Sentencing – Restitution

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U.S. Court of Appeals
For the Seventh Circuit

Criminal

Sentencing – Restitution

In a fraud case, restitution is determined based on the value of property at the time it is sold.

“A second question concerning restitution concerns the method of calculating it for victims entitled to restitution.

The defendants argue that the method used was wrong, citing United States v. Robers, 698 F.3d 937, 939 (7th Cir. 2012), cert. granted, 134 S. Ct. 470 (2013).
The victims in that case were a mortgage lender and a mortgage guarantor (for simplicity we’ll call them both ‘mortgagees’). They correspond to the defrauded banks in our case. As a result of Robers’s fraud, the properties were worth less than the balance of the mortgages and so the mortgagees could not recover the balance when the mortgagors defaulted. The restitution statute entitles a victim to ‘the value of the [victim’s] property on the date of sentencing, less the value (as of the date the property is returned) of any part of the property that is returned.’ 18 U.S.C. §§ 3663A(b)(1)(B)(i)(II), (ii). The question was whether ‘the date the property is returned’ should be the date of the foreclosure or, later, when the property is sold (presumably by the mortgagee, on the assumption that the mortgagee had acquired title to the property at the foreclosure sale). We held that it was the latter. Four circuits agree with this approach, United States v. Statman, 604 F.3d 529, 538 (8th Cir. 2010); United States v. James, 564 F.3d 1237, 1244–47, (10th Cir. 2009); United States v. Innarelli, 524 F.3d 286, 294 (1st Cir. 2008); United States v. Himler, 355 F.3d 735, 745 (3d Cir. 2004), and maybe a fifth. See United States v. Boccagna,
450 F.3d 107, 115–20 (2d Cir. 2006). Two disagree.

United States v. Holley, 23 F.3d 902, 914–15 (5th Cir. 1994);
United States v. Smith, 944 F.2d 618, 625–26 (9th Cir. 1991).

The Supreme Court will decide; until it does, we’ll stick with our Robers decision.”

Affirmed in part, and Reversed in part.

12-3007, 12-3178, 12-3180 & 12-3276 U.S. v. Farano

Appeals from the United States District Court for the Northern District of Illinois, Guzmán, J., Posner, J.

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