Sentencing – restitution — forfeiture

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United States Court of Appeals For the Seventh Circuit

Criminal

Sentencing – restitution — forfeiture

A sentencing court may order both restitution and forfeiture, but restitution must be based on the victim’s actual loss.

“It might seem that a defendant should never have to pay more than his victim’s loss, and therefore that a forfeiture order and a restitution order should be considered alternative rather than cumulative punishments. But the cases hold otherwise. United States v. Emerson, 128 F.3d 557, 566-67 (7th Cir. 1997); United States v. Newman, supra, 659 F.3d at 1240-42; United States v. McGinty, supra, 610 F.3d at 1246-48. That’s not much of a paradox. It means, very appropriately in a fraud case since fraud is a concealable offense, that the combination of a forfeiture order and a restitution order results in a form of punitive damages piled on top of the other penalties for the defendant’s crime, such as imprisonment.”

“For purposes of calculating a prison sentence, if the victim’s loss can’t be estimated the offender’s gain can be used to approximate the loss. U.S.S.G. § 2B1.1, Application Note 3(B); United States v. Vrdolyak, 593 F.3d 676, 680 (7th Cir. 2010); United States v. Chatterji, 46 F.3d 1336, 1340 (4th Cir. 1995). But an order of restitution, unlike either a prison sentence or an order of forfeiture (including the order of forfeiture in this case, which added to the defendant’s monetary gain the property that he bought with the proceeds of the fraud), can be based only on the victim’s loss, 18 U.S.C. § 3664(f)(1)(A); United States v. George, 403 F.3d 470, 474 (7th Cir. 2005); United States v. Galloway, 509 F.3d 1246, 1253 (10th Cir. 2007); see also 18 U.S.C. §§ 3663A(c)(3)(B), 3664(e), even though disgorgement of an ill-gotten gain is a standard example of restitution in civil cases.”

Affirmed in part, and Reversed in part.

10-1543 U.S. v. Navarrette

Appeal from the United States District Court for the Northern District of Illinois, Kennelly, J., Posner, J.