Federal Sentencing Judges Cannot Later Reopen Fraud Cases to Add Restitution, Rules Fifth Circuit
The U.S. Court of Appeals for the Fifth Circuit says that federal sentencing judges who initially withhold restitution in complex or large fraud cases because the amounts are too hard to calculate cannot choose to later open up the case and add that in should the government later come up with more information. The appeals court was not convinced by a district judge’s dependence on the US Supreme Court’s ruling in Dolan v. United States allowing sentencing judges to go back and include restitution after the 90-day post-sentencing deadline.
In this case, United States v. Murray, the defendants were convicted for mail fraud, securities fraud and other offenses stemming from a financial scam involving hundreds of investors and high valued collateralized loans. Rather than investing the victims’ funds in the loans, the defendants used the funds for their personal spending, made other investments, and also made good on the high returns that were promised to earlier investors. For purposes of determining sentencing, the district court calculated that the investors lost $84 million.
Yet during sentencing the sentencing judge and the federal probation department invoked a Mandatory Victims Restitution Act provision that lets the judge refuse to order restitution in cases where there are too many victims to determine exactly how many there are that it makes restitution “impracticable” or if figuring out certain complex issues of fact related to amount or cause of the losses would prolong or complicate the sentencing process to a point that this burden overrides the need to provide any victim with restitution. A few months after these defendants received their sentences, even though federal law places limits on when a district court can reopen or amend a sentence, prosecutors convinced the judge to open up the sentencing and conduct a hearing on information from hundreds of victim impact statements.
Following the hearing, the judge found that denying the investors restitution for their losses because the government had a hard time figuring out how much harm they suffered is a violation of MVRA’s main purpose, which is to make sure compensation where owed is given. She told the defendants they now had to pay restitution of millions of dollars.
Now, however, Fifth Circuit has said that in the event that a district court invokes §3663A(c)(3), §3663A(a)(1)’s provision that the court shall order for restitution to be made by the defendant to the victim is not applicable, which means that a district court cannot open a final sentence judgment. The fifth circuit said that while the sentencing judge in Dolan gave herself the option to revisit the matter of restitution in the future, the sentencing judge in US v. Murray did not.
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