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United States v. Atlantic States Cast Iron Pipe Co.

March 23, 2009

UNITED STATES OF AMERICA
v.
ATLANTIC STATES CAST IRON PIPE COMPANY, JOHN PRISQUE, SCOTT FAUBERT, JEFFREY MAURY, AND CRAIG DAVIDSON, DEFENDANTS.



The opinion of the court was delivered by: Mary L. Cooper United States District Judge

MEMORANDUM OPINION

OUTLINE OF OPINION

PRELIMINARY STATEMENT 3

DISCUSSION

I. LEGAL FRAMEWORK

A. The Crime Victims Rights Act - summary of rights and enforcement provisions 6

B. Definition of "victim" in CVRA and its source statutes, the VWPA and MVRA ("statutory victim status") 11

C. Review of case law on disputed factual issues of statutory victim status 34

D. Rights of statutory victims against particular defendants in sentencing 46

E. Comparison between statutory victim status and information from other affected persons 67

F. Constitutional and statutory rights of defendants in sentencing 74

II. FINDINGS AND CONCLUSIONS

A Indictment - Allegations and convictions 84

B. Statutes charged in the Indictment 104

C. OSHA statute - Not charged 112

D. CVRA contentions in this motion 117

E. No CVRA contentions prior to this motion 124

F. Findings and conclusions of the Court 133

PRELIMINARY STATEMENT

This is a complex criminal case in which an industrial company that operates a cast iron pipe foundry in New Jersey, and four of its employees, were convicted by a jury on charges of an alleged multi-object conspiracy and various substantive counts. Essentially, the indictment alleged that the corporate defendant and numerous indicted and unindicted conspirators -- all employees of the company -- engaged in a conspiracy and committed substantive offenses relating to violation of the Clean Water Act ("CWA") and the Clean Air Act ("CAA"); and that they systematically obstructed proceedings of the federal Occupational Safety and Health Administration ("OSHA") after incidents in which other employees sustained serious or fatal injuries at work. See infra Secs. II.A, II.B.

Sentencing proceedings are pending. The government has made a motion under the Crime Victims' Rights Act, 18 U.S.C. § 3771 ("CVRA"), which defendants oppose. We rule that the motion is moot in part and denied in part.

The offenses of conviction that are relevant to this motion are as follows: First, conspiracy in violation of 18 U.S.C. § 371, with objectives of obstructing pending proceedings before OSHA [contrary to 18 U.S.C. §§ 1505 and 1515(b)], making materially false statements to OSHA [contrary to 18 U.S.C. § 1001], and defrauding OSHA [in violation of the "defraud" clause of 18 U.S.C. § 371]. Second, substantive offenses of: (1) obstruction of OSHA in violation of 18 U.S.C. §§ 1505 and 1515(b); (2) obstruction of OSHA in violation of 18 U.S.C. § 1519 [altering object with intent to obstruct OSHA]; and (3) false statements to OSHA in violation of 18 U.S.C. § 1001. We will refer to those convictions as the "OSHA-related offenses."*fn1 The corporate defendant was convicted of those offenses; several of the individual defendants were also convicted of some of those offenses. See infra Sec. II.A.*fn2

The trial extended over approximately eight months from September 2005 through April 2006. See infra n.54. A total of 108 verdict questions were submitted to the jury. The verdicts were mixed, including convictions, acquittals, convictions on lesser-included offenses, and no verdict on one count. (See dkt. 721 at 3 n.4.) All but two counts of conviction were upheld by this Court in ruling upon post-trial motions in August, 2007, and the no-verdict count was dismissed. (Id. at 267.) Since then the sentencing proceedings have been protracted, due to the size of the case and the number and complexity of sentencing issues. Final sentencing hearing dates are set for April 20-24, 2009.

We divided the sentencing briefing process into Step One (Guideline calculations), to be followed by combined briefing on Steps Two and Three (Guideline departures; imposition of sentence under 18 U.S.C. § 3553(a)). Draft and Revised Presentence Reports ("PSRs") were distributed to the parties by U.S. Probation. The briefing on Step One was extensive, with the parties opposing each other on virtually every issue pertaining to the guidelines calculations and the Revised PSRs. After briefs and oral argument on those issues were complete, the Court adjourned the previously-scheduled sentencing dates while the objections were under review. On December 31, 2008, the Court provided to the parties a lengthy written memorandum containing its intended rulings on Guideline calculations for the individual defendants. The contents of that memorandum will be filed, with any necessary revisions, as an opinion on the docket at the time of sentencing. On February 2, 2009, the Court stated on the record its intended rulings on Guideline calculations for the corporate defendant. Also on that date, the Court conferred with counsel and set the current schedule for the remaining sentencing proceedings, culminating in the sentencing hearings on the stated dates.

While those events were unfolding, on December 1, 2008, the government filed a motion seeking to set a sentencing date, invoking the CVRA. The motion asserted that six individuals, employees who sustained serious or fatal injuries at work during the relevant period, qualify as crime victims under the CVRA because of the OSHA-related convictions in this case. The defendants did not oppose setting a sentencing date, which they understood the Court was going to do even without benefit of the government's motion, but they did oppose designating any persons as victims under the CVRA in this case. The government, in its reply brief, stated that it seeks the further relief that the alleged CVRA crime victims, or their representatives, be afforded the right to allocute at defendants' sentencing hearings. The rescheduled sentencing dates have since been set, so the motion is moot as to the timing aspect. The motion is not moot as to the status of the named individuals as CVRA crime victims, which is the issue we address here.

DISCUSSION

I. LEGAL FRAMEWORK

A. THE CRIME VICTIMS' RIGHTS ACT - SUMMARY OF RIGHTS AND ENFORCEMENT PROVISIONS

The formal name of the CVRA is the Scott Campbell, Stephanie Roper, Wendy Preston, Louarna Gillis, and Nila Lynn Crime Victims' Rights Act, Pub.L.No. 108-405, §§ 101-104, 118 Stat. 2260, 2261-65 (2004) (codified at 18 U.S.C. § 3771), effective Oct. 30, 2004. The CVRA itself was introduced and moved rapidly through Congress starting in April, 2004, at the end of almost a decade of unsuccessful bipartisan effort by victims' advocates to gain approval of a federal constitutional amendment.*fn3 The House Committee Report for the CVRA stated:

Crime victims already have a listing of rights in Title 42 of the United States Code. However, because those rights are not enumerated in the criminal code, most practitioners do not even know these rights exist. Further, the rights as they are currently enumerated do not contain any explicit enforcement provision. As such, crime victims often feel that they are ignored by a system that gives a great number of rights and protections to the person accused of the crime, but few to the victim. [This legislation] addresses these problems by moving the victims' rights to Title 18 of the United States Code, where they will be more readily available to practitioners. It also amplifies the current rights and sets forth an explicit enforcement mechanism for those rights.

H.R. REP. NO. 108-711, at 4 (2004), reprinted in 2005 U.S.C.C.A.N. 2274, 2277 ("House Committee Report").

The eight statutory rights of CVRA crime victims, as summarized in the House Committee Report, are: "the right to be reasonably protected from the accused; the right to be notified of, and not excluded from, public proceedings involving their case; the right to be heard at release, plea, or sentencing; the right to confer with the government attorney; the right to full and timely restitution; the right to be free from unreasonable delays in proceedings; and the right to respect. . . . [CVRA] makes no changes in the law with respect to victims' ability to get restitution." Id. at 2283.*fn4

Those eight rights, applicable in every federal criminal prosecution, are codified in the CVRA, 18 U.S.C. § 3771(a)(1)-(8).*fn5 We discuss those enumerated CVRA rights below, insofar as they pertain to the instant motion. See, e.g., infra Sec. I.D. The law that the CVRA superseded had a similar but not identical formulation of the victims' substantive rights. 42 U.S.C. § 10606 (repealed 2004).

There are other crime victims' rights provisions already in place in Title 18, including but not limited to certain restitution statutes that become relevant here. See, e.g., 18 U.S.C. §§ 3510, 3525, 3555, 3556, 3663, 3663A, & 3664. The Court of Appeals for the Fourth Circuit has observed that "[a]lthough the CVRA provides the vehicle for [a petitioner] to assert her right to restitution, it does not create an independent obligation for a district court to order or a defendant to pay such an award. . . . Rather, the CVRA merely protects the right to receive restitution that is provided for elsewhere." In re Doe, 264 Fed.Appx. 260, 262 n.2 (4th Cir. 2007).*fn6

The CVRA places responsibility on the court for its implementation, requiring that "the court shall ensure that the crime victim is afforded [those] rights." 18 U.S.C. § 3771(b)(1). It emphasizes the obligations of the responsible federal law enforcement agencies to "make their best efforts to see that crime victims are notified of, and accorded [those] rights." Id. § 3771(c)(1)-(3); see also id. § 3771(f) (procedures to promote compliance); 42 U.S.C. § 10607 (services to victims).

There are two primary innovations embodied in the CVRA. First, it applies to all federal offenses, not just those offenses for which statutory restitution provisions have been enacted. Second, it creates a new and powerful enforcement mechanism. It confers standing upon both the government and the victims themselves to assert the rights afforded under the CVRA. 18 U.S.C. § 3771(d)(1).*fn7 It provides that the asserted rights are to be asserted first in the district court, and if the relief sought is denied the movant may petition for mandamus on an expedited basis. This is the statutory mandamus petition procedure:

The rights described in subsection (a) shall be asserted in the district court in which a defendant is being prosecuted for the crime or, if no prosecution is underway, in the district court in the district in which the crime occurred.

The district court shall take up and decide any motion asserting a victim's right forthwith. If the district court denies the relief sought, the movant may petition the court of appeals for a writ of mandamus. The court of appeals may issue the writ on the order of a single judge pursuant to circuit rule or the Federal Rules of Appellate Procedure. The court of appeals shall take up and decide such application forthwith within 72 hours after the petition has been filed. In no event shall proceedings be stayed or subject to a continuance of more than five days for purposes of enforcing this chapter.

If the court of appeals denies the relief sought, the reasons for the denial shall be clearly stated on the record in a written opinion.

Id. § 3771(d)(3). A companion provision, applicable to "any court proceeding involving a crime victim," requires that "[t]he reasons for any decision denying relief under this chapter shall be clearly stated on the record." Id. § 3771(b)(1).*fn8

The CVRA also provides that the government may assert error under the CVRA in any appeal in the criminal case. Id. § 3771(d)(4). At least one circuit court has held that CVRA crime victims are limited to the mandamus procedure, and may not invoke CVRA rights to participate in a direct appeal of the conviction and sentence. See United States v. Hunter, 548 F.3d 1308, 1309-16 (10th Cir. 2008). This would be a distinction from district court decisions under the restitution statutes, which lack the mandamus procedure. Those decisions have been reviewed on appeals filed by the alleged victims. See, e.g., United States v. Kones, 77 F.3d 66, 67-68 (3d Cir. 1996) (asserted victim/claimant appealed final judgment of conviction of defendant, where district court had denied restitution to that claimant); see also United States v. Gamma Tech. Indus., Inc., 265 F.3d 917, 920-23 (9th Cir. 2001) (defendants appealed restitution granted in favor of asserted victim/claimant; government sided with defendants; circuit court granted amicus status to claimant and affirmed restitution orders).

There are limitations on the relief available under the CVRA. The statute provides that "in no case shall a failure to provide a right under this chapter provide grounds for a new trial."

18 U.S.C. § 3771(d)(5). It expressly creates no cause of action or any duty giving rise to a claim for damages against the government or its personnel, and it is not to be construed to impair prosecutorial discretion. Id. § 3771(d)(6). However, the CVRA provides a procedure for a victim to move to re-open a plea or sentence under specified conditions. Id. § 3771(d)(5).*fn9

B. DEFINITION OF "VICTIM" IN CVRA AND ITS SOURCE STATUTES, THE VWPA AND MVRA ("STATUTORY VICTIM STATUS")

A "crime victim" under the CVRA is defined as "a person directly and proximately harmed as a result of the commission of a Federal offense." Id. § 3771(e).*fn10 The House Committee report was silent on the meaning of that term, and there was no Senate Committee report on the CVRA. However, one of the chief sponsors of the bill, Sen. John Kyl, has explained that "the CVRA's definition of a crime victim is based on the federal restitution statutes," citing the Victim and Witness Protection Act ("VWPA"), 18 U.S.C. § 3663, and the Mandatory Victims Restitution Act ("MVRA"), 18 U.S.C. § 3663A. See Kyl et al., supra n.3, at 594 & n.65; see also Paul G. Cassell, Recognizing Victims in the Federal Rules of Criminal Procedure: Proposed Amendments in Light of the Crime Victims' Rights Act, 2005 BYU L. REV. 835, 857 (2005) (noting that the CVRA's definition of "victim" comes from the MVRA).*fn11

The definition of "victim" in the VWPA, which provides for discretionary restitution as part of the sentence for certain federal crimes, has developed over a series of Congressional amendments since its enactment in 1982. The case law interpreting it has evolved as well. In 1996 Congress enacted the MVRA, which requires mandatory restitution for specified crimes and augmented and partially superseded the VWPA in the statutory restitution arsenal. See United States v. Leahy, 438 F.3d 328, 331 nn.3-4 (3d Cir. 2006) (joining circuits holding that Booker does not apply to orders of restitution under MVRA and VWPA). Both the VWPA and the MVRA are subject to the administrative procedures and enforcement provisions of 18 U.S.C. § 3664. Id. at 331 n.4.*fn12

Here we quote again the definition of "victim" in the CVRA:

[A] person directly and proximately harmed as a result of the commission of a Federal offense or an offense in the District of Columbia.

18 U.S.C. § 3771(e).

The definition of "victim" in both the VWPA and MVRA is:

[A] person directly and proximately harmed as a result of the commission of an offense for which restitution may be ordered, including, in the case of an offense that involves as an element a scheme, conspiracy, or pattern of criminal activity, any person directly harmed by the defendant's criminal conduct in the course of the scheme, conspiracy, or pattern.

18 U.S.C. § 3663(a)(2); 18 U.S.C. § 3663A(a)(2).

There are two main differences between these two definitions of "victim." First, the CVRA definition does not contain the qualifier phrase, "for which restitution may be ordered." The CVRA by its terms, unlike restitution statutes, applies to all federal criminal prosecutions, regardless of whether the offense qualifies for an award of restitution. See, e.g., COMM. ON THE JUDICIARY, AMENDMENTS TO THE FEDERAL RULES OF CRIMINAL PROCEDURE, H.R. DOC. NO. 110-118, at 51 [hereinafter "RULES COMMITTEE REPORT"] ("The act defines the term 'crime victim' without limiting it to certain crimes."). Second, the clause in the VWPA and MVRA "victim" definition, after the word "including," which refers to "an offense that involves as an element a scheme, conspiracy, or pattern of criminal activity," is absent from the definition of "victim" in the CVRA. There is no legislative history explaining that omission, but we believe the CVRA definition will be interpreted to include that expansive clause because of the Congressional and case law history of that clause under the VWPA, briefly summarized below. This would be consistent with the stated purpose of the CVRA to strengthen rather than weaken victims' rights in federal criminal prosecutions.*fn13

Amendments to the Federal Rules of Criminal Procedure were adopted effective December 1, 2008, to implement the provisions of the CVRA. See Fed.R.Crim.P. 1(b)(11) ("victim" is a "crime victim" as defined in 18 U.S.C. § 3771(e)); id. 12.1(b) (disclosing government witnesses); id. 17(c)(3) (subpoena for personal or confidential information about a victim); id. 18 (place of prosecution and trial); id. 32 (sentencing and judgment); id. 41(b) (authority to issue a warrant); and id. 60 (victim's rights). The Committee Note to revised Rule 1(b)(11) ("victim" defined) observes: "Upon occasion, disputes may arise over the question whether a particular person is a victim. Although the rule makes no special provision for such cases, the courts have the authority to do any necessary fact finding and make any necessary legal rulings." RULES COMMITTEE REPORT, supra, at 37.

This Court is of the view that based on the text, origin and limited legislative history of the CVRA -- and bearing in mind the distinction that the CVRA applies to victims of all federal crimes while the VWPA and MVRA apply only to restitution rights under specified federal crimes -- nevertheless the definition of "victim" under CVRA will be interpreted consistent with existing and evolving case law under the VWPA and MVRA. The court decisions so far under the CVRA generally reflect this approach, as we describe below.

The Court of Appeals for the Third Circuit has not yet had occasion to interpret the meaning of the definition of "victim" in the CVRA. It has, however, described and interpreted the definition of "victim" in the VWPA and MVRA as it has evolved.

The VWPA was the first modern federal restitution statute, enacted in 1982. As of 1986, it authorized federal courts, when sentencing under certain offenses, to order "that the defendant make restitution to any victim of such offense." Hughey v. United States, 495 U.S. 411, 412-13 & n.1 (1990) (explaining that this provision was recodified effective Nov. 1, 1987, pursuant to the Sentencing Reform Act of 1984, when it became 18 U.S.C. § 3663, and had received the term "such offense" in the 1986 amendments).

The term "victim" in the pre-1987 version of the VWPA was not defined with any standard of causation other than the quoted phrase "to any victim of such offense," which is what the Hughey court interpreted. This is in contrast to the "direct and proximate" standard in the current VWPA, MVRA, and CVRA statutes.

In Hughey, the Supreme Court interpreted the phrase "restitution to any victim of such offense," as used in 18 U.S.C. § 3663(a), to authorize restitution "only for the loss caused by the specific conduct that is the basis of the offense of conviction." Id. at 413. There, the defendant pled guilty to only one count of use of an unauthorized credit card in violation of 18 U.S.C. § 1029(a)(2). Id. He had been charged with three counts under that offense statute, and three counts of theft by a Postal Service employee in violation of 18 U.S.C. § 1709, and at sentencing he was ordered to pay restitution for loss caused by all of the counts. Id. at 413-14. The Supreme Court held invalid the portions of the sentencing order directing restitution for losses caused by conduct outside the count of conviction. Id. at 422.

The Third Circuit describes the next Congressional step after Hughey as follows:

Not long after the Supreme Court decided Hughey, Congress amended the VWPA by adding 18 U.S.C. § 3663(a)(2) which provides:

For the purposes of restitution, a victim of an offense that involves as an element a scheme, a conspiracy, or a pattern of criminal activity means any persons directly harmed by the defendant's criminal conduct in the course of the scheme, conspiracy or pattern.

Crime Control Act of 1990, Pub.L.No. 101-647, 104 Stat. 4789, 4863 (1990). This amendment . . . expands the restitution granting authority of district courts beyond that found in Hughey. By its own terms, however, § 3663(a)(2) applies only in cases where a scheme, conspiracy, or pattern of criminal activity is an element of the offense of conviction. In such cases, § 3663(a)(2) authorizes restitution to "any person directly harmed by the defendant's criminal conduct in the course of the scheme, conspiracy, or pattern" that was an element of the offense of conviction. Kones, 77 F.3d at 69-70.*fn14

Another significant feature of the 1990 amendments to the VWPA, which carries through to the current VWPA and MVRA, was an exception for plea agreements. See United States v. Chalupnik, 514 F.3d 748, 752-53 (8th Cir. 2008) (referring to 18 U.S.C. § 3663(a)(3) as enacted in 1990). That provision in the current version of the VWPA states:

The court may also order restitution in any criminal case to the extent agreed to by the parties in a plea agreement.

18 U.S.C. § 3663(a)(3). The VWPA also states that "the court may also order, if agreed to by the parties in a plea agreement, restitution to persons other than the victim of the offense." Id. § 3663(a)(1)(A).

A more complicated version of this exception appears in the MVRA. See id. §§ 3663A(a)(3) & (c)(1)-(3). The MVRA expressly states that a plea agreement can provide for restitution to persons "other than the victim of the offense," and if so the court shall so order. Id. § 3663A(a)(3).

There was no plea agreement in this case, and those provisions of the VWPA and MVRA are not directly relevant here. However, when reviewing case law under the VWPA, the MVRA, and the CVRA, it is important to recognize that plea agreements pertaining to restitution can be entered into for the benefit of persons other than statutory "victims," and under offense statutes for which no statutory right to restitution exists, and for losses and amounts beyond those provided in restitution statutes. Persons having crime victim status under the CVRA, which applies to all federal offenses, can enforce rights to participate in the plea process even if the actual offense statutes do not carry a statutory right to restitution. See, e.g., In re Dean, 527 F.3d 391, 395-96 (5th Cir. 2008) (CVRA petitioners sought participation in plea proceedings for offenses to be charged under the CAA), denying mandamus in part in BP Prods. N. Am. Inc., 2008 WL 501321, at *3-*6.

Courts have recognized that the 1990 Congressional amendments to the VWPA definition of "victim" did not vitiate Hughey entirely. As one circuit court has observed, "Congress responded [to Hughey] by adding a definition of 'victim' that retained the core limiting principle of Hughey but clarified its application to certain offenses and to plea agreements. See 18 U.S.C. § 3663(a)(2) (Supp. III 1991)." Chalupnik, 514 F.3d at 752.

The Court of Appeals for the Third Circuit interpreted the "scheme, conspiracy, or pattern of criminal conduct" portion of the VWPA definition of "victim" in its 1996 Kones decision. 77 F.3d at 66-71. Defendant was a doctor who pled guilty to 200 counts of mail fraud in violation of 18 U.S.C. § 1341 in connection with false insurance claims based on nonexistent services to eighteen of his patients. Id. at 68. He agreed that his sentence would include $2 million forfeiture as restitution to the health insurance companies who were the victims of his fraud. Id. Before his sentencing, one of the eighteen patients filed a claim for $1 million in restitution, alleging that defendant gave her prescriptions for excessive amounts of pain killers, which caused her to become addicted, lose her job, and require ongoing treatment. Id. She contended that it was only by inducing her drug dependency that defendant was able to carry out his fraudulent scheme. Id.

The district court in Kones found that the patient was not a "victim" of defendant's offenses of conviction within the meaning of the VWPA. Id. The Third Circuit affirmed. It stated the controlling principle as follows:

This [1990 VWPA amendment] expansion of restitution powers, however, is limited by its terms. Section 3663(a)(2) is not so broad that it permits a district court to order restitution to anyone harmed by any activity of the defendant related to the scheme, conspiracy, or pattern. Rather, in order for restitution to be permissible, the harm must "directly" result from the "criminal conduct" of the defendant. In this context, we interpret "direct" to require that the harm to the victim be closely related to the scheme, rather than tangentially linked. Further, we interpret "defendant's criminal conduct in the course of the scheme, conspiracy or pattern" to mean conduct that is both engaged in the furtherance of the scheme, conspiracy or pattern, and proscribed by the criminal statute the defendant was convicted of violating.

Id. at 70 (emphasis added).*fn15

Applying that principle, Kones held on the facts in that case: [Patient] is not a "victim" of [defendant's] mail fraud offenses within the meaning of § 3663(a). . . . The conduct that [she] alleges caused her harm is not conduct proscribed by the mail fraud statute. The conduct proscribed by the mail fraud statute is the use of the mails for the purpose of executing a scheme to defraud. Specifically, in this case it is [defendant's] submission of false insurance claims through the mail. [Patient] does not allege that she was injured by the submission of the insurance claims. She alleges that she was injured by faulty medical services. While [patient] alleges that [defendant's] provision of drugs to her was malpractice and was done in furtherance of his scheme, the provision of drugs, properly or improperly, is not conduct proscribed by the mail fraud statute.

Thus, we agree with the district court that "victim" within the meaning of § 3663(a)(1) and (a)(2) does not include a person who has experienced no harm arising from the criminal conduct that gives rise to the offense of conviction.

Id. at 71. That case, interpreting the VWPA in the context of a mail fraud scheme, prompted the Kones court to add in a footnote:

We have no occasion here to address, and reserve for another day, the issue of whether in this context 'conduct in the course of the . . . conspiracy' includes only conduct prohibited by the substantive statute which the co-conspirators conspired to violate.

Id. at 70 n.3 (italics in original).*fn16

However, the court in Kones did couple its holding with some strong observations about the process that the VWPA envisioned for determining "victim" status, and the accompanying right to restitution under that statute. The 1990 version of the VWPA contained the following provision, as described in Kones:

Even where there is a "victim of the offense," § 3663(d) provides that the court may decline to order restitution "to the extent that the court determines that the complication and prolongation of the sentencing process [required to do so] outweighs the need to provide restitution to any victims."

Id. at 68 (quoting 18 U.S.C. § 3663(d) (1990)) (bracketed material original). That provision survives in the current version of the VWPA, and in a modified form in the later-enacted MVRA. See 18 U.S.C. § 3663(d); id. § 3663A(c)(3).

The Kones court stated:

We understand this provision to call for a weighing of the burden of adjudicating the restitution issue against the desirability of immediate restitution -- or otherwise stated, a weighing of the burden that would be imposed on the court by adjudicating restitution in the criminal case against the burden that would be imposed on the victim by leaving him or her to other available legal remedies. . . .

Nothing in the legislative history evidences an expectation that a sentencing judge would adjudicate, in the course of the court's sentencing proceeding, all civil claims against a criminal defendant arising from conduct related to the offense. Rather, it was expected that entitlement to restitution could be readily determined by the sentencing judge based upon the evidence he had heard during the trial of the criminal case or learned in the course of determining whether to accept a plea and what an appropriate sentence would be. While the original statute, similar to the current version, provided for discretion to decline to grant restitution when it would be an undue burden to do so, this was not because Congress expected that sentencing judges would be required to hold an evidentiary hearing on liability issues in the course of the sentencing proceedings. As the Senate Report explains, "the Committee added this provision to prevent sentencing hearings from becoming prolonged and complicated trials on the question of damages owed the victim." S.Rep. No. 532, 97th Cong., 2d Sess. 31 (1982), reprinted in 1982 U.S.C.C.A.N. 2515, 2537 (emphasis added). The kind of case that Congress had in mind was one in which liability is clear from the information provided by the government and the defendant and all the sentencing court has to do is calculate damages. See id. at 2536-37 (discussing a case where the victim of a purse snatching suffered a broken hip).

This aspect of Congress' expectation is important because it counsels against construing the text of the statute in a way that would bring fault and causation issues before the sentencing court that cannot be resolved with the information otherwise generated in the course of the criminal proceedings on the indictment. We are persuaded that this counsel should guide our interpretation of the restitution provisions of the VWPA.

Kones, 77 F.3d at 68-69 (emphasis in original).

[W]e agree . . . that "victim" within the meaning of § 3663(a)(1) and (a)(2) does not include a person who has experienced no harm arising from the criminal conduct that gives rise to the offense of conviction. As the facts of this case illustrate, to hold otherwise would unduly burden sentencing courts. No information developed in the course of these proceedings provided the district court with a basis for adjudicating whether [defendant's] treatment of [claimant] was legal or illegal, was consistent or inconsistent with medical standards prevailing in the community, or was or was not causally related to the injuries she allegedly suffered. As the district court aptly observed, it could not grant [claimant's] restitution request without fully litigating a tangentially related medical malpractice case as a part of the sentencing process.

Id. at 71.

Congress revisited the VWPA in 1996. That was the year that the MVRA was enacted.*fn17

The MVRA partially but not completely superseded the VWPA so as to require mandatory restitution as to specified offenses. Compare 18 U.S.C. § 3663(a)(1) with id. § 3663A(a)(1) & (c); see Leahy, 438 F.3d at 331 nn.3-4; Chalupnik, 514 F.3d at 752 & n.2. It also amplified the definition of "victim" in both statutes and made those definitions identical.

As a reference point for the 1996 amendments, we now quote again, from Kones, the former text of the VWPA that was added as subsection (b)(2) in the 1990 amendments:

For the purposes of restitution, a victim of an offense that involves as an element a scheme, a conspiracy, or a pattern of criminal activity means any persons directly harmed by the defendant's criminal conduct in the course of the scheme, conspiracy or pattern.

Kones, 77 F.3d at 69 (quoting Crime Control Act of 1990, Pub.L.No. 101-647, 104 Stat. 4789, 4863 (1990) (codified at 18 U.S.C. § 3663(a)(2) (1960))).

The corresponding 1996 provision, as set forth in both the VWPA and the MVRA as of the 1996 enactments and as currently in effect, is this text:

For the purposes of this section, the term "victim" means a person directly and proximately harmed as a result of the commission of an offense for which restitution may be ordered, including, in the case of an offense that involves as an element a scheme, conspiracy, or pattern of criminal activity, any person directly harmed by the defendant's criminal conduct in the course of the scheme, conspiracy, or pattern.

18 U.S.C. § 3663(a)(2) (emphasis added); id. § 3663A(a)(2) (1996) (emphasis added). The portion of the text shown above in bold type is the new language adopted by Congress for both the VWPA and the newly-enacted MVRA in 1996. See Chalupnik, 514 F.3d at 752-53. That, as we have seen, is the causation test that the drafters of the CVRA have adopted for its definition of "victim." 18 U.S.C. § 3771(e). The Conference Committee Report, in explaining the 1996 enactment of the MVRA and parallel amendment of the VWPA, explained the test of causation as follows:

The committee intends this provision to mean, except where a conviction is obtained by a plea bargain, that mandatory restitution provisions apply only in those instances where a named, identifiable victim suffers a physical injury or pecuniary loss directly and proximately caused by the course of conduct under the count or counts for which the offender is convicted.

S. REP. NO. 104-179, at 19 (1996), 1996 U.S.C.C.A.N. 924, 932. That Report emphasized: In all cases, it is the committee's intent that highly complex issues related to the cause or amount of a victim's loss not be resolved under the provisions of mandatory restitution. The committee believes that losses in which the amount of the victim's losses are speculative, or in which the victim's loss is not clearly causally linked to the offense, should not be subject to mandatory restitution.

Id. This statement of Congressional intent echoed the similar expressions of Congress under predecessor versions of the VWPA discussed in Kones. 77 F.3d at 68-71.

The Third Circuit confronted the "conspiracy" portion of the definition of "victim," in both the VWPA and the MVRA after the 1996 amendments, in United States v. Akande. 200 F.3d at 140. That case involved a guilty plea to a conspiracy rather than a jury verdict, but the court did address the meaning of the "offense," for purposes of determining the scope of conspiracy conduct encompassed within the VWPA/MVRA definition of "victim." Id.

The defendant in Akande pled guilty to a conspiracy to commit credit card fraud. Id. at 137. Her plea agreement specified that restitution would be ordered at sentencing, but it did not mention any particular transactions, victims, or dates. Id. at 138. The alleged conspiracy, according to the Information, took place from "on or about" a specified date to "on or about" another specified date. Id. At the plea hearing the defendant allocuted to certain transactions within that time period. Id. However, the PSR calculated the victims' losses for purposes of restitution under the MVRA to be a sum that included two instances of credit card fraud that predated by more than one month the alleged "on or about" dates in the Information. Id. The government stated at sentencing that defendant and her co-conspirators had been involved in both incidents, and asserted that the disputed transactions were part of the charged conspiracy (although not specifically alleged in the Information). Id. The district court included the two disputed transactions in the restitution order. Id. The circuit reversed and remanded for restitution to be recalculated without those transactions. Id. at 140 n.3, 142-43. The issue in Akande concerned the temporal limits of statutory restitution obligations, rather than, as here, statutory victim status per se. However, Akande necessarily addressed the MVRA/VWPA definition of "victim" in the context of a conspiracy because that statutory definition was the basis for determining the temporal limits as well. Id. at 140.

The Akande court began its discussion with a review of the history of statutory restitution authorization, and the corresponding definitions of "victim" in the VWPA (before and after the Supreme Court decision in Hughey), and the MVRA. It determined that "[t]he history of the pertinent statutes, past and present, reveals that this authorization is limited to the 'offense of conviction.'" Id. at 138. It reiterated several of the principles set down in Kones, including that "[t]he victim's harm must be closely connected to the conspiracy or scheme rather than merely tangentially." Id. at 139 (citing Kones, 77 F.3d at 70). It concluded that where the plea agreement did not specify a broader scope for restitution, "the offense of conviction is temporally defined by the period specified in the indictment or information." Id. at 141.

The court in Akande addressed the 1990 VWPA amendments that expanded the definition of "victim" where the offense had an element of scheme, conspiracy, or pattern, as those amendments were carried forward in the 1996 amendments that ushered in the MVRA and updated the VWPA. The court concluded that the "offense" that defines statutory victim status under the MVRA and VWPA must be the offense of conviction. Id. at 141-42. "The conduct underlying the offense of conviction thus stakes out the boundaries of the restitutionary authority." Id. at 141. It stated:

The [1990] amendment enlarged the group of victims who would be entitled to restitution, but the triggering event -- the offense of conviction -- remains the same. . . .

Although victims need not be specifically named in the indictment or at trial, their harm must still be directly and proximately caused by the criminal conduct that is established by the prosecution. As the 1990 House Report made clear, restitution was authorized only for "a victim of the offense for which the defendant has been convicted". . . . As stated in a later Senate Report accompanying the enactment of section 3663A, restitution is to be ordered where the loss was "directly and proximately caused by the course of conduct under the count or counts for which the offender is convicted". . . . Congress did not want sentencing to become a forum for determination of issues better suited to civil proceedings.

Id. (internal citations omitted).

One other point that Akande appeared to settle was the scope of conduct to be considered in making determinations under the "victim" definition in the MVRA and VWPA. It clearly stated that while "relevant" conduct may be a concept appropriate for other sentencing rulings, such as under the guidelines, that concept has no place in making decisions under the statutory "victim" definition in the MVRA and VWPA. Id. at 143. The court explained that "[a]lthough judges normally may use any information they possess to enhance a sentence, 'restitution is a special case,' because the statutes limit restitution to the losses caused by the offense of conviction. . . . Accordingly, . . . [in applying these statutes] we look only to the 'specific conduct' supporting the offense of conviction." Id. (internal citations omitted).*fn18

What does "directly and proximately harmed" mean, as used in the VWPA, the MVRA, and now in the CVRA? The Third Circuit interpreted the MVRA test of causation in the context of a scheme-based offense in Fallon. There, the president of a company that manufactured and distributed medical devices was convicted at trial of wire fraud and mail fraud under 18 U.S.C. §§ 1341 and 1343, respectively, in connection with a scheme to attract customers using a fabricated FDA clearance letter. Fallon, 470 F.3d at 545. The district court found that the basis for the fraud charges was the fabricated FDA letter, and that a customer who leased the devices relying on that letter was a fraud "victim" entitled to restitution. Id. at 549. The Court of Appeals agreed with that ruling, which was not challenged on appeal, and remanded only for determination of the amount of losses proximately caused by the offense. Id. at 549-50. Here we quote the portions of the Fallon opinion that interpret the test of causation under the MVRA in the context of a scheme or conspiracy:

By the statute's explicit terms, loss can only be paid to victims who are "directly and proximately harmed."

Thus, this court, as well as others, has repeatedly recognized that under the MVRA, "restitution must be . . . 'based on losses directly resulting from [the defendant's criminal] conduct'". . . . The First Circuit has adopted the following two-prong test:

First: Restitution should not be ordered in respect to a loss which would have occurred regardless of the defendant's conduct. . . .

Second: Even if but for causation is acceptable in theory, limitless but for causation is not. Restitution should not lie if the conduct underlying the offense of conviction is too far removed, either factually or temporally, from the loss.

Id. at 548-49 (internal citations omitted) (citing United States v. Vaknin, 112 F.3d 579, 589 (1st Cir. 1997)).

The Fallon court further explained as follows:

For scheme-based crimes such as wire fraud and mail fraud, . . . the term "victim" is broadly defined by the MVRA. . . .

Several courts have interpreted this language to hold that restitution:

1) may be ordered to a victim not named in the indictment, provided that the victim was "directly harmed by the defendant's criminal conduct in the course of a scheme or conspiracy." United States v. Henoud, 81 F.3d 484, 489 (4th Cir. 1996); see also United States v. Kones, 77 F.3d 66, 70 (3d Cir. 1996); 2) may be ordered for losses which result from acts or conduct related to the scheme, but for which the defendant was not convicted; cf. United States v. Lawrence, 189 F.3d 838, 846 (9th Cir. 1999); United States v. Hensley, 91 F.3d 274, 277 (1st Cir. 1996); or 3) may be ordered for losses of a common scheme, even though the loss was caused by conduct occurring outside the statute of limitations. See United States v. Dickerson, 370 F.3d 1330, 1342 (11th Cir. 2004).

Nonetheless, despite Congress' clear intent to broaden the district court's authority to grant restitution for crimes involving a scheme or conspiracy, we are unaware of any cases holding that the definition of "victim" for scheme-based crimes diminishes the requirement that losses be "directly" caused by the defendant's actions. . . . Thus, even for scheme or conspiracy based crimes, the government bears the burden of showing that the loss suffered was "directly" caused by defendants' actions.

Id. at 549 n.12.*fn19

As the Fallon opinion demonstrates, the term "directly and proximately harmed" serves a two-fold purpose when used in the MVRA [and, by analogy now, the VWPA and the CVRA]. First, it defines who qualifies as a "victim" under the statute. Second, it provides a rule for determining what losses may be claimed as restitution; i.e., only those losses "directly and proximately" caused by defendant's criminal conduct. The issue that required reversal in Fallon was the latter. There was no dispute on appeal that the duped customer was a "victim" of the mail/wire fraud scheme so as to be eligible for restitution under the MVRA. Id. at 549-50.

The Vaknin opinion, which first articulated the two-part test of causation that was cited with approval by our court of appeals in Fallon, provides an in-depth explanation of this concept under the VWPA. Vaknin, 112 F.3d at 589. Vaknin was decided under the pre-1990 version of the VWPA as interpreted in Hughey, before the word "directly" was added for schemes and conspiracy-type offenses in 1990, and before the word "proximately" was added in the 1996 enactments of the VWPA and MVRA. Id. at 583 n.1. Nevertheless, as seen from the above-quoted language in Fallon, the Vaknin court's careful delineation of the meaning of causation in that version of the VWPA appears fully applicable to interpreting the current VWPA and MVRA. Moreover, because the definition of "victim" in the CVRA is derived from the VWPA and MVRA, the Vaknin interpretation appears to be applicable as the causation test for determining "victim" status under the CVRA.

In a nutshell, what the court in Vaknin concluded was that neither "but for" [in the sense of being an event preceding the later events leading to the loss], nor "direct" [in the sense of being the event immediately before the loss] causation would satisfy the VWPA as then in effect. Having reviewed the then-existing statutory language, legislative history and case law, the court observed:

Upon close perscrutation, the extreme positions advocated by the parties do not hold out much promise in our quest for a serviceable standard of causation.

On the one hand, the sort of direct causation standard that the [defendants] propose is simply too rigid. Under their theory of intervening forces, a court could not impose restitution even if the defendant's conduct were a substantial cause of a loss, unless it were the last cause. . . .

On the other hand, concerns of fairness require us to reject the unbridled but for causation standard that the government propounds. Under it, a court could impose restitution based on the most tenuous of connections.

Id. at 588.*fn20

The Vaknin court then "distill[ed] certain bedrock principles" from the sources it had consulted, and articulated the two-part test later quoted with approval by the Third Circuit for the MVRA in Fallon. Id. at 589; see Fallon, 470 F.3d at 548-49 (quoted supra). From those principles, it articulated the following causative standard:

[W]e hold that a modified but for standard of causation is appropriate for restitution under the VWPA. This means, in effect, that the government must show not only that a particular loss would not have occurred but for the conduct underlying the offense of conviction, but also that the causal nexus between the conduct and the loss is not too attenuated (either factually or temporally). The watchword is reasonableness. A sentencing court should undertake an individualized inquiry; what constitutes sufficient causation can only be determined case by case, in a fact-specific probe. Vaknin, 112 F.3d at 589-90.

Vaknin also suggested a process for analyzing the contentions of the parties in factual disputes on causation. Id. at 590. It used the factual dispute in that case as an illustration. Id. There, the offense was bank bribery; loans had defaulted, leaving the FDIC as the victim. Id. at 582. The factual dispute under the VWPA was the causation of the loss amounts. Vaknin thus further explained the meaning of its test for causation:

[W]here, as here, the government establishes that arrangements for a bribe precede and relate to the making of a loan, a commonsense inference arises that subsequent losses referable to the loan's uncollectibility are causally linked in reasonable proximity to the bribe. . . . Of course, the inference can be rebutted if the defendant produces specific evidence of factual or temporal remoteness. Here, however, [defendant] made no such showing. To the contrary, there is no compelling proof either of an unforeseeable intervening cause or of any cognizable remoteness, factual or temporal.

Id. at 590.

We have included this detailed description of the groundbreaking opinion of the panel in Vaknin because, although it interpreted the pre-1990 version of the VWPA, it appears to express and explain the thinking that has informed courts as they have interpreted the definitions of "victim" as one who was "directly and proximately harmed," under both later versions of the VWPA, and under the MVRA and the CVRA once they were enacted. As demonstrated by the fact that Fallon cited it on this point (as have other courts), the Vaknin opinion deals with the concepts of "direct" and "proximate" causation in a way that helps make those concepts meaningful as courts endeavor to apply them to fact situations under these criminal statutes.

It is necessary to emphasize the following points before we leave this discussion of the definition of "victim" in the VWPA, MVRA, and CVRA. The concept of "related conduct," used by courts for purposes of determining statutory victim status in scheme, conspiracy, or pattern-based offenses, must be distinguished from the concept of "relevant conduct," as used in the federal sentencing guidelines. Here we draw upon some of the decisions summarized supra, as well as some cited infra. See, e.g., Akande, 200 F.3d at 143.

This distinction is illustrated in United States v. Dorcely, which did not involve a scheme-based offense. 454 F.3d 366 (D.C. Cir. 2006). There, defendant was acquitted of conspiracy to defraud the U.S. Department of Education of a substantial sum of money, and also acquitted of conspiracy to launder the money, but convicted of one count of making a false statement during the FBI's ensuing criminal investigation, in violation of 18 U.S.C. § 1001.

Id. at 173-75. The circuit court held that the guidelines calculation was properly based on the acquitted "relevant conduct," because it was established by at least a preponderance of the evidence. Id. at 180-81. However, a restitution award for the loss caused to the Department of Education was not proper under the VWPA or the MVRA because the only offense of conviction was the false statement count, which under Hughey could not support restitution except for any loss caused by the specific [non-scheme/conspiracy] offense of conviction. Id.

We believe that where, as here, one of the offenses of conviction does have a scheme, conspiracy, or pattern as an element, the "relevant conduct" for guidelines purposes may or may not be the same as "related conduct" for purposes of determining statutory victim status under the VWPA, MVRA, or CVRA. Akande, 200 F.3d at 143.

Likewise, the definition of "victim" in the restitution statutes and the CVRA does not mirror the various definitions of "victim" in the guidelines. Cf. United States v. Blake, 81 F.3d 498, 506 n.5 (4th Cir. 1996) ("The definition of victim provided in [the VWPA post-1990 amendments] is much narrower than the one in the guidelines, and it is § 3663 -- not the guidelines -- that governs the authority of a sentencing court to require restitution."). Indeed, the references to "victims" in the guidelines are not even consistent within the guidelines themselves, by design.*fn21

Therefore, the terms should not be conflated. It cannot be assumed that "relevant conduct" for guidelines purposes is the same as "related conduct" for purposes of determining statutory victim status under a scheme or conspiracy-based offense. Nor does the term "victim," as variously appearing in the guidelines, inform the determination of statutory victim status under the VWPA, MVRA, or the CVRA.

C. REVIEW OF CASE LAW ON DISPUTED FACTUAL ISSUES OF STATUTORY VICTIM STATUS

The parties have not cited, nor has our research revealed, any case in which statutory victim status was established in circumstances similar to this prosecution. We have studied the reported Third Circuit cases under the VWPA, MVRA, and CVRA, and we have surveyed the federal appellate case law in other circuits, in an effort to shed some light on the question presented in this motion. Here we summarize the results of that search.

First we address the case law in the Third Circuit under the VWPA, MVRA, and CVRA.*fn22 Most of those cases have arisen in prosecutions for property crimes causing pecuniary loss. The type of victim harmed by the criminal conduct was simply not in dispute, and the opinions dealt with other issues.*fn23 See, e.g.:

United States v. Hawes, 523 F.3d 245, 255-56 (3d Cir. 2008) (investors were victims of mail fraud);

United States v. Lessner, 498 F.3d 185, 189-90, 192, 205-06 (3d Cir. 2007) (federal agency was victim of mail fraud and defense procurement fraud);*fn24

United States v. Fallon, 470 F.3d 542, 547-48 (3d Cir. 2006) (customer was victim of mail fraud/wire fraud);

United States v. Leahy, 438 F.3d 328, 329-31 (3d Cir. 2006) (consolidated appeals including banks as victims of bank fraud);

United States v. Himler, 355 F.3d 735, 737-38, 744-46 (3d Cir. 2004) (settlement company was victim of being tendered counterfeit checks at real estate closing);

United States v. Syme, 276 F.3d 131, 135-36, 158-59 (3d Cir. 2002) (Medicare/Medicaid programs were victims of mail fraud/wire fraud, False Claims Act violations, and false statements relating to health care matters in false billing of government programs for ambulance trips);

United States v. Jarvis, 258 F.3d 235, 236-39 (3d Cir. 2001) (investors were victims of mail fraud);

United States v. Akande, 200 F.3d 136, 137-38 (3d Cir. 1999) (entities that made cash advances and sold merchandise were victims of conspiracy to commit credit card fraud);

United States v. Holmes, 193 F.3d 200, 201-02, 205-06 (3d Cir. 1999) (attorney's clients and acquaintances were victims of offenses including conspiracy and fraud schemes);

United States v. Voigt, 89 F.3d 1050, 1059, 1091-93 (3d Cir. 1996) (loan applicants and investors were victims of mail fraud/wire fraud scheme to obtain advance fees for loans);

United States v. Copple, 74 F.3d 479, 480-82 (3d Cir. 1996) ("Copple II") (investors were victims of mail fraud);

United States v. Graham, 72 F.3d 352, 354-55, 357-58 (3d Cir. 1995) (banks were victims of offenses including bank fraud and conspiracy to make and utter counterfeit checks);

United States v. Carrara, 49 F.3d 105, 106, 108-09 (3d Cir. 1995) (municipality was victim of conspiracy to misappropriate its insurance funds);

Gov't of Virgin Islands v. Davis, 43 F.3d 41, 42-44 & n.4 (3d Cir. 1994) (estate of decedent was victim of mail fraud scheme);

United States v. Copple, 24 F.3d 535, 549-50 (3d Cir. 1994) ("Copple I") (same as Copple II);

United States v. Hallman, 23 F.3d 821, 827-28 (3d Cir. 1994) (bank was victim of forgery and possession of stolen mail offenses);

United States v. Woods, 986 F.2d 669, 670-72, 678-79 (3d Cir. 1993) ("Woods II") (investors were victims of mail fraud);

United States v. Kress, 944 F.2d 155, 157-58 (3d Cir. 1991) (government was victim of contracting fraud; offenses included mail fraud, false statements to government agency, and filing false claims);

United States v. Sleight, 808 F.2d 1012, 1014-15, 1017-18 (3d Cir. 1987) (employer was victim of offenses of conspiracy to defraud it, to obtain money and property by false pretenses, and to deprive it of honest services, as well as mail fraud scheme to defraud it);

United States v. Woods, 775 F.2d 82, 84-87 (3d Cir. 1985) ("Woods I") (same as Woods II);

United States v. Palma, 760 F.2d 475, 476-77 (3d Cir. 1985) (employer bank was victim of bank embezzlement).

See also:

United States v. Turcks, 41 F.3d 893, 895-97, 901-03 (3d Cir. 1994) (remanding for restitution findings including loss to victim banks caused by offenses involving credit card and bank fraud);

United States v. Logar, 975 F.2d 958, 959-62 (3d Cir. 1992) (remanding for restitution findings including loss to investors caused by offenses involving fraudulent tax shelter investment).

There are a few cases in the Third Circuit where the offense was not a property crime, and statutory victim status under the VWPA, MVRA, or CVRA was not dispute. Again, as in the property cases, the rulings on appeal dealt with issues other than whether statutory victim status was shown. See:

United States v. Ausburn, 502 F.3d 313, 315-16, 319-27 (3d Cir. 2007) (sentencing hearing appropriately, under CVRA, included oral victim impact statements by parent and guardian of minor victim of offense under 18 U.S.C. § 2422(b) (using telephone and computer to persuade minor to engage in illegal sexual activity));

United States v. Quillen, 335 F.3d 219, 222-26 (3d Cir. 2003) (state parole board was victim of threatening letter containing white powdery substance mailed by defendant; district court findings under MVRA were sufficient to support restitution award for hazmat response and cleanup even though testing later revealed substance was not hazardous);

United States v. Simmonds, 235 F.3d 826, 828-32 (3d Cir. 2000) (homeowners whose furniture was destroyed by federal arson offense were victims under MVRA);

United States v. Jacobs, 167 F.3d 792, 794-97 (3d Cir. 1999) (victim of federal aggravated assault offense was victim under MVRA).

See also:

United States v. Coates, 178 F.3d 681, 684-85 (3d Cir. 1999) (remanding for restitution findings under MVRA, including loss to victim banks caused by bank robbery);

United States v. Crandon, 173 F.3d 122, 124-27 (3d Cir. 1999) (district court made adequate findings of proximate cause to award restitution for medical expenses incurred by parent for psychiatric treatment of minor victim of child pornography offense, under 18 U.S.C. § 2259(b)(1));

United States v. Johnson, 816 F.2d 918, 924 (3d Cir. 1987) (similar to Coates; bank robbery but restitution governed by VWPA).

We are aware of only four Third Circuit opinions addressing contested issues of statutory victim status under the CVRA, or under any of the federal restitution statutes. Those are easily summarized as follows. In United States v. Hayward, the defendant was convicted of transporting minors in interstate and foreign commerce with intent to engage in criminal sexual activity. 359 F.3d 631, 632-33 (3d Cir. 2004). The court soundly rejected his contention that the parents were not included as victims, under the MVRA, to obtain restitution for the costs of obtaining their victimized children from London and making them available to participate in the investigation and trial. Id. at 642. United States v. Kones is discussed at length supra Sec. I.B. There, the court held that a patient was not a victim of the defendant physician's insurance mail fraud scheme under the VWPA, because the conduct that allegedly harmed her was not conduct proscribed by the mail fraud statute. 77 F.3d at 70-71. United States v. Cottman held, consistent with other circuits, that the FBI is not a victim, under the VWPA, to obtain restitution of funds expended in a sting operation during a criminal investigation. 142 F.3d 160, 168-70 (3d Cir. 1996). United States v. Hand presented a different factual scenario, and the court held that the government was a victim entitled to restitution under the VWPA. 863 F.2d 1100, 1102-05 (3d Cir. 1988). There, defendant was convicted of contempt of court for her misconduct as a juror in a federal criminal trial that forced the trial judge to vacate the convictions of six defendants. Id. at 1101. An award of restitution for salaries and expenses of Assistant U.S. Attorneys, DEA agents and U.S. Marshals was upheld based on findings that their time and energy was wasted in the trial as a result of defendant's conduct. Id. at 1102-05.*fn25

Next we address case law in other circuits that has addressed whether statutory victim status was established under the VWPA, MVRA, or the CVRA. Cases in which victim status was not in dispute typically had similar fact patterns to those summarized above in the Third Circuit, and we will not list them here. See generally John F. Wagner, Annotation, Who is "victim" so as to be entitled to restitution under Victim and Witness Protection Act, 108 A.L.R. FED. 828 (1992 with pocket part updates).*fn26 The following collection of citations is limited to cases where statutory victim status was in dispute.*fn27

Statutory victim status was found to exist, over objection by one or more of the parties, in cases of which the following are a representative collection:

In re Stewart, 552 F.3d 1285, 1288-89 (11th Cir. 2008) (CVRA mandamus petition; circuit court held that mortgage borrowers were CVRA victims of conspiracy to deprive bank of honest services, where defendants were bank officer and co-conspirator whose offense caused borrowers to pay excess fees that defendants pocketed);

United States v. Brock-Davis, 504 F.3d 991, 998-1000 (9th Cir. 2007) (owner of second location at which defendants conspired to manufacture methamphetamine was MVRA victim for resulting cleanup costs although not named in indictment; victim status appropriate either because activity at that location was "related conduct," or it was part of same conspiracy);

United States v. Chalupnik, 514 F.3d 748, 752-55 (8th Cir. 2007) (distributor of copyrighted CDs and DVDs stolen by defendant was MVRA victim of misdemeanor copyright infringement offense);

United States v. Johnson, 440 F.3d 832, 835-39, 849-50 (6th Cir. 2006) (victims of four predicate criminal acts in RICO conspiracy conviction were MVRA victims, where district court found trial evidence established by a preponderance that defendant was actively involved in all four predicate acts);

United States v. Washington, 434 F.3d 1265, 1266-67, 1268-70 (11th Cir. 2006) (police department and another property owner were MVRA victims as to police car and property damaged during chase of defendant fleeing after bank robbery);

United States v. Gee, 432 F.3d 713, 715 (7th Cir. 2005) (local organization that held contracts to administer federal welfare program was MVRA victim of conspiracy to defraud the United States through bribery concerning programs receiving federal funds; organization was a "proxy" for the federal interest because it was a recipient of federal funds designated for a particular use); United States v. Rand, 403 F.3d 489, 493-96 (7th Cir. 2005) (all individuals who sustained losses caused by acts of identity theft performed in the charged identity theft conspiracy were MVRA victims, not just those listed in the indictment or in the plea agreement);

United States v. Donaby, 349 F.3d 1046, 1047-48, 1051-55 (7th Cir. 2003) (another bank robbery case; police department was MVRA victim as to police car damaged during chase);

United States v. Hackett, 311 F.3d 989, 992-93 (9th Cir. 2002) (insurer of home damaged by fire caused by explosion of chemicals used to manufacture methamphetamine was MVRA victim as to defendant convicted of aiding and abetting manufacture of methamphetamine);

United States v. Gamma Tech. Indus., Inc., 265 F.3d 917, 922-24, 926-28 (9th Cir. 2001) (subcontractors were convicted of paying kickbacks on Navy contracts; individual employee of defense contractor was convicted of conspiracy to provide and receive kickbacks; employer of individual defendant was MVRA victim as to all defendants because amount of the kickbacks paid to defendant employee was reflected in overcharges to employer by subcontractors);

Moore v. United States, 178 F.3d 994, 1001 (8th Cir. 1999) (bank customer was MVRA victim of attempted bank robbery; defendant had stood within six feet of teller and customer and pointed sawed-off gun at both of them);

United States v. Hoover, 175 F.3d 564, 566-69 (7th Cir. 1999) (university was MVRA victim of false statement offense under 18 U.S.C. § 1001, where it provided tuition loan money under federal student loan program based on defendant's misrepresentations in loan application);

United States v. Jackson, 155 F.3d 942, 944-45, 949-50 (8th Cir. 1998) (where defendant was convicted, for check writing fraud scheme, of conspiracy to possess or utter counterfeit securities and related substantive offenses, MVRA victims were all persons and entities harmed by the scheme including those from whom checks were stolen and those who received fraudulent checks that were dishonored, whether or not individually identified in indictment);

United States v. Vaknin, 112 F.3d 579, 583-84, 590-91 (1st Cir. 1997) (three bank customers separately paid bribes to bank officer when applying for loans that eventually went into default; bank later failed and FDIC took over; defendant customers were each convicted of bank bribery; circuit court held that record supported finding that FDIC was VWPA victim as to first defendant, and remanded for factual findings on causation of losses as to other two defendants);

United States v. Hensley, 91 F.3d 274, 275-78 (1st Cir. 1996) (where defendant pled guilty to mail/wire fraud and other charges in indictment alleging that he devised and executed a scheme in Boston to obtain merchandise by false pretenses from computer-products distributors in specified states including California, during an approximate one-month period, and PSR contained undisputed facts about a delivery not specified in the indictment, which was obtained by defendant from a California distributor using same modus operandi during same time period, that distributor was a victim of "unitary scheme" under VWPA [post-1990 amendments]);

United States v. Henoud, 81 F.3d 484, 486-90 (4th Cir. 1996) (telephone companies were VWPA victims of offenses of conspiracy, wire fraud and fraud using access devices, where indictment specifically alleged scheme to defraud local and long-distance carriers; indictment did not have to identify all asserted victims for them to qualify as statutory victims under VWPA);

United States v. Haggard, 41 F.3d 1320, 1323-24, 1329 (9th Cir. 1994) (mother of child missing for several years was VWPA victim of hoax by state inmate who contacted FBI falsely claiming to know location of body and identity of assailant; defendant pled guilty to offenses including obstructing FBI investigation and making false statements to FBI and grand jury; district court found that mother's refreshed grief that manifested as physical illness and disability was a result of defendant's crimes of lying to FBI and grand jury; circuit court concluded that where defendant deliberately targeted an unsuspecting family as the victim of his crimes, VWPA victim status for the mother was established);

United States v. Sanga, 967 F.2d 1332, 1333-35 (9th Cir. 1992) (live-in maid kept as virtual slave by defendants was VWPA victim as to defendants convicted of conspiracy to smuggle aliens; any complicity by victim ended when she became an object of, rather than a participant in, the criminal goals of defendants);

United States v. Spinney, 795 F.2d 1410, 1414-18 (9th Cir. 1986) (deceased man was VWPA victim of misdemeanor conspiracy to commit simple assault where defendant, intending only to assault the victim, supplied a weapon to an intoxicated individual who used it to murder the victim);

United States v. Fountain, 768 F.2d 790, 793-94, 800-04 (7th Cir. 1985) (where defendant federal inmates murdered two guards and permanently disabled another guard and Department of Labor provided some compensation to the injured guards or their estates, all had statutory VWPA victim status).

See also:

In re W.R. Huff Asset Mgmt. Co. [United States v. Rigas], 409 F.3d 555, 557-61, 563-64 (2d Cir. 2005) (CVRA mandamus petition; circuit court held that after two members of securities fraud conspiracy were convicted and were awaiting sentencing, and government was determining whether to prosecute others, those who suffered pecuniary loss resulting from conspiracy were CVRA victims entitled to be heard, but proposed "global" settlement that limited criminal restitution to a $715 million victim compensation fund under which claimants would be required to release civil claims against all except the two convicted defendants was reasonable and did not violate CVRA or MVRA);

United States v. Grundhoefer, 916 F.2d 788, 789-91, 793-95 (2d Cir. 1990) (bankruptcy trustee lacked standing to appeal VWPA restitution orders in favor of students who sustained pecuniary loss from conspiracy to make false claims to federal student loan program and related substantive offenses; circuit court in dicta approved district court finding that students were VWPA victims).

Cf.:

United States v. Kaminski, 501 F.3d 655, 657-58, 665, 669-70 (6th Cir. 2007) (affirming district court finding that "society at large" was the victim of offenses under Food, Drug and Cosmetic Act, 21 U.S.C. § 321 et seq., involving sales of unapproved and adulterated drugs, and imposing restitution as a condition of probation under 18 U.S.C. § 3563(b)(2), in amount of retail sales to consumers).

Statutory victim status was determined not to exist in the following appellate decisions under the CVRA, MVRA, or VWPA:*fn28

In re Antrobus, 519 F.3d 1123, 1124-26, 1127-31 (10th Cir. 2008) (on original petition and on petition for rehearing and rehearing en banc) (CVRA mandamus petition; affirming district court finding that deceased woman was not CVRA victim of offense of transferring a handgun to a juvenile in violation of 18 U.S.C. § 922(x)(1), where defendant supplied a weapon to a juvenile who indicated nothing about his intentions, but more than seven months later as an adult murdered five people, including petitioners' decedent, in shopping mall rampage);*fn29

In re Jane Doe, 264 Fed.Appx. 260, 263 (4th Cir. 2007) (CVRA mandamus petition; holding that petitioner was not a statutory victim under CVRA or VWPA, where corporate defendant was convicted of misbranding a prescription drug (OyxContin) with intent to defraud or mislead, in violation of 21 U.S.C. §§ 331(a), 333(a)(2), and entered plea agreement requiring it to pay restitution to various entities affected by its conduct but did not provide for restitution to consumers, and petitioner objected and petitioned to set aside plea and reopen sentencing to obtain restitution, contending that she suffered harm from OxyContin addiction);

United States v. Robertson, 493 F.3d 1322, 1326-27, 1333-35 (11th Cir. 2007) (purchaser of stolen goods who was sued by and settled with manufacturer from whom the goods were obtained by defendant by mail/wire fraud, was not an MVRA victim entitled to restitution of money paid under undisclosed terms of settlement with manufacturer);

United States v. Randle, 324 F.3d 550, 555-58 (7th Cir. 2003) (where defendant pled guilty to one count of bankruptcy fraud [an offense not having element of scheme, conspiracy or pattern], and plea agreement did not expand group of victims, under Hughey individuals harmed by similar criminal conduct in dismissed counts were not MVRA victims);

United States v. Cutter, 313 F.3d 1, 2-9 (1st Cir. 2002) (where defendant was convicted of two counts of bankruptcy fraud [offenses not having element of scheme, conspiracy or pattern], but where bankruptcy trustee initiated fraudulent conveyance action against transferee of defendant's prior residence not because of defendant's bankruptcy fraud but because of below-market-value sale price to transferee, loss sustained by transferee when forced to sell the property to settle with bankruptcy trustee did not create MVRA victim status for transferee);

United States v. Elias, 269 F.3d 1003, 1007-08, 1021--22 (9th Cir. 2001) (where defendant was convicted, inter alia, of: (1) one count of storing or disposing of hazardous waste without a permit, knowing that his actions placed others in imminent danger of death or serious bodily injury, under 42 U.S.C. § 6928(e) [RCRA], and (2) false statements to investigators who responded after worker was taken to hospital near death from working inside cyanide-contaminated confined space, holding that worker was not MVRA victim as to 18 U.S.C. § 1001 false statement count, and no federal restitution statute authorized restitution for offenses under Title 42);*fn30

United States v. Ramirez, 196 F.3d 895, 896-97, 899-900 (8th Cir. 1999) (investors in separate fraudulent investment scheme, which was not stated or implied to be the subject of wire fraud scheme described in the indictment, were not MVRA victims);

United States v. Upton, 91 F.3d 677, 679-81, 686-87 (5th Cir. 1996) (materialmen and suppliers who were left unpaid when defendant failed to complete bonded Air Force construction job, were not VWPA victims of the conspiracy and substantive counts of conviction, which were based on a scheme to defraud the Air Force by obtaining reimbursement for fraudulent surety bonds);

United States v. Broughton-Jones, 71 F.3d 1143, 1144-49 (4th Cir. 1995) (where defendant pled guilty to perjury before grand jury [an offense not having element of scheme, conspiracy, or pattern], and grand jury had been investigating her for suspected fraudulent financial dealings, but conviction was only for perjury and plea agreement did not provide for restitution to any financial victims, individual who had sustained financial harm in scheme alleged in dismissed wire fraud count was not VWPA victim under Hughey and post-1990 amendments).*fn31

Cf:

United States v. Blake, 81 F.3d 498, 501-02, 505-07 (4th Cir. 1996) (persons from whom defendant stole credit cards that he used to commit [non-conspiracy] offense of fraudulent use of unauthorized access devices were not VWPA victims [using narrow reading of Hughey, post-1990 amendments and before 1996 amendments]; circuit court suggesting that if "directly harmed" were added to VWPA statutory victim definition, this result would be corrected).*fn32

We summarize this case law survey with the point made at the outset: The existing legal landscape does not feature any case in which statutory victim status was asserted or found to exist in circumstances similar to this prosecution. They do provide useful background, however, as we render our findings and conclusions infra Sec. II.F.

D. RIGHTS OF STATUTORY VICTIMS AGAINST PARTICULAR DEFENDANTS AT SENTENCING

We next review the rights that all statutory victims have in sentencing proceedings under the CVRA and related statutes.

The CVRA provides that where a person is a "crime victim," as defined in that statute, a crime victim has the following enumerated rights:

(1) The right to be reasonably protected from the accused.

(2) The right to reasonable, accurate, and timely notice of any public court proceeding, or any parole proceeding, involving the crime or of any release or escape of the accused.

(3) The right not to be excluded from any such public court proceeding, unless the court, after receiving clear and convincing evidence, determines that testimony by the victim would be materially altered if the victim heard other testimony at that proceeding.

(4) The right to be reasonably heard at any public proceeding in the district court involving release, plea, sentencing, or any parole proceeding.

(5) The reasonable right to confer with the attorney for the Government in the case.

(6) The right to full and timely restitution as provided in law.

(7) The right to proceedings free from unreasonable delay.

(8) The right to be treated with fairness and with respect for the victim's dignity and privacy. 18 U.S.C. § 3771(a); see id. § 3771(e) (defining "crime victim"). The CVRA specifies: In any court proceeding involving an offense against a crime victim, the court shall ensure that the crime victim is afforded the rights described in subsection(a). Id. §3771(b)(1).

Officers and employees of the Department of Justice and other departments and agencies of the United States engaged in the detection, investigation, or prosecution of crime shall make their best efforts to see that crime victims are notified of, and accorded, the rights described in subsection(a).

Id. § 3771(c)(1).

The prosecutor shall advise the crime victim that the crime victim can seek the advice of an attorney with respect to the rights described in subsection(a).

Id. § 3771(c)(2).*fn33

The CVRA does not itself confer a right to restitution.*fn34 It is, however, obvious that if a person is a "crime victim" under the CVRA, and if the offense of conviction is one specified in the restitution statutes, MVRA or VWPA, then that person also has statutory victim status under the restitution statutes.*fn35 This is evident from the fact that, as we have seen, the definition of "crime victim" in the CVRA is based on the definition of "victim" in both the MVRA and the VWPA. See supra Sec. I.B.

All of the OSHA-related offenses in this case are violations of Title 18 of the United States Code. See supra n.1 and accompanying text. The VWPA (discretionary restitution statute) applies to all offenses arising under Title 18, as well as other specified statutes, except those carved out for mandatory treatment in the MVRA. See 18 U.S.C. § 3663(a)(1)(A). The offenses to which the MVRA (mandatory restitution statute) applies include "an[y] offense against property under [title 18], including any offense committed by fraud or deceit," and crimes of violence as defined in 18 U.S.C. § 16. See 18 U.S.C. § 3663A(c)(1)(A).

The VWPA certainly applies in this case if any persons are "crime victims" of the offenses of conviction, although in our view the MVRA would not arguably apply. Neither of those statutes is new, and neither was amended when the CVRA was enacted in 2004. Therefore, with the filing of the present motion asserting that individuals are "crime victims" under the CVRA, it is clear to us that the Court's review of the rights of victims must include awareness of the restitution provisions of the VWPA.

Case law under both the VWPA and the MVRA is relevant here because many of the provisions are parallel. Also, the requirements for issuance and enforcement of restitution orders under both statutes are specified in one place: 18 U.S.C. § 3664 (Procedure for issuance and enforcement of order of restitution). The name of Section 3664 is somewhat of a misnomer because it treads into substantive territory as well as procedural ground. See, e.g., infra n.40 and accompanying text. Implementation of the VWPA and MVRA, as well as the CVRA, is also governed by the Federal Rules of Criminal Procedure.*fn36

Here we provide an overview of the substantive restitution rights of statutory victims under the VWPA, and the restitution-related procedural rights of statutory victims under 18 U.S.C. § 3664 and the Federal Rules of Criminal Procedure.*fn37 Relevant case law under both the VWPA and MVRA is also cited. Next, we describe how the CVRA provisions are implemented in the sentencing process, including but not limited to the restitution aspect of sentencing.

The substantive provisions of the VWPA state in pertinent part: The court, when sentencing a defendant convicted of an offense under this title, . . . may order, in addition to . . . any other penalty authorized by law, that the defendant make restitution to any victim of such offense, or if the victim is deceased, to the victim's estate.

18 U.S.C. § 3663(a)(1)(A); see also id. § 3663(a)(2) (defining "victim").

The court, in determining whether to order restitution under this section, shall consider --

(I) the amount of the loss sustained by each victim as a result of the offense; and

(II) the financial resources of the defendant, the financial needs and earning ability of the defendant and the defendant's dependents, and such other factors as the court deems appropriate.

Id. § 3663(a)(1)(B)(i).

To the extent that the court determines that the complication and prolongation of the sentencing process resulting from the fashioning of an order of restitution under this section outweighs the need to provide restitution to any victims, the court may decline to make such an order.

Id. § 3663(a)(1)(B)(ii).

The order may require that such defendant --

(1) in the case of an offense resulting in damage to or loss or destruction of property of a victim of the offense --

(2) in the case of an offense resulting in bodily injury to a victim . . . --(A) pay an amount equal to the cost of necessary medical and related professional services and devices relating to physical, psychiatric, and psychological care, including non-medical care and treatment rendered in accordance with a method of healing recognized by the law of the place of treatment;

(B) pay an amount equal to the cost of necessary physical and occupational therapy ...


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