United States v. Youssef Abdelbary

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 13-4083
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v.
YOUSSEF HAFEZ ABDELBARY,
Defendant - Appellant.
Appeal from the United States District Court for the Western
District of Virginia, at Roanoke. Samuel G. Wilson, District
Judge. (7:10-cr-00067-SGW-1)
Argued: December 12, 2013 Decided: March 11, 2014
Before TRAXLER, Chief Judge, and DIAZ and FLOYD, Circuit Judges.
Affirmed by published opinion. Chief Judge Traxler wrote the
majority opinion, in which Judge Floyd joined. Judge Diaz wrote
a dissenting opinion.
ARGUED: Paul Graham Beers, GLENN, FELDMANN, DARBY & GOODLATTE,
Roanoke, Virginia, for Appellant. Joseph W.H. Mott, OFFICE OF
THE UNITED STATES ATTORNEY, Roanoke, Virginia, for Appellee. ON
BRIEF: Timothy J. Heaphy, United States Attorney, OFFICE OF THE
UNITED STATES ATTORNEY, Roanoke, Virginia, for Appellee.
TRAXLER, Chief Judge:
Youssef Abdelbary appeals a district court order requiring
him to pay restitution as part of his sentence for bankruptcy
fraud. Finding no error, we affirm.
I.
Abdelbary was convicted of wire fraud, money laundering,
currency structuring, bankruptcy fraud, and perjury. This is
the second appeal in this case, and many of the facts relevant
to this appeal are set out in our first decision. See United
States v. Abdelbary, 496 Fed. App’x 273, 2012 WL 5352515 (4th
Cir. 2012).
A.
Youssef Abdelbary owned and operated a gas
station and convenience store in Dublin, Virginia.
Abdelbary leased the property and bought the gas he
sold from Jordan Oil. While running this business,
Abdelbary used a branch of the Carter Bank and Trust
in Christiansburg, Virginia, where he made more than
one hundred transactions, each involving more than
$10,000. At the time of the first deposit of this
size, Ralph Stewart, a local manager for Carter Bank
and Trust, explained to Abdelbary about the currency
transaction reports (“CTRs”) that had to be filed on a
transaction involving more than $10,000.
Abdelbary’s relationship with Jordan Oil grew
contentious in late 2007 and early 2008. When
Abdelbary failed to make a payment due to Jordan Oil
in early February 2008 for gas it had delivered,
Jordan Oil ceased its deliveries to Abdelbary. Jordan
Oil sued soon thereafter to collect the money that
Abdelbary owed, which totaled about $250,000. The
following day, Abdelbary began withdrawing currency in
amounts less than $10,000. Over the next eight days,
Abdelbary withdrew $59,879.31 from his account in
2
eleven transactions. The litigation against Jordan Oil
continued through the spring of 2008. Eventually, at
the end of May, this litigation concluded when Jordan
Oil obtained a final judgment against Abdelbary for
$247,759.79 and Abdelbary’s counterclaim was
dismissed.
The next month, Abdelbary engaged in a series of
credit card transactions in which he charged his
personal credit cards at his store in multiple equal
amounts in a span of a few minutes. The value of these
purchases was credited to the account at Carter Bank
and Trust that Abdelbary used for his business, and he
then withdrew this money, totaling $52,350, from that
account in amounts less than $10,000.
Abdelbary met with a bankruptcy attorney in July
2008. Abdelbary initially told this bankruptcy
attorney that he wanted to get back at Jordan Oil, but
Abdelbary eventually concluded that he would file for
bankruptcy. When Abdelbary submitted his bankruptcy
filing, he denied having made any gifts within one
year or having transferred any property within two
years of the filing. Additionally, Abdelbary stated at
the bankruptcy creditors’ meeting that he had not
transferred any assets to a family member. Despite
these statements, Abdelbary had sent $76,000 to his
brother in Egypt during those previous two years.[1]
B.
Based on these events, Abdelbary was charged in a
twenty-count indictment with wire fraud, 18 U.S.C. §
1343, money laundering, 18 U.S.C. § 1956(a)(1)(B)(i)
and (ii), currency structuring, 31 U.S.C. § 5324(a)(1)
and (3) and § 5324(d), bankruptcy fraud, 18 U.S.C. §
152(3), and perjury, 18 U.S.C. § 1623. A jury
convicted Abdelbary on all counts.
After the jury returned its verdict, the district
court granted Abdelbary’s Rule 29 motion for judgment
of acquittal on the wire fraud and money laundering
counts. The district court read the indictment as
requiring the Government to prove beyond a reasonable
1
The bankruptcy court eventually denied Abdelbary’s Chapter
7 petition.
3
doubt that Abdelbary incurred the credit card charges
in June 2008 with the intention of filing for
bankruptcy and thus not repaying those companies. The
district court held that the Government had not met
this burden and therefore dismissed those counts of
the indictment.
At sentencing, the district court sentenced
Abdelbary to twenty-four months in prison. The court
entered a criminal forfeiture judgment against
Abdelbary for $112,229.31 and also ordered Abdelbary
to pay restitution to Jordan Oil of $84,079.35 for
attorney’s fees incurred during the bankruptcy
proceeding. The district court cited both the
voluntary, 18 U.S.C. § 3663, and mandatory, 18 U.S.C.
§ 3663A, restitution provisions during the hearing
without ever specifying the provision on which it was
relying.
Id. at 274-75 (footnote omitted).
On appeal, we affirmed Abdelbary’s conviction for currency
structuring, reversed the judgment of acquittal on the wire
fraud and money laundering convictions, and remanded for
reinstatement of the jury verdict and entry of the judgment
against Abdelbary. See id. at 279. Additionally, we vacated
the restitution award and remanded for further proceedings,
holding that the district court had not specified whether the
award was pursuant to the Victim and Witness Protection Act
(“VWPA”), see 18 U.S.C. § 3663, or the Mandatory Victim
Restitution Act (“MVRA”), see 18 U.S.C. § 3663A, and the court
had overlooked making the factual findings required by the
appropriate act. See Abdelbary, 496 Fed. App’x at 279.
4
On remand, the district court sentenced Abdelbary to 27
months’ imprisonment. The parties disagreed, as they did during
Abdelbary’s first sentencing, regarding whether Abdelbary should
be required, as part of his sentence for the bankruptcy fraud
offenses, to make restitution to Jordan Oil for the attorneys’
fees it incurred in the bankruptcy proceeding. The parties
agreed that the MVRA governs the question. See 18 U.S.C. §
3663A(c)(1)(A)(ii) (providing that MVRA applies to “an offense
against property under this title . . ., including any offense
committed by fraud or deceit”). The district court found as a
factual matter that the attorneys’ fees at issue “were incurred
as a result of the bankruptcy fraud,” J.A. 523, and Abdelbary
did not dispute that point. However, Abdelbary argued, as he
had during his initial sentencing, that Jordan Oil could not
recover its attorneys’ fees incurred in the bankruptcy
proceeding as part of restitution. Abdelbary maintained that
attorneys’ fees could never be included as compensable costs as
part of restitution under the MVRA. He alternatively argued
that attorneys’ fees were not includable based on the facts of
this case as Jordan Oil was not a victim of Abdelbary’s offense
since Abdelbary failed in his attempt to discharge his debts in
bankruptcy. Abdelbary maintained that Jordan Oil’s incurrence
of attorneys’ fees was at most a consequential loss, not a
5
direct one, and thus the fees were not compensable as part of
restitution. 2
The government disagreed and urged the district court to
again require Abdelbary to pay Jordan Oil restitution in the
amount of the attorneys’ fees it incurred as a result of
Abdelbary’s bankruptcy fraud offenses. The government denied
that there was any sort of “blanket prohibition against
attorneys’ fees as a class of expense” and argued that they were
includable as part of restitution so long as they resulted
directly from the crime. J.A. 525. The government asserted
that Jordan Oil’s fees resulted directly and proximately from
the bankruptcy fraud because Jordan Oil incurred the fees
defending its rights in the same proceeding – Abdelbary’s
2
A question has been raised as to whether Abdelbary argued
during resentencing that the district court had failed to find
but-for causation. See post, at 23 n.2 (citing J.A. 525-26,
528-29). But the district court noted during resentencing that
it had already found during the first sentencing “that these
attorney fees were incurred as a result of the bankruptcy
fraud.” J.A. 523. Abdelbary offered no challenge whatsoever to
that determination. In the above-cited pages of the joint
appendix, Abdelbary simply argued that the attorneys’ fees were
consequential, rather than direct, damages. See J.A. 525-26
(“[W]e do not concede that Jordan Oil is even a victim for
mandatory restitution purposes, because the victim has to be the
direct victim of the alleged offense. They’re not the direct
victim . . . . I think if there’s a victim there, Judge, it’s
the bankruptcy trustee, not Jordan Oil.”); J.A. 528-29 (“Mullins
says that consequential damages, such as attorneys’ fees, are
not recoverable. . . . [The fees are] not a direct damage. As
a matter of law, that’s a consequential damage. . . . They’re
trying to get attorneys’ fees; that’s a remote, inconsequential
damage. That’s not an intended – a direct loss.”).
6
bankruptcy – in which the fraud occurred. In other words, the
position of the government was that in order to avoid paying
Jordan Oil and its other creditors, Abdelbary tried to hide his
money, assert insolvency, and file for bankruptcy. Jordan Oil
was then forced to obtain legal representation to keep its claim
against Abdelbary alive. As the bankruptcy proceedings
progressed, Abdelbary persisted in his lies about his assets and
what he had done with his money. The lies he told became the
bases for his convictions for bankruptcy fraud and required the
continuation of the bankruptcy proceedings that caused Jordan
Oil’s litigation expenses to reach $84,079.35. The government
distinguished the facts of the present case from those in which
a victim suffers a loss and then sometime later incurs
attorneys’ fees attempting to recover from the defendant.
The district court rejected Abdelbary’s arguments, agreed
with the government, and again ordered Abdelbary under the MVRA
to pay $84,079.35 to Jordan Oil in restitution, representing the
amount of the legal fees Jordan Oil incurred during bankruptcy
proceedings. The district court found that the attorneys’ fee
expenditures “were directly and proximately caused” by
Abdelbary’s bankruptcy fraud insofar as Jordan Oil incurred the
fees defending its rights in the very same proceeding in which
the bankruptcy fraud occurred. J.A. 534. The district judge
specifically stated that “I’m not thinking of this as fee-
7
shifting. I’m thinking of it as a direct harm from the filing
of this. As [the government] has indicated, [Jordan Oil was]
essentially dragged into bankruptcy court.” J.A. 533-34.
II.
Abdelbary now argues on appeal that the district court
erred in requiring him to pay Jordan Oil’s attorneys’ fees
incurred in the bankruptcy proceeding as part of restitution.
We disagree.
In the sentencing context, we review findings of fact for
clear error and questions of statutory construction de novo.
See United States v. Moore, 666 F.3d 313, 320 (4th Cir. 2012).
We review the application of the court’s factual findings in
this context for abuse of discretion. See id.
Some background concerning the enactment of the VWPA and
the MVRA is helpful to an understanding of the issue Abdelbary
raises. Although restitution has long been authorized at common
law, there was no statutory authorization for requiring
restitution as part of a criminal sentence outside of the
probation context prior to the enactment of the VWPA, see S.
Rep. No. 97-532, at 30 (1982); United States v. Amato, 540 F.3d
153, 159 (2d Cir. 2008). Congress enacted the VWPA in 1982, see
Pub. L. 97-291, 96 Stat. 1248 (currently codified at 18 U.S.C.
8
§ 3663). 3 Under the VWPA, as originally enacted, restitution
could be made only to a “victim” of the offense of conviction
and only for specified types of losses that were “caused by the
specific conduct that is the basis of the offense of
conviction.” Hughey v. United States, 495 U.S. 411, 413 (1990). 4
Even concerning victims who have suffered the specified type of
losses, the decision whether to order restitution under the VWPA
is discretionary. See 18 U.S.C. § 3663(a)(1).
As originally enacted, the VWPA identified particular types
of losses that could be included in restitution for certain
types crimes involving damage to or loss or destruction of
property, see 18 U.S.C. § 3663(b)(1), and other types of losses
that could be included for crimes involving bodily injury, see
18 U.S.C. § 3663(b)(2), (3). In 1994, Congress added to the
types of losses that could be included under the VWPA by adding
subsection (b)(4). See Violence Against Women Act of 1994, Pub.
L. No. 103-322, Title IV, § 40504, 108 Stat. 1796, 1947 (1994).
That subsection provides that, for any type of crime,
3
The VWPA was originally codified at 18 U.S.C. §§ 3579-80
but was later recodified so that § 3579 now appears as § 3663
and § 3580 now appears as § 3664. See Hughey v. United States,
495 U.S. 411, 413 n.1 (1990).
4
“Federal courts do not have the inherent authority to
order restitution, but must rely on a statutory source to do
so.” United States v. Davis, 714 F.3d 809, 812 (4th Cir. 2013)
(internal quotation marks and alteration omitted).
9
restitution orders may be used to “reimburse the victim for lost
income and necessary child care, transportation, and other
expenses related to participation in the investigation or
prosecution of the offense or attendance at proceedings related
to the offense.” 18 U.S.C. § 3663(b)(4).
In 1996, Congress enacted the MVRA as part of the
Antiterrorism and Effective Death Penalty Act of 1996, see Pub.
L. No. 104-132, 110 Stat. 1214 (1996). The MVRA made payment of
restitution as part of a criminal sentence mandatory for certain
categories of offenses that directly and proximately caused a
victim to suffer either a physical or a pecuniary loss. See
MVRA § 202, 110 Stat. at 1227; United States v. Squirrel, 588
F.3d 207, 212 (4th Cir. 2009). While the VWPA’s substantive
requirements are codified at 18 U.S.C. § 3663, the MVRA’s are
primarily set out at 18 U.S.C. § 3663A. 5 Section 3663A’s
structure mirrors that of § 3663, and much of § 3663A is
identical or nearly identical to language in § 3663.
Additionally, the MVRA amended § 3663’s definition of “victim”
to match the definition in § 3663A, which is, as is relevant
here, “a person directly and proximately harmed as a result of
5
The procedure for imposing restitution under both statutes
is set out in 18 U.S.C. § 3664. See 18 U.S.C. § 3556.
10
the commission of an offense for which restitution may be
ordered.” 18 U.S.C. § 3663A(a)(2); see 18 U.S.C. § 3663(a)(2).
Section 3663A(b), like its VWPA counterpart, § 3663(b),
specifically identifies the types of losses includable in a
restitution award under the MVRA. This appeal primarily
concerns 18 U.S.C. § 3663A(b)(1), which provides:
(b) The order of restitution shall require that such
defendant−
(1) in the case of an offense resulting in damage to
or loss or destruction of property of a victim of
the offense−
(A) return the property to the owner of the
property or someone designated by the owner; or
(B) if return of the property under subparagraph
(A) is impossible, impracticable, or inadequate,
pay an amount equal to−
(i) the greater of−
(I) the value of the property on the date of the
damage, loss, or destruction; or
(II) the value of the property on the date of
sentencing, less
(ii) the value (as of the date the property is
returned) of any part of the property that is
returned . . . .
Here, the district court found that Jordan Oil was a “victim” of
Abdelbary’s offense because his offenses directly and
proximately caused Jordan Oil to expend $84,079.35 for
attorneys’ fees, see 18 U.S.C. § 3663A(a)(2), such than an award
in the amount of those fees was proper under subsection (b)(1).
11
On this basis, the court ordered Abdelbary to make restitution
to Jordan Oil in that amount.
Abdelbary does not challenge the district court’s
determination that Jordan Oil incurred the attorneys’ fees as a
result of his bankruptcy fraud. Abdelbary maintains, though,
that the restitution order was erroneous because attorneys’ fee
expenditures are never compensable under the MVRA as is
demonstrated by our decision in United States v. Mullins, 971
F.2d 1138 (4th Cir. 1992). 6 We conclude, however, based on the
6
Abdelbary also contends that the district court erred in
concluding that Jordan Oil was a victim because the district
court specifically found that Jordan Oil did not suffer an
actual loss, within the meaning of the MVRA, as a result of the
offense. See United States v. Harvey, 532 F.3d 326, 339 (4th
Cir. 2008) (explaining that a restitution order must be based on
a victim’s actual loss). In support of his contention that the
district court found no actual loss, Abdelbary points to page 5
of the amended judgment, wherein the court listed “$0.00” as
Jordan Oil’s “[t]otal [l]oss.” J.A. 565. However, we conclude
that the listing of “0.00” as Jordan Oil’s total loss on the
amended judgment at most amounted to an administrative error.
The sentencing transcript makes clear that the district court
actually found as a fact that Abdelbary’s conduct underlying his
offenses directly and proximately caused Jordan Oil to expend
$84,079.35 in attorneys’ fees. We therefore conclude that the
notation on the amended judgment does not affect the validity of
the restitution order. Cf. United States v. Osborne, 345 F.3d
281, 283 n.1 (4th Cir. 2003) (“It is normally the rule that
where a conflict exists between an orally pronounced sentence
and the written judgment, the oral sentence will control.”);
United States v. Morse, 344 F.2d 27, 30 (4th Cir. 1965) (“[W]e
should carry out the true intention of the sentencing judge as
this may be gathered from what he said at the time of
sentencing.”).
(Continued)
12
district court’s findings, that the fees were includable under
subsection § 3663A(b)(1). 7
In Mullins, the defendant was convicted of aiding and
abetting the commission of wire fraud, which involved obtaining
$45,000 worth of kitchen equipment. See id. at 1140. The
district court ordered the defendant to pay $42,500 in
restitution as part of his sentence under the VWPA. See id. As
is relevant here, the defendant argued that the amount
improperly included consequential damages in the form of
We do not read page 13 of Abdelbary’s opening brief to
challenge the district court’s failure to find but-for causation
at sentencing. In our view, the cited page is simply part of
Abdelbary’s argument that Jordan Oil was not a “victim” within
the meaning of the MVRA because the court’s listing of “$0.00”
as Jordan Oil’s “[t]otal loss” constituted a factual finding
that Jordan Oil suffered no loss as a result of the bankruptcy
fraud. In the cited page of Abdelbary’s brief, Abdelbary argues
that a finding of no loss would not have been clearly erroneous
because Jordan Oil’s attorneys’ fees were at most consequential,
rather than direct, damages. See Appellant’s Brief at 13
(“Abdelbary’s goal was to obtain a judicial discharge of his
indebtedness to Jordan Oil and other creditors. Causing Jordan
Oil to incur attorney’s fees was not an element of the offense.
Jordan Oil’s legal bills were at most an indirect consequence of
Abdelbary’s offense. . . . A restitution award may only
compensate for a victim’s actual damages resulting directly from
an essential conduct element of the offense. Indirect losses
and consequential damages are not compensable ‘losses’ under the
MVRA.” (emphasis added)). For the reasons explained in the
remainder of our opinion, Abdelbary’s argument is incorrect.
7
Because we conclude that the fees were includable under
subsection (b)(1), we do not address Abdelbary’s argument that
the district court correctly determined that the fees were not
includable under subsection (b)(4).
13
attorneys’ fees and other amounts expended by the equipment’s
owner in repossessing the equipment. See id. at 1146. In
analyzing the scope of the losses includable in the restitution
order, we observed that 18 U.S.C. § 3663(b)(1) – which is
essentially identical to its MVRA counterpart 8 – described the
amount of restitution the district court was authorized to
award. See id. Construing this language, we concluded that
“[i]n cases involving the damage, loss, or destruction of
property, restitution must be limited to that which the statute
authorizes: return of the property, or payment of the property’s
value, either on the date of damage or loss or on the date of
8
18 U.S.C. § 3663(b)(1) provides:
(b) The order may require that such defendant−
(1) in the case of an offense resulting in damage to or
loss or destruction of property of a victim of the
offense−
(A) return the property to the owner of the property or
someone designated by the owner; or
(B) if return of the property under subparagraph (A) is
impossible, impractical, or inadequate, pay an amount
equal to the greater of−
(i) the value of the property on the date of the
damage, loss, or destruction, or
(ii) the value of the property on the date of
sentencing,
less the value (as of the date the property is
returned) of any part of the property that is returned
. . . .
14
sentencing, less the value of any part of the property that is
returned.” Id. at 1147. Regarding Mullins’s consequential-
damages argument, we “h[e]ld that an award of restitution under
the VWPA cannot include consequential damages such as attorney’s
and investigators’ fees expended to recover the property” that
was the target of the crime. Id.
Abdelbary contends that Mullins is consistent with the
“American Rule,” under which each party is responsible for his
own attorney’s fees and the related rule that courts are not
authorized to deviate from the American Rule unless an express
contractual or statutory provision specifically provides for an
attorneys’ fee award. See Fox v. Vice, 131 S. Ct. 2205, 2213
(2011); Crescent City Estates, LLC v. Draper (In re Crescent
City Estates, LLC), 588 F.3d 822, 825-26 (4th Cir. 2009). He
claims that in light of Mullins and the American Rule,
§ 3663(b)’s MVRA counterpart, § 3663A(b), should not be
construed to authorize the restitution ordered here. We
disagree.
Initially, we note that the American Rule has no
application here. That rule provides that “[i]n the United
States, the prevailing litigant is ordinarily not entitled to
collect a reasonable attorneys’ fee from the loser.” Alyeska
Pipeline Serv. Co. v. Wilderness Society, 421 U.S. 240, 247
(1975). But we are not reviewing a question of entitlement to
15
fee shifting as between parties to a case − that would be a
matter for the bankruptcy court. Rather, what is before us is
the separate question of what losses can be includable as part
of criminal restitution. See United States v. Scott, 405 F.3d
615, 619 (7th Cir. 2005) (“The line between criminal restitution
and common law damages is important to maintain.”). In this
context, there is no reason to presume that Congress intended to
preclude the inclusion of amounts expended on attorneys’ fees as
part of restitution in the exceptional scenario in which the
fees were the direct and proximate result of the defendant’s
crime.
Rather, this case is governed by the rule explained in
United States v. Elson, 577 F.3d 713 (6th Cir. 2009):
Generally, attorney fees incurred in civil litigation
against the defendant for the same acts at issue in
the criminal proceedings are consequential damages
that are not recoverable. However, where a victim’s
attorney fees are incurred in a civil suit, and the
defendant’s overt acts forming the basis for the
offense of conviction involved illegal acts during the
civil trial, such as perjury, such fees are directly
related to the offense of conviction and therefore are
recoverable as restitution under the MVRA.
Id. at 728 (citation omitted); see also United States v. Havens,
424 F.3d 535, 539 (7th Cir. 2005) (holding that restitution
under the MVRA for identity-fraud victim could include “[f]ees
paid to counsel or other experts for dealing with the banks and
credit agencies in the effort to correct her credit history and
16
repair the damage to her credit rating”). We note that this
explanation of the applicable causation rule concerning the MVRA
is in line with other circuits’ applications of the VWPA as
well. See United States v. DeGeorge, 380 F.3d 1203, 1221-22
(9th Cir. 2004) (holding that when the defendant’s offense
“included his perjury and other conduct during the civil trial”
then “the insurance company’s expenses in the civil trial were
directly, not tangentially, related to [the defendant’s]
offenses” and thus includable as part of restitution under the
VWPA); United States v. Mikolajczyk, 137 F.3d 237, 245-46 (5th
Cir. 1998) (holding that when the filing of a fraudulent lawsuit
is part of the offense, the “costs of defending the lawsuit were
a direct and mandatory result of [the defendant’s act], not a
voluntary action taken . . . to recover property or damages”
even though “[t]he VWPA does not generally authorize recovery of
legal fees expended to recover stolen property”); see also
Government of Virgin Is. v. Davis, 43 F.3d 41, 46 (3d Cir. 1994)
(stating that “[t]he plain language of the VWPA, as well as the
reasoning adopted by other courts of appeal, leads us to
conclude that absent specific statutory authority for an award
of attorneys’ fees, the amount of restitution ordered under the
VWPA may not include compensation for legal expenses unless such
costs are sustained as a direct result of the conduct underlying
the offense of conviction” (emphasis added)).
17
This rule is also entirely consistent with Mullins. That
is so because the attorneys’ fees the Mullins victim expended in
an attempt to recover property taken earlier fall within the
general rule that such fees are not the direct and proximate
result of the defendant’s criminal conduct but are merely
consequential damages. In fact, an examination of exactly how
the applicable statutory language applies to the facts in
Mullins also reveals how the present case falls outside of the
general rule that attorneys’ fees are not includable.
Subsections 3663(b)(1) and 3663A(b)(1) apply “in the case
of an offense resulting in damage to or loss or destruction of
property of a victim of the offense.” 18 U.S.C. §§ 3663(b)(1),
3663A(b)(1). And, to be a victim under § 3663 or § 3663A, an
entity must be “directly and proximately harmed” by the
defendant’s offense. 18 U.S.C. §§ 3663(a)(2), 3663A(a)(2). In
light of (a)(2)’s direct-and-proximate requirement, we have
applied the same requirement in (b)(1) such that “the amount of
any restitution due [the victim] under the MVRA is the amount of
actual loss to [the victim] directly and proximately caused by
[the defendant’s] offense conduct.” United States v. Wilkinson,
590 F.3d 259, 268 (4th Cir. 2010) (emphasis added). The
property lost or destroyed in Mullins was the $45,000 in
restaurant equipment, not the fees later incurred to recover the
equipment. That is, the only loss directly and proximately
18
caused by the wire-fraud offense was the loss of the restaurant
equipment, and restitution was thus permitted only as to that
loss. Because the statute does not authorize restitution for
consequential damages, the inclusion of the amount of attorneys’
and investigators’ fees expended to repossess the equipment were
improper in Mullins.
In the present case, however, unlike in Mullins, the causal
relationship the government sought to establish between the
crime and the incurrence of the fees was not based simply on the
fact that the fees were incurred to prevent harm from, or to
remedy harm caused by, the defendant’s criminal conduct.
Rather, the government sought to prove that the fees incurred
were directly and proximately caused by Abdelbary’s bankruptcy
fraud because the fraud occurred in the context of Abdelbary’s
bankruptcy proceeding and Jordan Oil incurred the fees defending
its interests against Abdelbary’s fraud in that same proceeding.
See Elson, 577 F.3d at 728; DeGeorge, 380 F.3d at 1221-22;
Mikolajczyk, 137 F.3d at 245-46. Since the offense directly and
proximately caused Jordan Oil to incur the fees, the offense
“result[ed] in damage to or loss or destruction of property of a
victim of the offense,” 18 U.S.C. § 3663A(b)(1) − the property
being the money that Jordan Oil expended on the fees.
Accordingly, the district court properly determined that the
amount of attorneys’ fees Jordan Oil incurred in the bankruptcy
19
case as a result of Abdelbary’s offense is includable as
restitution under the MVRA. See 18 U.S.C. § 3663A(b)(1)(B). 9
III.
For the foregoing reasons, the district court’s restitution
order is affirmed.
AFFIRMED
9
Abdelbary argues that the district court concluded that it
had authority under subsections (a)(1) and (a)(2) of § 3663A to
include the fees, but did not find that they were includable
under subsection (b)(1). That the district court did not
specifically identify (b)(1) as the source of its authority is
beside the point, however, as the court made the critical
finding that Jordan Oil’s incurrence of the fees was the direct
and proximate result of Abdelbary’s offense.
20
DIAZ, Circuit Judge, dissenting:
The majority concludes that attorneys’ fees are recoverable
as restitution under the MVRA “in the exceptional scenario in
which the fees were the direct and proximate result of the
defendant’s crime.” Maj. Op. at 16. Although I agree, in
theory, that attorneys’ fees may be part of an award of
restitution under the statute, I take issue with the finding
that all of the fees incurred by Jordan Oil were directly and
proximately caused by Abdelbary’s offense conduct. Such a
conclusion takes too broad a view of what constituted
Abdelbary’s criminal offense.
The Supreme Court has instructed that “restitution as
authorized by [the MVRA] is intended to compensate victims only
for losses caused by the conduct underlying the offense of
conviction.” Hughey v. United States, 495 U.S. 411, 416 (1990)
(emphasis added). In the context of crimes involving false
statements, this court has noted that “Hughey and the text of
the [MVRA] do not allow us to stretch the ‘offense’ involved in
a perjury conviction to include any other conduct . . . to which
the defendant’s perjurious statement may have borne some
relationship.” United States v. Broughton-Jones, 71 F.3d 1143,
1149 (4th Cir. 1995); see also United States v. Blake, 81 F.3d
498, 506 (4th Cir. 1996) (“[T]he factual connection between [the
defendant’s] conduct and the offense of conviction is legally
21
irrelevant for the purpose of restitution.”). The only relevant
considerations for restitution purposes are “the elements of the
offense of conviction and the specific conduct underlying these
elements.” United States v. Freeman, __ F.3d __, No. 12-4636,
2014 WL 185572, at *10 (4th Cir. Jan. 17, 2014) (internal
quotation marks omitted).
Abdelbary was convicted of three counts of violating 18
U.S.C. § 152(3), which prohibits a person from “knowingly and
fraudulently mak[ing] a false . . . statement under penalty of
perjury . . . in or in relation to any case under title 11.” He
was also convicted of two counts of violating 18 U.S.C. § 1623,
which prohibits a person from “knowingly mak[ing] any false
material declaration” while under oath. The conduct underlying
these convictions consisted of: (1) Abdelbary’s fraudulent
representation in his Statement of Financial Affairs that he did
not transfer any assets during the two years preceding the
bankruptcy petition; (2) his fraudulent statement, at a
creditors meeting, that he had not transferred any assets to any
family members; and (3) his fraudulent denial, at the same
meeting, of having transferred any assets within the previous
five years.
The district court did not make a specific finding that
Abdelbary’s fraudulent statements--i.e., his offense conduct--
caused Jordan Oil to incur attorneys’ fees. Instead, the court
22
seemed to base the restitution award on a finding that Jordan
Oil was harmed by the very fact that it had to participate in
bankruptcy proceedings at all. For example, the court stated,
“I’m thinking of it as a direct harm from the filing of
this. . . . [Jordan Oil was] essentially dragged into bankruptcy
court.” J.A. 533-34. 1
In my view, the district court improperly ordered
restitution on the basis of Abdelbary’s “relevant conduct”--
pursuing a discharge in bankruptcy--rather than the specific
conduct underlying his offense of conviction. See Freeman, 2014
WL 185572, at *6 (“[T]hese [restitution] statutes do not allow
restitution for relevant conduct, a related offense, or a
factually relevant offense, but rather the offense, which can
only be read to mean the offense of conviction.” (internal
quotation marks omitted)). 2 There is nothing in the record to
1
The majority makes a similar error, stating “the fees
incurred were directly and proximately caused by Abdelbary’s
bankruptcy fraud because the fraud occurred in the context of
Abdelbary’s bankruptcy proceeding . . . .” Maj. Op. at 19
(emphasis added).
2
Although the majority believes otherwise, Abdelbary
challenged the district court’s failure to find but-for
causation at sentencing, see, e.g., J.A. 525-26, 528-29, and on
appeal, see, e.g., Appellant’s Br. at 13 (arguing that
“[c]ausing Jordan Oil to incur attorney’s fees was not an
element of the offense,” and emphasizing that “[a] restitution
award may only compensate for a victim’s actual damages
resulting directly from an essential conduct element of the
offense”).
23
suggest that Abdelbary could not have filed for bankruptcy
absent the fraudulent representations regarding his assets. And
for all we know, Abdelbary may well have qualified for a
discharge if he had not lied about the transferred assets. In
that case, Jordan Oil still would have been “dragged into
bankruptcy court” and incurred attorneys’ fees to protect its
judgment.
To drive the point home, consider 18 U.S.C. § 157, which
criminalizes the filing of a bankruptcy petition in connection
with a scheme to defraud. 3 Had Abdelbary been convicted of
violating that provision, the government would have had an
arguable case that all of the fees Jordan Oil incurred in the
bankruptcy proceedings were attributable to Abdelbary, as the
very filing of a bankruptcy petition would have constituted his
offense conduct, and the entire proceedings would have been
tainted. But Abdelbary was neither charged with nor convicted
of violating 18 U.S.C. § 157, and, under this court’s precedent,
there is no basis for ordering restitution for conduct for which
he was not convicted.
3
“A person who, having devised or intending to devise a
scheme or artifice to defraud and for the purpose of executing
or concealing such a scheme or artifice or attempting to do so
. . . files a petition under title 11 . . . shall be fined under
this title, imprisoned not more than 5 years, or both.” 18
U.S.C. § 157(1).
24
I recognize that Abdelbary’s untruthfulness may have
exacerbated the fees Jordan Oil had to expend to defend its
interests in bankruptcy. Perhaps Abdelbary’s petition would
have been dismissed much earlier had he not misrepresented his
financial affairs, thus saving Jordan Oil time and expense. But
the government never attempted to demonstrate a causal
connection between Abdelbary’s fraudulent statements and the
aggravation of Jordan Oil’s fees, and the district court made no
factual findings to that effect. 4 In other words, the government
failed to show that “even had [Abdelbary] been completely
truthful about these matters, [Jordan Oil] would not have
suffered the same harm.” Freeman, 2014 WL 185572, at *10.
Because the district court clearly erred when it found that
Abdelbary’s criminal conduct directly and proximately caused all
of Jordan Oil’s attorneys’ fees, I would reverse that portion of
the district court’s judgment ordering Abdelbary to pay
$84,079.35 in restitution.
I respectfully dissent.
4
Jordan Oil also incurred fees representing the interests
of other creditors during the bankruptcy proceedings. See J.A.
470 (“Jordan Oil . . . took the lead in objecting to Defendant’s
discharge for the benefit of itself and Defendant’s other
creditors. . . . [N]o other creditors objected to Defendant’s
discharge. Jordan Oil bore the burden and expense for the
benefit of all . . . .”). I do not believe Abdelbary can be
responsible for the fees Jordan Oil voluntarily incurred
defending other creditors’ debts.
25