Second Circuit Holds Restitution Order under MVRA May Include Attorneys Fees and Accounting Costs

The multi-million dollar legal and forensic accounting fees incurred by companies investigating fraud perpetrated by their executives may be included in a restitution order under the Mandatory Victims Restitution Act (MVRA), the Second Circuit held in United States v. Amato, 06-5600-cr, 2008 WL 3876554 (2d Cir. August 21, 2008). The case is another reminder of how one’s criminal conduct can be the gift that goes on giving, long after any prison sentence or probation term has been served.

Holding

The holding is a simple one: the MVRA requires district courts to “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.”  In Amato, the Court, following a Ninth Circuit case, held that the phrase “other expenses” may include attorney fees and accounting costs incurred by the victim in investigating and assisting the prosecution of the case.  The “plain meaning of the statute” gave the district court “broad authority” to determine the victim’s expenses that may be included in a restitution order, as long as they met four statutory requirements: they were “necessary,” they were incurred in connection with the investigation or prosecution, they were incurred by a victim, and “they do not require unduly complicated determinations of fact.”

Foreseeability?

The Court sidestepped the issue of whether the expenses must also be the “direct and foreseeable result” of the defendant’s wrongful conduct, as required by the Ninth Circuit.  “We need not formulate a precise test in the present case because – even assuming attorney fees and auditing costs must be a direct and foreseeable result of the offense – such a requirement was clearly met here . . . That this fraud would force the corporation to expend large sums of money on its own internal investigation as well as its participation in the government’s investigation and prosecution of defendants’ offenses is not surprising.”