United States v. Farr, James E. ( 2005 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 04-3502
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
JAMES E. FARR,
Defendant-Appellant.
____________
Appeal from the United States District Court
for the Eastern District of Wisconsin.
No. 00 CR 187—Rudolph T. Randa, Chief Judge.
____________
ARGUED APRIL 8, 2005—DECIDED AUGUST 17, 2005
____________
Before FLAUM, Chief Judge, and BAUER and WOOD, Circuit
Judges.
FLAUM, Chief Judge. Defendant-appellant James Farr
was convicted of bank fraud and related offenses, for which
the district court sentenced him to twenty-seven months of
incarceration and five years of supervised release. After
Farr served his prison term and was released, the district
court ordered him to pay $208,169.44 in restitution as a
condition of his supervised release. Upon Farr’s appeal, and
for the reasons stated herein, we vacate the district court’s
order of restitution.
2 No. 04-3502
I. Background
On February 9, 2001, a jury convicted Farr of one count
of bank fraud, one count of interstate transmission of stolen
funds, and two counts of engaging in unlawful financial
transactions. See 18 U.S.C. §§ 1344, 2314, 1957. In anticipa-
tion of sentencing, the United States Probation Office
prepared a presentence report (“PSR”) which stated that
“restitution in the amount of $208,168.44 is outstanding,”
but explained that the probation office was still in the pro-
cess of contacting victims to request financial affidavits. At
the sentencing hearing, the probation officer said that she
was having some difficulty getting declarations of losses
from the victims but promised to provide an amended PSR
stating the exact amounts of the victims’ losses. The court
responded that the parties could return later if there was a
dispute about the amount of restitution that should be
ordered. On July 16, 2001, the court entered judgment,
sentencing Farr to twenty-seven months of imprisonment
and five years of supervised release. The judgment stated
that restitution was “to be determined” and that the “deter-
mination of restitution is deferred to unknown [sic].” Farr
went to prison and we affirmed his conviction. See United
States v. Farr, 297 F.3d 651 (7th Cir. 2002).
On August 21, 2003, Farr was released from custody
and began serving his term of supervised release. Around
this time, the probation office discovered that restitution
had never been ordered. The government originally had in-
tended to seek restitution under the Mandatory Victims
Restitution Act (“MVRA”), 18 U.S.C. § 3663A, which re-
quires courts to order restitution to the victims of certain
specified offenses, including bank fraud. See §§ 3663A(a)(1),
(c)(1). A district court generally may not order restitution
under the MVRA, however, unless it does so within ninety
days of sentencing. See § 3664(d)(5). Because more than
three years had passed since Farr was sentenced, the
government asked the court to order restitution as a
No. 04-3502 3
condition of supervised release rather than under the
MVRA. Farr argued that the ninety-day time limit in
§ 3664(d)(5) applies to restitution orders entered as a
condition of supervised release as well as those issued
pursuant to the MVRA. The district court disagreed with
Farr and, on September 13, 2004, ordered him to pay
$208,169.44 in restitution as a condition of supervised
release. Farr appeals the restitution order.
II. Discussion
Farr contends that the district court exceeded its stat-
utory authority in ordering restitution as a condition of
supervised release more than ninety days after sentencing.
We review de novo questions of law regarding the statutory
authority of the federal courts to order restitution. United
States v. Donaby, 349 F.3d 1046, 1048-49 (7th Cir. 2003).
Because “federal courts possess no inherent authority to
order restitution, and may do so only as explicitly empow-
ered by statute,” we begin our analysis with the statute
itself. Id. at 1052 (internal quotations omitted). By follow-
ing a series of statutory cross-references, we are led to the
conclusion that the district court exceeded its authority in
ordering restitution in this case.
The district court issued its restitution order pursuant to
18 U.S.C. § 3583(d), which provides that a court may order
as a condition of supervised release “any condition set forth
as a discretionary condition of probation in section
3563(b)(1) through (b)(10) and (b)(12) through (b)(20), and
any other condition it considers to be appropriate.” The
district court selected from this list § 3563(b)(2)’s authoriza-
tion of orders to “make restitution to a victim of the offense
under section 3556 (but not subject to the limitation of
section 3663(a) or 3663A(c)(1)(A)).” Thus, the court was
authorized to order restitution as a condition of supervised
release under § 3556, which states that “[t]he procedures
4 No. 04-3502
under section 3664 shall apply to all orders of restitution
under this section.” The mandatory “shall” of § 3556 indi-
cates that, in ordering restitution as a condition of super-
vised release, the court was required to follow the proce-
dures set forth in § 3664. Section 3664 provides in part:
If the victim’s losses are not ascertainable by the date
that is 10 days prior to sentencing, the attorney for the
Government or the probation officer shall so inform the
court, and the court shall set a date for the final deter-
mination of the victim’s losses, not to exceed 90 days
after sentencing. If the victim subsequently discovers
further losses, the victim shall have 60 days after
discovery of those losses in which to petition the court
for an amended restitution order. Such order may be
granted only upon a showing of good cause for the
failure to include such losses in the initial claim for
restitutionary relief.
§ 3664(d)(5) (emphasis added).
At the end of this series of steps, we see that a court
relying on §§ 3583(d) and 3563(b)(2), as the district court
did in this case, may order restitution as a condition of
supervised release no later than ninety days after sentenc-
ing, unless a victim petitions the court within sixty days of
the discovery of its losses and can show good cause for the
delay. Here, it is undisputed that no victim petitioned the
district court and there was no good cause for the delay.
Accordingly, the district court did not have authority to
order Farr to pay restitution as a condition of supervised
release when it did so more than three years after sentenc-
ing him.
In an effort to avoid this result, the government cites
several cases from this and other circuits, none of which
provide support for affirming the district court’s order in
this case. In United States v. Brooks, 114 F.3d 106 (7th Cir.
1997), and United States v. Daddato, 996 F.2d 903 (7th Cir.
No. 04-3502 5
1993), the district courts ordered repayment of drug “buy
money” as a condition of supervised release under
§ 3583(d)’s catch-all provision. See § 3583(d) (“[t]he court
may order, as a [ ] condition of supervised release . . . any
condition set forth as a discretionary condition of probation
in section 3563(b)(1) through (b)(10) and (b)(12) through
(b)(20), and any other condition it considers to be appro-
priate.”) (emphasis added). In affirming, we explained that
while a court may not order repayment of the government’s
investigative costs as restitution because the government is
not a victim of the crime, a district court is authorized by
the catch-all provision to order such repayment as a
condition of supervised release. See Daddato, 996 F.2d at
905-06; Brooks, 114 F.3d at 108; see also United States v.
Cook, 406 F.3d 485, 489 (7th Cir. 2005) (repayment of “buy
money” may be ordered as a condition of supervised release
but not as restitution). Because the district courts in
Daddato and Brooks did not, and could not have, invoked
§ 3563(b)(2), we were not led through the series of cross-
references to the ninety-day time limit in § 3664(d)(5). These
cases say nothing about ordering restitution as a condition
of supervised release or the procedures that courts must
follow in doing so. Furthermore, the district court in this
case did not rely on § 3583(d)’s catch-all provision, and the
government does not argue that this provision authorized
the court’s order. Therefore, Brooks and Daddato provide no
guidance as to whether the district court exceeded its
authority in this case.
The government also cites United States v. Dahlstrom,
180 F.3d 677 (5th Cir. 1999), and United States v. Bok, 156
F.3d 157 (2d Cir. 1998), for the proposition that where
restitution cannot be imposed pursuant to the MVRA or the
Victim and Witness Protection Act (“VWPA”),1 a court may
1
The MVRA and the VWPA are similar in many respects. The
(continued...)
6 No. 04-3502
be able to order restitution as a condition of supervised
release. Although this is true, it does not further the
government’s position in this case. As we explained above,
§ 3583(d) read in conjunction with § 3563(b)(2) authorizes
a district court to order restitution as a condition of super-
vised release. Section 3563(b)(2) specifically provides that
such orders are not subject to the limitations of § 3663(a) of
the VWPA. Consistent with the plain language of these
provisions, Dahlstrom and Bok held that restitution could
be ordered as a condition of supervised release despite
limitations in § 3663(a) that precluded the district courts
from ordering restitution under the VWPA. By contrast, the
government contends in this case that an order of restitu-
tion need not comply with § 3664(d)(5)’s ninety-day limit.
Not only is § 3664 not excepted from § 3563(b)(2), as is
§ 3663(a), but courts are expressly directed to comply with
the procedures set forth in § 3664. See § 3556 (“[t]he
procedures under section 3664 shall apply to all orders of
restitution under this section.”). Thus, Dahlstrom and Bok
do not advance the government’s position here.
Next, the government points to United States v. Grimes,
173 F.3d 634 (7th Cir. 1999), and United States v. Zakhary,
357 F.3d 186 (2d Cir. 2004). In Grimes, we were faced with
a restitution order that violated § 3664(f)(1)(A), which
provides in part that “[i]n each order of restitution, the
court shall order restitution to each victim in the full
amount of each victim’s losses.” The district court had or-
dered restitution based on an estimate of total loss, rather
than on a calculation of each victim’s losses. We vacated the
1
(...continued)
primary difference between the two statutes is that for certain
offenses specified in the MVRA, an order of restitution is man-
datory and is calculated by looking to the victim’s losses, without
regard to the defendant’s ability to pay. United States v. Randle,
324 F.3d 550, 555 n.2 (7th Cir. 2003).
No. 04-3502 7
order because the district court had exceeded its authority
by failing to comply with § 3664(f)(1)(A). Mindful of the
MVRA’s purpose of benefitting “the victims, not the victimiz-
ers,” however, we also directed the district court to
resentence the defendant, which would restart the ninety-
day period so that a new order of restitution could be issued
in compliance with § 3664(d)(5)’s time limit. Grimes, 173
F.3d at 639.
The district court in Zakhary also issued a restitution
order in violation of § 3664(f)(1)(A), and as in Grimes, the
court of appeals vacated the order. As to the scope of the
remand, the defendant argued that, because more than
ninety days had elapsed since sentencing, the district court
should not be permitted to identify on remand any addi-
tional victims not listed in the original restitution order.
Zakhary, 357 F.3d at 188. The Second Circuit held that any
future violation of the time limit in the case would be
harmless2 and refused to limit the district court’s authority
to order full restitution on remand. Id.The point of both Grimes and Zakhary is that where an
illegal restitution order is vacated, § 3664(d)(5) will not
always preclude the issuance of a new restitution order on
remand where the original sentence was entered more than
ninety days earlier. In this case, the government does not
argue in favor of this type of solution, but instead contends
that the illegal restitution order need not be vacated at all.
Its only basis for this position is its assertion that the
statutory purpose would be furthered by allowing the
restitution order to stand. Although we have noted that
§ 3664 generally is intended to benefit victims, we have
never concluded that the ninety-day time limit may be
disregarded for the victim’s benefit. See Grimes, 173 F.3d at
2
As noted below, we do not decide here whether harmlessness is
a proper consideration in this analysis.
8 No. 04-3502
639-40. Furthermore, given the clear time limit set forth in
§ 3664(d)(5), it cannot be said that it was Congress’s intent
to allow district courts to order restitution at any time. The
statutory language in § 3664(d)(5) sets forth an unambigu-
ous requirement that courts ordering restitution as a
condition of supervised release do so within ninety days of
sentencing. We may not overlook the statute’s plain lan-
guage to further what may be a broader statutory purpose.
See Barnhart v. Sigmon Coal Co., Inc., 534 U.S. 438, 461-62
(2002) (when statutory language is unambiguous, courts
must apply the plain meaning and not speculate that the
legislature intended to say something different).
In a final effort to protect the restitution order, the gov-
ernment states, without explanation or argument: “More-
over, given the intent behind the imposition of restitution to
compensate victims, the defendant likewise is not harmed
by the delay.” While it is not entirely clear, we assume that
the government is arguing that we should analyze this case
under the harmless error standard. There is some disagree-
ment, however, as to whether this standard is applicable in
cases such as this, where a district court did not comply
with § 3664(d)(5)’s time limit in ordering restitution.
Compare United States v. Johnson, 400 F.3d 187, 199 (4th
Cir. 2005) (“failure to conform with the ninety-day limit
constitutes harmless error absent prejudice”) with United
States v. Maung, 267 F.3d 1113, 1121 (11th Cir. 2001)
(“[T]here is no prejudice requirement in [§ 3664(d)(5)], and
we are not convinced that we should read one into it.”). We
have not had occasion to decide the issue3 and, because it
3
A recent case states that the Seventh Circuit has held that
“district courts can enter restitution orders more than ninety days
after sentencing provided that the delay does not prejudice the
defendant.” Johnson, 400 F.3d at 199 (attributing this holding to
United States v. Pawlinski, 374 F.3d 536, 539 (7th Cir. 2004)). In
(continued...)
No. 04-3502 9
has not been sufficiently raised here, we do not address it.
See Tyler v. Runyon, 70 F.3d 458, 464 (7th Cir. 1995) (“[A]
litigant who fails to press a point by supporting it with
pertinent authority, or by showing why it is sound despite
a lack of supporting authority, forfeits the point.”).
III. Conclusion
The district court exceeded its authority by ordering
restitution more than three years after Farr was sentenced.
Accordingly, the order of restitution is VACATED.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
3
(...continued)
Pawlinski, however, we merely suggested without deciding that
the time limits within § 3664(d)(5) “can sometimes be bent.” 374
F.3d at 539. At most, this indicates that there might be ways to
restart the ninety-day period as we did in Grimes, or that the run-
ning of the period may be tolled in some cases. Id. (citing Grimes,
173 F.3d at 638-40, and United States v. Terlingo, 327 F.3d 216,
219-22 (3d Cir. 2003) (surveying cases from several circuits
regarding whether § 3664(d)(5)’s ninety-day time limit is subject
to equitable tolling)). Because the government does not seek either
of these results, we need not decide whether they are generally
permitted, or whether either course would be warranted in this
case.
USCA-02-C-0072—8-17-05