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Ninth Circuit Finds Forfeited Assets Satisfy Restitution Order; Eleventh Circuit Disagrees

Ninth Circuit Finds Forfeited Assets Satisfy Restitution Order; Eleventh Circuit Disagrees

by Derek Gilna

Greg Carter served a 70-month federal prison sentence for defrauding U.S. airlines with phony tickets, along with several co-defendants. As part of his conviction he forfeited cash, real estate and other assets for the purpose of satisfying over $505,000 in court-ordered restitution. Shortly after his release from prison, Carter was advised that he still owed restitution; he filed a motion with the district court to clarify the amount and status of his restitution order.

Carter argued that at the time of sentencing it was understood by all parties involved in the case that the amount of restitution had already been satisfied by the assets seized by and forfeited to the government, and that his restitution obligation was therefore satisfied in full.

The same district court judge who had indicated at Carter’s sentencing that the forfeited assets covered the restitution amount contradicted his earlier judgment, stating forfeiture and restitution were two different processes and the fact that Carter had forfeited his assets did not necessarily mean he had fully paid his restitution. The court found that Carter was still liable for the difference between the actual value of the forfeited assets and the restitution order, which amounted to $65,955.73. Fortunately for Carter the transcript of his sentencing hearing indicated otherwise.

According to the Ninth Circuit, the transcript and Carter’s pre-sentence investigation report clearly showed that all parties had, in fact, understood that the forfeited assets were meant to cover the restitution order in full. Although the government partly agreed with Carter’s position, it had argued that the district court was without jurisdiction to even hear his motion to clarify the status of his restitution, having already entered judgment years earlier.

The Court of Appeals agreed with the district court that it retained jurisdiction to enforce the terms of its original judgment order, but ultimately sided with Carter with respect to his restitution, noting, “a defendant has no right to a credit against a restitution order equal to any part of the amount forfeited.... However, the Government may choose to assign forfeited proceeds to victims, as was the case here.”

“Given these circumstances, the district court’s [previous] statements made contemporaneously with sentencing, read in conjunction with the surrounding circumstances, [lead us to] conclude that because the restitution amount was fulfilled through the forfeited assets, Carter does not have any remaining restitution obligation,” the appellate court wrote, with one judge dissenting. See: United States v. Carter, 742 F.3d 440 (9th Cir. 2014).

The Ninth Circuit’s ruling was contrary to a recent decision by the Eleventh Circuit in a case involving a similar issue.

Michael W. Joseph III, incarcerated at a Florida state prison, pleaded guilty to 41 of 46 counts of an indictment accusing him of a fraudulent plan to obtain refunds from income tax returns filed with stolen personal information. The government seized $29,514.91, which were the proceeds of Joseph’s fraudulent scheme. A pre-sentence investigation report found that he should also pay $37,196.27 in restitution to the IRS. Joseph “objected to the [pre-sentence report] on numerous grounds, including the restitution amount not being reduced by the value of the funds forfeited to the government.”

Joseph was sentenced to 63 months in federal prison, and the district court stated at his sentencing hearing that the forfeited funds would offset the restitution amount, leaving a balance of $7,681.36. However, after the hearing the court entered a written order setting the restitution amount at $37,196.27 with no offset for the forfeited funds.

Joseph filed an appeal seeking to overturn the written judgment entered by the district court that conflicted with its oral pronouncement at sentencing, which would have allowed the forfeited assets to be applied to his restitution order.

The Eleventh Circuit affirmed the written judgment, stating the district court lacked jurisdiction to offset a restitution obligation with the value of forfeited assets, as forfeiture and restitution are separate processes with different purposes. The appellate court said its finding was consistent with decisions by the Fourth, Seventh, Eighth, Ninth and Tenth Circuits.

In so ruling, the Eleventh Circuit held that the general rule that discrepancies between oral and written judgment terms are to be resolved in favor of the oral pronouncement would not apply in this case, as the district court’s oral pronouncement at Joseph’s sentencing hearing was unlawful. See: United States v. Joseph, 743 F.3d 1350 (11th Cir. 2014).


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Related legal cases

United States v. Carter

United States v. Joseph