United States General Accounting Office

GAO Report to the Chairman, Senate

Committee on the Judiciary, and the

Chairman, Subcommittee on Crime,

House Committee on the Judiciary

June 1998 FINES AND

RESTITUTION

Improvement Needed

in How Offenders’

Payment Schedules

Are Determined

GAO/GGD-98-89

GAO United States

General Accounting Office

Washington, D.C. 20548

General Government Division

B-276684 

June 29, 1998

The Honorable Orrin Hatch

Chairman, Committee on the Judiciary

United States Senate

The Honorable Bill McCollum

Chairman, Subcommittee on Crime

Committee on the Judiciary

House of Representatives

This is the first of two reports responding to your joint request that we

study orders of fines and restitution imposed on federal criminal

offenders. The objectives of this report are to (1) identify guidance

available to probation officers on how to determine payment schedules for

offenders who received orders to pay fines to the government and

restitution to their victims and (2) assess, in two judicial districts, how

offenders’ payment schedules were actually determined while under court

supervision. The second report will include information on the types of

offenders who are ordered to pay fines and restitution and those who are

not ordered to pay.

Individuals convicted of a federal crime can be ordered by the court to pay

a fine or restitution at sentencing. Criminal fines, which are punitive, are

to be paid in most cases to the Department of Justice’s (DOJ) Crime Victims

Fund; restitution is to be paid in certain federal criminal cases where there

is an identifiable victim. In 1996, according to U.S. Sentencing Commission

data, over 42,000 federal offenders were sentenced; nearly 15,000 of them

(36 percent) were ordered to pay fines, restitution, or both. Approximately

16 percent of all federal offenders were ordered to pay fines only;

approximately another 17 percent were ordered to pay restitution only;

and approximately another 3 percent of offenders were ordered to pay

both. Overall, in 1996, the federal courts imposed approximately

$102 million in fines and $1.5 billion in restitution.

Under the U.S. Sentencing Guidelines and relevant provisions of the law,

offenders should pay their court-ordered fines and restitution as a

lump-sum payment. If the court determines that a lump-sum payment

cannot be made, installment payments are to be made. These are either

established by the judge, generally based on information provided by the

probation officer, or established by the probation officer under the judge’s

order. If these installment payment schedules are not properly established,

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B-276684 

the punitive and restorative aspects of fines and restitution might not be

fully realized.

Results in Brief In the Central District of California and the Northern District of Texas,

probation officers who supervised offenders lacked clear, specific policy

guidance for determining how much offenders should pay each month

towards their court-ordered fines and restitution. In the absence of such

clear policy guidance, the officers in the two districts we reviewed

developed their own methods for determining how much offenders could

pay monthly. These methods were often based on subjective decisions not

associated with financial criteria. We identified issues of inconsistency and

apparent inequity in 62 percent of the Central District of California

installment-payment cases and 42 percent of the Northern District of

Texas installment-payment cases we reviewed. Some examples follow.

• Some offenders paid their fines or restitution orders immediately from

available assets while other offenders kept, without explanation, either the

proceeds from the sale of assets or the assets themselves, such as second

homes, securities, bank accounts, and paintings, that might have been

made available to pay their fines and restitution.

• Probation officers created their own arbitrary methods for developing

installment payment schedules, including negotiated amounts, good-faith

payments, and choosing round numbers. These arbitrary methods for

setting installment payment schedules were not based on financial criteria,

such as an analysis of an offender’s income and expenses. As a result,

some offenders with lower incomes were directed to make higher

payments than offenders with higher incomes who owed more in fines or

restitution.

• While offenders were required to report their necessary monthly expenses

on a personal financial statement, there were no criteria on the types or

amount of expenses that were to be considered necessary. Some offenders

identified expenses such as a European cruise, servant salaries,

entertainment expenses, and recreational boat payments as necessary,

thus limiting their ability to pay fines to the government or restitution to

victims. Others increased their personal monthly spending while claiming

financial difficulties that limited their ability to pay fines or restitution.

• Personal financial statements were often 18 months old or older for

offenders who were on installment payments, so probation officers were

not in a good position to tell whether payment amounts should be

changed. Guidance and training suggested, but did not require, that a

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B-276684 

financial statement be obtained every 6 months from an offender who was

on a payment schedule.

The Administrative Office of the U.S. Courts (AOUSC) has provided

guidance to probation officers on how to determine payment schedules.

However, the guidance, which is focused on what information to collect

and how to collect it, does not specify how probation officers are to

analyze financial information provided by offenders to determine how

much, or if all, of the fine or restitution can be paid each month. The

Federal Judicial Center (FJC) offered financial investigation training to

probation officers that provided more specific guidance on determining

repayment schedules than that contained in the AOUSC manuals and

publications. Although AOUSC viewed the training as reflecting its policies,

it did not make this clear to probation officers. Moreover, the FJC training

is voluntary, and not all officers took it. The probation officers in the two

districts we visited were either unfamiliar with the FJC training or saw the

training as an optional tool and not a reflection of policy.

The inconsistent methods used by probation officers for determining an

offender’s monthly payment schedule resulted in apparently inequitable

treatment of offenders and reduced or slowed payments to the Crime

Victims Fund and to crime victims. Although our detailed reviews were

limited to two judicial districts and cannot be generalized beyond those

districts, the fact that probation officers in the other judicial districts are

working with the same limited guidance and lack of financial standards as

the districts we visited creates the risk that the types of inconsistencies

and apparent inequities we found could occur nationwide. Therefore, we

are recommending that the AOUSC establish as policy improved guidance to

help probation officers who monitor offenders under court supervision

make more consistent and equitable payment schedule determinations for

offenders who owe criminal fines and victim restitution.

In commenting on a draft of this report, AOUSC cited several steps that it

was taking, or planned to take, to address some of the findings in this

report, including considering specific guidance on financial standards. It is

unclear how these steps will be implemented or the extent to which they

will resolve the matters discussed in this report.

Background Criminal fines, which are designed to be punitive in nature, are to be

imposed by the courts in all cases except where an offender has

established that he is unable to pay and unlikely to become able to pay the

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B-276684 

fine. According to the Sentencing Guidelines, if an offender establishes

that the payment of the fine in a lump sum would have an unduly severe

impact on the offender or any dependents of the offender, the court should

establish an installment schedule for payment of the fine. The guidelines

also provide that the length of the installment schedule generally should

not exceed 12 months. Most fines are to be paid to DOJ’s Crime Victims

Fund, which is to provide grants for victim assistance programs and

compensation to victims.

The courts are also to consider the need to provide restitution to an

identifiable victim of an offense. According to the Mandatory Victims

Restitution Act (MVRA) of 1996 (title II of P.L. 104-132), which was effective

April 24, 1996, restitution must be ordered as part of a sentence for certain

offenses in cases with an identifiable victim. Under the MVRA, restitution to

the victim of the crime must be ordered regardless of the offender’s

economic circumstances.1

 If an offender cannot pay restitution

immediately, the court is to determine the length of time over which

scheduled payments would be made, and the law requires that it be the

shortest time in which full payment could reasonably be made. Generally,

a probation officer provides information that the judge may use to set a

payment schedule based on a determination of the offender’s ability to

pay.

Probation officers are responsible for monitoring offenders’ compliance

with court orders—including orders to pay fines or restitution—while the

offenders are under a period of court supervision. Probation officers are to

report any violations to the courts. An offender can receive either

probation or, to follow imprisonment, a period of supervised release.

Probation or supervised release can be imposed by a judge for up to 5

years; although for some cases, the limit is 3 years.

In the two districts in our sample, presentence probation officers develop

the presentence report, which includes a financial investigation of the

offender and the total amount of the fine or restitution required by law or

by sentencing guidelines. Other uses of the presentence report include

information on the sentencing options under the guidelines and criminal

history.

1

In determining the method of payment for the restitution amount, the court is to determine the

financial circumstances of the defendant. Prior to the MVRA, judges were to consider the financial

conditions and earning abilities of the defendant, among other factors, in determining whether or not

to order restitution.

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B-276684 

In the two districts in our sample, supervision probation officers’

responsibilities begin after the offender is sentenced. The supervision

probation officer monitors the offender’s compliance with court orders

while the offender is under court supervision. These responsibilities

include establishing a payment schedule if one has not been established by

the judge or, when the payment plan has been established by the judge,

monitoring and recommending changes to the payment schedule to the

judge. Court supervision includes probation after sentencing or supervised

release after imprisonment.

The judge may establish the method of payment the offender is to follow

at the time of sentencing, or, in some jurisdictions, the judge may delegate

that responsibility to the probation officer. A decision of the U.S. Court of

Appeals for the Fifth Circuit, which includes the Northern District of

Texas, requires the judge to establish the payment plan. However, judges

frequently stipulate that the monthly payment plan should be “not less

than” a certain amount. According to a senior probation official in the

district, this allows the supervision probation officer to increase the

payment if the offender’s economic circumstances change. The method of

payment can also be affected by the result of a civil court action or be

delegated to an agency owed restitution, such as the Small Business

Administration.

Roles of Different Agencies

Regarding Fines and

Restitution

The Judicial Conference of the United States2 is the courts’ principal

policymaking body. The Conference’s statutory responsibilities include

making recommendations to the various courts to promote uniformity of

management procedures.

AOUSC is the administrative body for the federal court system and performs

many support functions for the courts. Among its responsibilities, AOUSC

provides national standards and policies as well as administrative and

management guidance to probation offices. A primary focus has been the

development of policies and procedures to help probation officers carry

out their responsibilities of probation officers more efficiently and

effectively. AOUSC also monitors and reviews program performance and

resource use.3

2

The Judicial Conference consists of 26 judges plus the Chief Justice of the United States, who

presides over the conference.

3

Activities of the Administrative Office of the United States Courts, Annual Report of the Director,

Leonidas Ralph Mecham, 1997.

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B-276684 

FJC is the judicial branch agency that, among other things, conducts

orientation and provides continuing education and training programs for

federal judges, probation officers, and other court employees. FJC’s

programs and projects involve coordination and consultation with AOUSC.

Each of the 94 district courts is granted by statute and practice

considerable discretion in managing its own affairs. This includes the

authority to appoint, supervise, and train its employees, and to establish

local practices and rules of operation.

The U.S. Sentencing Commission also has responsibility for establishing

sentencing policies and practices. The Commission does this through its

Sentencing Guidelines which, with respect to fines, for example, state that

the length of the installment schedule generally should not exceed 12

months.

DOJ also has a role in obtaining fines or restitution from offenders.

Financial Litigation Units within the U.S. Attorney’s Offices can place liens

on offenders’ assets and pursue other collection efforts. In the two

districts in our study, the Financial Litigation Units did not become

involved while the offender was under court supervision, except at the

request of the probation officer. The Financial Litigation Unit is also

responsible for pursuing any remaining fines or restitution owed by the

offender once the offender leaves court supervision.

Objectives, Scope,

and Methodology

Our objectives were to (1) identify guidance available to probation officers

on how to determine payment schedules for offenders who received

orders to pay fines or restitution and (2) assess, in two judicial districts,

how offenders’ payment schedules were actually determined while under

court supervision. We did not review the basis for the presentence report,

the original court decision that imposed a fine or restitution order, or the

total amount of fine or restitution ordered by the court. Our evaluation

focused on how payment schedules were determined for offenders who

owed fines or restitution and the guidance available to the supervision

probation officers in the two districts studied.

To determine what guidance existed on how offenders should pay their

obligations, we held discussions with officials from AOUSC, FJC, the U.S.

Sentencing Commission, and the Executive Office of the U.S. Attorney

within DOJ. Within the two districts we reviewed, we held discussions with

the Chief Probation Officer, probation officers, judges, and representatives

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B-276684 

of the U.S. Attorney’s Financial Litigation Unit. From the officials

interviewed, we requested any available documentation relating to how

payment schedules should be determined for offenders owing fines or

restitution. We reviewed the documentation provided by these officials to

determine what guidance existed, including any financial standards for

establishing the method of payment.

To examine how fine and restitution payment schedules were determined,

we selected statistical samples of offender case files in two judicial

districts: 242 cases in the Central District of California, which included Los

Angeles, and 253 cases in the Northern District of Texas, which included

Dallas. We selected these districts for review because they (1) are large

districts in terms of number of cases and (2) had probation offices

geographically dispersed within the districts. Our samples were drawn

from an automated list of offenders on probation or supervised release

who (1) were ordered to pay fines or restitution, (2) were sentenced after

January 1, 1990, and (3) would not be off probation or supervised release

prior to June 30, 1997. We stratified our sample in each district by those

who received orders to pay fines only, those who received orders to pay

restitution only, and those who received orders to pay both fines and

restitution. Because our file review was limited to these two districts, our

results cannot be generalized to how offenders are required to pay their

fines or restitution in other districts. A demographic profile of the

offenders in the two districts we reviewed is included in appendix II.

We considered a case to contain issues of inconsistency and apparent

inequity in how payment schedules were determined when the following

conditions were met:

• First, documents supplied by the offenders indicated that income or assets

might exist to pay toward fines or restitution on a more complete or timely

basis.

• Second, the offenders (1) would not pay off their fines or restitution prior

to the end of their court supervision or (2) would pay off their fines or

restitution prior to the end of their court supervision but appeared to have

resources to pay more quickly.

• Third, we identified one or more of the following issues during our case

review: (1) there was no evidence that consideration was given to

additional assets that might have been available to pay toward the fine or

restitution; (2) arbitrary methods were used to establish the installment

payment schedules that were not linked to income, expenses, or other

financial criteria; (3) the types or amount of expenses that were reported

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B-276684 

as necessary by the offender appeared high in relation to location and

family circumstances; and (4) financial information was not current and

had not been updated for 18 months or more.

To gain a better understanding of these cases, we discussed the case with

a probation officer or supervisor, if available, to resolve any issues we

identified.

For this review, we did not consider cases in which the offenders (1) paid

their fines or restitution orders as a lump sum, (2) had their cases closed

by the judge or transferred to another district, or (3) were returned to

court for a violation of a condition of probation.

A panel of our team members met, and each member reviewed and

discussed all cases to ensure consistency in how the issues were

identified. Cases with identified issues of inconsistency and apparent

inequity were given an additional review by another panel with a different

configuration of team members. Both teams had to agree before we

counted the case as inconsistent or apparently inequitable.

Greater detail on our scope and methodology is included in appendix I. We

did our work from March 1997 through October 1997 in accordance with

generally accepted government auditing standards. We obtained written

comments from AOUSC, FJC, DOJ, and the U.S. Sentencing Commission.

These comments are summarized at the end of this letter and are

contained in appendixes III, IV, V, and VI.

Guidance Lacked

Specifics on How

Payment Schedules

Should Be

Determined

AOUSC provided general guidance for probation officers on how offenders

should be required to pay their court-ordered fines and restitution, but the

guidance lacked specific financial standards to guide the probation officer

in determining payment schedules. In both district courts we visited, the

AOUSC guidance was supplemented with local guidance; but the local

guidance was also very general, lacking specific financial standards. For

example, the AOUSC guidance required probation officers to establish

“realistic” payment schedules but provided no standards on what was

considered realistic. FJC offered a financial investigation training course

that included suggested standards on how payment schedules should be

determined, but only a few probation officers we interviewed were

familiar with it, and those who were saw it as an optional tool, not a

reflection of AOUSC policy.

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B-276684 

Guidance Provided by

AOUSC

AOUSC guidance to probation officers on determining an offender’s ability

to pay fines and restitution advised establishing a payment plan if the

judge did not provide one at sentencing. However, the guidance, which is

focused on what information to collect and how to collect it, does not

specify how probation officers are to analyze financial information

provided by offenders to determine how much, or if all, of the fine or

restitution can be paid each month.

In its August 1993 guidance to probation officers (Monograph 109,

Supervision of Federal Offenders), AOUSC identified the need to establish

payment plans when offenders are not financially able to make lump-sum

payments and to verify an offender’s ongoing financial status through such

methods as reviewing financial information on monthly supervision

reports. AOUSC later stressed4

 the importance of (1) monitoring an

offender’s compliance with financial obligations imposed by the courts,

(2) establishing realistic payment schedules, (3) taking appropriate steps

to ensure timely payment, and (4) involving the U.S. Attorney’s Financial

Litigation Unit when offenders fail to meet financial obligations.5

In its Probation Manual, AOUSC provides some general guidance to

probation officers on completing the financial investigation for the

presentence report. However, this guidance is directed toward providing

information that will assist the judge in determining the total amount of

the fine or restitution to be ordered. In the districts we visited, these

responsibilities were handled by presentence probation officers.

The supervision probation officers who monitor offenders on probation or

supervised release after sentencing received only general guidance on how

an offender should be required to pay fines and restitution that were not

paid at the time of sentencing. For example, while the guidance included

instructions on forms to complete and data to collect, it offered no

specifics on how to interpret the information collected, such as what

constituted a realistic payment schedule, when to consider assets

available, or the specific types of expenses that could be considered

necessary. As a result, as shown in the following sections, individual

probation officers were left to create their own arbitrary standards, thus

producing inequitable results.

4

Update to Probation Officers on the Imposition and Collection of Fines and Restitution,

September 1995.

5

Upon request by the probation officer, the U.S. Attorney’s Financial Litigation Unit can do financial

background checks on offenders and pursue garnishing an offender’s wages or placing liens on an

offender’s assets.

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B-276684 

Training Provided by FJC FJC provided in-district training programs on financial investigations

designed to, among other things, develop and enhance probation officers’

skills in determining an offender’s ability to pay fines and restitution. The

training suggested tools to use in making determinations of how an

offender should be required to make payments on fines and restitution

ordered by the court. AOUSC officials informed us that the training reflects

their policies, and FJC officials agreed that the more specific guidance in

the training is based on AOUSC’s general policies.

FJC records show that between fiscal years 1995 and 1997, it provided this

training to 4,427 court personnel in 76 of 94 court districts, including court

personnel in the Central District of California and the Northern District of

Texas. According to the Chief of FJC’s Probation and Pretrial Programs,

while the exact number of probation officers who took the training is

uncertain, the training was given predominately to probation officers. FJC

officials, however, stated that the training provided was not mandatory,

and, under the division of responsibilities in the judicial branch, neither FJC

nor AOUSC can require that the training be taken. According to AOUSC

officials, the chief judge has the authority to require probation officers to

take the training. Thus, AOUSC policies, if reflected in the training, were

distributed in a manner that does not ensure that officers were aware of it

or subscribed to it.

FJC informed us that they provided financial investigation training as part

of their orientation programs for new probation and pretrial services

officers. FJC’s training and guidance offered a detailed approach to

collecting and analyzing financial information to determine an offender’s

ability to pay. This financial investigation training included a formula that

could be used to compute a monthly installment payment schedule, a

definition of necessary expenses, general guidance on the amount of

specific expenses to allow as necessary, and steps to take in analyzing an

offender’s personal financial statement. As part of the training program,

FJC provided the Financial Investigation Desk Reference for U.S. Probation

and Pretrial Officers to assist probation officers in determining an

offender’s ability to pay. The desk reference included information such as

(1) the type and frequency of financial information that should be obtained

from offenders in determining their ability to pay, (2) a general definition

of necessary monthly expenses, (3) a formula to use in setting installment

payments, and (4) guidance on how to verify assets or income reported by

offenders. However, the cover page of the Financial Investigation Desk

Reference states:

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“This Federal Judicial Center publication was undertaken in furtherance of the Center’s

statutory mission to develop and conduct education programs for judicial branch

employees. The views expressed are those of the authors and not necessarily those of the

Federal Judicial Center.”

In determining ability to pay, the training recommended that probation

officers first look at cash or other assets that can be made available for

immediate payment by the offender. The training suggested that if

probation officers suspected that offenders’ lifestyles or spending habits

exceeded their reported income, the officers could search for unreported

assets or income by requesting credit checks or checks for unreported real

estate. The training also recommended verification of income through pay

stubs or tax information.

The FJC training advised that, in considering what assets are available to

pay fines and restitution, probation officers could assume that most

securities could be readily converted to cash and that real estate could be

sold. The training suggested that it would be more desirable for offenders

to borrow against an asset rather than liquidate it, since the liquidation of

an asset can be a lengthy process.

The training recommended that if the offenders do not have the ability to

pay the fines or restitution immediately, probation officers should set an

installment payment schedule by deducting necessary monthly expenses

from monthly income to arrive at cash flow. The monthly cash flow, less

an unspecified amount for emergencies and unforeseen expenditures,

should be available to make payments on restitution or fines.

The training advised that probation officers should use caution when

assessing the types and amounts of necessary expenses. It defined

necessary expenses as those necessary for the offender’s continued

employment and for the basic health and welfare of the offender’s

dependents.

The FJC financial investigation training portion of new officer orientation

also advised, but did not require, using the Consumer Expenditure Tables

published by the Bureau of Labor Statistics as a reasonable estimate of

current expenses. These tables provide average annual household

expenses by income level. The training suggested using a percentage of

expenses in relation to income as a reasonable way to estimate expenses.

For example, about 5 to 7 percent of gross income would be allowed for

utilities by families with incomes between $30,000 and $39,999, while

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another 23 to 30 percent of gross income would be allowed for housing.

The training cautioned, however, that the tables should be used only as a

general guide and that the information, which is dated, has limited

usefulness.

Starting in 1995, FJC reported that they also invited officers to attend

regional seminars, which included financial investigation techniques.

According to the FJC, participants were selected in part because of their

willingness and ability to carry the results of the training to their home

districts. FJC figures show that the training reached officers in 76 districts,

and 61 of those 76 districts reported to FJC that they implemented financial

investigation projects after these seminars. In 1997 FJC reported on 10 of

those 61 projects designed to address one or more aspects of fines and

restitution.6

 For example, FJC reported that

• The Northern District of California improved its databases, resulting in an

increase in the number of offenders with payment plans from 21 percent to

39 percent over a 4-month period.

• The Eastern District of Virginia developed a project that explored new

techniques of more accurately assessing an offender’s ability to pay a fine

or restitution.

• The Middle District of Florida formed a financial investigation committee

to assist officers and to develop additional avenues for locating hidden or

criminal assets.

The FJC report provided examples of ongoing programs and projects in the

Eastern District of Pennsylvania, the Eastern District of New York, the

Eastern District of Wisconsin, the Western District of Oklahoma, the

Northern District of Indiana, the Southern District of Illinois, and the

Southern District of West Virginia. We did not evaluate FJC’s projects. Nor

did we attempt to determine the extent to which these projects

disseminated the training to probation officers in the districts or the extent

to which probation officers implemented this guidance.

Although AOUSC officials believed the training reflected their policies, the

training was not transmitted to all probation officers as policy, as were

other documents such as Monograph 109. Instead, training was voluntary

and was not taken by all probation officers. Officials in the districts we

visited did not consider the FJC training as policy to be followed when

establishing payment schedules. Officials in the Northern District of Texas

had recently revised their local guidance on an offender’s ability to pay

6

We did not verify the results reported from these programs and projects.

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fines and restitution but acknowledged that the references did not include

FJC’s Financial Investigation Desk Reference. In the Central District of

California, we interviewed 11 supervisors, only 1 of whom mentioned a

“handbook from the [Federal] judicial center” when commenting on the

guidance available from the AOUSC. This supervisor also stated that he saw

memorandums from the AOUSC, but the memorandums were general, not

specific. Two of the supervisors cited AOUSC’s Monograph 109: Supervision

of Federal Offenders. One of these supervisors cited Monograph 109 and

“little else,” adding that Monograph 109 is “general, not specific.” One cited

“general guidelines” and a “training program 5 or 6 years ago that included

a video,” but no ongoing training. Other responses from supervisors

concerning AOUSC guidance included “can’t think of any,” “hasn’t seen

anything,” and “interpretation of statute only.”

Local Guidance Provided

by the Districts

In addition to the guidance provided by AOUSC, both districts we reviewed

provided local guidance to probation officers on determining an offender’s

ability to pay fines and restitution. The Central District of California

provided both (1) a supervision handbook, which included general

instructions on the need to establish installment payment schedules and

(2) a training module on financial investigation, which included the need

for completion by the offender of a personal financial statement and

incorporated some of the FJC training on financial investigation. However,

as with the guidance provided by the AOUSC, the local guidance lacked

specifics, leaving it up to the individual probation officer to decide how

installment payment schedules should be established.

In August 1997, the Northern District of Texas provided local guidelines

that advised probation officers, when determining payment schedules, to

“pay attention to” indicators such as luxury items, excessive travel, and

“unnecessary expenditures.” The latter included loan payments to family

members, loans to family members, private school tuition, unemployed

spouses able to work, and funds paid out for home and lawn maintenance.

However, the guidance does not specify how these items should be

considered in setting a payment schedule. Also, as previously cited, the

local guidance did not refer to the FJC training.

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Inconsistencies in

How Payment

Schedules Were

Established Created

Apparent Inequities

To determine how payment schedules were established for offenders who

owed court-ordered fines or restitution, we reviewed 242 cases in the

Central District of California and 253 cases in the Northern District of

Texas. Of these cases, 24 of the California cases and 16 of the Texas cases

had been either closed by the judge, returned to court, or transferred to

another district. Because the complete file was not available to us in these

cases, we did not identify issues in these cases for this review. Further, the

offender paid the fine or restitution as a lump sum in 36 of the California

cases and 33 of the Texas cases. Again, for this review, we identified no

issues in these cases because the fine or restitution was paid in full at or

near the time of sentencing. Table 1 shows the percentages of sample

cases where the fines and restitution were paid as a lump sum or by

installments.

Table 1: How Offenders in Sample Cases Were to Pay Their Fines and Restitution

Lump-sum payment Installment payment Lump-sum payment Installment payment

Central District of California Northern District of Texas

Type of court-ordered

payment Cases Percent Cases Percent Cases Percent Cases Percent

Fine 22 25% 67 75% 21 23% 71 77%

Restitution 5 5 88 95 4 4 89 96

Fine and restitution 9 25 27 75 8 15 44 85

Total cases 36 17 182 83 33 14 204 86

Note: These percentages exclude cases that were closed, transferred, or returned to court.

Source: GAO analysis of offender case files.

In the remaining cases where offenders were expected to make

installment payments, we identified issues of inconsistency and apparent

inequity among either victims or offenders in 112 of the 182 cases

(62 percent) in the Central District of California and 85 of the 204 cases

(42 percent) in the Northern District of Texas. We also identified issues in

those cases in which financial documents, submitted by the offender,

suggested that assets or income might have been available to pay fines or

restitution on a more complete or timely basis. Issues identified by us

during our review included

• lack of consideration given to additional assets that might have been

available to pay toward the fine or restitution;

• use of arbitrary methods to establish the installment payment schedules

that were not linked to income, expenses, or other financial criteria;

Page 14 GAO/GGD-98-89 Fines and Restitution Payment Schedules
B-276684 

• reported “necessary” expenses that appeared high in relation to location

and family circumstances; and

• financial information that was not current and had not been updated for 18

months or more.

Table 2 summarizes the percent of installment-payment cases in our

sample where we identified these types of issues.

Table 2: Sample Cases With Issues About How Payment Schedules Were Established

Central District of California Northern District of Texas

Type of court-ordered

payment

Cases with

payment

schedules

Number with

issues

Percent with

issues

Cases with

payment

schedules

Number with

issues

Percent with

issues

Fine 67 49 73% 71 30 42%

Restitution 88 49 56 89 34 38

Fine and restitution 27 14 52 44 21 48

Total cases 182 112 62 204 85 42

Source: GAO analysis of offender case files.

Our case file reviews and discussions indicated that individual probation

officers, in the absence of guidance that included financial standards,

developed their own arbitrary methods for determining offenders’

payment schedules for court-ordered fines and restitution. As described in

the following sections, related issues include what types of assets should

be made available for lump-sum payments and how installment payment

schedules were established when offenders did not make lump-sum

payments.

Guidance Lacked Specifics

on What Types of Assets

Should Be Made Available

for Payments

Offenders are to report their assets, such as bank accounts, securities, and

real estate on the personal financial statement.7

 However, there are no

standards on what kinds of assets could be considered available for

payment. For example, there is no guidance on what a probation officer

should do if assets are jointly held with another family member or held in

a retirement account.

7

According to FJC’s Financial Investigation Desk Reference for U.S. Probation and Pretrial Services

Officers, the Financial Investigation Task Force was organized by AOUSC in response to our report,

After the Criminal Fine Enforcement Act of 1984—Some Issues Still Need to Be Resolved

(GAO/GGD-86-2; Oct. 10, 1985). The report recommended the development of a standard report to

assist probation officers in compiling financial information in a complete and uniform manner. The

task force created the personal financial statement in 1987 and a standard process to assist officers in

conducting financial investigations. FJC also developed a training program.

Page 15 GAO/GGD-98-89 Fines and Restitution Payment Schedules
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We identified issues of inconsistency and apparent inequity in cases where

offenders reported assets that might have been available for payments but

there was no indication in the file that probation officers considered these

assets as a means for payments. We interviewed probation officers

responsible for the cases in question, and they could not always explain

why the assets were not considered available to apply toward the fines or

restitution owed. Table 3 shows the percent of cases in which we

identified these types of issues.

Table 3: Installment Payment Cases Where Additional Assets Might Have Been Available but Were Not Considered for

Payments

Central District of California Northern District of Texas

Type of court-ordered

payment

Cases with

payment

schedules

Cases with

issues

Percent with

issues

Cases with

payment

schedules

Cases with

issues

Percent with

issues

Fine 67 21 31% 71 3 4%

Restitution 88 10 11 89 6 7

Fine and restitution 27 9 33 44 15 34

Total cases 182 40 22 204 24 12

Source: GAO analysis of offender case files.

The following examples illustrate cases where assets might have been

available but were not considered for payments toward fines or restitution

owed by offenders.

• An offender was convicted of a fraud scheme and sentenced to 12 months

in prison and 36 months of supervised release. He was also ordered to pay

a fine of $15,000 and restitution of $153,000. The offender reported a

monthly income of $3,000 and was required to make monthly installment

payments of $100. The offender reported a second home valued at

$850,000 on one personal financial statement; on his next statement, that it

had been sold. The probation officer supervising the case said he did not

know what the offender did with the proceeds from the sale. After our

case review, AOUSC followed up on the case and provided further details

that showed the offender actually sold the second home for $680,000

around the time of sentencing and did not apply the $52,000 proceeds in

equity from the sale toward his restitution. However, we did not find

guidance that would have advised the probation officer to notify the judge

or the U.S. Attorney to advise them when an offender is disposing of assets

that may be used toward payments.

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• An offender was convicted of racketeering and was sentenced to 72

months in prison and 36 months of supervised release. He was also

ordered to pay a fine of $32,000 and restitution of $8,000. The offender

reported a monthly income of $2,800 and expenses of $1,700 and was

required to make monthly installment payments of $200. While under

supervision, the offender sold $20,000 worth of securities but did not

report what he did with the proceeds. The probation officer supervising

the case did not know what the offender did with the proceeds from the

sale, and we did not find guidance advising when an officer should ask

that securities be used toward payments or if the officer should notify the

judge when the offender disposes of assets that could be applied toward

payments.

• An offender was convicted of posing as a stockbroker for a national

brokerage house, and selling counterfeit securities in well-known

legitimate companies by phone. He was sentenced to 36 months in prison

and 36 months of supervised release. He was ordered to pay over $100,000

in restitution. The offender was required to make monthly payments of

$400 to his victims. The offender, who was single, reported a monthly

income of $4,600 and necessary monthly expenses of $3,200, which

included leases on two vehicles of $875. The offender verbally claimed

ownership of a painting valued at $185,000, but later claimed that the

painting was jointly owned with his mother. The offender also claimed his

mother would be paying his restitution since he was 4 months in arrears

on his payments to his victims. A letter in the case file from one of his

victims inquired why restitution was being received so slowly. He also

claimed life insurance with a cash surrender value of $25,000. We did not

find guidance on the documentation that the probation officer should have

obtained concerning ownership of jointly held property, how jointly held

property should be considered when restitution is owed to victims, or how

to handle promises of future payments by relatives or others when the

offender stops making payments.

• An offender convicted of bank robbery was sentenced to 46 months in

prison and 36 months of supervised release. He was also ordered to pay

$1,450 in restitution. The offender reported a monthly income of $1,638

and expenses of $1,190. The offender was received for supervision in

October 1995, and the probation officer set the initial payment at $50 per

month. In January 1996, the offender requested and received approval

from the probation officer to travel to another city outside the district to

receive a legal settlement of $6,500, promising to use the proceeds toward

the restitution, and submitted supporting documentation for the trip to the

probation officer. However, the offender applied none of the settlement

toward the restitution, and, at the time of our review in July 1997, had

Page 17 GAO/GGD-98-89 Fines and Restitution Payment Schedules
B-276684 

made only one $25 payment in February 1997 toward the restitution. Also,

at the time of our review, no personal financial statement had been

obtained from this offender, who had been under court supervision for

almost 2 years. We found no guidance advising the probation officer about

how to handle a case where an offender stops making payments based on

promises of large, future payments and then fails to pay. After we

discussed this case with district officials, the offender’s supervised release

was revoked for several reasons according to AOUSC, including

nonpayment of restitution.

• An offender convicted of wire fraud was sentenced to 36 months of

probation. The offender was fined $3,000 and ordered to pay restitution of

$1,995. The offender reported an average monthly income of $8,200 and

necessary monthly expenses of $8,100. The probation officer set the

payment at $90 per month. The offender reported over $65,000 in a

personal savings account. The probation officer stated that as long as the

offender made the $90 monthly payment, he left him alone; and there was

no guidance that even large, cash amounts in bank accounts should be

applied toward fines or restitution.

In other cases, probation officers did not consider immediate payment as

necessary, even if the offender reported enough cash to make an

immediate payment toward fines or restitution. For example:

• One offender, a doctor, was convicted of participating in a fraudulent auto

accident insurance scheme by certifying nonexistent injuries as real. The

offender was sentenced to 60 months of probation and 3,000 hours of

community service. The offender was also fined $10,000. The probation

officer set the installment payment at $200 per month. The offender

reported real estate worth over $1,000,000 with over $900,000 in equity and

over $500,000 in cash assets, including $20,000 in a personal bank account.

Despite a claim of changed circumstances, the offender’s necessary

monthly expenses included a pool maintenance man and a gardener for

the offender’s home in Beverly Hills. The probation officer supervising the

case told us that it was not necessary for the offender to pay off the fine

any sooner than by the end of the offender’s 60-month probationary

period, which, according to AOUSC, was eventually paid. There was no

guidance that would clarify whether this offender should have made an

immediate payment instead of paying it off over 5 years. There is no

specific guidance on what assets, even $500,000 in cash assets, should be

used to pay a fine or restitution.

• In another case, an offender convicted of bribery was sentenced to 36

months of probation and ordered to pay a $1,500 fine. The offender

Page 18 GAO/GGD-98-89 Fines and Restitution Payment Schedules
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reported having over $25,000 in the bank. The probation officer on this

case also told us that immediate payment was not expected of offenders

and set a payment schedule of $50 per month, and there was no guidance

on whether large cash sums in the bank should be used to pay off fines.

Guidance Lacked Specifics

on How to Determine

Installment Payment

Schedules

If an offender is unable to make an immediate lump-sum payment,

installment payment schedules may be used.8

 As shown earlier, most

offenders in our sample paid their fines or restitution by installments. For

these cases, installment payment schedules were most often set by

probation officers in the Central District of California and by judges,

generally using information provided by probation officers, in the

Northern District of Texas, as shown in table 4.

Table 4: Person Who Set the Installment Payment Schedule for the Sample Cases

Probation officers Judges Othera

Probation

officersb Judges

Central District of California

Northern District of Texas

Type of court-ordered

payment Cases Percent Cases Percent Cases Percent Cases Percent Cases Percent

Fine 45 67% 12 18% 10 15% 32 45% 39 55%

Restitution 75 85 6 7 7 8 38 43 51 57

Fine and restitution 20 74 2 7 5 19 17 39 27 61

Total cases 140 77 20 11 22 12 87 43 117 57

aIncludes cases where payment schedules were set by other federal agencies that were owed

restitution, such as the Resolution Trust Corporation, where we could not determine who set the

payment schedule, or where an installment payment schedule should have been set but was not.

bAs we noted earlier in this report, the law in Texas currently does not allow judges to delegate

the setting of installment payment schedules to probation officers. The cases in our sample where

probation officers set the schedules included cases that were transferred from other districts and

cases that predated the 1994 U.S. Court of Appeals decision that precluded judicial delegation of

this function.

Source: GAO analysis of offender case files.

When installment payment schedules were set by judges, probation

officers were responsible for monitoring installment payments made while

the offender was on probation or under supervised release. The probation

officer was also responsible for suggesting increases or decreases in the

8

For fines, the U.S. Sentencing Guidelines state that the length of the installment payment schedule

generally should not exceed 12 months. The sentencing guidelines further provide that the defendant

should be required to pay a substantial installment at the time of sentencing. For fines and restitution,

the law [18 U.S.C. 3572 (d)(2)] requires that if the order permits other than immediate payment, the

length of time over which scheduled payments will be made shall be set by the court, but shall be the

shortest time in which full payment can be reasonably made.

Page 19 GAO/GGD-98-89 Fines and Restitution Payment Schedules
B-276684 

payment amount based on changes in the offender’s ability to pay. In the

Northern District of Texas, the four judges we interviewed told us that

when they set the installment payment amount, they depended “very

heavily,” “exclusively,” “99 percent of the time,” and “almost exclusively,”

respectively, on the recommendations from the probation officer. In

addition, the installment payment amount could be identified by the judge

as “not less than” a given amount, and the probation officer could

recommend a higher payment.

We identified cases in which arbitrary methods not linked to income,

expenses, or other financial criteria were used to establish the installment

payment schedules. Table 5 shows the percent of sample cases where we

identified issues about the methods used by probation officers to establish

or recommend the installment payment schedules.

Table 5: Cases Where Arbitrary Methods Were Used to Establish the Installment Payment Schedule

Type of court-ordered

payment

Cases with

payment

schedules

Cases with

issues

Percent with

issues

Cases with

payment

schedules

Cases with

issues

Percent with

issues

Fine 67 29 43% 71 12 17%

Restitution 88 31 35 89 12 13

Fine and restitution 27 10 37 44 5 11

Total cases 182 70 38 204 29 14

Source: GAO analysis of offender case files.

As shown in the following examples, the probation officers we interviewed

used arbitrary methods for developing installment payment schedules,

including negotiating amounts, accepting good-faith payments, and

choosing round numbers that were not linked with income, expenses, or

other financial criteria.

• An offender was convicted of illegally selling explosives and was

sentenced to 33 months in prison and 36 months of supervised release. He

was also fined $3,000. The offender reported an average monthly income

of over $2,000. The probation officer said she determined an installment

payment schedule by suggesting payment amounts until the offender

heard an amount he thought he could live with. She said the offender

finally agreed to pay $25 a month, although he thought this amount was

unreasonable.

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• An offender was convicted of attempting to manufacture

methamphetamine and was sentenced to 60 months in prison and 48

months of supervised release. He was also fined $6,000. The offender

reported a monthly income of $2,200 as a production supervisor. The

probation officer selected a monthly payment amount of $100 because he

said it was a nice round number.

• An offender was convicted of leasing one of his ranches for the

manufacture of methamphetamine and sentenced to 18 months in prison

and 36 months of supervised release. He was also fined $3,000. The

offender reported a monthly income of $4,600. The probation officer said

that the offender’s previous probation officer had set a monthly payment

of $50, and the current probation officer said he did not know how it was

set, except that the payment appeared to be a good-faith payment.

• An offender was convicted in a fraud scheme and sentenced to 24 months

in prison and 36 months of supervised release. He was ordered to pay

$2.8 million in restitution. The offender reported a monthly income of over

$4,000. The probation officer said that she arrived at a monthly payment of

$50 through “almost a negotiation process, what they’re comfortable with,

almost like bartering.”

• An offender was convicted of conspiracy to commit bank fraud and was

sentenced to 36 months in prison and 60 months of supervised release. He

was also ordered to pay $1 million in restitution. The offender reported a

monthly income of $1,700. The probation officer accepted $50 as an

installment amount because, he said, he didn’t know how to handle this

case.

Arbitrary Methods

Affected Lower-Income

Offenders

Because installment payment schedules were set using arbitrary methods,

some offenders with lower incomes were expected to make higher

payments than offenders with higher incomes who owed more in fines or

restitution. For example, based on financial criteria such as income and

expenses, the following offenders appeared to be paying a much higher

percentage of income toward fines and restitution than other offenders

presented as examples in this report with higher incomes who owed more

in fines or restitution.

• An offender was convicted of cashing counterfeit checks and sentenced to

1 month in prison and 60 months of supervised release. She was also

ordered to pay about $8,000 in restitution. The offender, who had four

children, reported a monthly income of $737 from welfare. The probation

officer set the monthly installment payment at $50.

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• An offender was convicted of filing false claims for state disability

insurance and sentenced to 24 months of probation. He was ordered to

pay $900 in restitution. The offender had a wife and four children and

reported a monthly income of $800. The probation officer set the monthly

payment at $50.

• An offender, a single mother with one dependent child, was convicted of

filing a false home-loan application and was sentenced to 1 day in prison

and 36 months of supervised release. She was ordered to pay $32,000 in

restitution when she defaulted on the loan. She reported a monthly income

of $2,400. The probation officer set the payment schedule at $1,000 per

month.

Guidance Lacked Specifics

on the Type or Amount of

Expenses Considered

Necessary

Offenders are to report their necessary monthly expenses on a personal

financial statement that identifies the types of expenses that could be

listed as necessary, including home rent or mortgage, utilities, groceries

and supplies, insurance, minimum installment payments, transportation,

medical, clothing, and other. The personal financial statement also

requires the offender to deduct necessary monthly expenses from reported

income to arrive at cash flow. However, AOUSC has not developed

standards to help probation officers decide what type or amount of

expenses should be considered necessary.

As discussed earlier, FJC training defined necessary expenses as those

necessary for the offender’s continued employment and for the basic

health and welfare of the offender’s dependents. AOUSC includes this

definition in its Probation Manual in sections concerning the presentence

report used to assist the judge in determining the total amount of fine or

restitution to order in the case. However, there is no specific guidance on

actual types or amounts of expenses that might be considered as

necessary. As a result, probation officers in cases where we identified

issues often just accepted the types or amounts of expenses listed as

necessary by the offender.

FJC training also advised, but did not require, using data published in the

Bureau of Labor Statistics’ Consumer Expenditure Tables as a general

guide to reasonable expenses and recommended using cash flow reported

by the offender—income less necessary expenses—as the basis for setting

an installment payment schedule. While we did not evaluate whether these

tables are the best available for this purpose, their application to these

cases illustrates the impact of using financial standards in determining an

offender’s ability to pay a fine or restitution.

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We identified issues of inconsistency and apparent inequity in those cases

where the types or amount of expenses reported as necessary appeared

high in relation to location or family circumstances. Table 6 shows the

percent of cases in which we identified these types of issues.

Table 6: Installment Payment Cases With Expenses That Appeared High in Relation to Income or Family Circumstances

Central District of California Northern District of Texas

Type of court-ordered

payment

Cases with

payment

schedules

Cases with

issues

Percent with

issues

Cases with

payment

schedules

Cases with

issues

Percent with

issues

Fine 67 18 27% 71 4 6%

Restitution 88 17 19 89 7 8

Fine and restitution 27 6 22 44 8 18

Total cases 182 41 23 204 19 9

Source: GAO analysis of offender case files.

The following are examples of cases in which we identified issues about

the type or amount of expenses.

• An offender was convicted of fraud and sentenced to 12 months in prison

and 36 months of supervised release. He was also ordered to pay over

$160,000 in restitution. The offender reported an average monthly income

of about $12,000 and over $14,000 in necessary monthly expenses for

himself, his spouse, and one dependent child. The necessary monthly

expenses included mortgage payment expenses of about $6,000,

entertainment expenses of $350, clothing expenses of $400, and $5,000 of

unspecified miscellaneous expenses. Consumer Expenditure Tables

identified total monthly expenses of $4,700 for a household at this income

level, including $101 in miscellaneous expenses. The offender was

required to make monthly restitution payments of $300. At that rate, it

would take the offender over 40 years to pay his restitution. AOUSC

reported that there was a lien against the offender’s home. However, the

offender’s financial statements showed the mortgage on the home was

more than the home was worth. We did not, however, find any specific

guidance from AOUSC on the amount of miscellaneous expenses that should

be considered necessary for a family of three, the total amount of

expenses that could be reasonably considered necessary, nor how to set

the installment payment schedule.

• An offender was convicted of illegally ordering machine gun parts and

sentenced to 74 months of probation. He was also fined $3,000. The

Page 23 GAO/GGD-98-89 Fines and Restitution Payment Schedules
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offender reported a monthly income of $3,000 and expenses of $2,310,

including a $440 payment on a recreational boat. There was no guidance

from AOUSC on whether payments on recreational vehicles can be deducted

from an offender’s income as necessary expenses. The offender’s payment

was set at $150 a month.

• An offender was convicted of environmental crimes related to illegal

dumping and was sentenced to 60 months of probation. He was also fined

$50,000. He reported a monthly income of $5,000 for himself and $10,000

for his spouse, who managed his business. The offender reported over

$12,000 in necessary monthly expenses, including over $5,000 in monthly

mortgage expenses and $1,500 for groceries and supplies. The Consumer

Expenditure Tables identified monthly household expenses of $4,700 for a

household at this income level, including $1,411 for housing and $657 for

groceries and supplies. The offender also reported taking a $6,000

European cruise with his wife, which he verbally claimed was

nonrefundable and had been purchased prior to sentencing, although the

file showed that, based on prior statements by the offender, it had been

purchased after sentencing. AOUSC followed up on this case and reported

that the offender eventually paid the fine prior to taking the cruise,

although neither the probation officer nor the probation officer’s

supervisor was aware that the offender had made any payments as of 10

months after sentencing and the case file showed no payments had been

made. However, there was no guidance from AOUSC on what

documentation should be obtained from an offender regarding

recreational travel, such as cruise ship documents showing the purchase

date and the extent to which the cruise was refundable, when there is no

evidence that the fine or restitution has been paid, nor what would be

necessary monthly expenses for this offender and his wife, nor how to

consider spousal income when the spouse is employed by the offender.

• An offender was convicted for possession and sale of stolen goods and

sentenced to 10 months in prison and 24 months of supervised release. He

was also fined $5,000. The offender reported monthly income averaging

$2,500 and expenses of $2,335. His monthly payment was set at $210. He

made two payments and stopped because of a self-declared inability to pay

because of all his expenses. After he stopped making payments, the

offender, a salesman, moved from an $800 monthly rental home to a $1,400

monthly rental home that the probation officer described as a “huge home

with horse property.” AOUSC followed up on this case and noted that the

offender moved to an area with a “substantially higher standard of living.”

The offender, a salesman of technical equipment with a territory, did not,

however, change jobs. The Consumer Expenditure Tables identified

housing expenses of $631 at this income level. However, we did not find

Page 24 GAO/GGD-98-89 Fines and Restitution Payment Schedules
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any guidance about whether a voluntary move to an area with a higher

standard of living precluded an offender from making payments on fines

or restitution owed or what necessary housing expenses should be.

• An offender was convicted of misapplication of bank funds and sentenced

to 30 months in prison and 36 months of supervised release. He was also

ordered to pay $35,000 in restitution. He reported a monthly income of

about $7,600 and expenses of about $7,500. His reported monthly expenses

included $800 for car payments and $960 for private school tuition. The

Consumer Expenditure Tables identified expenses of $347 for car

payments and $78 for education expenses at this income level. The

offender reported high medical expenses due to a disabled child as

necessary but did not offset those expenses with the medical insurance

payments that the file showed he received. The probation officer originally

set the monthly installment payment at $100, then increased it to $200 at

the time of our review. However, we did not find AOUSC guidance on how

to treat necessary expenses in determining installment payment schedules

when those expenses are being reimbursed by a third party.

• An offender was convicted of making false statements on a loan

application and sentenced to 6 months in prison and 48 months of

supervised release. The offender was ordered to pay about $33,000 in

restitution. The offender reported a monthly income of over $7,500 and

expenses of about $7,000. The Consumer Expenditure Tables identified

$4,700 of monthly household expenses at this income level. Included in the

expenses was a monthly payment of $750 to the offender’s sister. The

probation officer acknowledged that payments to the offender’s sister

could be scaled back. However, there was no guidance from the AOUSC on

how to treat payments to relatives that are identified by offenders as

necessary expenses and used to reduce the amount of the income

available for monthly installment payments on restitution owed. The

probation officer set the monthly payment at $100.

Offenders’ Case Files

Had Outdated or

Missing Financial

Statements

In its guidance to probation officers, AOUSC advised that, in most instances,

offenders should be required to submit updated financial statements every

6 months. However, AOUSC does not provide guidance on when financial

statements should be updated. According to the FJC training, for cases

where offenders could not pay their fines or restitution in a lump sum,

probation officers were advised to review the status of net assets, net

income, and necessary expenses on a regular basis, at least once every 6

months. Local guidance issued by the Northern District of Texas suggests

initiating a financial investigation if a significant increase or decrease in

Page 25 GAO/GGD-98-89 Fines and Restitution Payment Schedules
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the offender’s earning ability is noticed. As a general rule in this district,

any case having a financial obligation should be investigated annually.

Offenders are also required by the local district offices to submit monthly

supervision reports. In the Central District of California, the monthly

supervision reports include monthly income and any purchases over $500.

In the Northern District of Texas, the monthly supervision reports also

include total amount of expenses. However, the monthly supervision

reports do not include the detailed financial information included on the

personal financial statement.

Despite the guidance and training, we found that financial statements were

not maintained on a current basis for many offenders in our sample who

paid their fines and restitution in installments. Although the 6-month

period was suggested for most offenders, to be conservative we only

classified financial statements as too old to be useful if one had not been

obtained for at least 18 months or more. We also found cases that had

been active for 18 months or more without having a financial statement

completed. Table 7 shows the percent of cases where (1) the financial

statements were 18 months old or older or (2) no financial statement was

in the file and the case was active for 18 months or more. Because the

financial information was outdated for these cases, probation officers

were not in a position to determine whether the installment payment

schedule needed adjustment.

Table 7: Installment Payment Cases With Outdated or Missing Financial Statements

Central District of California Northern District of Texas

Type of court-ordered

payment

Cases with

payment

schedules

Cases with

issues

Percent with

issues

Cases with

payment

schedules

Cases with

issues

Percent with

issues

Fine 67 18 27% 71 18 25%

Restitution 88 14 16 89 27 30

Fine and restitution 27 6 22 44 11 25

Total cases 182 38 21 204 56 27

Source: GAO analysis of offender case files.

Following are some examples of cases where we found the financial

statement in the file to be at least 18 months old or missing.

Page 26 GAO/GGD-98-89 Fines and Restitution Payment Schedules
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• An offender convicted of computer hacking to get into private telephone

systems was sentenced to 6 months in prison and 24 months of supervised

release. He was also ordered to pay $38,000 in restitution. The probation

officer set the installment payment at $200 a month, and this amount was

not changed. The offender’s most current financial statement was

60-months old. Other information in his file showed his income had almost

doubled; there was no information on changes in expenses, assets, or cash

flow. However, there was no guidance from AOUSC on whether this is the

type of circumstance in which an updated personal financial statement

should generally be obtained.

• An offender was convicted of obtaining over 20 fraudulent lines of credit

and sentenced to 5 months in prison and 36 months of supervised release.

She was also ordered to pay $75,000 in restitution. The probation officer

set the installment payment at $150 per month. Her latest financial

statement was 36 months old at the time of our review and showed

monthly income of over $4,000 and monthly expenses of $3,385. The

offender requested a reduction in payments, claiming financial hardship

and a reduced income. While her financial circumstances had changed,

she did not report the income of her husband, a college professor, which

was reported in documents used for the presentence report. However,

there was no guidance from AOUSC on whether this was a circumstance in

which a current financial statement should generally be obtained or on

how to treat spousal income.

• An offender was convicted of mail fraud and sentenced to 2 months in

prison and 36 months of supervised release. He was also ordered to pay

$11,000 in restitution. The judge set the monthly installment payment at

$250, and the amount was not changed. Approximately 2 months before

the payment was set, the offender reported a monthly income of $1,600

and monthly expenses of $1,350. The probation officer had not requested a

current financial statement in the last 24 months. During this period, the

files showed that the offender’s income had increased to over $3,000 per

month, and there was no record of his expenses. However, there was no

guidance from AOUSC on whether this is the type of circumstance in which

a current personal financial statement should generally be obtained.

Conclusions Probation officers did not have specific guidance and financial standards

clearly established by AOUSC as policy on how payment schedules should

be determined for offenders who owed fines or restitution. In the absence

of such guidance and standards, probation officers often created their own

arbitrary methods for determining whether and to what extent offenders

had the ability to pay their court-ordered fines and restitution. In many

Page 27 GAO/GGD-98-89 Fines and Restitution Payment Schedules
B-276684 

cases, probation officers also lacked the current financial information

necessary to monitor changes in offenders’ ability to pay. Inconsistencies

on the part of probation officers in setting payment amounts resulted in

apparently inequitable treatment of some offenders and victims and

reduced and slowed payments to the Crime Victims Fund and to crime

victims. Although our detailed reviews were limited to two judicial

districts, the fact that probation officers in the other judicial districts have

the same limited guidance and lack financial standards creates the risk

that similar inconsistencies and apparent inequities could occur

nationwide.

FJC reported that other districts had initiatives under way to try to improve

training and guidance on fines and restitution. We did not evaluate these

initiatives, but even if they help improve decisionmaking in those districts,

they are local initiatives designed to address local needs—not a

coordinated national effort to ensure consistency and equity within and

among all judicial districts.

AOUSC officials believe that the FJC training materials that were more

specific reflected their policies and that probation officers should have

considered them as such. However, these training materials included a

qualifier stating that they reflected the views of the authors, not FJC. Also,

the material and training were offered on a voluntary basis and not all

probation officers participated. Thus, we believe it is reasonable for

probation officers who took the training to be uncertain about whether it

constituted AOUSC policy, which is usually transmitted under signature to

all chief probation officers as policy, and for other probation officers not

even to have seen the material.

We have not done sufficient work to conclude that a specific set of

standards is preferable, nor do we suggest anything that would limit the

judge’s final discretion in reviewing a probation officer’s recommendation

on how an offender should be required to pay. However, our review

showed that if specific financial standards had been used to determine an

offender’s ability to pay fines and restitution ordered by the courts and

financial information had been regularly updated, it would have helped

reduce the inconsistencies and apparent inequities we found in the sample

cases in these two court districts.

Recommendations We recommend that the AOUSC

Page 28 GAO/GGD-98-89 Fines and Restitution Payment Schedules
B-276684 

• establish, as policy, specific guidance on how probation officers should

determine how offenders should pay their fines and restitution, including

criteria establishing what types of assets should be considered for

immediate lump-sum payments or substantial payments; how installment

schedules should be established; and the type and amount or range of

expenses that should ordinarily be considered necessary when

determining the amount of payments under installment schedules;

• establish as policy that personal financial statements should be obtained

on a regular, timely basis, such as every 6 months or when circumstances

change, from offenders on installment payment schedules; and

• implement procedures to ensure that probation officers are aware of and

recognize the guidelines as AOUSC policy.

Agency Comments

and Our Evaluation

AOUSC, FJC, DOJ, and the U.S. Sentencing Commission provided written

comments on a draft of this report (see apps. III, IV, V, and VI.) AOUSC

provided seven overall comments on the report, which are discussed in

detail in appendix III. Four enclosures were provided to expand on these

comments. Due to their length, we have not reproduced the enclosures in

this report but rather we summarize them and comment on them in the

text of the report and in appendix III. We have summarized the seven

overall comments as follows.

AOUSC’s first two comments reflect its view that it has provided the

probation officers with sufficient guidance to make payment schedule

decisions, and any problems noted in this report result from the failure of

individual probation officers to follow that guidance. AOUSC provided

documentation with its comments to support its view that specific

guidance was available. We reviewed the documents and found that, in

reaching conclusions about the lack of specific guidance available to

probation officers, we had already considered the most relevant

documents and believe that none of the guidance addresses the issues

raised in this report.

The most relevant documentation was Publication 107: The Presentence

Investigation Report; Monograph 109: Supervision of Federal Offenders;

and the “Update to Probation Officers on the Imposition of Fines and

Restitution dated September 1, 1995.” As we reported, these documents

only generally addressed fines and restitution and did not specifically

address how probation officers should establish payment schedules for

offenders under supervision who owed fines or restitution. For example,

the guidance lacked specifics about issues that we noted in our case

Page 29 GAO/GGD-98-89 Fines and Restitution Payment Schedules
B-276684 

examples. The other documentation furnished—a mixture of statutes,

general guidance, and articles from various publications—would not have

resolved the issues raised in this report because none of them were official

policy statements on how offenders should pay their fines and restitution.

AOUSC also commented that the FJC training reflects AOUSC’s policies on

how to determine payment schedules, and probation officers in the field

should have been aware of this. However, as discussed in the report, the

training was voluntary and not all probation officers took it. We question

whether a voluntary training program is the most appropriate way to

communicate agency policy to all staff affected by the policy.

Third, AOUSC commented that we should eliminate the impression that it

has statutory authority to mandate compliance with our

recommendations. However, it is AOUSC’s responsibility to articulate

policies, guidance, and standards. In its annual report for 1997, AOUSC

stated that it provides national standards and policies as well as

administrative and management guidance to probation officers. AOUSC can

establish policies even if those policies cannot be mandated without the

support of the district judges.

Fourth, AOUSC commented that our report should clearly indicate that the

review was a study of conditions in two courts and that there were

different practices between the two courts. We emphasize this point

throughout the report.

Fifth, AOUSC commented that most of our sample cases predated MVRA, and

our report does not consider important differences in the laws in effect

then and now. MVRA mandates that restitution be ordered in all cases

where a victim can be identified, and that restitution should be ordered

without regard to the offender’s economic circumstances. We have added

additional language concerning the law to the report. However, MVRA does

not have a major impact on the subject of this report because probation

officers are still to take ability to pay into account when determining

payment schedules.

Sixth, AOUSC commented that we should take greater note of the role of DOJ

in the execution of fines and restitution sentences. We agree that DOJ’s role

is important and have added some additional language on this subject.

However, the focus of this report was on the responsibilities of probation

officers while offenders were under court supervision. For example, in

some cases, AOUSC reported to us that a lien had been filed on an offender’s

Page 30 GAO/GGD-98-89 Fines and Restitution Payment Schedules
B-276684 

property by the Financial Litigation Unit of the U.S. Attorney’s Office. In

each of these cases, however, there was no evidence in the file that a lien

had been filed at the time of our study, nor was the probation officer

aware of the lien when we discussed our analysis of the case. Primary

authority for the lien may rest with the U.S. Attorney’s Office. However,

we believe that it may also be appropriate for a probation officer who is

determining an installment payment schedule to know if the offender’s

assets, which come to the officer’s attention, have liens against them or

not, and if not, make the U.S. Attorney’s Office aware of the assets. While

AOUSC provided guidance on how to contact the U.S. Attorney’s Office,

AOUSC did not provide guidance informing the probation officer of when it

should be done in these cases.

Seventh, AOUSC commented that performance can be improved and that it

is considering steps to improve program implementation and officer

performance. These steps are included in full in appendix III. Some of

these steps include (1) strengthening AOUSC’s program review and financial

audit functions in this area, (2) informing judges and probation officers of

the importance of these issues, (3) redistributing the Financial

Investigation Desk Reference, (4) reviewing and consolidating all financial

investigation guidance, and (5) considering specific guidance regarding

particular financial standards. While these proposed steps appear

promising, it is unclear how effectively they will be implemented or the

extent to which they will resolve the matters discussed in this report.

Comments from the FJC, DOJ, and the U.S. Sentencing Commission

suggested that we provide additional information on areas outside the

scope of our evaluation, including (1) the roles of the Bureau of Prisons

and DOJ in debt collection; (2) the original decision by the judge to order a

fine or restitution, including the extent to which the court is ordering

restitution under MVRA; and (3) information relating to the presentence

investigation. This information would not have added substantively to our

discussion of how payment schedules were established for offenders who

owed fines or restitution.

These agencies also raised questions about whether our report focused on

the presentence report, which includes a financial investigation of the

offender’s ability to pay a fine or restitution. To better identify the focus of

our report, we changed the title of this report. The presentence report is

prepared to help the judge determine the total amount of the fine or

restitution to order. As stated in this report, our scope focused on how

payment schedules were established for amounts already ordered. If the

Page 31 GAO/GGD-98-89 Fines and Restitution Payment Schedules
B-276684 

judge established the payment plan in the original court order, we did not

raise an issue with how the judge established that plan. We only raised an

issue in those circumstances if (1) the offender’s financial circumstances

changed while under probation or supervised release and the probation

officer did not notify the judge of the change; (2) the judge ordered a

payment of not less than a given amount and the probation officer took no

action when an offender’s financial circumstances changed while on

probation or supervised release; or (3) the probation officer did not obtain

current financial information for an offender on probation or supervised

release.

We have incorporated in the final report technical comments and

suggestions from the four agencies, as appropriate.

As agreed with your offices, unless you publicly announce its contents

earlier, we plan no further distribution of this report until 30 days from the

date this letter. At that time, we will send copies of this report to the

Ranking Minority Members of your committees, the Chairman and

Ranking Minority Member of the Subcommittee on Administrative

Oversight and the Courts, Senate Committee on the Judiciary; the

Chairman and the Ranking Minority Member of the House Committee on

the Judiciary; the Director, AOUSC; the Director, FJC; the Commissioner,

U.S. Sentencing Commission; and other interested parties. Copies will be

made available to others upon request.

Major contributors to this report are listed in appendix VII. If you have any

questions about this report, please call me on (202) 512-8777.

Richard M. Stana

Associate Director

Administration of Justice Issues

Page 32 GAO/GGD-98-89 Fines and Restitution Payment Schedules
Page 33 GAO/GGD-98-89 Fines and Restitution Payment Schedules
Contents

Letter 1

Appendix I 

Scope and

Methodology

38

Appendix II 

Demographic

Characteristics of

Offenders in Sample

Districts and Average

and Median Amounts

of Restitution and

Fines

40

Appendix III 

Comments From the

Administrative Office

of the U.S. Courts

44

Appendix IV 

Comments From the

Federal Judicial

Center

51

Appendix V 

Comments From the

Department of Justice

54

Page 34 GAO/GGD-98-89 Fines and Restitution Payment Schedules
Contents

Appendix VI 

Comments From the

United States

Sentencing

Commission

60

Appendix VII 

Major Contributors to

This Report

63

Tables Table 1: How Offenders in Sample Cases Were to Pay Their Fines

and Restitution

14

 Table 2: Sample Cases With Issues About How Payment

Schedules Were Established

15

 Table 3: Installment Payment Cases Where Additional Assets

Might Have Been Available but Were Not Considered for

Payments

16

Table 4: Person Who Set the Installment Payment Schedule for

the Sample Cases

19

Table 5: Cases Where Arbitrary Methods Were Used to Establish

the Installment Payment Schedule

20

Table 6: Installment Payment Cases With Expenses That

Appeared High in Relation to Income or Family Circumstances

23

Table 7: Installment Payment Cases With Outdated or Missing

Financial Statements

26

Table II.1: Selected Characteristics of Offenders in the Central

District of California

40

Table II.2: Average and Median Amounts of Restitution and Fines

for Offenders in the Central District of California

41

Table II.3: Selected Characteristics of the Offenders in the

Northern District of Texas

42

Table II.4: Average and Median Amounts of Restitution and Fines

for Offenders in the Northern District of Texas

43

Page 35 GAO/GGD-98-89 Fines and Restitution Payment Schedules
Contents

Abbreviations

AOUSC Administrative Office of the U.S. Courts

DOJ Department of Justice

FJC Federal Judicial Center

IRS Internal Revenue Service

MVRA Mandatory Victims Restitution Act

PACTS Probation and Pretrial Services Automated Case-Tracking

System

Page 36 GAO/GGD-98-89 Fines and Restitution Payment Schedules
Page 37 GAO/GGD-98-89 Fines and Restitution Payment Schedules
Appendix I 

Scope and Methodology

To assess how payment schedules were determined for offenders who

owed fines or restitution, we collected data from files of stratified, random

samples of cases involving offenders who (1) were on probation or

supervised release active status, (2) had been sentenced on or after

January 1, 1990, and (3) were not scheduled to be released from probation

or supervision until after June 30, 1997. Using information from their

Probation and Pretrial Services Automated Case-Tracking System (PACTS)

database, Administrative Office of the U.S. Courts (AOUSC) provided us

with lists of all offenders in the Central District of California and the

Northern District of Texas who, as of January 1997, met the time-period

criteria. After eliminating duplicate entries for the same offenders and

offenders who were not on active probation or supervised release status,

we identified 1,257 offenders in the Central District of California and 850

offenders in the Northern District of Texas.

We stratified the offenders on active status in each district into three

categories: (1) those required to pay a fine, (2) those required to pay

restitution, and (3) those required to pay both a fine and restitution. We

selected the case files of 242 offenders in the Central District of California

and 253 offenders in the Northern District of Texas. From each district, we

randomly selected 100 offenders who had received orders to pay a fine

only and 100 offenders who had received orders to pay restitution only.

We randomly selected approximately half (42) of the 85 offenders in the

Central District of California and all 53 offenders in the Northern District

of Texas who had received both a fine and restitution. We collected usable

data from 218 (90 percent) of the 242 cases from the Central District of

California and 237 (94 percent) of the 253 cases in the Northern District of

Texas.

We identified issues of inconsistency and apparent inequity in how

offenders were required to pay fines or restitution in those cases on

installment payment schedules that met the following conditions.

• First, documents supplied by the offenders indicated that income or assets

might exist to pay toward fines or restitution on a more complete or timely

basis. These documents included the personal financial statement and the

monthly supervision report.

• Second, the offenders (1) would not pay off their fines or restitution prior

to the end of their court supervision or (2) would pay off their fines or

restitution prior to the end of their court supervision but appeared to have

resources to pay them more quickly.

Page 38 GAO/GGD-98-89 Fines and Restitution Payment Schedules
Appendix I 

Scope and Methodology

• Third, we identified one or more of the following issues during our case

review: (1) lack of consideration given to additional assets that might have

been available to pay toward the fine or restitution; (2) use of arbitrary

methods to establish the installment payment schedules that were not

linked to income, expenses, or other financial criteria; (3) reported

“necessary” expenses that appeared high in relation to location and family

circumstances; and (4) financial information that was not current and had

not been updated for 18 months or more.

To gain a better understanding of these cases, we discussed the case with

a probation officer or supervisor, if available, to resolve any issues we

identified.

A panel of our team members met, and each member reviewed and

discussed all cases to ensure consistency in how the issues were

identified. Cases with identified issues of inconsistency and apparent

inequity were given an additional review by another panel with a different

configuration of team members. Both teams had to agree before we

counted the case as inconsistent or apparently inequitable.

Page 39 GAO/GGD-98-89 Fines and Restitution Payment Schedules
Appendix II 

Demographic Characteristics of Offenders

in Sample Districts and Average and Median

Amounts of Restitution and Fines

Table II.1: Selected Characteristics of Offenders in the Central District of California

Restitution

only Fine only

Restitution

and fine

Restitution

only Fine only

Restitution

and fine

Case file review samples Populations of offendersa

Percent Percent Percent Percent Percent Percent

Gender

Male 77.0 84.0 92.9 75.8 83.0 90.6

Female 23.0 16.0 7.1 24.2 16.8 9.4

Unknown 0.0 0.0 0.0 0.0 0.2 0.0

Total offenders 100 100 42 719 453 85

Race

White 64.0 74.0 81.0 59.3 70.2 70.6

Black 18.0 15.0 11.9 24.6 15.0 15.3

Asian 17.0 11.0 7.1 15.6 14.3 14.1

Other 1.0 0.0 0.0 0.3 0.2 0.0

Unknown 0.0 0.0 0.0 0.3 0.2 0.0

Total offenders 100 100 42 719 453 85

Hispanic

Yes 14.0 19.0 9.5 11.5 18.3 8.2

No 86.0 81.0 90.5 88.3 81.7 91.8

Unknown 0.0 0.0 0.0 0.1 0.0 0.0

Total offenders 100 100 42 719 453 85

Primary offense of convictionb

White collar 80.0 46.9 68.4 72.7 46.4 68.4

Violent 1.1 0.0 0.0 8.0 0.7 1.3

Property 6.7 0.0 2.6 3.8 1.1 2.5

Drug 0.0 22.9 0.0 0.1 23.5 0.0

Immigration law 0.0 4.2 0.0 0.3 5.3 0.0

Other 12.2 26.0 28.9 15.1 23.0 27.9

Total offenders 90 96 38 662 435 79

aOffenders who (1) were on supervised release or probation active status, (2) had been

sentenced on or after January 1, 1990, and (3) were not scheduled to be released from

supervision until after June 30, 1997.

bData on the primary offense of conviction were not provided for all offenders.

Source: GAO analysis of AOUSC PACTS data.

Page 40 GAO/GGD-98-89 Fines and Restitution Payment Schedules
Appendix II 

Demographic Characteristics of Offenders

in Sample Districts and Average and Median

Amounts of Restitution and Fines

Table II.2: Average and Median Amounts of Restitution and Fines for Offenders in the Central District of California

Restitution

only Fine only

Restitution

and fine

Restitution

only Fine only

Restitution

and fine

Case file review samples Populations of offendersa

Amount Amount Amount Amount Amount Amount

Average restitution $315,067 N/A $82,733 $153,621 N/A $209,464

Median restitution $20,087 N/A $16,500 $15,000 N/A $13,000

Average fine N/A $14,226 $16,320 N/A $14,363 $14,134

Median fine N/A $3,500 $4,500 N/A $3,000 $4,000

Total offenders 100 100 42 719 453 85

Note: N/A represents that data are “not applicable.”

aOffenders who (1) were on supervised release or probation active status, (2) had been

sentenced on or after January 1, 1990, and (3) were not scheduled to be released from

supervision until after June 30, 1997.

Source: GAO analysis of AOUSC PACTS data.

Page 41 GAO/GGD-98-89 Fines and Restitution Payment Schedules
Appendix II 

Demographic Characteristics of Offenders

in Sample Districts and Average and Median

Amounts of Restitution and Fines

Table II.3: Selected Characteristics of the Offenders in the Northern District of Texas

Restitution

only Fine only

Restitution

and fine

Restitution

only Fine only

Restitution

and fine

Case file review samples Populations of offendersa

Percent Percent Percent Percent Percent Percent

Gender

Male 58.0 92.0 88.7 66.9 88.5 88.7

Female 41.0 8.0 11.3 32.7 11.5 11.3

Unknown 1.0 0.0 0.0 0.4 0.0 0.0

Total offenders 100 100 53 553 244 53

Race

White 62.0 78.0 73.6 64.9 79.5 73.6

Black 34.0 19.0 20.8 30.9 18.4 20.8

Asian 3.0 1.0 3.8 2.9 0.8 3.8

Other 0.0 0.0 1.9 0.4 0.0 1.9

Unknown 1.0 2.0 0.0 0.9 1.2 0.0

Total offenders 100 100 53 553 244 53

Hispanic

Yes 5.0 16.0 1.9 5.2 14.7 1.9

No 93.0 83.0 98.1 93.5 84.0 98.1

Unknown 2.0 1.0 0.0 1.3 1.2 0.0

Total offenders 100 100 53 553 244 53

Primary offense of convictionb

White collar 72.1 37.4 65.2 69.9 34.3 65.2

Violent 5.8 2.2 4.3 4.9 2.2 4.3

Property 8.1 1.1 13.0 14.7 2.6 13.0

Drug 0.0 35.2 4.3 0.6 31.3 4.3

Immigration law 1.2 8.8 0.0 0.2 7.0 0.0

Other 12.8 15.4 13.0 9.6 22.6 13.0

Total offenders 86 91 46 488 230 46

aOffenders who (1) were on supervised release or probation active status, (2) had been

sentenced on or after January 1, 1990, and (3) were not scheduled to be released from

supervision until after June 30, 1997.

bData on the primary offense of conviction were not provided for all offenders.

Source: GAO analysis of AOUSC PACTS data.

Page 42 GAO/GGD-98-89 Fines and Restitution Payment Schedules
Appendix II 

Demographic Characteristics of Offenders

in Sample Districts and Average and Median

Amounts of Restitution and Fines

Table II.4: Average and Median Amounts of Restitution and Fines for Offenders in the Northern District of Texas

Restitution

only Fine only

Restitution

and fine

Restitution

only Fine only

Restitution

and fine

Case file review samples Populations of offendersa

Amount Amount Amount Amount Amount Amount

Average restitution $170,021 N/A $229,400 $112,499 N/A $229,488

Median restitution $10,000 N/A $10,000 $10,000 N/A $10,000

Average fine N/A $5,680 $6,650 N/A $7,676 $6,650

Median fine N/A $3,000 $3,000 N/A $3,000 $3,000

Total offenders 100 100 53 553 244 53

Note: N/A represents that data are “not applicable.”

aOffenders who (1) were on supervised release or probation active status, (2) had been

sentenced on or after January 1, 1990, and (3) were not scheduled to be released from

supervision until after June 30, 1997.

Source: GAO analysis of AOUSC PACTS data.

Page 43 GAO/GGD-98-89 Fines and Restitution Payment Schedules
Appendix III 

Comments From the Administrative Office

of the U.S. Courts

Note: GAO comments

supplementing those in the

report text appear at the

end of this appendix.

Page 44 GAO/GGD-98-89 Fines and Restitution Payment Schedules
Appendix III 

Comments From the Administrative Office

of the U.S. Courts

See comment 1.

Page 45 GAO/GGD-98-89 Fines and Restitution Payment Schedules
Appendix III 

Comments From the Administrative Office

of the U.S. Courts

Page 46 GAO/GGD-98-89 Fines and Restitution Payment Schedules
Appendix III 

Comments From the Administrative Office

of the U.S. Courts

See comment 2.

Page 47 GAO/GGD-98-89 Fines and Restitution Payment Schedules
Appendix III 

Comments From the Administrative Office

of the U.S. Courts

See comment 3.

See comment 4.

Page 48 GAO/GGD-98-89 Fines and Restitution Payment Schedules
Appendix III 

Comments From the Administrative Office

of the U.S. Courts

GAO Comments 1. In enclosure 2, List of Specific AO Guidance to Probation Officers on

Financial Investigations, AOUSC provided additional documents which,

while generally concerning the subject of fines or restitution, would not

have resolved the issues raised in this report. These were, for offenders

under supervision who owed fines or restitution, (1) what assets should be

available for payment toward the fines or restitution, (2) how the

installment payment schedule should be set, (3) what type or amount of

expenses should be considered necessary, and (4) how frequently

financial information should be obtained from offenders who are making

installment payments. Although the documents mention fines or

restitution or some element of payment practice, they do not constitute

statements of policy concerning how fines or restitution should be paid.

2. AOUSC provided enclosure 3, Evolution of Criminal Debt Collection

Issues and AO Training Efforts, to provide historical background on the

roles of the various agencies, including the Department of Justice (DOJ), in

the evolution of criminal debt collection issues and related training efforts.

Although the roles of other agencies are important to the overall process,

the focus of this report was on the responsibilities of probation officers

while offenders were under court supervision. In both districts in this

study, the Financial Litigation Units of the U.S. Attorney’s Offices, unless

already involved at sentencing, did not become involved while the case

was under court supervision except at the request of the probation officer.

We also believe that the probation officer who receives information about

an offender’s financial condition while the offender is under supervision

should take appropriate action even if other agencies involved may have

previously overlooked the information.

3. AOUSC commented they would consider specific guidance, if provided by

us, regarding particular financial standards. For example, AOUSC mentions

that we may be suggesting standards such as those used by Internal

Revenue Service (IRS). We did not develop our own standards for this

report nor do we believe it would be appropriate for us to do so. We

provided the agency information on the IRS standards as an example of

how an agency responded to a previous recommendation we made. The

recommendation was based on a similar, but not identical, situation to the

one we identify in this report.

In a 1994 report,1

 we reported on how IRS made ability-to-pay

determinations for offenders who owed delinquent taxes. We found that,

1

Tax Administration: IRS Can Do More to Collect Taxes Labelled “Currently Not Collectible”

(GAO/GGD-94-2; Oct. 8, 1993).

Page 49 GAO/GGD-98-89 Fines and Restitution Payment Schedules
Appendix III 

Comments From the Administrative Office

of the U.S. Courts

in about 16 percent of the cases, IRS was allowing what appeared to be

expenses that exceeded necessary and reasonable living expenses. We

recommended that the Commissioner of Internal Revenue “establish

specific guidelines for determining taxpayer’s ability to pay delinquent

taxes, including criteria for determining dollar ranges for reasonable and

necessary expenses.”

IRS developed specific guidance for employees to use in analyzing financial

information. It provided dollar guidelines of necessary expenses by family

size and thus helped identify an amount the taxpayer can reasonably be

expected to pay. Housing and transportation expenses are specific by

geographic area. The data are derived from the Census Bureau, the

Federal Reserve Board of Governors, and the Bureau of Labor Statistics.2

The IRS standards are available through the Internet on the World-Wide

Web and are revised annually. We believe it may be useful for AOUSC to

review the IRS financial standards and the mechanism IRS used to

promulgate them to determine if there are aspects that could be useful to

them.

4. AOUSC provided two enclosures that offered specific observations about

the examples in our report. We reviewed these observations and modified

the examples as appropriate to reflect additional information relevant to

our review and consistent with our standards for evidence. In some cases,

AOUSC provided additional information about the ultimate resolution of the

case (e.g., that probation was revoked or the fine or restitution eventually

paid) that occurred after the period of the review. However, following a

detailed review of each case, we concluded that these later events did not

affect our observations about how payment determinations were initially

made. Accordingly, we did not include these details in the report.

2

The Consumer Expenditure Tables from the Bureau of Labor Statistics used by IRS in developing its

standards were also presented in FJC training to illustrate the type of data probation officers might

seek in their financial investigations.

Page 50 GAO/GGD-98-89 Fines and Restitution Payment Schedules
Appendix IV 

Comments From the Federal Judicial Center

Note: GAO comments

supplementing those in the

report text appear at the

end of this appendix.

Page 51 GAO/GGD-98-89 Fines and Restitution Payment Schedules
Appendix IV 

Comments From the Federal Judicial Center

See comment 1.

Page 52 GAO/GGD-98-89 Fines and Restitution Payment Schedules
Appendix IV 

Comments From the Federal Judicial Center

GAO Comments 1. FJC believes our report misunderstands FJC’s training about how

necessary expenses are determined, including use of the Consumer

Expenditure Tables. Our report states on page 23 that we did not evaluate

whether the tables are the best available for this purpose and applied

them, when we did, only to illustrate the example of financial standards.

The information in table 6 where we identified issues related to necessary

expenses was not a comparison of the amounts allowed under the

Consumer Expenditure Tables. Rather, the information evaluated those

cases where an offender’s reported necessary expenses appeared high in

relation to location and family circumstances. The primary advice in the

Financial Investigation Desk Reference for individuals (organizations were

not within our scope) follows:

“Necessary expenses are those necessary for the offender’s continued employment and for

the basic health and welfare of the offender’s dependents. Expenses should be reasonable

for the offender’s income, size of family, and the geographical area where the offender

lives.”

The Financial Investigation Desk Reference does not define “necessary” or

“reasonable,” nor does it provide ranges for allowable expenses or

examples to help guide decisionmaking. It does contain a description of

how the amount of expenses should be verified, but does not suggest how

an officer would determine that the expenses are excessive or

unnecessary.

We also discussed the expenses with the probation officers, when

available, when we identified issues. As presented in our examples, the

types of expenses we questioned as necessary included multiple car

payments by single individuals, excessive housing costs for the area and

family size, undefined monthly miscellaneous expenses in the thousands

of dollars, high recreational expenses, and payments to relatives.

However, we have no basis to specify what the actual, necessary expenses

should be.

Page 53 GAO/GGD-98-89 Fines and Restitution Payment Schedules
Appendix V 

Comments From the Department of Justice

Note: GAO comments

supplementing those in the

report text appear at the

end of this appendix.

Page 54 GAO/GGD-98-89 Fines and Restitution Payment Schedules
Appendix V 

Comments From the Department of Justice

Page 55 GAO/GGD-98-89 Fines and Restitution Payment Schedules
Appendix V 

Comments From the Department of Justice

See comment 1.

Page 56 GAO/GGD-98-89 Fines and Restitution Payment Schedules
Appendix V 

Comments From the Department of Justice

See comment 2.

See comment 3.

Page 57 GAO/GGD-98-89 Fines and Restitution Payment Schedules
Appendix V 

Comments From the Department of Justice

GAO Comments 1. DOJ stated it was not aware of any statutory authority for a probation

officer to recommend a payment schedule to a judge. According to the

law, the manner of payment is to be established by the court. However, in

some jurisdictions, the judge, after ordering the total amount of the fine or

restitution, may delegate the responsibility for the payment schedule to

the probation officer, as an officer of the court.

Our report was not limited to a description of statutory authority, but also

examined actual practice. FJC’s Financial Investigation Desk Reference

cites that “Probation officers make recommendations to the court to assist

the court in ordering fines, restitution, and payment schedules at

sentencing.” Based on our discussions with judges, even when they set the

payment, they are dependent on information provided by the probation

officer. Also, we found that judgment and commitment orders can include

language regarding an installment payment schedule that is not a fixed

amount, but instead is expressed as “not less than” a given amount. In the

Northern District of Texas, a senior official who spoke to us on this matter

stated that this allows the probation officer to increase the payment.

2. DOJ raised a concern about what GAO presents as inconsistencies and

cited one of the examples in the report. The example concerned a

defendant who was ordered to pay a fine of $15,000 and restitution of

$153,000 and required to make monthly installment payments of $100. DOJ

noted that the report does not state whether the payment schedule was

established by the court or the probation officer. DOJ stated that in this

example, and other examples in the report, if the court imposed the

installment schedules, and the defendant was current in payment of that

obligation, the offender could not have been forced to sell any property to

repay the fine or restitution. If the judge established the payment plan in

the original court order, we did not raise an issue with how the judge

established that plan. We only raised an issue in those circumstances if

(1) the offender’s financial circumstances changed substantially while

under probation or supervised release and the probation officer did not

notify the judge of the change; (2) the judge ordered a payment of not less

than a given amount and the probation officer took no action when an

offender’s financial circumstances changed substantially while on

probation or supervised release; or (3) the probation officer did not obtain

current financial information on the offender while on probation or

supervised release.

In the example cited, the probation officer set the payment. Our principal

point in this example was that there were unresolved questions suggesting

Page 58 GAO/GGD-98-89 Fines and Restitution Payment Schedules
Appendix V 

Comments From the Department of Justice

possible ability to pay that it would be reasonable for a probation officer

to inquire further about.

In other cases, we believe that even if the payment has been ordered by

the judge, it may be appropriate for the probation officer to notify the

judge or the U.S. Attorney’s Office of changes in the offender’s economic

circumstances that occur while under the probation officer’s supervision.

3. DOJ notes that “Debt collection is not an exact science, and is not readily

available to specific standards or guidelines for repayment to be applied

nationally.” We agree that debt collection is not an exact science, but

comprehensive guidance would help advise probation officers on how to

evaluate the facts and circumstances of a case and arrive at an appropriate

payment schedule. Within guidance, there can be room for deviation, and

the expectation that deviation will occur where appropriate and for

reasons given. We believe guidelines that facilitate the objective of

consistent and equitable payment schedules are feasible without the need

for inflexible rules. As described in appendix III, IRS has promulgated

guidelines in a similar, but not identical, situation.

Page 59 GAO/GGD-98-89 Fines and Restitution Payment Schedules
Appendix VI 

Comments From the United States

Sentencing Commission

Note: GAO comments

supplementing those in the

report text appear at the

end of this appendix.

Page 60 GAO/GGD-98-89 Fines and Restitution Payment Schedules
Appendix VI 

Comments From the United States

Sentencing Commission

See comment 1.

Page 61 GAO/GGD-98-89 Fines and Restitution Payment Schedules
Appendix VI 

Comments From the United States

Sentencing Commission

GAO Comment 1. The U.S. Sentencing Commission commented that it would be useful for

us to compare the consistency of officers who took the FJC training and

those who did not. However, FJC could not identify for us the probation

officers who had taken the training. We then attempted, as part of a

structured interview, to question probation officers in the two districts

about whether or not they had received FJC’s financial investigation

training. Some officers insisted they had taken FJC’s financial investigation

training, but further inquiry revealed that they had confused it with a

seminar provided by IRS. In the Central District of California, only one

probation officer who was not a supervisor correctly identified for us FJC’s

Financial Investigation Desk Reference, which is one of the key course

materials. Thus, we were not able to gather sufficient, reliable data to

provide a comparison.

Page 62 GAO/GGD-98-89 Fines and Restitution Payment Schedules
Appendix VII 

Major Contributors to This Report

General Government

Division, Washington,

D.C.

David Alexander, Senior Social Science Analyst

Office of the General

Counsel, Washington,

D.C.

Jan Montgomery, Assistant General Counsel

Geoff Hamilton, Senior Attorney

Los Angeles Field

Office

Darryl W. Dutton, Assistant Director

Richard R. Griswold, Evaluator-in-Charge

James R. Russell, Evaluator

Dallas Field Office Ronald J. Salo, Senior Evaluator

Mary K. Muse, Senior Evaluator

(182832) Page 63 GAO/GGD-98-89 Fines and Restitution Payment Schedules
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