UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 08-5026

UNITED STATES OF AMERICA,

Plaintiff - Appellee,

v.

MICHAEL A. LOMAS,

Defendant - Appellant.

Appeal from the United States District Court for the Eastern 

District of North Carolina, at Raleigh. W. Earl Britt, Senior 

District Judge. (5:07-cr-00117-BR-1)

Argued: March 26, 2010 Decided: August 3, 2010

Before MICHAEL and DAVIS, Circuit Judges, and Eugene E. SILER, 

Jr., Senior Circuit Judge of the United States Court of Appeals 

for the Sixth Circuit, sitting by designation.

Affirmed by unpublished per curiam opinion.

ARGUED: Elizabeth Brooks Scherer, SMITH MOORE LEATHERWOOD LLP, 

Raleigh, North Carolina, for Appellant. Anne Margaret Hayes, 

OFFICE OF THE UNITED STATES ATTORNEY, Raleigh, North Carolina, 

for Appellee. ON BRIEF: Stephen W. Petersen, SMITH MOORE 

LEATHERWOOD LLP, Raleigh, North Carolina, for Appellant. George 

E. B. Holding, United States Attorney, Jennifer P. May-Parker, 

Assistant United States Attorney, OFFICE OF THE UNITED STATES 

ATTORNEY, Raleigh, North Carolina, for Appellee.
2

Unpublished opinions are not binding precedent in this circuit.
3

PER CURIAM: 

Michael A. Lomas was indicted in a multi-count indictment 

charging conspiracy in violation of 18 U.S.C. § 371 and mail 

fraud in violation of 18 U.S.C. § 1341. Lomas pled guilty to one 

count of mail fraud pursuant to a plea agreement in which the 

parties left the issue of restitution for the sentencing court’s 

determination. The district court sentenced Lomas to serve 240 

months in prison and to pay $45,675,365.97 in restitution to 993 

victims of his mail fraud scheme. On appeal, Lomas contends 

that under the Mandatory Victim Restitution Act, 18 U.S.C. 

§ 3663A, none of the 993 people in the restitution order qualify 

as “victims of the offense” to which he pled guilty and asks 

that we vacate the order of restitution. We reject Lomas’s 

contention and, accordingly, we affirm.

I.

On May 10, 2007, Lomas was named in an 18-count indictment 

in the United States District Court for the Eastern District of 

North Carolina. Count One of the Indictment charged Lomas and 

his co-defendants with conspiracy to commit mail fraud in 

violation of 18 U.S.C. § 1341. Counts Two through Eighteen 

charged Lomas and his co-defendants, as principals and aiders 

and abettors, with individual substantive counts of mail fraud 

in violation of 18 U.S.C. §§ 1341 and 2. 
4

The Indictment began with a lengthy introduction that 

described the operation and scope of the scheme to defraud and 

set out the roles played by Lomas and his six co-defendants. It 

clearly stated that the allegations set forth in the 

introduction were incorporated into each count of the 

Indictment. J.A. 56, ¶19 (“The allegations set forth in this

Introduction are incorporated into each count in this 

Indictment.”). 

The introduction catalogued the extensive overlapping 

schemes that Lomas and his co-defendants used to defraud 

individuals out of approximately $70 million. In 1999, Lomas 

and co-defendant Michael Young operated an entity named The 

Agency Alliance Group (TAAG). TAAG operated a “lease program” 

in which individuals were promised a 15% annual return from 

revenue generated by pay telephones, payable monthly, in 

exchange for five annual investments of $6,000. 

After Pennsylvania authorities issued TAAG a cease-anddesist order, Lomas and his co-defendants renamed their 

enterprise the “National Payphone Corporation” and reworked the 

terms of their scam, promising a 14.35% annual return and 

requiring a $7,000 annual investment. Otherwise, they continued 

to operate the same scheme. After a federal agency sued an 

unrelated entity that promised similar terms to investors, Lomas 

changed the name and appearance of his enterprise yet again. 
5

In early 2001, Lomas and his co-defendants formed Mobile 

Billboards of America, Inc. This time they promised a 13.49% 

annual return, required seven annual investments of $20,000, and 

purported to generate revenue by selling ad space on the sides 

of trucks. Between 2001 and 2004, Lomas directed the promotion 

and sale of the “investments.” The Indictment charged that Lomas 

made extensive use of false and misleading statements, both 

spoken and written, all of which were aimed at persuading his 

“investors” that he was operating a legitimate business that 

would generate sufficient money to make the promised investment 

returns and would carry little or no risk. 

Lomas and his co-defendants scammed approximately $70 

million through various iterations of this investment scheme. 

At the peak of his scheme in 2004, Lomas and his co-defendants 

took in approximately $4 million monthly. The government 

estimates that individuals lost tens of millions dollars to 

Lomas and his co-defendants. 

On December 17, 2007, Lomas entered into a plea agreement 

with the government pursuant to which he agreed to plead guilty 

to Count Two of the Indictment. Count Two charged, in material 

part, that, on or about March 13, 2003, Lomas and his codefendants “having devised a scheme and artifice to defraud, and 

to obtain money and property by means of materially false and 

fraudulent pretenses, representations, and promises,” and “for 
6

the purpose of executing such scheme and artifice,” “placed in a 

post office and authorized depository for mail matter” a letter 

(sent by co-defendant Scott B. Hollenbeck) to retiree “GW” in 

Roanoke Rapids, North Carolina. J.A. 59-60.

In exchange for Lomas’s guilty plea to Count Two of the 

Indictment, the government agreed to dismiss the remaining 

counts of the Indictment, including the conspiracy charge. Also 

as a part of his plea agreement, Lomas agreed to “make 

restitution to any victim in whatever amount the Court may 

order, pursuant to 18 U.S.C. 3663 and 3663A.” J.A. 64. The 

district court accepted Lomas’s guilty plea on January 7, 2008. 

On August 18, 2008, the district court sentenced Lomas to the 

statutory maximum of 240 months. 

The sentencing court also ordered Lomas to pay restitution. 

In Lomas’s Pre-Sentence Report, the Probation Officer reported 

that “[d]uring the course of the instant offense, 1,231 victims 

were defrauded and suffered a loss of $70,967,712.90.” 

J.A. 197, ¶18. Nevertheless, the probation officer initially 

stated that restitution could not be ordered in this case. The 

government objected, and filed a memorandum asking the district 

court to order Lomas to pay $45,675,365.97 in restitution to 993 

victims. On October 9, 2008, following a hearing, the district 

court ordered Lomas to pay $45,675,365.97 to 993 victims, 

stating that Lomas was jointly and severally liable with his 
7

four co-defendants for this sum. In support of its ruling, the 

district court cited the very broad definition of “offense” in 

18 U.S.C. § 3663A(a)(2), and noted that Count Two of the 

Indictment, the count to which Lomas pled guilty, explicitly 

incorporated the description of the scheme from the Indictment’s 

introductory section. 

On October 14, 2008, Lomas filed a timely notice of appeal. 

We have jurisdiction pursuant to 28 U.S.C. § 1291 and 18 U.S.C.

§ 3742(a). 

II.

We review criminal restitution orders under an abuse of 

discretion standard. United States v. Henoud, 81 F.3d 484, 487 

(4th Cir. 1996); United States v. Hoyle, 33 F.3d 415, 420 

(4th Cir. 1994). A sentencing court's discretion in ordering 

restitution “is circumscribed by the procedural and substantive 

protections” of the statute authorizing restitution. Henoud, 81 

F.3d at 487. Here, the applicable statute is 18 U.S.C. § 3663A, 

the Mandatory Victim Restitution Act of 1996 (“MVRA”).1

 1 Restitution in federal court is governed by one of two

statutes: the Victim Witness Protection Act (“VWPA”), 18 

U.S.C. § 3663, or the Mandatory Victim Restitution Act of 1996 

(“MVRA”), 18 U.S.C. § 3663A. The structure and language of both 

the MVRA and the VWPA are substantially the same, other than in 

one respect: the VWPA permits a district court to order 

restitution subject to a defendant’s ability to pay and the MVRA 

(Continued)
8

III.

The district court, after conducting a hearing, granted 

restitution in the amount of $45,675,365.97 to 993 victims. It 

clearly stated its reasoning on the record: 

The Court holds that the amount of restitution is not 

limited to the counts of conviction. The court bases 

its reasoning on 18 U.S.C. Section 3663(a)(2) [sic]

for the purposes of restitution and victim and offense 

that involves as a scheme or pattern of criminal 

activity means any person directly in harm of the 

defendant’s criminal conduct in the course of the 

scheme, conspiracy or pattern. 

Now, in the case of United States versus Henoud, 

81 F.3d 484, the Fourth Circuit said this amendment is 

widely viewed as partially overruling Hughey’s 

restrictive interpretation of the VWPA and expanding 

on the Courts’ authority to grant restitution. 

Federal courts now allow broader restitution 

orders encompassing losses that resulted from a 

criminal scheme or conspiracy regardless of whether 

the defendant is convicted for each criminal act 

within that scheme. The harm must be a direct result 

of the defendant’s criminal conduct though or closely 

related to the scheme. 

The scheme, in my view, and I so hold, is clearly 

described in the indictment in the introduction, which 

as I have pointed out earlier, is by paragraph 19 on 

page 7 incorporated into each count of the Indictment 

and the count to which the defendant pled guilty, 

Count 2, specifically refers to having devised a 

scheme and artifice to defraud.

And United States versus Karam, 201 F.3d 320, the 

Fourth Circuit said that where one count specifically 

incorporated all of the factual allegations contained 

in another count, that the court could order or should 

order restitution based on that. 

 

mandates restitution for certain crimes without consideration to 

the defendant’s ability to pay. 18 U.S.C. §§ 3663 & 3663A. 

There is no dispute that this case is controlled by the MVRA.
9

So this court holds that . . . by pleading 

guilty, the Defendant Lomas pled guilty and he 

admitted the conduct set forth in the introduction and 

incorporated into the count to which he plead guilty. 

J.A. 117-18. 

A.

Lomas contends that none of the 993 people in the 

restitution order qualify as “victims of the offense” to which 

he pled guilty under the MVRA. See 18 U.S.C. § 3663A(A)(1) 

(“[T]he court shall order . . . that the defendant make 

restitution to the victims of the offense.”). He argues, citing 

Hughey v. United States, 495 U.S. 411 (1990), superseded by 

statute, Crime Control Act of 1990, Pub. L. No. 101-647, § 2509, 

104 Stat. 4863, as recognized in Henoud, 81 F.3d at 488, that 

under the MVRA, the term offense is limited to indicate “the 

offense of conviction,” and that his “offense of conviction” was 

a very narrow mail fraud offense with a single victim. Thus, 

Lomas argues that he should only be required to pay restitution, 

if any, to “retiree G.W.,” the only victim who could have been 

directly harmed by the specific, narrow scheme that Lomas 

insists he pled guilty to when he pled guilty to Count Two of 

the Indictment.2

 2 Lomas relies on United States v. Adams, 363 F.3d 363 (5th 

Cir. 2004), but that case is easily distinguished. In Adams, 

the Fifth Circuit held that the parties to a plea agreement may, 

if they choose, narrow the scope of the scheme alleged in an 

 

(Continued)
10

The government argues that Lomas was correctly ordered to

pay $45,675,365.97 in restitution to 993 people because the

Indictment plainly manifested that he defrauded all of those 

victims. It argues that the allegations regarding Lomas’s fiveyear scheme are detailed in the introduction of the Indictment 

and are all explicitly incorporated into each count of the 

Indictment, including Count Two. The government adds that 

nothing in Lomas’s plea agreement or guilty plea colloquy 

narrowed the factual basis of his conviction. Thus, the 

government continues, Lomas’s conviction was sufficiently broad 

to support the district court’s restitution order. 

B.

The government clearly has the better of the argument here. 

The 1990 amendments to the VWPA, as interpreted by Henoud, 81 

F.3d at 488, fatally undermine Lomas’s argument that the law 

 

indictment for restitution purposes. Adams, 363 F.3d at 366-68. 

The court found on the facts in that case that the defendant and 

the government (essentially by acquiescence to the defendant’s 

insistence) narrowed the scope of the scheme in their plea 

agreement from the broader scheme alleged in the indictment.

Id. at 367. Here, the parties did not narrow the scope of the 

scheme alleged in the indictment in the plea agreement. To the 

contrary, as part of the negotiated plea agreement in this case, 

the parties agreed that Lomas would “make restitution to any 

victim in whatever amount the Court may order, pursuant to 18 

U.S.C. 3663 and 3663A.” J.A. 64. Thus, the parties expressly 

left for the determination by the sentencing court the contours 

of a restitution order. 
11

only required him to pay restitution to victims explicitly named

in the count of his Indictment to which he pled guilty. 

Although Henoud interpreted the 1990 amendment as it applied to 

the VWPA, a later amendment added identical language to the 

MVRA. Compare Crime Control Act of 1990, Pub. L. No. 101-647, 

§ 2509, 104 Stat. 4863 (codified as amended at 18 U.S.C. 

§ 3663(a)(2)(1994)) with Antiterrorism and Effective Death 

Penalty Act of 1996, Pub. L. No. 104-132, § 204(a), 110 Stat. 

1227 (codified at 18 U.S.C. § 3663A(a)(2)(2000)). Accordingly, 

our interpretation of the language in U.S.C. § 3663(a)(2) from 

Henoud controls this case and we hereby adopt it. 

In Henoud, 81 F.3d at 488, we explained that the 1990 

amendment to 18 U.S.C. § 3663(a)(2) broadened the ability of 

district courts to grant restitution. We stated: 

The amendment is widely viewed as partially overruling 

Hughey's restrictive interpretation of the VWPA and 

expanding district courts' authority to grant 

restitution. See United States v. Kones, 77 F.3d 66, 

69 (3rd Cir. 1996); United States v. Broughton-Jones, 

71 F.3d 1143, 1147 n.1 (4th Cir. 1995). The majority 

view is that the 1990 amendment “did have a 

substantive impact on the amount of restitution a 

court could order when a defendant is convicted of an 

offense involving a scheme, conspiracy, or pattern.” 

United States v. DeSalvo, 41 F.3d 505, 515 (9th Cir. 

1994). Federal courts therefore now allow broader 

restitution orders encompassing losses that result 

from a criminal scheme or conspiracy, regardless of 

whether the defendant is convicted for each criminal 

act within that scheme. See, e.g., United States v. 

Manzer, 69 F.3d 222, 230 (8th Cir. 1995). The harm 

must be a direct result of the defendant's criminal 
12

conduct, though, or “closely related to the scheme.” 

Kones, 77 F.3d at 70.

Id. (holding that the trial court did not err when it ordered 

restitution for losses caused by acts for which the defendant 

was not convicted).

Applying that analysis to the same language in the MVRA, 18 

U.S.C. § 3663A(a)(2), it is clear that the district court here 

properly ordered Lomas to pay restitution as it did. The MVRA

states, in pertinent part: 

(a)(1) Notwithstanding any other provision of law, 

when sentencing a defendant convicted of an offense 

described in subsection (c), the court shall order . . 

. that the defendant make restitution to the victim of 

the offense . . . 

(2) For the purposes of this section, the term 

“victim” means a person directly and proximately 

harmed as a result of the commission of an offense for 

which restitution may be ordered including, in the 

case of an offense that involves as an element a 

scheme, conspiracy, or pattern of criminal activity, 

any person directly harmed by the defendant's criminal 

conduct in the course of the scheme, conspiracy, or 

pattern. . . .

(3) The court shall also order, if agreed to by the 

parties in a plea agreement, restitution to persons 

other than the victim of the offense.

. . . . 

(c)(1) This section shall apply in all sentencing 

proceedings for convictions of, or plea agreements 

relating to charges for, any offense—

(A) that is--

(i) a crime of violence, as defined in section 16; 

(ii) an offense against property under this title, or 

under section 416(a) of the Controlled Substances Act 

(21 U.S.C. 856(a)), including any offense committed by 

fraud or deceit; . . . .

18 U.S.C. § 3663A. 
13

The MVRA requires the court to order a defendant to pay 

restitution to victims of certain crimes. § 3663A(a)(1) (“the 

court shall order”). Because mail fraud is a crime against 

property under Title 18 of the United States Code, it triggers 

the MVRA and thus the district court was required to order 

restitution to the victims of Lomas’s crime.

The statute also clearly defines “victims.” Victims are 

those who are “directly and proximately harmed as a result of 

the commission of an offense.” § 3663A(a)(2). When the crime 

involves a scheme or pattern of criminal activity, the universe 

of victims includes “any person directly harmed by the 

defendant’s criminal conduct in the course of the scheme, 

conspiracy, or pattern.” Id. Lomas’s conviction was based on 

his knowing participation in a scheme to defraud executed 

through the use of the mails in violation of 18 U.S.C. § 1341. 

Since mail fraud necessarily includes a scheme to defraud, and 

in fact includes it as an element of the crime itself, United 

States v. Curry, 461 F.3d 452, 457 (4th Cir. 2006), the victims 

affected by Lomas’s offense include all persons harmed by Lomas 

“in the course of [his participation in] the scheme.” See §

3663A(a)(2). 

Lomas disputes the scope of the scheme. We reject his 

contention that the plea agreement narrowed the scope of the 

charged scheme, and we can discern no other basis on which to 
14

adopt Lomas’s contentions. We most recently discussed this 

issue in United States v. Karam, 201 F.3d 320, 325-26 (4th Cir. 

2000).3

 3 Again, Karam addresses the application of 18 U.S.C. § 

3663(a)(2), rather than 18 U.S.C. § 3663A(a)(2). As discussed 

above, both restitution statutes contain the same definition of 

“victim,” including the definition that applies when the offense 

of conviction has a scheme as an element of the offense. See 18 

U.S.C. §§ 3663(a)(2) & 3663A(a)(2).

 There, Thomas E. Karam, a certified public accountant, 

was indicted for wire fraud, money laundering, and aiding and 

abetting. Id. at 323. The indictment charged him with 

executing a multi-year scheme to defraud private medical 

entities such as Fairfax Anesthesiology Associates, Inc., out of 

millions of dollars. Id. at 325. Karam pled guilty to a single 

count of wire fraud in which he was charged with executing the 

scheme by requesting an electronic funds transfer of $150,000. 

That count of the indictment specifically incorporated all of 

the factual allegations contained in the indictment, allegations 

that detailed Karam’s long-term scheme to defraud private 

medical practices. Id. The district court sentenced Karam to 

24 months imprisonment and ordered him to pay $774,508 in 

restitution, an amount covering losses beyond the losses arising 

from the count of conviction. Id. at 323-24. On appeal, Karam 

challenged the amount of the restitution order, arguing that he 

was required to pay only $150,000, the amount explicitly stated 
15

in the count of conviction. Id. at 325. He argued that the 

additional $624,508 in restitution was not directly related to 

the conduct underlying his conviction.

We rejected Karam’s contentions and affirmed, holding that,

“[f]ederal courts may order restitution encompassing losses 

resulting from a criminal scheme ‘regardless of whether the 

defendant is convicted for each criminal act within the scheme,’

so long as the loss is a direct result of the defendant's 

criminal conduct or is ‘closely related to the scheme.’” Id. at 

325-26 (citing Henoud, 81 F.3d at 488). We evaluated the 

$624,508 in restitution that was ordered in addition to the 

$150,000 and found that the additional money was “directly 

related to the conduct underlying Karam’s conviction” because it 

represented losses that resulted from the same scheme to steal 

money from medical professionals by purporting to invest their 

money in fraudulent investment schemes. Id. at 326. 

Specifically, in addition to stealing money (by failing to meet 

payroll tax liabilities) from medical groups, Karam also stole 

from individual physicians by inviting them to “defer” their 

bonuses and purporting to “invest” their money in a business 

that promised a 15% return. 

Thus, under Karam, a sentencing court may order restitution 

for losses resulting from a scheme even if the defendant is not 

convicted of each individual criminal act, e.g., indictment 
16

count, as long as the acts are the direct result of the 

defendant's criminal conduct or are “closely related to the 

scheme.”4

 4 Our sister circuits agree that when the crime of 

conviction includes a scheme as an element of the offense, 

restitution may be ordered based on acts for which the 

defendants was not convicted. E.g., United States v. BrockDavis, 504 F.3d 991, 999 (9th Cir. 2007) (“when the crime of 

conviction includes a scheme, conspiracy, or pattern of criminal 

activity as an element of the offense, . . . the restitution 

order[may] include acts of related conduct for which the 

defendant was not convicted"); United States v. Holthaus, 486 

F.3d 451, 458 n.6 (8th Cir. 2007) (explaining that MVRA 

superseded Hughey’s holding and that it authorizes restitution 

for every victim harmed in the course of the defendant’s scheme, 

not just the offense of the conviction); United States v. 

Hensley, 91 F.3d 274, 277 (1st Cir. 1996) (same).

 Id.; see also Henoud, 81 F.3d at 488. Here, both 

condition precedents are fulfilled. The financial harm 

inflicted on Lomas’s victims was the direct result of Lomas’s 

knowing participation in the overall scheme to defraud 

individuals by inducing them to invest in fraudulent business 

enterprises. And Lomas’s knowing participation in the charged 

scheme to defraud satisfies the “closely related” standard. The 

district court required Lomas to pay restitution to individuals 

whom he defrauded via mail fraud in the same manner as he 

attempted to defraud the individual identified in Count Two

(“retiree GW”). In fact, Lomas’s schemes are more tightly 

connected than the schemes carried out in Karam because Lomas 

actually used the various derivations of the same scheme to 
17

defraud his victims, whereas in Karam, the defendant employed 

two related but separate schemes. Either way, the restitution 

ordered in this case falls safely within the boundaries staked 

out in Karam and Henoud. 

Thus, the district court fully acted within its discretion 

when it awarded $45,675,365.97 in restitution to Lomas’ 993 

victims. 

IV.

For all of these reasons, the district court decision is 

AFFIRMED.