Term: 2017
Docket: 16-1519
Lagos v. United States
- Pro
16-1519 LAGOS V. UNITED STATES DECISION BELOW: 864 F.3d 320 CERT. GRANTED 1/12/2018 QUESTION PRESENTED: Under the Mandatory Victims Restitution Act (MVRA), courts must order the defendant 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." 18 U.S.C. 3663A(b)(4). In the decision below, the Fifth Circuit, adopting the decisions of multiple courts of appeals, held that this provision covers the costs of internal investigations and private expenses that were "neither required nor requested" by the government; these private costs were incurred outside the government's official investigation, and, indeed, were incurred before the government's investigation even began. In reaching this conclusion, the Fifth Circuit expressly rejected the "opposite conclusion" from the D.C. Circuit, which itself "recognize[d]" but "respectfully disagree[d]" with the decisions of four other courts of appeals. Judge Higginson concurred below, acknowledging that he was bound by circuit precedent, but "agree[d] with the D.C. Circuit's persuasive interpretation" of the statute. The courts of appeals are clearly and intractably divided over this important and recurring question of statutory interpretation-one that repeatedly occurs whenever companies detect hints of fraud and conduct an internal investigation. The question presented is: Whether Section 3663A(b )( 4) covers costs that were "neither required nor requested" by the government, including costs incurred for the victim's own purposes and unprompted by any official government action. LOWER COURT CASE NUMBER: 16-20146
In Lagos v. United States, the Supreme Court ruled that the Mandatory Victims Restitution Act of 1996 (MVRA) does not cover costs incurred by victims in private investigations and civil proceedings related to the offense. The case involved Sergio Fernando Lagos who had pleaded guilty to using a company he controlled to defraud a lender of $26 million. After his conviction, he was ordered under MVRA to pay restitution for legal, expert and consulting fees that General Electric Capital Corporation spent on internal investigations and bankruptcy litigation caused by his fraud scheme. However, Lagos argued these expenses were not "investigation" or "proceedings" as defined by MVRA because they weren't conducted by government bodies but rather private entities. The Fifth Circuit initially rejected this argument but upon appeal, the Supreme Court unanimously reversed this decision stating that MVRA only covers governmental proceedings.
In the dissenting opinion for Lagos v. United States, Justice Breyer argued that the Mandatory Victims Restitution Act (MVRA) should cover costs incurred during private investigations and civil proceedings related to fraud offenses. He contended that these expenses are a direct result of criminal conduct and therefore fall within the scope of "investigation" and "proceedings" as defined by MVRA. The majority's narrow interpretation, he claimed, fails to consider Congress' intent in passing this legislation - which was to ensure full restitution for victims of crime. Furthermore, he pointed out that limiting restitution only to government-initiated actions would create an unfair burden on victims who often have no choice but to undertake their own investigations or initiate civil proceedings due to resource constraints faced by public authorities.
