Summary
holding cost of private post-offense investigation not recoverable under § 3663A(b), but leaving other parts of restitution award undisturbed
Summary of this case from United States v. AvenattiOpinion
No. 16–1519.
05-29-2018
Sergio Fernando LAGOS, Petitioner v. UNITED STATES.
Daniel L. Geyser, Dallas, TX, for Petitioner. Michael R. Huston, Washington, D.C., for Respondent. Randolph L. Schaffer, Jr., Houston, TX, Daniel L. Geyser, Stris & Maher LLP, Dallas, TX, Peter K. Stris, Douglas D. Geyser, Stris & Maher LLP, Los Angeles, CA, for Petitioner. Noel J. Francisco, Solicitor General, John P. Cronan, Acting Assistant Attorney General, Eric J. Feigin, Michael R. Huston, Assistants to the Solicitor General, William A. Glaser, Attorney, Department of Justice, Washington, D.C., for Respondent.
Daniel L. Geyser, Dallas, TX, for Petitioner.
Michael R. Huston, Washington, D.C., for Respondent.
Randolph L. Schaffer, Jr., Houston, TX, Daniel L. Geyser, Stris & Maher LLP, Dallas, TX, Peter K. Stris, Douglas D. Geyser, Stris & Maher LLP, Los Angeles, CA, for Petitioner.
Noel J. Francisco, Solicitor General, John P. Cronan, Acting Assistant Attorney General, Eric J. Feigin, Michael R. Huston, Assistants to the Solicitor General, William A. Glaser, Attorney, Department of Justice, Washington, D.C., for Respondent.
Justice BREYER delivered the opinion of the Court.
The Mandatory Victims Restitution Act of 1996 requires defendants convicted of a listed range of offenses to
"reimburse the victim for lost income and necessary child care, transportation, and other expenses incurred during participation in the investigation or prosecution of the offense or attendance at proceedings related to the offense ." 18 U.S.C. § 3663A(b)(4) (emphasis added).
We must decide whether the words "investigation" and "proceedings" are limited to government investigations and criminal proceedings, or whether they include private investigations and civil proceedings. In our view, they are limited to government investigations and criminal proceedings.
I
The petitioner, Sergio Fernando Lagos, was convicted of using a company that he controlled (Dry Van Logistics) to defraud a lender (General Electric Capital Corporation, or GE) of tens of millions of dollars. The fraud involved generating false invoices for services that Dry Van Logistics had not actually performed and then borrowing money from GE using the false invoices as collateral. Eventually, the scheme came to light. Dry Van Logistics went bankrupt. GE investigated. The Government indicted Lagos. Lagos pleaded guilty to wire fraud. And the judge, among other things, ordered him to pay GE restitution.
The issue here concerns the part of the restitution order that requires Lagos to reimburse GE for expenses GE incurred during its own investigation of the fraud and during its participation in Dry Van Logistics' bankruptcy proceedings. The amounts are substantial (about $5 million), and primarily consist of professional fees for attorneys, accountants, and consultants. The Government argued that the District Court must order restitution of these amounts under the Mandatory Victims Restitution Act because these sums were "necessary ... other expenses incurred during participation in the investigation ... of the offense or attendance at proceedings related to the offense." § 3663A(b)(4). The District Court agreed, as did the U.S. Court of Appeals for the Fifth Circuit. 864 F.3d 320, 323 (2017).
Lagos filed a petition for certiorari. And in light of a division of opinion on the matter, we granted the petition. Compare United States v. Papagno, 639 F.3d 1093, 1100 (C.A.D.C.2011) (subsection (b)(4) of the Mandatory Victims Restitution Act does not cover private investigation costs), with United States v. Elson, 577 F.3d 713, 726–729 (C.A.6 2009) (statute not so limited); United States v. Hosking, 567 F.3d 329, 331–332 (C.A.7 2009) (same); United States v. Stennis–Williams, 557 F.3d 927, 930 (C.A.8 2009) (same); United States v. Amato, 540 F.3d 153, 159–163 (C.A.2 2008) (same); United States v. Gordon, 393 F.3d 1044, 1056–1057 (C.A.9 2004) (same).
II
The Mandatory Victims Restitution Act is one of several federal statutes that govern federal court orders requiring defendants convicted of certain crimes to pay their victims restitution. It concerns "crime[s] of violence," "offense[s] against property ..., including any offense committed by fraud or deceit," and two specific offenses, one concerning tampering with a consumer product and the other concerning theft of medical products. 18 U.S.C. § 3663A(c)(1)(A). It requires, in the case of property offenses, return of the property taken or its value, § 3663A(b)(1) ; in the case of bodily injury, the payment of medical expenses and lost income, § 3663A(b)(2) ; in the case of death, the payment of funeral expenses, § 3663A(b)(3) ; and, as we have said, supra, at 1687, in all cases, "reimburse [ment]" to
"the victim for lost income and necessary child care, transportation, and other expenses incurred during participation in the investigation or prosecution of the offense or attendance at proceedings related to the offense ." § 3663A(b)(4) (emphasis added).
We here consider the meaning of that italicized phrase. Specifically, we ask whether the scope of the words "investigation" and "proceedings" is limited to government investigations and criminal proceedings, or whether it includes private investigations and civil or bankruptcy litigation. We conclude that those words are limited to government investigations and criminal proceedings.
Our conclusion rests in large part upon the statute's wording, both its individual words and the text taken as a whole. The individual words suggest (though they do not demand) our limited interpretation. The word "investigation" is directly linked by the word "or" to the word "prosecution," with which it shares the article "the." This suggests that the "investigation [s]" and "prosecution[s]" that the statute refers to are of the same general type. And the word "prosecution" must refer to a government's criminal prosecution, which suggests that the word "investigation" may refer to a government's criminal investigation. A similar line of reasoning suggests that the immediately following reference to "proceedings" also refers to criminal proceedings in particular, rather than to "proceedings" of any sort.
Furthermore, there would be an awkwardness about the statute's use of the word "participation" to refer to a victim's role in its own private investigation, and the word "attendance" to refer to a victim's role as a party in noncriminal court proceedings. A victim opting to pursue a private investigation of an offense would be more naturally said to "provide for" or "conduct" the private investigation (in which he may, or may not, actively "participate"). And a victim who pursues civil or bankruptcy litigation does not merely "atten[d]" such other "proceedings related to the offense" but instead "participates" in them as a party. In contrast, there is no awkwardness, indeed it seems perfectly natural, to say that a victim "participat[es] in the investigation" or "attend[s] ... proceedings related to the offense" if the investigation at issue is a government's criminal investigation, and if the proceedings at issue are criminal proceedings conducted by a government.
Moreover, to consider the statutory phrase as a whole strengthens these linguistic points considerably. The phrase lists three specific items that must be reimbursed, namely, lost income, child care, and transportation; and it then adds the words, "and other expenses." § 3663A(b)(4). Lost income, child care expenses, and transportation expenses are precisely the kind of expenses that a victim would be likely to incur when he or she (or, for a corporate victim like GE, its employees) misses work and travels to talk to government investigators, to participate in a government criminal investigation, or to testify before a grand jury or attend a criminal trial. At the same time, the statute says nothing about the kinds of expenses a victim would often incur when private investigations, or, say, bankruptcy proceedings are at issue, namely, the costs of hiring private investigators, attorneys, or accountants. Thus, if we look to noscitur a sociis, the well-worn Latin phrase that tells us that statutory words are often known by the company they keep, we find here both the presence of company that suggests limitation and the absence of company that suggests breadth. See, e.g., Yates v. United States, 574 U.S. ––––, ––––, 135 S.Ct. 1074, 1085, 191 L.Ed.2d 64 (2015).
We add a practical fact: A broad reading would create significant administrative burdens. The statute provides for mandatory restitution, and the portion we construe is limited to "necessary ... other expenses." § 3663A(b)(4) (emphasis added). The word "necessary" would, if the statute is broadly interpreted, invite disputes as to whether particular expenses "incurred during" participation in a private investigation or attendance at, say, a bankruptcy proceeding, were in fact "necessary." Such disputes may become burdensome in cases involving multimillion dollar investigation expenses for teams of lawyers and accountants. A district court might, for example, need to decide whether each witness interview and each set of documents reviewed was really "necessary" to the investigation. Similarly, the statute also limits restitution to expenses incurred only during "attendance at proceedings related to the offense," ibid. (emphasis added), inviting disputes as to whether, say, a licensing proceeding, a human resources review, an in-house disciplinary proceeding, a job interview, a Consumer Product Safety Commission hearing, or a neighborhood watch meeting qualified as "proceedings" sufficiently "related to the offense" so as to be eligible for restitution.
To interpret the statute broadly is to invite controversy on those and other matters; our narrower construction avoids it. And one begins to doubt whether Congress intended, in making this restitution mandatory, to require courts to resolve these potentially time-consuming controversies as part of criminal sentencing—particularly once one realizes that few victims are likely to benefit because more than 90% of criminal restitution is never collected. See GAO, Federal Criminal Restitution: Most Debt Is Outstanding and Oversight of Collections Could Be Improved 25 (GAO–18–203, 2018) (explaining that the Justice Department considers 91% of outstanding criminal restitution to be "uncollectible").
There are, of course, contrary arguments—arguments favoring a broad interpretation. The Government points out, in particular, that our narrow interpretation will sometimes leave a victim without a restitution remedy sufficient to cover some expenses (say, those related to his private investigation) which he undoubtedly incurred as a result of the offense. Leaving the victim without that restitution remedy, the Government adds, runs contrary to the broad purpose of the Mandatory Victims Restitution Act, namely, "to ensure that victims of a crime receive full restitution." Dolan v. United States, 560 U.S. 605, 612, 130 S.Ct. 2533, 177 L.Ed.2d 108 (2010).
But a broad general purpose of this kind does not always require us to interpret a restitution statute in a way that favors an award. After all, Congress has enacted many different restitution statutes with differing language, governing different circumstances. Some of those statutes specifically require restitution for the "full amount of the victim's losses," defined to include "any ... losses suffered by the victim as a proximate result of the offense." See 18 U.S.C. §§ 2248(b), 2259(b), 2264(b), 2327(b). The Mandatory Victims Restitution Act, however, contains no such language; it specifically lists the kinds of losses and expenses that it covers. Moreover, in at least one other statute Congress has expressly provided for restitution of "the value of the time reasonably spent by the victim in an attempt to remediate the intended or actual harm incurred by the victim from the offense." § 3663(b)(6). Again the Mandatory Victims Restitution Act has no similar provision. And given those differences between the Mandatory Victims Restitution Act and other restitution statutes, we conclude that the considerations we have mentioned, particularly those based on a reading of the statute as a whole, tip the balance in favor of our more limited interpretation.
We add that this interpretation does not leave a victim such as GE totally without a remedy for additional losses not covered by the Mandatory Victims Restitution Act. GE also brought a civil lawsuit against Lagos for the full extent of its losses, and obtained an over-$30 million judgment against him. The Government says that GE has largely been unable to collect on that judgment, but there is no reason to think that collection efforts related to a criminal restitution award would prove any more successful.
The Government makes one additional argument. It points out that GE shared with the Government the information that its private investigation uncovered. And that fact, the Government says, should bring the expenses of that investigation within the terms of the statute even if the "investigation" referred to by the statute is a government's criminal investigation. The short, conclusive answer to that claim, however, lies in the fact that the statute refers to "necessary child care, transportation, and other expenses incurred during participation in the investigation or prosecution of the offense." § 3663A(b)(4) (emphasis added). It does not refer to expenses incurred before the victim's participation in a government's investigation began. And the Government does not deny that it is those preparticipation expenses—the expenses of conducting GE's investigation, not those of sharing the results from it—that are at issue here. We therefore need not address in this case whether this part of the Mandatory Victims Restitution Act would cover similar expenses incurred during a private investigation that was pursued at a government's invitation or request. It is enough to hold that it does not cover the costs of a private investigation that the victim chooses on its own to conduct.
* * *
For the reasons stated, we conclude that the words "investigation" and "proceedings" in the Mandatory Victims Restitution Act refer to government investigations and criminal proceedings. Consequently Lagos is not obliged to pay the portion of the restitution award that he here challenges. We reverse the Court of Appeals' judgment to the contrary, and we remand the case for further proceedings consistent with this opinion.
It is so ordered.