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167.

Restitution for Consumers

Restitution for consumer purchasers should be sought in odometer fraud cases whenever possible. U.S.S.G. § 5E1.1(a) provides that the court shall order restitution in all appropriate cases, either at the time of sentencing or as a condition of supervised release. The procedure and considerations to be employed in determining whether to order restitution are set forth in 18 U.S.C. §§ 3663 and 3664.

The defendant's resources, financial needs, and earning ability may limit restitution. See 18 U.S.C. § 3664. In addition, pursuant to 18 U.S.C. § 3663(d) and U.S.S.G. § 5E1.1(b), the court may decline to order restitution where the complication and prolongation of the sentencing process resulting from the fashioning of a restitution requirement outweighs the need to provide restitution to any victims.

Prosecutors should consider these factors to determine whether it is appropriate to seek an order of restitution pertaining only to the owners of motor vehicles that are specifically identified in the indictment. Where there are numerous victims of a scheme, the loss to consumers is likely to greatly exceed the defendant's ability to provide restitution. Moreover, determining the identity of all victims may be extremely complicated.

Prosecutors who wish to seek restitution for owners of motor vehicles not itemized in the indictment should consider charging an offense containing a scheme, conspiracy, or pattern as an element. See 18 U.S.C. § 3663(a)(2) (authorizing restitution). Hughey v. United States, 495 U.S. 411 (1990) and its progeny should also be considered, since courts have varied in their interpretation of provisions that may authorize such restitution. See United States v. Westland, 23 F.3d 205, 207 (8th Cir.) (discussing restitution in mail fraud convictions), cert. denied, 115 S.Ct. 641 (1994). Compare Gall v. United States, 21 F.3d 107 (6th Cir. 1994), with United States v. Daddato, 996 F.2d 903 (7th Cir. 1993).

Determining with precision individual consumer loss, and identifying victims where there are multiple owners, can be difficult or impossible. The amount of restitution should ordinarily hinge on the loss per car finding used under U.S.S.G. § 2F1.1. Similarly, based on the practical question of what data is available, a prosecutor can rationally recommend restitution be paid to either the first consumer-owner or to the current consumer-owner. While such a distribution may use averages and general principles that would both under- and over-compensate particular victims, sentencings should not be used to sort out the car problems of numerous victims. To attempt to do so would unduly complicate the proceedings, triggering the exemptions of 18 U.S.C. § 3663(d) and U.S.S.G. § 5E1.1(b).

Furthermore, where the precise amount is difficult to determine, the court is authorized to reach an expeditious, reasonable determination of appropriate restitution by resolving uncertainties with a view toward achieving fairness to the victim. See U.S.S.G. § 5E1.1, Background. In general, fairness suggests that the very limited restitution monies that are generally available be provided to consumer victims rather than to institutions such as dealers or auctions that may have purchased the rollback vehicles. Consumers are generally unable to protect themselves from rollbacks. Institutional purchasers, on the other hand, have greater resources to avoid purchasing the rollbacks in the first instance.

Prosecutors should address issues regarding restitution in the presentence investigation. Final decisions about the amount of restitution and schedule and amounts of payments should be determined by the court in its sentence, not by the probation office. See United States v. Johnson, 48 F.3d 806, 807-09 (4th Cir. 1995); United States v. Porter, 41 F.3d 68, 71 (2d Cir. 1994); United States v. Albro, 32 F.3d 173, 174 (5th Cir. 1994) (timing and amount of payments); United States v. Gio, 7 F.3d 1279, 1292-93 (7th Cir. 1994) (same). But cf. United States v. Clack, 957 F.2d 659, 661 (9th Cir. 1992) (indicating court may set upper limit of total restitution and delegate to probation officer timing and amount of payments).

It is important to notify victims of the offense that they are victims, and of their rights. Victims often purchase motor vehicles with inaccurate mileage from reputable dealers which may repurchase the vehicle or make a financial settlement satisfactory to the victim. The victim also may have a right of action against the dealer.

Further, witness notification is consistent with 42 U.S.C. § 10607, which directs prosecutors to make victims aware the rights they may have under the law. Notice also alerts the consumer to the true mechanical needs of the vehicle, and may avoid further sales with the odometer reading represented as accurate. In order to facilitate this process, the identification of victims should be considered during the investigative effort. The task of notifying victims can often be delegated to the investigative agency. NHTSA has made victim notification a priority, and has standardized information to provide to victims.

Part of victim notification may involve producing to victims copies of documents subpoenaed by a grand jury. Consideration should be given to whether an order should be obtained from the court supervising the grand jury authorizing the disclosure. What follows is a motion that was used to obtain such an order. PRACTICE TIP: While notification in the case below occurred after prosecution was completed, there is no general reason why notification cannot take place much earlier. Consideration should be given to providing notice even while an investigation is ongoing. Consumers having excessive miles on their vehicles could then take precautions to avoid mechanical problems, and may also be able to obtain restitution on their own, particularly if they purchased from a legitimate dealer which acquired the vehicle from the persons committing the fraud.

Of course, this is a strategic decision that should take place in the context of the particular needs of an individual case. Factors to be considered include prematurely revealing an investigation, the possibility of flight, and the potential that private litigation could be initiated.

[cited in USAM 4-8.310]