Archive | restitution

Sunday, June 12th, 2011

PC World

Here are two per curiams in white collar cases, decided on the same day.

First, in United States v. Lauerson, No. 09-0255-cr (2d Cir. June 7, 2011) (McLaughlin, Pooler, Sack, CJJ) (per curiam), the circuit agreed that the district court lacked the authority to waive the delinquency and default penalties arising from the defendant’s falling behind on his restitution payments. The relevant statute, 18 U.S.C. § 361, permits courts to, in some circumstances, modify or remit the restitution order itself, but does not permit waiver of those penalties.

And, in United States v. Wolfson, No. 10-2786-cr (2d Cir. June 7, 2011) (Kearse, Pooler, Lynch, CJJ), the court found no error in the jury instructions at a“pump and dump” securities fraud trial. The scheme operated by having corrupt stock brokers selling overvalued stocks, for which they were rewarded with “exorbitant” commissions that they either failed to disclose at all or lied …

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Categories: restitution, securities law, Uncategorized

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Friday, March 11th, 2011

Dead Again

United States v. Qurashi, No. 10-348-cr (2d Cir. March 8, 2011) (Newman, Walker, Pooler, CJJ)

Imran Quarashi and his brother, Adnan, purchased $3 million insurance policies on Adnan’s life from two different insurance companies. They then faked Adnan’s death, falsely asserting that he had died in a car accident in Pakistan, and the insurers paid Quarashi on the policies. A few years later, Adnan returned to the United States and assumed a new identity, Hassan Khan, and Quarashi purchased eight $10 million insurance policies on Khan’s life. When he claimed that Khan had been killed in a traffic accident in Pakistan, the insurance companies balked, opened an investigation, and Quarashi was ultimately charged with fraud.

Quarashi pled guilty – Adnan is still a fugitive – and was sentenced to 108 months’ imprisonment. On appeal he challenged the district court’s inclusion of prejudgment interest on the restitution order. Noting that this …

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Categories: restitution, Uncategorized

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Thursday, March 10th, 2011

Peter Paul and Money

United States v. Paul, No. 09-3191-cr (2d Cir. March 7, 2011) (Cabranes, Chin, CJJ, Crotty, DJ)

Defendant Peter Paul pled guilty to securities fraud, in connection with a stock manipulation scheme that permitted him to fraudulently obtain multi-million dollar margin loans, which he never repaid, from two brokerage houses. The district court sentenced Paul principally to 120 months’ imprisonment and more than $11.4 in restitution.

He raised three main claims on appeal, all without success.

At a pretrial conference, the district judge remarked that he had a reputation for giving a Guideline sentence after trial but for being lenient with defendants who pled guilty. The judge also remarked that the twenty-five months Paul spent fighting extradition in Brazil – he apparently fled there as his scheme was unraveling – would not be credited if he did not plead guilty. On appeal, Paul claimed that these remarks violated Fed.R.Cr.P. 11(c)(1), which …

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Categories: restitution, Rule 11, speedy sentencing, Uncategorized

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Sunday, February 27th, 2011

Restoration Comedy

United States v. Pescatore, No. 10-0520-cr (2d Cir. February 23, 2011) (Kearse, Winter, Hall, CJJ)

In connection with a plea agreement that covered both a long-running chop-shop operation and an extortion scheme, Michael Pescatore agreed to accept a 132 month sentence, a $2.5 million forfeiture and “no less than $3 million” in restitution. The agreement specified that the prosecutors would recommend that the forfeited assets be transferred to the victims, a process known as “restoration,” but that the ultimate decision lay with the Department of Justice, which would “make its decision in accordance with applicable law.”

At Pescatore’s 2008 sentencing, the court imposed the agreed-upon sentence, including $3 million in restitution, to be paid in full by the end of 2009. The written Judgment reflected this order, but did not contain the names of the victims to whom Pescatore owed restitution or the amounts to which they were entitled. In …

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Categories: fofeiture, restitution, Uncategorized

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Tuesday, January 4th, 2011

Be Careful What You Fish For

United States v. Bengis, No. 07-4895-cr (2d Cir. January 4, 2011) (Feinberg, Cabranes, Hall, CJJ)

Three defendants pled guilty to various offenses arising from their South African lobster fishing businesses; they illegally harvested large numbers of rock lobsters from South African waters for export to the United States, conduct that violated both South African and United States law. This opinion addresses the government’s appeal of the district court’s legal conclusion that South Africa was not entitled to restitution. The Circuit reversed.

The district court had first held that South Africa did not have a property interest in the illegally harvested lobsters. The appellate court disagreed. Under South African law, lobsters caught illegally are not the property of those who caught them. They are subject to seizure by the government, which can then sell them and keep the proceeds. Thus, the defendants’ conduct, which included evading the seizure of overharvested lobsters, …

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Friday, November 26th, 2010

Payoff Games

United States v. Kalish, No. 08-3374-cr (2d Cir. November 24, 2010) (Newman, Winter, Lynch, CJJ)

Defendant Kalish was convicted of mail and wire fraud in connection with an advance loan fee scheme. The district court ordered him to pay $ 1.2 million in restitution, and also ordered a $ 3.9 million forfeiture.

On appeal, Kalish claimed that the district court should have reduced the forfeiture amount by the amount of the restitution order. The circuit affirmed, finding that the claim was premature. There is no error in imposing both a forfeiture order and a restitution order, since each is authorized by a separate statute.

However, once “some payment has been made by way of restitution, a defendant would be in a position to argue that such a payment should be a credit against any then remaining forfeiture amount.” Since the forfeiture amount represents “ill-gotten gains,” it is “at least arguable” …

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Categories: forfeiture, restitution, Uncategorized

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Saturday, April 10th, 2010

Payment Plan Available

United States v. Kyles, No. 06-4196-cr (2d Cir. April 2, 2010) (Miner, Katzmann, Raggi, CJJ)

In 1993, defendant Kyles received a long bank robbery sentence, along with a $4,133 restitution order. The court did not set a payment schedule, and instead (illegally) delegated that task to the Probation Department, which never acted. In 1998, the district court amended the restitution order by directing that Kyles pay $2 per month while incarcerated. Kyles did not appeal that order.

In 2006, the district court amended the order again, this time raising the monthly payments from $2 to $25. After much back-and-forth over whether the district court had authority to order this and Kyles’ ability to pay, the court amended the order again, this time specifying that Kyles’ payments should be “increased in accordance with the guidelines of the Inmate Financial Responsibility Program.”

Kyles appealed, arguing that the district court lacked the authority …

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Saturday, March 27th, 2010

The Boss From Hell

United States v. Sabhnani, No. 08-3720-cr (2d Cir. March 25, 2010) (Wesley, Livingston, CJJ, Restani, JCIT)

The defendants, husband and wife, were convicted of forced labor, harboring aliens, peonage and document servitude, both substantive and conspiracy. The wife received an eleven-year sentence, while the husband was sentenced to forty months. The court also imposed fines and restitution and ordered the forfeiture of their home. The defendants raised several issues on appeal, not all of which are summarized here, but won relief only on a restitution issue.


The facts of this case are quite disturbing. The defendants lived very comfortably, along with their children, in a large house on Long Island from which the husband ran a successful export business. Beginning in 2002, with the help of the wife’s mother, the defendants brought two women to the United States from Indonesia to serve as household servants. Their treatment of the …

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Categories: restitution, Uncategorized, vulnerable victim

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Wednesday, August 12th, 2009

You Can’t Bet On It

United States v. Battista, No. 08-3750-cr (2d Cir. August 6, 2009) (Walker, Wesley, Wallace, CJJ)

James Battista was part of an illegal NBA gambling operation. He pled guilty to conspiring to transmit wagering information, in violation of 18 U.S.C. §§ 371 and 1084, and his sentence included restitution to the NBA. On appeal he unsuccessfully challenged this order.


The gambling scheme began with a corrupt NBA referee, who would transmit “picks” through an intermediary to Battista, who would then place bets on those games. Battista paid the ref a fee for each game where the ref picked the winner. The ref and the intermediary each pled guilty to wire fraud, while Battista pled guilty to the wagering conspiracy. At sentencing, the district court ordered the three defendants to pay more than $ 200,000 in restitution to the NBA.

The Appeal

On appeal, Battista argued that the NBA was not …

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Categories: restitution, Uncategorized

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Friday, July 10th, 2009

Back to the Future

United States v. Pearson, No. 07-0142-cr (2d Cir. July 2, 2009) (Miner, Katzmann, Raggi, CJJ) (per curiam)

Title 18, U.S.C. § 2259 provides that, in sex abuse cases, restitution is mandatory for the full amount of any loss to the victim, including the costs of medical or psychiatric care. Here, in a case of first impression in the circuit, the court held that this section includes restitution for estimated future expenses.

In this case, then, the district court properly ordered such future restitution. The circuit sent the case back anyway, however, because the district court, which arrived at a figure of nearly $ 1 million – the victims were two young girls – did not adequately explain how it arrived at the figure it selected.

The court also held that the issue survived the appellate waiver in Pearson’s plea agreement. With respect to restitution, the agreement merely stipulated that Pearson …

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Friday, February 6th, 2009

Cashed and Burned

United States v. Varrone, No. 07-4533-cr (2d Cir. January 30, 2009) (Calabresi, Sotomayor, Parker, CJJ)

Joseph A. Castello ran a check cashing business. He cashed more than $200 million in checks that exceeded $10,000 – charging a four percent check-cashing fee – for which he was obligated to file currency transaction reports (CTR’s). He did not, however, and was convicted by a jury of violating 31 U.S.C. §§ 5313 and 5322(a). On appeal, he challenged a restitution order, and claimed that the forfeiture order violated the Excessive Fines Clause of the Eighth Amendment. The circuit vacated.

The Restitution Order

The restitution order involved a fraud victim, who was induced to send a $300,00 check to a bogus financial firm. This had nothing at all to do with Castello, except that the firm cashed the check at his establishment. When the victim contacted Castello, he falsely represented that he was an …

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Categories: Eighth Amendment, forfeiture, restitution, Uncategorized

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