had no dependents, was in good health, had a college degree, had been employed for seven years earning $500 weekly, and had produced award-winning movie videos. The D.C. Circuit held that the restitution order was not plain error. The district court’s remarks indicated that it had reviewed the PSR prior to imposing sentence. This alone showed that the district court considered the defendant’s ability to pay. The burden was on defendant to show error by the district court in ordering restitution. See 18 U.S.C. § 3664(d). Given that the PSR’s conclusion was based in part on an $8,000 debt to a friend and defendant’s statement that he had no assets, the district court was not required to accept that conclusion. The court could reasonably view a personal loan in a different light than a commercial loan. Moreover, defendant’s educational and work history could reasonably cause the district court to conclude that he had the ability to earn a decent living. U.S. v. Wolff, 195 F.3d 37 (D.C. Cir. 1999).
D.C. Circuit upholds restitution based on PSR’s unchallenged findings of ability to pay. (610) Defendant was the co-owner of a home health care agency that billed Medicare and Medicaid for $106,506 in services it did not perform. She argued that the court erred in ordering restitution because it failed to consider her ability to pay and because the evidence showed she could not make restitution. The D.C. Circuit held that the record adequately considered defendant’s ability to pay. The court adopted the unchallenged findings of the PSR, which discussed defendant’s financial worth, past work history, and future ability to pay. The court’s decision to order $62,294.50 in restitution was not plain error. Defendant did not meet her burden to prove an inability to pay restitution, because the PSR’s unchallenged ability to pay findings were sufficient to sustain the restitution order. U.S. v. Bapack, 129 F.3d 1320 (D.C. Cir. 1997).
Article provides update on selected restitution issues. (610) Catharine M. Goodwin, Assistant General Counsel, Administrative Office of the U.S. Courts, provides an update on selected restitution issues. She recommends a five step process to determine the amount of restitution: (1) identify the statutory offense of conviction, (2) identify the victims of the offense of conviction, (3) identify the harms to the victim caused by the offense of conviction, (4) identify which harms and costs are compensable as restitution, and (5) consider the effect of the plea agreement on the restitution amount. She also discusses restitution in juvenile cases, cases involving multiple victims or multiple defendants, the ways in which a restitution order can be vacated or amended, and the effect of civil agreements or settlements on restitution. Catharine M. Goodwin, Looking at the Law – Update on Selected Restitution Issues, 65 Fed. Prob. 54 (June 2001).
Article discusses problems in structuring restitution payments. (610) District Judge W. Royal Furgeson, Jr., joined by Catharine M. Goodwin, Assistant General Counsel for the Administrative Office of the Courts, and Briefing Attorney Stephanie Lynn Zucker, describe the practical problems of imposing restitution. In particular, they discuss the problems of making restitution “due immediately” and problems with delegating payment schedules to probation officers or the Bureau of Prisons. They conclude that “[i]t is currently difficult for district courts to impose financial penalties in an effective, practical and legally sound manner.” They point out that “[v]arying interpretations of both pre-MVRA and post-MVRA statutory provisions have led to increasing uncertainty, disparity and much litigation.” Thus, “[t]he ability of the BOP to collect financial penalties to the maximum extent feasible from inmates, as well as the ability to implement collection programs evenly among inmates, is hindered.” W. Royal Furgeson, Jr., Catharine M. Goodwin and Stephanie Lynn Zucker, The Perplexing Problem with Criminal Monetary Penalties in Federal Courts, 19 Rev. of Litigation, 167 (Spring 2000).
Article explains steps involved in imposing restitution. (610) The Assistant General Counsel of the Administrative Office of the U.S. Courts proposed a four-step analysis to help probation officers determine the victims of, and compensable losses incurred from, an offense for restitution purposes. The steps involve (1) the determination of whether restitution is mandatory or discretionary, (2) the identification of victims of the offense, (3) the determination of the victim’s harms caused by the offense, and (4) the determination of which of those harms are compensable as restitution. The author also reviews how the restitution statute allows certain plea agreement provisions to affect the imposition of restitution. Catherine M. Goodwin, The Imposition of Restitution in Federal Criminal Cases, 62 Fed. Probation 95 (Dec. 1998).
Commission proposes to require mandatory restitution for amphetamine and methamphetamine offenses. (610) In the Methamphetamine Anti-Proliferation Act of 2000, § 3613 of Pub. L. 106-310, Congress amended 21 U.S.C. § 853(q) to provide mandatory restitution for offenses that involve the manufacture of methamphetamine. The proposed amendment amends § 5E1.1 to include a reference to § 853(q) in the guideline provision regarding mandatory restitution. 2001 Proposed Amendment 8.
Commission provides procedures for full restitution to victims. (610) To conform to section 204 of the Antiterrorism and Effective Death Penalty Act of 1996, Pub. L. 104-132, 110 Stat. 1227, the Commission amended §§ 5E1.1 and 8B1.1 to include procedures for payment of full restitution to a victim of the offense. The amendment also implements the directive to the Commission in section 205 of the Act to issue guidelines to assist courts in determining an appropriate amount of “community restitution” when the defendant is convicted of certain drug offenses and there is no identifiable victim of the offense. The new guideline that permits broad court discretion to determine an amount of community restitution not exceeding the fine imposed. The Commission intends to evaluate and refine this guideline in light of sentencing experience over time. Amendment 571, effective November 1, 1997.
Commission provides for mandatory restitution. (610) In Amendment 530, effective November 1, 1995, the Commission amended the Commentary to §5E1.1 to indicate that certain statutes require mandatory restitution, including offenses involving sexual abuse and exploitation of children, telemarketing fraud offenses, and domestic violence offenses.
New law makes restitution to victims mandatory. (610) Section 204 of the 1996 Antiterrorism and Effective Death Penalty Act adds a new § 3663A to Title 18, requiring mandatory restitution to any victim who has suffered physical injury or pecuniary loss, for any offense that is (1) a crime of violence, (2) an offense against property, or (3) tampering with consumer products. Under subsection (b)(4), restitution must include reimbursement to any victim “for lost income and necessary child care transportation, and other expenses incurred during participation in the investigation or prosecution of the offense or attendance at proceedings related to the offense.” The court must also order restitution to persons other than the victim of the offense, “if agreed to by the parties in a plea agreement.”
Article advises against restitution orders. (610) The Hon. William M. Acker, Jr., U.S. District Judge for the Northern District of Alabama, recommends against ordering restitution in all but the most unusual circumstances. Judges have the authority to refuse to order restitution because they can almost always find that a restitution order would complicate and prolong the sentencing process. Moreover, in many cases, the defendant is too poor to be expected to pay restitution. Avoiding restitution orders is wise because of the practical problems associated with the orders and the infrequency of compliance. William M. Acker, Jr., Making Sense of Victim Restitution: A Critical Perspective, 6 Fed. Sent. Rptr. 234-35, 228 (1994).
Commission requires restitution for more cases. (610) On November 1, 1991, the Commission amended section 5E1.1 to expand the restitution guideline to cover convictions beyond Title 18 and 49 U.S.C. section 1472. The amendment requires that restitution be ordered as a condition of probation or supervised release for such offenses unless the court determines that the complication and prolongation of the sentencing process outweighs the need to provide restitution to any victims.