Restitution in Federal Criminal Cases: Georgia Appellate Court Reverses For Improper Procedure

Readers are aware that we do lots of federal criminal cases, and that many of our white collar matters sometimes result in a sentencing hearing. In federal court, some lawyers not accustomed to the often arcane rules fail to appreciate the intricate procedures found in the Mandatory Victims Restitution Act (MRVA). I have given lots of speeches about the MRVA to lawyers around the country, so I have a fair understanding of how difficult it can be to plow through and be aware of the traps in this law. Basically, this law makes it mandatory for a federal judge to impose “restitution” to a “victim” of a federal crime. Last week, a Georgia federal appeals court issued a ruling that was a mixed bag for the Defendant. The United States Court of Appeals for the Eleventh Circuit rejected most of the Defendant’s restitution claims, but did agree on one, sending the case back for more hearings. The case is U.S. v. Edwards, and can be found here.

Mr. Edwards and his company were found guilty by a jury of wire fraud, mail fraud, and money laundering, all offenses arising out of a high yield investment scheme. In the scheme, Edwards solicited funds from investors by promising astronomical returns and then used the funds for extravagant personal expenditures. At sentencing, the district court ordered Edwards to pay the victims over six million dollars in restitution pursuant to the MVRA.

Mr. Edwards objected to the restitution ruling on a number of grounds, most of which were rejected. For example, the Court of Appeals applied long-standing law in holding that restitution is mandatory, and that the issue of whether the Defendant has enough money to pay is irrelevant. The appeals court also used a lot of precedent to support its ruling that restitution can be ordered for victims who never testify at trial, and even when a particular count related to a particular victim has been dismissed, so long as the other procedures under the MVRA have been followed.

However, the Eleventh Circuit held that when the MVRA procedures are not followed, then restitution is improper at least for those victims whose situation was involved in the wrong procedure. That’s what happened in the Edwards case. The important Presentence Investigation Report (or “PSI”, a very important document we deal with in all our federal cases that result in a sentencing hearing) suggested $850,000 in restitution to a person named “Reece”, whose foundation had sent money to the Defendant. However, the night before the sentencing hearing, the Probation Officer substituted other persons as the victims instead of Reece. There was no evidence in the record as to whether the Defendant had any personal connection with these victims. As a result, the Court of Appeals reversed this part of the restitution ruling.

Restitution can be very important, as it can follow a Defendant for many years after he or she has served a federal criminal sentence. This case is one more example of how people potentially facing federal criminal cases need attorneys well-versed in all aspects of the complex system of rules in federal court.

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