Petition for Writ of Certiorari — Bach v. United States

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Supreme Court, US

FILED

99127 JUN 151999

No.

debhelper

IN THE

Supreme Court of the United States

LARRY D. BACH,

Petitioner,

UNITED STATES OF AMERICA,

Respondent.

On PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

PETITION FOR A WRIT OF CERTIORARI

HowarbD W. FELDMAN

Counsel of Record

STANLEY N. WASSER

FELDMAN, WASSER, DRAPER & BENSON

Attorneys for Petitioner

1307 South Seventh Street

Post Office Box 2418

Springfield, Illinois 62705

(217) 544-3403

153806 @ Counsel Press LLC

FORMERLY LUTZ APPELLATE SERVICES

(800) 274-3321 + (800) 359-6859

QUESTION PRESENTED

Does restitution ordered under the federal Mandatory

Victims Restitution Act as part of a criminal sentence

constitute punishment thereby rendering the retrospective

application of that Act a violation of the Ex Post Facto

Clause of the United States Constitution?

PARTIES TO THE PROCEEDING

The only parties to the proceedings before this Court

are those set forth in the caption of the case.

iil

TABLE OF CONTENTS

I he ee ae coe es

Partees 00 Ghee Proceeding .. ww. ccc cece cc cece

ES eee

ea bs celscd eeseee scene

SR eee

emtemnert OF FUTISGICTION ... 1. ccc cece ees

Constitutional and Statutory Provisions Involved

rr a a es eek cohen ceewees

A. The Indictment Underlying the Conviction

SS re

B. The Sentencing Proceedings Below .......

Reasons for Granting the Writ .................

EE A IE I

I. The Petition Should Be Granted Because The

Opinion Below Conflicts With The Decisions

Of A Majority Of Other Circuit Courts Of

RS hed. ha tke kW awe e set ese ses

Contents

Page

Il. The Petition Should Be Granted Because The

Opinion Below Disregards The Principles

Previously Established By This Court A

Regarding The Prohibitions Of The Ex Post

Facto Clause And Disregards This Court’s

Emphasis On The Primacy Of The Penal

Goals Of The State In The Imposition Of

PR. oswacd cache wes Caneel ies 17

A. Ex Post Facto Principles ............ 17

B. Fine-Restitution Distinction ......... 20

III. The Petition Should Be Granted Because The

Decision Below Conflicts With The Federal

Sentencing Guidelines Instructions About

When To Retrospectively Apply The

Mandatory Restitution Requirements. .....

ned ere ta ee oe eee aed ee 24

TABLE OF CITED AUTHORITIES

Page

Cases:

Austin v. United States, 509 U.S. 602 (1993) ..... 9

Beazell v. Ohio, 269 U.S. 167 ae ee Bar 18

Calder v. Bull, 3 Dall. 386 GNOME easuse cia elel. 10, 18

Collins y. Youngblood, 497 U.S. 37(1990) ...... 18

Department of Revenue y. Kurth Ranch, 511 U.S.

TD evcixtis ieee ace ne 9

Dobbert v. Florida, 432 U.S. 282 (1977) ........ 10, 19

Hudson vy. United States, 522 U.S. 93 4) 14,15

Kansas y. Hendricks, 521 U.S. 346 13 /) 8

Kelly v. Robinson, 479 U.S. 36 (1986) ....13, 20, 21, 22

Kennedy y. Mendoza-Martinez, 372 U.S. 144 (1963)

Phiten LOS TET Te SEN ee ye se 9

Lindsey y. Washington, 301 U.S. 397 (8997) ..... 17

Lynce v. Mathis, 519 U.S. 433 is Sali werent 7,20

Miller v. Florida, 482 U.S. 423 (1987) .......... i?, 23

Cited Authorities

Rutan v. Republican Party of Illinois, 868 F.2d 943

Go Bi, Pere eer errr pre ere

Securities and Exchange Commission v. Bach

Energy Corporation, et al., No. 92-1271-S

(U.S. Dist. Ct. W.D. La. Jan. 15, 1994) .......

United Mine Workers v. Bagwell, 512 U.S. 821

CPOE sx 620 eed wa ten bs be ae

United States v. Arutunoff, | F.3d 1112 (10th Cir.

SOND i kun cbewenneds 45550000

United States v. Bach, 172 F.3d 520 (7th Cir. 1999)

eeeeaeoeee Rese eneeve_ce @Feeeacue 2 ee@enp ae eoeeae ee O42 ee ee ee 6

United States v. Bach, No. 96-CR-30025 (C.D.IL.,

| BEA, | eer rt rere

United States v. Baggett, 125 F.3d 1319 (9th Cir.

NORTE é vac bd 0eb 084 0a cakes Dee

United States v. Bapack, 129 F.3d 1320 (D.C. Cir.

i) ee er

United States v. Black, 125 F.3d 454 (7th Cir.

cs Pe ere easement need ma SAEs

United States v. Bruchey, 801 F.2d 456 (4th Cir.

SOOTE 60 vn eessuvieseveseteanant eee

vil

Cited Authorities

Page

United States v. Corn, 836 F.2d 889 (Sth Cir.

ab wenndadeusiecoedan tree 13,14

United States v. Edwards, 162 F.3d 87 (3rd Cir.

i SR eA Ante EM. FER Mie, AE OB Edo (Ag ee

United States v. Fountain, 768 F.2d 790 (7th Cir.

WE + ties erae eee vue ee 2]

United States vy. Gilberg, 75 F.3d 15 (Ist Cir.

SE vase keueuand ccleeea oe ae 14

United States v. Grimes, 173 F.3d 634 (7th Cir.

eae oe pelett eee ee 1]

United States vy. Halper, 490 U.S. 435 (1988) 9

United States v. Hampshire, 95 F.3d 999 (10th Cir.

eee bse hole usta veue eis 13, 14

United States v. Hoover, 173 F.3d 564 (7th Cir. 1999)

SUMS Sees CHET EUSA a Weeek ee ce coe Clete 1]

United States v. Jewett, 978 F.2d 248 (6th Cir. 1992)

COE CERS OVER ETOSE Ue bbe O CCT icc es 14

United States v. Licausi, 167 F.3d 36 (1st Cir.

ES at ie ean cao e cee hE ee oak 14

United States v. Newman, 144 F.3d 53] (7th Cir.

WE led acieaet dD cae ee 5, 6, 7, 10, 11, 14, 15, 21

vill

;

Cited Authorities

Page

United States v. Nichols, 169 F.3d 1255 (10th Cir.

SE soda wa sue ak Aa eed ode e aie se kawn ee 12, 13

United States v. Rose, 153 F.3d 208 (Sth Cir

SN Koue Gaus ba eaws sea uae e eee cabs eda ie 13,14

United States v. Seacott, 13 F.3d 1380 (7th Cir

ST aca ae eee eva ieee este teteseede 23

United States v. Siegel, 153 F.3d 1256 (11th Cir. _

DN coe ofa beOV ER bee Zeenat Bis tm 82

United States v. Szarwark, 168 F.3d 993 (7th Cir.

SE SW yy 4 24 he os Wasa Ba eae ee ee eo 1]

United States v. Thompson, 113 F.3d 13 (2nd Cir

SEES sine Ck ens £5 eeu akan ee Pa, 5a. 82

United States v. Ursery, 518 U.S. 267 (1996) ..... 8,9

United States v. Wells, F.3d __, 1999 WL 236467

CR, CE oc ne doce ed snind ee hhaa ens 11

United States v. Williams, 128 F.3d 1239 (8th Cir.

SEE ciciiewnkiee bade e6e ees ean ie ee 11,12

Vance v. Terrazas, 444 U.S. 252 (1980) ......... 9

Weaver v. Graham, 450 U.S. 24 (1981) ...... 17, 18, 19

Woodby v. INS, 385 U.S. 276 (1966) ............ 9

Cited Authorities

Page

Statutes:

SE SI oe tes. 20

ETI BOI occ casks cdceeicl rea 13

Ie oie ok cehe Cieike bas en 4

UR CUO eee eee SS 2,10

TRit Fog oS ae 15

ORE, 6 ig vie vs ook vb ete cn 5

18 U.S.C. § 3663(a)(1(A) .......0. eee cece ee. 18

18 U.S.C. § 3663(a)(1)(B)ii) .. 20.0.0. eee. 18

Cele fe es 9,10

18 U.S.C. § 3663(a)(3) 2.0.0 e cece cece cece ceee. 9

CL ag oe oe ee.

18 U.S.C. § 3663A(a)(1) 20.0.0 eee eee cece eee. 12,15

18 U.S.C. § 3663A(c)(I)(A)ii) 20.0.0 eee eee. 10

aE ok Sc ee 10

18 U.S.C. § 3664(P( IMA) ......... 0c cece ces. 2, 10

i ei ess,

Pub. L. 104-132, Title II, §§ 201-211, Apr. 24, 1996,

I Se re ee es 10, 15, 22

Cited Authorities

Page

United States Constitution:

Article I, Section 9, clause3 ................2, 10,17

Other Authorities:

HR ES Ge hk Beer eer ere. 3, 5, 22, 23, 24

feo toe Fn BPPerperrr error er errs 23

United States Sentencing Commission, Guideline

Manual, Highlights at p. XVII (Nov. 1998) .... 23

S. Rep. 104-179, 1996 U.S.C.C.A.N. 924 ........ 15

H. Rep. 104-16, reported at 1995 WL 43586 (Feb.

Be COE oe ce ctaragenssenieceatoneee 15

H. Rep. No. 681(1), 101st Cong., 2d Sess., 177,

reprinted in 1990 U.S.C.C.A.N. 6472, 6583 .. 16

142 Cong. Rec. H3606 (daily ed., April 18,

ROE os 6.0006 eb bk vesenecenaner tee 15

141 Cong. Rec. $19278, $19280-81 (daily ed., Dec.

Mle COE (6s chdsbeskeee ee evetiea eee 15

Mandatory Victim Restitution: Hearing on S. 173

Before the Comm. on the Judiciary of the United

States Senate, 104th Cong. 805 (1995) (statements

of Senators Biden, Grassley, and Nickles) ..... 15

Sentencing Reform Act of 1984 (98 Stat. 2032) ... 6

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

§ 2509, 104 Stat. 4789, 4863(1990) .......... 15, 16

TABLE OF APPENDICES

Appendix A —- Opinion Of The United States Court

Of Appeals For The Seventh Circi ‘t Dated And

Decided April 16,1999 ....................

Appendix B — Order Of The United States District

Court For The Central District Of Illinois,

Springfield Division Dated And Filed September

Pp ME aah oe onde ede es ta coer ae ead

Appendix C Judgment Of The United States

District Court For The Central District Of Illinois

Dated And Filed September 17,1998 ......_..

Appendix D — Final Judgment Of The United States

District Court For The Western District Of

Louisiana, Shreveport Division In Securities And

Exchange Commission v. Bach Energy Corporation,

Et Al., Civil Action No. 92-1271-S Dated And Filed

By RO i a ote

Appendix E — Relevant Statute ...............

Page

24a

Petitioner, Larry D. Bach, respectfully prays that a writ

of certiorari be issued to review the judgment of the United

States Court of Appeals for the Seventh Circuit, entered in

the above-entitled proceeding on April 16, 1999.

OPINIONS BELOW

The opinion of the United States Court of Appeals for

the Seventh Circuit is reported at United States v. Bach,

172 F.3d 520 (7th Cir. 1999) and is reprinted in the

Appendix A hereto at 1a. The Order entered by the District

Court in United States v. Bach, No. 96-CR-30025 (C.D.IL.,

September 17, 1998), which Order resolved disputed

sentencing factors including the issue of restitution, is not

published and is reprinted in the Appendix B hereto at 8a.

The Judgment of Conviction entered by the District Court

in United States v. Bach, No. 96-CR-30025 (C.D.IL..,

September 17, 1998) is not published and is reprinted in

the Appendix C hereto at 24a.

STATEMENT OF JURISDICTION

The judgment of the United States Court of Appeals

for the Seventh Circuit (“Court of Appeals”) was entered

on April 16, 1999.

The jurisdiction of this Court is invoked under

28 U.S.C. § 1254(1).

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

Article One, Section 9, Clause 3 of the United States

Constitution provides:

No Bill of Attainder or ex post facto Law shall

be passed.

18 U.S.C. § 2248 (statutory note):

Effective date of amendments made by

§§ 201-210 of Act April 26, 1996. Act April

24, 1996, P.L. 104-132, Title Il, Subtitle A,

§ 211, 110 Stat. 1241, provides: “The

amendments made by this subtitle [for full

classification, consult USCS Tables volumes]

shall, to the extent constitutionally permissible,

be effective for sentencing proceedings in cases

in which the defendant is convicted on or after

the date of enactment of this Act [Apr. 24, 1996].

18 U.S.C. § 3663A (The Mandatory Victims Restitution

Act):

The text of this provision is reprinted in the Appendix

E hereto at 44a.

18 U.S.C. § 3664(f)(1)(A):

In each order of restitution, the court shall

order restitution to each victim in the full amount

of each victim’s losses as determined by the court

and without consideration of the economic

circumstances of the defendant.

ey ee

U.S.S.G. § SE1.1 (Nov. 1, 1997 ed):

(a) In the case of an identifiable victim, the court

shall —

(1) enter a restitution order for the full

amount of the Victims loss, if such

order is authorized under 18 U.S.C... .

§ 3663A; or

(g) Special Instruction

(1) this guideline applies only to a

defendant convicted of an offense

committed on or after November 1,

1997. Notwithstanding the provisions

of § 1B1.11 (Use of guidelines Manual

in Effect on Date of Sentencing), use

the former § S5E1.1 (set forth in

Appendix C, amendment 571) in lieu

of this guideline in any other case.

STATEMENT OF THE CASE

The fundamental constitutional issue presented by this

case is whether the Ex Post Facto Clause of the United States

Constitution prohibits the retrospective imposition of

restitution under the Mandatory Victim Restitution Act,

18 U.S.C. § 3663A, as part of a sentence imposed on a

criminal defendant. This issue arises in the context of a

federal criminal case in which the District Court sentenced

Petitioner Larry D. Bach following his plea of guilty to

violating the mail fraud statute, 18 U.S.C. § 1341. The sentence

required Petitioner to immediately pay mandatory restitution

of $674,325.84 pursuant to the Mandatory Victims Restitution

Act, I8 U.S.C. § 3003A. That Act was effective April 24, 1996,

over three years after the date of the offense for which Petitioner

was indicted but prior to Petitioner's 1997 guilty plea and 1998

sentencing.

The Seventh Circuit Court of Appeals affirmed the

sentence holding that the Act is not penal, and therefore not

subject to the Constitution’s Ex Post Facto Clause. The Seventh

Circuit, acknowledged, however, that its construction of the

Act was a minority view among the various circuit courts that

have considered this issue.

A. The Indictment Underlying the Conviction and

Sentence

On June 21, 1996, Petitioner Larry D. Bach was indicted

in the United States District Court for the Central District of

Illinois on two counts of mail fraud in violation of

IS U.S.C. § 1341. The Indictment alleged that “| b]eginning in

July 1988, or before, and continuing through December, 1992”

Petitioner devised a scheme to defraud and obtain money and

property from investors in certain oil and gas lease programs

in Louisiana which programs his company, Bach Energy

Corporation, owned and operated. The Indictment alleged that

the scheme to defraud was that Petitioner made certain “false

and fraudulent oral and written representations and pretenses,

and omissions of material facts, to induce investors to purchase

interests in the oil and gas programs.” The Indictment was

based upon two mailings. Count | charged that a mailing

occurred “[o]}n or about June 25, 1991”. Count 2 charged that

a mailing occurred “[o]n or about July 1, 1991." No other

mailings were alleged in the Indictment.

On November 3, 1997, after unsuccessfully attempting

to have the District Court dismiss the Indictment as being

barred by the statute of limitations for mail fraud', Petitioner

pled guilty to Count | of the Indictment.

B. The Sentencing Proceedings Below

In September 1998, the District Court conducted a

sentencing hearing. Prior to that sentencing hearing the

probation office issued a presentence report which set forth

the position that restitution should be ordered pursuant to

the Victim and Witness Protection Act of 1982, 18 U.S.C.

§ 3063(a) (“VWPA”). Under that 1982 Act, restitution is

not mandatory and the defendant's ability to pay is to be

considered. Three days before the sentencing hearing, and

in response to comments filed by the Government, the

probation office issued a supplement to the presentence

report stating that restitution in the amount of $676,088.22

was mandatory pursuant to the Mandatory Victims

Restitution Act of 1996, 18 U.S.C.§ 3663A (“MVRA”), and

that in accordance with Section 5E1.1 of the November 1,

1997 version of the United States Sentencing Guidelines,

restitution “shall be ordered.”

Following the sentencing hearing, the District Court

issued its Order addressing the sentencing factors and

overruling all of Petitioner’s objections to the presentence

report, as supplemented. With respect to the issue of

restitution, the District Court, relying on United States vy.

Newman, 144 F.3d 531 (7th C Cir. 1998), rejected Petitioner's

1. The Seventh C ircuit Cour ourt of Appeals affirmed the District

Court's denial of Petitioner's Motion to Dismiss the Indictment.

This Petition does not raise any issue related to that aspect of that

Opinion.

objection that applying the Mandatory Victims Restitution

Act violated the constitutional prohibition against ex post

facto laws. In Newman, the Seventh Circuit Court of

Appeals held that the Mandatory Victims Restitution Act

was not subject to the Constitution’s Ex Post Facto Clause

because the Act was not penal and thus could be applied

retrospectively. The District Court stated that it agreed with

the Government that the Mandatory Victim Restitution Act

was applicable to Petitioner’s case as he had pleaded guilty

after that Act became effective. Although the District Court

further found, over Petitioner’s objection, that he had the

ability to pay restitution, the District Court ruled that

Petitioner's ability to pay restitution was irrelevant under

the Mandatory Victim Restitution Act.

The District Court entered its Judgment of conviction

against Petitioner, sentencing Petitioner pursuant to the

Sentencing Reform Act of 1984 (98 Stat. 2032) to 30 months

imprisonment and a three year supervised release term. A

section of the District Court’s Judgment decree entitled

“CRIMINAL MONETARY PENALTIES” also imposed

upon Petitioner as part of the sentence a requirement that

Petitioner pay restitution of $674,325.84. The District Court

directed that restitution to be paid in full immediately. The

District Court’s sentence did not impose any fine against

Petitioner as the District Court determined that Petitioner

did not have an ability to pay any fine, which under the

applicable sentencing guidelines would have ranged up to

$60,000.

Petitioner appealed to the Seventh Circuit Court of

Appeals, which affirmed Petitioner’s conviction and

sentence. Petitioner asked the Court of Appeals to overrule

its decision in Newman and declare restitution imposed

under the Mandatory Victims Restitution Act to be punitive

in nature so as to subject the Act to the bar of retrospective

application by the Ex Post Facto Clause. The Court of Appeals,

however, found the Mandatory Victims Restitution Act to be

functionally a tort statute which allows a tort victim to recover

damages in a summary proceeding ancillary to a criminal

prosecution. The Court of Appeals characterized the Act as

simply a procedural innovation which should not trigger rights

under the Ex Post Facto Clause. The Court of Appeals thus

declined to overrule its Newman decision. Citing the decision

of the Third Circuit Court of Appeals in United States v.

Edwards, 162 F.3d 87, 89-90 (3rd Cir. 1998), the Seventh

Circuit acknowledged however, that its view of the non-penal

nature of the Mandatory Victims Restitution Act was a minority

view’.

REASONS FOR GRANTING THE WRIT

Introduction

This case involves a question which implicates a most

important constitutional protection that a criminal defendant

has to shield against the excesses which occur from time to

time in the administration of justice, namely the prohibition

on ex post facto laws. This constitutional prohibition against

retrospective application of new laws gives expression to what

this Court has termed a “presumption . . . deeply rooted in our

jurisprudence, and [one that] embodies a legal doctrine

centuries older than our Republic.” Lynce v. Mathis, 519 U.S.

433, 439 (1997).

2. The decision of the Seventh Circuit Court of Appeals did not

discuss Petitioner’s appeal of the District Court’s determination that

Petitioner had the ability to make restitution. Nor did the decision

discuss Petitioner’s argument on appeal that the District Court’s order

for immediate payment of the restitution was an abuse of discretion.

The result in this case — imposition of a mandatory

restitution sum without regard to the ability of Petitioner

Larry D. Bach to pay — was dictated solely by the fact that

Petitioner was tried in the jurisdiction of the Seventh Circuit

Court of Appeals. As stated by Judge Ripple in his dissent

to the Seventh Circuit Court of Appeals en banc opinion in

Rutan v. Republican Party of Illinois, 868 F.2d 943, 959

(7th Cir. 1989):

American citizens . . . ought not have their legal

protection depend on the accident of where

Congress decided to draw the administrative line

separating one circuit from another.

All of the Courts of Appeal have addressed this question,

either in the context of the MVRA or the VWPA. Only the

Seventh Circuit and the Tenth Circuit have found that

restitution imposed as part of a criminal sentence is not

punitive so as to trigger the constitutional protection of the

Ex Post Facto Clause. All other Courts of Appeal have

concluded that this constitutional protection bars

retrospective application of changes in the criminal

restitution laws when a criminal defendant is sentenced for

offenses committed before the changes were enacted. The

need for resolution of this conflict is self evident.

The question on which Petitioner seeks review also

implicates the criminal-civil procedural distinctions that are

embedded in our Constitution. This Court has dealt with a

long line of cases in which it has addressed the issue of the

application of criminal procedural protections to putatively

civil procedures or actions. See, e.g., Kansas v. Hendricks,

521 U.S. 346, 361-68 (1997) (civil commitment of violent

predator); United States v. Ursery, 518 U.S. 267, 288-92

(1996) (forfeitures); Austin v. United States, 509 U.S. 602,

622 (1993) (forfeitures); Department of Revenue v. Kurth

Ranch, 511 U.S. 767, 784 (1994) (taxes); United States v.

Halper, 490 U.S. 435, 452 (1988) (civil fines); United Mine

Workers v. Bagwell, 512 U.S. 821, 834-38 (1994) (civil

contempt sanctions); Kennedy v. Mendoza-Martinez, 372

U.S. 144, 165-66 (1963) (citizenship revocation); Vance v.

Terrazas, 444 U.S. 252, 266-67 (1980) (expatriation); and

Woodby v. INS, 385 U.S. 276, 285 (1966) (deportation).

This issue, however, has not been addressed in the

context of restitution imposed pursuant to statute as part of

the imposition of a criminal sentence. In the present era

which has given an increasingly prominent role to victims

rights in criminal cases, the need for resolution of the nature

of restitution in the context of criminal sentencing,

particularly in view of the existing conflicts among the

Courts of Appeal, is imperative at this time.

THE PETITION SHOULD BE GRANTED BECAUSE

THE OPINION BELOW CONFLICTS WITH THE

DECISIONS OF A MAJORITY OF OTHER CIRCUIT

COURTS OF APPEAL.

The decision of the Seventh Circuit Court of Appeals

in the case below conflicts with the decisions of a majority

of other Courts of Appeal that have addressed the issue of

whether the Ex Post Facto Clause bars the retrospective

application of changes to the federal restitution laws — the

1990 amendment to the Victim and Witness Protection Act,

18 U.S.C. §§ 3663(a)(2) and (3) (1994) (“VWPA”) and the

1996 enactment of the Mandatory Victim Restitution Act,

ainsaahdil

18 U.S.C. § 3663A and the amendments to 18 U.S.C.

§ 3664 (“MVRA”) — when sentencing defendants

convicted of crimes occurring prior to the effective dates

of those enactments. In the case of the MVRA, at issue in

the decision below, the new law made restitution a

mandatory part of a convicted defendant’s sentence for

certain enumerated offenses without consideration of a

defendant’s ability to pay. 18 U.S.C. § 3664(f)(1)(A).

In the case of the VWPA, the amendment expanded the class

of victims to whom a defendant could be ordered to make

restitution. 18 U.S.C. § 3663(a)(2).

Enacted in 1996 the MVRA made mandatory the

imposition of restitution to victims of certain enumerated

crimes, including mail fraud as in Petitioner’s case.

18 U.S.C. § 3663A(c)(1)(A)(ii); Pub. L. 104-132, Title II,

§§ 201-211, Apr. 24, 1996, 110 Stat. 1227. Congress

directed the courts to apply that Act “to the extent

constitutionally permissible. . . for sentencing proceedings

in cases in which the defendant is convicted on or after the

date of enactment of [the] Act.” 18 U.S.C. § 2248 (statutory

note). The constitutional concern arises under the Ex Post

Facto Clause prohibition which comes into play when a

statute applies to criminal conduct occurring before its

enactment and increases the punishment for that conduct

or alters the rules regarding receipt of evidence. U.S. Const.,

Art. I, Sec. 9, cl. 3; Dobbert v. Florida, 432 U.S. 282, 292

(1977); Calder v. Bull, 3 Dall. 386, 390 (1798). See Reason

II, infra.

One year prior to its decision in Petitioner’s case, the

Seventh Circuit Court of Appeals issued its decision in

United States v. Newman, 144 F.3d 531 (7th Cir. 1998),

holding that the MVRA was not penal and therefore not

iateieeeictiniaiiatiatsieiiliieiiininiaiiaiiieiiaiaaiial

subject to the Constitution’s Ex Post Facto Clause

prohibition against retrospective application. In Petitioner’s

case, the Court of Appeals refused to overrule its Newman

opinion’ and adopt the construction urged by Petitioner that

restitution imposed under the MVRA as part of the

imposition of a sentence on a criminal defendant is in fact

punitive so as to bar the retrospective application of the

Act. The Court of Appeals acknowledged, however, that

its view of the Act as not being penal so as to implicate the

Ex Post Facto Clause “is a minority view.”

Courts of Appeal for the Second, Third, Eighth, Ninth,

Eleventh and District of Columbia circuits have held that

mandatory restitution is sufficiently punitive so as to bar

the retrospective application of the MVRA under the Ex

Post Facto Clause in sentencing defendants for crimes

committed prior to its enactment. United States v.

Thompson, 113 F.3d 13, 14.1 (2d Cir. 1997); United States

v. Edwards, 162 F.3d 87, 89-92 (3rd Cir. 1998); United

States v. Williams, 128 F.3d 1239, 1241 (8th Cir. 1997);

United States v. Baggett, 125 F.3d 1319, 1322 (9th Cir.

1997); United States v. Siegel, 153 F.3d 1256, 1259 (11th

Cir. 1998); United States v. Bapack, 129 F.3d 1320, 1327

n.13 (D.C. Cir. 1998).

3. The Newman decision noted that no judge of the Seventh

Circuit requested to hear that case en banc. 144 F.3d at 533 nt.

4. Besides Petitioner’s case and the Newman case, the Seventh

Circuit has four other times held that the retrospective application

of the MVRA does not violate the Ex Post Facto Clause. United

States v. Grimes, 173 F.3d 634 (7th Cir. 1999); United States v.

Hoover, 173 F.3d 564 (7th Cir. 1999); United States v. Wells, __

F.3d _, 1999 WL 236467 (7th Cir. 1999); United States v.

Szarwark, 168 F.3d 993 (7th Cir. 1999).

In Thompson, the Second Circuit viewed the fact that the

MVRA generally made significant changes to the VWPA as

the reason to trigger the ex post facto bar.

113 F.3d at 15 n.1. In Williams, the Eighth Circuit viewed the

express language of Section 3663A(a)(1) of the MVRA that

restitution is to be ordered “in addition to . . . any other penalty

authorized by law”, as establishing that mandatory restitution

was a penalty. 128 F.3d at 1241. In Baggett, the Ninth Circuit

concluded that the elimination of consideration of a defendant’s

economic circumstances under the MVRA triggered the ex

post facto bar. 125 F.3d at 1322. In Siegel, the Eleventh Circuit

viewed the mandatory restitution as a penalty both from the

express language of the MVRA and its prior precedents

characterizing restitution under the VWPA as a criminal

penalty. 153 F.3d at 1259-60. In Bapack, the District of

Columbia Circuit, following Thompson, viewed the fact that

restitution was now made mandatory as triggering the ex post

facto bar. 129 F.3d at 1327 n.13. In Edwards, the Third Circuit

viewed the mandatory restitution under MVRA as a form of

punishment by reason of the MVRA statutory scheme and its

legislative history, the circuit’s prior precedents holding

restitution under the VWPA as a criminal penalty and the

circuit’s prior precedents finding criminal restitution imposed

as an integral part of the sentencing a form of criminal penalty.

162 F.3d at 91-92.

Only the Tenth Circuit has agreed with the view of the

Seventh Circuit. United States v. Nichols, 169 F.3d 1255, 1279-

80 (10th Cir. 1999).° The Tenth Circuit decision noted that its

5. Petition for Certiorari Filed (June 30, 1999) (No. 99-5063).

In Nichols, the District Court held that the Ex Post Facto Clause barred

retrospective application of the MVRA and the Government did not

take issue with the ruling. Nichols, 169 F.3d at 1279. The issue came

before the Tenth Circuit only by reason of the brief of the amici. Jd.

decision rejected the views of the other six circuits. Jd. at

1280 n.9. The Tenth Circuit decision was based on two of

its earlier decisions, Jd. at 1280 n.8, one decided under a

federal law involving the recovery of child support, United

States v. Hampshire, 95 F.3d 999 (10th Cir. 1996)

(18 U.S.C. § 288(c)), and one decided under the VWPA

where the only issue was whether the ordered restitution

exceeded the amount of the loss. United States v. Arutunoff,

1 F.3d 1112, 1121 (10th Cir. 1993).

The Courts of Appeal for the Fourth, Fifth and Sixth

Circuits have not considered the MVRA, but have construed

the VWPA as a penal statute that could not constitutionally

be retrospectively applied. In United States v. Bruchey, 801

F.2d 456 (4th Cir. 1987), the Fourth Circuit reviewed a

restitution order that compelied a defendant to sign a

promissory note to the victim which required payments

beyond the defendant’s probation term. There was no ex

post facto issue in that case. The Fourth Circuit decision

noted that criminal restitution “rests with one foot in the

world of criminal procedure and sentencing and the other

in civil procedure and remedy, though because it is part of

the sentencing process it is fundamentally ‘penal’ in nature”,

citing this Court’s decision in Kelly v. Robinson, 479 U.S.

36, 51-52 (1986).

The Fifth Circuit in United States v. Corn, 836 F.2d

889, 895-96 (Sth Cir. 1988) held that restitution ordered

under the VWPA for events occurring before the effective

date of that law was an ex post facto violation. Ten years

later the Fifth Circuit decided United States v. Rose, 153

F.3d 208 (Sth Cir. 1998), a case involving restitution ordered

under the VWPA for a conviction under the Child Support

Recovery Act, 18 U.S.C. § 288(c) (“CSRA”). The Fifth

Circuit held, as did the Tenth Circuit in Hampshire, supra,

and the Seventh Circuit in United States v. Black, 125 F.3d

454 (7th Cir. 1997) — relied upon by the Seventh Circuit

for its decision in Newman — that restitution under CSRA

did not raise ex post facto concerns. But the Fifth Circuit

noted that by reason of its decision in Corn, it differed from

the Tenth and Seventh Circuit as to their characterizations

of the VWPA as predominantly compensatory. Rose, 153

F.3d at 211 n.1.

The Sixth Circuit in United States v. Jev ett, 978 F.2d

248, 252-53 (6th Cir. 1992), held that retrospective

application of the 1990 amendment to the VWPA in

sentencing a defendant convicted of mail fraud offenses

committed prior to the amendment was prohibited as ex

post facto. The Sixth Circuit noted that the legislative

history of the amendment, although unnecessary to its

determination, supported its conclusion. /d. at 253 n.5.

The First Circuit has not addressed the issue of the

constitutionality of the retrospective application of the

MVRA, but has recently noted in passing that such

circumstances would contravene the Ex Post Facto Clause.

United States v. Licausi, 167 F.3d 36, 52 n.4 (1st Cir. 1999).

The First Circuit has, however, held that retrospective

application of the VWPA would violate the Ex Post Facto

Clause. United States v. Gilberg, 75 F.3d 15, 21 (1st Cir.

1996).

The Seventh Circuit decision in Newman — which

decision is at the root of the decision below — relied on

this Court’s decision in Hudson v. United States, 522 U.S.

93 (1997) to determine whether restitution can be considered

a civil or criminal punishment. Newman, 144 F.3d at 540.

The first consideration under Hudson is whether the

legislature evidenced 2 preference for a criminal or civil

penalty. /d. The Seventh Circuit was of the view that the

express language of Section 3663A(a)(1), that restitution

should be ordered in addition to “any other penalty

authorized by law” was ambiguous. /d. This view of the

MVRA conflicts with the decisions of the Third Circuit in

Edwards, supra, the Eighth Circuit in Thompson, supra,

and the Eleventh Circuit in Siegel, supra, all of which found

that this plain language in the MVRA clearly evidenced a

Congressional intent that mandatory restitution was

intended to be a punitive measure.

Moreover, the Seventh Circuit in Newman, although

purporting to apply the Hudson analysis, made no review

of the legislative history of the MVRA. In contrast, the Third

Circuit decision in Edwards, reciting in detail the legislative

history of the MVRA‘, found that this history makes clear

that Congress intended mandatory restitution “to be one

means by which the criminal justice system that is more

responsive to the needs of crime victims, as mandatory

restitution, forces an individual defendant to address the

harm his crime has caused to the individual victims of his

crime and to society.” 162 F.3d at 91. Similarly, the

legislative history of the 1990 amendment to the Victim

and Witness Protection Act of 1982, 18 U.S.C. §§ 3663-

3664, enacted by the Crime Control Act of 1990, Pub. L.

6. S. Rep. 104-179, 1996 U.S.C.C.A.N. 924, 925-27,

929-34; H. Rep. 104-16, reported at 1995 WL 43586 (Feb. 2, 1995),

at 5-6, 10, 12; 142 Cong. Rec. H3606 (daily ed., April 18, 1996);

141 Cong. Rec. $19278, $19280-81 (daily Ed., Dec. 22, 1995);

and Mandatory Victim Restitution: Hearing on S. 173 Before the

Comm. on the Judiciary of the United States Senate, 104th Cong.

805 (1995) (statements of Senators Biden, Grassley, and Nickles).

No. 101-647, § 2509, 104 Stat. 4789, 4863 (1990), which

expanded the class of victims who could benefit from

sentencing imposing restitution, reported the changes out

as enhanced criminal penalties and provisions that enhanced

existed criminal penalties. H. Rep. No. 681(1), 101st Cong.,

2d Sess., 177, reprinted in 1990 U.S.C.C.A.N. 6472, 6583.

The Seventh Circuit’s view of the nature of restitution

imposed in connection with the sentencing of a criminal

defendant conflicts sharply with all of the other Circuit

Courts of Appeal, save one. The implications of the Seventh

Circuit’s view has a significant effect upon the fundamental

constitutional protections afforded a criminal defendant by

the Ex Post Facto Clause. Had Petitioner been prosecuted

on the other side of the Mississippi River, or almost any

place else in this country, he would not have suffered the

imposition of mandatory restitution without due

consideration of his ability to pay. The immense size of the

immediate restitution payment that Petitioner has been

ordered to bear evidences the very kind of oppressive

consequences that the Ex Post Facto Clause was put in place

to guard against. Petitioner urges this Court to grant the

writ of certiorari in order to resolve this conflict between

the Courts of Appeal.

;

Il.

THE PETITION SHOULD BE GRANTED BECAUSE

THE OPINION BELOW DISREGARDS THE

PRINCIPLES PREVIOUSLY ESTABLISHED BY

THIS COURT REGARDING THE PROHIBITIONS

OF THE EX POST FACTO CLAUSE AND

DISREGARDS THIS COURT’S EMPHASIS ON THE

PRIMACY OF THE PENAL GOALS OF THE STATE

IN THE IMPOSITION OF RESTITUTION.

A. Ex Post Facto Principles

The Ex Post Facto Clause forbids the retrospective

application of criminal laws to a crime already committed

that results in a disadvantage to an offender affected by

that new law. U.S. Const., Art. I, § 9, cl. 3; Lindsey v.

Washington, 301 U.S. 397, 401 (1937); Miller v. Florida,

482 U.S. 423, 430 (1987); Weaver v. Graham, 450 U.S. 24,

29-30 (1981). Petitioner meets the initial considerations for

invoking an ex post facto challenge. First, he was sentenced

to pay mandatory restitution under the MVRA, a law enacted

years after he committed his offense. Second, he was

disadvantaged by the application of the mandatory

restitution law as his ability to pay restitution was deemed

irrelevant’. The issue therefore is whether this disadvantage

triggered the prohibition of the Ex Post Facto Clause.

7. The finding of Petitioner’s ability to pay restitution remains

unreviewed. See note 2, supra. However, whether Petitioner would

receive a different restitution sentence does not bar Petitioner from

raising an ex post facto challenge to his mandatory restitution

sentence. Lindsey v. Washington, 301 U.S. 397, 401-02 (1937).

The constitutional prohibition on ex post facto laws

applies only to penal statutes which disadvantage the

offender affected by them. Collins v. Youngblood, 497 U.S.

37, 41 (1990). This Court has long held that a law that makes

more burdensome the punishment for a crime after its

commission, or that alters the rules regarding receipt of

evidence, is prohibited as ex post facto. Beazell v. Ohio,

269 U.S. 167, 169-170 (1925); Calder v. Bull, 3 Dall. 386,

390 (1798) (opinion of Chase, J.). This Court has cautioned

that where a law has been characterized as simply a

procedural change, such a label does not immunize the law

from scrutiny under the Ex Post Facto Clause, as a law that

purports to effect a procedural change but which increases

the punishment for a crime, operates to deny an accused a

defense or which otherwise affects an accused in a harsh

and arbitrary manner is likewise prohibited as ex post facto.

Collins, 497 U.S. at 45-51; Weaver, 492 U.S. at 29, Beazell,

269 U.S. at 170.

The Seventh Circuit decision below trivialized the

substantial personal right that Petitioner had prior to the

enactment of the MVRA, namely the right to avoid a

mandatory imposition of restitution and to have evidence

of his ability to pay taken into consideration by a sentencing

court in deciding to impose an order of restitution as part

of a sentence. 18 U.S.C. §§ 3663(a)(1)(A) and (a)(1)(B)(ii).

The substantial nature of this right is self evident in the

present case. The District Court ordered Petitioner, then age

57, to immediately pay over $600,000 at the same time it

sentenced Petitioner to 30 months imprisonment. Petitioner,

his wife and his company had previously disgorged over

$400,000 in a 1992 Securities and Exchange Commission

action against him for securities fraud related to the same

investment programs, which action was the genesis for the

REE Nae ura Abela

x hls taht Ae

present criminal prosecution. See Securities and Exchange

Commission v. Bach Energy Corporation, et al., No. 92-

1271-S (U.S. Dist. Ct. W.D. La. Jan 14, 1994) (reprinted in

the Appendix D hereto at 37a).

Seeking to avoid the ex post facto principles enunciated

by this Court, the Seventh Circuit decision below

characterized the mandatory restitution provision of the

MVRA as simply a procedural innovation which does not

trigger the ex post facto prohibition. The MVRA does not

come within the “procedure” exception enunciated in

Dobbert v. Florida, 432 U.S. 282, 293 (1977), which excepts

from the ex post facto restrictions laws that simply control

remedies and modes of procedure while not affecting

matters of substance. The MVRA clearly affects matters of

substance. The MVRA has the force and effect of law. Its

provisions do not simply guide a court’s discretion but

mandate the imposition of restitution. Moreover, the

application of the MVRA directly and adversely affects the

sentence a convicted offender is to receive. The Court of

Appeals decision in the case below has thus significantly

mischaracterized the MVRA as simply a procedural

innovation and in doing so has ignored the principles

established by this Court for evaluating the application of

the constitutional ex post facto prohibitions.

The Seventh Circuit decision below also ignores

established principles enunciated by this Court by focusing

on the motivation of the MVRA to streamline the

cumbersome processes of the law to facilitate a tort victim’s

recovery of damages. Ever since this Court’s decision in

Weaver v. Graham, 450 U.S. 24, 33 (1981), the motivating

interest for enacting a law is irrelevant to any essential

inquiry as to whether the retrospective application of a law

is barred by the Ex Post Facto Clause. Rather, the inquiry

is solely whether, based upon an objective appraisal, the

new law is more onerous than the prior law. Lynce v. Mathis,

519 U.S. 433, 442-44 (1997).

The petition should be granted so that this Court can

present clear guidance to the federal courts as to the proper

application of this Court’s longstanding ex post facto

principles in the context of the imposition of criminal

restitution in connection with the sentencing of a criminal

defendant.

B. Fine-Restitution Distinction

The Seventh Circuit decision below reasoned that

restitution imposed as part of a criminal sentence was not

punitive because unlike the traditional criminal remedy of

a fine, which is paid to the government, restitution is paid

to the victim. This decision ignores this Court’s decision in

Kelly v. Robinson, 479 U.S. 36 (1986), in which this Court

refused to find a distinction between the penal nature of

criminal restitution and a criminal fine.

In Kelly, this Court held, in the context of a bankruptcy

case, that restitution obligations imposed on a criminal

defendant as a condition of the defendant’s sentence of

probation in state criminal proceedings were not subject to

discharge in Chapter 7 bankruptcy proceedings. This Court

ruled that such restitution was not dischargeable under

11 U.S.C. § 523(a)(7) which prohibits the dischargeability

in bankruptcy of “a fine, penalty, or forfeiture payable to

and for the benefit of a governmental unit, and is not

compensation for actual pecuniary loss.” Although

acknowledging, as did the Court of Appeals below, that

restitution, unlike traditional fines, is paid to the victim, this

Court stated that the decision to impose restitution generally

does not turn on the victim’s injury but on the penal goals of

the state and the defendant’s situation. 479 U.S. at 51-52. This

Court emphasized that it is the context in which the restitution

is imposed that is controlling, not simply that the restitution is

for the benefit of the victim. /d. This Court found further

support for its conclusion by reason of the fact that in the

context of the federal Victim and Witness Protection Act,

restitution had been deemed penal and not compensatory by

every federal court of appeals so as to preclude a criminal

defendant from having a right to a jury trial under the Seventh

Amendment. 479 US. at 53 n.14.

The Seventh Circuit decision below is in direct

contradiction to this Court’s reasoning in Kelly. The Court of

Appeals decision rejects totally the concept that restitution is

to be considered primarily as serving the state’s penal goals,

finding instead that the imposition of restitution was merely

some form of ancillary process connected to the criminal

prosecution. The Court of Appeals decision wrongfully

elevates the benefit to the victim to whom the restitution is

paid over the fact that the context in which the restitution is

imposed is an integral part of a criminal sentence. Both in the

decision below and in its prior Newman decision that it refused

to revisit, the Seventh Circuit also ignores its own prior

characterization that restitution was one of the earliest criminal

remedies: “the original conception of [criminal restitution] is

that of forcing the criminal to yield up to his victim the fruits

of the crime. . . . This form of criminal restitution is sanctioned

not only by history but also by its close relationship to the

retributive and deterrent purposes of criminal punishment.”

United States v. Fountain, 768 F.2d 790, 800 (7th Cir. 1985).

The petition should be granted so that this Court can

reaffirm the importance of its holding in Kelly that,

notwithstanding the compensatory nature of criminal

restitution and its benefit for crime victims, criminal

restitution is imposed as an integral part of the punishment

phase of a criminal proceeding so as to trigger the

application of constitutional protections such as the bar

against ex post facto laws.

THE PETITION SHOULD BE GRANTED BECAUSE

THE DECISION BELOW CONFLICTS WITH

THE FEDERAL SENTENCING GUIDELINES

INSTRUCTIONS ABOUT WHEN TO RETROSPEC-

TIVELY APPLY THE MANDATORY

RESTITUTION REQUIREMENTS.

The Seventh Circuit decision in the case below conflicts

directly with the federal Sentencing Guidelines which reflect

the considered judgment of the United States Sentencing

Commission that retrospective application of the mandatory

restitution provisions of the MVRA in sentencing a

defendant for a crime committed prior to the effective date

of the Guideline is barred by the Ex Post Facto Clause.

The Court of Appeals affirmed the District Court’s

September 1998 Judgment decree under which Petitioner

was ordered as part of his sentence to pay restitution

pursuant to U.S.S.G. § S5E1.1 (Nov. 1, 1997 ed.). That

Guideline had been amended November 1, 1997 to

incorporate the statutory changes brought about by Section

204(a) of the Antiterrorism and Effective Death Penalty Act

of 1996, Pub. L. No. 104-132, § 204(a), 110 Stat. 1227,

Ro em RR ATEN ASE she aD

which added 18 U.S.C. § 3663A, the MVRA. United States

Sentencing Commission, Guideline Manual, Highlights at

p. XVII (Nov. 1998).

As indicated by this Court’s decision in Miller v.

Florida, 482 U.S. 423 (1987), the ex post facto prohibition

applies to criminal sentencing guidelines. Accord United

States v. Seacott, 13 F.3d 1380, 1384-86 (7th Cir. 1994)

(applying Miller to the federal Sentencing Guidelines and

noting that all sister circuits have held that retrospective

application of a guideline amendment occurring after

commission of a crime and which works to a defendant’s

detriment violates the Ex Post Facto Clause).

Recognizing that the MVRA presented clear concerns

about it being retrospectively applied in violation of the Ex

Post Facto Clause, the 1997 Guideline amendment added

§ 5E1.1(g), a special instruction that made the amended

Guideline applicable only “to a defendant convicted of an

offense committed on or after November 1, 1997.” Petitioner

was such a defendant. The special instruction of the

amended Guideline provides that the former version of

§ 5E1.1 is to be used in any case where the offense for

which a defendant has been convicted occurred prior to

November 1, 1997. U.S.S.G. § 5E1.1(g). The former version

of § 5E1.1 implemented the discretionary restitution

provisions of the VWPA. U.S.S.G., Appendix C,

amendment 571 (Nov. 1, 1997 version).

The Court of Appeals decision ignores the

determination by the United States Sentencing Commission

that the mandatory restitution provisions of the MVRA are

not to be applied retrospectively to impose restitution when

sentencing a defendant whose offense was committed prior

to the date of the § 5E1.1 Guideline amendments

implementing the MVRA. The petition for certiorari should

be granted to resolve this significant conflict regarding the

constitutionality of the application of the restitution

Sentencing Guideline.

CONCLUSION

For these reasons, a writ of certiorari should be issued

to the United States Court of Appeals for the Seventh Circuit

to review the question presented by this Petition.

Respectfully submitted,

HOWARD W. FELDMAN

Counsel of Record

STANLEY N. WASSER

FELDMAN, WASSER, DRAPER & BENSON

Attorneys for Petitioner

1307 South Seventh Street

Post Office Box 2418

Springfield, Illinois 62705

(217) 544-3403

APPENDIX

— ; . 2 eee sit awo ge. cn Seale ty ay. oc rey

APPENDIX A — OPINION OF THE UNITED STATES

COURT OF APPEALS FOR THE SEVENTH CIRCUIT

DATED AND DECIDED APRIL 16, 1999

In the

United States Court of Appeals

for the Seventh Circuit

No. 98-3403

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

Larry D. Bacu,

Defendant-Appellant.

Appeal from the United States District Court

for the Central District of Illinois.

No. 96 CR 30025 — Richard Mills, Judge.

ARGUED JANUARY 22, 1999 — Decipep Aprit 16, 1999

Before Posner, Chief Judge, and FLAum and RuppLe,

Circuit Judges.

Posner, Chief Judge. The defendant pleaded guilty

(with a reservation of one issue, whether the statute of

limitations had run) to violating the federal mail fraud

statute, 18 U.S.C. § 1341, by operating a Ponzi scheme. He

Appendix A

was sentenced to 30 months in prison and ordered to pay

$674,325.84 in restitution to his victims.

Bach pretended to sell lucrative interests in oil and gas

leases — in one case promising the investor a guaranteed

monthly payment of $934 for every $25,000 invested. The

scheme ended in December 1992, but Bach was not indicted

until June 1996. The statute of limitations for mail fraud is

five years. 18 U.S.C. § 3282. Only two mailings alleged to

be in furtherance of the scheme to defraud, and therefore

punishable under the mail fraud statute, were made within

five years before the indictment was filed. Bach contends

that they were not in furtherance of the scheme to defraud.

One was a check for $934, purporting to represent a portion

of revenues from one of the oil and gas leases, that he mailed

to one of the victims of the scheme. Another was a report,

purportedly of income and expenses relating to another

lease, that Bach mailed to another victim, one who believed

that he had bought an interest in that lease. Enclosed along

with the report was a letter advising him that because of

the financial results shown in the report, the amount of

operating expenses deducted from his income had been

increased.

Both mailings were made in 1991, by which time, as

Bach points out, his victims were smelling a rat and

beginning to seek legal counsel. With the scheme

unraveling, he argues, the mailings could not have been in

furtherance of it. But when asked at argument what the

purpose of the mailings could have been, if not to lull the

recipients into thinking that maybe they would get the

promised returns from their investments after all, his lawyer

Appendix A

was at a loss. It is true that the mailings were not intended

to elicit additional money from the recipients — but was

that all there was to the scheme? The critical question is

what the scheme was. Schmuck v. United States, 489 U.S.

705, 711-12 (1989); United States v. Sampson, 371 U.S.

75, 80-81 (1962). If it was merely to obtain money from

gulled investors, then it ended when Bach received the

money, and once a scheme to defraud is over and done with

there is nothing more to further with additional mailings.

United States v. Maze, 414 U.S. 395, 403-05 (1974). But if,

as is altogether more plausible, the scheme was to obtain

and retain the payments that the investors made, then

mailings designed to make the investors think that the

defendant was legit, and thus to reduce the likelihood that

they would complain to the SEC or take other steps designed

to recoup their losses, were indeed in furtherance of the

scheme to defraud. “Avoidance of detection is often a

material part of a fraudulent scheme; for an illegal scheme

would hardly be undertaken were there to be no profit to

the plotters.” United States v. LeDonne, 21 F.3d 1418, 1430

(7th Cir. 1994); see also United States v. Lane, 474 U.S.

438, 451-53 (1986); United States v. Mankarious, 151 F.3d

694, 705 (7th Cir. 1998); United States v. Brocksmith, 991

F.2d 1363, 1367 (7th Cis. 1993); United States v. Perry,

152 F.3d 901, 904-05 (8th Cir. 1998). It is irrelevant that

the mailings failed in their purpose; a scheme to defraud

need not succeed to violate the mail fraud statute. Schmuck

v. United States, supra, 489 U.S. at 715; United States v.

Koen, 982 F.2d 1101, 1109 (7th Cir. 1992); United States

v. Frey, 42 F.3d 795, 799 (3d Cir. 1994). It is all a question

of what the scheme was.

Appendix A

It is true that language in some cases suggests a

disposition to deem any and every effort to cover up a

scheme to defraud as a part of the original scheme. See,

e.g., United States v. Brocksmith, supra, 991 F.2d at

1367-68; United States v. Georgalis, 631 F.2d 1199,

1204-05 (Sth Cir. 1980). But to take such language literally

would generate tension with the principle generally followed

in dealing with statute of limitations questions that fraud,

and efforts to conceal the fraud, are separate frauds, since

otherwise the statute of limitations in a fraud case would

not run as long as the defendant was endeavoring to conceal

the fraud — even if the plaintiff had already discovered it.

E.g., Wolin v. Smith Barney Inc., 83 F.3d 847, 851 (7th Cir.

1996); Cada v. Baxter Healthcare Corp., 920 F.2d 446,

450-51 (7th Cir. 1990). It would be odd if, years after the

government discovered and was investigating a mail fraud,

a mailing designed to impede the investigation would not

only be actionable as mail fraud and obstruction of justice

in its own right, but also allow the government to prosecute

the defendant for the original fraud no matter how long ago

it had occurred. There is a clear analytic difference between

a scheme to defraud investors and a scheme hatched and

executed later to prevent the government from discovering

and prosecuting the perpetrators after the original scheme

ended, that is, after all the targets of the scheme were fleeced

as planned. (Suppose that ten years after the fleecing, the

defrauders, realizing that their victims had discovered the

fraud and were complaining to prosecutors, fraudulently

promised to return the money if the victims agreed not to

cooperate with the government.) We need not decide

whether, to the extent the second scheme succeeds in

preventing the government from discovering the first within

Appendix A

the statutory period, the doctrine of fraudulent concealment,

a defense to the statute of limitations in civil cases, would

be applicable despite the fact that statutes of limitations

tend to be more strittly construed in criminal than in civil

cases. See, e.g., Toussie v. United States, 397 U.S. 112,

115 (1970); United States v. Meador, 138 F.3d 986, 994

(5th Cir. 1998). It is enough to note that in the present case

the scheme was both to defraud and to retain investors’

money and that the mailings charged in the indictment were

indeed in furtherance of that scheme.

Let us move on to the sentence. Bach invites us to

overrule United States v. Newman, 144 F.3d 531 (7th Cir.

1998), which holds that the Mandatory Victims Restitution

Act, 18 U.S.C. § 3663A, is not subject to the Constitution’s

ex post facto clause (and so it may be applied retroactively)

because it is not penal. See also United States v. Nichols,

No. 98-1231, 1999 WL 107021, at *24 (10th Cir. Feb. 26,

1999). We decline the invitation. Ours is a minority view,

United States v. Edwards, 162 F.3d 87, 89-90 (3d Cir. 1998)

(collecting cases), but we think it is correct. The Act requires

the court to identify the defendant’s victims and to order

restitution to them in the amount of their loss. In other

words, definite persons are to be compensated for definite

losses just as if the persons were successful tort plaintiffs.

See also 18 U.S.C. §§ 3664(h), (j). Crimes and torts

frequently overlap. In particular, most crimes that cause

definite losses to ascertainable victims are also torts: the

crime of theft is the tort of conversion; the crime of assault

is the tort of battery — and the crime of fraud is the tort of

fraud. Functionally, the Mandatory Victims Restitution Act

is a tort statute, though one that casts back to a much earlier

Appendix A

era of Anglo-American law, when criminal and tort

proceedings were not clearly distinguished. See, e.g., J. de

S. & Wife v. W. de S., Y.B. Liber Assisarum, 22 Edw. 3,

f. 99, pl. 60 (1348 or 1349); Carol S. Steiker, “Punishment

and Procedure: Punishment Theory and the Criminal-Civil

Procedural Divide,” 85 Geo. L.J. 775, 782-83 (1997); Gail

Heriot, “An Essay on the Civil Criminal Distinction With

Special Reference to Punitive Damages,” 7 J. Contemp. Leg.

Issues 43 (1996); David J. Seipp, “The Distinction Between

Crime and Tort in the Early Common Law,” 76 B.U. L.

Rev. 59, 81 (1996). The Act enables the tort victim to recover

his damages in a summary proceeding ancillary to a criminal

prosecution. Cf. Richard S. Frase, “Comparative Criminal

Justice as a Guide to American Law Reform: How Do the

French Do It, How Can We Find Out, and Why Should We

Care?,” 78 Calif. L. Rev. 542, 669-70 (1990). We do not

see why this procedural innovation, a welcome streamlining

of the cumbersome processes of our law, should trigger

rights under the ex post facto clause. It is a detail from a

defrauder’s standpoint whether he is ordered to make good

his victims’ losses in a tort suit or in the sentencing phase

of a criminal prosecution. It would be different if the order

of restitution required the defendant to pay the victims’

losses not to the victims but to the government for its own

use and benefit; then it would be a fine, cf. Jn re Towers,

162 F.3d 952, 955 (7th Cir. 1998); United States v.

Bongiorno, 106 F.3d 1027, 1036 (1st Cir. 1997), which is,

of course, traditionally a criminal remedy.

Bach also complains that the judge refused to allow

him to present at the sentencing hearing certain exhibits

which he had been led to understand would be allowed.

net ght lara be

Appendix A

The judge did act abruptly, but we cannot find the harm to

Bach. The exhibits were of computations of the amount of

loss that Bach had inflicted on his victims. The computations

were based on his argument that some of the losses were

not attributable to him, such as losses resulting from

solicitations to investors that were made by people working

with him, notably an Indiana veterinarian who fell so

completely for Bach’s line that he gave up his practice,

moved to New Orleans (the center of Bach’s operations),

and in all blessed innocence recruited additional investors

for Bach’s programs. Once Bach’s argument for excluding

the losses suffered by investors recruited by the vet, and

for other exclusions, was properly rejected, his exhibits

became irrelevant. And they were properly rejected.

Relevant conduct within the meaning of the sentencing

guidelines includes conduct by the defendant’s agents,

U.S.S.G. § 1B1-3(a)(1)(A); United States v. Levinson, 56

F.3d 780, 781-82 (7th Cir. 1995), and the vet was Bach’s

agent. The other relevant conduct to which Bach objects

was also properly taken into account in the sentencing; it

consisted of frauds that were mere variants of the offense

of conviction and conducted at the same time.

No other issues need be discussed. The judgment is

AFFIRMED.

A true Copy:

Teste:

Clerk of the United States Court

of Appeals for the Seventh Circuit

APPENDIX B — ORDER OF THE UNITED STATES

DISTRICT COURT FOR THE CENTRAL DISTRICT

OF ILLINOIS, SPRINGFIELD DIVISION DATED

AND FILED SEPTEMBER 17, 1998

IN THE UNITED STATES DISTRICT COURT

FOR THE CENTRAL DISTRICT OF ILLINOIS

SPRINGFIELD DIVISION

No. 96-30025

UNITED STATES OF AMERICA,

Plaintiff,

LARRY D. BACH,

Defendant.

ORDER

RICHARD MILLS, U.S. District Judge:

This cause is before the Court following Defendant’s

sentencing hearing.

On November 3, 1997, Defendant changed his plea from

not guilty to guilty of mail fraud in violation of 18 U.S.C.

§ 1341. Defendant and the Government have raised the

following unresolved objections to the Presentence

Investigation Report (“PSR”):

Appendix B

OBJECTIONS AND FINDINGS

A. GOVERNMENT

The Government objects to paragraphs 17, 27, and 28

arguing that Defendant is not entitled to a three point

reduction in his adjusted offense level for acceptance of

responsibility. The Government asserts that Defendant has

not truly accepted responsibility for his criminal conduct

in that he has raised numerous frivolous and unsupported

objections to the PSR in an attempt to minimize his sentence

and the amount of restitution which he owes to his victims.

In support of its objection, the Government has listed each

objection raised by Defendant to the PSR and, then, has

attempted to show the falsity and frivolity of the objection.

Because Defendant has not shown that he truly and clearly

has accepted responsibility for his criminal conduct, the

Government argues that he is not entitled to a three point

reduction for acceptance of responsibility.

However, Defendant reserved the right in his plea

agreement to challenge, at sentencing, the Probation

Office’s calculation regarding the amount of loss. In

addition, although Defendant acknowledged that restitution

would be appropriate, he also reserved the right to challenge

the specific amount of restitution owed. The Court believes

that Defendant accepted responsibility for his criminal

conduct when he entered a plea of guilty to Count I of the

indictment. The Court cannot say that Defendant’s

objections are so patently frivolous that they are inconsistent

with his acceptance of responsibility. U.S.S.G. § 3E1.1,

10a

Appendix B

n. l(a). Accordingly, the Government’s objections to

paragraphs 17, 27, and 28 are denied.

B. DEFENDANT

1. Amount of Loss

Defendant objects to paragraphs 10 through 13 which

calculate the amount of loss in the instant offense. First,

Defendant argues that several of the victims were not

personally solicited by him, and therefore, he should not

be held accountable for any loss sustained by those victims.

Second, Defendant asserts that he should not be held

accountable for any loss resulting from the BEC 89-3 (i.e.,

the Grand Cane) program because that program is different

from the other programs in that he did not guarantee any

monthly payments to the BEC 89-3 investors. Third,

Defendant argues that the PSR fails to set off from the

amount of loss, funds which the investors received or should

have received from other sources. Specifically, Defendant

complains that the PSR fails to adequately determine and

set off from the amount of loss: (1) the amount of revenues

received by investors after BEC no longer operated the wells

after the SEC’s intervention, (2) the amount of revenue

received by investors from Southern Oil & Gas which

purchased several of the BEC 88-1 leases, and (3) the

amount of revenue received by investors from the Michigan

City, Indiana, investors who became operators of record of

two of the BEC 88-1 leases in June 1991. Accordingly,

Defendant argues that the amount of loss enhancement

should be (at the most) “7” rather than “11.”

ne ee eee ee

lla

Appendix B

A sentencing court has great latitude in determining

the amount of loss from all of the information available.

United States v. Ross, 77 F.3d 1525, 1552 (7th Cir. 1996);

United States v. Austin, 54 F.3d 394, 402 (7th Cir. 1995).

Moreover, application note 8 to U.S.S.G. § 2F1.1 provides

that

the loss need not be determined with precision.

The court need only make a reasonable estimate

of the loss, given the available information. This

estimate, for example, may be based on the

approximated number of victims and an estimate

of the average loss to each victim, or on more

general factors, such as the nature and duration

of the fraud and the revenues generated by

similar operations. The offender’s gain from

committing the fraud is an alternative estimate

that ordinarily will underestimate the loss.

/d. Based upon the evidence presented to the Court at the

sentencing hearing, in the parties’ commentaries on

sentencing factors, and to the United States Probation

Office, the Court finds that the amount of loss as calculated

by the United States Probation Office and the Government

and as stated in the attached chart is accurate. '

1. Subsequent to Defendant’s sentencing hearing, a

mathematical error was discovered. At the time of the sentencing

hearing, the Court believed the amount of loss to be $852,293.29.

However, the correct amount of loss is actually $824,814.15.

Because this error does not affect Defendant’s adjusted offense

level, no further action is necessary.

12a

Appendix B

First, simply because Defendant did not solicit a

particular investor, that does not mean that that investor’s

loss should not be included as part of the amount of loss for

sentencing purposes. Defendant has admitted that he was

the organizer and/or leader of a scheme to defraud BEC

investors. Moreover, Defendant was the ultimate beneficiary

of the scheme to defraud, whether or not he was the one

who solicited the investors.

For example, Defendant solicited Dr. Donald Pohlman

to invest in BEC. Dr. Pohlman, in turn, solicited Ranier

Martens to invest in BEC.? However, Defendant received

the benefit of Martens’ investment, not Pohlman. In fact,

Defendant was the only person involved (other than perhaps

his wife) who knew that the scheme was fraudulent.

Otherwise, it is doubtful that anyone would have invested

any money in BEC or would have solicited others to do

so.’

Furthermore, the amount of loss should include the

investments of those investors whom Defendant did not

personally solicit because it constitutes relevant conduct.

U.S.S.G. § 1B1.3(a)(1)(A) provides that “all acts and

Omissions committed, aided, abetted, counseled,

commanded, induced, procured, or willfully caused by the

2. In Martens’ case, Defendant spoke directly with Martens

about his investment and BEC’s guaranteed monthly payment

program.

3. Dr. Pohiman cannot confirm whether he would have

invested in and/or solicited others to join BEC because he is

deceased.

13a

Appendix B

defendant” constitute relevant conduct. It is clear that

Defendant aided, abetted, and counseled others in their

solicitation of potential investors in BEC. Because he was

the sole beneficiary of the scheme to defraud, the losses

sustained by investors which Defendant did not personally

solicit are attributable to him for sentencing purposes.

United States v. O’Brien, 119 F.3d 523, 533-35 (7th Cir.

1997).

Second, the Court finds that BEC 89-3 or the Grand

Cane program is part of the same course of conduct or

common scheme or plan as the convicted offense, and

therefore, any loss attributable from the BEC 89-3 or Grand

Cane program should be included as relevant conduct. The

fact that Defendant may not have guaranteed the BEC 89-3

investors a monthly payment matters little. All of

Defendant’s activities involved investments in fraudulent

oil and gas leases in oil and gas fields in Louisiana.

Furthermore, as with the investors in BEC 88-1 and

88-6, investors in the Grand Cane program were promised

by Defendant investment recovery within a short period of

time.* For example, Defendant induced Dr. Robert Russell

of Springfield, Illinois, to invest $250,000.00 in the Grand

Cane program promising him that the program was a “can’t

miss” type of investment and informing him that there were

“no dry holes” on this lease.

4. Defendant promised investors in BEC 88-1 and 88-6

guaranteed monthly payments; Defendant promised investors in

BEC 89-3 investment recoupment within four months.

14a

Appendix B

In addition, in the Grand Cane program, Defendant

induced investors to invest in a gas field in which he had

previously sold the rights to the gas to a private company,

i.e., Tifton Aluminum Company. Pursuant to the agreement

between Defendant and Tifton Aluminum, the sale price

was to be paid in two installments. However, at the same

time in which Defendant solicited investors for the Grand

Cane fields, he had pledged the fields as collateral on a

personal loan with Ida Oil’ and Dr. Hal Brown of the

Cayman Islands. Defendant never informed investors about

this arrangement.°®

Application note 6 to U.S.S.G. § 2F1.1 provides that

“(t]he cumulative loss produced-by a common scheme or

course of conduct should be used in determining the offense

level, regardless of the number of counts of conviction.”

Id.; see United States v. Martinson, 37 F.3d 353, 356 (7th

Cir. 1994) (holding that the amount of loss related to a mail

fraud count that was dropped by the Government on the

eve of trial could be considered by the trial court in

calculating the adjusted offense level under the Sentencing

Guidelines). Albeit in a different context (i.e., calculating

drug amounts), the Seventh Circuit has opined that

[t]}wo or more offenses are part of a common

scheme or plan if they are connected by at least

5. Defendant’s brother, Dan Bach, is the president of Ida Oil.

6. In addition, Tifton Aluminum obtained a default judgment

against BEC in the amount of $3,000,000.00 when BEC failed to

satisfy the terms of their contract.

15a

Appendix B

one common factor, such as “common victims,

common accomplices, common purpose,

or similar modus operandi.” U.S.S.G.

§ 1B1.3(a)(2), Application Note 9. Offenses are

part of the same course of conduct if they are

“part of a single episode, spree, or ongoing series

of offenses.” /d. In assessing whether offenses

are part of the same course of conduct, courts

looked to “a strong relationship between the

uncharged conduct and the convicted offense,

focusing on whether the government has

demonstrated a significant ‘similarity, regularity,

and temporal proximity.’ ” Acosta, 85 F.3d at

281 (citations omitted).

United States v. Bacallao, 149 F.3d 717, 1998 WL 416879,

*2 (7th Cir. July 24, 1998). As described above, all of

Defendant’s schemes had common victims, a common

purpose, a similar modus operandi, and were similar in

regularity and temporal proximity. Defendant's individual

fraudulent oil and gas schemes were so similar that the Court

believes that each individual scheme (i.e., BEC 88-1, 88-6,

and 89-3) constitutes a larger overall fraudulent scheme.

Thus, the Court finds that the losses sustained by the

investors in BEC 89-3 should be included as part of the

amount of loss for sentencing purposes.’

7. Immediately prior to the sentencing hearing, Defendant

filed an objection to including Ranier Martens’ investment in

calculating the amount of loss. Defendant argued that Martens

invested in the BEC 88-5 program which was not part of the

underlying charge or conviction; therefore, it should not be included

(Cont'd)

l6a

Appendix B

Third, the Court does not believe that the PSR is

inaccurate for failing to set off from the amount of loss,

funds which the investors received or should have received

from other sources. Such a position would discourage

victims from seeking self-help remedies in order to mitigate

their losses. In addition, the amount of loss is determined

at the point at which the fraud is discovered, not at the time

of sentencing. United States v. Holiusa, 13 F.3d 1043,

1046-47 (7th Cir. 1994). Although the Seventh Circuit and

the Sentencing Guidelines have adopted a “net loss

approach” to calculating a criminal defendant’s adjusted

offense level, Defendant’s PSR has employed such an

approach. /d. As far as the Court is aware, Defendant has

received credit for all of the funds and investments repaid

to investors by Defendant, including the $452,318.42 ina

bank account frozen by the SEC and distributed to investors.

Moreover, the Probation Office’s and the Government’s

calculation of the amount of loss is based upon the SEC’s

reports and findings. The SEC based its reports and findings

upon figures supplied by Defendant. Accordingly,

Defendant cannot be heard to complain about the accuracy

of those figures now.

The Probation Office and the Government relied upon

the statements of the victims and on the SEC’s reports in

(Cont'd)

in the amount of loss calculation. However, the Court finds that

Martens’ investment should be included as part of the amount of

loss for sentencing purposes because it constitutes relevant conduct

for the same reasons that the Court found that the Grand Cane

investments constitute relevant conduct.

Da espa cen a sameeren nse |e ae

17a

Appendix B

calculating the amount of loss. U.S.S.G. § 2F 1.1, n. 8. Those

documents bear a sufficient indicia of reliability to support

their accuracy. United States v. Coonce, 961 F.2d 1268,

1278-80 (7th Cir. 1992). In sum, the Court believes that

the amount of loss calculation as stated in the attached chart

is a reasonable estimate based upon the best available

information and is supported by sufficient indicia of

reliability. Accordingly, Defendant’s objections to

paragraphs 10 through 13 are denied.*

2. Amount of Restitution

Defendant objects to paragraphs 13, 15, and 68 which

calculate the amount of restitution owed and to which

victims it is owed. First, Defendant argues that restitution

under the Victim and Witness Protection Act of 1982 can

only be awarded for victim losses resulting from the specific

conduct for which a criminal defendant is convicted. Thus,

Defendant asserts that restitution should be much more

limited in amount and in the alleged victims than established

in the PSR. Second, Defendant asserts that he does not have

the ability to pay the amount of restitution called for in the

PSR. Accordingly, Defendant asks the Court to impose a

lesser amount of restitution, if it determines to impose

restitution at all.

First, Defendant is correct that the United States

Supreme Court held in Hughey v. United States, 495 U.S.

8. Notably, although Defendant objected to the charts and

figures tendered to the Court by the Government and in the PSR,

he never offered any alternative figures and/or charts in support of

his objections.

18a

Appendix B

411, 413 (1990), that the Victim and Witness Protection

Act authorizes the sentencing court to impose restitution

only for losses caused by the conduct underlying the offense

of conviction. However, Defendant also acknowledges that

the Seventh Circuit has held that Hughey “supports

restitution for all victims of the scheme.” United States vy.

Bennett, 943 F.2d 738, 740 (7th Cir. 1991). This Court is,

of course, bound by the Seventh Circuit’s interpretation,

and thus, restitution is appropriate for all the victims of

Defendant’s fraudulent scheme.

Second, the Court rejects Defendant’s argument

regarding his ability to pay restitution for two reasons. First,

contrary to his assertions, Defendant has the ability to make

restitution. The Seventh Circuit has listed five factors which

a sentencing court should consider in determining whether

to order restitution:

(1) the amount of loss sustained by the victims

as a result of the offense; (2) the financial

resources of the defendant; (3) the financial

needs of the defendant and his or her dependents;

(4) the financial earning ability of the defendant

and his or her dependents; and (5) any other

factors the court deems appropriate. Loscalzo,

18 F.3d at 386; 18 U.S.C. § 3664(a). However,

although the sentencing court is required to

consider the defendant’s indigence, this one

factor is not solely determinative of whether

restitution is appropriate. United States v. Boyle,

10 F.3d 485, 492 (7th Cir. 1993).

19a

Appendix B

Ross, 77 F.3d at 1552; 18 U.S.C. § 3664(a). The Court

believes that these factors weigh in favor of ordering

restitution. The victims lost large amounts of money as a

result of Defendant’s scheme, some of which had been saved

for retirement funds. Defendant has the capacity, especially

given his current and past entrepreneurial enterprises, to

make restitution. Defendant has little debt and is currently

engaged in an apparently lucrative business venture. Finally,

Defendant has only one dependant, his wife, and her salary

is greater than his. Thus, an order of restitution is

appropriate.

Second, the Court agrees with the Government that the

Mandatory Victim Restitution Act, 18 U.S.C. § 3663(A),

is applicable in the case at bar because Defendant pleaded

guilty after the Act became effective. United States v.

Newman, 144 F.3d 531, 537-39 (7th Cir. 1998). Under the

Mandatory Victim Restitution Act, restitution is mandatory.

Therefore, Defendant’s ability to pay restitution is

irrelevant. Accordingly, Defendant’s objections to

paragraphs 13, 15, and 68 are denied.

Ergo, the Government’s and Defendant’s objections to

the Presentence Investigation Report are DENIED.

Therefore, Defendant has an adjusted offense level of 18

and a criminal history within category I, yielding a

sentencing range of 27 to 33 months of imprisonment.

Accordingly, Defendant is sentenced to 30 months of

imprisonment to be followed by a 3 year term of supervised

release upon being discharged from the Bureau of Prisons.

Defendant is ordered to pay a special assessment of $50.00

20a

Appendix B

immediately. Defendant is also ordered to immediately pay

restitution in the amount of $674,325.84 to the victims in

the instant offense as reflected in the chart attached to this

Order. No fine is ordered.

ENTER: 17 Sept., 1998

FOR THE COURT:

s/ Richard Mills

RICHARD MILLS

UNITED STATES DISTRICT JUDGE

;

“

‘

2la

Appendix B 1

LOSS RESTITUTION

PRO- AMOUNT AMOUNT AMOUNT QUEST SOUTHERN

INVESTOR GRAM INVESTED PAID OF LOSS SCARBROUGH ENERGY OIL & GAS RESTITUTION

Burrows, Robert 88-1 37,500.00 25,628.43 11,871.57 1,266.49 10,144.90 0.00 460.18

Clancy, Tom 88-1 250,000.00 200,127.10 49.872.90 5,337.35 0.00 0.00 44,535.55

Connett, James 88-6 25,000.00 3,245.19 21,754.81 2,352.05 980.14 0.00 18,422.62

Courage, Richard 88-1 25,000.00 19,970.25 5,029.75 542.78 4,486.97

Dabagia, Milt 88-1 25,000.00 22,463.27 2,536.73 271.39 0.00 0.00 2,265.34

Fiss Partnership* 88-1 50,000.00 37,646.74 12,353.26 0.00 0.00 0.00 0.00

Foster, Frank 88-1 100,000.00 84,641.05 15,358.95 1,628.34 13,730.61

Frumento, Anthony 88-1 25,000.00 22,463.77 2,536.23 271.00 2,265.23

Hallman, Victor 88-6 25,000.00 3,245.19 21,754.81 2,352.05 658.44 0.00 18,744.32

Hankins, Chuck 88-6 25,000.00 4,179.19 20,820.81 2,216.36 18,604.45

Haverstock, Lynn* 88-6 25,000.00 3,245.19 21,754.81 13,754.81 8,000.00

Hepburn, Gary 88-1 25,000.00 22,577.25 2,422.75 257.82

88-6 25,000.00 21,482.00 3,518.00 375.42 346.26 0.00 4,961.25

Hultgren, Steve 88-1 25,000.00 22,463.77 2,536.23 271.00 2,265.23

Johnson, Bernice 88-1 100,000.00 81,193.49 18,806.51 1,990.20 16,816.31

Kauer, Clarence (Estate) | 88-1 25,000.00 22,577.25 2,422.75 257.82 2,164.93

Keane, John (Estate) 88-1 100,000.00 91,568.16 8,431.84 904.63

88-6 200,000.00 250,884.66 0.00 117.60 11,310.86 0.00 0.00

22a

Appendix B

LOSS RESTITUTION

PRO. AMOUNT AMOUNT AMOUNT QUEST SOUTHERN

INVESTOR GRAM INVESTED PAID OF LOSS SCARBROUGH ENERGY OIL & GAS RESTITUTION

Krocek, Steve 88-6 25,000.00 3,254.46 21,745.54 |} 2,306.82 19,438.72

Lemihan, Greg 88-6 12,500.00 6,380.51 6,119.49 655.86 5,463.63

Liddell, Charles 88-6 37,500.00 4,906.37 32,593.63 3,509.99 29,083.64

Martens, Ranier 88-1 25,000.00 21,094.85 3,905.15 416.13

88-6 25,000.00 2,459.87 22,540.13 2,424.42 0.00 0.00 23,604.73

McCarthy, John 88-1 25,000.00 22,463.77 2,536.23 271.00 : 2,265.23

Mesterpey, John 88-1 12,500.00 11,157.26 1,342.74 | 144,28 1,198.46

Meyers, Ed 88-1 25,000.00 22,192.40 2,807.60 | 298.53 0.00 0.00 2,509.07

Meyer, Doug 88-6 12,500.00 6,071.00 6,429.00 | 692.04 0.00 0.00 5,736.96

Miller, David 88-6 25,000.00 3,357.80 21,642.20 | 2,329.43 19,312.77

Miller, Herbert 88-6 25,000.00 3,245.19 21,754.81 2,352.05 612.64 6,691.32 12,098.80

Morris, Tom 88-1 25,000.00 19,528.00 5,472.00 588.01 4,883.99

Morrison, Jack** 89-3 50,000.00 50,000.00 0.00 0.00 0.00 0.00 0.00

Perkins, Richard 88-1 200,000.00 164,164.69 35,835.31 3,858.27 0.00 0.00 31,977.04

Pizarek, Tom 88-1 150,000.00 135,451.40 14,548.60 1,565.02

88-6 37,500.00 4,826.95 32,673.05 3,514.51 42,142.12

Pohiman, Don (Estate) 88-1(2) 625,000.00 506,627.04 40,009.96 4,306.07

88-6 85,000.00 8,676.88 76,323.12 8,218.62 2,477.00 3,044.00 131,353.41

89-3 50,000.00 12,944.54 37,055.46 3,989.44

Polk, Dennis 88-1 25,000.00 22,313.97 2,686.03 284,96 41,112.17

88-6 50,000.00 6,620.98 43,379.02 4,667.92

23a

Appendix B

LOSS RESTITUTION

PRO. AMOUNT AMOUNT AMOUNT QUEST SOUTHERN

INVESTOR GRAM | _ INVESTED PAID OF LOSS || SCARBROUGH ENERGY OIL&GAS__| RESTITUTION

Radke, Lester 88-6 12,500.00 1,622.56 10,877.44 1,166.98 9,710.46

Rodkin, Don 88-6 25,000.00 3,245.19 | 21,754.81 | 2,352.05 4,548.29 14,854.47

Russell, Robert** 88-1 27,808.00 27,808.00 0.00 |

88-6 10,226.48 10,226.48 0.00 0.00 0.00

89-3 34,161.30 34,161.30 0.00

Schiller, John 88-1 25,000.00 22,463.77 2,536.23 271.00 2,265.23

Schneider, Rob 88-1 25,000.00 22,463.77 2,536.23 271.00 0.00 0.00 2,265.23

Shamblin, William 88-1 12,500.00 11,232.24 1,267.76 135.69 1,132.07

Shepperd, Gerald 88-1 50,000.00 46,242.17 3,757.83 402.56

88-6 50,000.00 6,992.00 | 43,008.00 4,631.74 165.00 0.00 41,566.53

Smith, Michael* 88-1 25,000.00 22,463.77 2,536.23 | 0.00 0.00 0.00 0.00

Snyder, Steven 88-6 25,000.00 4,179.19 | 20,820.81 2,216.36 0.00 0.00 18,604.45

Spiller, Tom 88-1 25,000.00 18,118.77 6,881.23 737.21

88-6 25,000.00 4,082.59 | 20,917.41 2,252.54 24,808.83

Weiss, Al 88-6 25,000.00 3,238.05 | 21,761.95 | 2,343.00 0.00 0.00 19,418.95

Woodfield, Ted 88-6 12,599.00 1,622.56 | 10,976.44 | 1,180.55 9,795.89

TOTAL $3,069,794.78 | $2,217,501.49 | $824,814.15 | $98,521.22 $31,243.53 $9,735.32 | $674,325.84

24a

APPENDIX C — JUDGMENT OF THE UNITED

STATES DISTRICT COURT FOR THE CENTRAL

DISTRICT OF ILLINOIS DATED AND

FILED SEPTEMBER 17, 1998

United States District Court

Central District of Illinois

Case Number: 3:96CR30025-001

UNITED STATES OF AMERICA

LARRY D: BACH

JUDGMENT IN A CRIMINAL CASE

(For Offenses Committed On or After November |, 1987)

Howard W. Feldman

Defendant’s Attorney

THE DEFENDANT:

{J pleaded guilty to count(s) |

+ + *

Title & Nature of Date Offense Count

Section Offense Concluded Number(s)

18 U.S.C. Mail Fraud 6/25/1991

§ 1341

25a

Appendix C

The defendant is sentenced as provided in pages 2

through 6 of this judgment. The sentence is imposed

pursuant to the Sentencing Reform Act of 1984.

* * *

{J Count(s) 2 is dismissed on the motion of the United

States.

IT IS FURTHER ORDERED that the defendant shall

notify the United States Attorney for this district within 30

days of any change of name, residence, or mailing address

until all fines, restitution, costs, and special assessments

imposed by this judgment are fully paid.

Defendant’s Soc. Sec. 09/14/1998

No.: 531-42-0066 Date of Imposition of

Judgment

Defendant’s Date of Birth:

10/01/1940

Defendant’s USM No.: s/ Richard Mills

10880-026 Signature of Judicial Officer

Defendant’s Residence RICHARD MILLS

Address: U.S. DISTRICT JUDGE

19 Meadow Run Name & Title of Judicial

Round Rock TX 78664 Officer

Defendant’s Mailing 09/17/1998

Address: Date

19 Meadow Run

Round Rock TX 78664

26a

Appendix C

IMPRISONMENT

The defendant is hereby committed to the custody of

the United States Bureau of Prisons to be imprisoned for a

total term of 30 month(s).

The court makes the following recommendations to the

Bureau of Prisons:

That the defendant be placed in a facility as close to

his home in Texas as possible.

The defendant shall surrender for service of sentence

at the institution designated by the Bureau of Prisons:

before 2 p.m. on 10/14/1998.

* * o*

SUPERVISED RELEASE

Upon release from imprisonment, the defendant shall be

on supervised release for a term of 3 year(s).

The defendant shall report to the probation office in

the district to which the defendant is released within 72

hours of release from the custody of the Bureau of Prisons.

The defendant shall not commit another federal, state, or

local crime.

27a

Appendix C

The defendant shall not illegally possess a controlled

substance.

For offenses committed on or after September 13, 1994:

The defendant shall refrain from any unlawful use

of a controlled substance. The defendant shall submit

to one drug test within 15 days of release from

imprisonment and at least two periodic drug tests

thereafter, as directed by the probation officer.

{J The above drug testing condition is suspended

based on the court’s determination that the

defendant poses a low risk of future substance

abuse. (Check, if applicable.)

{x} The defendant shall not possess a firearm as defined in

18 U.S.C. § 921. (Check, if applicable.)

If this judgment imposes a fine or a restitution

obligation, it shall be a condition of supervised release

that the defendant pay any such fine or restitution that

remains unpaid at the commencement of the term of

supervised release in accordance with the Schedule of

Payments set forth in the Criminal Monetary Penalties

sheet of this judgment.

The defendant shall comply with the standard

conditions that have been adopted by this court (set forth

below). The defendant shall also comply with the additional

conditions on the attached page (if indicated below).

See Special Conditions of Supervision — Sheet 3.01

28a

Appendix C

STANDARD CONDITIONS OF SUPERVISION

1) the defendant shal! not leave the judicial district

without the permission of the court or probation officer;

2) the defendant shall report to the probation officer and

shall submit a truthful and complete written report

within the first five days of each month;

3) the defendant shall answer truthfully all inquiries by

the probation officer and follow the instructions of the

probation officer;

4) the defendant shall support his or her dependents and

meet other family responsibilities;

5) the defendant shall work regularly at a lawful

occupation unless excused by the probation officer for

schooling, training, or other acceptable reasons;

6) the defendant shall notify the probation officer ten days

prior to any change in residence or employment;

7) the defendant shall refrain from excessive use of

alcohol;

8) the defendant shall not frequent places where

controlled substances are illegally sold, used,

distributed, or administered;

9) the defendant shall not associate with any persons

engaged in criminal activity, and shall not associate

10)

11)

13)

29a

Appendix C

with any person convicted of a felony unless granted

permission to do so by the probation officer;

the defendant shall permit a probation officer to visit

him or her at any time at home or elsewhere and shall

permit confiscation of any contraband observed in plain

view of the probation officer;

the defendant shall notify the probation officer within

seventy-two hours of being arrested or questioned by

a law enforcement officer;

the defendant shall not enter into any agreement to act

as an informer or a special agent of a law enforcement

agency without the permission of the court;

as directed by the probation officer, the defendant shall

notify third parties of risks that may be occasioned by

the defendant’s criminal record or personal history or

characteristics, and shall permit the probation officer

to make such notifications and to confirm the

defendant’s compliance with such notification

requirement.

30a

Appendix C

Judgment-Sheet 3.01

SPECIAL CONDITIONS OF SUPERVISION

1. The defendant shall not own, purchase, or possess a

firearm, ammunition, or other dangerous weapon.

2. The defendant shall not incur any new debts or open

any additional lines of credit in excess of $200 without prior

approval of the probation officer.

3. The defendant shall provide the probation officer access

to any requested financial information including both his

business and personal income tax returns.

3la

Appendix C

CRIMINAL MONETARY PENALTIES

The defendant shall pay the following total criminal

monetary penalties in accordance with the schedule of

payments set forth on Sheet 5, Part B.

Assessment Fine Restitution

Totals: $ 50.00 $ $ 674,325.84

os > *

RESTITUTION

* * 7

The defendant shall make restitution to the following

payees in the amounts listed below.

If the defendant makes a partial payment, each payee

shall receive an approximately proportional payment unless

specified otherwise in the priority order or percentage

payment column below.

Name of Payee

Robert Burrows

Tom Clancy

James Connett

Richard Courage

Milt Dabagia

Frank Foster

Anthony Frumento

Victor Hallman

Chuck Hankins

Lynn Haverstock

Gary Hepburn

Steve Hultgren

Bernice Johnson

32a

Appendix C

**Total Amount

of Loss

$11,871.57

$49,872.90

$21,754.81

$5,029.75

$2,536.73

$15,358.95

$2,536.23

$21,754.81

$20,820.81

$21,754.81

$5,940.75

$2,536.23

$18,806.51

Amount of

Restitution

Offered

$460.18

$44,535.55

$18,422.62

$4,486.97

$2,265.34

$13,730.61

$2,265.23

$18,744.32

$18,604.45

$8,000.00

$4,961.25

$2,265.23

$16,816.31

** Findings for the total amount of losses are required under

Chapters 109A, 110, LIOA, and 113A of Title 18 for offenses

committed on or after September 13, 1994.

Clarence Kauer,

Estate

Steve Krocek

Greg Lernihan

Charles Liddell

Ranier Martens

John McCarthy

John Mesterpey

Ed Meyers

Doug Meyer

David Miller

Tom Morris

Richard Perkins

Tom Pizarek

Don Pohlman,

Estate

33a

Appendix C

$2,422.75

$21,745.54

$6,119.49

$32,593.63

$26,445.28

$2,536.23

$1,342.74

$2,807.60

$6,429.00

$21,642.20

$21,754.81

$5,472.00

$35,835.31

$47,221.65

$153,388.54

$2,164.93

$19,438.72

$5,463.63

$29,083.64

$23,604.73

$2,265.23

$1,198.46

$2,509.07

$5,736.96

$19,312.77

$12,098.80

$4,883.99

$31,977.04

$42,142.12

$131,353.41

Dennis Polk

Lester Radke

Don Rodkin

John Schiller

Rob Schneider

William Shamblin

Gerald Shepperd

Steven Snyder

Tom Spiller

Al Weiss

led Woodfield

John Keane, Estate

Fiss Partnership

Michael Smith

Totals:

34a

Appendix C

$46,065.05

$10,877.44

$21,754.81

$2,536.23

$1,267.76

$46,765.83

$20,820.81

$27,798.64

$21,761.95

$10,976.44

$8,431.84

$12,353.26

$2,536.23

$824.814.15

$41,112.17

$9,710.46

$14,854.47

$2,265.23

$1,132.07

$41.566.53

$18,604.45

$24,808.83

$19,418.95

$9,795.89

$674.325.84

35a

Appendix C

SCHEDULE OF PAYMENTS

Payments shall be applied in the following order: (1)

assessment; (2) restitution; (3) fine principal; (4) cost of

prosecution; (5) interest; (6) penalties.

Payment of the total fine and other criminal monetary

penalties shall be due as follows:

A @& in full immediately;

* + *

Unless the court has expressly ordered otherwise in the

special instructions above, if this judgment imposes a period

of imprisonment payment of criminal monetary penalties

shall be due during the period of imprisonment. All criminal

monetary penalty payments are to be made to the United

States Courts Nationa! Fine Center, Administrative Office

of the United States Courts, Washington, DC 20544, except

those payments made through the Bureau of Prisons’ Inmate

Financial Responsibility Program. If all criminal monetary

penalty payments are to be made as directed by the court,

the probation officer, or the United States attorney.

STATEMENT OF REASONS

“oe * *

{J The court adopts the factual findings and guideline

application in the presentence report except (see

attachment, if necessary):

See attached order.

36a

Appendix C

Guideline Range Determined by the Court:

Total Offense Level: 18

Criminal History Category: I

Imprisonment Range: 27 to 33 months

Supervised Release Range: 2 to 3 years

Fine Range: $ 6,000.00 to $ 60,000.00

{] Fine waived or below the guideline range

because of inability to pay.

Total Amount of Restitution: $ 674,325.84

* * *

{x} The sentence is within the guideline range, that

range does not exceed 24 months, and the court

finds no reason to depart from the sentence called

for by the application of the guidelines.

mK * * *

37a

APPENDIX D — FINAL JUDGMENT OF THE

UNITED STATES DISTRICT COURT FOR

THE WESTERN DISTRICT OF LOUISIANA,

SHREVEPORT DIVISION IN SECURITIES AND

EXCHANGE COMMISSION v. BACH ENERGY

CORPORATION, et ai., CIVIL ACTION NO. 92-1271-S

DATED AND FILED JANUARY 14, 1994

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF LOUISIANA

SHREVEPORT DIVISION

CIVIL ACTION NO.

92-1271-S

SECURITIES AND EXCHANGE COMMISSION,

Plaintiff,

BACH ENERGY CORPORATION, BI-PETRO

RESOURCES, INC., LARRY D. BACH, SR..,

and SANDRA J. BACH,

Defendants,

TOTAL ENERGY CORPORATION,

Defendant for

Purposes of Relief.

FINAL JUDGMENT AS TO LARRY D. BACH, SR.,

SANDRA J. BACH AND TOTAL ENERGY, INC.

38a

Appendix D

Plaintiff, Securities and Exchange Commission

(“Commission”), having filed its Complaint for Permanent

Injunction and Other Equitable Relief in this matter;

defendants Larry D. Bach, Sr. and Sandra J. Bach

(collectively “the Bachs”) and relief defendant Total Energy

Corporation (“Total”) having previously consented to the

entry of Orders of Permanent Injunction and other Equitable

Relief entered by this Court on July 9, 1992, in which:

(a) the Bdchs were permanently enjoined from further

violations of Sections 5(a), 5(c) and 17(a) of the Securities

Act and Sections 10(b) and 15(a) of the Exchange Act;

(b) the Bachs and Total were each ordered to pay

disgorgement of an amount to be determined by agreement

of the parties, plus preyudgment thereon; and (c) the Bachs

were ordered to pay civil penalties of amounts to be agreed

upon by the parties; the parties having agreed to an entry

without further notice of this Final Judgment, and it further

appearing that no further notice of hearing for the entry of

this Final Judgment need be given; and the Court being fully

advised in the premises:

IT IS FURTHER ORDERED, ADJUDGED, AND

DECREED THAT:

Defendants Larry D. Bach, Sr., Sandra J. Bach and relief

defendant Total shall jointly and severally disgorge to the

Registry of this Court the sum of $600,000, provided that

payment of the difference between the $600,000 and the

amount currently on deposit for the Bachs and Total’s

benefit with the Court-appointed escrow agent in this matter,

a are eee narra i

39a

Appendix D

and all prejudgment interest, is waived based upon (1) the

Bachs and Total’s inability to pay as established through

their sworn testimony, their sworn financial statements and

other evidence adduced by them in this matter; (2) and upon

the condition that they shall have provided complete and

truthful information in said testimony and financial

statements concerning the funds each received in connection

with the activities alleged in the Complaint in this action,

and concerning their financial condition, including their

assets, liabilities, income and expenses; and (3) the

agreement of the Bachs to secure a loan, pledging their

homestead in Shreveport, Louisiana as collateral, and to

pay a portion of said loan proceeds, estimated by the parties

at this time to be approximately $185,000, to Tifton

Aluminum Company in exchange for a mutually acceptable

release. The Bachs and Total waive any and all claims to

the amount currently on deposit in the escrow account and

agree to allow the escrow-agent to immediately transfer all

sums in the escrow account to the Registry of this Court

upon entry of this Final Judgment. Plaintiff, Commission,

at any time following the entry of this Final Judgment may

petition the Court for a hearing to reconsider the Bachs and

Total’s inability to pay disgorgement and interest if the

Commission obtains information from any source that their

sworn testimony, sworn financial statements or any other

evidence adduced by the Bachs and Total regarding the

funds and assets each received in connection with the

activities alleged in the Complaint, or their financial

condition, including their assets, liabilities, income or

expenses, were inaccurate or incomplete in any material

respect. In connection with any such petition, the Court may

consider all available temedies, including, but not limited

40a

Appendix D

to, determining the appropriate amount of disgorgement and

interest, ordering the defendants to pay additional funds or

assets, directing the forfeiture of any concealed assets or

sanctions for contempt of this Court’s Final Judgment. The

Bachs and Total may not by way of defense contest the

allegations in the Complaint or assert that disgorgement

and prejudgment interest are inappropriate for the violations

alleged in the Complaint.

Il.

Based upon the Bachs’ representations to the

Commission under oath, that they are financially unable to

pay civil penalties, the Court is not ordering any of them to

pay penalties. The Court does, however, note the

appropriateness of civil penalties in this instance. The

determination that the Bachs are unable to pay civil penalties

is conditioned on the truthfulness of the representations in

the Bachs’ sworn financial statements and sworn deposition

given in this action. The Commission may, at any time

following the entry of this Final Judgment, petition the Court

for a hearing to reconsider the Bachs’ financial inability to

pay civil penalties if the Commission obtains information

from any source that the Bachs’ sworn financial statements,

sworn depositions, or any other evidence adduced by them

regarding their financial condition, including their assets,

liabilities, income or expenses, were inaccurate or

incomplete in any material respect. In connection with any

such petition, the Court may consider all available remedies,

including, but not limited to, ordering the Bachs to pay civil

penalties for the violations alleged in the Complaint and

ordering further discovery. The Bachs may not by way of

4la

Appendix D

defense to that petition, contest the allegations in the

Complaint or assert that penalties are inappropriate for the

violations alleged in the Complaint.

III.

IT IS FURTHER ORDERED that the Court-appointed

escrow agent shall immediately transfer to the Registry of

this Court all funds currently on deposit in the escrow

account for the Bachs and Total’s benefit, pending a final

plan of distribution to be submitted by the Commission to

the Court.

IV.

IT IS FURTHER ORDERED that the Bachs shall

continue to be permanently enjoined from further violations

of the provisions of the federal securities laws as set forth

in this Court’s Orders of Permanent Injunction and Other

Equitable Relief entered against each of them on July 9,

1992, and that this Court shall retain jurisdiction of this

action for all purposes, including for purposes of

entertaining any suitable application or motion by the

Commission for additional relief within the jurisdiction of

this Court, including but not limited to the relief requested

by the Commission in its Complaint in this action.

IT IS FURTHER ORDERED that Paragraphs I, VII,

VIII, and LX of the Agreed Order Freezing Assets and Other

42a

Appendix D

Equitable Relief, entered by this Court on July 9, 1992, are

hereby dissolved.

Dated and signed this 14 day of January, 1994.

s/ Donald E. Walsh

UNITED STATES DISTRICT

JUDGE

AGREED AS TO SUBSTANCE

AND FORM:

s/ Larry D. Bach, Sr.

LARRY D. BACH, SR.

s/ Sandra J. Bach

SANDRA J. BACH

s/ Larry D. Bach, Sr.

TOTAL ENERGY, INC.

By Larry D. Bach, Sr., President

On this 7th day of January, 1994, before me personally

appeared Larry D. Bach, Sr., known to me to be the person

who executed the foregoing Final Judgment in his capacity

as president of Total Energy, Inc., and he acknowledged to

me that he executed the same.

s/ Bonnie R. Guin

My commission expires: Notary Public, in and for

at death DeSoto Parish

Louisiana

43a

Appendix D

CORPORATE RESOLUTION

1, Larry D. Bach, Sr., president of Total Energy, Inc., a

corporation duly organized and existing under the laws of

the State of Louisiana, United States, do hereby certify that

the following is a true and correct copy of a certain

resolution duly adopted by the Board of Directors of that

corporation:

BE IT RESOLVED that Larry D. Bach, Sr., Director

and President of Total Energy, Inc., be and hereby is

authorized and directed on behalf of Total Energy, Inc., in

connection with a civil injunctive action filed by the

Securities and Exchange Commission, plaintiff, against

Total Energy, Inc., defendant for purposes of relief, in the

United States District Court for the Western District of

Louisiana, Shreveport Division, to execute and agree to

entry of, on behalf of Total Energy, Inc., the forgoing Final

Judgment.

IN WITNESS WHEREOPF, I have hereunto set my hand

affixed the seal of the Corporation on this 7th day of

January, 1993.

TOTAL ENERGY, INC.

By: s/ Larry D. Bach

LARRY D. BACH, SR.

President

Corporate Seal

s/ Dan R. Waller

Dan R. Waller, Esq.

Attorney for the Bachs and Total

44a

APPENDIX E — RELEVANT STATUTE

18 U.S.C. § 3663A

§ 3663A. Mandatory restitution to victim of certain

crimes

(a)(1) Notwithstanding any other provision of law,

when sentencing a defendant convicted of an

offense described in subsection (c), the court shall

order, in addition to, or in the case of a

misdemeanor, in addition to or in lieu of any other

penalty authorized by law, that the defendant make

restitution to the victim of the offense or, if the

victim is deceased, to the victim’s estate.

(2) For the purposes of this section, the term

“victim” means a person directly and proximately

harmed as a result of the commission of an offense

for which restitution may be ordered 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. In the case of a victim

who is under 18 years of age, incompetent,

incapacitated, or deceased, the legal guardian of

the victim or representative of the victim’s estate,

another family member, or any other person

appointed as suitable by the court, may assume the

victim’s rights under this section, but in no event

shall the defendant be named as such representative

or guardian.

45a

Appendix E

(3) The court shall also order, if agreed to by the

parties in a plea agreement, restitution to persons

other than the victim of the offense.

(b) The order of restitution shall require that such

defendant —

(1) 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 —

(1) 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

46a

Appendix E

(ii) the value (as of the date the

property is returned) of any part

of the property that is returned;

(2) in the case of an offense resulting in bodily

injury to a victim —

(A) pay an amount equal to the cost of

necessary medical and related professional

services and devices relating to physical,

psychiatric, and psychological care,

including nonmedical care and treatment

rendered in accordance with a method of

healing recognized by the law of the place

of treatment;

(B) pay an amount equal to the cost of

necessary physical and occupational

therapy and rehabilitation; and

by such victim as a result of such offense;

(3) in the case of an offense resulting in bodily

injury that results in the death of the victim, pay

an amount equal to the cost of necessary funeral

and related services; and

(4) in any case, reimburse the victim for lost

income and necessary child care, transportation,

and other expenses incurred during participation

in the investigation or prosecution of the offense

or attendance at proceedings related to the offense.

47a

Appendix E

(c)(1) This section shall apply in all sentencing

proceedings for convictions of, or plea agreements

relating to charges for, any offense —

(A) that is —

(i) acrime of violence, as defined

in section 16;

(ii) an offense against property

under this title, including any

offense committed by fraud or

deceit; or

(iii) an offense described in

section 1365 (relating to

tampering with consumer

products); and

(B) in which an identifiable victim or

victims has suffered a physical injury or

pecuniary loss.

(2) In the case of a plea agreement that does not

result in a conviction for an offense described in

paragraph (1), this section shall apply only if the

plea specifically states that an offense listed under

such paragraph gave rise to the plea agreement.

(3) This section shall not apply in the case of an

offense described in paragraph (1)(A)(ii) if the

court finds, from facts on the record, that —

48a

Appendix E

(A) the number of identifiable victims ts

so large as to make restitution

impracticable; or

(B) 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.

(d) An order of restitution under this section shall be issued

and enforced in accordance with section 3664.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.