The background was as follows. Petitioner 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,” who “pleaded guilty to wire fraud. And the [federal District Court] judge, among other things, ordered him to pay GE restitution” pursuant to the Mandatory Victims Restitution Act of 1996. That act “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).” The judge’s restitution order included a requirement that Lagos “reimburse GE for expenses GE incurred during its own investigation of the fraud and during its participation in Dry Van Logistics’ bankruptcy proceedings. The [expenses] 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 … Fifth Circuit.” Lagos sought certiorari.
In its decision reversing the judgment of the Fifth Circuit, the Supreme Court stated that “Lagos is not obliged to pay the portion of the restitution award that he here challenge[d],” because “the words ‘investigation’ and ‘proceedings’ in the Mandatory Victims Restitution Act refer to government investigations and criminal proceedings,” not to “a private investigation that the victim chooses on its own to conduct.” The Court explained that its “conclusion rests in large part upon the statute’s wording…. 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,” such as bankruptcy litigation.
Whether a defendant is required to pay restitution, and the amount of that restitution, may be a substantial collateral consequences of a conviction. Several years ago, the SJC specifically ruled in Commonwealth v. Henry that the court must consider a defendant’s ability to pay. If you or a loved one is charged with a criminal offense and potentially facing the possibility of restitution – whether under the Mandatory Victims Restitution Act of 1996 or otherwise – it is crucial that you have a skilled and experienced attorney to minimize the financial impact of any such order. Attorney Daniel Cappetta is sensitive to all aspects of a criminal conviction – from the fact that a conviction may have an impact on a person’s employability, to the fact that it may pose a substantial financial hardship. Call him for a free consultation today so he can help you.