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United States v. Lillard

United States Court of Appeals, Ninth Circuit

August 28, 2019

United States of America, Plaintiff-Appellee,
v.
Lonnie Eugene Lillard, Defendant-Appellant.

          Argued and Submitted May 14, 2019 Seattle, Washington

          Appeal from the United States District Court for the Western District of Washington D.C. No. 3:98-cr-05168-RJB-1, Ronald B. Leighton, District Judge, Presiding

          Lonnie Eugene Lillard, Sheridan, Oregon, pro se Defendant-Appellant.

          Gregory T. Murphy (argued), Assistant Federal Public Defender, Office of the Federal Public Defender, Seattle, Washington, for Amicus Curiae Office of the Federal Public Defender.

          Kyle A. Forsyth (argued), Assistant United States Attorney; Annette L. Hayes, United States Attorney; United States Attorney's Office, Seattle, Washington; for Plaintiff-Appellee.

          Before: Michael Daly Hawkins, William A. Fletcher, and Mark J. Bennett, Circuit Judges.

         SUMMARY [*]

         Criminal Law

         The panel reversed the district court's order granting the government's motion pursuant to § 3664(n) of the Mandatory Victims Restitution Act to seize funds in the defendant's inmate trust account to be applied to the defendant's outstanding restitution debt related to a prior conviction.

         The defendant received the funds in his inmate trust account while he was in pretrial detention awaiting trial on federal bank fraud charges. Section 3664(n) provides that if a person "receives substantial resources . . . during a period of incarceration, such person shall be required to apply the value of such resources to any restitution or fine still owed."

         The panel held that the change in the defendant's custodial sentence - he pled guilty and was sentenced to 196 months imprisonment - does not render the case moot; and that de novo rather than plain error review is appropriate.

         The panel held that the language and statutory context favor the view that the phrase "period of incarceration" in § 3664(n) does not include pretrial detention, and that the rule of lenity resolves any ambiguity in the defendant's favor.

         Dissenting, Judge Bennett wrote that pretrial detention qualifies as "a period of incarceration" under § 3664(n), and because the statutory language is unambiguous, the rule of lenity does not apply.

          OPINION

          W. FLETCHER, CIRCUIT JUDGE

         Lonnie Lillard received $6, 671.81 in his inmate trust account while in pretrial detention awaiting trial on federal bank fraud charges. When the United States Attorney's Office learned of his receipt of the $6, 671.81, it sought to apply the funds toward Lillard's outstanding restitution debt from an unrelated 1998 conviction. The United States moved to seize Lillard's funds pursuant to § 3664(n) of the Mandatory Victims Restitution Act ("MVRA"), codified in relevant part at 18 U.S.C. §§ 3613A, 3663A, 3664. Section 3664(n) of the MVRA provides that if a person "receives substantial resources . . . during a period of incarceration, such person shall be required to apply the value of such resources to any restitution or fine still owed." 18 U.S.C. § 3664(n) (emphasis added). The United States argued that § 3664(n) applies to pretrial detainees because they are in "federal custody." Over Lillard's pro se objection, the district court ordered the seizure of the $6, 671.81 pursuant to § 3664(n). On appeal, the Federal Defender, as amicus counsel for Lillard, argues that the phrase "period of incarceration" in § 3664(n) does not include pretrial detention. We agree and reverse.

         I. Background

         A. The Mandatory Victims Restitution Act

         The MVRA requires the district court to order full restitution for certain crimes in which an "identifiable victim" has suffered "physical injury or pecuniary loss." 18 U.S.C. §§ 3663A(c)(1)(A), (B); see Lagos v. United States, 138 S.Ct. 1684, 1687-88 (2018) (detailing the crimes and victim losses covered by the MVRA).

         Section 3664 of the MVRA is entitled "Procedure for issuance and enforcement of order of restitution." 18 U.S.C. § 3664. It establishes procedures for the probation office, defendant, identified victims, and district court to follow in determining the amount of restitution the district court should impose during a defendant's sentencing. The probation office, for example, is required to include in its presentence report "information sufficient for the court to exercise its discretion in fashioning a restitution order," including information on "the losses to each victim" and "the economic circumstances of each defendant." 18 U.S.C. § 3664(a). The probation office must also notify all identified victims of the "offenses of which the defendant was convicted," in order to allow the victims an opportunity to "submit information" concerning their losses. 18 U.S.C. § 3664(d)(2)(A)(i), (iii). The defendant must file "an affidavit" describing his financial resources, needs, and earning capacity. 18 U.S.C. § 3664(d)(3).

         When a district court orders restitution it must "specify in the restitution order the manner in which, and the schedule according to which, the restitution is to be paid . . . ." 18 U.S.C. § 3664(f)(2). If a defendant cannot pay full restitution "under any reasonable schedule of payments," the district court may order "nominal periodic payments" in perpetuity. 18 U.S.C. § 3664(f)(3)(B).

         Once a restitution order is in place, the defendant must notify the court "of any material change in the defendant's economic circumstances that might affect the defendant's ability to pay restitution." 18 U.S.C. § 3664(k). Ordinarily, the district court addresses changed economic circumstances under § 3664(k) of the MVRA. Under § 3664(k), a district court "may . . . adjust the [defendant's] payment schedule, or require immediate payment in full, as the interests of justice require." Id. (emphasis added). In one narrow circumstance, however, the MVRA "require[s]" that newly received funds be applied toward restitution. 18 U.S.C. § 3664(n). Section 3664(n) provides:

If a person obligated to provide restitution, or pay a fine, receives substantial resources from any source, including inheritance, settlement, or other judgment, during a period of incarceration, such person shall be required to apply the value of such resources to any restitution or fine still owed.

Id. (emphasis added). This appeal requires us to interpret the phrase "period of incarceration" in § 3664(n).

         B. Factual and Procedural Background

         In 1998, Lonnie Lillard pleaded guilty to Possession of Counterfeited Securities and a related count of Conspiracy. The district court sentenced Lillard to 34 months imprisonment and ordered him to pay $79, 130.55 in restitution. The district court did not specify a minimum payment schedule for the restitution order. Instead, the court ordered the restitution amount due "in full immediately," despite finding that "Mr. Lillard has no income or assets or the likelihood of either in the immediate future." Lillard made ...


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