Case No. 16-1519 | 5th Cir.
The Mandatory Victims Restitution Act (“MVRA”) requires defendants convicted of certain crimes to reimburse the victims of those crimes. Reimbursable expenses under the MVRA include “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) (2012).
Petitioner committed wire fraud by misleading General Electric Capital Corporation (“GECC”) to increase the amount of a revolving loan for businesses owned by Petitioner and his co-conspirators. After discovering the fraud, GECC hired a variety of outside consultants to fully investigate. Eventually, Petitioner’s businesses filed for bankruptcy, and GECC incurred additional expenses as a result of participating in the bankruptcy proceedings.
As a “victim” under the MVRA, GECC was awarded restitution of more than $4.1 million for investigative fees and more than $780,000 for costs related to Petitioner’s bankruptcy proceedings. This restitution was affirmed by the Fifth Circuit, which found that both the investigative expenses and the bankruptcy resulted from the wire fraud.
Petitioner claims that expenses from the internal investigation and bankruptcy proceedings do not fall within the scope of the MVRA because “participation in the investigation or prosecution of the offense” is limited to government—not private—investigations or prosecutions. Further, Petitioner claims that expenses incurred before the investigation or prosecution do not fall under the purview of the MVRA, either. The D.C. Circuit adopts this narrow construction, while several other circuits interpret the statute more broadly.
Respondent asserts that the expenses are recoverable through the MVRA because the consultants hired were necessary to preserve evidence and fully uncover Petitioner’s scheme. Further, Respondent argues, the expenses from participation in the bankruptcy proceedings are proper restitution because the statute expressly includes “proceedings,” not “criminal proceedings.” Respondent also argues that legal and professional expenses are restitution under the MVRA because these expenses stem from Petitioner’s fraud. The Supreme Court’s ruling in this case may resolve the circuit split. The Court may align with the D.C. Circuit’s narrow interpretation, adopt the broad interpretation of other circuits, or find that an entirely distinct reading of the MVRA is warranted.