In a recent decision, the United States Court of Appeals for the Sixth Circuit concluded that private parties cannot compromise criminal restitution orders through civil settlement agreements. The Court founded its decision on two principles: (1) private settlements cannot undermine the Government’s efforts to punish criminal conduct (restitution is punitive, not compensatory); and (2) under the Mandatory Victim Restitution Act, restitution is mandatory and not within a district court’s discretion. At most, a criminal defendant is entitled to offset a criminal restitution order by the amount paid in the civil settlement.
In United States v. May, the defendant (May) owned an RV and used car dealership, which had a revolving line of credit with First Financial Bank. May used that line of credit to defraud the Bank. The Bank discovered the fraud and seized various assets. May sued the Bank for mismanaging those assets in August 2009. Two months later, the Government indicted May. The Court sentenced May in May 2010 and ordered May to pay $1,682,000 in restitution to the Bank. Approximately a year later, May and the Bank settled their civil case (May agreed to pay the Bank $100,000). That agreement purported to settle the “amount of Federal Restitution ordered by the United States District Court for the Northern District of Ohio.”
May took the settlement agreement to the District Court and sought to discharge the restitution order. But the District Court refused; instead, it merely offset the restitution order by the $100,000 May paid the Bank. The Court of Appeals affirmed noting that its decision was “in line with the other circuits that had addressed the issue” (though the Court acknowledged some inconsistent authority from the Tenth Circuit).
The holding reinforces the need for advocacy before a district court enters a restitution order. The relative bargaining position of both the victim (the Bank) and the defendant (May) were decided with that order.
The decision may be found at United States v. May, 11-4032 (6th Cir. September 18, 2012).