United States: Second Circuit Affirms Mandatory Restitution Award For Bribery Conviction

In United States v. Razzouk, the Second Circuit (Walker, Carney, Koeltl by designation) considered the meaning of an "offense against property" as used by the Mandatory Victim Restitution Act ("MVRA").  The panel rejected a categorical approach, and instead permitted consideration of the facts and circumstances of the defendant's crimes.  Restitution is one of the areas in sentencing law that has seen major developments over the past few years.  This decision appears to continue the Second Circuit's long tradition of being a generally favorable forum for victims of crime.

Background

From 2007 to 2011, Sassine Razzouk worked as a manager at power company Con Edison.  The Government alleged that he abused his position by manipulating Con Edison's contractor bidding system to benefit a company owned by his friend Rodolfo Quiambao.  In total, Razzouk's crimes cost Con Edison approximately $6 million compared to what it would have paid using legitimate bids.  In exchange, Razzouk received bribery payments.

In January 2011, the Government charged Razzouk with one count of accepting bribes and three counts of tax evasion.  Razzouk elected to cooperate with the Government, pleading guilty and agreeing to provide information about his friend and co-conspirator Quiambao in exchange for the Government's promise to ask the court to impose a more lenient sentence than provided for under the Guidelines.  Proving the truism that not every defendant is cut out to be a cooperating witness, Razzouk's decision to cooperate was unwise:  Razzouk broke his cooperation agreement, revealing details about his cooperation to Quiambao and even offering to testify falsely in Quiambao's trial.  A subsequent effort to withdraw his guilty plea failed and the Government ultimately declined to file a 5K1.1 letter in support of a downward departure.¹  The District Court even denied a reduction in offense level for acceptance of responsibility and it sentenced Razzouk to 78 months of incarceration and ordered him to pay $6.87 million to Con Edison as restitution.  The District Court held that Razzouk's crime was a "crime against property," which triggered the provisions of the MVRA.  The District Court calculated the restitution to Con Edison as follows:

The Circuit's Decision

On appeal, Razzouk principally argued that his crimes were not "offenses against property" and therefore the MVRA could not apply to him.  The MVRA is a federal statute intended to provide restitution to victims of certain crimes—namely, "a crime of violence," and an "offense against property. . . . including any offense committed by fraud or deceit."  18 U.S.C. § 3663A(c)(1).  If the MVRA applied to Razzouk, then an award of restitution was mandatory; otherwise, it would be in the District Court's discretion whether to award restitution.  See 18 U.S.C. § 3663(a).  Razzouk's argument was that the federal bribery statute, under which he was convicted, does not mention "property" and the elements of the crime do not implicate property. 

This argument is akin to the "categorical approach" commonly applied to the Armed Career Criminal Act and other federal statutes.  Under that approach, it is the elements of the offense that determine whether an offense qualifies as a predicate offense, not the specific facts of the defendant's case.  Here, the panel rejected such an approach.  Instead, it held that the facts of Razzouk's crimes can be considered in determining whether he committed an offense against property.  It principally relied on the fact that the statute refers to an offense "committed by fraud or receipt," evincing a focus on the commission of the crime itself rather than the statutory elements.  It also noted that its interpretation was in harmony with the purpose of the MVRA, which is to make victims of crime whole, and comported with the decisions of other Circuits. 

Having determined that it may consider the facts and circumstances of Razzouk's crimes, the panel had little trouble concluding that he committed offenses against property.  Razzouk admitted during his plea allocution that he deprived Con Edison of money by steering contracts to his friend in exchange for bribes. 

Finally, the panel addressed the District Court's imposition of restitution for Con Edison's investigatory expenses.  The MVRA provides that victims be reimbursed for expenses incurred "during participation in the investigation or prosecution of the offense."  18 U.S.C § 3663A(b)(4).  In Lagos v. United States, 138 S. Ct. 1684 (2018), the Supreme Court held that this provision refers to participation in a governmental investigation, and left open the issue of whether a victim could be awarded restitution for expenses incurred in conducting a private investigation.  Although Razzouk did not address the issue on appeal, the Government did not oppose a limited remand for the District Court to consider the issue in the first instance.  Lagos marked a departure from Second Circuit precedent which was more favorable to victims who conducted internal investigations as part of their response.  See United States v. Amato, 540 F.3d 153 (2d Cir. 2008) (holding that attorneys' fees and accounting costs may be recovered as restitution under the MVRA").

Analysis

 This case continues the Second Circuit's broad interpretation of the scope of restitution.  (See, e.g., our coverage of United States v. Parnell, where the Circuit held that restitution includes losses from a fraudulent scheme that occurred outside the limitations period; Federal Insurance Co. v. United States, where the Circuit ordered a company to pay restitution for the criminal acts of its employees.).  Here Razzouk's reliance on the categorical approach ran contrary to the statutory text as well as the purpose underlying the MVRA.  Given the widespread use of the categorical approach, it makes sense that defense counsel would seek to use it here.  However, it is fair to ask why the Court would employ the categorical approach in any context other than one in which it was required.  As Judge Pooler noted in a recent dissent, "the categorical approach itself is a rather bizarre exercise, requiring intricate legal inquiry to determine . . . whether [a] conviction[] for shooting another person in the shoulder, should indeed be considered a crime of violence."  Villanueva v. United States, 893 F.3d 123, 139 (2d Cir. 2018) (Pooler, J.).  Confining the categorical approach to those places where it is required seems like a practical, prudent decision.

The decision also is a victory for victims of federal crimes.  Con Edison lost $6 million due to Razzouk's crimes.  The fact that the crime was committed through a bribery scheme rather than some other means has no practical effect on Con Edison's loss, nor does it mean that this crime was other than a crime against Con Edison's property.  The Court's decision rejected Razzouk's attempt to evade his restitution obligations on what amounts to, in essence, a technicality.  On the Lagos issue, however, it seems likely that the defendant will be able to reduce his restitution.

Footnote

1. In a summary order, Razzouk made several arguments to challenge the Government's actions, but they were not successful.  With respect to his argument that the Government acted in bad faith, the Court dryly observed "that in light of his own actions Razzouk is ill-placed to argue bad faith."

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