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Thursday, August 25th, 2022

The government can garnish your 401(k) for restitution

In United States v. Greebel, 21-993-cr (2d Cir. Aug. 24, 2022), the Second Circuit holds that the Mandatory Victims Restitution Act (MVRA) enables the government to garnish a defendant’s retirement accounts to pay restitution.

Defendant Greebel was convicted of conspiracy to commit wire fraud and securities fraud and ordered to pay over $10 million in restitution. Pursuant to this restitution order, the government tried to garnish two of his 401(k) retirement accounts. The defendant objected. The Circuit found that these accounts’ plans permitted the defendant himself to withdraw lump-sums. And because the MVRA empowered the government to reach any property “in which the debtor has a substantial nonexempt interest,” allowing the government to “step[] into the defendant’s shoes, acquiring whatever rights the defendant himself possesses” to property, the funds were fair game for the government.

In so holding, the Circuit addressed a potential conflict between the MVRA and the …

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Monday, September 13th, 2021

Second Circuit reverses and remands an order of restitution, imposed under the Mandatory Victim’s Restitution Act of 1996 (“MVRA”) — 18 U.S.C. § 3663A(a)(2), (c) — because the Government failed to prove, by a preponderance, the proximate cause element: i.e., that the losses to the victims were foreseeable to the defendant in the course of committing the “offense of conviction.” United States v. Goodrich, No. 19-208, __F.4th__ , 2021 WL 3889801 (2d Cir. Sept. 1, 2021) (C.J.J. Calabresi, Pooler, Carney).

The Circuit reversed, in part, an Amended Judgment that imposed restitution under the MVRA, because, although the defendant was responsible for the $479,000 losses to purchasers of stocks traded on the public market, the government didn’t establish that the $1.85 million of losses from the “private placement” trades were foreseeable to Goodrich.

Defendant Goodrich, a broker-dealer in the over-the-counter securities market,  pleaded guilty to a conspiracy to commit securities fraud, in violation of 18 U.S.C. § 371. Goodrich executed fraudulent trades with co-defendants to artificially inflate the share price of a sham company named, Cubed, Inc.  Op at 3-4 (They allegedly engaged in a “pump and dump” market manipulation scheme, through “wash” and “matched” trades); see Op at 4, 6, footnotes 1 & 4 defining a pump & dump scheme and wash and matched trades).

Goodrich executed trades in the public market, while “his co-defendants, who are not appellants here, …

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Friday, January 8th, 2021

Second Circuit rejects application of the categorical approach for determining an “offense against property” under the MVRA.

In United States v. Razzouk, No. 18-1395 (2d Cir. Jan. 4, 2021), the Second Circuit, in an opinion by Judge Carney, joined by Judge Walker and District Judge Koeltl, held that in determining whether a conviction is for an “offense against property,” such that restitution is required under the Mandatory Victims Restitution Act (“MVRA”), 18 U.S.C. § 3663A(c)(1)(A)(ii), a court may consider the facts and circumstances of the specific crime committed—not just the generic elements of the offense. The appellant had argued that his bribery conviction, which was based on a statute that does not refer to “property” or necessarily implicate its involvement, should not be subject to mandatory restitution. The Circuit rejected this, finding that an analysis based on the categorical approach was unwarranted and concluding that the facts of his case supported that it was an “offense against property.”

Defendant-appellant Sassine Razzouk pleaded guilty to one count …

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Categories: bribery, categorical approach, MVRA, restitution

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Friday, June 1st, 2018

This Week’s Supreme Court Opinions

This week the Supreme Court issued two opinions, both of which seem relatively straightforward in their holdings.

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In Collins v. Virginia, the Court held that the automobile exception to the Fourth Amendment does not permit a warrantless search of a vehicle parked within the curtilage of a home. In Collins, police officers tracked a stolen vehicle to the address of the defendant’s girlfriend. There, parked in the driveway, an officer saw what appeared to be a motorcycle frame covered with a white tarp. The officer entered the driveway, uncovered the tarp, and confirmed that it was the stolen motorcycle.

Justice Sotomayor’s opinion, for an eight-member majority, is clear in its language and broad in its scope. The opinion swiftly concludes that the part of the driveway on which the motorcycle was parked was curtilage.  That portion of the driveway was enclosed on three sides, but open …

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Categories: automobile exception, curtilage, Fourth Amendment, MVRA

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Friday, February 16th, 2018

Second Circuit Holds that A Criminally Culpable Corporation Is Not Entitled to Restitution for Its Employees’ Criminal Conduct

The Second Circuit issued two opinions this week on third parties’ claims for restitution and shares of criminally forfeited property from defendants. See Federal Insurance Co. v. United States & United States v. Mazer (related cases), Nos. 16-2967 & 16-3402 (2d Cir. 2017) (Parker, Lynch, Carney) (appeal from Daniels, J., SDNY), opinion available here; United States v. Ohle, No. 16-601 (2d Cir. 2017) (Leval, Calabresi, Cabranes) (appeal from Rakoff, J., SDNY), opinion available here.

The lengthier of these opinions, in Federal Insurance, brings welcome news (or at least a sigh of relief) to the sort of low-level employees to whom corporate defendants are incentivized to shift blame in white collar prosecutions. Federal Insurance concerns a corporation’s entitlement to restitution and forfeiture payments from employees who were convicted for participating in a fraud for which the corporation is criminally culpable. In part, the opinion affirms …

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Categories: CVRA, forfeiture, fraud, MVRA, restitution, victims

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Wednesday, January 10th, 2018

Burdens of Proof & Restitution Under The MVRA

Yesterday the Second Circuit issued a short opinion concerning the burdens of proof for modifying restitution orders under the Mandatory Victims Restitution Act (MVRA), 18 U.S.C. §§ 3663A & 3664. Specifically, the panel held that the district court acted within its discretion in requiring the defendant to prove that a victim recovered money in civil litigation “for the same loss” caused by the defendant. Id. § 3664(j)(2) (requiring that a restitution order be reduced by the amount of such recoveries). The opinion in United States v. Smathers, No. 16-2394 (Kearse, Cabranes, Wesley) (per curiam) (appeal from Hellerstein, J., SDNY), is available here.

Mr. Smathers, a former AOL employee, was ordered to pay $84,000 in restitution to AOL in connection with his conviction for selling the company’s customer list to be used for spam. Through his attorney, Mr. Smathers requested that the district court determine whether this restitution order …

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