Opinion ID: 71522
Heading Depth: 2
Heading Rank: 4

Heading: C, infra.

Text: 22 Specifically, the two alleged victims had purchased Porsche engines from Fuentes at below-market prices. Due to the low prices, defense counsel suggested, and the Government conceded, that these victims knew, or at least should have known, that they were buying stolen parts and thus did not deserve restitution. This consideration is a good example of a section 3664(a) other factor deemed appropriate by the trial court. 23 Unfortunately, the probation officer, the Government, and the district court appear to have committed multiple mathematical errors in calculating restitution. Because we are vacating the restitution order and remanding for recalculation, we need not address these errors. 27 financial condition and earning capacity. Everyone agreed that Fuentes was indigent and could not pay restitution at the time of sentencing. The focus of most of the testimony at sentencing regarding restitution was on Fuentes' ability to pay restitution in the future, while on supervised release.24 Defense counsel contended that Fuentes' lack of job skills rendered him unlikely to be able to make full restitution during his period of supervised release. Both the Government and the probation officer argued that the very nature of his crimes showed that he possessed significant mechanical skills that would help him earn a legitimate living and pay restitution following his release. Defense counsel conceded that some restitution might be appropriate, but argued that ordering full restitution would be improper in light of Fuentes' current financial condition and limited skills. In response to this concern, the probation officer recommended restitution in the full amount suggesting that the probation office could determine how much Fuentes could pay in monthly payments during supervised release. The Government agreed with the probation officer's recommendation and further argued that full restitution was appropriate so that an order would be in place in the admittedly unlikely event that Fuentes did acquire enough money to pay full restitution. After considering all these arguments, the court ordered 24 The VWPA authorizes the district court to order that restitution be payable within five years after imprisonment. 18 U.S.C. § 3663(f)(2)(B). Good faith compliance with a restitution order is a condition of supervised release. § 3663(g). 28 restitution in the amount of $357,281. The final judgment stated, Payments of restitution are to be made as directed by the U.S. Probation Office.25 In this appeal, Fuentes challenges the amount 25 Fuentes contends on appeal that the district court may not delegate to the probation office the duty of setting a payment schedule for restitution. His argument finds support in both the text of the VWPA and the majority of cases from other circuits addressing this issue. The VWPA provides, The [sentencing] court may require that [the] defendant make restitution under this section within a specified time or in specified installments. 18 U.S.C. § 3663(f)(1) (emphasis added); see also U.S.S.G. § 5E1.1, comment. (backg'd) (The restitution order should specify the manner in which ... payment is to be made.). Several circuits have found that this language prevents district courts from delegating authority to set payment schedules. See, e.g., United States v. Graham, 72 F.3d 352, 356-57 (3d Cir.1995), cert. denied, --- U.S. ----, 116 S.Ct. 1286, 134 L.Ed.2d 230 (1996); United States v. Porter, 41 F.3d 68, 71 (2d Cir.1994); United States v. Ahmad, 2 F.3d 245, 248-49 (7th Cir.1993). But cf. United States v. Lilly, 901 F.Supp. 25, 31-32 (D.Mass.1995) (ordering full restitution but declining to set payment schedule and instead allowing probation office to assess the defendant's progress toward satisfaction of [restitution] and to act to revoke supervised release if satisfactory progress is not made), aff'd, 80 F.3d 24 (1st Cir.1996). Other circuits have held that the determination of restitution and payment schedules is a judicial function the delegation of which would violate Article III of the United States Constitution. See, e.g., United States v. Johnson, 48 F.3d 806, 808-09 (4th Cir.1995); United States v. Albro, 32 F.3d 173, 174 (5th Cir.1994) (applying plain error standard). But see United States v. Barany, 884 F.2d 1255, 1260 (9th Cir.1989) (approving delegation under Probation Act of determination of payment schedule for restitution to probation office where court has set maximum amount of restitution in light of that loss), cert. denied, 493 U.S. 1034, 110 S.Ct. 755, 107 L.Ed.2d 771 (1990). Notwithstanding the plain language of the statute and the persuasive opinions from our sister circuits, our precedent clearly authorizes delegation of payment schedules to the probation office. See United States v. Stinson, 97 F.3d 466, 468 n. 1 (1996) (per curiam) (citing United States v. Lombardo, 35 F.3d 526, 528 n. 2 (11th Cir.1994) (per curiam)). As we are bound by precedent, we must reject Fuentes' 29 of restitution in light of his financial condition. Specifically, he argues that the district court erred in ordering restitution in an amount that the record showed he would unlikely be able to pay either at the time of sentencing or in the future. B. The VWPA requires sentencing courts to consider, inter alia, the financial resources of the defendant, [and] the financial needs and earning ability of the defendant and the defendant's dependents. 18 U.S.C. § 3664(a). Although a sentencing court may order restitution even if the defendant is indigent at the time of sentencing, United States v. Stevens, 909 F.2d 431, 435 (11th Cir.1990), it may not order restitution in an amount that the defendant cannot repay. See United States v. Remillong, 55 F.3d 572, 574 (11th Cir.1995) (per curiam); cf. United States v. Apex Roofing of Tallahassee, Inc., 49 F.3d 1509, 1514 (11th Cir.1995) (vacating restitution order against dissolved corporation partly because it was not able to pay restitution). A contrary rule would effectively eliminate the mandate of section 3664(a) that the sentencing court consider the defendant's ability to pay.26 delegation challenge. 26 Although the primary policy behind orders of restitution is clearly the compensation of victims for their losses, limiting restitution orders to an amount that the defendant can pay serves other important policies. A restitution order in an amount the defendant cannot possibly pay threatens respect for judicial orders generally. Remillong, 55 F.3d at 574 (quoting United States v. Bailey, 975 F.2d 1028, 1032 (4th Cir.1992)) (internal quotation marks omitted). 30 In light of this requirement that restitution not exceed the defendant's ability to pay, we must focus on the district court's consideration of Fuentes' ability to pay. We review orders of restitution for abuse of discretion. See Remillong, 55 F.3d at 574. A district court abuses its discretion when it orders restitution in an amount that it finds the defendant is not likely to be able to pay. Our review of the record strongly suggests that, although it made no explicit findings regarding ability to pay, the court believed that Fuentes was not likely to be able to pay restitution in the amount ordered.27 Moreover, an order in an amount well beyond a defendant's means strongly detracts from any hope of rehabilitation for the defendant. See United States v. Mahoney, 859 F.2d 47, 52 (7th Cir.1988) ([I]t is most paramount that the defendant, in the all-important rehabilitative process, have at least a hope of fulfilling and complying with each and every order of the court.). Judge Winter of the Second Circuit has elaborated on this policy: A defendant subject to an impossible restitution order may be tempted to pay little or nothing because partial restitution offers no assurance of being considered by the court as satisfaction of the order. As a result, a defendant subject to an impossible restitution order has less incentive to seek remunerative, rehabilitative, and non-criminal employment and to maximize his or her income than a defendant subject to a difficult but doable order. Porter, 41 F.3d at 73 (Winter, J., concurring); cf. Bearden v. Georgia, 461 U.S. 660, 670-71, 103 S.Ct. 2064, 2072, 76 L.Ed.2d 221 (1983) (Revoking the probation of someone who through no fault of his own is unable to make restitution .... may have the perverse effect of inducing the probationer to use illegal means to acquire funds to pay in order to avoid revocation.). 27 We note that this would be a different case if the record either showed that the court believed Fuentes was able to pay restitution in the amount ordered or gave no indication of its belief on this issue. In imposing an order of restitution, a court need not make an explicit finding that the defendant will be able 31 At the sentencing hearing, the court prefaced the discussion about the amount of restitution by commenting, I don't know that it's going to make all that much difference in this case. When defense counsel began to point out that Fuentes was indigent, the court interrupted, All you are saying is it's academic.... I want to find out what the amount is. That's really the thrust of my question. The court also stated that the Government hardly expect[s] that [Fuentes] is going to ultimately be able to make restitution in the full amount, but ... it's fair and reasonable to require that some restitution be made. Later in the discussion, defense counsel stated that based on the Court's statement now—I think we all agree that he cannot make full restitution, so we need to find a monetary amount that he can make (emphasis added). Apparently agreeing with defense counsel's statement that Fuentes could not pay the full amount, but believing that some amount of restitution does make sense to the victims, the court next asked the Government how to calculate the award in an amount Fuentes would be able to pay. The Government responded, It's not really possible to calculate how much the defendant is going to able to repay during his period of supervised release or later on in his lifetime. The State of Florida certainly provides ample legal protection against debtors from having their entire means of living taken by creditors, so I don't think the Court needs to worry about him being oppressed by a large debt. to make restitution in the amount ordered so long as the record provides sufficient reasons for the decision to order restitution. Remillong, 55 F.3d at 576 (citing United States v. Hairston, 888 F.2d 1349, 1352-53 (11th Cir.1989)). This form of review is not appropriate where, as here, the record strongly suggests the sentencing court found that the defendant was unlikely to be able to comply with the order. 32 It is the Government's position that he should be ordered to pay the full amount of restitution, and that while he is on supervised release, his supervised release officer can designate that portion of his income that should be given over to restitution based on how much money he is making and what his obligations are to support himself or any legal dependents, and that the debt should be established so that in the future if [Fuentes] does come into sufficient money to be collectable under the laws of the State of Florida or the United States, then that order will be there and the victims will have their opportunity. The Government conceded that [t]here may not be a strong likelihood that Fuentes would come into such a sum of money. Apparently accepting these arguments, the court ordered full restitution. Taken together, all these statements by the court and counsel convince us that there is at least a strong likelihood that the court ordered restitution in an amount it believed Fuentes was unlikely to be able to pay. The Government's argument that full restitution is nonetheless appropriate may be persuasive, but it is foreclosed by the inclusion of the defendant's ability to pay among the factors the sentencing court must consider. The mere possibility that a defendant will unexpectedly acquire a large sum of money is not sufficient to support an order in an amount he is unlikely to be able to pay. See Remillong, 55 F.3d at 575 n. 8. As the Third Circuit has noted, [I]f it is realistic that [the] defendant may inherit a substantial sum from a well-off relative or has a story to write that will be a bestseller, then the district court would be entitled to consider these possible additional sources of income in fashioning a restitution order. On the other hand, we will not put the court in the lottery business. United States v. Logar, 975 F.2d 958, 964 (3d Cir.1992); see also Mahoney, 859 F.2d at 51 n. 6 (The prospect of the defendant's 33 winning a lottery—present in any case—is too remote a possibility to justify [an unreasonably high] restitution order....). Moreover, the VWPA requires the sentencing judge to consider ability to pay at the time of sentencing. See United States v. Sasnett, 925 F.2d 392, 398-99 (11th Cir.1991) (per curiam) (holding that restitution must be determined at sentencing and cannot be postponed, even in light of uncertainty of predicting defendant's future ability to pay). Under the Government's line of reasoning, a sentencing court should order full restitution in every instance, regardless of the financial resources of the defendant.28 On this point, we find instructive the observation of the Seventh Circuit: [H]ad Congress intended that the defendant's ability to pay be considered only after ... nonpayment, it could very easily have mandated that the court direct the payment of full restitution in every case subject to a later revision of the said order should the defendant fail to comply with his payment schedule based upon his financial condition. Mahoney, 859 F.2d at 52. The VWPA states, Any dispute as to the proper amount ... of restitution shall be resolved by the court by the preponderance of the evidence. 18 U.S.C. § 3664(d). The defendant bears the 28 Congress apparently adopted this policy in the Mandatory Victim Restitution Act of 1996. Under the new act, the sentencing court may not consider the economic circumstances of the defendant when determining the amount of restitution. § 206(a), 1996 U.S.C.C.A.N. (110 Stat.) 1232, 1234 (to be codified at 18 U.S.C. § 3664(f)(1)(A)). The court will take these factors into account when it determines the manner in which, and the schedule according to which, the defendant will satisfy the restitution order. Id. (to be codified at 18 U.S.C. § 3664(f)(2)). If the defendant cannot pay any amount of restitution, the court may direct him to pay nominal periodic payments. Id. (to be codified at 18 U.S.C. § 3664(f)(3)(B)). 34 burden of persuasion on the issue of his ability to pay. Id. The defendant carries this burden when the court finds that the defendant more likely than not will be unable to pay full restitution. To order full restitution in the face of this finding constitutes an abuse of discretion. Because our review of the record strongly suggests that the court made just such a finding, we must vacate the restitution order and remand for recalculation 29 in an amount Fuentes is likely to be able to pay. See United States v. Grimes, 967 F.2d 1468, 1473 (10th Cir.) (vacating restitution order where sentencing court had stated, [i]t's, of course, doubtful that she could pay much or at least any substantial amount of restitution), cert. denied sub nom. McGlynn v. United States, 506 U.S. 927, 113 S.Ct. 355, 121 L.Ed.2d 269 (1992). C. To assist the sentencing court in its task, we briefly discuss the proper procedures for determining restitution when a defendant 29 Because the court did not expressly find that full restitution was beyond Fuentes' means, we acknowledge that it is possible that the court believed Fuentes would be able to pay the full amount. We must vacate the order, however, because the record is not sufficient to clear up this ambiguity. Cf. Hairston, 888 F.2d at 1352-53 (holding that district court should make express findings of fact where the record does not provide an adequate basis for appellate review). Nothing in this opinion should be interpreted to imply that we believe the original $357,281 order is or is not, as a matter of fact, beyond Fuentes' means. If the court finds on remand that Fuentes will be able to make full restitution, that determination would be a factual finding entitled to clear error review only. 35 alleges that she is unable to pay.30 The procedural scheme for issuing an order of restitution is set forth in 18 U.S.C. § 3664. As discussed supra, the sentencing court must consider several factors—most importantly, the amount of loss by any victim of the offense and the defendant's financial condition and ability to pay. 18 U.S.C. § 3664(a). While the VWPA authorizes the court to order the probation office to gather pertinent information either in the PSR or a separate report made available to both sides, 18 U.S.C. § 3664(b), (c), the statute explicitly allocates between the parties burdens of persuasion with respect to the relevant restitution issues. The Government must prove the amount of loss by a preponderance of the evidence, and the defendant must establish her financial resources and needs by a preponderance of the evidence. 18 U.S.C. § 3664(d). The burden of proving other relevant issues falls upon the party designated by the court as justice requires. Id. In most cases, the amount of loss will be relatively clear, 30 This discussion only applies to sentencing proceedings in cases in which the defendant was convicted prior to April 24, 1996. As discussed in note 20, supra, all other cases are governed by the procedures outlined in the Mandatory Victims Restitution Act of 1996. We provide this discussion to assist the sentencing court on remand of the instant case and to provide guidance for the substantial number of sentencing hearings not covered by the new act. Two of the major changes are that restitution is mandatory for, inter alia, Title 18 crimes against property, § 204(a), 1996 U.S.C.C.A.N. (110) Stat. at 1227-29 (to be codified at 18 U.S.C. § 3663A(a)(1), (c)(1)(A)(ii)), and that the sentencing judge does not consider the defendant's financial resources at all when determining the amount of restitution, instead accounting for ability to pay when setting the payment schedule, see supra note 28. 36 and the Government will have little trouble carrying its burden. Determining how much restitution the defendant is able to pay is a much more speculative venture; the court must look into the future and predict the defendant's ability to pay. When the defendant is subject to a long prison term, this determination becomes progressively more speculative. In light of the allocation of burdens of persuasion, there is a presumption that the defendant can pay full restitution. The defendant must present some evidence that she cannot pay full restitution before ability to pay becomes an issue. Because the defendant bears the burden of persuasion, she also bears the risk of nonpersuasion. Thus, while a bald assertion that she is indigent may put her ability to pay at issue, a defendant may not be able to carry her burden without persuasive evidence supporting her claim. Once the defendant presents evidence suggesting that she cannot pay full restitution, the sentencing court assumes its traditional fact finding role. The court must evaluate not just the probative value of the evidence before it, but also the credibility of any witnesses, particularly the defendant. If the court is not persuaded by the defendant's evidence, or if it finds that the evidence is in equipoise, it is free to order full restitution. Thus, a defendant who is not completely candid with the court and merely asserts that she is indigent faces a formidable risk that full restitution will be ordered. Where the underlying criminal conduct resulted in substantial 37 financial gain for the defendant, a strong inference may arise that the defendant has access to the fruits of her crime, or at least proceeds therefrom. She must present convincing evidence to rebut this natural inference. See United States v. Copple, 74 F.3d 479, 486 (3d Cir.1996) (Alito, J., concurring) (All the [illegally obtained] assets for which the defendant cannot account may be included in the amount of restitution ordered. To the extent that records are unavailable, the risk of inaccuracy should be borne by the defendant rather than the victims.). Although it need not introduce any evidence of ability to pay—again, the defendant bears the burden of persuasion on this issue—the Government often will seek to rebut the defendant's evidence of indigency. It may seek to prove that the defendant has secreted assets or concealed a source of income (for example, a family member who provides the defendant with financial assistance). It may also point to evidence adduced at trial to prove that the defendant is underrepresenting her financial abilities. If the defendant shows to the satisfaction of the sentencing court that it is more likely than not that she cannot pay full restitution at the time of sentencing, the sentencing court must fashion a restitution order that accounts for her ability to pay.31 31 The defendant retains her burden on ability to pay even if she has successfully proven that she cannot be expected to pay full restitution. She bears the burden of proving how much restitution she cannot pay or, depending on one's perspective, how much restitution she can pay. This concept is implicit in the defendant's burden on ability to pay. 38 While it may solve this problem by simply ordering restitution in 32 a lesser amount or declining to order restitution at all, the better course often will be to set up a payment schedule over time. The VWPA authorizes the court to make restitution payable by a specified date or to set a schedule of installments. 18 U.S.C. § 3663(f)(2). There are statutory limits to the deadline by which full payment must be made. If the court sentences the defendant to probation, it must require that the full amount of restitution ordered be paid by the end of the period of probation. 18 U.S.C. § 3663(f)(2)(A). When no probation is ordered, the court must require restitution within five years of the end of the term of imprisonment imposed, or if no imprisonment is imposed, within five years of the date of sentencing. 18 U.S.C. § 3663(f)(2)(B), (C). The sentencing court must fashion a restitution order so that the defendant reasonably will be able to comply with the order within the statutorily mandated time period.33 See Remillong, 55 F.3d at 32 While the court may decline to order any restitution in light of the defendant's financial condition, Stevens, 909 F.2d at 435, restitution even in a small amount is favored, see 18 U.S.C. § 3553(c) (1994) (requiring court to explain why partial or no restitution is ordered); U.S.S.G. § 5E1.1 (requiring restitution where authorized); Ahmad, 2 F.3d at 247 (When there is doubt about ability to pay, the court should order full restitution.). The court may also decline to order any restitution if it determines that the complication and prolongation of the sentencing process resulting from the fashioning of an order of restitution ... outweighs the need to provide restitution to any victims. 18 U.S.C. § 3663(d). Again, however, some restitution is favored. 33 We note that although the sentencing court must determine the amount of restitution in light of the defendant's ability to pay 39 575 & n. 8. Calculating the exact amount that the defendant will be able to pay within the statutory period may be the most difficult and speculative task facing the sentencing court. The longer the term of imprisonment, the more speculative any prediction of future earnings becomes. However, the VWPA requires that this determination be made at the time of sentencing. See Sasnett, 925 F.2d at 398-99. The task is not impossible, nor is it a duty for which district courts are unprepared. They must make similar determinations when calculating future earnings in tort and employment discrimination cases. Counterbalancing the speculative nature of this determination are mechanisms that soften the effects of an order that turns out within the time period provided by § 3663(f), the defendant is not automatically off the hook at the end of that period. While the court might no longer be able to enforce its order through its contempt power or through revocation of supervised release, the VWPA provides two other methods of enforcement. First, the United States can enforce a restitution order in the manner provided for the collection and payment of fines in subchapter B of chapter 229 of Title 18 of the United States Code. Subchapter B of chapter 229 provides inter alia that a fine is a lien in favor of the United States upon all property belonging to the person fined. 18 U.S.C. § 3613(a) (1994). This lien becomes unenforceable twenty years after entry of judgment or upon the defendant's death. See 18 U.S.C. § 3613(b). Second, both the United States and any victim named in the restitution order may enforce the order in the same manner as a judgment in a civil action. 18 U.S.C. § 3663(h)(1)(B), (h)(2). Presumably, the restitution order may be recorded as a money judgment and thus become a lien on the defendant's property. If so, this form of enforcement would be governed by the statute of limitations applicable to judgment liens. 40 to be beyond the defendant's means. The sentencing court remains free to modify its order in the future if the defendant's financial condition changes.34 See Stevens, 909 F.2d at 435. Moreover, the VWPA expressly provides that district courts must consider the defendant's employment status, earning ability, financial resources, the willfulness of the defendant's failure to pay, and any other special circumstances that may have a bearing on the defendant's ability to pay. 18 U.S.C. § 3663(g); see also Bearden, 461 U.S. at 672, 103 S.Ct. at 2073 (holding that sentencing court cannot revoke defendant's probation for failure to pay fine or restitution absent finding that defendant was responsible for failure to pay or that no alternative punishment would adequately punish and deter defendant). This court takes the speculative nature of a sentencing court's prediction of an indigent defendant's future earnings into account by reviewing such determinations with a deferential standard. See United States v. Porter, 90 F.3d 64, 68 (2d Cir.1996) (Because of the nuanced nature of the decision to impose restitution it makes little sense for an appellate court, significantly more removed from the case than the district court, to scrutinize the decision closely.). We review any factual finding that the defendant will be able to comply with the 34 Although this modification usually will entail a reduction of the restitution to be paid where a defendant's financial condition worsens, some courts have suggested that the amount may be increased where the defendant's financial condition improves. See United States v. Mitchell, 893 F.2d 935, 936 (8th Cir.1990); Mahoney, 859 F.2d at 51 n. 6. But see Porter, 41 F.3d at 71 (calling this practice into doubt). 41 restitution order for clear error, Sasnett, 925 F.2d at 397, and restitution orders themselves for abuse of discretion, Remillong, 55 F.3d at 574. When the sentencing court makes the restitution determination by following the procedures discussed here, its determination rarely will be disturbed on appeal. A quick review of the record of the sentencing hearing will reveal whether the court followed these procedures. If the defendant raises an ability-to-pay objection at sentencing, the record must show that the sentencing court considered all relevant evidence of the defendant's financial resources as well as the financial needs of the defendant and her dependents. United States v. Page, 69 F.3d 482, 493 (11th Cir.1995). If the court finds that the defendant likely will be able to pay restitution in the amount ordered, its finding will be reviewed only for clear error. Even if it does not make an explicit finding, its order will be affirmed so long as the record supports a finding that the defendant likely will be able to pay restitution in the amount ordered. Hairston, 888 F.2d at 1353. Finally, where the record suggests that the court found as a matter of fact that the defendant would not be able to make restitution in the amount ordered, as the record in the instant case suggests, the order will be vacated as an abuse of discretion.