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Restitution Under Federal and Texas Law: Criminal Defense Overview

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Our criminal justice system provides for the government to take property (real and personal) from individuals in a number of ways.  For instance, monetary fines are established by statute as punishment alongside periods of incarceration.  There are also forfeiture laws, which allow the taking of property even before any conviction has occurred.

For more on fines and forfeitures, read our earlier discussions in:

A third avenue allowed by law for the government to take property from an individual based upon criminal jurisprudence is through restitution.  This is a form of punishment after a criminal conviction in either federal or state court.

What is Restitution?

Judges in both federal and state courts have the authority to sign court orders requiring property be transferred or a set sum be paid to crime victims by the individual held by law to be the perpetrator of the crime that caused their harm.  This is called “restitution,” and its use can be traced back centuries to ancient legal systems including the Babylonian Code of Hammurabi, as a means to provide justice for victims directly from those deemed responsible for the criminal offense and its consequences.

Federal Restitution Law

For federal crimes, the Mandatory Restitution Act of 1996 found in 18 USC §3663A controls the restitution process, including giving judicial guidance on determining restitution amounts.

Essentially, the federal Restitution Act mandates that defendants convicted of crimes occurring on or after April 24, 1996, must pay “identified victims” (individuals or corporate entities) the losses experienced as a result of the crime.

The federal restitution statute provides, in part:

Notwithstanding any other provision of law, when sentencing a defendant convicted of an offense described in subsection (c), the court shall order, in addition to, or in the case of a misdemeanor, in addition to or in lieu of, any other penalty authorized by law, that the defendant make restitution to the victim of the offense or, if the victim is deceased, to the victim’s estate….

The order of restitution shall require that such defendant—

(1) in the case of an offense resulting in damage to or loss or destruction of property of a victim of the offense—

(A) return the property to the owner of the property or someone designated by the owner; or

(B) if return of the property under subparagraph (A) is impossible, impracticable, or inadequate, pay an amount equal to—

(i) the greater of (I) the value of the property on the date of the damage, loss, or destruction; or (II) the value of the property on the date of sentencing, less

(ii) the value (as of the date the property is returned) of any part of the property that is returned;

(2) in the case of an offense resulting in bodily injury to a victim—

(A) pay an amount equal to the cost of necessary medical and related professional services and devices relating to physical, psychiatric, and psychological care, including nonmedical care and treatment rendered in accordance with a method of healing recognized by the law of the place of treatment;

(B) pay an amount equal to the cost of necessary physical and occupational therapy and rehabilitation; and

(C) reimburse the victim for income lost by such victim as a result of such offense;

(3) in the case of an offense resulting in bodily injury that results in the death of the victim, pay an amount equal to the cost of necessary funeral and related services; and

(4) in any case, 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.

Texas Restitution Law

For state crimes, Texas Code of Criminal Procedure Art. 42.037 provides for restitution to be paid to crime victims.  This  accords with the 1989 Amendment to the Texas Constitution which includes restitution as a constitutional right of crime victims in the Lone Star State. Tex. Const. art. I, §30(b)(4).

The Texas restitution statute provides, in part:

In addition to any fine authorized by law, the court that sentences a defendant convicted of an offense may order the defendant to make restitution to any victim of the offense or to the compensation to victims of crime fund established under Subchapter J, Chapter 56B, to the extent that fund has paid compensation to or on behalf of the victim.  If the court does not order restitution or orders partial restitution under this subsection, the court shall state on the record the reasons for not making the order or for the limited order.

(b)(1) If the offense results in damage to or loss or destruction of property of a victim of the offense, the court may order the defendant:

(A)  to return the property to the owner of the property or someone designated by the owner; or (B) if return of the property is impossible or impractical or is an inadequate remedy, to pay an amount equal to the greater of: (i) the value of the property on the date of the damage, loss, or destruction; or (ii) the value of the property on the date of sentencing, less the value of any part of the property that is returned on the date the property is returned.

(2)  If the offense results in personal injury to a victim, the court may order the defendant to make restitution to:

(A)  the victim for any expenses incurred by the victim as a result of the offense; or (B) the compensation to victims of crime fund to the extent that fund has paid compensation to or on behalf of the victim.

(3)  If the victim or the victim’s estate consents, the court may, in addition to an order under Subdivision (2), order the defendant to make restitution by performing services instead of by paying money or make restitution to a person or organization, other than the compensation to victims of crime fund, designated by the victim or the estate.

Who Is Eligible for Restitution?

Under both state and federal law, crime victims as well as other individuals are eligible to get property under court orders of restitution.  Recipients of restitution are determined by meeting statutory definitions, and may include corporate entities as well as people.

For instance, under the Federal Restitution Act, a victim eligible for restitution is defined as a person directly and proximately harmed as a result of the commission of an offense for which restitution may be ordered including, in the case of an offense that involves as an element a scheme, conspiracy, or pattern of criminal activity, any person directly harmed by the defendant’s criminal conduct in the course of the scheme, conspiracy, or pattern.

The Federal Act also allows a federal judge to order restitution to persons other than the crime victim if provided pursuant to the terms of a finalized, negotiated plea agreement.

How Is Restitution Paid to the Crime Victim?

Restitution orders can be entered for convicted individuals whether or not they are behind bars.  Restitution applies to people who are on (1) probation; (2) incarcerated; or (3) on parole or mandatory supervision.

Oftentimes, those who are not incarcerated will be ordered to pay restitution to the crime victim in the form of monthly payments. There will be an installment plan. In Texas, each county has an office for the Texas Community Supervision and Corrections Department.  This state agency serves as intermediary between the defendant and the crime victim, and it is here that state-ordered monthly restitution payments are sent and thereafter forwarded.

If the defendant is not on probation or on parole, but instead is serving time in a Texas correctional facility, then the Texas Department of Criminal Justice can withdraw restitution payments from the inmate’s trust fund account.  These are trust accounts set up for each state inmate as part of their entry into incarceration to serve as a place to deposit any wages earned while they are behind bars pursuant to Tex. Gov’t Code §501.014.  Loved ones can also deposit funds to the inmate trust accounts.  Inmates can use these funds to do things like buy personal products (e.g., snacks or cigarettes).  Restitution orders can be used to garnish the trust fund account balance to make restitution payments.

As for federal restitution orders, the Northern District of Texas provides an example of federal restitution payment procedures.  Smaller restitution amounts are due immediately, but large amounts are often allowed by the federal judge to be made pursuant to a monthly payment plan.  Interest accrues “…even if a payment schedule has been established once the interest start date has passed.”

The Financial Litigation Unit of the Office of the U.S. Attorney is responsible for overseeing the collection and payment of restitution to crime victims pursuant to federal restitution orders.

Does Restitution Always Involve Money or Property?

There are times where restitution involves the defendant being ordered to do something other than pay money or transfer property as restitution.  This can be done under Texas law with the consent of the crime victim.  Here, restitution involves community service.

The Department of Justice describes this as “symbolic restitution” … with “redress for the victim, less severe sanction for the offender, rehabilitation of the offender, reduction of demands on the criminal justice system, and reduction of the need for vengeance in a society, or a combination of these factors.”

The judge may order services be provided to the public service organization chosen by the crime victim.

What Is The Power of the Restitution Order?

When a judge in federal or state court signs an order of restitution, that document becomes a powerful tool that can be used to locate and take property held in the name of the convicted individual.  Certified copies of the original court order as signed by the judge can be obtained at the clerk’s office for use in finalizing the transfer of property ownership.

For instance, the crime victim can support a lien on real property as well as any interest in personal property (including motor vehicles) through the power of the restitution order.  See, e.g., Tex. Admin. Code §217.103. In federal proceedings, the Justice Department will file judgment lien notices in the real property records of all counties where the defendant owns, or may own, property.

Bankruptcy Is No Protection

Of importance, it has been held by the United States Supreme Court that restitution orders are not dischargeable in bankruptcy.  11 USC §1328(a)(3).   Read, Sather, Stephen W. “Crooked Path to Nondischargeability of Restitution Obligations.” American Bankruptcy Institute Journal 38.4 (2019): 46-99.

How Is The Restitution Amount Calculated?

In each criminal matter, the criminal court judge is responsible for deciding what the final amount of restitution should be in the matter before the bench.  How these calculations are made vary with federal law and state law.

As a general rule, all restitution orders will include consideration of the crime victim’s direct financial losses proximately caused by the commission of the crime itself.  These amounts include things like medical expenses; lost income; lost future earnings; and property damage.  The judge may also order the defendant to return property to the crime victim as part of the restitution order, if that can be done.

Other potential items that may be included by the judge in a restitution order are funeral expenses; psychological counseling costs; rehabilitation care expenses; and sums necessary to repair or replace damaged property, such as the repair of a business premise after a violent armed robbery.

The prosecution will tally the expenses faced by the crime victim for presentation to the court in its deliberations of the restitution order.  The defense attorney has the ability to review and challenge each itemization presented by the prosecutor at the restitution hearing.

What Happens at the Restitution Hearing?

In order for the judge to make a determination on the restitution to be ordered in a particular matter, the issue must be presented to the bench.  Sometimes, this happens as part of a plea-bargaining agreement, and the judge is asked to approve a negotiated restitution amount.

In other instances, there is a presentence investigation prepared for presentation by the prosecution to the judge.  This includes an analysis of the needs of the crime victim and the financial wherewithal of the defendant to pay restitution.  In federal court, this is provided by the United States Probation Office and may include a “Victim Impact Statement.”

The defendant has a right to review what the prosecution will be presenting to the judge.  If the defendant does not agree with the prosecution’s position, then the defense attorney can present evidence that benefits the defendant at a restitution hearing.

In a Texas state proceeding, the burden of proof is less than it is at the criminal trial: here, the lesser standard of “preponderance of the evidence” applies.  Tex.Code Crim.Proc. art. 42.037(k).   At the hearing, the statutory burden of demonstrating the amount of the loss sustained by a victim as a result of the offense is on the prosecuting attorney.  The burden of demonstrating the financial resources of the defendant and the financial needs of the defendant and the defendant’s dependents is on the defendant.  The burden of demonstrating other matters as the court deems appropriate is on the party designated by the court as justice requires.  Id.

Plea Bargaining and Restitution

A great many criminal cases, filed in either state or federal court, will end up in negotiations between the criminal defense lawyer and the prosecutor in a negotiated plea deal.  One of the bargaining chips here may be the negotiation of restitution by the defendant as part of an agreed lesser sentence.  An aggressive criminal defense attorney may be able to orchestrate the dismissal of all criminal charges in exchange of a substantial restitution arrangement in a plea agreement.

For more on plea bargaining, read:

Civil Cases for Damages

Of note, any negotiation between the government and the criminal defense attorney regarding financial restitution to the crime victim cannot negotiate or prevent the ability of the crime victim to sue the defendant for monetary damages in civil court.

For more on civil claims, read:

The Need for Experienced Criminal Defense Representation for Restitution Orders

For defendants with substantial financial assets, the ability of the government to argue for large restitution orders can impact not only the defendant’s future, but also the lives of their loved ones for many years to come.  Physicians facing health care fraud charges, for instance, may face the jeopardizing of their children’s college education and more.

For more, read:

Accordingly, it is imperative for any criminal defendant whose finances and property are being surveyed by government agents for possible restitution to have a vigilant and knowledgeable criminal defense lawyer to advocate on their behalf.

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For more information, check out our web resources, read Michael Lowe’s Case Results, and read “Top 5 Mistakes in Defending a Texas Criminal Case.”

 

 
Posted on by Michael Lowe , on InDepth Articles, Sentencing

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