Opinion ID: 2791904
Heading Depth: 2
Heading Rank: 2

Heading: Investigative Audit Costs

Text: Herrera also contests the inclusion of $16,105 for the District’s investigative audit costs. This court has not specifically addressed whether investigative audit expenses are recoverable under the MVRA. Herrera presents three lines of argument on this point. We address each individually, but point out that even if investigative audit expenses did not fall within the ambit of the MVRA, Herrera’s plea agreement clearly encompasses such costs as “arising from all relevant conduct, not limited to that arising from the offense of conviction alone.” Even absent a plea agreement, the MVRA appears to cover such costs as “other expenses incurred during participation in the investigation or prosecution of the offense or attendance at proceedings related to the offense.” § 3663A(b)(4). 2 Herrera argues that the District’s investigative audit expenses do not fall under this provision because the District incurred the costs before deciding to pursue criminal charges. We disagree. The District’s reliance on external auditing services was necessary in the wake of Herrera’s fraud. Given that the District utilized a one-person office, and Herrera herself was the sole employee, the increase in audit and accounting costs was a direct and inevitable result of her crimes. Further, the investigative audit in this case was a fundamental component of the District’s investigation of Herrera’s criminal activity. 3 After discovering the discrepancy 2 In a case that directly confronts the issue, the Seventh Circuit determined that restitution for investigation costs was proper because “[t]he bank’s investigation was clearly an important part of ‘the investigation . . . of the offense’ [because it] led to the determination of the actual amount embezzled, and therefore the costs of that investigation may be included in the restitution award under § 3663A(b)(4).” United States v. Hosking, 567 F.3d 329, 332 (7th Cir. 2009) (internal citation omitted). Hosking is persuasive. 3 For the same reasons, we are not persuaded by Herrera’s characterization of these costs as “consequential damages.” 7 Case: 14-10513 Document: 00512995779 Page: 8 Date Filed: 04/07/2015 No. 14-10513 from 2011, the District contacted the FBI and filed a police report naming Herrera as an embezzlement suspect. The District incurred $8,715 in additional audit fees for the 2011 audit, and $7,930 in additional audit fees for the 2012 audit. The purpose of the investigative audits, together totaling $16,105, was to ferret out the extent of Herrera’s criminal activity. The District provided these audit reports to the Tom Green County Sheriff’s Office and the FBI in furtherance of the investigation. Herrera also contends that it was reversible error for the district court to adopt the PSR’s “bald recital” of the auditing costs without supporting documentation to justify the amount of restitution ordered. A court is not required to make explicit findings or provide a detailed analysis so long as the record provides adequate basis to support the restitution order in a manner that allows for effective appellate review. DeLeon, 728 F.3d at 507. Here, the PSR provided the amounts for the District’s routine audit expenses and compared that figure to the extraordinary audit expenses incurred to investigate the losses for 2011 and 2012. The restitution award constituted the difference. The duration and complexity of Herrera’s fraud provide an adequate basis to support the district court’s inclusion of these costs in the restitution order.