Court Erroneously Excluded Character Evidence & Calculated Restitution to Include Loss Outside Alleged Time Period

United States v. De Leon, No. 12-40244 (Aug. 29, 2013) (Stewart, Davis, Wiener)

De Leon was convicted at trial of five counts of health-care fraud.  His attorney called his mother as a character witness.  After some background questions, the attorney asked whether De Leon was a law-abiding citizen.  The Government objected citing Federal Rule of Evidence 608(a).  The Court sustained the objection and instructed De Leon that his second character witness would be limited to testifying as to De Leon’s reputation for truthfulness.  The defense attorney did not call the second witness and then rested. 

The district court erred in excluding evidence of De Leon’s law-abiding character.  “‘[E]vidence of the defendant’s pertinent trait’ is admissible.  [Fed. R. Evid. 404(a)(2)(A).] And evidence of the defendant’s ‘character as a law-abiding citizen . . . is always relevant.’” Rule 608(a) applies only to a witness’s credibility, and De Leon was not a witness.  This erroneous ruling, however, did not affect De Leon’s substantial rights since there was “overwhelming evidence of De Leon’s knowing submission of fraudulent claims.”  The panel affirms the conviction.

The district court also plainly erred in calculating the restitution award.  The PSR calculated the loss as the $2.9 million paid by Medicare and Medicaid to De Leon, on any and all claims, from 2005 through 2011.  The temporal scope of the conduct charged in the indictment was June or July 2008 through April 2010.  “Restitution is limited to the loss actually caused by the offense of conviction . . . [and] cannot be awarded for ‘losses’ attributable to conduct outside the temporal scope of the scheme charged . . . [or] for conduct not charged as part of the scheme.”  Thus, payments to De Leon in 2005, 2006, 2007, and 2011 cannot be counted among the actual losses incurred.

The district court conducted several hearings to try to discern which of the payments were fraudulent.  Ultimately, the court concluded that “it was ‘difficult, if not impossible, to ascertain with precision the actual loss,” so the court estimated that the total loss totaled $750,000 split evenly between Medicare and Medicaid.  The panel vacates the restitution reward and remands for recalculation even though the district court did not award the full $2.9 million since the record does not suggest that the district court excluded the sums outside of the temporal scope of the Indictment.  “By calculating restitution on the basis of the PSR’s exaggerated ‘ceiling,’ the district court indisputably awarded restitution for claims outside the scope of the charged conspiracy.

The panel notes, though, that on remand the district court can assign De Leon the burden of demonstrating the amount of credit he is due if the court concludes that justice requires this burden shift:

“Even though the MVRA puts the burden on the government to demonstrate the amount of a victim’s loss, a sentencing court may shift ‘the burden of demonstrating such other matters as the court deems appropriate . . . [to] the party designated by the court as justice requires.’ . . . ‘[W]e have approved the transfer of at least a portion of the burden to a defendant to establish his entitlement to a restitution credit.’ 

United States v. Sharma, 703 F.3d 318, 325 (5th Cir. 2012).

Plain Error to Order Restitution for Loss Associated with Acquitted Counts

United States v. Mason, No. 10-10743 (July 2, 2013) (Jolly, Davis, Prado)

The heading seems to make basic sense, right? If someone is acquitted of some counts but found guilty of other counts, then the restitution amount should only be based on the loss associated with the guilty counts.

Instead, the district court ordered mandatory restitution that included $74,619.12 of loss attributed to the conspiracy count of which the defendant, Andrews, was acquitted. Andrews did not object, so the panel reviewed for plain error. Under United States v. Inman, 411 F.3d 591 (5th Cir. 2005), the Mandatory Victims Reauthorization Act makes a defendant "only responsible for paying restitution for the conduct underlying the offense for which he was convicted." According to United States v. Sharma, 703 F.3d 318 (5th Cir. 2012), a restitution award cannot compensate a victim for losses "caused by conduct that falls outside the temporal scope of the acts of conviction." Thus, the panel concludes that the district court plainly erred by including loss related to an offense of which Andrews was acquitted. This affected his substantial rights because the variance was over $70,000 and because the failure to correct the error would constitute manifest injustice.

The other defendants in this case raised a variety of issues that the panel did not address because they did not find any merit to those arguments.

En Banc Grant: Is Proximate Cause Required for Child Porn Restitution?

The Fifth Circuit will be revisiting en banc its decision in In re Amy Unknown, 636 F.3d 190 (2011), a mandamus action arising out of Doyle Paroline's prosecution for possession of child pornography. Two of the images Paroline possessed were of Amy Unknown; the images had been produced years before by an uncle who abused her as a young child.

After Paroline pleaded guilty, Amy Unknown sought restitution under 18 U.S.C. § 2259, which mandates restitution for losses incurred by victims of various offenses involving sexual exploitation of children. The district court denied restitution, concluding both that § 2259 requires that the defendant proximately cause the losses for which restitution is allowed, and that the Government failed to prove that Paroline's conduct was the proximate cause of Amy's losses.

Amy appealed the order denying restitution and also sought mandamus under the Crime Victims Rights Act (18 U.S.C. § 3771(d)(3)). A panel of the Fifth Circuit denied mandamus. A second panel was assigned both the direct appeal of the restitution order and Amy's petition for rehearing of the decision denying mandamus. That panel held, contrary to several other circuits, that § 2259 does not require a victim to show that the defendant proximately caused the losses for which restitution is allowed (except for a catch-all category of losses for which the statute specifically requires proximate cause). Also at issue was whether a crime victim has a right to a direct appeal in these circumstances; the second panel did not reach that issue because "the district court clearly and indisputably erred in grafting a proximate causation requirement onto the CVRA."

This AP story provides additional background about the case. (link via SL&P).