United States v. Nel ( 2021 )

Case: 19-51028 Document: 00515714850 Page: 1 Date Filed: 01/21/2021
United States Court of Appeals
for the Fifth Circuit
United States Court of Appeals
Fifth Circuit
FILED
January 21, 2021
No. 19-51028 Lyle W. Cayce
Clerk
United States of America,
Plaintiff—Appellee,
versus
Jan Abraham Nel,
Defendant—Appellant.
Appeal from the United States District Court
for the Western District of Texas
USDC No. 3:17-CR-2152-1
Before Haynes, Higginson, and Oldham, Circuit Judges.
Per Curiam:*
Jan Abraham Nel pleaded guilty to wire fraud. As part of his sentence,
the district court ordered him to pay $448,170.14 in restitution. On appeal,
Nel argues that the restitution amount violated the Mandatory Victims
Restitution Act (“MVRA”), 18 U.S.C. § 3663A. For the reasons below, we
AFFIRM.
*
Pursuant to 5th Circuit Rule 47.5, the court has determined that this
opinion should not be published and is not precedent except under the limited
circumstances set forth in 5th Circuit Rule 47.5.4.
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No. 19-51028
I. Background
Nel and his business partner, Manuel Isaac Garciagadoy, entered into
a scheme to defraud the U.S. Government by claiming large income tax
refunds for the 2014 and 2015 tax year. Both Nel and Garciagadoy knew at
the time of their respective filings that the amounts claimed as interest
income and income tax withholdings were fraudulent. Although Nel never
received a tax refund, Garciagadoy received one for $1,454,681.99 from the
Internal Revenue Service (“IRS”) for his 2015 tax return. Several days later,
the IRS reversed payment and recovered $1,006,511.85 from Garciagadoy.
However, Garciagadoy had already spent $430,785.37 on various
expenditures, including a $41,000 Buick Enclave. Relevant here, the Buick
was later seized by the IRS.
Nel eventually pleaded guilty to one count of wire fraud. As part of
his plea agreement, he agreed to provide full restitution to all charges
contained in the indictment and forfeit certain assets (not including the
Buick). After adopting Nel’s presentence investigation report in full, the
district court sentenced Nel to 46 months in prison, three years of supervised
release, and ordered him to pay $448,170.14 in restitution, jointly and
severally with Garciagadoy, for the difference between the amount
Garciagadoy received in tax refund and the amount the IRS recovered. Nel
did not object to the restitution amount at his sentencing hearing. Shortly
after, Nel timely appealed.
II. Standard of Review
The district court resolves any disputes as to the amount of restitution
owed based on a preponderance of evidence. 18 U.S.C. § 3664(e). The
Government has the burden of demonstrating the amount of loss sustained
by a victim as a result of the offense. Id. “On occasion, however, we have
shifted to the defendant the burden to show any entitlement to a credit for
2
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value bestowed on the victim.” United States v. De Leon, 728 F.3d 500, 506
(5th Cir. 2013).
We review an unpreserved restitution award argument for plain
error. 1 See United States v. Maturin, 488 F.3d 657, 659–60 (5th Cir. 2007).
To demonstrate plain error, a defendant must show that “(1) there is an
error, (2) the error is clear or obvious, and (3) the error affects his substantial
rights.” United States v. Coil, 442 F.3d 912, 916 (5th Cir. 2006). If those
conditions are met, this court may grant relief if “the error seriously affects
the fairness, integrity, or public reputation of the judicial proceedings.”
United States v. Ibarra, 465 F.3d 596, 606 (5th Cir. 2006).
III. Discussion
On appeal, Nel raises a sole issue: whether the district court’s failure
to credit the value of the Buick, forfeited 2 and seized by the IRS, resulted in
a restitution order that exceeds the amount permitted under the MVRA.
According to Nel, allowing the IRS to receive restitution and forfeiture would
result in an impermissible “double recovery” because both remedies would
be going to the same victim—the IRS—without a reduction in the restitution
amount. Nel maintains that a reduction was required because the Buick was
“returned” to the IRS. See 18 U.S.C. § 3663A(b)(1). Because the MVRA
does not allow a court to award restitution greater than the victim’s actual
loss, see United States v. Sharma, 703 F.3d 318, 322 (5th Cir. 2012), Nel
1
We do not apply a harmless error analysis to restitution “because an order of
restitution must be limited to losses caused by the specific conduct underlying the offense
of conviction.” De Leon, 728 F.3d at 507 (quotation omitted).
2
Nel does not contest the Government’s assertion that the Buick was
administratively forfeited.
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concludes that the district court’s restitution order is unlawful. We disagree
with Nel’s characterization.
It is important to recognize that forfeiture and restitution are distinct
legal remedies with different purposes. United States v. Taylor, 582 F.3d 558,
566 (5th Cir. 2009) (per curiam). Forfeiture is a punitive remedy, which aims
to disgorge “any ill-gotten gains from a defendant.” Id. (quotation omitted).
In contrast, restitution is remedial in nature and “operates to make the victim
of the crime whole.” Id. (quotation omitted). Because they serve distinct
purposes, an order for both restitution and forfeiture is permissible, even if
the Government is the recipient of both sums. Id.The parties do not dispute these general principles; instead, they
disagree about the application of these principles to the facts of this case. Nel
argues that, unlike previous cases, this situation does not involve distinct
Government entities receiving the forfeited asset and the restitution award—
here, the IRS seized the forfeited Buick and is entitled to restitution as the
victim of the offense. Consequently, Nel maintains that the IRS will receive
a double recovery through both forfeiture and restitution.
Despite Nel’s double recovery assertion, he has not provided any
proof that seizing the Buick was equivalent to permanently keeping its
proceeds. In the absence of such evidence, we need not decide the question
of whether restitution and forfeiture to the same governmental entity results
in a double recovery. 3 See id. at 567 (“Generally, courts decline to offset
3
Nel’s citation to United States v. Ruff, 420 F.3d 772 (8th Cir. 2005) does not
compel a different conclusion. In Ruff, the defendant “attempted to establish enforcement
of the court’s restitution order would result in a double recovery” and asked whether the
forfeited asset had been sold. Id. at 776. Here, Nel merely observed “[t]he exact value of
the seized asset . . . [wa]s uncertain.” Given the lack of evidence that Nel attempted to
establish a double recovery and the more deferential plain error standard of review, Ruff is
distinguishable on these grounds.
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No. 19-51028
restitution when there is no evidence that doing so would result in double
recovery to the victim.”). Nor does he cite to controlling precedent that
would make such an award erroneous—much less plainly erroneous—under
the circumstances presented in this case. 4 See United States v. Jordan, 945
F.3d 245, 254 (5th Cir. 2019) (acknowledging that an error is clear and
obvious, for the purpose of plain error review, only “if controlling circuit
court or Supreme Court precedent has clarified that the action, or inaction is
an error”), cert. denied, 140 S. Ct. 2698 (2020), and cert. denied sub nom. Wise
v. United States, No. 20-5692, 2020 WL 6037392 (U.S. Oct. 13, 2020).
In light of the highly deferential standard of review, we AFFIRM the
district court’s order of restitution.
4
Nel also fails to demonstrate that the district court has the authority to offset the
restitution order under the circumstances presented for review. See United States v. Sanjar,
876 F.3d 725, 750–51 (5th Cir. 2017) (agreeing with other circuits that “a district court is
without statutory authority to offset restitution with amounts forfeited” because the
MVRA requires courts to order full restitution without an exception for amounts forfeited);
see also 18 U.S.C. §§ 3663A, 3664.
5