News You Can Use: Tenth Circuit reaffirms that restitution must be based on the offense of conviction, not relevant conduct.

The Mandatory Victim Restitution Act authorizes restitution only for the loss caused by the specific conduct that is the basis of the offense of conviction.  United States v. Mendenhall, 945 F.3d 1264 (10th Cir. 2019).

Restitution can be an afterthought at sentencing.  The parties are, understandably, far more concerned with incarceration.  However, appropriately limiting restitution is important because a large restitution order can follow a client for 20 years and make it difficult for them to get back on their feet, and stay there.  See 18 U.S.C. § 3613.

As the Tenth Circuit has recognized, “The most important thing at sentencing is determining whether the defendant will be incarcerated and, if so, for how long. Other matters, such as restitution and conditions of supervised release, are, appropriately, of secondary concern. But they are not inconsequential and deserve focused attention.” United States v. Martinez-Torres, 795 F.3d 1233, 1234 (10th Cir. 2015)

Recently, in United States v. Mendenhall, the Tenth Circuit reiterated a fundamental aspect of restitution under the Mandatory Victim Restitution Act (MVRA): a district court can order restitution only to a victim of an offense of conviction, and “only for loss caused by the specific conduct that is the basis of the offense of conviction.”  Mendenhall, 945 F.3d at 1267.

In Mendenhall, an indictment charged the defendant with unlawful possession of three specific stolen firearms, each identified by serial number.  The firearms were stolen from a pawnshop during a burglary in which a total of 62 firearms were stolen, and substantial evidence implicated Mendenhall in the burglary.  Only a dozen or so firearms, including the three identified in the indictment, were recovered and returned to the pawnshop.

The district court ordered Mendenhall to pay the pawnshop restitution in the amount of $33,763.23 for “the loss of firearms not recovered, wages for employees to conduct inventory, loss of revenue for closing of business . . . and cleanup/repairs.”  Id. at 1266.  Mendenhall did not object to the restitution order.  On plain error, the Tenth Circuit reversed.

The Tenth Circuit explained that “[d]istrict courts lack inherent powers to order restitution.”  Id.  They may only do so as authorized by statute, and the MVRA authorizes restitution only to “a person directly and proximately harmed as a result of the commission of an offense.”  Id. (quoting 18 U.S.C. § 3663A(a)(2)).  Moreover, the Supreme Court has interpreted this language as limiting restitution “only for losses caused by the conduct underlying the offense of conviction.”  Id. at 1267 (quoting Hughey v. United States, 495 U.S. 411, 416 (1990)).  Based on these limitations, Mendenhall did not owe any restitution at all.

The elements of Mr. Mendenhall’s offense of conviction were: (1) knowing possession of the firearms; (2) interstate commerce; and (3) knowing or having reasonable cause to believe the firearms were stolen.  “None of these elements caused the losses cited as the basis for the restitution order” because the “three firearms listed in the indictment were recovered and returned.”  Id. at 1268.  That Mendehall did not object to the PSR’s assertion that he was involved in the burglary was irrelevant: “Restitution must be based on the offense of conviction, not relevant conduct.”  Id. (quoting United States v. Frith, 461 F.3d 914, 916 (7th Cir. 2006)).

Finally, the Tenth Circuit panel was reluctant to find that the fourth prong of the plain error test was met—that is, whether the error “seriously affects the fairness, integrity, or public reputation of judicial proceedings”—calling it “not an easy question in a case like this one where everybody knows that Mendenhall stole the firearms and pocketed the cash from the theft.”  Id. at 1270.  However, it acknowledged that a restitution order that exceeds the amount authorized by statute “amounts to an illegal sentence,” just as a term of imprisonment above the stat max does.  Accordingly, the Tenth Circuit was bound by precedent to conclude that all four prongs of plain error were met, and it reversed the order of restitution.

Takeaways

  • Restitution can be very burdensome for our clients.
  • Because restitution is a secondary concern for everyone—the defense, the government, probation, and the court—the orders often contain errors.
  • Restitution can be ordered only for loss caused by the specific conduct that is the basis of the offense of conviction. In other words, restitution must be based on the offense of conviction, not relevant conduct.
    • Caveat: in a plea agreement, a defendant can agree to restitution beyond what is otherwise authorized by statute.
  • An excessive restitution order is an illegal sentence

Author: COFPD

Federal Public Defender's Office for the Districts of Colorado and Wyoming

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