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 was an issue of first impression here, the circuit affirmed.
The restitution statute, 18 U.S.C. § 3663A, provides that restitution shall be based on the property’s value “on the date of sentencing” if that is greater than the value on the date of loss. Since the purpose of restitution is to make the victims whole,“value” is a “flexible concept to be calculated by a district court by the measure that best serves” the statutory purpose. And, indeed, accounting for the “time-value of money” requires flexibility. Since the statute requires restitution in the “full amount of” the victim’s losses, there is “no reason to exclude losses that result from the deprivation of the victim’s ability to put its money to productive use.” Prejudgment interest “stands in to provide a rough but fair approximation” of this loss.
The court also indicated – but stopped short of holding – that in a case where there is evidence that the victim “would not have put the funds to productive use,” prejudgment interest might not be appropriate. Here, while the insurance companies’ restitution request, which included a request for prejudgment interest, did not specify how the money would have been used if it had not been paid out to Quarashi, there was no evidence that they would not have used it productively.