Friday, March 14, 2014

Restitution Order affirmed

US v. Abdelbary:  In this appeal, the Fourth Circuit considers the propriety of an order requiring a defendant to pay attorneys’ fees incurred by a creditor in a bankruptcy proceeding as a part of restitution; the Fourth Circuit approved and affirmed.

Youssef Abdelbary received convictions in connection with a fraudulent bankruptcy filing. As part of his sentence, the district court imposed a restitution award to his creditor, Jordan Oil, for its attorneys’ fees. On his first appeal, the Fourth Circuit remanded because the district court failed to designate the statutory basis for the restitution, and overlooked the predicate factual findings required by the appropriate act, here, the Victim and Witness Protection Act ("VWPA") or the Mandatory Victim Restitution Act ("MVRA"). On remand, the parties agreed that the MVRA governed the issue. The district court again imposed a restitution award, finding as a factual matter that the attorneys’ fees for Jordan Oil were incurred as a result of the bankruptcy fraud; Abdelbary countered that attorneys’ fees should never be included as compensable costs as part of restitution under the MVRA, or in the alternative, that Jordan Oil was not a victim of Abdelbary’s bankruptcy offense.

In order to reach its decision, the Fourth Circuit discussed the background of both the VWPA and the MVRA, showing how particular types of losses could be included in restitution for certain types of crimes, including those involving damage to or loss or destruction of property, crimes involving bodily injury, and pertinently, for certain categories of offenses "that directly and proximately caused a victim to suffer either a physical or a pecuniary loss." The district court in this case found that Jordan Oil was a "victim" of Abdelbary’s offense because his attempt to discharge his debts to that company (via fraudulent bankruptcy filings) directly and proximately caused Jordan Oil to shell out cash for attorneys’ fees in order to protect its interests against Abdelbary’s fraud.

In dissent, Justice Diaz argues that the finding that all of Jordan Oil’s attorneys’ fees were directly and proximately caused by Abdelbary’s fraudulent bankruptcy, and that such a conclusion takes too broad a view of Abdelbary’s criminal conduct. He posits that Abdelbary may well have been able to file for bankruptcy without making any fraudulent representations, which would have dragged Jordan Oil into court, incurring attorneys’ fees all the while; the government failed to show, he states, that even if the defendant had been utterly truthful, that Jordan Oil would not have suffered the same harm.

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