United States v. Day, Jack A. ( 2005 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 04-2663
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
JACK A. DAY,
Defendant-Appellant.
____________
Appeal from the United States District Court
for the Western District of Wisconsin.
No. 04 CR 13—John C. Shabaz, Judge.
____________
ARGUED FEBRUARY 17, 2005—DECIDED AUGUST 12, 2005
____________
Before POSNER, RIPPLE and MANION, Circuit Judges.
RIPPLE, Circuit Judge. Jack Day pleaded guilty to one
count of making false statements with respect to the actual
mileage of a motor vehicle in violation of 49 U.S.C.
§§ 32705(a)(2) and 32709(b). Mr. Day was sentenced to 25
months’ imprisonment and ordered to pay restitution in the
amount of $39,875. In this appeal, Mr. Day challenges his
sentence as well as the amount of restitution. For the
reasons set forth in the following opinion, we reverse the
judgment of the district court with respect to the order of
restitution. We further order a limited remand consistent
2 No. 04-2663
with this court’s decision in United States v. Paladino, 401
F.3d 471 (7th Cir. 2005), petition for cert. filed, No. 04-10402
(May 26, 2005). In all other respects, we affirm the judgment
of the district court.
I
BACKGROUND
From June 2000 through March 2002, Mr. Day was in-
volved in a scheme to profit from the resale of used vehicles
by altering the odometers of the vehicles and misrepre-
senting the mileage at the time of sale. On January 13, 2004,
Mr. Day was charged with three counts of knowingly and
willfully resetting and altering vehicle odometers, in vio-
lation of 49 U.S.C. §§ 32703(2) and 32709, as well as four
counts of knowingly and willfully making false statements
relating to the actual mileage of a motor vehicle, in violation
of 49 U.S.C. §§ 32705(a)(2) and 32709(b). Mr. Day initially
entered a plea of not guilty on all the charges. However, he
later pleaded guilty, pursuant to an agreement, to Count 5
of the indictment, one of the counts of making false state-
ments with respect to the mileage of a vehicle. According to
the plea agreement, Mr. Day agreed
to pay restitution for all losses relating to the offense of
conviction and all losses covered by the same course of
conduct or common scheme or plan as the offense of
conviction. The exact restitution figure will be agreed
upon by the parties prior to sentencing or, if the parties
are unable to agree upon a specific figure, restitution
will be determined by the Court at sentencing.
R.10 at 2.
At the plea hearing, Mr. Day admitted only those facts
related to Count 5 of the indictment. Specifically, Mr. Day
No. 04-2663 3
affirmed that, on September 28, 2001, he knowingly and
willfully had given false information relating to the mileage
of a 1993 Ford truck: Mr. Day represented that the mileage
was 59,645 when, in actuality, the mileage was 159,591.
During the plea hearing, no other vehicles or other aspects
of the criminal scheme were discussed or were admitted by
Mr. Day. The district court accepted the plea agreement.
The United States Probation Office (“Probation Office”)
then prepared a Presentence Report (“PSR”) for Mr. Day.
The starting point for Mr. Day’s sentence calculation was
United States Sentencing Guidelines (“U.S.S.G.”) § 2N3.1(a)
(2000), which provides for a base offense level of six.
However, § 2N3.1(b) includes a cross-reference to § 2F1.1
(Fraud and Deceit) if the offense involved more than one
vehicle. Relying on other charged and uncharged conduct
attributed to Mr. Day, the Probation Office determined that
Mr. Day’s offense included more than one vehicle and there-
fore employed § 2F1.1 in the calculation.
Like § 2N3.1, the base offense level for § 2F1.1 is six.
However, § 2F1.1 also contains a chart that increases the
offense level according to the total amount of loss. To deter-
mine the amount of loss, the Probation Office considered the
losses associated with the sale of all of the vehicles involved
in the roll-back scheme. The Probation Office estimated that
the loss associated with the sale of these vehicles was more
than $20,000 but less than $40,000, which corresponded to a
four-level increase and resulted in an offense level of ten.
The PSR then recommended adding two levels pursuant to
§ 2F1.1(b)(2)(B) because the offense involved more than one
victim. Finally, the PSR recommended a two-level down-
ward departure for Mr. Day’s acceptance of responsibility,
which returned Mr. Day’s offense level to ten. This offense
level, in conjunction with Mr. Day’s criminal history level,
4 No. 04-2663
1
corresponded to a guideline range of 21 to 27 months. The
PSR also recommended that Mr. Day be ordered to pay
restitution in the amount of $39,875.
Mr. Day did not contest the guideline calculation; how-
ever, he did submit a written objection to the restitution
recommendation. Mr. Day claimed that the amount of resti-
tution was excessive based on the amount of loss sustained
by each victim as well as on his financial resources, financial
needs and earning ability. Mr. Day filed objections to this
amount on the ground that he had no present or future
financial resources that would allow him to pay such a sum.
Mr. Day stated, as part of his objections, that he wished to
pay full restitution if he were to become able to do so. How-
ever, his current economic circumstances did not allow for
the payment of any amount of restitution, nor did he
anticipate being able to pay the full amount of restitution in
the foreseeable future. Consequently, he requested that the
court order only nominal periodic payments towards his
restitution pursuant to 18 U.S.C. § 3664(f)(3)(B).
In the Addendum to the PSR, the Probation Office
acknowledged that it would be difficult for Mr. Day to pay
restitution; it nevertheless recommended that the court
order the full amount of restitution. The Government, as
well, acknowledged the difficulty Mr. Day would have in
paying the recommended restitution amount; at sentencing
the assistant United States attorney stated:
Although it probably isn’t likely that the defendant will
ever be able to repay, assuming the defendant is not in-
carcerated for the rest of his life . . . you never know
what can happen with someone’s financial circum-
1
An offense level of six would have corresponded to a guideline
range of 9 to 15 months.
No. 04-2663 5
stances . . . . He could win the lottery. He could come
into money in some other way and we just want to have
the order in place.
Tr.II at 8. The Government therefore urged the district court
to order the restitution amount recommended in the PSR.
At sentencing, the district court recounted Mr. Day’s
criminal activities:
The Court notes that from on or about June 2000 to
March 2002 the defendant was involved in a scheme to
profit from the resale of used vehicles by tampering or
rolling back the odometers and/or misrepresenting the
actual mileage at the time of sale, submitting multiple
false applications to the Wisconsin Department of
Transportation. The results of the investigation have
revealed that he was responsible for rolling back and
misrepresenting approximately 1,430,000 miles of use
on 19 vehicles.
Id. at 9. It then adopted that sentencing calculation set forth
in the PSR and imposed a sentence of 25 months. The
district court similarly accepted the PSR’s restitution rec-
ommendation and ordered Mr. Day to pay restitution in the
amount of $39,875, due and payable immediately. In
sentencing Mr. Day, the district court ordered Mr. Day “to
pay restitution in the amount of $39,875 which is due and
payable immediately to the Clerk of Court for the Western
District of Wisconsin to be disbursed to the victims in the
amended Appendix A which is attached to your Judgment
of Conviction.” Id. at 11. The district court, however, refused
to impose a fine: “The defendant has neither the means nor
the earning capacity to pay a fine without impairing his
ability to pay the mandatory restitution and support himself
upon release.” Id.6 No. 04-2663
Mr. Day timely appealed his sentence and the restitution
order.
II
DISCUSSION
A. Application of Booker
Mr. Day first argues that the district court’s imposition of
a sentence that was based upon facts that neither were
admitted nor found by a jury runs afoul of the Supreme
Court’s decision in United States v. Booker, 125 S. Ct. 738(2005). However, Mr. Day did not argue to the district court
that the imposition of the sentence would violate his Sixth
Amendment rights. Consequently, our review is for plain
error. See Booker, 125 S. Ct. at 769; Paladino, 401 F.3d at 481.
We may review an error not raised below under the follow-
ing circumstances: There must be (1) “error,” that is (2)
“plain,” and that (3) “affect[s] substantial rights.”
United States v. Olano, 507 U.S. 725, 732 (1993) (internal
quotation marks and citations omitted). If these three con-
ditions are met, the court may exercise its discretion to
notice a forfeited error, but only if it (4) “seriously affects
the fairness, integrity, or public reputation of judicial pro-
ceedings.” Id. at 732 (internal quotation marks and citations
omitted).
Mr. Day admitted to rolling back the odometer on one
Ford truck and to misrepresenting the actual mileage on the
truck when it was resold. The district court concluded,
however, based on facts which Mr. Day did not admit, that
more than one vehicle was involved, that the loss was in the
range of $20,000 to $40,000, and that more than one victim
was harmed. These findings resulted in a six-level increase
in offense level and a correspondingly higher guideline
range for Mr. Day.
No. 04-2663 7
The Government concedes that, “[i]n light of Booker, the
imposition of a mandatory Guideline sentence in this case
is error that was plain in the sense that it is now clear or
obvious.” Appellee’s Supp. Br. at 4. However, the
Government maintains that Mr. Day cannot establish the
third prong of the plain error test because “he cannot
establish that he would have received a different sentence
had the Guidelines been advisory, rather than mandatory.”
Id. at 5. The Government points to the fact that the district
court, in sentencing Mr. Day, commented that “ ‘this is a
much more serious activity than either counsel appear to
understand.’ ” Id. (quoting Tr.II at 9); see also Tr.II at 10.
Furthermore, the Government argues, the district court
sentenced Mr. Day near the top of the applicable guideline
range, which suggests it was not inclined to give Mr. Day
the benefit of the doubt.
It is true that the district court gave no indication that, if
unfettered by the Guidelines, it would have imposed a
lighter sentence; indeed, as noted above, there is some evi-
dence to the contrary. However, the district court’s actions
here do not remove all doubt as to “what the district judge
would have done with additional discretion”; for instance,
the district court did not indicate on the record “that, if it
had more leeway, it would have imposed a higher sen-
tence.” United States v. Lee, 399 F.3d 864, 866 (7th Cir. 2005).
Nor were there other circumstances present, such as a mini-
mum term of imprisonment mandated by statute, that
prevented the district court from imposing a lighter sen-
tence. See id. at 866 (referring to one of the defendants in
Paladino who received a sentence at the statutory minimum
and stating that “[n]othing in Booker gives a judge any
discretion to disregard a mandatory minimum, so there was
no need to speculate about prejudice”). Because we cannot
be certain of the approach the district court would have
8 No. 04-2663
taken if not constrained by the Guidelines, “it is important
to ask the district judge’s opinion.” Id. at 867. Therefore, in
accordance with our recent decision in Paladino, 401 F.3d at
483, we retain jurisdiction and direct a limited remand to
permit the sentencing court to determine whether it would
have imposed the same sentence had it known that the
Guidelines were merely advisory.
B. Restitution Amount
Mr. Day also challenges the district court’s restitution
2
order. The authority for restitution for the crime to which
Mr. Day pleaded guilty is found at 18 U.S.C. § 3663, which
2
We have made clear in prior cases that restitution is a civil rem-
edy to which “the sixth amendment does not apply.” United States
v. George, 403 F.3d 470, 473 (7th Cir. 2005). Similarly, Apprendi v.
New Jersey, 530 U.S. 466 (2000), and United States v. Booker, 125 S.
Ct. 738 (2005), have no application to restitution orders. See
George, 403 F.3d at 473. We have held that Booker does impact a
district court’s imposition of restitution as a condition of super-
vised release, pursuant to U.S.S.G. § 5E1.1. See United States v.
Pree, 408 F.3d 855, 857-58 (7th Cir. 2005). In the present case, the
district court did condition Mr. Day’s supervised release on the
payment of restitution, see R.12 at 3; however, because of our
disposition of the restitution issue, it is unnecessary to remand in
accordance with United States v. Paladino, 401 F.3d 471 (7th Cir.
2005), petition for cert. filed, No. 04-10402 (May 26, 2005), for the
district court to determine whether it “would have imposed the
condition of restitution upon [Mr. Day’s] supervised release had
it understood the guidelines to be advisory, rather than manda-
tory.” Pree, 408 F.3d at 876. As part of the remand on restitution,
however, the district court should treat U.S.S.G. § 5E1.1 (requir-
ing a court to condition supervised release on payment of
restitution) as advisory, not mandatory.
No. 04-2663 9
originally was enacted through the Victims and Witnesses
Protection Act (“VWPA”). However, § 3663’s scope and
enforcement mechanism were altered significantly with the
adoption of the Mandatory Victim Restitution Act
(“MVRA”) in 1996. Because both of these laws impact
Mr. Day’s restitution order, we briefly outline the operative
provisions of each below.
1. Statutory Language
The VWPA was enacted in 1982 for the purpose of
granting federal courts the authority to order restitution in
criminal cases, apart from probation. Section 3663(a)(1)
allowed, but did not mandate, restitution for most crimes:
“The court, when sentencing a defendant convicted of an
offense under this title . . . may order . . . that the defendant
make restitution to any victim of such offense.” 18 U.S.C.
3
§ 3663(a)(1) (1995) (emphasis added). Although restitution
was discretionary, 18 U.S.C. § 3664(a) mandated that the
court consider certain factors in arriving at the restitution
amount:
The court, in determining whether to order restitution
under section 3663 of this title and the amount of such
restitution, shall consider the amount of loss sustained
by any victim as a result of the offense, the financial re-
sources of the defendant, the financial needs and earn-
ing ability of the defendant and the defendant’s de-
pendents, and such other factors as the court deems
appropriate.
18 U.S.C. § 3664(a) (1995) (emphasis added).
3
18 U.S.C. § 3663(a)(3) (1995) provided that “[t]he court may also
order restitution in any criminal case to the extent agreed to by
the parties in a plea agreement.”
10 No. 04-2663
In 1996, Congress enacted the MVRA which amended
§§ 3663 and 3664 of the VWPA and also added § 3663A.
With respect to the amendments to § 3663, Congress re-
tained most of the language of the former § 3663(a), but
removed from § 3663’s scope a wide range of crimes now
4
covered by § 3663A. The amended § 3663 also contains a
modified version of the former § 3664(a); thus § 3663(a)(1)(B)
now contains the considerations that previously had been
set forth in § 3664:
(B)(i) The court, in determining whether to order restitution
under this section, shall consider—
(I) the amount of the loss sustained by each victim
as a result of the offense; and
4
The amended version of § 3663(a)(1)(A) provides as follows:
The court, when sentencing a defendant convicted of an
offense under this title, section 401, 408(a), 409, 416, 420, or
422(a) of the Controlled Substances Act (21 U.S.C. 841, 848(a),
849, 856, 861, 863) (but in no case shall a participant in an
offense under such sections be considered a victim of such
offense under this section), or section 46312, 46502, or 46504
of title 49, other than an offense described in section
3663A(c), may order, in addition to or, in the case of a mis-
demeanor, in lieu of any other penalty authorized by law,
that the defendant make restitution to any victim of such
offense, or if the victim is deceased, to the victim’s estate. The
court may also order, if agreed to by the parties in a plea
agreement, restitution to persons other than the victim of the
offense.
18 U.S.C. § 3663(a)(1)(A).
The amended § 3663 retained, in its entirety, the language of
§ 3663(a)(3) (“The court also may order restitution in any criminal
case to the extent agreed to by the parties in a plea agreement.”).
The application of § 3663(a)(3) to the present case is discussed
infra at note 7.
No. 04-2663 11
(II) the financial resources of the defendant, the
financial needs and earning ability of the defendant
and the defendant’s dependents, and such other
factors as the court deems appropriate.
18 U.S.C. § 3663(a)(1)(B)(I) (2005) (emphasis added). Section
3663 no longer contains its own procedure for enforcement
of the restitution awards; instead, 18 U.S.C. § 3663(d)
provides that “[a]n order of restitution made pursuant to
this section shall be issued and enforced in accordance with
section 3664.”
The MVRA also created a wholly new section, § 3663A,
which requires district courts to order restitution with re-
spect to a wide range of crimes:
Notwithstanding any other provision of law, when sen-
tencing a defendant convicted of an offense described in
subsection (c), the court shall order, in addition to, or in
the case of a misdemeanor, in addition to or in lieu of,
any other penalty authorized by law, that the defendant
make restitution to the victim of the offense or, if the
victim is deceased, to the victim’s estate.
18 U.S.C. § 3663A(a)(1) (emphasis added). For its part,
§ 3663A(c) provides:
(c)(1) This section shall apply in all sentencing proceed-
ings for convictions of, or plea agreements relating to
charges for, any offense—
(A) that is—
(i) a crime of violence, as defined in section 16;
(ii) an offense against property under this title, or
under section 416(a) of the Controlled
Substances Act (21 U.S.C. 856(a)), including any
offense committed by fraud or deceit; or
12 No. 04-2663
(iii) an offense described in section 1365 (relat-
ing to tampering with consumer products); and
(B) in which an identifiable victim or victims has
suffered a physical injury or pecuniary loss.
5
18 U.S.C. § 3663A(c)(1) (emphasis added).
In addition to mandating restitution for many crimes, the
MVRA also substantially amended § 3664, which now sets
forth the “[p]rocedure for issuance and enforcement” of
restitution orders pursuant to both § 3663 and § 3663A. The
pertinent provision of 18 U.S.C. § 3664 for this case is
§ 3664(f). Subsection (1) states 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 circum-
stances of the defendant.” 18 U.S.C. § 3664(f)(1)(A) (empha-
sis added). A court, however, may weigh such consider-
ations when setting a schedule for payment of the restitu-
tion amount; § 3664(f)(2) provides:
(2) Upon determination of the amount of restitution
owed to each victim, the court shall, pursuant to section
3572, specify in the restitution order the manner in
which, and the schedule according to which, the restitu-
tion is to be paid, in consideration of—
5
Although Mr. Day’s crime certainly is “an offense against prop-
erty,” it is not “an offense against property under this title”—
Title 18; his crime arises under Title 49. Consequently, as rec-
ognized by both parties, see Appellant’s Br. at 18 n.1; Appellee’s
Br. at 24 n.4, Mr. Day’s crime does not fall within the mandatory
provision of § 3663A, but instead the discretionary language of
§ 3663.
No. 04-2663 13
(A) the financial resources and other assets of the
defendant, including whether any of these assets are
jointly controlled;
(B) projected earnings and other income of the
defendant; and
(C) any financial obligations of the defendant;
including any obligations to dependents.
18 U.S.C. § 3664(f)(2).
2. Reconciling the Statutory Language
The amendments to § 3664 set forth above, read in
conjunction with the language of § 3663, appear to create
some tension with respect to the criteria employed by
district courts in deciding whether to order restitution and
those employed by a district court in deciding the amount
of the restitution order. Specifically, restitution pursuant to
§ 3663 is discretionary; and, in determining whether to
exercise this discretion, the district court is required to
consider the financial resources of the defendant. However,
§ 3663(d) also requires that any restitution order be issued
and enforced in accordance with § 3664. Section 3664, in
contrast to § 3663, forbids a district court from considering
the economic circumstances of a defendant in fashioning a
restitution award; rather, the district court must order resti-
tution in the “full amount” of the victim’s losses. 18 U.S.C.
§ 3664(f)(1)(A). Under § 3664, a district court may consider
the defendant’s financial circumstances only in determining
the method of payment and in setting the payment sched-
ule.
14 No. 04-2663
a.
Little has been said in case law about the interaction be-
6
tween these sections. In dicta, a district court for the
Southern District of New York recognized this “tension”
and offered a possible resolution of the provisions:
There appears to be some tension between the discre-
tionary language in Section 3663 and the mandatory
language in Section 3664 of Title 18, United States Code.
Restitution awards under the MVRA are implemented
and enforced according to the provisions of Section 3664.
18 U.S.C. §§ 3663(d) and 3663A(d). Section 3664 pro-
vides:
In 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 with-
out consideration of the economic circumstances of the
defendant.
Id. § 3664(f)(1)(A) (emphasis supplied). The tension
between Sections 3663 and 3664 may be resolved in the
following way. Once the court has determined that res-
titution should be awarded under either Section 3663 or
Section 3663A, the court is required to award restitution
for the full amount of the victim’s losses. In other
words, the court’s first determination is whether there is
to be an award of restitution. In making this discretion-
ary determination under Section 3663, the court must
consider the defendant’s financial circumstances. Id.
§ 3663(a)(1)(B)(i)(II). Once the decision to award restitu-
6
This, no doubt, results in large part from the fact that so many
crimes now are covered by the mandatory restitution provisions
of § 3663A.
No. 04-2663 15
tion has been made, however, restitution in the full
amount of the victim’s loss is required. The court
should, of course, take the defendant’s financial circum-
stances into account in setting the payment schedule. Id.
§ 3664(f)(2)(A)-(C).
United States v. Cummings, 189 F. Supp. 2d 67, 72 (S.D.N.Y.
2002). This approach was applied by the same district court
in Ferrarini v. United States, 2002 WL 1144377, at *6 (S.D.N.Y.
May 30, 2002).
No court of appeals has addressed directly the interaction
between § 3663 and § 3664 after passage of the MVRA.
However, some courts of appeals have discussed the
MVRA’s amendments to § 3664 and the meaning of those
amendments. These discussions largely have arisen in the
context of cases in which the key issue is the retroactive
application of the MVRA to individuals who stand con-
victed of crimes that fall within § 3663A’s coverage and any
ex post facto implications arising therefrom. Consequently,
these cases do not discuss the interaction of the permissive
restitution language of § 3663 with the mandate of full res-
titution contained in § 3664. Nevertheless, these cases are
helpful in understanding the amended § 3664. For instance,
in United States v. Alalade, 204 F.3d 536 (4th Cir. 2000), the
Fourth Circuit stated that,
with passage of the MVRA, Congress completely de-
leted the language of the VWPA affording the district
court discretion . . . to consider any factor it deemed
appropriate in determining the amount of restitution to
be ordered, and replaced it with language requiring the
district court to order restitution in the full amount of
loss to each victim as determined by the district court.
Id. at 540 (citations omitted). Additionally, that court noted
that “in contrast to the VWPA, the MVRA does not contain
any language requiring the district court, in determining the
16 No. 04-2663
total amount of restitution to be ordered, to consider the
financial resources of the defendant.” Id.; see also
United States v. Karam, 201 F.3d 320, 329 (4th Cir. 2000) (stat-
ing that “[t]he [MVRA] substantially amended the 1992
VWPA by requiring district courts to impose ‘full’ resti-
tution without considering the defendant’s economic
circumstances” and observing that this process is a reverse
of that followed under the VWPA in which “the court must
first consider the defendant’s financial circumstances before
setting the amount of restitution to be paid”). These obser-
vations have been made by other courts of appeals as well.
See, e.g., United States v. Richards, 204 F.3d 177, 212 (5th Cir.
2000) (“The MVRA amended the [VWPA]. 18 U.S.C.
§§ 3663-3664. Before the amendments to the VWPA, the
statute required a court to consider a defendant’s ability to
pay in setting the amount of a restitution order. As
amended, the statute provides that ‘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 defendant.’ 18 U.S.C.
§ 3664(f)(A).”), overruling on other grounds recognized by
United States v. Longoria, 298 F.3d 367 (5th Cir. 2002).
In other contexts, as well, courts have commented upon
the differences between the VWPA and the MVRA. In
deciding a VWPA case prior to the passage of the MVRA,
the Eleventh Circuit stated that “[t]he VWPA provisions for
restitution were substantially amended by the [MVRA]
which became effective April 24, 1996. Prior to the 1996
amendment, awarding restitution was discretionary and the
court was required to consider . . . the financial resources of
the defendant”; however, “[t]he amended provisions for
restitution mandate that the district court order restitution
in the full amount of the victim’s loss without considering
the defendant’s financial resources.” United States v. Thayer,
No. 04-2663 17
204 F.3d 1352, 1357 & n.7 (11th Cir. 2000) (internal quotation
marks and citations omitted).
Finally, in applying the amendments to § 3664 to individ-
uals convicted of crimes that fall within § 3663A, our own
court has observed that § 3664 mandates “full” restitution
without regard to a defendant’s financial resources. We
noted, for instance, in one case that “the MVRA forced the
court to impose the full amount of restitution on [the
defendant] without any reprieve for his inability to pay.”
United States v. Newman, 144 F.3d 531, 536 n.5 (7th Cir. 1998).
Furthermore, in United States v. Szarwark, 168 F.3d 993 (7th
Cir. 1999), we stated that, under the MVRA, “district courts
no longer are permitted to consider a defendant’s financial
circumstances when determining the amount of restitution
to be paid.” Id. at 997.
With respect to case law from the courts of appeals, there-
fore, there does not appear to be an explanation of how to
read § 3663 in tandem with § 3664. However, the courts of
appeals have spoken with one voice with respect to the
inability of a district court, after the MVRA amendments to
§ 3664, to consider the financial resources of the defendant
in entering a restitution order: A district court must order
full restitution in an amount equal to the victim’s loss
without reference to the defendant’s financial circum-
stances.
Like much of the case law, the legislative history does not
speak directly to the relationship between the permissive
restitution language of § 3663 and the mandate of full
restitution in the amended § 3664. However, the legislative
history does offer some guidance on Congress’ reading of
the statutory language. First, there is no question that
Congress intended that orders of restitution pursuant to
§ 3663 remain discretionary. See S. Rep. 104-179, at 19 (1996),
reprinted in 1996 U.S.C.C.A.N. 924 (“Moreover, as noted,
except to the extent that this act would make restitution
18 No. 04-2663
mandatory under certain circumstances, the committee
intends no change in the range of statutes covered by
permissive restitution under 18 U.S.C. 3663.” (emphasis
added)). It is equally clear that Congress intended the
amendments to § 3664 to apply to restitution orders under
both § 3663 and § 3663A and that this uniformity applied to
“both the amount of restitution owed to each victim and the
terms of repayment.” Id. at 20 (“The procedures contained
in this section are intended to provide a streamlined process
for the determination of both the amount of restitution
owed to each victim and the terms of repayment based on
a reasonable interpretation of the defendant’s economic
circumstances.”). Thus, the mandate of “full” restitution
applies with equal force to restitution orders pursuant to
§ 3663 and to § 3663A.
b.
Although none of the sources discussed above—the stat-
utory language, the case law or the legislative history—gives
explicit direction with respect to the way courts should read
the permissive language of § 3663 in conjunction with the
mandate of § 3664, we believe that the interpretation of these
sections suggested by the district court for the Southern
District of New York is both true to the entire statutory
language and consistent with the case-law readings of § 3664
and with the statements made by Congress in enacting the
MVRA. According to this interpretation, the permissive
language of § 3663 is read narrowly: For offenses covered by
§ 3663, the district court has the discretion to order (“may
order”) restitution; in determining “whether” to exercise that
discretion, the district court “shall” be guided by the consid-
erations set forth in § 3663(a)(1)(B). However, once the
district court determines that restitution ought to be made,
§ 3664 comes into play and, for its part, mandates that the
No. 04-2663 19
court order “full” restitution, “without consideration of the
economic circumstances of the defendant.”
This reading of § 3663 and § 3664 has several advantages.
First, it is true to the basic principles of statutory interpreta-
tion that, in interpreting a statute, we look primarily to the
language of the statute, see, e.g., Greenfield Mills, Inc. v.
Macklin, 361 F.3d 934, 954 (7th Cir. 2004), and, in doing so,
attempt to give effect to every word or provision, see, e.g.,
Hoffman v. Caterpillar, Inc., 256 F.3d 568, 575 (7th Cir. 2001).
There is no question that this reading gives full effect to the
language employed by Congress. When Congress amended
§ 3663 to include the considerations previously located in
§ 3664(a), Congress did not use exactly the same wording as
it had in the former § 3664(a). Under the old version of
§ 3664, courts were to consider the financial circumstances
of the defendant both “in determining whether to order res-
titution” and also in determining the “amount of such
restitution.” 18 U.S.C. § 3664(a) (1995) (emphasis added).
However, the new § 3663(a)(1)(B) requires courts to consider
these factors only in determining whether to order restitu-
tion; all reference to the amount of restitution has been
omitted.
Furthermore, this reading is consistent with Congress’
stated intentions in adopting the MVRA and with the courts
of appeals’ interpretations of the MVRA in other contexts.
As explained above, the legislative history makes clear that
Congress intended that § 3663 continue as a permissive
provision, but that all restitution orders (whether ordered
under § 3663 or § 3663A) be issued and enforced in a uni-
form manner. This interpretation also is consonant with the
many case-law interpretations of § 3664, which read this
section to guarantee full restitution to all victims.
20 No. 04-2663
3. Application to Mr. Day
The application of § 3663 and § 3664 to Mr. Day is made
somewhat difficult because both parties have failed to
7
address the interaction between § 3663 and § 3664 or to
consider critically the continued applicability of pre-MVRA
case law to the present action. Nevertheless, we review
briefly the arguments of both sides and address those argu-
ments that still survive under the present statutory scheme
as we have just outlined it.
Much of Mr. Day’s argument is focused on the alleged
failure of the district court to consider his lack of financial
resources in ordering him to pay such a large sum in
restitution. Mr. Day relies on the standards set forth in our
pre-MVRA case law interpreting § 3663 and § 3664, see, e.g.,
United States v. Studley, 892 F.2d 518, 532 (7th Cir. 1989), in
support of his claim that the district court abused its
discretion. For its part, the Government argues that, based
on those same standards, the district court’s award should
be upheld against Mr. Day’s challenge.
These submissions are not directed to the issues we must
address. As we have discussed above, the MVRA removed
any discretion that the district court had under prior law to
fix the amount of the restitution award based upon the
defendant’s economic circumstances. Once the district court
exercises its discretion to order restitution under § 3663, it
must award restitution in the “full amount” of the victim’s
7
As noted above, Mr. Day pleaded guilty to a violation of 49
U.S.C. §§ 32705(a)(2) and 32709(b). This crime falls outside the
mandatory coverage of § 3663A. See supra note 5. It also is not
encompassed by § 3663(a)(1), but falls within the coverage of
§ 3663(a)(3) (allowing a district court to order restitution ac-
cording to a plea agreement).
No. 04-2663 21
losses. In any event, Mr. Day does not maintain that the
district court abused its discretion in ordering restitution.
Indeed, such a position would be a difficult one for him to
sustain in light of the fact that he agreed to pay full restitu-
tion as part of his plea agreement. Furthermore, at this
juncture, Mr. Day does not contest that $ 39,875 is an
8
accurate assessment of the victims’ losses. Consequently,
under the reading of § 3663 and § 3664 outlined above, we
cannot say that the district court abused its discretion in
ordering Mr. Day to pay restitution in the amount of
$ 39,875.
Mr. Day nevertheless contends that the amount of his
restitution is inconsistent with this court’s prior statements
regarding the rehabilitative purpose of restitution. Speci-
fically, Mr. Day points to pre-MVRA case law that em-
phasizes that the defendant’s ability to make restitution is
crucial to fulfilling the rehabilitative aspects of restitution.
In interpreting the earlier statutory scheme, we had ex-
plained that “at the time the court orders restitution it is
most paramount that the defendant, in the all-important
rehabilitative process, have at least a hope of fulfilling and
complying with each and every order of the court.”
United States v. Mahoney, 859 F.2d 47, 52 (7th Cir. 1988).
Under pre-MVRA case law, a restitution order that seemed
impossible to satisfy—that was, in essence, “a sham”—was
8
Mr. Day also makes no argument that restitution should have
been limited to the loss incurred by the victim of Count 5 of the
indictment—the crime to which Mr. Day pleaded guilty. Again,
Mr. Day would encounter some difficulty in making a convincing
attack on his restitution award on this basis because Mr. Day’s
plea agreement explicitly provides that he will pay for “all losses
covered by the same course of conduct or common scheme or
plan as the offense of conviction.” R.10 at 2.
22 No. 04-2663
grounds for reversal. See id.; United States v. Jaroszenko, 92
F.3d 486, 492 (7th Cir. 1996).
However, in enacting the MVRA, Congress rejected two
principles underlying those cases: that the rehabilitative
aspects of restitution should take precedence over other con-
siderations and that the rehabilitative aspects of restitution
necessarily were linked to the defendant’s ability to pay the
restitution award. In discussing the amendments to § 3664,
the legislative history evidences a new focus:
The committee recognizes that a significant number of
defendants required to pay restitution under this act
will be indigent at the time of sentencing. Moreover,
many of these defendants may also be sentenced to pris-
on terms as well, making it unlikely that they will be
able to make significant payments on a restitution
payment schedule. At the same time, these factors do
not obviate the victim’s right to restitution or the need
that defendants be ordered to pay restitution.
For these reasons, the committee has included in its
amendment provisions permitting the court to order full
restitution under a schedule of nominal payments in
those instances where the defendant cannot pay restitu-
tion. The committee recognizes that restitution is an
integral part of the criminal sentence that must be
complied with. For this reason, the defendant is also
required to report material changes in his or her econo-
mic circumstances that might affect the ability to pay
restitution, and the court is authorized to amend the
payment requirements accordingly.
S. Rep. 104-179, at 21. Thus, Congress, in adopting the
MVRA, believed that the law should be concerned first with
the victim’s right to full restitution and the defendant’s
concomitant recognition of the duty to pay full restitution,
No. 04-2663 23
albeit a largely symbolic one. This belief is given effect
through § 3664(f), which first requires the court to order
“restitution to each victim in the full amount of each vic-
tim’s losses as determined by the court and without consid-
eration of the economic circumstances of the defendant.” 18
9
U.S.C. § 3664(f)(1)(A). Therefore, the fact that a defendant
may never be able to satisfy a restitution award is no longer
grounds for reversing that award.
C. Schedule of Restitution Payments
Mr. Day also maintains that the district court abused its
discretion when it made his ordered restitution due and
payable immediately. Specifically, Mr. Day claims that the
district court failed to take into account his financial situ-
ation in ordering the manner of payments as required by
§ 3664(f)(2). See Reply Br. at 14.
Although § 3664(f) requires payment of restitution in
“full” “without consideration” of the defendant’s financial
circumstances, the district court is required to consider the
financial resources of the defendant with respect to the
method and schedule of payments:
(2) Upon determination of the amount of restitution
owed to each victim, the court shall, pursuant to section
3572, specify in the restitution order the manner in
9
Section 3664(f)(3)(B) does allow the court to “direct the
defendant to make nominal periodic payments if the court finds
from facts on the record that the economic circumstances of the
defendant do not allow the payment of any amount of a restitu-
tion order, and do not allow for the payment of the full amount
of a restitution order in the foreseeable future under any rea-
sonable schedule of payments.” 18 U.S.C. § 3664(f)(3)(B).
24 No. 04-2663
which, and the schedule according to which, the restitu-
tion is to be paid, in consideration of—
(A) the financial resources and other assets of the
defendant, including whether any of these assets are
jointly controlled;
(B) projected earnings and other income of the
defendant; and
(C) any financial obligations of the defendant;
including any obligations to dependents.
18 U.S.C. § 3664(f)(2).
Mr. Day maintains that the record is devoid of any evi-
dence that he will be able to pay the ordered restitution at
any point, much less that he is able to pay the entire $ 39,875
immediately. Consequently, he maintains, the district court
could not have considered his financial resources with
respect to the schedule of restitution payments as required
by § 3664(f)(2).
Whether Mr. Day’s argument is meritorious is dependent,
in large part, on the meaning of “due and payable immedi-
ately.” Our case law establishes that this phrase ought not
to be read literally. We have stated:
Our cases have held that “immediate payment” does
not mean “immediate payment in full;” rather it means
“payment to the extent that the defendant can make it
in good faith, beginning immediately.” As we have
previously noted, “if the defendant is not paying what
he can the probation officer will ask the judge to revoke
or alter the terms of release. Then the judge may make
the order more specific [by prescribing a payment
schedule] or, if the defendant has not paid what he
could in good faith, may send him back to prison.” We
No. 04-2663 25
see nothing in the district court’s order that would have
violated this procedure.
Jaroszenko, 92 F.3d at 492 (quoting United States v. Ahmad, 2
F.3d 245, 249 (7th Cir. 1993)).
Mr. Day acknowledges our holding in Jaroszenko, but
urges us to revisit Jaroszenko’s interpretation of “immediate
payment” in light of the MVRA’s amendments to § 3664. He
maintains that ordering “payment to the extent that the
defendant can make it in good faith, beginning immedi-
ately” delegates too much authority to the Probation
Office—authority that explicitly is conferred by the statute
to the sentencing court.
In making this argument, Mr. Day fails to mention our
decision in United States v. McIntosh, 198 F.3d 995 (7th Cir.
2000), which, at first glance, appears to dispose of Mr. Day’s
argument. In McIntosh, the district court had waived a fine;
it nevertheless ordered that $38,764.50 in restitution be paid
immediately. The defendant argued that the district court
should not have made the payment due immediately given
its decision to waive a fine (thus acknowledging his appar-
ent lack of resources). We found “no merit” in this chal-
lenge. Id. at 1004. We explained:
“ ‘[I]mmediate payment’ does not mean ‘immediate
payment in full;’ rather it means ‘payment to the extent
that the defendant can make it in good faith, beginning
immediately.’ ” United States v. Jaroszenko, 92 F.3d 486,
492 (7th Cir. 1996). The district court ordered that the
restitution be paid immediately and that McIntosh
should “notify the probation officer of any material
changes and economic circumstances [that] might affect
his ability to pay restitution.” Thus, the district court
has given McIntosh the opportunity to explain his
financial circumstances to the probation officer if prob-
26 No. 04-2663
lems arise. The probation officer can then ask the
district court to amend the order of restitution accord-
ingly or make the order more specific. We have ap-
proved similar approaches in the past, see id.; see also
United States v. Ahmad, 2 F.3d 245, 249 (7th Cir. 1993),
and McIntosh presents us with no reason that we
should consider it error now.
Id. Thus, in at least one case applying the MVRA, we have
approved the continued use of our pre-MVRA interpreta-
tion of “immediate” payment.
However, a closer look at the facts of McIntosh convinces
us that it does not purport to lay down a general approach
to restitution under the MVRA and thus ignore the signifi-
cant changes that Congress clearly implemented through
that statute. In McIntosh, the defendant had engaged in a
series of fraudulent transactions which had provided him
with a large amount of cash at his disposal. When he was
apprehended by federal authorities, the defendant was driv-
ing a late model BMW automobile that he had purchased
with the proceeds of the fraud and also was in possession of
$1,558.54 in cash. On appeal, one of McIntosh’s challenges
to the restitution order was that “the district court refused
to provide him with credit for the property (the BMW and
$ 1558.54 in cash) that the U.S. Marshals seized when they
arrested him.” Id. at 1003. The Government objected to the
claimed credit “by pointing out that McIntosh had not
signed over the property nor had it been forfeited.” Id. The
district court’s resolution of the issue—a resolution which
we later approved—was to state: “ ‘[I]f he does, he’ll be
entitled to credit for it.’ ” Id. Thus, it appears that the parties
and the court anticipated that the seized property (or
proceeds therefrom) would be available for the payment of
at least a sizeable portion of the ordered restitution.
The availability of such funds increases the possibility
No. 04-2663 27
of “immediate” payment, or at least “immediate” partial
payment, of the restitution.
We believe that our employment of the pre-MVRA inter-
pretation of “immediate” payment in McIntosh must be read
in light of these circumstances. Nothing in the language we
employed in McIntosh suggests either that the district court
does not have the duty to fix the payment schedule and/or
that this duty is delegable. However, under the circum-
stances in McIntosh, the defendant had at his disposal some
funds immediately available to be used for restitution; it
therefore was both logical, and consistent with the MVRA,
to make the defendant pay all of the funds remaining from
his fraudulent activities towards restitution and to use the
Probation Office to help ensure that the funds were used to
pay the restitution. Should the proceeds prove insufficient
to satisfy the entire restitution order immediately, the
defendant could inform the Probation Office, and “the pro-
bation officer c[ould] then ask the district court to amend
the order of restitution accordingly or make the order more
specific.” Id. at 1004. In sum, the presence of existing pro-
ceeds of the criminal scheme—some funds available to be
used towards “immediate” payment—were critical to our
10
approval of the district court’s order in McIntosh.
We believe that, given the statutory scheme set forth in the
MVRA, the most direct, and most efficient, way for a district
court to perform its statutory duty is to fix a payment
schedule and to set forth that schedule at the time of
10
It also appears that the defendant in United States v. McIntosh,
198 F.3d 995 (7th Cir. 2000), never suggested that the MVRA pro-
vided a basis for abandoning, or at least narrowing, our interpre-
tation of “immediate” payment under pre-MVRA law. See id. at
1004 (“We have approved similar approaches in the past . . . and
McIntosh presents us with no reason that we should consider it
error now.”).
28 No. 04-2663
sentencing, even if later events might require its amend-
ment. Such an approach is most compatible with the
congressional decisions made in the MVRA. See supra at 18-
20. Furthermore, when § 3664(f)(2), which contemplates
nominal payments, is taken into consideration, Congress’
enactment of that section of the MVRA manifests a clear
congressional intent that the district court be involved in
setting a restitution payment schedule initially upon entry of
judgment and that the court also be the ultimate decision-
maker in alteration of those payments as time goes on.
Notably, the statute does not preclude use of the probation
officer, or any other officials such as employees of the
Bureau of Prisons, to inform the court of the changed
circumstances of the defendant and of the need to alter the
schedule. This approach is consistent with that of the other
courts of appeals. See, e.g., United States v. McGlothlin, 249
F.3d 783, 785 (8th Cir. 2001) (holding that the MVRA
“require[s] the district court to set a detailed payment
schedule at sentencing”); United States v. Coates, 178 F.3d
11681, 683-85 (3d Cir. 1999) (same).
Returning to Mr. Day’s situation, we believe that it is clear
that the approach taken in McIntosh will not suffice. Here,
Mr. Day does not have at his disposal any funds available
for immediate payment of the restitution award. Mr. Day
relies on Social Security to provide his basic needs, and
there is nothing in Mr. Day’s personal or family situation
that suggests that his financial situation will improve.
Indeed, in light of his current incarceration and current state
of his health, it is likely that his financial situation will only
11
Weinberger v. United States, 268 F.3d 346 (6th Cir. 2001), is not to
the contrary. Despite its miscitation to United States v. Coates, 178
F.3d 681 (3d Cir. 1999), the case deals with an application of the
VWPA, not the MVRA. See Weinberger, 268 F.3d at 356, 359-60.
No. 04-2663 29
decline. Ordering restitution “due and payable imme-
diately” in Mr. Day’s case, therefore, not only ignores
Mr. Day’s financial circumstances, it also assigns respon-
sibility to the Probation Office to formulate a payment
schedule from Mr. Day’s limited resources. We do not
believe that such an action is compatible with the language
of § 3664 which requires “the court” to “specify in the
restitution order the manner in which, and the schedule
according to which, the restitution is to be paid.” 18 U.S.C.
§ 3664(f)(2). Accordingly, the district court should revisit
this issue and, if the defendant’s circumstances are what
they appear to be, enter a more precise order accounting for
the defendant’s limited resources. Specifically, we invite the
district court’s attention to 18 U.S.C. § 3664(f)(3), which
allows the court to order nominal payments towards the
restitution amount if warranted by the defendant’s inability
12
to pay.
Conclusion
For the foregoing reasons, we order a limited remand
consistent with our holding in Paladino, 401 F.3d 471. We
also reverse the judgment of the district court with respect
to restitution and remand for further proceedings consistent
with this opinion. In all other respects, the judgment of the
district court is affirmed.
AFFIRMED in part; REVERSED and REMANDED in part
12
We note that a district court’s determination that restitution
payments are not due and payable immediately in no way affects
the liability of the defendant to pay full restitution. The judicial
act of requiring full restitution is distinct from setting a payment
schedule.
30 No. 04-2663
A true Copy:
Teste:
_____________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—8-12-05