Thursday, March 31st, 2022

“Hybrid” Restitution Order Makes Less Culpable Defendant Liable to Personally Pay the Full Amount Jointly Imposed Until All Restitution Has Been Paid, Including Additional Restitution Assessed Against More Culpable Defendant

After Ayfer and Hakan Yalincik, mother and son, pled guilty to a fraud scheme led by Hakan, the district court imposed $500,000 in restitution for one victim, for which the defendants were jointly and severally liable, and an additional $250,000 for the same victim, for which only Hakan was individually liable. After the victim had received more than $500,000 in payments, but was still owed $139,057 out of the total $750,000, the defendants moved for an order declaring Ayfer’s obligation satisfied because the amount for which she was jointly liable had been paid. Ayfer had personally “made only minimal restitution payments;” most of the payments were made by Hakan or distributed from bankruptcies of his businesses. The district court denied the motion. The Second Circuit affirmed, in an opinion by Judge Lynch, ruling that Ayfer was liable until either the victim was made completely whole or Ayfer had personally paid the $500,000 for which she was jointly liable. United States v. Yalincik, Nos. 20-1540; 20-1542; 20-2144 (March 29, 2022),  2022 WL 90511.

First, the Second Circuit approved of the so-called “hybrid” restitution order, a practice approved in other Circuits, as “compatible with” both the Mandatory Victims Restitution Act (“MVRA”) and  “our traditional understanding of joint and several liability in restitution obligations.”  The MVRA requires the court to order restitution to each victim “in the full amount” and, if it finds “that more and 1 defendant has contributed to the loss of a victim, the court may make each defendant liable for payment of the full amount of restitution or may apportion liability among the defendants to reflect the level of contribution to the victim’s loss and economic circumstances of each defendant.” 18 U.S.C. § 3664(h).  The Second Circuit acknowledged that “federal courts have no ‘inherent power to order restitution,’ and that a court’s power to order it “depends upon and is circumscribed by statute.”  It further acknowledged that the statute, the MVRA, does not specifically authorize either “hybrid restitution” or  “joint and several” liability.  However, the Circuit had long applied the common law concept of “joint and several liability” to restitution orders, making two defendants who are each ordered to pay restitution for the victim’s whole loss liable for the whole until the full amount has been paid.

“Hybrid restitution,” the Circuit explained,  “combine[s] the discretion and apportionment authority permitted by 3664(h) with the common law concept of joint and several liability.” It allows apportionment of joint and several liability to account for the defendants’ varying degrees of contribution to the victim’s loss – here, Ayfer’s joint responsibility for up to $500,000, but not for the additional $250,000 caused by Hakan alone. This approach holds each defendant liable for the amount ordered against him until the full amount is paid. The Circuit went further, however, and held that the effect of joint liability in a hybrid restitution order makes the less responsible defendant personally liable to pay her full joint amount, even if it has already been paid by the co-defendant, until the entire amount of restitution ordered – including the additional amount she is not liable for – is paid to that victim. Therefore, although more than the $500,000 for which Ayfer was jointly liable had been paid, because she had not personally paid her maximum liability of $500,000, she was still liable to pay restitution until the entire additional $250,000 assessed only against her son was paid as well.

The Circuit noted that a district court can avoid such an outcome for a less culpable defendant by providing that a given defendant’s “restitution obligation ends once the aggregate paid by that defendant and his co-defendants reaches a certain amount, even if the defendant himself did not pay anything and the victim was no yet made whole.”

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