Opinion ID: 6327676
Heading Depth: 2
Heading Rank: 2

Heading: Ayfer’s Restitution Obligation

Text: Ayfer challenges the district court’s holding that the restitution order in her case was “plainly imposed using a hybrid joint and several liability scheme.” Yalincak, 2020 WL 1969490, at . We find no merit in that challenge. As discussed above, the circumstances of the case, and the formulation of the related 24 restitution orders imposed as part of both Ayfer and Hakan’s sentences, fit the classic pattern of the restitution orders that have been described as hybrid restitution awards. Moreover, to the extent there is any ambiguity in the wording of the restitution order – and we do not think there is – a district court’s interpretation of its own orders is entitled to considerable deference from an appellate court. See United States v. Spallone, 399 F.3d 415, 423 (2d Cir. 2005) (“When an issuing judge interprets his own orders, we accord substantial deference to the draftsman, and we will not reverse the judge’s construction of an ambiguity in his own words except for abuse of discretion.”). For the most part, whether formulated as objections to the characterization of the restitution order imposed in Ayfer’s case or as criticisms of the hybrid approach, Ayfer’s central claim is that the district court improperly calculated the effect of the payments credited to Hakan on Ayfer’s remaining restitution obligation. As Ayfer and Hakan would have it, the fact that an amount exceeding that which Ayfer was ordered to pay has already been deemed paid to W.A-M. – from sources other than Ayfer – means that Ayfer’s restitution obligation has been completely satisfied, regardless of whether she has actually paid W.A-M. anything even approaching the amount she was ordered to pay. 25 That claim rests on a misunderstanding of the nature of hybrid restitution orders. Ayfer’s claim that her restitution obligation is satisfied because more than $500,000 has been deemed paid to W.A-M. misconstrues statements we made about the effect of joint and several liability in Nucci. In Nucci, we acknowledged that the “effect of joint liability in a tort context is to excuse one defendant from paying any portion of the judgment if the plaintiff collects the full amount from the other.” 364 F.3d at 423, quoting Smith, 861 F.2d at 374. Ayfer argues that because W.A-M. has received $500,000 in restitution from some source – even if it was not from Ayfer herself – her liability has been “fully satisfied and she should be excused ‘from paying any portion of the judgment’ because the government has collected ‘the full amount [$500,000] from the other.’” Ayfer’s Br. 12 (alteration in original), quoting Nucci, 364 F.3d at 423. But Ayfer misapprehends the meaning of the phrase “full amount” as used in Nucci. The quoted statement in Nucci references the classic meaning of joint and several liability in tort law, and explains that in that context, once the “plaintiff collects the full amount” of a judgment from one co-defendant, 364 F.3d at 423 (emphasis added), the other co-defendants are absolved from further liability. The focus is on whether the injured party has received the total amount 26 that he is due in compensation for his injury. Notably, in tort law there is no equivalent to a hybrid order: all tortfeasors are jointly and severally liable for the full amount of the plaintiff’s damages. In the restitution context, the hybrid approach by its very nature tempers any possible unfairness in making all codefendants liable for the full amount of a victim’s injury by limiting the amount that minor participants in the scheme can be made to pay. Where a principal wrongdoer such as Hakan has been held liable for the entire amount of the harm inflicted on the victim, a lesser participant such as Ayfer may benefit (whether her liability is also for the whole amount or is for a lesser sum) if the principal offender pays (or the government forcibly collects from him) the entire amount that the victim is due. Conversely, the principal wrongdoer’s obligation will be reduced if some portion of the amount due is paid by or collected from the lesser offender. Those are consequences of the fact that a victim is not entitled to recover more than he lost simply because two different offenders caused that loss and are liable to pay restitution. It does not follow, however, either from the wording of the restitution order or from the tort analogy, that a lesser offender whose restitution liability has been limited to a portion of the loss is entitled to have that liability 27 extinguished where the principal offender makes a payment that exceeds the limited amount due from the lesser offender. In Ayfer’s view, any amount owed to a victim is essentially fungible: a payment from any source can and should be credited to every defendant’s restitution obligation. Relatedly, Hakan argues in his reply brief, which Ayfer requests we consider adopted by her, that the government’s argument reads a “‘personally’ paid rule into the MVRA when no such rule exists.” Hakan’s Reply Br. 2. But those arguments are incorrect. Hybrid restitution orders, including the ones at issue here, do in fact require specific defendants to make restitution payments to victims. A restitution order creates a personal liability on the part of the defendant on whom it is imposed. While that obligation can be satisfied if other defendants have made the victim whole, that is an artifact of the rule that a victim may not receive more in restitution than the total amount of his loss. Thus, if Hakan paid a total of $750,000 to W.A-M., W.A- M. would be made whole and both defendants’ obligations would be deemed satisfied. But that rule does not absolve any defendant from the obligation to pay the restitution that she has been sentenced to pay before the victim has been fully satisfied. The same would be true in Nucci: if Nucci paid the entire $34,476 in 28 restitution, Bell and Favia’s restitution obligations of $9,000 and $5,776, respectively, would also be extinguished. But the Nucci example clearly illustrates the significance of the hybrid approach and the error of the Yalincaks’ argument. If, in Nucci, Bell had paid his entire restitution obligation of $9,000, that would satisfy his individual obligation, because he had paid all that the court had ordered him to pay. But it would be absurd to conclude that his payment would also exonerate Favia from paying anything at all simply because Bell had paid (as he was required to do) a greater amount than what Favia owed. Similarly, if the government succeeded in seizing $15,000 from Nucci, leaving the victims still short by some $20,000, the restitution obtained from Nucci would not extinguish Bell’s or Favia’s restitution obligations simply because the sum obtained from Nucci exceeded the total amounts due from his co-defendants. The “full amount” language from Nucci that Ayfer relies upon simply means the “full amount” owed to the victims in order to compensate for the victims’ losses, not the full amount owed by any one individual defendant. Nor is Ayfer correct that the district court’s understanding of the hybrid order essentially makes her liable for the full $750,000 owed to W.A-M. rather than the $500,000 she was ordered to pay. Ayfer asserts that if the district court 29 “had intended for Ayfer to be jointly and severally liable with Hakan as to W.A- M. for an amount over $500,000, it presumably would have entered such an order,” but “did not.” Ayfer’s Br. 13. She argues that the district court’s denial of her motion “has the effect of making Ayfer’s restitution as to W.A-M. identical to Hakan’s, thereby undermining the court’s adoption of two different restitution schemes” and making Ayfer “liable for the same $250,000 over $500,000 as Hakan.” Id. But the district court’s decision does not make Ayfer liable for any amount over the $500,000 the district court originally ordered her to pay. She could never be required to pay more than the $500,000 her sentence makes her liable for, even if Hakan paid nothing at all, because the $500,000 obligation in her sentence serves as an upper limit on what she may be required to pay. Ayfer’s restitution obligation has always been the same: she must continue to make payments to W.A-M. until she has either paid the $500,000 the district court ordered her to pay or until W.A-M. is made whole – no less, no more. Ayfer and Hakan’s remaining arguments contend that, as a matter of policy, district courts should design restitution orders to create certain incentives for defendants to make their restitution payments. Ayfer first argues that the 30 hybrid approach “creat[es] a disincentive for defendants to make restitution” because a defendant like Hakan is “more likely to pay the first $500,000 to W.A- M. if doing so means that his co-defendant also receives credit for the entire payment,” at least in a case like this one, in which the co-defendants have a close family relationship. Ayfer’s Br. 13-14. Under the hybrid approach, Ayfer argues, there is no such incentive because the “first $250,000 that Hakan pays is credited to him alone; Ayfer receives her first dollar of credit from Hakan’s joint and several payments only when Hakan pays $250,001.” Id. at 14. Ayfer may be correct that in certain limited circumstances – for example, where co-defendants are family members or have similarly close relationships – a defendant may indeed have a greater incentive to pay when his payments are also credited to his co-defendant. But the argument crucially mistakes the nature and purpose of restitution orders. Restitution payments are not voluntary donations that are to be induced by the creation of incentives for the donor; they are legal obligations that a defendant is required to make, in default of which the government (like a tort plaintiff holding a civil judgment) may use coercive means to collect the amount due by attaching the defendant’s assets. Moreover, the primary purpose of criminal restitution is to make the victim 31 of a crime whole, see Thompson, 792 F.3d at 277, not to manage relationships between co-defendants or craft restitution arrangements for the benefit of mother-and-son co-defendants like Ayfer and Hakan. If we adopted Ayfer’s incentive argument, and the first $500,000 credit extinguished Ayfer’s obligation to W.A-M., the only remaining source for the restitution payments would be Hakan, even if he lacked or had successfully hidden additional resources while Ayfer held or obtained significant assets amenable to seizure. But one of the benefits of the hybrid approach is that it works to ensure multiple sources of restitution, up until the point at which the victim is made whole or an individual defendant has satisfied his or her obligation. As the Fifth Circuit noted in Sheets,” [e]nsuring that restitution payments from all defendants contribute toward the victim’s overall recovery is a simple and uniform means to have victims receive full and timely restitution as provided by law and otherwise ensure that decisions of our district courts align with the purpose of the MVRA.” 814 F.3d at 262. Ayfer’s incentive argument also ignores the practicalities of restitution in many cases, and mistakes the true incentive of most defendants – to avoid paying restitution by hiding, transferring, or otherwise protecting their assets. Neither 32 incentives nor compulsion are necessary where a criminal (or tort) defendant is willing and able to comply with the judgment of the court and writes a check to satisfy his obligations and make the victim whole. In far too many cases, however, one or more defendants will lack either the ability or the desire to pay restitution voluntarily. In such situations, Ayfer’s proposed method of crediting payments reduces the number of potential sources of restitution, to the detriment of crime victims. As the government argues, if Hakan “were unable to make such payments for some reason (e.g., death, disability, or destitution), victim W.A-M. would be left shouldering the loss.” Appellee’s Br. 15. The same would be true if Hakan simply refused to pay more than he already has, and attempted to put what assets he has beyond the reach of the government or the victim. The hybrid approach instead requires both Hakan and Ayfer to continue making payments to W.A-M. until he is fully compensated or until Ayfer has paid all the restitution for which the court held her liable.4 4 Ayfer also argues that the district court’s ruling removes any incentive for her to pay anything towards her $500,000 restitution obligation, because even if she paid the $500,000, she would “still . . . be liable for up to an additional $250,000 because the first $500,000 would be deducted from the total loss of $750,000 rather than extinguishing her liability under a ‘bottom-up’ approach that starts at $0.” Ayfer’s Br. 14. But as noted above, this misconstrues the district court’s ruling. If Ayfer did pay the $500,000 she was ordered to pay, her liability would 33 A district court can, of course, craft a restitution order of the sort Ayfer would prefer. For example, a district court could include a provision that a given defendant’s restitution obligation ends once the aggregate paid by that defendant and his co-defendants reaches a certain amount, even if the defendant himself did not pay anything and the victim was not yet made whole. That is what the district court did in United States v. Broadbent, 225 F. Supp. 3d 239 (S.D.N.Y. 2016). In Broadbent, four co-defendants were sentenced by four different judges to pay different restitution amounts. Id. at 241. After Broadbent was sentenced, the judge sentencing one of his co-defendants ordered that co-defendant to forfeit more than $300,000 to the government, and then ordered the government to credit that amount towards his restitution obligation. Id. But while Broadbent’s own judgment made his restitution obligation joint and several with his codefendants, it also specifically provided that his “‘obligation to make restitution shall cease once the aggregate of the restitution paid’ by him and the other three defendants ‘reaches $120,000.’” Id. then be extinguished. Of course, unscrupulous defendants will always have an incentive not to pay anything, in the hope that the government will find it easier to collect the entire loss from a co-defendant with whom she is jointly liable, or will simply be unable to locate and attach her own assets. Nothing about the hybrid approach increases that incentive. 34 Such a provision alters the hybrid approach. As the district court noted in Broadbent, that provision meant that, like “rungs on a ladder” and starting “at the moment judgment is entered,” the government “may collect from any of the four defendants until the total amount that [the victim] receives from all sources reaches $120,000.” Id. at 243. At that point, Broadbent’s restitution obligation is extinguished. While noting that that outcome is “not how courts have enforced restitution collection under the hybrid approach,” the district court nevertheless determined that such a provision explicitly “reliev[ed] [the defendant] of restitution obligations when the aggregate amount paid by his co-defendants reached $120,000.” Id. at 245. The provision in Broadbent demonstrates how specific language in restitution orders can excuse individual defendants from future payments once an aggregate amount is paid from all sources. If Ayfer’s restitution order had a provision like the one in Broadbent, such as an instruction that her “obligation to make restitution shall cease once the aggregate of the restitution paid from any source to W.A-M. reaches $500,000,” then Ayfer’s restitution obligation would clearly be satisfied. But the district court’s restitution order here had no such limitation on Ayfer’s liability, and there is no reason to read in such a limitation. 35 Instead, the restitution order here was, as the district court concluded, a textbook example of the hybrid approach. Ayfer next argues that the district court’s approach “creates less predictability and more guesswork as to what the ultimate restitution figure will be years after judgment.” Ayfer’s Br. 15. According to Ayfer, the “final figure [owed by a defendant] will depend less on the amount clearly listed in the judgment and more on the manner in which restitution is made over the ensuing years.” Id. But the hybrid approach does not create any such ambiguity or necessitate any such guesswork. Ayfer has known all along that if she pays $500,000 or if W.A-M. is made whole through other sources, her own restitution obligation will be satisfied. If Ayfer elects to make only minimal payments and wait until W.A-M. recovers the $750,000 from Hakan (and if the government fails to identify assets belonging to Ayfer that it can attach in order to help satisfy the amount owing to W.A-M.), the amount Ayfer owes will, naturally, change over time. But that is not the fault of the hybrid approach; rather, it is simply the nature of an arrangement in which multiple defendants are making restitution payments, in that the balance remaining to make the victim whole will necessarily decrease as payments are made. 36 Moreover, while we recognized in our earlier decision in this case that “persons subject to restitution orders are entitled to know, as they lead their lives and make economic decisions over the long duration of restitution orders, the extent of their remaining restitution obligations,” Yalincak, 853 F.3d at 639, we also note that the MVRA’s main priority is securing recoveries for victims, not ensuring the most predictable restitution arrangement for defendants. See Dolan v. United States, 560 U.S. 605, 613 (2010) (noting that the MVRA’s “efforts to secure speedy determination of restitution is primarily designed to help victims of crime secure prompt restitution rather than to provide defendants with certainty as to the amount of their liability”) (emphasis removed).5 Ayfer’s final argument is that the money disbursed from the various bankruptcies should be considered “joint credits” paid by both Ayfer and Hakan 5 While we find the Yalincaks’ policy arguments unpersuasive, and believe that the hybrid approach will often be appropriate in cases of this sort, we note that district courts are granted considerable discretion by the MVRA to order full restitution by all participants in a crime, to apportion the liability among defendants, to use the hybrid approach as described in this opinion, or to create variant hybrid approaches in order to effectuate the goals of the MVRA in particular cases. The orders entered by district courts will be reviewed “deferentially,” and, absent errors of law or clearly erroneous fact findings, will be “revers[ed] only if in our view the trial court abused its discretion.” United States v. Amato, 540 F.3d 153, 158-59 (2d Cir. 2008), abrogated on other grounds by Lagos v. United States, 138 S. Ct. 1684 (2018). 37 and that these “joint credits” should correspondingly reduce both of the Yalincaks’ remaining restitution obligations. Ayfer points to 18 U.S.C. § 3664(j)(2), which provides: “Any amount paid to a victim under an order of restitution shall be reduced by any amount later recovered as compensatory damages for the same loss by the victim in [any federal or state civil proceeding].” Ayfer admits that the “situation envisioned by § 3664(j)(2) is not precisely the situation here,” but argues that the provision “suggests that amounts that Ayfer is required to pay to the victim should be reduced by the amounts that the victim has received as compensatory damages.” Ayfer’s Br. 16-17. Section 3664(j)(2) says nothing, however, about how credits apply to individual defendants’ separate restitution obligations. That provision, like the rule against double recoveries, operates to reduce the total amount that the victim can collect. Thus, to the extent that W.A-M. has obtained some recompense from the proceeds of the bankruptcy of Hakan’s investment funds, W.A-M. may not collect from the defendants’ other assets the entire $750,000 loss for which Hakan and Ayfer, to their different degrees, are liable. Notably, those payments are significantly responsible for reducing the outstanding balance owed to W.A-M. by both Yalincaks to less than $140,000. The credit for those 38 payments thus benefitted Ayfer by reducing her restitution obligation by $274,181.02 (the amount of the credit that exceeded the now-satisfied $250,000 portion of W.A-M.’s loss owed solely by Hakan). But nothing in § 3664(j)(2) supports Ayfer’s argument that the distributions from the bankruptcy proceedings should be credited to Ayfer so as to clear her restitution obligation to W.A-M. Like payments made directly by Hakan, payments from collateral sources benefit Ayfer by bringing the defendants collectively closer to the point at which the victim is fully compensated, and the defendants’ restitution obligations therefore end; they do not absolve a defendant who continues to be liable up to the amount ordered by the court, until either she has paid that amount or the victim has been fully compensated from other sources. Accordingly, we reject Ayfer’s “joint credits” argument, as did the district court. Yalincak, 2020 WL 1969490, at -5.