CLICK HERE TO ACCESS THE AUDIO PRESENTATION

NOTE: the audio is an MP3 file.

The following is a verbatim transcript of the online seminar presented on the AFDA web site in October 2004
(minus the introductory and closing remarks):

Please hit PLAY on your audio player. 

Our Thanks To: 

U.S. Sentencing Commission 

www.ussc.gov 

HelpLine: 202-502-4545 

AND 

Catharine M. Goodwin, Assistant General Counsel Administrative Office of the United States Courts 

(when she was with the Commission, she developed the five-step approach to restitution that we will cover today) 

The Sentencing Commission and Ms. Goodwin deserve the credit for developing the five-step methodology that is being presented here today.

Ms Goodwin wrote outlines on restitution which are very much worth having, even though they go back several years. Copies of these articles have been distributed to attendees at AFDA's hotel conferences on federal sentencing.

Here are the links to her three outlines, so you can have them in your hard drive. When you click on each link, a new pop-up window will appear with the outline in PDF format. Let's take a few moments to allow everyone to save each outline to your hard drive, and then the presentation will begin:

Click Here for Ms. Goodwin's December 1998 article that introduced the 5-step analysis for determining victims and harms for restitution

Click Here for the June 2000 article on the imposition and enforcement of restitution

click here for the June 2001 update to the above outlines

Overview of Restitution

• Restitution is a matter of statutory interpretation
• Restitution is a separate component of the sentence
1. BOP's Inmate Financial Responsibility Program
• Full restitution is mandatory for most non-drug federal offenses
• Scope of restitution is different than scope of relevant conduct
1. key factor: causation (to be discussed)

MANDATORY VICTIMS RESTITUTION ACT
[MVRA]

Effective: April 24, 1996

• Created 18 U.S.C. 3663A (Mandatory Restitution)
• Greatly enhanced imposition and enforcement procedures in section 3664
• Amended collection provisions for restitution in sections 3571, et seq, and 3611, et seq

FIVE-STEP DETERMINATION OF THE RESTITUTION AMOUNT:

Step One:

Identify the statutory Offense of conviction: is there an applicable restitution statute?

Step Two:

Identify the victims of the offense of conviction

Step Three

Identify the harms caused to the victims by the offense of conviction

Step Four:

Determine whether the victims' losses are statutorily compensable harms (under the restitution statute)

Step Five:

Does the plea agreement allow broader restitution?

STEP ONE: 

IDENTIFY THE STATUTORY OFFENSE OF CONVICTION: WHAT TYPE OF RESTITUTION APPLIES, IF ANY?

KEY: restitution is a statutory penalty: the court’s authority to impose restitution is controlled by the language and terms in the restitution statutes.

Two threshold determinations:

• whether restitution is mandatory or discretionary
• whether restitution is available as a separate sentence or only as a condition of supervision

Let's discuss each of these two questions that comprise Step One.

IS RESTITUTION MANDATORY OR DISCRETIONARY?

I. Mandatory Restitution

The court “shall” impose full restitution, without consideration of defendant's ability to pay.

Compare fines, which are based on the defendant's ability to pay (18 U.S.C. 3571)

Mandatory restitution covers the following offenses:

A. Offenses listed in § 3663A(c)

Crimes of violence (as defined in 18 U.S.C. § 16)

All property offenses under title 18, including fraud / deceit

Controlled substance manufacturing offenses (21 U.S.C. § 856(a))

Tampering with consumer products (18 U.S.C. § 1365)

B. Specific title 18 provisions:

Sexual abuse (§§ 2241-2245; restitution at § 2248)

Sexual exploitation of children (§§ 2251-2258; restitution at § 2259)

Domestic violence (§§ 2261-2262; restitution at § 2264)

Telemarketing fraud (§§ 1028-1029 and §§ 1341-1345; restitution at § 2327)

Child Support Recovery Act (§ 228) [different criteria]

Human trafficking (18 U.S.C. § 1953)

See also: 21 U.S.C. § 853(q)

Implicit presumption for full restitution in all cases with an identifiable victim:

Court must state reason if full restitution is not imposed, in Statement of Reasons. § 3553(c)

§ 3664(f)(1)(A) provides: “In each order of restitution, the court shall order restitution to each victim in the full amount of each victim’s losses . . . without consideration of the economic circumstances of the defendant.”

Guidelines require restitution to be imposed for the full amount of the victim’s loss as a condition of supervision in any case with an identifiable victim. (U.S.S.G. §5E1.1(a)(2))

II. Discretionary Restitution

Discretionary restitution covers the following Offenses:

Offenses listed in § 3663(a)(1)(A): the Court "may" impose restitution for:

Any title 18 offenses not covered by § 3663A

Drug offenses with or without identifiable victims, and

Air piracy (title 49)

Any other offense - where imposed solely as a condition of supervision

(§§ 3563(b)(2) or 3583(d))

KEY POINT: see § 3664(f)(1): if restitution is imposed, then restitution should be imposed for the full amount of the victims' harms. Applies to all restitution orders. See § 3663(d).

IS RESTITUTION AUTHORIZED AS A SEPARATE SENTENCE, OR ONLY AS A CONDITION OF SUPERVISION?

I. Restitution is generally imposed as a separate component of the sentence where it is:

Imposed under a restitution statute

18 U.S.C. 3663 (VWPA) or § 3663A (added by the MVRA), or

Imposed under a specific restitution statute. Examples under Title 18:

§ 2248: sexual abuse

§ 2259: sexual exploitation / abuse of children

§ 2264: domestic violence / stalking

§ 2327: telemarketing

In these circumstances, the order of restitution in the Judgment / Commitment Order is deemed a sentence of restitution.

Characteristics of restitution as a separate sentence:

It automatically becomes condition of probation (§ 3563(a)

It survives supervision if imposed in this manner

Lasts for 20 years after judgment or release from prison. See §§ 3664(m)(1)(A) and 3613(b)

II. May be imposed solely as a condition of supervision in offenses where not available as a separate component of the sentence

• Ends when term of supervision ends
• Authority: §§ 3563(b)(2) or 3583(d)(3)
• Must meet criteria as any other restitution order, pursuant to §§ 3663 and 3664 (steps 2 - 4 re: victims and harms)

WE HAVE NOW COMPLETED OUR DISCUSSION OF STEP ONE OF THE FIVE STEPS.

STEP TWO: 

IDENTIFY THE VICTIMS OF THE OFFENSE OF CONVICTION

Defense focus: argue that even if a certain individual suffered harm from the defendant, the individual was not a victim harmed by the specific offense of conviction

Case law examples (each case listed below is a link you can click on to access the opinion):

U.S. v. Reed, 80 F.3d 1419 (9th Cir. 1996) (restitution was not allowed to a shooting victim where the defendant was convicted of felon in possession of a gun)

U.S. v. Smith, 182 F.3d 733, 736 (10th Cir. 1999) (restitution upheld for credit union robbery that was basis of defendant’s conviction under § 924(c) of using a gun in a crime of violence; gun was “an integral part and cause of the injury and loss to the credit union.”)

U.S. v. Paradis , 219 F.3d 22 (1st Cir. 2000) (bankruptcy trustee was not victim of defendant’s conviction for laundering bankruptcy fraud proceeds).

Statutory definitions of restitution victims:

Mandatory or discretionary restitution, generally:

“For purposes of this section, the term ‘victim’ means a person directly and proximately harmed as a result of the commission of an offense for which restitution may be ordered...” § 3663A(a)(2) and § 3663(a)(2).

Mandatory or discretionary restitution involving scheme, etc.:

“...including, in the case of an offense that involves as an element a scheme, conspiracy, or pattern of criminal activity, a victim is a person directly harmed by the defendant's criminal conduct in the course of the scheme, conspiracy, or pattern.” § 3663A(a)(2) and §3663(a)(2).

Specific Title 18 offenses containing their own restitution provisions:

“...losses suffered by the victim as a proximate result of the offense.” Title 18 special restitution statutes (§§ 2248, 2259, 2264, and 2327).

How does the Court identify victims for restitution purposes in a prosecution of a scheme / conspiracy?

See §§ 3663A(a)(2) and 3663(a)(2):

"...in the case of an offense that involves as an element a scheme, conspiracy, or pattern of criminal activity, a victim is a person directly harmed by the defendant's criminal conduct in the course of the scheme, conspiracy, or pattern..."

The subject of restitution in the context of conspiracy / scheme prosecutions can be the subject of a separate seminar in itself. Key pointers:

• If offense of conviction involves a scheme, court must determine the extent or nature of the scheme, in order to know which acts or victims are included for restitution purposes.
• Some courts have been willing to look beyond the specific offense of conviction, and look at the scope of the facts alleged in the indictment, the plea colloquy, or the proof at trial in order to determine the nature and extent of the scheme.
• Examples:
• U.S. v. Jackson, 155 F.3d 942 (8th Cir. 1998) (although offense charged was conspiracy to possess unauthorized credit cards and ID documents; restitution was upheld for theft of identity documents and cards because evidence at trial indicated that thefts were in furtherance of conspiracy)
• U.S. v. Hughey (known as "Hughey II"), 147 F.3d 423, 438 (5th Cir. 1998), cert denied, 119 S.Ct. 569 (1998) (vacated restitution for losses that “fall outside the offense as defined in the indictment, and the trial record does not otherwise tie those losses to Hughey’s fraudulent scheme.")

This takes us directly to Step Three:

STEP 3: 

IDENTIFY VICTIMS' HARMS CAUSED BY THE OFFENSE OF CONVICTION

Statutory terms on causation of restitution harms:

• [the victim is] “directly and proximately” harmed (for §§ 3663A, 3663)
• [the victim is] harmed as a “proximate result of the offense,” and “full amount of victim’s losses” (for special restitution statutes in title 18)
• [the court shall impose restitution for] “the full amount of each victim’s losses” (for all restitution orders in § 3664(f)(1))he trial

Repeating theme: "Proximate cause" of harm

Two criteria must be met to justify including a certain harm in the restitution order:

• It would not have happened "but for" the defendant's conduct, AND
• It was "reasonably foreseeable" to someone in the defendant's position

KEY POINTS on causation:

• Reasonable estimate OK.
• U.S. v. Sapoznik, 161 F.3d 1117 (7th Cir. 1998) (Reasonable to estimate value of lost services from corrupt police chief in portion of years of good vs. bad service).
• Excludes routine costs
• Includes post-sentencing costs -- if reasonably ascertainable [ § 3664(d)(5)]

Case Law Illustrations of the causation requirement:

• U.S. v. Seward, 272 F.3d 831 (7th Cir. 2001) [vacates restitution order in fraud/money laundering case; district court should not have included attorneys' and executor's fees in the restitution calculations)
• U.S. v. Brierton, 165 F.3d 1133 (7th Cir. 1999) (harms from acts involved in the cover-up of a fraud offense, even though part of the same common scheme or plan as the offense, and thus part of the Relevant Conduct of the offense, were not harms “caused” by the offense and thus could not be included in restitution. Good example of distinction between Relevant Conduct analysis and restitution analysis)
• U.S. v. Piggie, 303 F.3d 923 (8th Cir. 2002) (district court properly included investigative fees and fines in the restitution order because those losses were caused by the specific conduct that was the basis for defendant's mail and wire fraud convictions)
• U.S. v. Phillips, 367 F.3d 846 (9th Cir. 2004) (holds that site investigation costs are not the same as criminal investigation costs and thus may be recoverable through restitution orders)
• U.S. v. Barton, 366 F.3d 1160 (10th Cir. 2004) [remands back to district court with instructions to impose restitution; rejects district court's conclusion that calculation of restitution was too complex under 18 U.S.C. 3663A(c)(3)(B)]

OK, we have identified the offense of conviction; identified who the victims are; identified the harm suffered by the victims that was proximately caused by the defendant's conduct. 

Now, we turn to the fourth step:

STEP FOUR: 

ARE THE VICTIMS' HARMS WHICH HAVE BEEN PROXIMATELY CAUSED BY THE OFFENSE OF CONVICTION STATUTORILY COMPENSABLE AS RESTITUTION?

I. Harms authorized for Restitution by 18 U.S.C. §§ 3663A(b) or 3663(b)

In offense resulting in damage to, loss, or destruction of victim’s property:

Return of the property, or greater of value of property on date of offense or sentencing, less its value (if any) when returned to victim. §§ 3663A(b)(1); 3663(b)(1). [NOTE: if real estate appreciates in value during pendency of prosecution, then value of property on date of sentencing will be greater than on date of offense and results in higher restitution).

In offense resulting in bodily injury to a victim:

Cost of necessary medical and related professional services and devices relating to physical, psychiatric, and psychological care, including non-medical care and treatment and necessary physical and occupational therapy and rehabilitation; and income lost by the victim as a result of the offense. §§ 3663A(b)(2); 3663(b)(2)

In offense resulting in bodily injury and death of a victim:

Pay cost of necessary funeral and related services. §§ 3663A(b)(3); 3663(b)(3)

NOTE: In each restitution order, the court shall order restitution for “the full amount of each victim’s losses” [§ 3664(f)(1)]

B. What costs to the victim are compensable as restitution?

In any case:

Victim’s costs for lost income, necessary child care, transportation, and other expenses related to participation in the investigation and prosecution of the offense or attendance at proceedings related to the offense. § 3663A(b)(4); 3663(b)(4)

NOTE: This category of restitution, which is a reimbursement for a “cost,” can easily be overlooked; thus, it's important for defense counsel to be aware of this component of the restitution analysis.

II. Harms/Costs Authorized for Restitution by Special Restitution

The defendant shall pay the “full amount of the victim’s losses” (§§2327, 2248, 2259, and 2264) which includes:

“all losses suffered by the victim as a proximate result of the offense.” (18 U.S.C. §§ 2327(2),(3), telemarketing); or

specific, inclusive list of harms, e.g., psychiatric or psychological care, transportation, temporary housing, and child care, lost income, attorneys’ fees, and any other losses suffered by the victim as a “proximate result of the offense.” (18 U.S.C. §§ 2248)(3), 2259(3), and 2264(3))

NOTE: the above costs pertain to non-violent offenses, such as telemarketing.  Further above, we saw that such expenses are included as restitution in violent crimes cases, but here it's treated as a cost for non-violent offenses.

Compensation to victim-providers

§§ 3664(j)(1) and 3664(f)(1)(B)

("from insurance or any other source")

Case Law Illustrations on Step Four:

• U.S. v. Shugart, 176 F.3d 1373 (11th Cir. 1999) (Replacement value to “restore” victim approved as a compensable harm; the damaged property here was an old church)
• U.S. v. Laney, 189 F.3d 954 (9th Cir. 1999) (Future harms compensable if ascertainable at sentencing; in this case, future mental health counseling for victim of sexual exploitation of child)
• U.S. v. Jacobs, 167 F.3d 792 (3d Cir. 1999) (Restitution upheld for annual leave used by victim, as “lost wages.”)

And now, the fifth and final step in the analysis:

STEP FIVE: 

DOES THE PLEA AGREEMENT PERMIT BROADER RESTITUTION?

Up to now, we have focused entirely on what restitution is authorized by statute.  But we need to be careful about opening the door to further restitution in the plea agreement.  Or, conversely, we may want to stipulate to a higher amount of restitution than authorized by statute as part of a plea disposition where the government makes other concessions in exchange, such as a plea to a more favorable offense carrying less jail time or which allows probation.

Ways By Which Restitution Can Be Broadened By The Plea Agreement:

To the extent of the agreement in ANY criminal case

§ 3663(a)(3)

To persons OTHER THAN THE VICTIM of the offense

remember that Step Two discusses that the statutes only allow victims of the offense to receive restitution; but the parties can stipulate around that restriction in the plea agreement

§§ 3663(a)(1)(A) and 3663A(a)(3)

Mandatory restitution for non-qualifying offense if agreed that guilty plea resulted from a qualifying offense

§ 3663A(c)(2)

Example: indictment charges fraud and money laundering. Guilty plea to money laundering. Plea agreement states that the offense of conviction (money laundering) arose out of the fraud scheme. Fraud is within the mandatory restitution provisions of § 3663A.

Case Law Illustrations on Step Five:

• U.S. v. Peterson, 268 F.3d 533 (7th Cir. 2001) (Plea agreement allowed for broader restitution and was upheld by Circuit; opinion addresses question of the specificity with which parties agree to go beyond statutory restitution requirement, and that the agreement to go beyond the statute must be binding)
• U.S. v. Phillips, 174 F.3d 1074 (9th Cir. 1999) (Specificity requirement: restitution order vacated where plea agreement regarding tax fraud counts did not show defendant's specific agreement to restitution in exchange for plaintiff government's promise to drop the securities charges)
• U.S. v. Powell, 354 F.3d 362 (5th Cir. 2003) (harmless error where district court failed to advise defendant about restitution at change of plea hearing, but court did advise defendant of maximum fines allowed and the restitution order did not exceed that amount).

THAT COMPLETES OUR DISCUSSION OF THE FIVE-STEP APPROACH TO RESTITUTION DEVELOPED BY THE U.S. SENTENCING COMMISSION AND BY CATHERINE GOODWIN.

Thank you all for attending

[closing remarks omitted]

Send your comments by email to:  

Greg Nicolaysen   

greg@afda.org 

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