01-1569 U.S. v. Shepard

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“Both sec.3663A and its predecessor sec.3663 have been understood to require restitution only for direct losses and not for consequential damages and the other effects that may ripple through the economy. See, e.g., United States v. Arvanitis, 902 F.2d 489, 497 (7th Cir. 1990) (restitution is limited to the property subject to the offense and therefore excludes consequential losses such as attorneys’ fees). (Arvanitis interprets sec.3663(b) rather than sec.3663A, but in this respect the two statutes are identical). If by failing to check Eileen’s credentials the Hospital magnified the harm that the Shepards were able to inflict on others, in that respect the Hospital was a tortfeasor, not a victim. And to the extent the Hospital was vicariously liable for the Shepards’ fraud, it was not a victim under sec.3663A(a)(2)’s definition. To see this, consider the treatment of an insurer. Suppose Neely had purchased insurance against theft, with a double-indemnity clause, so that the insurer paid her estate $184,000. At oral argument the prosecutor conceded that the insurer would not be deemed a victim under the statute, and that restitution would be limited to $92,000. Why, then, should the Hospital be treated differently when it indemnifies Neely for her loss?”

Vacated and remanded.

Appeal from the United States District Court for the Southern District of Illinois, Murphy, J., Easterbrook, J.