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Restitution

Feb 04
Love4
MVRA Restitution Victim Benns

Who Qualifies as a “Victim” Under the Mandatory Victims Restitution Act?

By Fraud

Definition of “Victim” under the MVRA, leaves HUD out in the Cold | Who Qualifies for Relief Under the Mandatory Victims Restitution Act?

HUD MVRA Restitution Victim BennsUnited States v. Benns (5th Circuit, 2016) is a case regarding the Mandatory Victims Restitution Act (MVRA).  In this case, the US Court of Appeals for the Fifth Circuit held that HUD is not a victim of the defendant’s crime, even though the HUD was out a considerable amount of money after defendant forged a credit application. Read more about USA v. Benns below.

Anxious Couple Seeks Help for Mortgage Default

Desperate for relief from a mortgage in arrears, Michael and Brenda Arnold conveyed ownership rights of their Arlington home to Rickey Benns. At the time of the conveyance, Benns agreed to rent the home and pay the mortgage from the profits made from future tenants. The mortgage loan, held by Bank of America and insured by the United States Department of Housing and Urban Development (“HUD”), remained in the Arnold family’s name. Unfortunately, Benns reneged on his agreement and failed to pay off the mortgage, triggering foreclosure proceedings against the Arnolds, unbeknownst to them.

Looming Foreclosure Leads to Desperate Acts of Forgery

In an attempt to prevent foreclosure of the property, Benns secretly tried to refinance the property. Benns forged Arnolds’s signatures on loan modification documents and used a false pay stub to trick the bank into believing the Arnolds were creditworthy and still owned the property. After the application was denied by the bank, the property was eventually foreclosed on and sold below market value. Because Bank of America’s mortgage was insured by HUD, HUD paid the bank $54,906.59—the difference between what HUD paid Bank of America following foreclosure and the later sale price of the property.

A Plea is Entered and Restitution is Ordered

Benns plead guilty to one count of making false statement on a credit application, a violation of 18 U.S.C. § 1014. Upon entering the guilty plea, Benns “accepted the accuracy of a factual resume prepared by the government…author[izing] restitution to the victims of the community…includ[ing] restitution arising from all relevant conduct, not limited to that arising from the offense of conviction alone.” Benns was sentenced to twenty-seven months imprisonment, five years of supervised release, and ordered to pay restitution, totaling $544,602.42, under the federal Mandatory Victims Restitution Act (“MVRA”). Benns appealed to the United States Court of Appeals for the Fifth Circuit, arguing that HUD was not a victim of his convicted offense.

What is the Mandatory Victims Restitution Act (“MVRA”)?

The MVRA requires district courts to order restitution payments to crime victims during sentencing. 18 U.S.C. § 3663A. Under federal law, a victim is defined as, “a person directly and proximately harmed as a result of the commission of an offense for which restitution may be ordered.” Id. Typically, restitution is limited to losses arising from underlying conduct of a defendant’s offense of conviction. Hughley v. United States, 495 U.S. 411, 412-13 (1990); United States v. Espinoza, 677 F.3d 730, 732 (5th Cir. 2012); United States v. Maturin, 488 F.3d 657, 660-61 (5th Cir. 2007). To be a considered a victim under the MVRA, a person or organization must “suffer a foreseeable loss as a result of the conduct underlying the convicted offense.” Id. The government must establish, by a preponderance of the evidence, direct or proximate causation between the conduct underlying the offense and the actual loss suffered by the victim. United States v. Reese, 998 F.2d 1275, 1282 (5th Cir. 1993).

The Big Issue: Is HUD really a victim of Benns’s forgery scheme?

The United States Court of Appeals for the Fifth Circuit must determine whether HUD was a victim of Benn’s convicted offense. If the Court finds that HUD was a victim, then HUD will receive restitution under the MVRA. If the Court finds that HUD was not a victim, then Benns’ restitution award, which was imposed by the district court, could be amended or vacated altogether.

The Court of Appeals for the Fifth Circuit Weighs In with a Surprising Twist

Here, the Court weighs the argument made by the government against the facts of the case. The government argues that HUD’s loss was a direct result of Benn’s false credit application because the filing of the application itself delayed the foreclosure, which resulted in HUD selling the property at a loss. However, the Court states that the government did not produce evidence that the false credit application resulted in a delay, or that such a delay resulted in a greater loss for HUD than if HUD had sold the property any sooner than it actually did. The Court holds, because of the lack of evidence connecting the false credit application with the loss incurred by HUD, HUD is not to be considered a “victim” under the MVRA and, accordingly, cannot receive an award of restitution. “Benns was indicted and pleaded guilty to one count of filing a false credit application…it therefore does not follow that the behavior underlying Benn’s offense was the cause of HUD’s loss.”

Restitution could have only been awarded had the government established a direct or proximate causation between Benn’s false credit application and HUD’s loss when HUD sold the property at a foreclosure auction. The Court says the government failed to do so. Even though HUD was out $54,906.59, the Court does not consider HUD to be a victim of Benn’s convicted offense and vacates the restitution award.

Jun 04
Love0

US Supreme Court Decides Restitution Issue in Child Pornography Case

By Computer Crimes

In any criminal case involving sexual exploitation of a child in the making, possessing, or distributing of child pornography, there is an issue of restitution to consider.  More specifically, if the child suffered monetary damages, who is responsible to pay restitution to the child to make him/her whole?  Is it the person that created the images, the person that distributed them on the internet, the end user that downloads and possesses the images, or everyone?  The courts were split on this issue.   Some held that every person along the way should pay their share of the damages.   Other courts held that each person is responsible for the total damages.

The Supreme Court has now weighed in the issue and has held that every offender is liable for their share of the damages, not more.   Below is the synopsis of the case wherein the Supreme Court considered this issue.

Issue: Is a person who was convicted of possession of child pornography liable to pay full restitution to the victim (the child subject) or should the court limit damages to only that which was proximately caused by the convicted person’s actual role in the exploitation?

Paroline v. United States, 134 S. Ct. 1710 (2014)– Petitioner Randall Paroline pled guilty to possessing 150 to 300 images of child pornography, including two images of a girl named “Amy” being abused by her uncle at the age of eight or nine years old.  Amy’s uncle took a number of photographs depicting her in sexually abusive poses, and distributed the materials over the Internet.   However, Amy first learned that images of her abuse were being trafficked on the Internet when she was 17.  This new information caused renewed trauma from the events that took place when she was a young girl and it made it difficult for her to recover from the abuse.

Amy then sought restitution under 18 U.S.C. §2259 from Paroline even though he was not the originator of the pictures. Paroline argued that a victim’s damages must be proximately caused by the defendant’s conduct because any other result would turn child exploitation restitution proceedings into a procedural nightmare. Amy argued that §2259 did not require proximate causation for a victim to be entitled to full damages; otherwise, the victims of child abuse would bear the burden of collecting tiny shares of restitution from several defendants and might never receive full recovery.

The District Court declined to award restitution because the Government had failed to meet its burden of proving what losses, if any, were proximately caused by the Paroline’s offense. The Fifth Circuit held that §2259 did not limit restitution to losses proximately caused by the defendant, and each defendant who possessed the victim’s images should be made liable for the victim’s entire losses from the trade in her images, even though other offenders played a role in causing those losses.

The Supreme Court vacated and remanded the Fifth Circuit’s decision and held that restitution is proper under §2259 only to the extent the defendant’s offense proximately caused a victim’s losses. Victims should be compensated and defendants should be held accountable for the impact of their conduct on those victims, but defendants should only be made liable for the consequences and gravity of their own conduct, not the conduct of others. Where it can be shown both that a defendant possessed a victim’s images and that a victim has outstanding losses caused by the continuing traffic in those images but where it is impossible to trace a particular amount of those losses to the individual defendant by recourse to a more traditional causal inquiry, a court applying §2259 should order restitution in an amount that comports with the defendant’s relative role in the causal process that underlies the victim’s general losses. Therefore, in determining the proper amount of restitution, a court must assess as best it can from available evidence the significance of the individual defendant’s conduct in light of the broader causal process that produced the victim’s losses.

In short: each defendant pays his or her fair share of the victim’s losses in a child pornography matter.