This guest post was authored by Joseph Samuel, a summer associate with Montgomery McCracken.In a 9-0 decision handed down earlier today in Lagos v. United States, 584 U.S. __ (May 29, 2018), the Supreme Court held that the terms “investigation” and “proceedings” found in the Mandatory Victims Restitution Act, 18 U.S.C. § 3663A(b)(4), refer only to government investigations and criminal proceedings, not to private investigations and civil or bankruptcy proceedings. The ruling limits the extent to which a defendant must compensate a victim when convicted of certain offenses, including crimes of violence and crimes against property.

tim’s hands are “too dirty” to claim restitution. Relatedly, the government may be unable to demonstrate the act’s definition of a victim if a restitution order has the effect of treating persons as victims who were in effect co-conspirators.The court should similarly deny restitution in cases in which persons could be deemed aiders and abettors in the criminal context, as well as in SEC enforcement actions. To be sure, if the Securities and Exchange Commission could bring a case for aiding and abetting a violation of Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934, the government may be unable to demonstrate the person’s victim status. Indeed, although there is some disagreement in the district courts about whether securities fraud is a covered offense under the Mandatory Victims Restitution Act, the Second Circuit has acknowledged that district courts have held that the act applies to defendants convicted of a listed range of offenses, including securities fraud. 18 U.S.C. § 3663A. 18 U.S.C. § 3663(c)(1)(A)(i)-(B).United States v. Razzouk, 984 F.3d 181, 188–89 (2d Cir. 2020); compare United States v. Collins, 854 F.3d 1324, 1335 (11th Cir. 2017).United States v. Martin, 803 F.3d 581, 593 (11th Cir. 2015). 18 U.S.C. § 3664(e). 18 U.S.C. § 3663A(2).United States v. Goodrich, 12 F.4th 219, 228–29 (2d Cir. 2021); compare United States v. Stein, 846 F.3d 1135, 1152 (11th Cir. 2017).Goodrich, 12 F.4th at 229. 18 U.S.C. § 3663A(2). 446 F.3d 65, 135 (2d Cir. 2006).United States v. Agate, 613 F. Supp. 2d 315, 321 (E.D.N.Y. 2009).SeeUnited States v. Quatrella, 722 F. App’x 64, 69 (2d Cir. 2018); Unites States v. Benton, 765 F. App’x 477, 482 (2d Cir. 2019); Fed. Ins. Co. v. United States, 882 F.3d 348, 366 (2d Cir. 2018).In re Wellcare Health Plans, Inc., 754 F.3d 1234, 1239 (11th Cir. 2014).United States v. Cavallo, 790 F.3d 1202, 1239 (11th Cir. 2015).See United States v. Ojeikere, 545 F.3d 220, 223 (2d Cir. 2008).Reifler, 446 F.3d at 120–28. 18 U.S.C. § 2(a). 15 U.S.C

Expenses arising from civil matters, including parallel SEC investigations closely related to a criminal case, do not qualify.Under the MVRA, a defendant convicted of various fraud and other offenses is required to “reimburse the victim for lost income and necessary child care, transportation, and otherexpenses 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). In Lagos, the Supreme Court rejected an expansive interpretation of the MVRA and held that the words “investigation” and “proceedings” in the MVRA are limited to government investigations and criminal proceedings.

. . . including any offense committed by fraud or deceit.” 18 U.S.C. § 3663A(c)(1). If the MVRA applied to Razzouk, then an award of restitution was mandatory; otherwise, it would be in the District Court’s discretion whether to award restitution.

[4] MVRA § 3663A(b)(4) (emphasis added). [5] 18 U.S.C. § 3663A. [6] 18 U.S.C. § 3664(f)(1)(B). [7] 18 U.S.C. § 3663A(a)(2).

The Supreme Court of the United States issued its rulings in three cases today:Lagos v. United States, No. 16-1519: The Mandatory Victims Restitution Act of 1996 requires that defendants convicted of certain offenses “reimburse the victim for lost income and necessary . . . 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). Petitioner Sergio Fernando Lagos was convicted of using a company he controlled to defraud GE — the company’s lender — of tens of millions of dollars.

The indictment here included such notice, and 18 U.S.C. § 981 authorizes forfeiture for violations of 18 U.S.C. § 664 (among several other statutes). Restitution flows from a separate statute, 18 U.S.C. § 3663A (titled “Mandatory restitution to victims of certain crimes”), which similarly provides that for violations of § 664 a “court shall order, in addition to, or in the case of a misdemeanor, in addition to or in lieu of, any other penalty authorized by law, that the defendant make restitution to the victim of the offense.” 18 U.S.C. § 3663A(a)(1) (emphasis added); see id.

Because of declining housing prices, the banks received less cash on the resales than the purported fair market value when they took title. (Slip op. at 2).Relying on cases from other circuits, Robers claimed that when the lenders took title to the collateral in 2006, “part” of the “property” fraudulently obtained was “returned” to the lender, and therefore under 18 U.S.C. § 3663A(b)(1)(B)(ii), the restitution amount should be offset by the fair market value of the homes. The Seventh Circuit disagreed, following the cases from yet other circuits holding that the “property” lost by the lender is cash, and cash was returned only when the homes were resold, not when the lender took title.

Counsel representing corporate victims of crime need to be aware of the Second Circuit's recent decision clarifying the scope of restitution available to corporate victims under the Mandatory Victims Restitution Act of 1996 ("MVRA"), 18 U.S.C. § 3663A. Although the Court left intact the rule that costs incurred in conducting internal investigations are recoverable as restitution, it limited the ability to recover as restitution other costs commonly incurred by corporate crime victims.

Question presented:Whether a defendant-who has fraudulently obtained a loan and thus owes restitution for the loan under 18 U.S.C. § 3663A(b)(1)(B) returns “any part” of the loan money by giving the lenders the collateral that secures the money?Lower court opinion: United States v. Robers, 698 F.3d 937 (7th Cir. 2012)DocketScotusblog pageIn this case the Court will resolve a circuit split about the calculation of restitution under 18 U.S.C. § 3663A(b)(1), the Mandatory Victims Restitution Act (MVRA), in federal mortgage fraud prosecutions. The decision will be important to federal practitioners and, as the case arose in Wisconsin, will either validate or overturn current circuit precedent.