Recently in the Restitution category:
Forfeiture of the Sabhnanis’ Home
At issue in United States v. Sabhnani, 07 CR 429 (ADS), 2008 WL 2791970 (E.D.N.Y. July 19, 2008), was whether on top of sentences of 40 and 132 months, respectively, the husband and wife defendants should also forfeit their Long Island home, including the husband’s office annexed to the home. The jury had found the home subject to forfeiture in a supplemental verdict. The Sabhnanis challenged the forfeiture verdict as a violation of the Excessive Fines Clause, which the Supreme Court has held in United States v. Bajakian, 524 U.S. 321 (1998), requires that “the amount of the forfeiture must bear some relationship to the gravity of the offense that it was designed to punish.”
Applying the factors set forth in Bajakian – “the essence of the crime,” whether the respondent was within the class of persons targeted by the forfeiture statute, the maximum sentence and fine, and the nature of the harm caused – the district court rejected the claim. Here, “the essence of the Defendants’ crimes involve harboring illegal aliens and forcing them to perform domestic labor,” Varsha Sabhnani “actually caused serious bodily injury to the victims,” the crimes of conviction carried substantial maximum sentences, and the harm to the victims, who had been “starved, tortured, cut and beaten over the course of years” was “truly grave.”
In addition, the court rejected Mahender Sabhnani’s separate arguments that the forfeiture violated the Excessive Fines Clause as to him because “he played an almost entirely passive role in the offenses,” and at the very least, the forfeiture order should not include his office annexed to the home. While agreeing that he was less culpable than his wife, the court pointed out that the jury’s verdict as to Mahender contradicted any claim of passivity, and the home office was not only physically part of the home property, it was also involved in the offenses and used to facilitate the commission of the crimes.
Restitution
In another decision of the same date, United States v. Sabhnani, 2008 WL 2791869 (E.D.N.Y. June 19, 2008), the court calculated the restitution owed by the defendants to the domestic worker victims, which involved a complicated interaction between the mandatory restitution provisions of the Trafficking Victims and Violence Protection Act, the liquidated damages provision of the Fair Labor Standards Act and the procedures established in the Mandatory Victims Restitution Act.
Notably, the court rejected the request by Varsha Sabhnani for a detailed factual hearing with testimony from the victims regarding the appropriate amount of the restitution. Quoting the Second Circuit’s opinion in United States v. Maurer, 226 F.3d 150 (2d Cir.2000), the court noted that it had discretion to determine sentencing procedures, and that no hearing was necessary where “the trial record shed substantial light on the propriety of the restitution award, and the record reveals that [the defendant] had ample opportunity to present his views.”
A briefing order that reads like a law review article can only emanate from the chambers of EDNY judge Jack Weinstein. In United States v. Brennan, 05 CR 747 (JBW), 2007 WL 4443989 (E.D.N.Y. December 19, 2007), he has set the stage for what is likely to be a significant ruling on the interaction between restitution orders, forfeiture orders, and payments victims receive from other sources, including the payment at issue in Brennan - a compensation fund established as part of a non-prosecution agreement.
Brennan involved a prosecution of long-term employees of Newsday and Hoy, two Tribune Company newspapers, in a $100 million scheme to defraud advertisers. The newspapers and their parent company avoided prosecution, but entered into a separate agreement with the government, whereby they took responsibility for certain "unlawful circulation-reporting practices . . . used in connection with setting advertising rates" and agreed to forfeit $15 million to the government. Separate to the forfeiture, the papers were also attempting to repay advertisers for inflated advertising rates, and to date had repaid $90 million.
Since the government's settlement agreement with the newspapers meant that any victims not previously identified and repaid could seek restitution from the forfeited amount of $15 million, and in light of "the difficulty in determining whether additional restitution is owed to any victims who have yet to come forward," the government maintained that restitution should not be ordered against the nine defendants under 18 U.S.C. 3663A(c)(3) (the safety valve provision of the Mandatory Crime Victim Restitution Act - MVRA -, which excuses restitution where the number of victims is too large to make restitution practicable, or determining the amount of restitution would undly burden the sentencing process).
Disagreeing that on the current record, the MVRA's safety valve provision applied, the court's December 19 order directed the government to respond to a series of questions, and in the process, did a useful and extensive review of the applicable statutory framework and cases interpreting it.
Of particular interest is the court's focus on the potential for the MVRA to award "double recovery" to victims. The MVRA provides that the fact that a victim received or is entitled to receive compensation "from insurance or any other source" must not be considered in determining the amount of restitution to be ordered. On its face, then, the MVRA could allow a victim to recover twice - once through a restitution payment and once through some other form of compensation. As outlined in Brennan, several cases have addressed this issue of an unjustified windfall to the victim, including cases that have ruled a victim may not obtain double recovery through restitution and forfeiture, and cases that have precluded double recovery by virtue of some other court-ordered restitution award. None of these cases addressed the unique circumstance here - the situation where an unindicted party makes a voluntary payment to the government or an injured party. In fact, as the Brennan court ominously noted, citing a 6th Circuit case, "the purposes of criminal restitution include punishment. It would be improper to permit private parties to release criminal wrongdoers from punishment."
Thus, the court ordered the government to address the issue of whether application of the MVRA was excused by the fact that the repayment scheme established by the newspapers and their parent may result in a "windfall" to those defrauded. The case has since been assigned to a magistrate for hearings and a decision. Stay tuned for what will no doubt be an important decision in this technical and under-appreciated area that can have a significant impact on defendants' lives.
Finally, it is worth noting the court's concern at what it perceived as disproportionate treatment of offenders - something that occurs so often, because the higher-ups in a corporate or drug hierarchy have an uncanny ability to insulate themselves from liability. It appears to be one of the court's reasons for considering monetary as opposed to custodial punishment in this case. In a previous order, quoted in this decision, Judge Weinstein stated: "The Court is troubled by the lack of clarity respecting relative culpability, if it exists, of those prosecuted compared to those of higher authority and the institutions themselves."
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