United States District Court, D. Alaska
ORDER OF RESTITUTION
SHARON
L. GLEASON UNITED STATES DISTRICT JUDGE.
Before
the Court at Docket 342 is the United States' Motion for
Order of Restitution. Defendant's Response to the motion
is at Docket 349, and the Government filed a Reply at Docket
361. The Government seeks the entry of a restitution award in
the amount of $3, 259, 700 payable to Sheila Brandner, and an
award in the amount of $27, 000 payable to Attorney Robert
Woofter.
Defendant
opposes any award of restitution. He first observes that one
of the alleged victims, Sheila Brandner, did not submit a
victim impact statement, and has otherwise refused to
participate in the restitution process. At a minimum,
Defendant maintains that the Court should afford Ms. Brandner
the opportunity to be heard on the motion. However, Ms.
Brandner has provided a letter to the Court;[1] she also
addressed the Court at the sentencing hearing. Clearly, Ms.
Brandner does not perceive herself to be a victim of Dr.
Brandner as she defines that term. At sentencing, she stated,
"I'm obviously the person in question here where
[it's] been said that I'm a victim, and I disagree. I
think Michael [Brandner] has been a
victim."[2] In Ms. Brandner's letter to the Court,
she discussed her firm belief that Dr. Brandner lacked any
criminal intent; rather, in her view he sought only to
protect the family's assets when he secretly moved them
out of the United States.[3] Sheila Brandner has made her position
well known to the Court, and the Court has fully considered
it.
The
applicable statute is the Mandatory Victims Restitution Act
of 1996 ("MVRA"), 18 U.S.C. § 3663A. In
enacting the MVRA, Congress eliminated a court's
discretion as to whether to award or deny restitution; this
discretion was previously vested in district courts by the
Victim and Witness Protection Act
("VWPA").[4] A district court is now required to order
restitution to a victim whenever a defendant is convicted of
certain types of crimes, including one of the types of crimes
at issue in this case: wire fraud.[5] Congress did not, however,
mandate that a victim cooperate with the restitution process;
rather, "[n]o victim shall be required to participate in
any phase of a restitution order."[6] Congress also
provided that a victim may assign her interest in the
restitution to the Crime Victims Fund
("CVF").[7] The statute is silent on how a district
court should proceed when a victim refuses the restitution
that a court is required to award.
The
Court acknowledges that Ms. Brandner does not perceive
herself to be a victim of Dr. Brandner under her definition
of that term. However, the Court must apply the definition of
the term "victim" that Congress has provided in the
MVRA. That act defines a victim as "a person directly
and proximately harmed as a result of the commission of an
offense for which restitution may be
ordered."[8] The Ninth Circuit has explained that
"[a] victim for restitution purposes is a person who has
suffered a loss caused by the specific conduct that is the
basis of the offense of conviction."[9] "The
government bears the burden of proving [by a preponderance of
the evidence] that a person or entity is a victim for
purposes of restitution" and proving the amount of the
loss.[10]
Applying
the MVRA's definition of victim, the Court concludes that
Sheila Brandner is a victim of Dr. Brandner's wire fraud
scheme. The jury found Dr. Brandner guilty of four counts of
wire fraud: one with respect to the wired letter from the
fictitious "Frederico Rodriguez, " which falsely
indicated that there was a $3.25 million promissory note held
by "Dakota Investments" that could not be
cancelled. The other three counts all related to wired forms
regarding the $1.24 million in Pensco funds.[11] As a direct
and proximate result of each of these transactions, Ms.
Brandner suffered the loss of her marital interest in these
funds. But for Dr. Brandner's illegal wire fraud
transactions, Ms. Brandner's share of the marital estate
would not have been secretly moved out of the country and
ultimately seized by the Government when Dr. Brandner later
attempted to secretly move the funds back into the United
States.
Dr.
Brandner also asserts that the law firm of Attorney Robert
Woofter was not a victim of the wire fraud, maintaining that
the wire transactions of which Dr. Brandner was convicted
"did not directly or proximately harm
Woofter."[12] Instead, Dr. Brandner asserts that Mr.
Woofter "was harmed only because he was not paid by his
client."[13] It is not disputed that Mr.
Woofter's firm is owed $27, 000 in legal fees for work
that Mr. Woofter performed for Sheila Brandner in connection
with the Brandners' divorce. In its Amended Findings of
Fact and Conclusions of Law in the Brandner divorce, the
Alaska divorce court held that it would generally have
required each party to bear his or her own legal fees, but in
the Brandners' case the divorce court ordered Dr.
Brandner to pay all of Sheila Brandner's fees, including
the $27, 000, "[b]ecause Sheila's legal fees were
impacted by Michael's intentional secreting of assets and
his actions that led to her being
destitute."[14]Based on the divorce court's
findings, as well as the balance of the record in this case,
including Mr. Woofter's testimony at trial, the Court
finds that Mr. Woofter's unpaid legal fees were directly
and proximately caused by Dr. Brandner's wire fraud. But
for Dr. Brandner's wire fraud, Ms. Brandner would have
had available her share of the secreted funds from which to
pay Mr. Woofter's legal fees, and the amount of those
fees would have been considerably less. Instead, Mr.
Woofter's legal fees remain unpaid and should be included
in the restitution award.
Dr.
Brandner also takes issue with the amount of restitution to
be awarded to Shelia Brandner. He correctly observes that the
amount of intended loss for Sentencing Guidelines purposes is
not determinative of the amount of restitution. The Ninth
Circuit has explained:
[R]estitution clearly focuses on the victim, not the
individual defendant. Restitution seeks to compensate the
victim for all the direct and proximate
losses resulting from the defendant's conduct, not
only for the reasonable foreseeable losses. The purpose of
restitution is to put the victim back in the position he or
she would have been but for the defendant's criminal
conduct.[15]
Thus,
the purpose of restitution is different from the purpose of
sentencing, and a court should not look to the advisory
Sentencing Guidelines for calculating a victim's
losses.[16]
Rather,
in determining restitution, the focus should be on
compensating a victim for the actual loss proximately caused
to that victim by the defendant's conduct.
Here,
the amount of Sheila Brandner's actual loss can be
determined by reference to the divorce court's Amended
Findings of Fact and Conclusions of Law.[17] The divorce
court ordered the entire Pensco account to be awarded to
Sheila Brandner, valued at $1, 264, 700. Due to Dr.
Brandner's wire fraud, Sheila Branderhas received none of
these funds. Therefore, the entire Pensco amount should be
included in Ms. Brandner's restitution award.
In
addition to the Pensco funds, there was approximately $3.25
million in other funds that Dr. Brandner secretly moved to
Central America. Dr. Brandner created a fictitious promissory
note for $3.25 million in an effort to restrict both the
divorce court and Sheila Brandner's access to these
funds. The divorce court awarded Sheila Brandner an
overall 60% of the marital estate. Combining the
value of all the property listed in the Amended Findings of
Fact and Conclusions of Law with the $3.25 million promissory
note, the total estate as valued by the divorce court was $5,
033, 669. Ms. Brandner's 60% share of that estate totals
$3, 020, 201. Of this award, Ms. Brandner received $387, 035
at the time of the divorce, mostly derived from the value of
the marital home. She was also awarded the Pensco account,
which she has not received, but is valued at $1, 264, 700.
Accordingly, to achieve a 60% distribution of the estate to
Ms. Brandner, she is entitled to $1, 368, 466 of the $3.25
million note proceeds.[18]
This
$1, 368, 466 amount, combined with the Pensco funds of $1,
264, 700, is the total amount of restitution that Ms.
Brandner should receive. By these calculations, the amount of
restitution due to Ms. Brandner is $2, 633,
166.[19] Because the Court has the benefit of the
divorce court's findings as to the division of the
parties' marital property, no evidentiary hearing was
necessary to resolve this issue.
Dr.
Brandner next asserts that restitution should not be awarded
because the "chain of potential causation was broken
both by the federal government's seizure of and refusal
to return Sheila Brandner's funds to her and also by
Sheila Brandner's own totally unforeseeable refusal to
seek the return of her divorce court awarded
funds."[20] The applicable case law specifies that a
loss cannot be too far removed from a defendant's
conduct. As the Ninth Circuit has explained, a
"[defendant's conduct need not be the sole cause of
the loss, but any subsequent action that contributes to the
loss, such as an intervening cause, must be directly related
to the defendant's conduct."[21] Here, the
Court does not find either the Government's seizure of
the funds when Dr. Brandner attempted to return them to the
United States, or Ms. Brandner's delay in seeking the
return of the funds from the Government, to constitute an
intervening cause so distinct from Dr. Brandner's
original misconduct so as to constitute a superceding cause
that precludes the entry of an award of
restitution.[22] value of $1, 652 million, including the
Pensco funds and the marital home, while Dr. Brandner was
awarded other assets and debts with a combined value of only
$131, 669. See Docket 301-1 at 12. Stated differently, the
divorce court's findings evidence an intent to divide the
$3.25 million note proceeds in a manner that would effectuate
an overall 60/40 division of the entire estate.
Finally,
there remains the question of how the Court should proceed if
Sheila Brandner refuses the restitution that the Court is
required to award to her under the MVRA. The Ninth Circuit
has not addressed this precise issue.[23] Other
circuits that have addressed the issue have taken different
approaches. In the Second Circuit, a district court faced
with a victim disclaiming restitution must still order
restitution, but may itself assign the award to the CVF. A
victim, the Second Circuit reasons, "may not veto the
obligation of the District Court to impose orders of
restitution."[24] The Tenth Circuit, by contrast, has held
that a district court cannot assign restitution to the CVF,
and if a victim refuses restitution without assigning her
interest, restitution is no longer mandatory.[25] The Seventh
Circuit has also rejected the contention that a district
court can assign restitution to the CVF on behalf of the
victim who refuses it.[26]
The
Court finds the Second Circuit's approach to be more
consonant both with the statutory text and structure and with
the Ninth Circuit's general approach to restitution, and
adopts and applies that approach here.[27] Dr. Brandner
has been convicted of four counts of wire fraud, and so the
MVRA requires the Court to order restitution to the victim of
these crimes, Ms. Brandner.[28] This mandatory directive to
the sentencing court has only two enumerated exceptions: it
shall not apply if "the number of identifiable victims
is so large as to make restitution impracticable" or if
calculating the victim's losses would unreasonably
prolong the sentencing process.[29] Neither exception applies
in this case; restitution is therefore
required.[30]
A
victim, however, cannot be compelled to accept restitution.
But a victim's right to refuse restitution, and her
related right to assign her interest to the CVF, cannot
defeat a court's obligation to impose restitution in the
first place. The statutory provisions detailing Ms.
Brandner's rights cannot "reasonably be interpreted
as carving out an exception to the mandatory nature of §
3663A."[31]
It is
true that "[t]he primary and overarching goal of the
MVRA is to make victims of crime whole."[32] This is not,
however, the sole purpose of the MVRA. Rather, the Ninth
Circuit recognizes that restitution in the criminal context
is also ...