Restitution in Federal Cases – Don’t expect to just give back what you received.

In criminal law, the purpose of a court ordering restitution is to make a victim who suffered a loss from the criminal activity of the defendant “whole.”  Making a victim “whole” means financially reimbursing the defendant for losses including out-of-pocket expenses related to the criminal activity.  Making a victim whole, however, doesn’t necessarily mean the defendant will simply give back what was taken.  In fact, it is common in federal criminal cases that a defendant who does not substantially profit from criminal activity is held accountable for an extremely large amount of restitution.

Consider, for example, a “white collar” conspiracy to defraud the government through the food stamp program (called SNAP).  In these fraud schemes, there are sometimes “recruiters” – those on the streets that are paid a fee for referring SNAP beneficiaries to another member of the conspiracy who then trades food stamps for a profit of 50 cents on the dollar.  Imagine that recruiter is paid $10 for each person he refers while those “in charge” of the conspiracy are making hundreds of dollars off each person.  Over the course of the conspiracy, the recruiter may have made $300 while the conspiracy bilked $250,000 in food stamps.  The recruiter could be slapped with a joint and several $250,000 restitution order even though she has no ability to pay and even though she only made a few hundred dollars.

The Basics of Federal Criminal Restitution

Title 18 U.S.C. § 3663A mandates restitution to victims in nearly all white collar cases. It provides that “the court shall order … that the defendant make restitution” for any offense against Property under Title 18. This includes crimes of racketeering, telemarketing fraud, mail and wire fraud, health care fraud, bank fraud, and securities fraud.  The general conspiracy statute within Title 18 can also draw a non-Title 18 offense within the
mandatory requirements of § 3663A.  Under the statute, a victim is a person or entity that is “directly and proximately harmed as a result of the
commission” of the offense.

Section 3664 and Fed. R. Crim. P. 32(c) address the procedure regarding restitution.  The majority of federal cases end up in plea agreements, and those agreements often establish agreed-upon restitution amounts which, in most cases, are beyond the ability of the defendant to pay.

At or before sentencing, the Court will issue an order or judgment of restitution. The court’s final order or judgment must include the client’s
identifying information, case number, restitution amount, schedule of payments, any modification or remission, a requirement that the client keep her address current with the U.S. Attorney’s Office, and identification of the victims. The U.S. Attorney’s Office (USAO) then must file a lien against the client’s property, if any.  A Release of Lien is not filed until the restitution is paid.

Does the Court consider how much the Defendant can pay?

In determining the amount of restitution, the court cannot consider the defendant’s ability to pay.  That is, the court must order restitution for the entire amount of loss sustained by the victim regardless of the economic circumstances of the defendant.  However, after the court determines the amount of restitution, the court must specify how and when the restitution will be paid.  Therefore, the defendant’s financial circumstances and ability to pay influences how and when the restitution will be paid.  The Court can permit a payment plan, including nominal periodic payments.

How about that Defendant that didn’t profit from the criminal activity?

If more than one defendant caused the loss to a victim, the court may order each defendant to pay the full restitution amount “jointly and severally” or “may apportion liability among the defendant’s to reflect the level of contribution to the victim’s loss and economic circumstances of each defendant.”  The court has full discretion to decide which option to choose in a multi-defendant matter.

How long does the obligation to pay restitution last?

Up to 20 years.  Title 18 U.S.C. § 3613 provides that an order of restitution “is a lien in favor of the United States. … The lien arises on the entry of judgment and continues for 20 years” from its entry or after the individual’s release from imprisonment or until it is satisfied.  Should the client die
before the 20 years have passed, the lien passes to the client’s estate.

So what about that low-level member of the white collar fraud conspiracy?

Because the courts have to make restitution orders, all members of a white collar fraud conspiracy can expect restitution orders.  If the defendant and her counsel put on a strong case in extenuation and mitigation during sentencing, many judges will order nominal monthly payments of resitution.

 

Attorney Patrick Korody is a former Navy JAG attorney.  He practices federal, state, and military criminal law in and around Jacksonville, Florida.

 

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