Opposition Brief — Shailendra Bhawnani, et al., Petitioners v. United States District Court for the Eastern District of New York, et al.

No. 18-29

In the Supreme Court of the United States

SHAILENDRA BHAWNANI, ET AL., PETITIONERS

v.

UNITED STATES DISTRICT COURT FOR THE EASTERN

DISTRICT OF NEW YORK, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

BRIEF FOR THE FEDERAL RESPONDENT IN OPPOSITION

NOEL J. FRANCISCO

Solicitor General

Counsel of Record

BRIAN A. BENCZKOWSKI

Assistant Attorney General

WILLIAM A. GLASER

Attorney

Department of Justice

Washington, D.C. 20530-0001

SupremeCtBriefs@usdoj.gov

(202) 514-2217

QUESTION PRESENTED

Whether the district court correctly determined that

petitioners were not victims entitled to restitution under the Mandatory Victims Restitution Act of 1996,

18 U.S.C. 3663A.

(I)

TABLE OF CONTENTS

Page

Opinions below .............................................................................. 1

Jurisdiction .................................................................................... 1

Statement ...................................................................................... 1

Argument....................................................................................... 7

Conclusion ................................................................................... 16

TABLE OF AUTHORITIES

Cases:

Hughey v. United States, 495 U.S. 411 (1990) ...................... 8

Local # 46 Metallic Lathers Union & Reinforcing

Iron Workers, In re, 568 F.3d 81 (2d Cir. 2009),

cert. denied, 559 U.S. 938 (2010) ................................. 10, 14

United States v. Acosta, 303 F.3d 78 (1st Cir. 2002) .......... 12

United States v. Alisuretove, 788 F.3d 1247

(10th Cir.), cert. denied, 136 S. Ct. 370 (2015) ........... 13, 14

United States v. Archer, 671 F.3d 149 (2d Cir. 2011) .... 6, 10

United States v. Batson, 608 F.3d 630 (9th Cir. 2010) ... 9, 12

United States v. Bevon, 602 Fed. Appx. 147

(5th Cir. 2015) ...................................................................... 13

United States v. Broughton-Jones, 71 F.3d 1143

(4th Cir. 1995) ...................................................................... 12

United States v. Chalupnik, 514 F.3d 748

(8th Cir. 2008) ...................................................................... 12

United States v. Dickerson, 370 F.3d 1330

(11th Cir.), cert. denied, 543 U.S. 937 (2004) ................... 13

United States v. Fallon, 470 F.3d 542 (3d Cir. 2006) ......... 15

United States v. George, 403 F.3d 470 (7th Cir.),

cert. denied, 546 U.S. 1008 (2005) ................................. 9, 12

United States v. Hughey, 147 F.3d 423 (5th Cir.),

cert. denied, 525 U.S. 1030 (1998) ................................. 9, 12

United States v. Jones, 641 F.3d 706 (6th Cir. 2011) ........... 9

(III)

IV

Cases—Continued:

Page

United States v. Oladimeji, 463 F.3d 152

(2d Cir. 2006) ....................................................................... 14

United States v. Pepper, 51 F.3d 469 (5th Cir. 1995) ......... 13

United States v. Stouffer, 986 F.2d 916 (5th Cir.),

cert. denied, 510 U.S. 837 and 510 U.S. 919 (1993).......... 13

Wisniewski v. United States, 353 U.S. 901 (1957) ............. 14

Statutes:

Crime Control Act of 1990, Pub. L. No. 101-647,

§ 2509, 104 Stat. 4863............................................................ 8

Crime Victims’ Rights Act, Pub. L. No. 108-405,

Tit. I, 118 Stat. 2261 (18 U.S.C. 3771 (2006 &

Supp. III 2009)) ..................................................................... 2

18 U.S.C. 3771(a)(6) ........................................................... 3

18 U.S.C. 3771(d)(1) .......................................................... 3

18 U.S.C. 3771(d)(3) (2012 & Supp. V 2017) ................... 3

18 U.S.C. 3771(d)(3) (Supp. V 2017) ................................ 3

18 U.S.C. 3771(d)(4) .......................................................... 3

Mandatory Victims Restitution Act of 1996,

Pub. L. No. 104-132, Tit. II, § 205, 110 Stat.

1229-1232 (18 U.S.C. 3663A) ............................................ 2, 9

18 U.S.C. 3663(a)(1)(A) ..................................................... 8

18 U.S.C. 3663(a)(2) ..................................................... 9, 11

18 U.S.C. 3663A ................................................................. 2

18 U.S.C. 3663A(a)(1) ........................................................ 2

18 U.S.C. 3663A(a)(2) ............................................. passim

18 U.S.C. 3663A(c)(1) ........................................................ 2

18 U.S.C. 3663A(c)(3)(A)-(B) ............................................ 2

18 U.S.C. 3663A(c)(3)(B)................................................... 6

Victim and Witness Protection Act of 1982,

Pub. L. No. 97-291, § 5, 96 Stat. 1253-1255 ........................ 8

18 U.S.C. 1344 ................................................................ 1, 4, 11

V

Statutes—Continued:

Page

18 U.S.C. 1512(c)(1) ............................................................. 2, 4

26 U.S.C. 7206(1) ................................................................. 1, 4

In the Supreme Court of the United States

No. 18-29

SHAILENDRA BHAWNANI, ET AL., PETITIONERS

v.

UNITED STATES DISTRICT COURT FOR THE EASTERN

DISTRICT OF NEW YORK, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

BRIEF FOR THE FEDERAL RESPONDENT IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. 30a31a) is not published in the Federal Reporter but is

available at 2018 WL 2459564. The memorandum and

order of the district court (Pet. App. 1a-29a) is reported

at 284 F. Supp. 3d 262.

JURISDICTION

The judgment of the court of appeals was entered on

April 2, 2018. The petition for a writ of certiorari was

filed on July 2, 2018. The jurisdiction of this Court is

invoked under 28 U.S.C. 1254(1).

STATEMENT

Falgun Dharia was convicted pursuant to a guilty

plea on two counts of bank fraud, in violation of

18 U.S.C. 1344; one count of subscribing to a false income tax return, in violation of 26 U.S.C. 7206(1); and

(1)

2

one count of obstruction of justice, in violation of

18 U.S.C. 1512(c)(1). Pet. App. 5a, 32a-40a. Petitioners

sought restitution under the Mandatory Victims Restitution Act of 1996 (MVRA), 18 U.S.C. 3663A, asserting

that they should be classified as victims in Dharia’s

criminal case. The district court denied petitioners’ request. Pet. App. 27a. The court of appeals denied a

petition for a writ of mandamus. Id. at 30a-31a.

1. The MVRA governs restitution in most cases involving federal crimes with an identifiable victim. See

18 U.S.C. 3663A(c)(1). The statute provides that a sentencing court “shall order * * * that the defendant

make restitution to the victim of the offense.” 18 U.S.C.

3663A(a)(1). “[ V ]ictim” is defined as “a person directly

and proximately harmed as a result of the commission

of ” an offense covered by Section 3663A, “including, in

the case of an offense that involves as an element a

scheme, conspiracy, or pattern of criminal activity, any

person directly harmed by the defendant’s criminal conduct in the course of the scheme, conspiracy, or pattern.” 18 U.S.C. 3663A(a)(2).

The MVRA does not require restitution where the

district court finds either that “the number of identifiable victims is so large as to make restitution impracticable” or that “determining complex issues of fact related to the cause or amount of the victim’s losses would

complicate or prolong the sentencing process to a degree that the need to provide restitution to any victim

is outweighed by the burden on the sentencing process.”

18 U.S.C. 3663A(c)(3)(A)-(B).

Under the Crime Victims’ Rights Act (CVRA), Pub.

L. No. 108-405, Tit. I, 118 Stat. 2261 (18 U.S.C. 3771

(2006 & Supp. III 2009)), “crime victim[s]” have various

statutory rights, including “[t]he right to full and timely

3

restitution as provided in law.” 18 U.S.C. 3771(a)(6).

Although the crime victim is not a party to the criminal

prosecution, either the victim or the United States can

seek to enforce the victim’s CVRA rights by filing a motion in the district court. See 18 U.S.C. 3771(d)(1) and

(3). The district court is required to “take up and decide” the motion “forthwith.” 18 U.S.C. 3771(d)(3) (2012

& Supp. V 2017).

If the district court “denies the relief sought, the movant” (i.e., the victim or the government) “may petition

the court of appeals for a writ of mandamus.” 18 U.S.C.

3771(d)(3) (2012 & Supp. V 2017). The court of appeals

must generally “take up and decide” any mandamus petition within 72 hours after it is filed. Ibid. In deciding

the petition, the court of appeals “shall apply ordinary

standards of appellate review.” 18 U.S.C. 3771(d)(3)

(Supp. V. 2017). If the court of appeals denies mandamus relief, it must “clearly state []” “the reasons for the

denial * * * on the record in a written opinion.”

18 U.S.C. 3771(d)(3) (2012 & Supp. V. 2017) The government may also “assert as error the district court’s

denial of any crime victim’s right” through an “appeal”

in the underlying criminal case. 18 U.S.C. 3771(d)(4).

2. a. Dharia and his business partners engaged in

bank fraud from 2003 to 2010. Between 2003 and 2009,

they obtained Small Business Administration loans

from PNC Bank in order to develop several Houlihan’s

restaurant franchises, including one in Brooklyn, New

York. Pet. App. 6a-7a. The loan applications materially

misrepresented Dharia’s ownership interest in the franchises, allowing him to avoid certain reporting and personal guarantee requirements. Id. at 6a-8a. Dharia and

his partners used some of the loan proceeds for other

investments, and they eventually defaulted on the loans,

4

causing millions of dollars in losses to PNC Bank and

the Small Business Administration. Id. at 8a-9a.

In addition, between 2006 and 2010, Dharia and others obtained loans from Fidelity Bank of Florida to purchase approximately five hotels in need of renovation.

Pet. App. 6a, 9a. The loan applications that Dharia submitted minimized his ownership interest in the hotels,

allowing him to avoid providing personal guarantees.

Id. at 9a. Dharia and his business partners defaulted on

the loans, causing millions of dollars of losses to Fidelity

Bank of Florida. Ibid.

Dharia waived indictment and pleaded guilty to an

information charging two counts of bank fraud, in violation of 18 U.S.C. 1344, as well as one count of subscribing to a false income tax return, in violation of 26 U.S.C.

7206(1), and one count of obstruction of justice, in violation of 18 U.S.C. 1512(c)(1). Pet. App. 5a, 32a-40a. The

first bank-fraud count was based on the scheme to defraud PNC Bank in loan applications related to three

Houlihan’s restaurants. Id. at 34a-35a, 37a. The second

bank-fraud count was based on the scheme to defraud

Fidelity Bank of Florida in loan applications related to

five hotels. Id. at 35a-37a. As part of his plea agreement, Dharia agreed to pay restitution of more than $11

million to PNC Bank, the Small Business Administration, and Fidelity Bank of Florida. Id. at 4a, 6a.

On the day of Dharia’s sentencing, several individuals and entities (other than petitioners) appeared and

claimed they were entitled to restitution from Dharia

under the MVRA. Pet. App. 5a. The district court referred the restitution issue to a magistrate judge for

discovery. Ibid. While discovery was ongoing, petitioners sought to intervene, arguing that they were also

entitled to restitution under the MVRA because Dharia

5

had defrauded them through conduct involving a

hotel—a Holiday Inn in North Carolina—that was not

involved in either of the charged bank-fraud schemes.

Ibid.; Pet. C.A. App. 26-31. Petitioners had entered into

a contract with Dharia in 2006 to lease that Holiday Inn,

with an option to purchase the hotel. Pet. App. 46a-47a.

A company in which Dharia held an interest had acquired the hotel property in 2004 and had a franchise

agreement with Holiday Inn’s management company.

Id. at 45a-46a. Petitioners made a down payment to

Dharia and began operating the Holiday Inn and making monthly payments. Id. at 47a-49a. But Dharia

breached the lease agreement, including by failing to

convey ownership after petitioners exercised the option

to purchase, refinancing the hotel property so that petitioners could not maintain financing, and failing to

make payments on the property, resulting in its foreclosure. Id. at 47a-53a. Before seeking to intervene in

Dharia’s criminal case, petitioners brought a claim

against Dharia in arbitration, and prevailed on claims

for breach of contract, breach of the covenant of fair

dealing, and unjust enrichment, obtaining an award of

$775,000, plus interest. Id. at 6a, 54a.

b. The district court denied restitution to petitioners. Pet. App. 1a-27a. The court explained that “not

every person with a grievance against a defendant is entitled to criminal restitution.” Id. at 20a. Instead, the

court observed, “[o]nly those ‘directly and proximately

harmed as a result of the commission of an offense for

which restitution may be ordered’ may obtain restitution.” Ibid. (quoting 18 U.S.C. 3663A(a)(2)). The court

further explained that whether a person was directly

and proximately harmed by an offense depended on

6

“whether the fraudulent conduct that harmed a defendant was an ‘integral part of the single scheme the defendant devised.’ ” Id. at 21a (quoting United States v.

Archer, 671 F.3d 149, 172 (2d Cir. 2011)) (brackets omitted).

The district court noted that the crime of bank fraud

focuses on “a person’s conduct as it relates to a financial

institution” and that “[t]he conduct for which [Dharia]

was charged and pled guilty was that he misrepresented

ownership interests to obtain loans from banks and then

misappropriated the funds.” Pet. App. 21a. The court

explained that “[t]he harm claimed by” petitioners

“ ‘was not among’ ” the harms “ ‘that served as a basis for

either of the two bank fraud schemes, which involved

three Houlihan’s franchises and five other hotels.’ ” Id.

at 22a (citation omitted). While it recognized that “an

individual need not be named in a criminal indictment

in order to be entitled to restitution,” ibid., the court

determined that petitioners “were not harmed by this

bank fraud scheme, even if they were victims of some

bank fraud scheme,” id. at 23a. “Without a nexus to the

criminally charged schemes,” it wrote, “these claimants

have no entitlement to restitution.” Ibid.

The district court also concluded, in the alternative,

that petitioners should not be classified as victims entitled to restitution under the MVRA because the

MVRA’s “mandatory restitution scheme does not apply

when ‘determining complex issues of fact related to the

cause or amount of the victim’s losses would complicate

or prolong the sentencing process to a degree that the

need to provide restitution to any victim is outweighed

by the burden on the sentencing process.’ ” Pet. App.

23a (quoting 18 U.S.C. 3663A(c)(3)(B)). The court noted

the government’s representation that if the court were

7

to accept petitioners’ “position on restitution entitlement, it ‘would require the investigation of upwards of

fifty different properties, which would not be practicable for the government or the Court to accomplish without seriously impeding the sentencing process.’ ” Id. at

25a (citation omitted). The court wrote that it would

“not impose this burden on the government or the sentencing process.” Ibid.

c. The court of appeals denied petitioners’ petition

for a writ of mandamus directing the district court to

designate them as victims under the MVRA or to order

additional discovery. Pet. App. 30a-31a. The court

found that “[t]he district court did not abuse its discretion in determining the petitioners were not ‘victims’ of

Falgun Dharia’s bank frauds” or in “determining that

ordering restitution to ‘victims’ under the Petitioners’

definition of the term would unduly impede the sentencing process.” Id. at 31a.

ARGUMENT

Petitioners contend that this Court should grant review to decide “[w]hether the definition of ‘victim’ under

the [MVRA] includes all victims directly and proximately harmed by the same scheme, conspiracy, or pattern as the offense of conviction,” Pet. i, or only victims

“named in an indictment or information,” Pet. 17 (capitalization and emphasis omitted). See Pet. 3, 7, 21, 25.

The district court, however, properly declined to classify petitioners as victims under the MVRA because petitioners were not directly and proximately harmed by

the bank-fraud schemes underlying the defendant’s

convictions, and did not rely on the fact that petitioners

were not named in the charging instrument. The decisions below accordingly do not implicate any disagree-

8

ment over whether a victim must be named in a charging instrument to qualify for restitution under the

MVRA. Moreover, petitioners’ case would be an unsuitable vehicle for considering the definition of “victim”

under the MVRA because the district court’s denial of restitution also rests on independent alternative grounds.

The petition for a writ of certiorari should be denied.

1. a. Before the MVRA, federal restitution was primarily governed by the Victim and Witness Protection

Act of 1982 (VWPA), Pub. L. No. 97-291, § 5, 96 Stat.

1253-1255, which provides that a court “may order”

a defendant convicted of certain offenses to “make restitution to any victim of such offense,” 18 U.S.C.

3663(a)(1)(A). In Hughey v. United States, 495 U.S.

411, 413, 416-417 (1990), this Court held that “offense,”

as used in the VWPA, referred to the defendant’s “offense of conviction,” and that the VWPA therefore “authoriz[ed] an award of restitution only for the loss

caused by the specific conduct that is the basis of the

offense of conviction.” Hughey concluded that the

VWPA did not permit a court to order restitution for

conduct that formed the basis of counts that were dismissed as part of a plea agreement. Rather, the Court

concluded, “the loss caused by the conduct underlying

the offense of conviction establishes the outer limits of

a restitution order.” Id. at 420.

After Hughey, Congress amended the VWPA to

broaden the definition of “victim.” It provided that “in

the case of an offense that involves as an element a

scheme, conspiracy, or pattern of criminal activity,” the

term “victim” includes “any person directly harmed by

the defendant’s criminal conduct in the course of the

scheme, conspiracy, or pattern.” Crime Control Act of

1990, Pub. L. No. 101-647, § 2509, 104 Stat. 4863;

9

18 U.S.C. 3663(a)(2). When Congress created new restitution rights for crime victims by enacting the MVRA

in 1996, Congress similarly defined “victim” for purposes of both the VWPA and the MVRA as “a person

directly and proximately harmed as a result of the commission of an offense,” including, “in the case of an offense that involves as an element a scheme, conspiracy,

or pattern of criminal activity, any person directly

harmed by the defendant’s criminal conduct in the

course of the scheme, conspiracy, or pattern.” MVRA,

Pub. L. No. 104-132, Tit. II, § 205, 110 Stat. 1229-1232;

18 U.S.C. 3663(a)(2), 3663A(a)(2).

That expanded definition of “victim” “created an exception to Hughey” where the offense “includes as an

element a scheme, conspiracy or pattern of criminal activity,” United States v. Batson, 608 F.3d 630, 637 (9th

Cir. 2010). But the courts of appeals agree that Hughey

“continues to ‘require the court to exclude injuries

caused by offenses that are not part of the scheme of

which the defendant has been convicted.’ ” United

States v. Jones, 641 F.3d 706, 714 (6th Cir. 2011) (brackets and citation omitted). Accord United States v.

George, 403 F.3d 470, 474 (7th Cir.), cert. denied,

546 U.S. 1008 (2005); United States v. Hughey, 147 F.3d

423, 437 (5th Cir.), cert. denied, 525 U.S. 1030 (1998).

b. Petitioners contend that courts below “ignored

the plain text of the MVRA and adhered to the * * *

view that, in essence, Hughey still controls” “by finding

that petitioners were not victims simply because they

were not named in the Information.” Pet. 21-22; see

Pet. i, 25. Petitioners are incorrect.

The district court recognized that the MVRA’s definition of “victim” includes “any person directly harmed

by the defendant’s criminal conduct in the course of the

10

scheme, conspiracy, or pattern.” Pet. App. 10a (quoting

18 U.S.C. 3663A(a)(2)). It accordingly recognized that

“an individual need not be named in” the charging instrument “in order to be entitled to restitution” under

this definition. Id. at 22a. It further recognized that

determining whether a claimant is a victim requires the

court to “go[] beyond looking simply at the elements of

the crime, and instead focus[] on whether the fraudulent

conduct that harmed a [victim] was an ‘integral part of

the single scheme the defendant devised.’ ” Id. at 21a

(quoting United States v. Archer, 671 F.3d 149, 172 (2d

Cir. 2011)) (brackets omitted). The court then concluded that petitioners were not entitled to restitution

because they had not established they were directly and

proximately harmed by the relevant bank-fraud schemes.

Specifically, it explained that “[a] bank fraud scheme—

even if broadly viewed—must have some limit,” and

that petitioners had “made no showing that, if the defendant caused them losses, their losses were in any

way related to the charged offense conduct with respect

to specified banks.” Id. at 23a (emphasis added); see

ibid. (stating that petitioners “have no entitlement to

restitution” because there was no “nexus to the criminally charged schemes”).

The unpublished order of the court of appeals likewise did not suggest that the MVRA extends only to victims “named in the Information” or indictment, Pet. 21.

See Pet. App. 30a-31a. The order simply stated that

“[t]he district court did not abuse its discretion in determining that petitioners were not ‘victims’ of Falgun

Dharia’s bank frauds.” Id. at 31a (citing 18 U.S.C.

3663A(a)(2); In re Local # 46 Metallic Lathers Union

& Reinforcing Iron Workers, 568 F.3d 81, 87 (2d Cir.

2009) (per curiam), cert. denied, 559 U.S. 938 (2010)).

11

Petitioners principally argue (Pet. 22-25) that the

lower courts misapplied the MVRA because, in their

view, Dharia defrauded them through conduct that was

“indisputably” part of the bank-fraud scheme of which

Dharia was convicted. They rely (Pet. 22) on Dharia’s

having “defrauded petitioners during the same time

frame” as the bank-fraud schemes described in the information and they assert that Dharia also “used the

same methods and means” to defraud petitioners as he

did in the conduct described in the information. But the

district court’s finding that petitioners failed to show

“their losses were in any way related to the charged”

bank fraud, Pet. App. 23a, and the court of appeals’ decision upholding that determination on abuse-ofdiscretion review, id. at 31a, are fact-specific determinations that do not warrant review by this Court.

In any event, the district court’s determination was

not erroneous. The “scheme” that is an element of bank

fraud is a “scheme * * * to defraud a financial institution.” 18 U.S.C. 1344 (elements of bank fraud); see

18 U.S.C. 3663A(a)(2) (providing that “in the case of an

offense that involves as an element a scheme, conspiracy, or pattern of criminal activity, any person directly

harmed by the defendant’s conduct in the course of the

scheme, conspiracy, or pattern” qualifies as a “victim”)

(emphasis added). Assuming that private persons can

be victims of a bank-fraud scheme, petitioners cannot

show that they were “directly harmed” by the bankfraud schemes that gave rise to Dharia’s convictions.

18 U.S.C. 3663(a)(2). The hotel that petitioners leased

was not one of the five hotels involved in Dharia’s defrauding of Fidelity Bank, and the loss that petitioners

incurred resulted from Dharia’s breach of his contract

with them, not from his fraudulently obtaining funds

12

from a bank. See Pet. App. 54a; Pet. C.A. App. 79, 240.

There was accordingly no error, let alone an abuse of

discretion, in the district court’s determination that petitioner’s losses were not proximately and directly caused

by the relevant bank-fraud schemes.

2. Contrary to petitioners’ contention (Pet. 8-17),

the courts of appeals are not divided regarding the

MVRA’s definition of “victim.” Petitioners assert that

six circuits “have correctly * * * held that restitution

should be broadly available to victims harmed by the

defendant’s scheme,” Pet. 9, but that the Fifth and

Tenth Circuits “have clung to the abrogated, narrow

reading of the MVRA’s ‘victim’ definition employed by

the Court in Hughey” and that the Second and Third

Circuits “have evidenced intra-circuit confusion,” Pet.

13, 14. Petitioners are mistaken in claiming a conflict

over the extent to which Hughey remains good law.

Petitioners cite (Pet. 13) the Fifth Circuit’s statement that “[t]h[e] part of Hughey which restricted the

award of restitution to the limits of the offense * * *

still stands.” Hughey, 147 F.3d at 437. That statement,

which accompanied the court’s recognition that Congress had eliminated Hughey’s limitations in respect to

schemes, conspiracies, and patterns, see ibid., is consistent with the conclusion of the other circuits. Indeed,

the six circuits that petitioners view (Pet. 13) as having

interpreted the MVRA have all correctly recognized

that Hughey remains good law except to the extent that

it excluded harm resulting from a scheme, conspiracy,

or pattern that is an element of the offense of conviction.

See Batson, 608 F.3d at 637; George, 403 F.3d at 474;

United States v. Acosta, 303 F.3d 78, 87 (1st Cir. 2002);

United States v. Broughton-Jones, 71 F.3d 1143, 1147 n.1

(4th Cir. 1995); United States v. Chalupnik, 514 F.3d 748,

13

752 (8th Cir. 2008); United States v. Dickerson, 370 F.3d

1330, 1341 (11th Cir.), cert. denied, 543 U.S. 937 (2004).

Petitioners next cite the Fifth Circuit’s unpublished

decision in United States v. Bevon, 602 Fed. Appx. 147,

153-154 (2015) (per curiam), which reversed a restitution award to HSBC because the loss to HSBC resulted

from a “scheme to defraud” that was not part of the

“schemes underlying [the defendant’s] offenses of conviction.” Contrary to petitioner’s assertion (Pet. 9),

Bevon did not “ignore[] the clear congressional intent”

that restitution be imposed for losses incurred as part

of a scheme or conspiracy. Rather, Bevon found that

HSBC was not “directly harmed by the defendant’s

criminal conduct in the course of the scheme,” 18 U.S.C.

3663A(a)(2), “because the conduct relating to HSBC

was not a part of the schemes underlying Bevon’s offenses of conviction,” 602 Fed. Appx. at 154. In any

event, Bevon is an unpublished decision that does not

create binding circuit precedent. And, as petitioners

recognize (Pet. 14), the Fifth Circuit has concluded in

published decisions that restitution was proper for victims who were harmed in the course of a defendant’s

scheme. See ibid. (citing United States v. Pepper,

51 F.3d 469, 473 (1995); United States v. Stouffer,

986 F.2d 916, 928-929, cert. denied, 510 U.S. 837 and

510 U.S. 919 (1993)).

Petitioners next suggest (Pet. 14-15) that the Tenth

Circuit disregarded the language of the MVRA in

United States v. Alisuretove, 788 F.3d 1247, 1257, cert.

denied, 136 S. Ct. 370 (2015). Petitioners are mistaken.

Alisuretove reversed an order of restitution that was

based on losses to 12 financial institutions. The court

expressly acknowledged that the MVRA’s “language

does not limit the term ‘victim’ to any person or entity

14

specifically listed in the charging document.” Ibid. The

court reversed the district court’s restitution order concerning financial institutions not listed in the indictment

only because “neither the [presentence investigation report] nor the district court made any factual findings”

regarding whether the defendant, “in the course of carrying out the conspiracy * * * , directly harmed other

financial institutions in addition to the five that were the

specific targets of the conspiracy.” Id. at 1257-1258.

Accordingly, contrary to petitioners’ suggestion (Pet.

13-15), Alisuretove did not conclude that restitution was

limited to the institutions listed in the indictment. The

court simply required proof that the conspiracy “directly harmed” the institutions not named. See 18 U.S.C.

3663A(a)(2).

Finally, petitioners claim (Pet. 14) that “[t]he Second

and Third Circuit[s] have evidenced intra-circuit confusion about how to apply the MVRA’s definition of victim.” Intracircuit confusion would not warrant this

Court’s review. See Wisniewski v. United States,

353 U.S. 901, 902 (1957) (per curiam). But, in any event,

no intracircuit confusion exists. The Second Circuit in

In re Local # 46 acknowledged that the MVRA’s definition of “victim” “expands what * * * will give rise to

a compensable loss when a scheme, conspiracy or pattern is involved.” 568 F.3d at 87. But the court explained that “the reference point * * * remains the ‘offense’ of which the defendant has been convicted,” and

it declined to order restitution based on a scheme or

conspiracy other than the one to which the defendant

pleaded guilty. Ibid. And in United States v. Oladimeji, 463 F.3d 152, 158-159 (2d Cir. 2006), the court relied on the MVRA’s expansive definition of “victim” to

15

uphold a restitution award that included losses sustained as part of a scheme.

Nor is United States v. Fallon, 470 F.3d 542 (3d Cir.

2006) “contrary to” the Third Circuit’s other cases upholding restitution for the harm caused by the entire

scheme. Pet. 16. Fallon acknowledged “Congress’

clear intent to broaden the * * * authority to grant restitution for crimes involving a scheme or conspiracy.”

470 F.3d at 549 n.12. The court there vacated a restitution order because it found inadequate evidence that

certain losses were “directly related to [the defendant’s] fraud.” Id. at 549; see id. at 549 n.12 (stating that

the court was “unaware of any cases holding that the

definition of ‘victim’ for scheme-based crimes diminishes the requirement that losses be ‘directly’ caused by

the defendant’s actions”).

3. In any event, this case would be an unsuitable vehicle for reviewing the question presented. Resolution

of that question would not affect the outcome in this

case because the district court determined that petitioners were also not entitled to restitution based on an alternative ground—the application of the MVRA’s separate complexity prong. Pet. App. 23a-25a. The court of

appeals found no abuse of discretion in the complexity

determination, id. at 31a, and petitioners have not

sought review of that case-specific conclusion, see Pet. i.

Petitioners’ suggestion in a footnote (Pet. 24 n.5) that

the complexity determination is “intertwined with” the

lower courts’ “definition of victim” is misplaced. The

district court noted the government’s submission that

petitioners’ “position on restitution entitlement” would

require “ ‘investigation of upwards of fifty different

properties, which would not be practicable for the government or the Court to accomplish without seriously

16

impeding the sentencing process,’ ” and then determined that it was not appropriate to “impose this burden on the government or the sentencing process.” Pet.

App. 25a (citation omitted); see id. at 23a-25a, 31a. That

complexity-based determination was not “intertwined”

with the separate determination that petitioners did not

qualify as victims of the relevant bank-fraud schemes.

And while petitioners assert that the lower courts’ complexity analysis was “wrong” because they “had an arbitration award that detailed the amount lost and

owed,” Pet. 24 n.5, petitioners overlook that the district

court would have been required not simply to determine

the loss that Dharia caused petitioners overall but the

loss directly and proximately caused by the charged

bank-fraud schemes.

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

NOEL J. FRANCISCO

Solicitor General

BRIAN A. BENCZKOWSKI

Assistant Attorney General

WILLIAM A. GLASER

Attorney

OCTOBER 2018