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. e du/thir dc ir c uit_1998/269Filed November 27, 1998

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 98-1055

UNITED STATES OF AMERICA

v.

ROBERT ALLEN EDWARDS a/k/a FIDEL SALIM a/k/a JAMES F. WINTER, III a/k/a CHARLES KING a/k/a DONALD W. COLEMAN,

Robert Allen Edwards, Appellant

ON APPEAL FROM THE

UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA (D.C. Criminal No. 97-117-1)

Argued Under Third Circuit LAR 34.1(a) October 8, 1998

Before: McKEE AND RENDELL, Circuit Judges, DEBEVOISE, District Judge.*

(Opinion Filed: November 27, 1998)

___________________________________________________ ______________ *Honorable Dickinson Debevoise, United States Senio r District Court Judge for the District of New Jersey, sitting by de signation.Steven A. Feldman (ARGUED)

Of Counsel
Feldman and Feldman
Suite 206
1800 Northern Boulevard Roslyn, NY 11576 Attorney for Appellant

Michael R. Stiles, United States Attorney Walter S. Batty, Assistant United States Attorney, Chief of Appeals Joseph Dominguez (ARGUED) Assistant United States Attorney
615 Chestnut Street
Suite 1250 Philadelphia, PA 19106-4476 Attorneys for Appellee

OPINION OF THE COURT

RENDELL, Circuit Judge:

In this appeal, we are asked to determine whether t he Victim and Witness Protection Act ("VWPA") or the Mandatory Victims Restitution Act ("MVRA") applies to the imposition of restitution in sentencing a defendant who committed his offenses prior to the effective date of the
statute but is convicted on or after its effective date. The District Court found that although Edwards had no p resent ability to pay restitution, full restitution should be imposed under the MVRA. Edwards timely appealed to this cou rt. Both sides now agree that the District Court incorr ectly applied the MVRA to Edwards, and that the Victim an d Witness Protection Act (VWPA) should have been appl ied.1

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1. Appellant did not specifically argue that the VW PA, not the MVRA applied, but did contend that the District Court sh ould have made findings regarding his financial ability to pay bef ore ordering
restitution. This finding is necessary only for cases under the VWPA. 18 U.S.C. SS 3663, 3664.

2We hold that the application of the MVRA to Edwards

constitutes a violation of the ex post facto prohib ition, and we accordingly reverse and remand for a determinati on of whether restitution is appropriate for Edwards unde r the

VWPA.

I. Factual Background

Between December of 1992 and October of 1993, Edwards was involved in various schemes involving counterfeit checks, forged commercial checks, and s tolen
travelers' checks. PSI P 1. Edwards was sentenced o n December 23, 1997, after pleading guilty to one cou nt of conspiracy, one count of bank fraud, seven counts o f money laundering, and one count of criminal forfeit ure. Potential monetary penalties included a fine range of $12,500 to $5,000,000, restitution of $418,397.15, and a special assessment of $500. PSI P 77, 81. The proba tion
office's review of Edwards's liabilities and assets indicated that he had children to support, did not own proper ty or appear to have any assets of note, and had a total liability of $92,854 of debts owed to credit card companies a nd
banks. PSI PP 61-68.

At sentencing, defense counsel argued that Edwards did not have the ability to pay restitution, while the government contended that restitution was mandatory for his of fenses under the MVRA. The district judge found that altho ugh the defendant did not have the present ability to pay restitution, the MVRA required restitution and orde red full restitution in the amount of $418,397.15. (A. at 14 , 16, 22).2 This court has jurisdiction pursuant to 28 U.S.C.S 1291 and 18 U.S.C. S 3742. As the ex post facto argument was not raised before the District Court, plain error r eview applies. See United States v. Dozier, 119 F.3d 239, 241 (3d Cir. 1997).

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2. At sentencing, the Assistant United States Attor ney indicated to the District Court that Edwards' offenses required mand atory restitution. No issue of an ex post facto prohibition was raised by counsel or the court. A. at 22. Recently, the Justice Department has appa rently adopted a policy that the MVRA should not be applied to offen ses predating its
enactment. Gov't Br. at 6.

3II. The MVRA and the VWPA

In 1996, Congress passed the MVRA, or "Mandatory Victims Restitution Act of 1996," Title II, Subtitl e A of the Antiterrorism and Effective Death Penalty Act of 19 96, Pub. L. No. 104-132, 110 Stat. 1214, codified in relevan t part at 18 U.S.C. SS 3663A, 3664 (1996). The MVRA became effective April 24, 1996, to the extent its applica tion is constitutionally permissible. See 18 U.S.C. S 2248 (statutory notes). The MVRA makes restitution mandatory for particular crimes, including those offenses which i nvolve fraud or deceit. See 18 U.S.C. S 3663A(c)(1)(A)(ii) . If the MVRA applies to a defendant, a court must order
restitution to each victim in the full amount of th at victim's losses, and the court cannot consider the defendant 's economic circumstances. See 18 U.S.C. S 3664(f)(1)( A). While the MVRA clearly applies to convictions on or after its effective date, its applicability to offenses commi tted before that date is at issue here. See 18 U.S.C.S 2248 (st atutory notes).

The prior restitution statute, the Victim and Witne ss Protection Act, or "VWPA," requires the court to co nsider the economic circumstances of the defendant prior t o ordering restitution. In this Circuit, a District C ourt has to make certain factual findings before ordering resti tution under the VWPA: 1) the amount of the loss sustained by the victims; 2) the defendant's ability to pay that loss; and 3) how the amount of restitution imposed relates to any loss caused by the conduct underlying the offense(s ) at issue. See Government of Virgin Islands v. Davis , 43 F.3d 41, 47 (3d Cir. 1994). Under the VWPA, an indigent defendant can be made to pay restitution, but the c ourt must tailor its findings to a defendant's potential assets or earning capacity. Id.

Neither side contests the fact that Edwards's crime s fall under S 3663A if the MVRA applies to him. If the VW PA applies to Edwards, however, the District Court err ed by failing to make the required factual findings prior to imposing restitution. In order to determine which s tatute applies, we must determine the constitutionality of applying
the MVRA to a defendant whose criminal conduct occu rred prior to the effective date of the statute.

4III. Ex Post Facto Analysis

To fall within the ex post facto prohibition, a law must be 1) retrospective, that is, it must apply to events occurring before its enactment; and 2) it must disadvantage t he offender affected by it by altering the definition of criminal conduct or increasing the punishment for the crime. See Lynce v. Mathis, ___ U.S. ___, 117 S. Ct. 891, 896 (1997). The MVRA would be retrospective as applied to Edwar ds, and it disadvantages him by holding him accountable for the full amount of restitution, when under the VWPA , he would, in all likelihood, not be held accountable f or the full amount. The question then is whether the MVRA alter ed
the definition of criminal conduct or increased the punishment for Edwards's crimes. The MVRA did not a lter the definition of Edwards's criminal conduct, but i t did alter his fiscal responsibility for its consequences, and we must determine whether, in so doing, it increased the punishment for his crimes.

Most of the Courts of Appeals that have considered this question have found that the retrospective applicat ion of
the MVRA violates the Ex Post Facto Clause because restitution imposed as part of a defendant's senten ce is criminal punishment, not a civil sanction, and the shift from discretionary to mandatory restitution increas es the punishment meted out to a particular defendant. See United States v. Siegel, 153 F.3d 1256, 1259-1261 ( 11th Cir. 1998); United States v. Bapack, 129 F.3d 1320, 1327 n.13 (D.C. Cir. 1997); United States v. Williams , 128 F.3d 1239, 1241 (8th Cir. 1997); United States v. Bagget t, et al., 125 F.3d 1319, 1322 (9th Cir. 1997); United States v. Thompson, 113 F.3d 13, 14 n.1 (2d Cir. 1997); but s ee United States v. Newman, 144 F.3d 531 (7th Cir. 199 7).

In Williams, the Court of Appeals for the Eighth Ci rcuit viewed the express language of the MVRA as making c lear that mandatory restitution was a "penalty," and hen ce, punishment for the purposes of ex post facto analys is. 128 F.3d at 1241.3 In Siegel, the Court of Appeals for the

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3. Section 3663A(a)(1) provides:

Notwithstanding any other provision of law, when sentencing a defendant convicted of an offense [listed un der this section] the court shall order, in addition to, or in the case of a misdemeanor, in addition to or in lieu of, any other pena lty authorized by law,
that
the defendant make restitution to the victim of the offense . . . .

5Eleventh Circuit focused on the language of S 3663A (a)(1)

describing restitution as a "penalty" and its own p recedents characterizing restitution as a criminal penalty to conclude
that restitution under the MVRA should be considere d a criminal penalty, and that the retroactive impositi on of the
full amount of restitution would violate the Ex Pos t Facto Clause. See 153 F.3d at 1259-60.4 The Court of App eals for the Ninth Circuit, in Baggett, focused not so much on the punitive character of restitution, but on the chang e in procedure for determining a defendant's responsibil ity for restitution under the MVRA--from the VWPA procedure of analyzing the defendant's financial circumstances b efore determining the amount of restitution paid, to the MVRA's procedure of ordering full restitution without cons idering
the defendant's economic circumstances--to find tha t the retroactive application of the MVRA violated the Ex Post Facto Clause. See id. at 1322.

Of the Circuits that have considered this question, only the Court of Appeals for the Seventh Circuit, in Un ited States v. Newman, has determined that the retroacti ve imposition of restitution under the MVRA does not v iolate the Ex Post Facto Clause. In Newman, the court conc eded that the retroactive application of the MVRA would disadvantage a defendant whose conduct occurred pri or to its effective date, but the court stated that since restitution was essentially a civil penalty, and not punishment , the ex post facto prohibition did not apply. See 144 F.3d at 538.5

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4. Other Circuits have rejected the retroactive app lication of the MVRA outright. See Bapack, 129 F.3d at 1327 n.13 (indica ting that the retroactive application of the MVRA would raise ex post facto concerns); Thompson, 113 F.3d at 15 n.1 (concurring in the par ties' agreement that the retrospective application of the MVRA would be an ex post facto violation).

5. In so finding, the Newman court relied on Kansas v. Hendricks, 117 S. Ct. 2072 (1997) and Hudson v. United States , 11 8 S. Ct. 488 (1997)
to determine whether restitution can be considered punishment. The Seventh Circuit used the analysis set forth in Huds on to determine whether restitution is, in fact, punishment: First, a court must first ask whether the legislature, in establishing the "penal izing mechanism, indicated either expressly or impliedly a preferenc e" for a criminal or
civil penalty. Hudson, 118 S. Ct. at 493. Second, if the legislature indicates

6In so finding, the Newman court first looked to the

historical character of restitution as an equitable device, and opined that restitution serves more as a form o f individual remedy than a criminal sanction. Id. Al ong these lines, the Newman court stated that restitution ser ves to "ensure that a wrongdoer does not procure any benef it through his conduct at others' expense. . . . The c riminal law may impose punishments on behalf of all of soci ety, but the equitable payments of restitution in this conte xt inure only to the specific victims of a defendant's crimi nal conduct and do not possess a similarly punitive cha racter." Id. at 538 (citations omitted).

In addition to surveying the historical characteris tics of restitution as a remedy, the Newman court also note d that it had observed "the non-punitive character of rest itution in prior cases." Id. at 538-39 (citing cases). It did note, however, that "our view of restitution is not unive rsally shared." Id. at 539 n.7 (citing cases, including Un ited States v. Sleight, 808 F.2d 1012, 1020 (3d Cir. 1987)). Th e

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an intention to establish a civil penalty, a court must then inquire whether the statutory scheme was so punitive in eit her purpose or effect so as to transform what was clearly intended as a c ivil penalty into a criminal penalty. Id. In determining whether a stat utory scheme could be so transformed, the Court set forth a multifactor a nalysis, and emphasized that the factors had to be considered in relation to the face of the statute in question and that only "the clear est proof " will
suffice to override legislative intent. Id.

Our Circuit has used a somewhat different formulati on from that set forth in Hudson, namely, that a measure must pass a three-prong test: 1) actual purpose; 2) objective purpose; and 3) eff ect, to constitute nonpunishment. See Artway v. Attorney General, 81 F.3d 1235, 1263 (3d Cir. 1996). If the legislature intends a particular measure to be "punishment," or if retribution was one of its actu al purposes, then it must fail constitutional scrutiny; if, however, the " `restriction of the
individual comes about as a relevant incident to a regulation,' " the measure must be further analyzed. See id. The conti nued viability of Artway is arguably in doubt in the wake of recent S upreme Court precedent, but we need not reach the question here in light of the relative clarity of both the statutory language and legislative purpose of the MVRA. See, e.g., Hudson, ___ U.S. ___, 118 S. C t. at 493 & n. 4; E.B. v. Verniero, 119 F.3d 1077, 1093-94 (3d Cir. 1997).

7Newman court also looked to the statutory language of the

MVRA and took issue with the Williams court's readi ng of the plain language of the MVRA; instead, the court found the MVRA's statutory scheme to be ambiguous as to t he "criminal" or "civil" nature of the penalty assesse d under
S 3663A. See 144 F.3d at 539. After further review of the historical character of restitution and general characteristics of restitution as a remedy, the New man court concluded that the ambiguities found in the s tatute, combined with the traditionally non-punitive charac ter of restitution, warranted a finding that restitution s hould be considered a civil, rather than a criminal penalty, and that the retroactive imposition of restitution under the MVRA would not violate the Ex Post Facto Clause. See id. at 539-
40.

We find that the majority view of the Courts of App eal is the better view. Both the statutory scheme and the legislative history of the MVRA point toward a
determination that restitution should be considered a form of punishment under the statute. Section 3663A and related provisions indicate that restitution is a c riminal penalty under the MVRA, as it is imposed as an inte gral and necessary part of sentencing, supervised releas e, and probation for the crimes it implicates. 18 U.S.C.SS 3556, 3563(a)(6)(A), 3563(b)(2), 3565, 3663A, 3664. Even if we were mistaken as to the nature of the statutory sch eme itself, the legislative history of the MVRA leads t o the same conclusion. The legislative history indicates that Congress intended mandatory restitution to be one means by w hich the criminal justice system could be reformed into a system that is more responsive to the needs of crime victi ms, as mandatory restitution forces an individual defendan t to address the harm his crime has caused to the indivi dual victims of his crime and to society. See S. Rep. 10 4-179, 1996 U.S.C.C.A.N. 924, 925-26, 930-31; see also H. Rep. 104-16, reported at 1995 WL 43586 (Feb. 2, 1995), a t 5-6, 10; 142 Cong. Rec. H3606 (daily ed., April 18, 1996 ); 141 Cong. Rec. S19278, S19280 (daily ed., Dec. 22, 1995 ); Mandatory Victim Restitution: Hearing on S. 173 Bef ore the Comm. on the Judiciary of the United States Senate , 104th Cong. 805 (1995) (statements of Senators Biden, Gra ssley, and Nickles). In so stating, the legislative histor y also

8evinces a Congressional intent to streamline the

administration of restitution within the criminal j ustice system; to make mandatory restitution under the MVR A a penalty separate from civil remedies available to t he victims of crime; and to caution that the administration of mandatory criminal restitution should not take on t he procedural complications of civil proceedings--in o ther words, to ensure that restitution under the MVRA is a form of criminal penalty rather than civil redress. See S. Rep. 104-179, 1996 U.S.C.C.A.N. at 931-34; see also 141 Cong. Rec. S19278, S19281 (daily ed., Dec. 22, 1995). Mor eover, the legislative history also indicates that mandato ry restitution should be considered a condition of a defendant's supervised release and probation. See S . Rep. 104-179, 1996 U.S.C.C.A.N. at 927, 929; H. Rep. 104 -16, 1995 WL 43586 at 5, 12. Both the language and the h istory of the MVRA convince us that Congress intended the
restitution it mandated to be a form of criminal punishment.

Further, this finding is consistent with our preced ents stating views regarding restitution for criminal de fendants. We previously have indicated that restitution is a form of criminal penalty. See United States v. Sleight, 80 8 F.2d 1012, 1020 (3d Cir. 1987) ("While one purpose of
restitution under the Federal Probation Act is to m ake the victim whole, restitution . . . is imposed as a par t of sentencing and remains inherently a criminal penalt y."); United States v. Palma, 760 F.2d 475, 478-79 (3d Ci r. 1985) (finding that restitution imposed under the V WPA is a criminal penalty, and distinguishing its impositi on under the VWPA from a civil proceeding in which restituti on is imposed).6 We have also noted that while criminal restitution resembles a civil remedy and has compen satory as well as punitive aspects, neither these resembla nces to civil judgments, nor the compensatory purposes of c riminal restitution, detract from its status as a form of c riminal penalty when imposed as an integral part of sentenc ing. See United States v. Woods, 986 F.2d 669, 680-81 (3 d Cir.

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6. We also note the retributive aspect of a statuto ry modification mandating payment of restitution regardless of the defendant's means based solely on the nature of the crime.

91993); United States v. Kress, 944 F.2d 155, 157-59 (3d

Cir. 1991); United States v. Pollak, 844 F.2d 145, 152-53 (3d Cir. 1988); see also United States v. Carrara, 49 F.3d 105, 108 (3d Cir. 1995) (discussing the historical character and purposes of restitution in criminal law); Gover nment of Virgin Islands v. Davis, 43 F.3d 41, 47 (3d Cir. 19 94) (describing the compensatory purposes of restitutio n under the VWPA).

Based on the foregoing, we find that under the MVRA
, restitution is punishment, and that the retrospecti ve application of that punishment to Edwards under the facts
of this case is a violation of the Ex Post Facto Cl ause and plain error.7 Accordingly, we will reverse the impo sition of mandatory restitution and remand for the District C ourt to make the appropriate factual findings and determina tion of
restitution under the VWPA for Edwards.

A True Copy:

Teste:

Clerk of the United States Court of Appeals
for the Third Circuit

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7. We have little difficulty concluding that the vi olation of the Ex Post Facto Clause in this case was plain error based on the analysis and holding we set forth in United States v. Dozier, 11 9 F.3d at 244-45.

10