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Lengthy summary order affirms an order of restitution

In a 12-page summary order issued on February 9, 2018, the Second Circuit affirmed an order of restitution in United States v. Quatrella, 17-1786.  The order is interesting primarily because it addresses the question of when a victim of an offense is not really a victim but rather a fellow participant in the criminal scheme.  The rule in the Circuit is clear:  no order of restitution should be granted that has the effect of treating a coconspirator as a victim.  At the same time, a victim may not be denied restitution simply because the victim had greedy or dishonest motives, so long as the victim’s intentions were not in pari materia with the defendant’s. 

In Quatrella, the offense involved an attorney who acquired stranger-originated life insurance (“STOLI”) policies by making false representations to insurance companies.  Initially, it appeared that there were no victims of the offense because no death benefit was paid, and consequently, the insurers sustained no losses.  However, friends of the defendant who had invested in the premium payments intervened as victims and alleged $3 million in losses.  Even though the government did not advocate for these individuals to be treated as such, the district court concluded that the investors were victims within the meaning of the Mandatory Victims Restitution Act and ordered $1.9 million in restitution payments.  On appeal, the Circuit affirmed, concluding that the investors in the underlying scheme who lost money were not knowing participants in offense and therefore were victims under the MVRA. 

The Circuit also rejected the defendant’s argument that the order was procedurally unsound; although the government did not treat the investors as victims, once the investors intervened the defendant was given an opportunity to dispute their claims. 

As a general matter, we note that in some cases, the government does not pursue restitution as vigorously as victims may have hoped it would, perhaps due to some lingering concern about the victims’ conduct or in order to resolve a dispute with minimal sentencing proceedings.  But in federal court, victims of crimes may still step forward and seek the restitution that they are owed.  Especially if the defendant has funds (or will have funds in the future) to pay restitution, it is advisable for victims to consider taking this step.

-By Clinton Morrison and Harry Sandick