No. 94-158, Section "N".
March 5, 2001.
ORDER AND REASONS
Before the Court are Anthony Joseph Tusa, Jr.'s and Victor Joseph Tusa, Sr.'s Motions to Vacate Convictions and Sentences under 28 U.S.C. § 2255. For the following reasons, the petitioners' motions are GRANTED IN PART, and the parties are ordered to file supplemental briefs.
In 1994, Victor and Anthony Tusa were indicted with three counts of mail fraud charging them with engaging in a scheme to defraud the State of Louisiana, its agencies, and its citizens of video poker licenses. Both defendants were convicted on these counts and sentenced to terms of imprisonment often months, followed by three years of supervised release. Each of the Tusas was sentenced to pay a fine of $11,838.00 and a special assessment fee of $150.00, and the two were ordered to make restitution jointly and severally to Bally's Gaming, Inc. ("Bally's"), in the amount of $37,048.00.
The Tusas appealed their convictions, contending that the mail fraud counts were invalid because the video poker licenses they were accused of obtaining through fraud were not "property" of the State under 18 U.S.C. § 1341. The Fifth Circuit, while recognizing that other courts of appeals had held that similar licenses did not constitute "property" under § 1341, held that "video poker licenses constitute money or property as required by the mail fraud statute." United States v. Salvatore, 110 F.3d 1131, 1143 (5th Cir. 1997).
In Cleveland v. United States, 121 S.Ct. 365 (2000), the Supreme Court ruled that when a state issues a license as a result of fraudulent misrepresentation, the state has not been deprived of "property," and hence there has been no violation of 18 U.S.C. § 1341. Specifically, the Court held "that § 1341 requires the object of the fraud to be `property' in the victim's hands and that a Louisiana video poker license in the State's hands is not `property' under § 1341." Id. at 374. Accordingly, the Supreme Court's holding in Cleveland contradicts the Fifth Circuit's holding in Salvatore that the Tusas' convictions were proper under the mail fraud statute.
The Tusas now move the Court to vacate their convictions and sentences on the grounds that their conduct as alleged in the indictment and established by the Government at trial does not violate the statute under which they were convicted.
LAW AND ANALYSIS
Both the Government and the petitioners agree (1) that the mail fraud convictions and sentences of Victor and Anthony Tusa should be vacated, (2) that the indictments against the Tusas should be dismissed, and (3) that the United States should immediately repay all fines and fees assessed against the Tusas. However, the Government opposes the Tusas' request that they be reimbursed for the $37,048.00 paid in restitution.
In the proposed order attached to their original memorandum, petitioners ask that Bally's be ordered to repay the restitution. See Order at 2. However, in their reply brief, petitioners ask that the United States be ordered to repay the funds. See Reply at 4.
In United States v. Lewis, 478 F.2d 835 (5th Cir. 1973), the Fifth Circuit addressed the question of whether fines imposed pursuant to a statute which was subsequently determined to be unconstitutional may be recovered in a proceeding attacking the validity of the convictions. The Lewis court held that "[j]ust as the imposition of a fine is an incident of a criminal conviction, so is the direction for repayment an incident to the vacating and setting aside of the conviction." Id. at 836. The Fifth Circuit has not, however, spoken on the issue of restitution.
The Tusas contend that restitution should be treated as a fine, and that they are entitled to a full refund of the money paid to Bally's. Citing United States v. Venneri, 782 F. Supp. 1091, 1093 (D.Md. 1991), the petitioners argue that the All Writs Act, 28 U.S.C. § 1651, authorizes the Court to issue orders "as may be necessary or appropriate to effectuate and prevent the frustration of orders it has previously issued in its exercise of jurisdiction otherwise obtained." In Venneri, after the defendant's conviction was vacated as based upon an unconstitutional statute, the court invoked the All Writs Act to order the victim to refund all the money it received from the defendant as restitution. The Tusas also cite United States v. Beckner, 16 F. Supp.2d 677 (M.D.La. 1998) (Duplantier, J.), for the proposition that restitution should be refunded after a sentence has been vacated. After Beckner's conviction was reversed by the Fifth Circuit, the district court held that Beckner was entitled to a refund of the restitution he paid because the "final judgment is that Beckner owed restitution to no one." Id. at 679. The court further held that "[a]s in any other situation in which payment of a judgment subject to reversal on appeal is exacted pending appeal, the recipient who exacted the payment owes repayment." Id. Since the United States collected Beckner's restitution and disbursed it to the victims, the court ordered the United States to reimburse him.
The Court finds that Beckner may be distinguishable from the instant case, in which the petitioners' convictions were affirmed by the Fifth Circuit.
The Government argues that fines are distinguishable from restitution and that, while the repayment of fines is mandated by the Fifth Circuit, Fifth Circuit jurisprudence does not require that the Tusas be reimbursed for funds paid in restitution. In addition, the Government suggests, without elaboration, that there may be some non-Cleveland basis for the restitution order. See Mem. Opp. at 2, n. 1 (asserting that the "petitioners do not explain . . . why any arguable equitable power of the Court would extend to reimbursement of non- Cleveland monetary losses inflicted on third parties") (emphasis in original). Finally, if the Court finds that the petitioners are entitled to restitution, the Government questions whether the money should be repaid by the United States or by Bally's, the ultimate recipient.
Because the Court finds that the arguments raised by the Government warrant further examination, the parties are ordered to submit supplemental briefs on the restitution issue, including the question of whether any restitution, if ordered, should be paid by the United States or by Bally's.
IT IS ORDERED that
(1) the mail fraud convictions and sentences of Anthony Joseph Tusa, Jr. and Victor Joseph Tusa, Sr. are VACATED;
(2) the indictments against Anthony Joseph Tusa, Jr. and Victor Joseph Tusa, Sr. are DISMISSED; and
(3) the United States should immediately repay the $11,838.00 fine and the $150.00 special assessment fee levied against Anthony Joseph Tusa, Jr. and the $11,838.00 fine and the $150.00 special assessment fee levied against Victor Joseph Tusa, Sr.
IT IS FURTHER ORDERED that the parties submit additional briefing on whether the petitioners are entitled to reimbursement of the $37,048.00 paid as restitution.