Opinion ID: 173168
Heading Depth: 3
Heading Rank: 1

Heading: Definition of Victim

Text: The MVRA provides that, for certain crimes, the court shall order ... that the defendant make restitution to the victim of the offense. 18 U.S.C. § 3663A(a)(1). Mr. Speakman concedes that the MVRA applies to the count of wire fraud to which he pleaded guilty, see id. § 3663A(c)(1)(A)(ii) (applying MVRA to an offense against property ... committed by fraud or deceit), but contends that Merrill Lynch is not a victim within the meaning of the Act. For purposes of the MVRA, a victim is 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. Id. § 3663A(a)(2) (emphasis added). This definition of victim thus sets forth two separate ways an individual can be a victim under the MVRA: first, if the person is directly and proximately harmed as a result of the commission of an offense covered by the MVRA; second, if the defendant's crime includes an element that the defendant engaged in a scheme, conspiracy or pattern of criminal activity, then the person will be a victim if he is directly harmed by the defendant's criminal conduct in the course of the scheme, conspiracy, or pattern of criminal activity. Id.; see also Gallant, 537 F.3d at 1248 (A `victim' under the MVRA is someone who is `directly harmed by the defendant's criminal conduct in the course of the scheme.') (quoting 18 U.S.C. § 3663A(a)(2)). The first of these definitions is in some ways broader because it requires only that the individual be harmed as a result of the defendant's offense, and not in the course of the offense. The first clause also includ[es] the second, which applies only to those crimes that involve, as an element, a scheme, conspiracy, or pattern of criminal activity, and even then applies only when the individual is harmed in the course of the scheme, conspiracy, or pattern. It thus follows that an individual could be deemed a victim by meeting the first criteria only, and not the second. Following our decision in United States v. Gallant , the district court in this case concluded that Merrill Lynch was a victim under the second criterion. In Gallant, we held that wire fraud, Mr. Speakman's crime of conviction, includes as an element a scheme to defraud. Gallant, 537 F.3d at 1248 (A guilty verdict for wire fraud ... necessarily establishes the existence of a scheme to defraud [under the MVRA].) Accordingly, we concluded that when the defendant commits wire fraud, an individual will be deemed a victim so long as he was directly harmed in the course of the scheme. Id. at 1248; see also United States v. Gordon, 480 F.3d 1205, 1211 (10th Cir.2007) (recognizing that MVRA applies not only to those harmed by the offense of conviction, but also to those directly harmed by the defendant's criminal conduct in the course of a scheme, conspiracy, or pattern of criminal activity). On this basis, the district court concluded that Merrill Lynch was directly harmed by the defendant's criminal conduct in the course of the scheme, and was therefore a victim under the MVRA entitled to restitution. (R. Vol. 2 at 14-15.) The district court applied the wrong standard, however. The standard employed by the district court applies only when the alleged victim is directly harmed by the defendant's criminal conduct in the course of the scheme.  18 U.S.C. § 3663A(a)(2) (emphasis added). In Gallant, for example, the defendants committed acts of wire fraud in order to sell a credit card portfolio by misrepresenting its delinquency risk. Gallant, 537 F.3d at 1249. The individual that they hired to market their portfolio was directly harmed in the course of their scheme because his participation was essential to their scheme, and if the defendants had not committed wire fraud, the victim likely would not have incurred the expenses to market the account. Id. Here, by contrast, the harm that the government claims Merrill Lynch endured occurred when Merrill Lynch was found liable to Mrs. Speakman, well after the conclusion of Mr. Speakman's scheme. Unlike the scheme in Gallant, which required the victim's participation to be successful, Mr. Speakman's scheme did not contemplate that Mrs. Speakman would file an NASD arbitration. In fact, if Mrs. Speakman had never brought the NASD arbitrationwhich took place after Mr. Speakman's fraudulent scheme had run its courseMerrill Lynch would not have been harmed by Mr. Speakman's conduct at all. Therefore, Merrill Lynch's harm cannot be said to have arisen in the course of the scheme.