United States v. Anne Hankins ( 2017 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 15-30345
Plaintiff-Appellee,
D.C. No.
v. 6:01-cr-60100-
AA-1
ANNE MARIE HANKINS, as Primary
Shareholder, President and
Operations Officer of Emerald OPINION
Powerline Construction, Inc,
Defendant-Appellant.
Appeal from the United States District Court
for the District of Oregon
Ann L. Aiken, District Judge, Presiding
Argued and Submitted November 10, 2016
Portland, Oregon
Filed June 6, 2017
Before: M. Margaret McKeown and William A. Fletcher,
Circuit Judges, and Jennifer A. Dorsey, * District Judge.
Opinion by Judge McKeown
*
The Honorable Jennifer A. Dorsey, United States District Judge for
the District of Nevada, sitting by designation.
2 UNITED STATES V. HANKINS
SUMMARY **
Criminal Law
The panel affirmed the district court’s denial of Anne
Marie Hankins’s motion seeking full satisfaction of the
restitution judgment entered following her conviction for
bank fraud and submitting a false loan application.
The panel held that a defendant may not discharge a
restitution judgment based on a private settlement between
the victim and the defendant; and that the Mandatory
Victims Restitution Act of 1996 permits a district court to
redirect restitution payments to the Crime Victims Fund,
when a victim later disclaims restitution without making a
direct assignment to the Fund.
COUNSEL
John C. Fisher (argued), Eugene, Oregon, for Defendant-
Appellant.
Amy Potter (argued), Assistant United States Attorney;
Kelly A. Zusman, Appellate Chief; Billy J. Williams, United
States Attorney; United States Attorney’s Office, Eugene,
Oregon, for Plaintiff-Appellee.
**
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
UNITED STATES V. HANKINS 3
OPINION
McKEOWN, Circuit Judge:
In this appeal we resolve two related questions of first
impression in our circuit that arise out of the Mandatory
Victims Restitution Act of 1996 (“MVRA”), a statute that
requires certain criminal defendants to pay restitution to
compensate and assist victims. We first determine whether
a defendant may discharge a restitution judgment based on a
private settlement between the victim and the defendant.
The answer is no—restitution is a criminal sentence that
cannot be extinguished by a victim’s disclaimer of benefits.
Relatedly, we decide whether a district court may redirect
restitution payments to the federal Crime Victims Fund,
42 U.S.C. § 10601 et seq., (“the Fund”), when a victim later
disclaims restitution without making a direct assignment to
the Fund. The answer is yes—the statute provides leeway
for the court to fashion this practical solution.
Background
The factual background here is not complicated. In
2001, Anne Hankins pled guilty to bank fraud under
18 U.S.C. § 1344 after submitting a false loan application for
$350,000 to U.S. Bank Special Assets Group (“U.S. Bank”).
The district court sentenced Hankins to thirty days in jail and
entered a judgment under the MVRA ordering her to pay
U.S. Bank $350,000 in restitution. The restitution, payable
“in full immediately” or, if any unpaid balance remained at
the time of Hankins’s release from custody, “at the
maximum installment possible, and not less than $50 per
month,” was to be deposited with the clerk of the court “for
transfer to the payee.”
4 UNITED STATES V. HANKINS
In 2002, U.S. Bank assigned its interest in the restitution
judgment to Horton & Associates LLC (“Horton”). In 2011,
the district court entered an order substituting Horton as the
assigned victim. Although neither the record nor the district
court docket explains the time lag between the assignment
and the substitution order, the delay is immaterial for our
purposes.
From 2002 to 2013, Hankins made sporadic payments:
she paid most months, and the payments ranged from $50 to
$400. On several occasions between 2011 and 2013, the
Treasury Offset Program also garnished funds, taking from
Hankins as much as $3,310.22 at a time. 1 By July 2013,
Hankins had paid $13,044.30 towards her $350,000
judgment—leaving her with a remaining balance of
$336,955.70.
In September 2013, Hankins and Horton purported to
settle the outstanding restitution obligation for a mere
$5,000. Soon after, Horton filed with the court a notice
entitled “Full Satisfaction of Judgment.” 2 The record
reflects that neither the district court, Hankins, nor the
1
The Bureau of Fiscal Service administers the Treasury Offset
Program and reroutes payments, such as federal tax refunds, to collect
delinquent debts owed to federal agencies and states. Treasury Offset
Program (TOP), Bureau of the Fiscal Serv.: U.S. Dep’t of the Treasury,
https://fiscal.treasury.gov/fsservices/gov/debtColl/dms/top/debt_top.ht
m (last visited Apr. 17, 2017).
2
Horton is an inactive limited liability company according to the
public record maintained by the Oklahoma Secretary of State. Entity
Summary Information, Oklahoma Secretary of State,
https://www.sos.ok.gov/corp/corpInformation.aspx?id=3500644719
(last visited Apr. 17, 2017).
UNITED STATES V. HANKINS 5
government took any action in court in response to Horton’s
notice, although Hankins stopped making payments.
In April 2015, more than a year and a half after Horton
filed its notice, the Treasury Offset Program garnished
$21,765 from Hankins to be applied towards her restitution
balance. Hankins, likely displeased by this turn of affairs,
filed a motion a few weeks later seeking full satisfaction of
the restitution judgment. By that time, Hankins had paid
only $34,809.30, including the $21,765 garnishment, of the
$350,000 judgment.
The district court denied Hankins’s motion, reasoning
that the MVRA dictates full mandatory restitution to the
victim or the victim’s assignee. Based on Horton’s notice of
“satisfaction in full of the Restitution Judgment,” the district
court assumed that Horton no longer wished to receive
restitution payments and ordered that the money garnished
by the Treasury Offset Program and all of Hankins’s future
restitution payments be deposited into the Fund. 3 We review
de novo the legal basis for the district court’s ruling on
restitution. United States v. Luis, 765 F.3d 1061, 1065 (9th
Cir. 2014).
Analysis
I. THE MVRA FRAMEWORK
We begin with the statutory framework. The MVRA,
18 U.S.C. §§ 3663A–3664, mandates restitution to victims
of certain offenses, including those “committed by fraud or
deceit.” Id. § 3663A(c)(1)(A)(ii). Specifically, a district
3
The Fund is separate from the General Fund of the U.S.
Government, 42 U.S.C. § 10601(a), and administered by the U.S.
Department of Justice, id. § 10605.
6 UNITED STATES V. HANKINS
court, when sentencing a defendant convicted of a qualifying
offense, “shall order . . . that the defendant make restitution
to the victim of the offense or, if the victim is deceased, to
the victim’s estate.” Id. § 3663A(a)(1) (emphasis added).
This restitution order is part of a convicted defendant’s
criminal sentence. The statute permits district courts to order
“restitution to persons other than the victim of the offense”
when “agreed to by the parties in a plea agreement.” Id.
§ 3663A(a)(3).
The restitution order is issued and enforced in
accordance with § 3664. Id. § 3663A(d). Relevant here,
“[a] victim may at any time assign the victim’s interest in
restitution payments to the [Fund] without in any way
impairing the obligation of the defendant to make such
payments,” id. § 3664(g)(2), and “[n]o victim shall be
required to participate in any phase of a restitution order,”
id. § 3664(g)(1). When ordering restitution, the court must
assign to each victim “the full amount of each victim’s
losses” without regard to the defendant’s economic
situation. Id. § 3664(f)(1)(A). And, finally, an order
imposing restitution under the MVRA is a final judgment,
id. § 3664(o), although there are some circumstances under
which a district court may alter a final restitution order, see,
e.g., id. § 3664(j)(2), (o)(1)–(2).
II. INVALIDITY OF PRIVATE SETTLEMENT OF
RESTITUTION ORDERS UNDER THE MVRA
The first question we consider is the effect of Hankins’s
settlement with Horton on the district court’s restitution
order. In Hankins’s view, once Horton agreed to a “Full
Satisfaction of Judgment” in exchange for payment of
$5,000, she was off the hook in terms of restitution
payments. The government disagrees and claims that
UNITED STATES V. HANKINS 7
Hankins’s restitution order cannot be modified through
private settlement. The government is correct.
Starting with the basics, “[a] sentence that imposes an
order of restitution is a final judgment,” even though it can
be corrected or amended in certain limited circumstances.
Id. § 3664(j)(2), (o)(1)–(2). 4 Once a restitution order is
imposed, the MVRA leaves the district court with limited
options to modify restitution. See United States v. Turner,
312 F.3d 1137, 1143 (9th Cir. 2002). Ultimately, only the
court—rather than the victim or the defendant—can impose
or modify the defendant’s sentence. Neither the victim, nor
the victim’s assignee, has the authority to settle, release,
satisfy, or otherwise modify a restitution judgment. This
conclusion follows from the principle that “private
4
For example, under § 3664(o)(1), a restitution order may be:
(1) corrected, if there was clear error in the sentence
or the defendant provides substantial assistance to
the government;
(2) modified, if the sentence is appealed under
18 U.S.C. § 3742;
(3) amended, if the victim discovers further losses
after sentencing; and
(4) adjusted, if there is a material change in the
defendant’s economic circumstances or if the
defendant defaults on a restitution obligation.
Under § 3664(j)(2), a court may reduce the amount of restitution to
account for compensatory damages later recovered in a civil proceeding.
Finally, under § 3664(o)(2), a court may amend a restitution order upon
resentencing if the defendant’s probation is revoked or if the defendant
failed to pay restitution. None of these designated situations is
applicable here.
8 UNITED STATES V. HANKINS
individuals should not be allowed to thwart the penal goals
of the criminal justice system by entering into releases or
settlements with wrongdoers.” United States v. Bearden,
274 F.3d 1031, 1041 (6th Cir. 2001).
Because restitution is a criminal sentence, its
enforcement is distinct from a civil judgment that is left
largely in the parties’ hands. “Private parties cannot simply
agree to waive the application of a criminal statute.” United
States v. Savoie, 985 F.2d 612, 619 (9th Cir. 1993).
We have previously held that restitution is not foreclosed
even where a defendant and victim entered into a civil
settlement before the defendant was sentenced under the
MVRA. United States v. Edwards, 595 F.3d 1004, 1014 (9th
Cir. 2010). There, we noted that “[c]riminal restitution is
mandatory under the MVRA and cannot be waived by a prior
civil settlement.” Id. Our holding here is a logical extension
of the reasoning in Edwards: a victim cannot unilaterally
extinguish a defendant’s obligation to pay restitution by
privately settling that restitution order. See id. This
reasoning is all the more powerful here because, unlike in
Edwards, Hankins seeks to settle the restitution order
itself—a criminal sentence entered following a criminal
conviction.
Our conclusion accords with other circuits. The Eighth
Circuit has observed that it is “clearly correct” that a victim
and a defendant cannot settle a restitution obligation because
allowing otherwise would “violate[] public policy.” United
States v. Boal, 534 F.3d 965, 967–68 (8th Cir. 2008). This
principle is echoed by the Fifth Circuit: “[The victim] could
not waive the Government’s authority to collect restitution,
as that bears uniquely on the State’s right to administer
punishment.” United States v. Ridgeway, 489 F.3d 732, 738
(5th Cir. 2007) (discussing the MVRA’s predecessor statute,
UNITED STATES V. HANKINS 9
the Victim and Witness Protection Act of 1982 (“VWPA”)).
And the Second and Sixth Circuits agree that a district court
cannot reduce or eliminate restitution as a result of a victim’s
waiver or prior settlement. See United States v. Johnson,
378 F.3d 230, 244–45 (2d Cir. 2004); Bearden, 274 F.3d at
1041. Stated differently, “the law will not tolerate privately
negotiated end runs around the criminal justice system.”
Savoie, 985 F.2d at 619 (discussing the VWPA).
Importantly, if we adopt the rule that Hankins suggests,
there is a serious risk that defendants could coerce victims
into settling or that defendants and victims would collude on
settlements. Although this risk is less likely in Hankins’s
case, as the victim was a bank, we are not convinced that
other victims, such as victims of sexual assault, see United
States v. Palmer, 643 F.3d 1060, 1068 (8th Cir. 2011)
(affirming an award of restitution under the MVRA to a
victim of commercial sex trafficking), would stand in such a
detached bargaining position. In that situation, the power
imbalance between the actors may permit the defendant to
coerce the victim to accept a nominal settlement. Taking
restitution out of the hands of the criminal justice system and
leaving it to private parties is not a result contemplated or
countenanced by the MVRA.
Finally, the rule of lenity does not help Hankins.
Considering the text, structure, history, and purpose of the
statute, there is no “grievous ambiguity” that justifies
invoking the rule here. See Muscarello v. United States,
524 U.S. 125, 138–39 (1998).
10 UNITED STATES V. HANKINS
III. DISTRICT COURT’S AUTHORITY TO REDIRECT
RESTITUTION PAYMENTS TO THE CRIME VICTIMS
FUND
Once the district court determined that the attempted
settlement between Hankins and Horton did not modify the
restitution order and that Horton, as the victim’s assignee,
had disclaimed further restitution through its filing of a
notice of satisfaction, the district court directed payment of
the restitution to the Fund. Hankins argues that this relief
went beyond her request to satisfy the judgment and that the
district court’s decision “destroy[s] the contractual
arrangement between Hankins and Horton.” Hankins’s
argument is misguided, because any claimed contract does
not affect her liability for restitution. So, faced with a
situation in which payment of mandatory restitution is
continuing and the victim has declared its debt satisfied, the
district court dealt with a dilemma—where does the money
go? In Turner, a case that involved the validity of an
assignment by a victim, we validated the assignment but
noted, “What may or may not happen in the future [with the
restitution payments] was not before the district court. It
ought not be before us.” 312 F.3d at 1144. That question is
now before us.
Put simply, the district court ordered what makes
practical sense within the spirit and confines of the MVRA:
it did not modify the sentence itself but redirected payments
to the Fund. We conclude that the district court had the
flexibility under the MVRA to effect this solution. Three
principles derived from the statute support this
interpretation: the mandatory nature of restitution, the fact
that the payment obligation is not contingent on the victim,
and the purpose of restitution.
UNITED STATES V. HANKINS 11
The MVRA is clear that the award of full restitution is
mandatory. Although the victim is the beneficiary of
restitution, the victim has only limited rights and may not
dictate whether restitution is appropriate or the amount: “the
court shall order restitution to each victim in the full amount
of each victim’s losses.” 18 U.S.C. § 3664(f)(1)(A).
The restitution obligation is a continuous one that does
not ebb and flow with the victim’s circumstances. The
obligation is terminated only by “the later of 20 years from
the entry of judgment or 20 years after the release from
imprisonment of the person ordered to pay restitution” and
not by any action on the part of the victim. Id. § 3613(b).
Even when the defendant dies, her “estate will be held
responsible for any unpaid balance of the restitution
amount.” Id. And, when calculating restitution, the district
court may not consider that the victim is entitled to
compensation from insurance or another source. Id.
§ 3664(f)(1)(B). Nothing in the statute provides that the
defendant’s liability ends with any change in the victim’s
circumstances. At the same time, a victim is not required to
accept restitution, as “[n]o victim shall be required to
participate in any phase of a restitution order.” Id.
§ 3664(g)(1). To reconcile the mandatory nature of
restitution with this provision, the statute must admit some
flexibility as to where restitution money goes if the victim
disclaims participation.
One other section of the MVRA bears analysis.
Section 3664(g)(2) allows the victim to “at any time assign
[its] interest” to the Fund “without in any way impairing the
obligation of the defendant to make such payments.” See
Turner, 312 F.3d at 1144 (observing that a victim’s
assignment does not alter the defendant’s restitution
liability). It makes sense that the statute lays out the rights
12 UNITED STATES V. HANKINS
of the third-party victim since, without an explicit provision,
the third party would be left up in the air as to the ability to
assign. But this provision does not extend beyond the
victim’s ability to assign and cannot not be read to constrain
the district court’s authority to redirect payments.
In Johnson, one of the defendants made the same
argument Hankins makes here—namely, that because
§ 3664(g)(2) gives victims authority to assign to the Fund,
the statute should be read as cabining the district court’s
authority. Rejecting that approach, the Second Circuit was
clear: “We disagree. Although § 3664(g)(2) authorizes
victims to make such an assignment, it does not preclude the
Court from doing so.” 378 F.3d at 245 (emphasis added).
The statute’s silence gives us flexibility to construe the scope
of the district court’s authority. Indeed, as the Supreme
Court counsels, “There is a basic difference between filling
a gap left by Congress’ silence and rewriting the rules that
Congress has affirmatively and specifically enacted.” Mobil
Oil Corp. v. Higgenbotham, 436 U.S. 618, 625 (1978). Here,
we are doing the former—filling a gap in the MVRA.
Finally, allowing the district court to redirect restitution
serves the MVRA’s compensatory and punitive purposes.
See William A. Graham Co. v. Haughey, 646 F.3d 138, 144
(3d Cir. 2011) (noting that federal courts filling statutory
gaps “must do so with the statute’s policy goals in mind”).
The MVRA’s legislative history describes the statute’s dual
goals as “ensur[ing] that . . . victims . . . receive the
restitution that they are due” and that “the offender . . . pays
the debt owed to the victim as well as to society.” S. Rep.
No. 104-179, at 12 (1995) (emphasis added). As we
emphasized in United States v. Rich, “we have held
repeatedly that restitution payments have both compensatory
and penal purposes.” 603 F.3d 722, 729 (9th Cir. 2010)
UNITED STATES V. HANKINS 13
(internal quotation marks and citation omitted); see also
United States v. Green, 722 F.3d 1146, 1150 (9th Cir. 2013)
(describing the MVRA as having “hybrid” purposes).
Redirecting the defendant’s restitution payments to the Fund
supports the MVRA’s compensatory goal of supporting
crime victims, even if the victims compensated are not the
defendant’s actual victims. This solution also serves the
MVRA’s penal purpose of requiring the defendant to “pay[]
the debt owed to . . . society.” S. Rep. No. 104-179, at 12.
Conversely, adopting an interpretation that prohibits the
district court from redirecting restitution to the Fund would
thwart the goals of the MVRA. Hankins’s sentence
explicitly directs her to make restitution payments payable
to “the U.S. District Court Clerk, for transfer to the payee.”
See 18 U.S.C. § 3611 (stating that restitution payments may
be directed to the Clerk of the Court). Because Hankins is
obligated to continue paying restitution under her sentence,
absent redirection, her payments would have nowhere
specific to go. The funds would revert at some point to the
U.S. Treasury’s federal unclaimed property fund 5 and
eventually may even escheat to the state. See United States
v. Klein, 303 U.S. 276, 281–82 (1938) (affirming
Pennsylvania’s escheat of unclaimed money deposited in the
registry of a federal court even though the money had
already been transferred to the U.S. Treasury). But, in any
event, the funds would accrue without supporting any
victims of crime. Surely Congress did not intend this result.
See United States v. Webster, 108 F.3d 1156, 1158 (9th Cir.
5
Under the Guide to Judiciary Policy, after the passage of time
unclaimed restitution payments are transferred to the Treasury, either to
the Unclaimed Funds or the Forfeitures of Unclaimed Money and
Property Fund. 13 Guide to Judiciary Policy §§ 1020.10.30, 1020.30.20
(2013); see also 28 U.S.C. § 2042.
14 UNITED STATES V. HANKINS
1997) (opting for the construction that would avoid
“undesirable results”).
We are not persuaded by the two circuits that have
determined that a district court cannot redirect restitution.
See United States v. Speakman, 594 F.3d 1165, 1175–76
(10th Cir. 2010); United States v. Pawlinski, 374 F.3d 536,
541 (7th Cir. 2004).
To begin, the court in Speakman sidesteps the MVRA
and invents language that permits a victim to dictate whether
the defendant will pay restitution at all. When the victim in
Speakman declined restitution prior to sentencing, the
district court ordered the defendant to pay restitution to the
Fund. 594 F.3d at 1168–69. On appeal, the Tenth Circuit
held that “the MVRA is expressly made subject to the victim
accepting restitution. In other words, construing §§ 3663A
and 3664(g)(1) together means that restitution payments
under the MVRA are mandated only when the victim accepts
them.” 594 F.3d at 1177. According to Speakman, ordering
restitution when a victim declines it “punishes the defendant
without in any way compensating the victim” and renders
the policy supporting the MVRA “simply inapplicable.” Id.at 1178–79. This analysis flatly contradicts both the
mandatory nature of restitution and the conclusion of
multiple circuits that restitution under the MVRA does not
rest on the victim’s concurrence. Victims cannot control the
applicability of a penal statute. See Bearden, 274 F.3d at
1041.
Pawlinski involved a politician who was ordered to pay
restitution to defrauded campaign contributors. 374 F.3d at
537. When only a handful of contributors claimed the
money, the district court directed the remaining balance to
the Fund, although Pawlinski suggested it be restored to his
campaign fund. Id. at 538. In contrast to the Second Circuit
UNITED STATES V. HANKINS 15
and our view, the Seventh Circuit deemed the revised
sentence “illegal” and stated that the district court “ignore[d]
the statutory limits” of the MVRA. Id. at 540. The Seventh
Circuit read the statute to permit an award to non-victims in
only two situations: first, when restitution is imposed
pursuant to a plea agreement that directs restitution to non-
victims and, second, when the victim assigns its rights to the
Fund. Id. at 539–40. The Seventh Circuit did not address
the practical effect of its holding; it simply said that “[w]hat
happens to the money” would be an issue for the federal and
state governments. Id. at 541.
Neither Speakman nor Pawlinski affects our reasoning.
We do not view the redirection of restitution as violating the
rule that a district court cannot order restitution absent
explicit statutory authority. See United States v. Gossi,
608 F.3d 574, 577 (9th Cir. 2010). No one disputes that the
district court entered a valid restitution order at the outset.
The process of deciding where to send restitution payments
already ordered is distinct from the authority to order
restitution in the first instance. And we do not interpret the
MVRA’s silence regarding redirection as a limit on the
district court’s power to craft a solution that is consistent
with the purposes of the MVRA and the Fund and that
fosters the compensatory and punitive goals of the statute.
See Johnson, 378 F.3d at 245.
In short, Hankins cannot extinguish her restitution
sentence through settlement with the victim’s assignee,
Horton. Once Horton disclaimed further interest in
restitution, redirecting restitution to the Fund was within the
district court’s power.
AFFIRMED.