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Lagos v. United States

Supreme Court of the United States

April 18, 2018, Argued; May 29, 2018, Decided

No. 16-1519.

Opinion

 [*1687]  Justice Breyer delivered the opinion of the Court.

The Mandatory Victims Restitution Act of 1996 requires defendants convicted of a listed range of offenses 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) (emphasis added).

We must decide whether the words “investigation” and “proceedings” are limited to government investigations and criminal [***5]  proceedings, or whether they include private investigations and civil proceedings. In our view, they are limited to government investigations and criminal proceedings.

The petitioner, Sergio Fernando Lagos, was convicted of using a company that he controlled (Dry Van Logistics) to defraud a lender (General Electric Capital Corporation, or GE) of tens of millions of dollars. The fraud involved generating false invoices for services that Dry Van Logistics had not actually performed and then borrowing money from GE using the false invoices as collateral. Eventually, the scheme came to light. Dry Van Logistics went bankrupt. GE investigated. The Government indicted Lagos. Lagos pleaded guilty to wire fraud. And the judge, among other things, ordered him to pay GE restitution.

The issue here concerns the part of the restitution order that requires Lagos to reimburse GE for expenses GE incurred during its own investigation of the fraud and during its participation in Dry Van Logistics’ bankruptcy proceedings. The amounts are substantial (about $5 million), and primarily consist of professional fees for attorneys, accountants, and consultants. The Government argued that the District Court [***6]  must order restitution of these amounts under the Mandatory Victims Restitution Act because these sums were “necessary . . . other expenses incurred during participation in the investigation . . . of the offense or attendance at proceedings related to the offense.” §3663A(b)(4). The District Court  [**5]  agreed, as did the U.S. Court of Appeals for the Fifth Circuit. 864 F.3d 320, 323 (2017).

Lagos filed a petition for certiorari. And in light of a division of opinion on the matter, we granted the petition. Compare United States v. Papagno, 639 F.3d 1093, 1100, 395 U.S. App. D.C. 82 (CADC 2011) (subsection (b)(4) of the Mandatory Victims Restitution Act does not cover private investigation costs), with United States v. Elson, 577 F.3d 713, 726-729 (CA6 2009) (statute not so limited); United States v. Hosking, 567 F.3d 329, 331-332 (CA7 2009) (same); United States v. Stennis-Williams, 557 F.3d 927, 930 (CA8 2009) (same); United States v. Amato, 540 F.3d 153, 159-163 (CA2 2008) (same); United States v. Gordon, 393 F.3d 1044, 1056-1057 (CA9 2004) (same).

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138 S. Ct. 1684 *; 201 L. Ed. 2d 1 **; 2018 U.S. LEXIS 3209 ***; 86 U.S.L.W. 4321; 27 Fla. L. Weekly Fed. S 286; 2018 WL 2402570

SERGIO FERNANDO LAGOS, Petitioner v. UNITED STATES

Notice: The LEXIS pagination of this document is subject to change pending release of the final published version.

Subsequent History: On remand at, Remanded by United States v. Lagos, 735 Fed. Appx. 171, 2018 U.S. App. LEXIS 24186 (5th Cir. Tex., Aug. 27, 2018)

Prior History:  [***1] ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

United States v. Lagos, 864 F.3d 320, 2017 U.S. App. LEXIS 4834 (5th Cir. Tex., Mar. 17, 2017)

Disposition: Reversed and remanded.

CORE TERMS

restitution, proceedings, expenses, Mandatory, private investigation, words, incurred expenses, attendance, criminal proceeding, government investigation, lost income, childcare, transportation, suggests, losses

Criminal Law & Procedure, Sentencing, Restitution, Governments, Legislation, Interpretation