United States v. Stanley Cottman

LUDWIG, District Judge,

concurring and

dissenting:

I join in the majority’s decision on lack of mootness and affirmance of the application of the four level “in the business” Guidelines enhancement. U.S.S.G. § 2B1.1. I respectfully dissent from its decision to vacate the condition of supervised release requiring repayment to the government of $32,420 in “buy money” provided to defendant by the FBI. Defendant received those monies, in various installments, from an undercover agent in exchange for 231 stolen TV boxes— the subject matter of the conspiracy charge to which defendant pleaded guilty. The crime occurred in 1995, and the defendant was sentenced on July 22,1996.

The majority holds that restitution of “buy money” is not an authorized condition of supervised release under the Victim Witness Protection Act of 1982, 18 U.S.C. §§ 3663-3664 (1985 & supp.1995) or the supervised release statute, 18 U.S.C. § 3583 (1985 & supp.1995). Its reasoning is that the expenditure of “buy money” is a cost of law enforcement and does not qualify the government as a “victim” — the traditional prerequisite of restitution. I agree with that analysis as relates to the VWPA. 1 However, I do not believe it is necessary to decide that issue in applying the supervised release statute to this case. First, the sentencing judge did not intend to order “restitution” in the victim-related sense of the word — which is the underlying premise of the majority’s conclusion. Second, I would hold that the repayment of “buy money” is authorized as a discretionary condition of *171 supervised release under § 3588(d)(3). 18 U.S.C.

I

The sentencing judge stated, after discussing the victim-restitution cases:

[T]he FBI, I find, is not a victim of defendant Cottmaris offense and the “buy money” is not recoverable under the VWPA. Therefore, I agree with defendant’s objection to the award of restitution to the FBI. Restitution should be made to the owners of the cable boxes.... I’m ordering that the boxes be returned to their rightful owners as restitution.

Appendix at 46-47. The sentencing judge then reviewed the “buy-money” decision in United States v. Daddato, 996 F.2d 903 (7th Cir.1993) and concluded that authority for a repayment order was conferred by the supervised release statute provision: “any other condition [the court] considers to be appropriate.” 18 U.S.C. § 3583 (d)(3).

The sentencing judge — as the majority stresses-referred at times to the repayment as “restitution” and the repayment is so characterized on the judgment of sentence form. Nevertheless, the judge’s sentencing statement unmistakably shows the intent to follow Daddato and to exercise “any other condition” discretion, not to order restitution to the FBI as a victim. Appendix at 47-50, 59. The significance of the distinction is more than semantic. By incorporating by reference the conditions authorized in the probation statute, the supervised release statute also empowers the sentencing judge ‘restitution to the victim.” 18 U.S.C. § 3563 (b)(3). Under the VWPA cases, that provision, by its own terminology, could not be utilized to order a repayment of “buy money.” Despite the finding of the sentencing judge that the FBI was not a “victim” and was not entitled to victim-related “restitution,” the majority conclusively infers that the condition was imposed under § 3563(b)(3) and was, accordingly, invalid. to order

Moreover, the idea of restitution, which historically has involved redress to a victim, has been evolving to include victimless reparations. 2 The sentencing judge's sporadic use of “restitution” in a non-victim-related sense to refer to the repayment of “buy money” has good precedent. In Daddato , now Chief Judge Posner’s decision characterizes the repayment of “buy money” as “in the nature of restitution,” observing that “[we] need not determine whether such an order is also classic ‘restitution’____” 996 F.2d at 903, 905 . See United States v. Brooks, 114 F.3d 106, 108 (7th Cir.1997) (“In Daddato , after noting that an order to repay buy money as “restitution” under the[VWPA] was not cricket, we found that such an order would nevertheless pass muster as a condition of supervised release” (bold in original)). The majority’s predicate that the sentencing judge must have intended to act under 18 U.S.C. § 3563 (b) simply is not well founded. The sentencing judge was well aware of both the traditional compensatory and the victimless, or nontraditional, meaning of “restitution” — and clearly did not believe he was invoking § 3563(b). 3

*172 II

Daddato dealt with precisely the same question as is presented here:

Pursuant to his plea of guilty, James Dad-dato was convicted of ... selling hallucinogenic mushrooms and sentenced to 16 months in prison to be followed by three years of supervised release. His appeal challenges one of the conditions of supervised release: that he repay the $3,650 that he received from law enforcement officers in payment for mushrooms that they bought from him in order to obtain conclusive evidence of his guilt. The statute governing supervised release empowers the sentencing judge to impose as a condition of such release any condition authorized as discretionary condition of probation plus “any other condition it considers to be appropriate.” 18 U.S.C. § 3583 (d). Obviously the language is broad enough to encompass the requirement that the defendant make good the government’s “buy money”; nor could the imposition of such a requirement be thought an abuse of discretion — it merely asks the defendant (if he is financially able, once his release from prison enable him to obtain a paying job) to make good the expense to which he put the government by violating the laws that prohibit drug trafficking in a selected subset of mind-altering drugs.

996 F.2d at 903 .

The opinion then rejects the argument that repayment of “buy money” is beyond the sentencing judge’s power because “any other condition” must be comparable, by virtue of “ejusdem generis,” to the 20 specific conditions that precede it. Daddato explains that the return of “buy money” is comparable to, albeit not the same as, traditional “restitution.”

An order to repay the government’s “buy money” is similar in requiring the defendant to convey something of value to the community, rather than to his victims (if any there be) specifically. State v. Connelly, 143 Wis.2d 500 , 421 N.W.2d 859 (App. 1988).

* * * * * *

On the one hand, it seems unrealistic to describe the defendant as having wrongfully taken money eagerly tendered to him so that he could incriminate himself. On the other hand, it was money that he obtained through criminal activity and therefore had no right to keep. No matter. The list in section 3563(b) is not limited to restitution, or even to conditions that resemble restitution (which this, at the very least, does); it is enough that the order to repay the buy money is of the same general kind as the items in the list, and it is.

996 F.2d at 905 (bold in original).

The year after Daddato , a panel of the Sixth Circuit Court of Appeals granted § 2255 relief where a supervised release condition to repay “buy money” was imposed as to four drug charges, although three of the charges had been dismissed in exchange for the defendant’s guilty plea to the fourth. Gall v. United States, 21 F.3d 107 (6th Cir.1994). The decision, after confining “restitution” as a condition of supervised release to crimes “charged and convicted,” described the second part of its holding: “the government is not a victim to which a district court may order a defendant to pay restitution for the purpose of recovering drug ‘buy money’ and other costs of investigation voluntarily paid out.” 21 F.3d at 108 (bold in original). In much the same way as our majority, which cites Gall for this point, it ignores Daddato *173 and equates repayment of “buy money” with traditional “restitution”; it then summarily conflates § 3563(b)(3) with the VWPA because of the incorporation by reference of § 3563(b)(3) — “restitution to the victim.”

The concurrence in Gall , however, focuses on Daddato and criticizes it for having resorted to the “any other condition” provision of § 3583(d). Interestingly, the rationale is not that the restoration of “buy money” must be classified or construed to be the same as victim-related restitution.

Under § 3583(d)(2) ... a sentencing judge can only order additional “appropriate” conditions of supervised release that “involve no greater deprivation of liberty than is reasonably necessary for the purposes of: (1) affording adequate deterrence to criminal conduct; (2) protecting the public from further crimes of the defendant; and (3) providing the defendant with ... training ... care ... or treatment....

* * * * * *

Ordering a criminal defendant, as a condition of supervised release, to repay the government’s buy money or other investigative costs deprives the defendant of liberty during the period of supervised release, yet does not advance any of these three purposes.... Indeed, such a deprivation of liberty ... could actually encourage the defendant to commit further crimes as a means of repaying such an onerous financial burden.

21 F.3d at 112-13 .

In the instant sentencing, the judge quoted the above portion of the concurrence and stated:

I disagree with Judge Jones’ reasoning. This is because I find that ordering the defendant, pursuant to § 3583(d) to repay the FBI as a condition of his supervised release, even though restitution of this money to the FBI is not authorized under the VWPA, involves no greater deprivation of liberty than is reasonably necessary for the purposes of affording adequate deterrence to criminal conduct.

Appendix at 50.

In my view, the sentencing judge correctly overruled defendant’s “buy money” objection that was based on the Gall concurrence. The repayment of “buy money” imposes no greater deprivation of liberty and is no less a deterrent of criminal conduct than traditional restitution and other specifically authorized conditions of supervised release.

Ill

The broader question presented by this ease is the nature and extent of the sentencing options that are statutorily authorized to achieve the objectives of sentencing. Under 18 U.S.C. § 3553 , the sentencing judge is directed to consider, in part -

(1) the nature and circumstances of the offense an d characteristics of the defendant;

(2) the need for the sentence imposed -

(A) to reflect the seriousness of the offense, to promote respect for the law, and to provide just punishment for the offense;

Given these purposes, it would seem to be beyond dispute that a person who knowingly sells stolen merchandise should not be permitted to profit from the sale. The provision of the supervised release statute that authorizes “any other condition [the court] considers to be appropriate,” is in addition to — and not synonymous with or subordinate to — the condition authorizing victim-related restitution. The costs of law enforcement are paid from taxes, and criminal defendants are not required to reimburse the government for their day in court. The taxpayer, however, should not have to bear the cost of “buy money.” The difference is that the money involved has gone into the defendant’s pocket and to the extent practicable should be recovered. This is a self-evident corollary of “respect for the law” and “just punishment.”

The majority’s decision today puts an incongruous and unnecessary limitation on the power of the sentencing judge to effectuate the legislatively mandated goals of sentencing.

. 18 U.S.C. §§ 3663-3664 . See United States v. Gibbens, 25 F.3d 28, 32 (1st Cir.1994) ("[T]he government is not a ‘victim’ for purposes of the VWPA [and may not be awarded restitution] to the extent that it incurs costs in the clandestine provocation of a crime that, if carried to fruition under ordinary circumstances, would not directly harm the government.”); accord United States v. Meacham, 27 F.3d 214, 218 (6th Cir.1994); United States v. Salcedo-Lopez, 907 F.2d 97, 98 (9th Cir.1990).

. The VWPA amendment of 1996, 18 U.S.C. § 3663 (c)(1), includes restitution of “community harm” in drug cases where there is no “identifiable victim.”

. After the government's Petition for Panel Rehearing was granted, the majority modified its opinion to say that the sentencing judge "did not indicate what portion of 18 U.S.C. § 3583 (d) it was referring to .. — the "discretionary conditions of probation” prong or the "any other condition” catch-all prong. Majority at note 13. This, in my view, mischaracterizes the clear record. The sentencing judge read into the record a substantial excerpt of Daddato including the citation of the “any other condition” catch-all prong of § 3583(d) as the statutory basis for its holding. Appendix at 48. He also stated that the government relied on Daddato and that Daddato "relied on the catch-all phrase of the supervised release statute.” Id. at 47. His ruling was that "the government’s request is granted and defendant will be ordered to repay the FBI the amount of” the "buy money.” Id. at 50. In so ruling, he did not refer to "restitution,” id., albeit he did elsewhere.

Moreover, the parties in their argument to us had no doubt that the sentencing judge intended to invoke the "any other condition" clause. As set forth in appellant's brief, "the United States ... relied upon the 'catchall' provision of 18 U.S.C. Sec. 3583 (d) and United States v. Daddato. ...” Appellant's brief at 8. Appellant did not resort to the majority's "discretionary condition” distinction — but instead specifically challenged the sentencing judge's utilization of the "catch *172 all” prong. The very ground that the majority regards as not before us was argued by both sides as the basis for the sentencing judge’s decision.

On remand, the availability of the "catch-all” provision has at this point not been ruled on, and it is unclear whether the sentencing judge may now order repayment of the "buy money” so long as he explicitly states that he is using the "catch-all” provision and does not mention the word "restitution.” At a minimum, I would have remanded to permit the sentencing judge to re-clarify his intent on this subject in view of the majority's concerns.

Given the majority’s modification of the language in its original decision, Part III of my dissent may have little remaining significance. Nevertheless, I have not removed Part III because it emphasizes the need of the sentencing judge to be able to order the return of "buy money” as a condition of supervised release under the "any other appropriate condition” provision of § 3583(d).