United States v. Alalade ( 2000 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
No. 98-4877
OLUSOLA A. ALALADE, a/k/a George
Alalade,
Defendant-Appellant.
Appeal from the United States District Court
for the District of Maryland, at Greenbelt.
Alexander Williams, Jr., District Judge.
(CR-98-275-AW)
Argued: December 3, 1999
Decided: February 25, 2000
Before NIEMEYER and WILLIAMS, Circuit Judges,
and HAMILTON, Senior Circuit Judge.
_________________________________________________________________
Affirmed by published opinion. Senior Judge Hamilton wrote the
opinion, in which Judge Niemeyer and Judge Williams joined.
_________________________________________________________________
COUNSEL
ARGUED: Jason D. Tulley, BENNETT & NATHANS, L.L.P., Balti-
more, Maryland, for Appellant. Odessa Palmer Jackson, Assistant
United States Attorney, UNITED STATES ATTORNEY'S OFFICE,
Greenbelt, Maryland, for Appellee. ON BRIEF: Lynne A. Battaglia,
United States Attorney, UNITED STATES ATTORNEY'S OFFICE,
Greenbelt, Maryland, for Appellee.
OPINION
HAMILTON, Senior Circuit Judge:
The sole issue in this appeal is whether a district court has discre-
tion under the Mandatory Victims Restitution Act of 1996 (the
MVRA) § 206(a), 18 U.S.C.A. § 3664 (West Supp. 1999), to order a
defendant convicted of credit card fraud, see 18 U.S.C.A.
§ 1029(a)(2) (West Supp. 1999), to pay restitution in an amount less
than the full amount of each victim's loss by allowing an offset for
the value of fraudulently obtained property the government seized
from the defendant and retained in administrative forfeiture. For rea-
sons that follow, we answer this question in the negative. We, there-
fore, affirm the judgment in the present case to the extent it orders
Olusola Alalade (Alalade), the defendant in this case, to pay
$667,858.18 in restitution on a payment schedule of $150.00 per
month.
I
On September 9, 1998, Alalade pled guilty in the United States
District Court for the District of Maryland, pursuant to a written plea
agreement, to one count of credit card fraud in violation of 18 U.S.C.
§ 1029(a)(2). Alalade's fraudulent scheme, which began in late 1996
and ended in or about March 1998, is best described as occurring in
four stages. In the initial stage, Alalade obtained counterfeit drivers'
licenses and social security cards in the names of numerous actual
persons by using identifying information of those persons he obtained
without their knowledge or consent. Using the counterfeit drivers'
licenses and social security cards, Alalade next secured post office
boxes, office space, and clerical services in the names of at least ten
different fictitious business entities at a variety of locations in the
Maryland counties of Montgomery and Prince George's. Alalade then
obtained more than forty corporate credit card accounts, typically
with $20,000 credit limits, from a number of different financial insti-
tutions (the Victim Financial Institutions) in the names of his various
fictitious business entities. In the final stage of his fraudulent scheme,
Alalade used the credit cards chiefly to obtain cash advances on the
credit card accounts through automatic teller machines. Alalade also
charged some purchases directly to the credit card accounts.
2
Alalade used all of the cash and credit that he fraudulently obtained
to support himself personally, including using a portion of the cash
to pay his home mortgage and purchase furniture. In total, Alalade
fraudulently obtained $667,858.18 from the Victim Financial Institu-
tions.
As part of the plea agreement between Alalade and the govern-
ment, Alalade agreed not to contest the administrative forfeiture of all
items seized from him in connection with the investigation and prose-
cution of his case.1 The government ultimately seized and retained
$78,982.02 worth of items from Alalade in administrative forfeiture.
The record does not establish that any of the Victim Financial Insti-
tutions received any of the forfeited property through the Department
of Justice's program for remitting administrative forfeitures to "indi-
viduals who have an interest in the forfeited property but who did not
participate in, or have knowledge of, the conduct that resulted in the
property being subject to forfeiture and, where required, took all rea-
sonable steps under the circumstances to ensure that such property
would not be used, acquired, or disposed of contrary to law."2 28
C.F.R. § 9.1(a) (1999). Furthermore, the record does not establish that
the Victim Financial Institutions received any compensation for their
respective losses from any other source either prior to or subsequent
to the district court's sentencing of Alalade.
At his sentencing hearing on November 23, 1998, Alalade asked
the district court to reduce any amount of restitution it ordered him
to pay the Victim Financial Institutions by the value of the items the
government seized in administrative forfeiture. The district court
refused to grant Alalade the reduction he requested. In this regard, the
_________________________________________________________________
1 An administrative forfeiture is"the process by which property may be
forfeited by an investigative agency rather than through judicial proceed-
ings." 28 C.F.R. § 9.2(a) (1999).
2 Under the Department of Justice's remittance program, forfeited prop-
erty will only be remitted according to specific guidelines upon the filing
of a petition by the party seeking remittance. See 28 C.F.R. §§ 9.3, 9.5
(1999). The record does not establish that any of the Victim Financial
Institutions filed petitions for remittance with the Department of Justice
in connection with this case.
3
district court reasoned that, under the terms of the MVRA, the gov-
ernment's receipt of the items from Alalade in administrative forfei-
ture was not germane to the question of the appropriate amount of
restitution to be ordered.
At the conclusion of Alalade's sentencing hearing, the district court
sentenced Alalade to twenty-four months' imprisonment, followed by
a three-year term of supervised release. Additionally, the district court
ordered Alalade to pay restitution to the Victim Financial Institutions
in the amount of $667,858.18 on a payment schedule of $150.00 per
month. The district court subsequently entered a criminal judgment
against Alalade reflecting its rulings at sentencing.
Alalade noted this timely appeal. On appeal, Alalade solely chal-
lenges the total amount of restitution ordered by the district court.
Specifically, he challenges the district court's refusal to reduce the
total amount of restitution it ordered him to pay by the value of the
items the government seized from him and retained in administrative
forfeiture.
II
We begin our consideration of Alalade's challenge to the amount
of restitution ordered by the district court by setting forth the statutory
provisions implicated by his challenge. Alalade agrees that he is sub-
ject to the MVRA, which makes restitution mandatory for particular
crimes, including those offenses involving fraud such as the crime to
which Alalade pled guilty.3 See 18 U.S.C.A. § 3663A(a)(1),
(c)(1)(A)(ii) (West Supp. 1999). With respect to the amount of man-
datory restitution to be ordered, the MVRA provides that "[i]n each
order of restitution, the court shall order restitution to each victim in
the full amount of each victim's losses as determined by the court and
without consideration of the economic circumstances of the defen-
dant." Id. § 3664(f)(1)(A) (emphasis added); see also id. § 3663A(d)
_________________________________________________________________
3 Section 211 of the MVRA provides that the MVRA "shall, to the
extent constitutionally permissible, be effective for sentencing proceed-
ings in cases in which the defendant is convicted on or after" April 24,
1996. Pub. L. No. 104-132, Title II § 211; see also 18 U.S.C.A. § 2248note (West Supp. 1999).
4
(providing that an order of restitution under 18 U.S.C. § 3663A "shall
be issued and enforced in accordance with section 3664"). "In no case
shall the fact that a victim has received or is entitled to receive com-
pensation with respect to a loss from insurance or any other source
be considered in determining the amount of restitution." Id.
§ 3664(f)(1)(B).
Under the MVRA, after determining the full amount of restitution
owed to each victim, the district court is required to set the manner
in which, and the schedule according to which, the defendant is to pay
the amount of restitution ordered. See id.§ 3664(f)(2). In so doing,
the district court is required to consider: (1) the financial resources
and other assets of the defendant, including whether any of the assets
are jointly controlled; (2) projected earnings and other income of the
defendant; and (3) any financial obligations of the defendant, includ-
ing obligations to dependents. See id.
Despite the MVRA's prohibition on a district court from consider-
ing the fact that a victim has received or is entitled to receive compen-
sation with respect to a loss from insurance or any other source in
determining the amount of restitution to be ordered initially, see id.
§ 3664(f)(1)(B), the MVRA provides that "[a]ny amount paid to a
victim under an order of restitution shall be reduced by any amount
later recovered as compensatory damages for the same loss by the
victim in--(A) any Federal civil proceeding; and (B) any State civil
proceeding, to the extent provided by the law of the State," id.
§ 3664(j)(2).
Under the law in existence prior to the effective date of the MVRA,
the payment of restitution in this case would have been a discretion-
ary decision in the hands of the district court under the Victim and
Witness Protection Act of 1982 (VWPA) § 5(a), 18 U.S.C.A.
§ 3663(a) (West 1985) (amended 1996). Furthermore, in determining
whether to order restitution under the VWPA and the amount of such
restitution, the district court had to "consider the amount of loss sus-
tained by any victim as a result of the offense, the financial resources
of the defendant, the financial needs and earning ability of the defen-
dant and the defendant's dependants, and such other factors as the
court deem[ed] appropriate." Id.§ 3664(a).
5
Alalade concedes that the full amount of loss to the Victim Finan-
cial Institutions is $667,858.18. Nevertheless, he contends the district
court erred in ordering him to pay restitution in this amount. Accord-
ing to Alalade, the district court mistakenly believed that it lacked dis-
cretion under the MVRA to grant the reduction in restitution he
requested. Whether the district court possessed discretion under the
MVRA to order restitution in an amount less than the full amount of
each Victim Financial Institution's loss by allowing an offset for the
value of the property seized from Alalade and retained by the govern-
ment in administrative forfeiture is purely a legal question and, there-
fore, subject to de novo review. See United States v. Hall, 972 F.2d
67, 69 (4th Cir. 1992) (noting that interpretation of a statute is a
purely legal question calling for de novo review).
In support of his position, Alalade relies upon pre-MVRA case law
holding that the district court has discretion to reduce the amount of
restitution by amounts seized from the defendant in forfeiture pro-
ceedings. See United States v. Kahn, 53 F.3d 507, 519 (2d Cir. 1995)
(noting on remand for resentencing in a pre-MVRA case, that the dis-
trict court may reduce the amount of restitution to be ordered by the
amount of forfeiture); United States v. Barnette , 902 F. Supp. 1522,
1531 (M.D. Fla. 1995) (reducing amount of restitution to be ordered
by amount of forfeiture in a pre-MVRA case). Alalade contends this
pre-MVRA case law survived passage of the MVRA on the ground
that the MVRA does not specifically address whether the district
court is precluded from reducing the amount of restitution to be
ordered by forfeited amounts.
The government responds that the plain language of the MVRA,
specifically 18 U.S.C. § 3664(f)(1)(A), makes clear that a district
court is required to order a defendant to make restitution to the victim
of a covered offense in the full amount of each victim's loss. There-
fore, the government concludes, the plain language of the MVRA left
no room for the district court, in determining the amount of restitution
to be ordered, to reduce the full amount of loss to the Victim Finan-
cial Institutions by the value of the items the government seized from
Alalade and retained in administrative forfeiture. Accordingly, the
government argues, the district court's order of restitution should be
affirmed.
6
We fully agree with the government that the plain language of the
MVRA did not grant the district court discretion to reduce the amount
of restitution required to be ordered by an amount equal to the value
of the property seized from Alalade and retained by the government
in administrative forfeiture. Critically, with passage of the MVRA,
Congress completely deleted the language of the VWPA affording the
district court discretion in cases such as this to consider any factor it
deemed appropriate in determining the amount of restitution to be
ordered, see 18 U.S.C.A. § 3664(a) (West 1985) (amended 1996), and
replaced it with language requiring the district court to order restitu-
tion in the full amount of loss to each victim as determined by the dis-
trict court, see 18 U.S.C.A. § 3664(f)(1)(A) (West Supp. 1999).
Furthermore, in contrast to the VWPA, the MVRA does not contain
any language requiring the district court, in determining the total
amount of restitution to be ordered, to consider the financial resources
of the defendant or the financial needs and earning ability of the
defendant and the defendant's dependants. Compare 18 U.S.C.A.
§ 3664(f) (West Supp. 1999) with 18 U.S.C.A. § 3664(a) (West 1985)
(amended 1996). Moreover, the MVRA's prohibition on district
courts from considering the fact that a victim has received or is enti-
tled to receive compensation for its loss from an insurance company
or any other source in determining the total amount of restitution to
be ordered, see 18 U.S.C.A. § 3664(f)(1)(B) (West 1999), further
evinces congressional intent that defendants such as Alalade initially
be ordered to pay restitution in the full amount of each victim's loss.
If the MVRA prohibits district courts from reducing the amount of
restitution by the amount of third-party compensation received by a
victim prior to entry of the district court's order of restitution, it
would be nonsensical for the district court to have discretion to reduce
the amount of restitution by the value of property seized from the
defendant and retained by the government in administrative forfeiture,
a loss to the defendant.4
_________________________________________________________________
4 The MVRA's requirement that any amount paid to a victim under an
order of restitution be reduced by any amount later recovered by the vic-
tim as compensatory damages for the same loss in any federal or state
civil proceeding, see 18 U.S.C.A. § 3664(j)(2) (West Supp. 1999), does
not undercut the thrust of our point. This is because § 3664(j)(2), by its
terms, only comes into play after the district court has already ordered
restitution in the full amount of the victim's loss. See United States v.
7
Because literal application of the MVRA's requirement that the
district court "order restitution to each victim in the full amount of
each victim's losses as determined by the district court . . .," id.
§ 3664(f)(1)(A), does not produce a result demonstrably at odds with
the intent of Congress, we hold the district court lacked discretion
under the MVRA to order restitution in this case in an amount less
than the full amount of each Victim Financial Institution's loss by
allowing an offset for the value of the fraudulently obtained property
the government seized from Alalade and retained in administrative
forfeiture.5 See United States v. Ron Pair Enter., Inc., 489 U.S. 235,
242 (1989) ("The plain meaning of legislation should be conclusive,
except in the rare cases [in which] the literal application of a statute
will produce a result demonstrably at odds with the intentions of its
drafters." (internal quotation marks omitted) (alteration in original)).
Accordingly, we affirm the criminal judgment against Alalade to the
extent it orders him to pay restitution in the amount of $667,858.18
on a payment schedule of $150.00 per month.
AFFIRMED
_________________________________________________________________
Crawford, 169 F.3d 590, 593 (9th Cir. 1999) (explaining that "[w]hile
insurance settlements are excluded in the initial computation of the
amount of restitution owed" under § 3664(f)(1)(B), "once that total
amount is determined, the defendant is entitled[under § 3664(j)(2)], to
have the amount of restitution reduced by any amount later recovered by
the victim as compensatory damages for the same loss").
5 Under the facts of this case, we need not decide, and we express no
opinion on, the effect upon the district court's calculation of the full
amount of a victim's loss under the MVRA when the victim receives
property or cash from the Department of Justice through its remittance
program involving property or cash seized by the government in admin-
istrative forfeiture in connection with the case.
8