Opinion ID: 220729
Heading Depth: 1
Heading Rank: 7

Heading: Calculation of the restitution order

Text: Parisi objects to the restitution order of approximately $1.6 million that was entered against him. He contends that the restitution order should be remanded to the district court to correct a multitude of alleged errors. We address Parisi's contentions one by one. As is well-established, [w]e review restitution orders for abuse of discretion and the subsidiary findings of fact for clear error. If the appellant's challenge is based on a legal conclusion, we review that conclusion de novo. Where the defendant has failed to object below . . . we review only for plain error. United States v. Antonakopoulos, 399 F.3d 68, 83-84 (1st Cir.2005) (citation omitted).
Parisi argues that to the extent there were any victims, they were the [tribal] programs which did not have use of the funds. The federal agencies to whom Parisi is required to make restitution are not victims of his conduct, he claims, because even if the federal government's funds were not utilized as intended, the federal government turned over the right to possess those funds when it transferred the funds to the Tribe. The restitution order is governed by the Mandatory Victim Restitution Act, codified at 18 U.S.C. § 3663. As it happens, the statute includes a definition of victim: 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. 18 U.S.C. § 3663(a)(2). We have noted, as Parisi concedes, that governmental entities may, without dispute, be considered victims under the MVRA. United States v. Janosko, 642 F.3d 40, 41 (1st Cir.2011). What, then, is the basis of Parisi's claim that the agencies were not victims of his conduct? The closest he comes to pressing the point is his assertion, noted above, that the agencies lost any right to possess the relevant funds once they were granted to the Tribe. But this contention misses the point entirely. If the federal agencies were harmed, it was not by losing possession of the fundsthese were, after all, grants but rather by not having the funds go to the designated programs. [25] For Parisi to have so much as a shadow of a claim that the federal agencies were not his victims, he would have to show why that kind of frustrated expectation is not a cognizable harm under the MVRA. [26] But he nowhere makes any such allegation. We therefore consider the claim waived, and do not address it. Parisi spends a good deal of his discussion of restitution claiming that a restitution order would work a fundamental unfairness. Parisi claims that misuse of federal grant money was standard practice at the Tribe long before he arrived on the scene, and that the tribal council was well aware of this fact. Parisi claims that the tribal council acknowledged, in a May 2004 meeting, both that they were seriously overspending their budget and that federal SAMHSA grant money was being siphoned off to pay their own salaries. In short, Parisi's claim is that the tribal council was entirely aware of and complicit in Newell's financial shenanigans, and that he should not be made to compensate the Tribe for the financial consequences of decisions of the tribal political leadership, including the governor and tribal council members, particularly when he, as a tribal outsider, had no say in making these decisions. This is an argument about whether or not what he did ought to be considered a crime, or perhaps whether it is fair to punish him while not punishing the other allegedly complicit parties. It does not appear to be an argument about whether there was error in calculating the restitution order. Parisi had an opportunity to present this argument to a jury of his peers. We will not reopen the matter now.
Parisi next challenges the inclusion of specific amounts in the restitution order. Parisi disputes the following five amounts: (1) $129,044 relating to the SAMHSA funds at issue in counts three and five; (2) $33,000 spent on a Racino referendum effort, as well as other transfers from the health center's budget over which he had no control; (3) $15,900 of housing authority funds; and (4) a $30,000 DOJ COPS grant. [27] Before we address these contentions, however, we must first determine whether these claims were preserved. The government claims that Parisi did not properly object to some, and possibly any, of the specified amounts at sentencing. The government claims that Parisi only objected at sentencing to (3), the Racino expenditures, and that it was raised only with respect to the guidelines calculation rather than the size of the restitution order itself. Paragraphs 71-72 of the PSR detailed the use of health center funds to pay for the Racino effort. Parisi objected to paragraph 71 on the ground that he had no authority to initiate or stop the use of the $33,000 for the Racino effort, and he repeated this contention at the sentencing hearing. The government's position appears to be that although Parisi objected to the inclusion of the Racino funds, he did not object to the amount imposed. We do not know what to make of this contention. Parisi's claim was that the Racino funds should not have been included at all, from which it follows that in his view the correct amount was zero. Moreover, the government's contention that [t]he sentencing transcript reveals only one reference to any of the four disputed amounts is belied by the record. Parisi's objections to the PSR's inclusion of the $129,044 in SAMHSA funds can be found on pages 8-10 of the sentencing transcript. His objections to the DOJ COPS grant can be found on pages 15-16. The discussion of Parisi's involvement with transfers from the Housing Authority, although more elliptical, can be found on page 8. The objections were preserved.
Parisi first contests the inclusion of the $129,044 deriving from the misapplication of SAMHSA funds used to pay ghost employee salaries in the early part of 2004. Parisi argues that he was not the cause of this loss under the standard announced in United States v. Vaknin, 112 F.3d 579, 589 (1st Cir.1997). In Vaknin, we held that a modified but for standard of causation is appropriate for restitution under the [Victim and Witness Protection Act], meaning that the government must show not only that a particular loss would not have occurred but for the conduct underlying the offense of conviction, but also that the causal nexus between the conduct and the loss is not too attenuated (either factually or temporally). Id. at 589-90. We cautioned that what constitutes sufficient causation can only be determined case by case, in a fact-specific probe. Id. [28] Parisi was acquitted of count three, which alleged the actual misapplication, but was convicted of count five, which alleged filing false statements with HHS relating to the misuse of the SAMHSA funds. [29] Although the timing is not entirely clear, it appears that the funds were disbursed no later than May 2004, i.e., before the falsified 269 forms were filed with HHS. The form therefore could not have been a but for cause in causing HHS to disburse the funds. See id. at 589 (Restitution should not be ordered in respect to a loss which would have occurred regardless of the defendant's conduct.). This sum therefore should not have been included under Vaknin. [30]
Parisi also contests the inclusion of $33,000 used by the tribal government to pay for expenses stemming from an effort to get a referendum question on the November 2007 ballot asking for voter approval of a Racino. Less specifically, he challenges the inclusion of any of the transfers from the Health Center account used to make PTIT's payroll. Parisi does not provide a specific dollar amount, but the challenge appears to account for over $1 million of the $1.6 million restitution order. In both cases, the gist of Parisi's argument is that he was not the cause of these losses, as the decision to make those illicit transfers was made by Newell and other members of the Tribe's political leadership. Newell, in many cases with the tribal council's express consent, made the decision to transfer funds from federal grants to pay for, among other things, the council members' own salaries. Similarly, the $33,000 check to the Joint Tribal Council to cover the cost of the Racino referendum effort was authorized by Newell and approved by three separate council members. It was delivered to the Joint Tribal Council by Joe Socobasin, the Tribe's lieutenant governor at the time. It does not appear that Parisi had any say in deciding whether to support the Racino effort in the first place, or where the funds to do so would come from. The entirety of Parisi's involvement with this check appears to be that Newell ordered him to have it drawn up, an order that he in turn conveyed to Frances Neptune, the Tribe's IHS bookkeeper. The Tribe's habit of playing fast and loose with federal grant money, Parisi argues, was present before [Parisi] arrived. . . and continued after he left. Therefore, he contends, he was not a cause of the losses under Vaknin. The uncontroverted evidence in the record does indeed suggest that Parisi may have been set up by Newell to take the fall for the Tribe's corrupt financial practices. Unfortunately for Parisi, however, it is well established that defendants can be required to pay restitution for the reasonably foreseeable offenses of their co-conspirators. Collins, 209 F.3d at 4. As we noted above, even if Parisi's role was as limited as he suggestscarrying out or transmitting Newell's ordersthat is sufficient to support his conviction for conspiring with Newell to misapply federal funds. Since at some point the financial impropriety must have been glaringly obvious, and since there is no question that Parisi's co-conspirator, Newell, caused the transfers, Parisi's challenge to the inclusion of these amounts must be denied. Parisi's reliance on United States v. Neal, 36 F.3d 1190, 1200-01 (1st Cir.1994), is misplaced. It is true that we held in Neal that a person who aided others in committing a bank robbery, but did not actually participate in the robbery itself, could not be required on that basis alone to make restitution for the full amount of the loss suffered by the bank. However, as we made clear in Neal, Congress has insisted on a different standard when a defendant has been convicted of a federal crime that require[s] proof of a scheme, conspiracy, or pattern of criminal conduct. Id. at 1200; see also Collins, 209 F.3d at 3. [31] Unlike the defendant in Neal, Parisi was most definitely convicted of such a crime. Therefore, the reckoning of the losses that may be laid at his doorstep is substantially broader than it otherwise would have been.
Parisi claims that the district court erred in including $15,900 based on transfers from the Indian Township Housing Authority. The district court, Parisi argues, explicitly conceded that Parisi was not involved in these transfers but went ahead and included them in the restitution order anyway. Our review is for abuse of discretion. Parisi claims that the district court found that Parisi had nothing to do with the transfers from the Housing Authority. It is not clear from the record whether or not the district court made such a finding. The portion of the sentencing transcript on which Parisi relies shows that the parties were disputing another matterParisi's contention that the PSR should reflect that he never transferred money to accounts outside the tribal government's control. The court overruled Parisi's objection, and stated that it takes into account the parenthetical added to paragraph 26, and with that addition believes the paragraph to be accurate. [32] However, while the referenced parenthetical does include Parisi's insistence that he had nothing to do with the Housing Authority transfers, no actual discussion of that claim is reflected in the sentencing transcript, as the discussion instead was focused on the issue of his responsibility for transferring money to non-tribal accounts. Also bearing on our analysis here is the fact that many of these transfers from the Housing Authority's funds appear to have been undertaken exclusively by Newell for his own purposese.g., a donation for the marriage of Mr. and Mrs. Tammy Newell, unspecified loans in small amounts, compensation to Newell himself for mileage, and medical assistance to Tribe members whose relationship to Newell and/or Parisi is unexplained. In the absence of an explicit ruling by the district court, we are left uncertain whether the district court viewed these transfers as not within the scope of the (tacit) agreement between Newell and Parisi, but mistakenly did not deduct them from the overall restitution order, or if the court concluded that they were, appearances notwithstanding, indeed part of the overall conspiracy. Particularly in light of the extensive number of transactions involved, and the factual complexity of the case, both possibilities seem equally plausible. Because of the ambiguity in the record, we remand the restitution order to the district court to clarify its disposition of the $15,900 Indian Township Housing Authority transfers.
Parisi raises a similar contention in his reply brief as to the inclusion of $30,000 based on the misapplication of a DOJ COPS grant. The district court stated that [b]oth sides seem to agree that the PSR is inaccurate to the extent it states that Mr. Parisi requested the transfer of those funds. The statement will not be considered by the court. Nevertheless, the restitution order included this amount. Parisi's suggestion is that this was an oversight. The government's somewhat gnostic counter-suggestion is that the district court ruled only that it would not consider at sentencing the PSR's claim that Parisi had requested the transfer, but that it nevertheless intended to include the $30,000 in the restitution order. Once again, it is simply unclear on the record what the district court intended. It is possible that the district court concluded that the $30,000 DOJ COPS transfer was to be excluded from consideration. But we are not in a position to assert as much with any confidence. However, Parisi only raised this issue in his reply brief. As we have noted, issues raised for the first time in an appellant's reply brief are generally deemed waived. United States v. Torres, 162 F.3d 6, 11 (1st Cir.1998). Parisi attempts to circumvent this rule by characterizing the DOJ COPS grant issue as merely another instance of the restitution order including acquitted conduct. But Parisi was not in fact acquitted of this conduct. He was convicted of count 30, which, among other things, alleged misapplication of the COPS grant. The claim is therefore procedurally defaulted.
Parisi next argues that the district court failed to consider amounts that were misapplied but subsequently repaid. As before, our review is for abuse of discretion. Parisi argues that some of the moneys that were transferred from the federal grants into the Tribe's general accounts were subsequently repaid by the Tribe. Therefore, it was error to base the restitution order on the initial quantity transferred rather than the amount net repayments. Parisi argues that the restitution order grossly exaggerates the actual losses, and notes that restitution must be gauged by actual loss to the victim, United States v. Galloway, 509 F.3d 1246, 1253 (10th Cir.2007), and that the burden is on the government to establish the amount of the loss. 18 U.S.C. § 3664(e). Unfortunately, Parisi fails to provide any details about the alleged repayments. He fails to specify to whom the payments were made, who they were made by, when they were made, or how much was repaid. At sentencing, the district court heard from the parties as to whether those Tribe members whose retirement accounts had been affected by the misuse of earmarked money had been compensated, and that the government conceded that five or six such individuals had in fact been repaid. Neither party put forward a specific dollar amount that had been repaid. [33] The MVRA stipulates that [a]ny dispute as to the proper amount or type of restitution shall be resolved by the court by the preponderance of the evidence. 18 U.S.C. § 3664(e). As it does not appear that Parisi disputed the inclusion of allegedly repaid amounts in the PSR or at sentencing, we do not discern any abuse of discretion on this score.
Finally, Parisi claims that the imposition of the approximately $1.6 million restitution order is a violation of the Excessive Fines Clause of the Eighth Amendment because (a) the funds were spent on tribal government expenses, (b) Parisi did not personally benefit from the funds in question, (c) he does not have the resources to repay such an amount, and (d) the size of the order will prevent him from achieving any reasonable livelihood. We have never held that the Excessive Fines Clause of the Eighth Amendment applies to restitution. The circuits that have considered challenges to restitution orders under the Excessive Fines clause have held that where the restitution order reflects the amount of the victim's loss no constitutional violation has occurred. See United States v. Lessner, 498 F.3d 185, 205-06 (3d Cir.2007); United States v. Newsome, 322 F.3d 328, 342 (4th Cir.2003); United States v. Dubose, 146 F.3d 1141, 1145 (9th Cir.1998) (noting that [w]here the amount of restitution is geared directly to the amount of the victim's loss caused by the defendant's illegal activity, proportionality is already built in.). This is not surprising, as restitution is inherently proportional, insofar as the point of restitution is to restore the victim to the status quo ante. Restitution is distinct in this regard from forfeiture, as Parisi concedes. In this case, the amount of restitution ordered was the sum of the moneys that Parisi was found to have misapplied or for which he submitted false claims. Even assuming that restitution orders may be challenged under the Excessive Fines clause, the restitution ordered in this case would not therefore violate Parisi's rights.