Supreme Court Sets Limits for Mandatory Restitution

(CN) – The Supreme Court ruled unanimously Tuesday that reimbursement of costs and expenses under the Mandatory Victims Restitution Act only applies to government investigations and criminal cases, not private investigations or civil proceedings.

The Fifth Circuit found that 18 U.S.C. § 3663A(b)(4), covering restitution, is not overly broad, but the D.C. Circuit ruled otherwise. The U.S. Supreme Court agreed in January to decide Sergio Fernando Lagos v. United States of America and resolve the circuit split.

Lagos was convicted of defrauding General Electric Capital Corporation of millions of dollars and was ordered to repay the $11 million plus $4.85 million in costs associated with the internal investigation. He appealed his fraud conviction, saying the terms of the reimbursement statute are overly broad and easy to misapply.

Lagos did not rebut the government’s decision that he should repay $11 million of which he defrauded GE, but said he should not have to pay another $4.85 million in restitution for forensic expert and consulting fees that led to his arrest.

In his petition for a writ of certiorari, Lagos’ attorneys wrote: “The question presented is: Whether Section 3663A(b)(4) covers costs that were ‘neither required nor requested’ by the government, including costs incurred for the victim’s own purposes and unprompted by any official government action.”

On Tuesday, the Supreme Court reversed the Fifth Circuit and ruled unanimously that the terms “investigation” and “proceedings” in the Mandatory Victims Restitution Act are limited to government investigations and criminal cases and do not include private investigations and civil or bankruptcy cases.

Justice Stephen Breyer delivered the opinion, writing that “to interpret the statute broadly is to invite controversy.”

“The word ‘investiga­tion’ is directly linked by the word ‘or’ to the word ‘prose­cution,’ with which it shares the article ‘the.’ This sug­gests that the ‘investigation[s]’ and ‘prosecution[s]’ that the statute refers to are of the same general type,” Breyer wrote. “And the word ‘prosecution’ must refer to a government’s criminal prosecution, which suggests that the word ‘investigation’ may refer to a government’s criminal investigation. A similar line of reasoning suggests that the immediately following reference to ‘proceedings’ also refers to criminal proceedings in particular, rather than to ‘proceedings’ of any sort.”


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