Opinion ID: 195396
Heading Depth: 2
Heading Rank: 1

Heading: Conceptualizing the Problem.

Text: 20 This case falls into a grey area that separates two established legal principles. On one hand, although once problematic, see infra p. 35, it is by now settled that a government entity (local, state, or federal) may be a victim for purposes of the VWPA (and may be awarded restitution) when it has passively suffered harm resulting directly from the defendant's criminal conduct, as from fraud or embezzlement. See, e.g., Ratliff v. United States, 999 F.2d 1023, 1027 (6th Cir.1993) (collecting cases); United States v. Hand, 863 F.2d 1100, 1103 (3d Cir.1988) (collecting cases). This principle has been applied, and properly so, to cases involving food stamp fraud. See, e.g., United States v. Dudley, 739 F.2d 175, 178 (4th Cir.1984). 21 On the other hand, the federal courts are consentient to the effect that the government is not a victim for purposes of VWPA (and may not be awarded restitution) to the extent that it incurs costs in the clandestine provocation of a crime that, if carried to fruition under ordinary circumstances, would not directly harm the government. 4 See, e.g., Gall v. United States, 21 F.3d 107, 111 (6th Cir.1994) (holding that drug buy money advanced by the government is not recoverable under the VWPA); United States v. Daddato, 996 F.2d 903, 905 (7th Cir.1993) (similar) (dictum); United States v. Salcedo-Lopez, 907 F.2d 97, 98 (9th Cir.1990) (holding that money used by undercover government agent to purchase false identification documents is not recoverable under the VWPA); United States v. Finley, 783 F.Supp. 1123, 1127 (N.D.Ill.1991) (refusing to order restitution of funds extorted by defendant from undercover agent). All four of these cases rely at some level on the generality that investigatory costs do not constitute a loss within the purview of the Act because such costs are best conceived as voluntary outlays for the procurement of evidence. 5 See Gall, 21 F.3d at 112; Daddato, 996 F.2d at 905; Salcedo-Lopez, 907 F.2d at 98; Finley, 783 F.Supp. at 1128. 22 What makes this case difficult is that it falls somewhere between the two ends of the spectrum. While we deal with a crime provoked by an undercover investigation, the crime was designed to inflict harm on the government. If consummated under circumstances not involving official participation, the crime would have resulted in direct loss to the government in exactly the manner that the government here experienced loss. Nonetheless, the government instigated the particular incidents for which it now claims the right to restitution--indeed, had there been no official participation, the claimed losses would not have eventuated. This means that here, unlike in either of the more familiar prototypes, the difference between the face value of the food stamps and the amount appellant paid for them was both a calculated consequence of the defendant's crime and a calculated cost of the government's investigation. As a result of the hybrid nature of the loss, each side argues that this difficult situation more closely resembles the prototype that favors its position--and neither argument can easily be debunked. 23