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Federal Restitution Law Failing Crime Victims

by Mike Rigby

A federal law meant to ensure that victims of violence, fraud and other property crimes are compensated for financial loss does not work as intended.

According to the Mandatory Victims Restitution Act (MVRA) passed by Congress in 1996, crime victims who suffer identifiable monetary losses are entitled to “full and timely restitution.” However, that is rarely the case.

Since the MVRA was enacted, the amount of outstanding federal restitution debt owed to victims nationwide has ballooned from $3.7 billion to more than $44.4 billion in 2008, the most recent year for which statistics are available. In fact, according to the U.S.
Department of Justice, the average collection rate for all 94 federal judicial districts in 2008 was a mere 1.4 percent.

During that same year the rates in some individual districts were particularly abysmal. New Jersey and the Southern District of New York had collection rates of .025 and .021 percent, respectively. The Eastern District of Pennsylvania collected a paltry .002 percent of outstanding third-party restitution debt in 2008.

One problem, critics say, is that the MVRA requires judges to order restitution for the full amount of a victim’s losses regardless of the defendant’s ability to pay. Thus, the restitution orders don’t accurately reflect how much will actually be collected. Offenders who are sentenced to prison for financial fraud are typically ordered to pay $100 a month in restitution when they are released. At that rate it would take over 833 years for an offender to repay $1 million.

A case in point is a January 2005 study by the U.S. Government Accountability Office (GAO) that followed five white collar criminals who owed a combined $568 million in restitution. Eight years after sentencing, the report found only 7 percent of the total had been repaid. Adding to the problem, according to GAO statistics, is the fact that more than 85 percent of federal criminal defendants are indigent with little or no ability to repay their victims.

Prosecutors have argued, however, that even if defendants are financially well off and have the means to pay restitution, there is little chance of recovering money for their victims unless their assets are seized before charges are filed.

In October 2007, the U.S. Senate followed this line of reasoning and passed legislation introduced by Senator Byron Dorgan, a North Dakota democrat, that would have made it easier for federal prosecutors to seize a defendant’s assets before he or she had even been charged with a crime. Fortunately for those who still believe in the concept of innocent until proven guilty, the bill died in a House subcommittee in May 2008.

Critics – mainly House Judiciary Committee Chairman John Conyers, Jr. and the criminal defense bar – had argued that the legislation would unfairly harm potential defendants and would not significantly increase the collection of restitution. David B. Smith, a criminal defense attorney, said the bill would have given federal prosecutors “a nuclear weapon with which to pauperize every single defendant” and thus prevent them from retaining private defense counsel by preemptively seizing their assets.

Even had the bill passed, it would have done little to alleviate the overriding problem. The bottom line is that government officials fritter away whatever restitution money is collected rather than using it to repay crime victims.

According to one GAO report, federal prosecutors use most forfeited assets – which are intended for restitution payments – for other purposes such as providing funds to local and state law enforcement agencies that aid them in prosecutions.

In fiscal year 2008, the 94 U.S. Attorneys offices had a collective total of $1.1 billion in asset forfeiture deposits, of which less than 40 percent – $429.4 million – went to crime victims for restitution. Moreover, 88 percent of the restitution money paid out in 2008 came from a single U.S. Attorneys office in upstate New York, while 55 U.S. Attorneys offices did not apply any of their forfeited asset funds to restitution.

An article in the December 2009 issue of the California Law Review, titled “Should Crime Pay?: A Critical Assessment of the Mandatory Victims Restitution Act of 1996,” noted that while “the MVRA may have led to marginally more compensation for victims of crime, it has decreased victim satisfaction with restitution.” Further, the article found that “mandatory restitution impedes offenders’ reintegration into society,” and concluded “the MVRA is often an inefficient and impractical method of recompensing victims” that is “detrimental to both victims and offenders.”

Sources:, California Law Review

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