No. 97-5253 IN THE SUPREME COURT OF THE UNITED STATES OCTOBER TERM, 1996 LARS NELSON BORNKESSEL, PETITIONER v. UNITED STATES OF AMERICA ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT BRIEF FOR THE UNITED STATES IN OPPOSITION SETH P. WAXMAN Acting Solicitor General JOHN C. KEENEY Acting Assistant Attorney General JOSEPH C. WYDERKO Attorney Department of Justice Washington, D.C. 20530-0001 (202) 514-2217 ---------------------------------------- Page Break ---------------------------------------- QUESTION PRESENTED Whether the district court properly ordered petitioner to pay $423,623 in restitution under the Victim and Witness Protection Act of 1982, 18 U.S.C. 3664(a) (1994) , amended by the Mandatory Victims Restitution Act of 1996, Pub. L. No. 104-132, 110 Stat. 1232. (I) ---------------------------------------- Page Break ---------------------------------------- IN THE SUPREME COURT OF THE UNITED STATES OCTOBER TERM, 1996 No. 97-5253 LARS NELSON BORNKESSEL, PETITIONER v. UNITED STATES OF AMERICA ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT BRIEF FOR THE UNITED STATES IN OPPOSITION OPINION BELOW The opinion of the court of appeals (Pet. App. la-2a) is unreported, but the judgment is noted at 116 F.3d 476 (Table) . JURISDICTION The judgment of the court of appeals was entered on April 15, 1997. The petition for a-writ of certiorari was filed on July 3, 1997. The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1) . STATEMENT After a jury trial in the United States District Court for the Western District of Texas, petitioner was convicted of conspiracy to commit wire fraud, in violation of 18 U.S.C. 371, and on two ---------------------------------------- Page Break ---------------------------------------- 2 counts of wire fraud, in violation of 18 U. S. C.. 1343. He was sentenced to 46 months' imprisonment, to be followed by three years of supervised release, and ordered to pay $432,623 in restitution. 1. Between January 1993 and March 1994, co-defendant Sherrill Landes owned and operated two telemarketing businesses, Hugs and Not Drugs (HAND) and Nationwide Marketing Company (Nationwide) , in San Antonio, Texas, that defrauded thousands of consumers of $2.7 million. Sales representatives for HAND misrepresented that consumers would receive a valuable award, such as a new automobile or a $5,000 shopping spree, if they sent fees ranging from $527 to $999 for merchandise with anti-drug messages. Sales representatives for Nationwide primarily targeted elderly persons, misrepresenting that such persons would receive a valuable award if they sent fees ranging from $1,000 to $2,500 to cover processing costs and taxes. Gov't C.A. Br. 3-12; PSR 5-7. Petitioner began working for HAND as a sales representative in September 1993- Shortly thereafter, he began working as a sales representative for Nationwide. Petitioner, who was considered one of Nationwide's top salesmen, generated $50,685 in sales. In January 1994, petitioner became an assistant manager at Nationwide. In that capacity, petitioner earned a commission on the sales made by the sales representatives who worked for him. He made sure that sales representatives had leads, attended sales meetings, and stepped in when a sales representative had difficulty closing a sale. Between January and March 1994, Nationwide generated sales of $381,938. Gov't C.A. Br. 12-13; Second Addendum to PSR 1. ---------------------------------------- Page Break ---------------------------------------- 3 2. Petitioner was initially sentenced on January 19, 1995, to 57 months' imprisonment, to be followed by three years of supervised release. He was also ordered to pay $866,230 in restitution. On October 31, 1995, the court of appeals affirmed petitioner's convictions, but vacated his sentence and remanded for ". resentencing. Gov't C.A. Br. 3; See also United States v. Landes 71 F.3d 875 (5th Cir. 1995) (Table) . 3. On January 18, 1996, petitioner was resentenced. The district court determined that petitioner's Sentencing Guidelines range was 46-57 months' imprisonment, based on his offense level of 22 and his placement in Criminal History Category II. In calculating the offense level, the court found that petitioner's offense conduct resulted in losses to the victims totaling $432,623, which included petitioner's own sales at Nationwide of $50,685 as well as Nationwide's sales of $381,938 between January and March 1994 when petitioner worked as an assistant manager. 1/18/96 Tr- 5-6 Second Addendum to PSR 1; Gov't C.A. Br. 13-14. The district court sentenced petitioner to 46 months' imprisonment, to be followed by three years of supervised release. The court also ordered petitioner to pay $432,623 in restitution. 1/18/96 Tr. 7-8; Amended Judgment 1-6. 4. The court of appeals affirmed. Pet. App. la-.2a. It ruled that " [t]he district court did not err in finding that [petitioner] was responsible for $381,937.96 in losses as assistant manager at Nationwide ." Ibid. The court also concluded that " [t]he district Court did not abuse its discretion in ordering restitution." Id. ---------------------------------------- Page Break ---------------------------------------- 4 at 2a (citing United States v. Ryan, 874 F.2d 1052, 1054 (5th Cir. 1989) ) . ARGUMENT Petitioner's sole contention (Pet. 8-13) is that the district court improperly ordered. him to pay restitution under the Victim and Witness Protection Act of 1982 (VWPA) , former 18 U.S.C. 3664 (1994) , without considering his and his wife's future earning ability. That contention does not merit this Court's review, When petitioner was resentenced on January 18, 1996, the VWPA provided: The court, in determining whether to order restitution under section 3663 of this title and the amount of restitution, shall consider the amount of the loss sustained by any victim as a result of the offense, the financial resources of the defendant, the financial needs and earning ability of the defendant and the defendant's dependents, and such other factors as the court deems appropriate. 18 U.S.C. 3664(a) (1994). As petitioner notes (Pet. 10-13) , the courts of appeals expressed some disagreement concerning whether Section 3664(a) allowed a district court to order full restitution when a defendant was indigent and had a limited earning ability.l ___________________(footnotes) 1 Compare United States v. D'Andrea, 107 F.3d 949, 959 (lst Cir. 1997) (" [A] sentencing court [is] not required to base its determination on a finding that the defendant has the ability to repay the ordered amount of restitution" so long as the court "considered [the defendant's] financial situation in arriving at its figure."); United States v. Ahmed, 2 F.3d 245, 247 (7th Cir. 1993) ("When there is doubt about the ability to pay, the court should order "full restitution. " ); United States v. Ryan, 874 F.2d 1052, 1054 (5th Cir. 1989) (" [A] defendant's indigency at the time restitution is ordered is not a bar to the requirement of restitu- tion.") ; with United States v. Ramilo, 986 F.2d 333, 336 (9th Cir. 1993) ("[T]he record must reflect some evidence [that 1 the defendant may be able to pay destitution in the amount ordered in (continued. . .) ---------------------------------------- Page Break ---------------------------------------- 5 The disagreement among the courts of `appeals over the proper interpretation of former Section 3664(a), however, does not warrant this Court's review. In 1996, Congress enacted the Mandatory Victims Restitution Act of 1996 (MVRA) , Pub. L. No. 104-132, 201-211, 110 Stat. 1227, which applies to sentencing proceedings in cases in which the defendant was convicted on or after April 24, 1996. The MVRA generally makes an order of restitution mandatory for any offense that is: (i) a crime of violence * * * (ii) an offense against property under this title, including any offense committed by fraud or deceit; or (iii) an offense described in section 1365 (relating to tampering with consumer products); and (B) in which an identifiable victim or victims has suffered a physical injury or pecuniary loss. 18 U.S.C. 3663A(c)(l). Moreover, the MVRA provides that whenever a court determines the amount of restitution, it cannot consider the defendant's financial resources: In each order of restitution, the court shall order restitution to each -victim in the full amount of each victim's losses as determined by the court and without consideration of the economic circumstances of the defendant. 18 U.S.C. 3664(f) (1) (A) (Supp. II 1996). Thus , for most persons like petitioner, who was convicted of fraud, one of the covered ___________________(footnotes) 1 (... continued) the future."); United States v. Zink 107 F-3d 716, 719 (9th Cir. 1997);United States v. Logar 975 f.2d 958, 963 (3d Cir. 1992); United States v. McIlvain 967 F.2d 1479, 1481 (lOth Cir. 1992) ; United States v. Mitchell, 893 F.2d 935, 936 (8th Cir. 1990). ---------------------------------------- Page Break ---------------------------------------- 6 crimes, the sentencing court must now order full restitution in every case, regardless of the defendant's financial resources and earning ability. In such cases, the economic circumstances of a defendant are taken into account only when the court determines "the manner in which, and the schedule according to which, " the defendant will satisfy the restitution order. 18 U.S.C. 3664(f) (2) (Supp. II 1996). See Fuentes, 107 F.3d at 1531 nn.28 & 30; United States v. Zink 107 F.3d 716, 719 n.1 (9th Cir. 1997). The enactment of the MVRA, with its restrictions on a sentencing court's ability to consider a defendant's financial resources in imposing a restitution order, reduces markedly the continuing importance of the question presented by petitioner.2 In addition, further review is unwarranted in this case because petitioner did not raise the question presented here in the district court. At his resentencing hearing, petitioner objected to the amount of restitution on the ground that he should be held responsible only for the losses attributable to his own fraudulent sales, and not the losses" resulting from Nationwide's fraudulent sales while he worked as an assistant manager. Petitioner did not object to the amount of restitution ordered by the district court on the ground that it was beyond his earning ability. 1/18/96 Tr. ___________________(footnotes) 2 A provision substantially similar to former 18 U.S.C. 3664 (a) is now codified at 18 U.S.C. 3663(a) (1) (B) (i). That provision applies to those convicted of crimes not covered by the mandatory restitution provisions of 18 U.S.C. 3663A. For such persons, the issue presented by petitioner may have continuing importance, but it is not clear how many cases will raise the issue. ---------------------------------------- Page Break ---------------------------------------- 7 2-4, 12. Consequently, petitioner's claim is subject to review under the plain error standard. The district court's restitution order in this case is not plainly erroneous. The court established a schedule making the restitution payable in monthly amounts of no, less than $150 during petitioner's three-year term of supervised release. Amended Judgment 3, 5. That monthly payment is well within petitioner's future earning ability given his youth, family support, and past employment history. Following the supervised release term, the restitution order operates, in effect, as a civil judgment subject to certain statutory limitations. See United States v. Porter, 90 F.3d 64, 69-70 (2d Cir. 1996). Accordingly, the district court's restitution order does not seriously affect the fairness, integrity, or public reputation of judicial proceedings. CONCLUSION The petition for a writ of certiorari should be dented. Respectfully submitted. SETH P. WAXMAN Acting Solicitor General JOHN C. KEENEY Acting Assistant Attorney General JOSEPH C. WYDERKO Attorney SEPTEMBER 1997