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Fifth Circuit Upholds Nearly $13.5 Million Restitution Order Against Federal Prisoner

by Anthony W. Accurso

On February 25th, 2022, winning turnedout to be losing for a federal prisoner when the U.S. Court of Appeals for the Fifth Circuit affirmed a massive restitution order issued by a district court in Texas, saying the prisoner had provided jurisdiction with his own successful challenge to an original order that was incorrectly made.

In 2005, Donald Tarnawa was sentenced by the federal court for the Eastern District of Texas to 40 years in custody of the federal Bureau of Prisons (BOP) on convictions of fraud and money laundering stemming from a spectacular con, which the Fifth Circuit later recalled:

“After serving a prison sentence in Florida in the 1990s, Tarnawa assumed the identities of several fellow prisoners, formed at least six corporate entities, and proceeded to swindle investors out of $27,636,962.00.”

At sentencing, he was ordered to pay $13,491,048 in restitution to victims, with payments that were to begin “immediately,” the district court said. To accomplish this, it recommended that the prisoner participate in BOP’s inmate financial responsibility program (IFRP) “at a rate determined by [BOP] staff.”

After Tarnawa was transferred to a federal prison in California in 2009, he filed a habeas corpus petition pro se in federal court for the Eastern District of California under 28 U.S.C. § 2241, arguing that the sentencing court’s failure to specify a payment schedule — and leaving it up to BOP — was an impermissible delegation of authority under 18 U.S.C. § 3663A, which sets out “Mandatory restitution to victims of certain crimes.”

That petition was dismissed, but Tarnawa made a successful appeal to the U.S. Court of Appeals for the Ninth Circuit, which also appointed federal public defenders as his counsel. They accompanied him on remand to the district court in California, which then granted his habeas petition, ruling that Tarnawa was exempted from IFRP “unless the sentencing court specifies the restitution schedule.” See: Tarnawa v. Ives, 2013 U.S. Dist. LEXIS 49140 (E.D. Cal.).

The government then moved the sentencing court in Texas under 18 U.S.C. § 3664(k) to modify Tarnawa’s restitution order to include a repayment schedule. Without specifying the reasoning for its decision, that court ordered that “[d]uring the term of imprisonment, restitution is payable every three months in an amount, after a telephone allowance, equal to 50 percent of the funds deposited into the defendant’s inmate trust fund account.”

With the aid of Houston attorney Seth Kretzer, Tarnawa appealed the order, arguing that the district court failed to demonstrate it considered the factors under § 3664(f)(2) and that the court lacked authority to modify its original order because there existed no “material change in his economic circumstances” as required under § 3664(k).

After acknowledging that different circuits have varying standards of review, the Fifth Circuit refused to determine which was appropriate here, a de novo review or one for abuse by the lower court of its discretion. It also refused to consider which party bears the burden of proof. Why? Either way, the Court said, “the modification must be affirmed.”

Rejecting the first of Tarnawa’s arguments, the Court determined that a district court is not required to state on the record its consideration of factors enumerated under § 3664(f)(2). It said that motions under § 3664(k) required no such consideration, but, even if they did, it would be foreclosed by Circuit precedent: “Sentencing judges are accorded broad discretion in ordering restitution and are not required to make specific findings on each factor listed in § 3664,” the Court said, citing United States v. Impson, 129 F.3d 606 (5th Cir 1997).

Moving on to Tarnawa’s second argument, the Court decided that the California district court’s order exempting Tarnawa from the IFRP was sufficient in itself to constitute a “material change in the defendant’s economic circumstances.” In other words, the Texas court’s order established the prisoner’s economic circumstances, and his successful challenge to that order in the California court constituted a change in his circumstances, which then allowed the Fifth Circuit on appeal to modify the order once again. Holding otherwise, the Court added, “would undermine the principles of criminal restitution.”

Searching for precedent, the Court lit on United States v. Rand, 924 F.3d 140 (5th Cir 2019), quoting it to note that “[a] convicted criminal ‘cannot escape his responsibility to restore his victims by hiding behind his sentencing order, not when he has the means to pay and not when the law provides a remedy that the government and the district court may act upon.’” Thus the Texas district court’s modified restitution order was upheld. See: United States v. Tarnawa, 26 F.4th 720 (5th Cir. 2022).

Tarnawa filed for a writ of certiorari from the U.S. Supreme Court, but that petition was denied on June 27, 2022. See: Tarnawa v. United States, 2022 U.S. LEXIS 3110. 

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