Opinion ID: 173168
Heading Depth: 2
Heading Rank: 2

Heading: Restitution Order to Crime Victims Fund

Text: Mr. Speakman also argues that the district court erred in ordering him to pay $194,205.77 in restitution to the Crime Victims Fund. That sum was owed to Mrs. Speakman as a result of the fraud, but Mrs. Speakman specifically disclaimed her interest in receiving the money. The district court believed that it was nevertheless required to order restitution, because the MVRA imposes a mandatory requirement on district courts to order restitution. Specifically, the statute says that Notwithstanding any other provision of law, when sentencing a defendant convicted of an offense described in subsection (c), the court shall order, in addition to, or in the case of a misdemeanor, in addition to or in lieu of, any other penalty authorized by law, that the defendant make restitution to the victim of the offense or, if the victim is deceased, to the victim's estate. 18 U.S.C. § 3663A(a)(1) (emphasis added). The MVRA must be construed in conjunction with 18 U.S.C. § 3664, however, which outlines the procedures for enforcing a restitution order. See id § 3663A(d) (stating that a restitution order under the MVRA shall be issued and enforced in accordance with section 3664). Section 3664 states: No victim shall be required to participate in any phase of a restitution order. Id. § 3664(g)(1). The statute also provides that [a] victim may at any time assign the victim's interest in restitution payments to the Crime Victims Fund in the Treasury without in any way impairing the obligation of the defendant to make such payments. Id. § 3664(g)(2). The district court interpreted these three statutory provisions §§ 3663A(a)(1), 3664(g)(1), and 3664(g)(2)as imposing a mandatory obligation on the court to order restitution. Even though Mrs. Speakman did not assign her interest in restitution to the Fund, the court was concerned that by not ordering any restitution, it would allow the victim to trump[ ] the [mandatory nature of the] statute, when we have a receptacle in the victim's restitution fund for the disposition of restitution amounts. (Tr. at 10, R. Vol. 2.) The district court concluded that it had a statutory duty to order restitution, and that the victim's decision to forego restitution cannot abrogate that duty. ( Id. at 11.) Accordingly, because the court believed it was bound to order restitution under the MVRA and because § 3664(g)(2) establishes a receptacle to which victims can assign their restitution interests, the court ordered the restitution due to Mrs. Speakman be paid instead into the Crime Victims Fund. We disagree with the district court. As the starting point of our analysis, we note that `[f]ederal courts possess no inherent authority to order restitution, and may only do so as explicitly empowered by statute.' United States v. Nichols, 169 F.3d 1255, 1278 (10th Cir.1999) (quoting United States v. Hensley, 91 F.3d 274, 276 (1st Cir.1996)). While we agree that the MVRA imposes a mandatory obligation on courts to order restitution in certain cases, restitution is only mandatory if it is ordered either to the victim of the offense or, if the victim is deceased, to the victim's estate. 18 U.S.C. § 3663A(a)(1). Here, the victim (Mrs. Speakman) is alive, so the MVRA, read in isolation, would appear to require the district court to order restitution to Mrs. Speakman. The MVRA must be read in conjunction with § 3664(g)(1), however, which permits a victim to decline restitution. See id. § 3663A(d) (directing courts to issue restitution orders in accordance with section 3664). These two statutes can thus be read together in a sensible way. Because restitution is only mandatory when ordered to the victim or the victim's estate, see id. § 3663A(a)(1), and because victims are not required to participate in any phase of a restitution order, see id. § 3664(g)(1), courts are not required to order restitution if the victim declines the restitution without assigning her interest to the Fund. The district court's emphasis on § 3664(g)(2) is also misplaced. By its own terms, that provision only permits restitution to be made to the Fund if the victim assign[s] the victim's interest in restitution payments to the Crime Victims Fund. Id. § 3664(g)(2). The statute could have been written so as to authorize the court to order restitution payments to the Fund even when the victim failed to assign her interest, or to require the victim to either accept restitution or assign her interest to the fund. However, as written, the statute only authorizes restitution to (1) the victim (§ 3663A(a)(1)), (2) the victim's estate, if the victim is deceased (§ 3663A(a)(1)), (3) persons other than the victim if agreed to by the parties in a plea agreement (§ 3663A(a)(3)), or (4) the Crime Victims Fund, if the victim assigns her interest to the Fund (§ 3664(g)(2)). [7] Here, the predicates for (2), (3), and (4) are not met, and the victim has renounced her interest in restitution. There is thus no statutory basis to support the district court's award of restitution to the Fund. The legislative history of §§ 3663A and 3664 reinforce this conclusion in two ways. First, although § 3664 was originally enacted prior to § 3663A, the provisions of § 3664 at issue herenamely, § 3664(g)(1) and (2)were enacted as an amendment to § 3664 in the same bill in which Congress enacted § 3663A. See Antiterrorism & Effective Death Penalty Act of 1996, Pub.L. No. 104-132, §§ 204, 206, 110 Stat. 1214, 1227-36 (1996). This underscores the importance of reading § 3663A in conjunction with § 3664, and strongly suggests that while Congress intended to order mandatory restitution to victims (§ 3663A(a)(1)), it also expressly gave victims the right to decline that restitution (§ 3664(g)(1)). Second, the Senate considered and rejected a broader version of § 3664(g)(1): (g)(1) No victim shall be required to participate in any phase of a restitution order. If a victim declines to receive restitution made mandatory by this title, the court shall order that the victim's share of any restitution owed be deposited in the Crime Victims Fund in the Treasury.  S.Rep. No. 104-179, at, U.S.Code Cong & Admin.News 1995 at p.924, 6 (1995) (emphasis added). Section 3664(g)(2) in this proposed bill, just as in the version finally adopted, also gave victims the option of assigning their interest to the Fund. Id. Thus, the proposed legislation would have explicitly authorized the restitution order entered by the district court here; however, the enacted statute lacks any such explicit authorization. While evidence of what Congress considered but did not enact may not be conclusive proof of the proper construction of the statute, this legislative history further underscores what we believe is the proper reading: that Congress only authorized courts to order a restitution payment to the Fund when the victim herself assigns her interest to the Fund. Our conclusion also finds support in the Seventh Circuit's holding in United States v. Pawlinski, 374 F.3d 536 (7th Cir.2004). In Pawlinski, an alderman committed mail fraud by using money contributed to his campaign fund for purposes unrelated to the campaign. Id. at 537. The court ordered the defendant to pay restitution and to deposit the sum owed in the district court. Id. The court then notified the contributors that they could be reimbursed for their donation, but many contributors did not collect what they were owed. Id. The defendant suggested that this unclaimed amount be returned to the campaign fund, which could then be dissolved in accordance with state law. Id. at 538. The government was indifferent between that outcome and paying the unclaimed sum to the Crime Victims Fund, and the district court ordered the money to be paid into the Fund. Id. The Seventh Circuit reversed, holding that [a]n order of restitution under [the MVRA] ... must go to victims of the defendant's crimes, and the Crime Victims Fund is neither a victim of Pawlinski nor a representative of his victims. Id. at 539. The court recognized that there were only two exceptions contained in the MVRA that permit restitution to nonvictims: if the order is imposed pursuant to a plea agreement which provides for restitution to nonvictims, or if the victims assign their right to restitution to the Crime Victims Fund. Id. at 539-40 (citing 18 U.S.C. §§ 3663A(a)(3), 3664(g)(2)). The court in Pawlinski reversed the restitution order because [f]ederal courts cannot order restitution in a criminal case without a statutory basis, and no such basis existed. Id. at 540. We, too, lack a statutory basis here, and so the district court could not order Mr. Speakman to pay restitution to the Fund. In contrast to our holding today and the Seventh Circuit's decision in Pawlinski, the Second Circuit has affirmed a court's sua sponte award of restitution to the Fund. Focusing on the mandatory language of the MVRA, that court held that a district court mayindeed, mustimpose orders of restitution on defendants convicted of crimes identified in the MVRA even if their victims decline restitution. United States v. Johnson, 378 F.3d 230, 244 (2d Cir.2004). That court rejected the defendant's argument that § 3664 precludes ordering restitution to the Fund when the victim does not assign her interest because the permissive language of § 3664(g)(2)[a] victim may ... assign the victim's interest in restitution payments to the Crime Victims Funddoes not foreclose the ability of the court from assigning the victim's interest as well. Johnson, 378 F.3d at 245 (Although § 3664(g)(2) authorizes victims to make such an assignment, it does not preclude the Court from doing so.). We respectfully disagree with the Second Circuit, for two reasons. First, the court failed to appreciate the import of § 3664(g)(1), which permits victims to decline restitution. 18 U.S.C. § 3664(g)(1) (No victim shall be required to participate in any phase of a restitution order.) The Johnson court asserted that this provision cannot reasonably be interpreted as carving out an exception to the mandatory nature of § 3663A, and that a victim's refusing restitution has no effect on the mandate of the court to order restitution. 378 F.3d at 245. As explained above, however, we believe that § 3664(g)(1), adopted at the same time as § 3663A, has the precise effect of carving out an exception to the mandatory nature of § 3663A. Because the MVRA only authorizes restitution payments to victims (except in certain specifically delineated circumstances), and because § 3664(g)(1) allows victims to decline restitution, the MVRA is expressly made subject to the victim accepting restitution. In other words, construing §§ 3663A and 3664(g)(1) together means that restitution payments under the MVRA are mandated only when the victim accepts them. See 18 U.S.C. § 3663A(a)(1) (stating only that the court shall order ... that the defendant make restitution to the victim ....). The Second Circuit's holding thus disregards the principle that [f]ederal courts cannot order restitution in a criminal case without a statutory basis. Pawlinski, 374 F.3d at 540. Our second reason for disagreeing with the Johnson court reflects a deeper disagreement between our two courts about the nature of restitution. The Second Circuit has a long-held understanding of the purposes of restitution, which include not only the compensation of victims, but also the punishment of offenders. Johnson, 378 F.3d at 245; see also United States v. Brown, 744 F.2d 905, 909 (2d Cir.1984) (Restitution undoubtedly serves traditional purposes of punishment.). We have consistently held, however, that the MVRA does not inflict criminal punishment, and thus is not punitive. United States v. Serawop, 505 F.3d 1112, 1122-23 (10th Cir.2007) (collecting cases) (emphasis in original). Accordingly, the purpose of restitution `is not to punish defendants or to provide a windfall for crime victims but rather to ensure that victims, to the greatest extent possible, are made whole for their losses.' Id. at 1124 (quoting United States v. Hudson, 483 F.3d 707, 710 (10th Cir.2007)). Our view of the compensatory nature of restitution further underscores our reading of the MVRA. If the victim declines restitution but the court nevertheless orders the defendant to pay a sum of money to another entity, this punishes the defendant without in any way compensating the victim. This reasoning is not inconsistent with § 3664(g)(2), which allows victims to designate their interest in restitution to the Fund. While this provision may result in the defendant having to pay money to an entity that was not the victim of his crimes, it is still in some sense compensatory in nature to the victim. Just as most individuals who donate to charity receive a psychic benefit for their donation, a victim who designates his interest in restitution payments to the Fund may be receiving a form of emotional compensation by helping other crime victims. In this sense, the victim still receives some emotional compensation from the defendant, as she knows that the harm the defendant caused is going to benefit other crime victims. Indeed, § 3664(g)(2) is analytically no different than having a victim accept restitution from a defendant and then donate the restitution directly to a victim's charity. This reasoning clearly falls apart when the victim does not designate her interest but instead simply declines restitution, because the victim is in no way compensated if she simply declines restitution without designating her interest and the court orders the defendant to pay money to the Fund or another person or entity. Contrary to the government's argument, our holding in United States v. Gallant does not require a different conclusion. In Gallant, one of the victims of the defendants' fraud had earlier reached a private civil settlement with the defendants in which the victim released [the defendants] from further liability. 537 F.3d at 1249. Noting that [t]he MVRA requires the sentencing court to provide restitution to victims, we concluded that [a] private settlement cannot abrogate that [mandatory] language. Id. at 1250. [8] We thus held that the defendants were required to pay restitution to the victim, an investment firm, despite the existence of a private settlement generally releasing the defendants from further liability. Id. While we agree with the government that Gallant emphasizes the mandatory nature of the MVRA, the facts of that case differ from the facts with which we are presented here. Most significantly, the victim in Gallant never renounced its interest in restitution. There is no indication in Gallant that the victim ever invoked § 3664(g)(1), either in the private settlement agreement or before the sentencing court. Although the release clause contained in the civil settlement was broadly worded, see id. at 1249 (releasing defendants from further liability), it does not explicitly mention restitution awards. Here, by contrast, neither party disputes that Mrs. Speakman declined restitution pursuant to § 3664(g)(1). When a victim does not specifically decline restitution, we agree with the rationale of our holding in Gallant that [t]he MVRA requires the sentencing court to provide restitution to victims, and this overriding public policy prevents a court from concluding that a victim renounced her interest in restitution without a clear statement that the victim in fact renounces restitution. Id. at 1250. Where a victim, acting pursuant to § 3664(g)(1), clearly does renounce her interest in restitution, by contrast, the public policy favoring restitution is simply inapplicable, as the statute requires that restitution be paid to the victim, and allows the victim to renounce restitution. See 18 U.S.C. § 3663A(a)(1). Finding no statutory basis on which a court could have ordered Mr. Speakman to pay restitution to the Crime Victims Fund, we therefore reverse that portion of the district court's order.