Posted: June 25, 2018

Judge Brodie Denies Criminal Defendant’s Motion To Require Government To Apply Forfeited Funds To Reduce Restitution Amount

Posted by Solomon N. Klein, Litigation Partner

District Judge Margo K. Brodie rejected a defendant’s request to require the government to apply the amount of forfeited funds as a credit to his restitution obligation. United States v. Pratt, 17-cr-00262 (E.D.N.Y. June 11, 2018) (MKB).

The defendant is a former postal employee who pled guilty to stealing approximately $30,000 in USPS funds. The government obtained a forfeiture order of the full amount, but refused to credit the forfeited amount to the restitution owed by defendant. Defendant moved the Court to “‘order the crediting of any forfeited funds to restitution’ because ‘the amounts of forfeiture and restitution are exactly the same . . . and no purpose is served by requiring him to make in effect a double payment, doubling the just under $30,000 that he stole[.]’”

While defendant’s argument may have some commonsensical appeal, the Court rejected it – explaining that the statutory framework and Second Circuit precedent is clear: the government in its discretion may apply the forfeiture funds to the restitution, but the Court has no authority to compel the government to do so.

Defendant acknowledges in his application to the Court that restitution and forfeiture serve different purposes. (See id. at 3 (“Forfeiture rids a defendant of his ill-gotten gains . . . while restitution ‘compensates victims for their losses.’” (alteration omitted) (first citing United States v. Kalish, 626 F.3d 165 (2d Cir. 2010); and then quoting United States v. Pescatore, 637 F.3d 128, 138 (2d Cir. 2011))).)
. . .
The Second Circuit recognized that other circuits had rejected similar requests, and noted that “these remedies are authorized by separate statutes, and their simultaneous imposition offends no constitutional provision.” Id.
. . .
While the government has discretion and can decide to apply forfeited funds to restitution, the Court is not aware of any authority to order the Government to exercise its discretion in a particular case. See United States v. Torres, 703 F.3d 194, 204–05 (2d Cir. 2012) (“[A]lthough the government is not required to apply any payments that [the defendant] makes toward the forfeiture award to reduce her restitution obligation (or vice versa), [the defendant] may seek such relief, and the Attorney General may apply one payment as credit against the other obligation.” (first citing Pescatore, 637 F.3d at 138; and then citing Kalish, 626 F.3d at 169–70)); Pescatore, 637 F.3d at 138 (noting that the DOJ’s Asset Forfeiture Policy Manual provided that “discretion may be exercised to transfer forfeited assets to victims ‘where . . . other property is not available to satisfy the order of restitution’”). Indeed, other circuits have consistently held that district courts generally have no authority to apply forfeited funds to restitution. See, e.g., United States v. Joseph, 743 F.3d 1350, 1354 (11th Cir. 2014) (“In light of the statutory framework governing restitution and forfeiture, we hold that a district court generally has no authority to offset a defendant’s restitution obligation by the value of forfeited property held by the government, which is consistent with the approach taken by the Fourth, Seventh, Eighth, Ninth, and Tenth Circuits.” (collecting cases)).
. . .
Thus, absent “specific statutory authorization,” Bodouva, 853 F.3d at 78–79, this Court has no basis to order the Government to apply forfeited funds to any restitution order.

United States v. Pratt, 17-cr-00262 (E.D.N.Y. June 11, 2018) (MKB).

Posted by Solomon N. Klein, Litigation Partner

Posted in EDNY, Forfeiture, Sentencing
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