Monday, August 15, 2005

Some Restitution Issues for the Well-to-Do Defendant

United States v. Bernard Jaffe. Jr., Docket No. 04-1278-cr (2d Cir. August 2, 2005) (Winter, Katzmann, Raggi) (Op. by Winter): This case addresses a host of related issues concerning restitution. Jaffe pled guilty to making false statements in connection with securing a $20 million loan from a bank, and the district court ordered restitution in the full amount of the victim's loss, as required by the MVRA, 18 USC ยง 3663A et seq. Additionally, the district court imposed a schedule of restitution payments that, among other things, required a $1.5 million payment by September 2005 and subsequent payments of at least $150,000 each January. Jaffe objected to the schedule on numerous grounds, claiming inter alia that (1) the district court ignored his non-legal obligation to support a 43-year-old adult daughter; and (2) the schedule violated ERISA and Florida's homestead exemption law because the only way that he could meet the repayment schedule -- in particular the $1.5 million lump sum payment -- was by either liquidating ERISA-protected accounts or his $1.3 million condo in Florida.

The Circuit rejected all of these challenges. Primarily, it held that under the MVRA, which requires the court to consider the defendant's "obligations to dependents" in setting the schedule of repayment, the court need only consider "legal obligations" and not merely moral ones. Thus, the district court properly refused to consider the fact that Jaffe also financially supported an adult daughter, who suffered from depression and was in treatment for cancer, in setting the schedule. Op. at 8 ("[A] 'dependent' is someone that the defendant has a legal obligation to support.").

The Circuit also rejected Jaffe's ERISA and homestead law claims. Essentially, the Court held that because the schedule of repayment did not require the liquidation of any assets in particular, it did not intrude upon these laws. As the Court explained, the schedule "leaves the choices of assets to be tapped to appellant." Op. at 12. The Court suggests (facetiously, in this reader's opinion) that Jaffe -- convicted of lying to secure bank loans -- could somehow satisfy the payment schedule by securing "some other source of funds, such as a loan". Id.


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