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Lagos v. United States

United States Supreme Court

May 29, 2018

SERGIO FERNANDO LAGOS, PETITIONER
v.
UNITED STATES

          Argued April 18, 2018

          CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT No. 16-1519.

         ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

         Petitioner Sergio Fernando Lagos was convicted of using a company he controlled to defraud a lender of tens of millions of dollars. After the fraudulent scheme came to light and Lagos' company went bankrupt, the lender conducted a private investigation of Lagos' fraud and participated as a party in the company's bankruptcy proceedings. Between the private investigation and the bankruptcy proceedings, the lender spent nearly $5 million in legal, accounting, and consulting fees related to the fraud. After Lagos pleaded guilty to federal wire fraud charges, the District Court ordered him to pay restitution to the lender for those fees. The Fifth Circuit affirmed, holding that such restitution was required by the Mandatory Victims Restitution Act of 1996, which requires defendants convicted of certain federal offenses, including wire fraud, to, among other things, "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).

         Held:

1. The words "investigation" and "proceedings" in subsection (b)(4) of the Mandatory Victims Restitution Act are limited to government investigations and criminal proceedings and do not include private investigations and civil or bankruptcy proceedings. The word "investigation" appears in the phrase "the investigation or prosecution." Because the word "prosecution" must refer to a government's criminal prosecution, this suggests that the word "investigation" refers to a government's criminal investigation. Similar reasoning suggests that the immediately following reference to "proceedings" refers to criminal proceedings. Furthermore, the statute refers to the victim's "participation" in the "investigation, " and "attendance" at "proceedings, " which would be odd ways to describe a victim's role in its own private investigation and as a party in noncriminal court proceedings, but which are natural ways to describe a victim's role in a government's investigation and in the criminal proceedings that a government conducts.
Moreover, the statute lists three specific items that must be reimbursed: lost income, child care expenses, and transportation expenses. These are precisely the kind of expenses that a victim is likely to incur when missing work and traveling to participate in a government investigation or to attend criminal proceedings. In contrast, the statute says nothing about the kinds of expenses a victim would often incur during private investigations or noncriminal proceedings, namely, the costs of hiring private investigators, attorneys, or accountants. This supports the Court's more limited reading of the statute.
A broad reading would also require district courts to resolve difficult, fact-intensive disputes about whether particular expenses "incurred during" participation in a private investigation were in fact "necessary, " and about whether proceedings such as a licensing proceeding or a Consumer Products Safety Commission hearing were sufficiently "related to the offense." The Court's narrower interpretation avoids such controversies, which are often irrelevant to the victim because over 90% of criminal restitution is never collected.
The Court's interpretation means that some victims will not receive restitution for all of their losses from a crime, but that is consistent with the Mandatory Victims Restitution Act's enumeration of limited categories of covered expenses, in contrast with the broader language that other federal restitution statutes use, see, e.g., 18 U.S.C. §§2248(b), 2259(b), 2264(b), 2327(b). Pp. 3-7.
2. That the victim shared the results of its private investigation with the Government does not make the costs of conducting the private investigation "necessary . . . other expenses incurred during participation in the investigation . . . of the offense." §3663A(b)(4). That language does not cover the costs of a private investigation that the victim chooses on its own to conduct, which are not "incurred during" participation in a government's investigation. Pp. 7-8.

864 F.3d 320, reversed and remanded.

          BREYER, J.,

         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." ...

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