III.Services for Fraud Victims

A.Emotional Support and Referrals

The tangible cost of fraud crime is easily translated into dollar amounts. Less easily measured, and perhaps the most exacting cost of all, is the severe emotional impact of fraud crime on many of its victims. Such emotional harm can be caused by the victim's loss of the following:

Crimes of fraud are personal violations and often evoke the following feelings or emotional reactions among their victims:

Additionally, some victims experience such high degrees of shame, or fear about the loss of personal and professional respect and credibility, that they choose not to disclose their victimization to family members, friends, or professional colleagues. In some instances, an elderly or disabled victim's very independence is jeopardized, particularly if family members react to the loss by having the victim declared legally incompetent to handle his or her own financial affairs. Also, victims' family members and business associates may be financially exploited in a "domino effect" of fraudulent acts, resulting in increased feelings of guilt and blame for many fraud victims. Clearly, the impact of financial crimes goes deeper than the loss of just money.

 1.Indicators of Emotional Trauma

Traditionally, victim service providers and mental health practitioners have focused on the devastating effects of violent crime. The long-term emotional trauma of fraud crimes is not as easily seen and measured as that of a physical injury, violent encounter, or continued fear for one's personal safety. However, some of the same physiological and emotional effects experienced by victims of violent crimes are also experienced by fraud victims. These are some of those long-term effects:

Short-term effects on victims include these:

In the extreme, fraud crimes have led some victims to attempt or succeed in committing suicide.

2.Services and Support That May Reduce Victims' Stress and Anxiety

The following services and support strategies are not intended for all victims, nor is it expected that victim/witness coordinators will be sufficiently trained or experienced to determine the appropriateness of, or to provide, direct counseling. Counseling should be provided only by mental health professionals. This information is provided, however, to alert victim/witness coordinators to some of the possible emotional service or referral needs of fraud victims.

These are some of the general, non-therapeutic services that victim/witness coordinators can provide to lessen or acknowledge the emotional distress of fraud victims:

3.Identifying Appropriate Mental Health and Community Referrals

Victim service professionals have long recognized the value of providing victims of violent crime with appropriate referrals for support and services outside the scope of criminal justice-based programs and services. Victims of violence realize numerous benefits from those referrals. Victim/witness coordinators must not overlook the value of similar referrals for victims of fraud.

Much of victim/witness coordinators' work to establish a comprehensive referral base for victims of fraud can be drawn from referral sources already identified for victims of other crimes. Established referral bases should include basic governmental and community-based programs, agencies, and other entities that provide general services and assistance to crime victims. Additionally, a comprehensive referral base should include contact information that provides the agency name, address, phone number, contact person, hours of operation, fees (if applicable), client eligibility, list of program services, etc. Categories of referrals include these:

When seeking to identify appropriate mental health and financial assistance referrals, victim/witness coordinators should consider the following agencies:

4.Determining Appropriate Referrals

Before referring fraud victims to a mental health agency or nonprofit support program, victim/witness coordinators may want to determine first that the agency

Inappropriate referrals can significantly heighten fraud victims' frustration and anxiety.

5.Additional Referral Needs

Some fraud victims have additional referral needs. For instance, some victims have limited access to transportation due to physical or financial restraints and will need transportation assistance to mental health or financial assistance appointments. Victim/witness coordinators will find it helpful to compile a list of volunteer agencies, cab companies, or community transportation services that provide door-to-door pickup for disabled victims or have reduced fees for indigent victims.

Victim/witness coordinators also play a vital role in the establishment of linkages between elderly victims and local governmental and nonprofit agency programs and services. The simple act of linking service to victim can do much to improve the emotional welfare of an elderly fraud victim and could reduce the chance for fraudulent revictimization in the future. Victim/witness coordinators might wish to establish links with the following types of agencies:

6.Locating Appropriate Referrals

Additional sources for gathering victim-related referrals include these:

In fraud cases involving numerous victims in different jurisdictions throughout the nation, victim/witness coordinators should consider contacting the prosecutor-based victim assistance programs in those jurisdictions to learn of local programs and services.

7.Assessing and Updating Referrals

The importance of gathering feedback on service referrals must not be overlooked. Victim/witness coordinators should learn which agencies are best able to meet fraud victims' needs. Some programs gather referral feedback by

  • Telephoning victims and asking about their satisfaction with the referral,
  • Disseminating written surveys to victims to learn about their satisfaction with the referral agency, or
  • Disseminating written surveys to referral agencies to learn about their services, location, and service population.

8.Establishing a Support Group/Counseling Program

In the past few decades, support groups addressing societal problems (gambling and alcohol and substance abuse), health issues, and crime-related needs have proven to be invaluable for dispensing emotional support, sharing information, and seeking solutions to address various problems. In the victim arena, homicide, rape, child sexual abuse, and domestic violence support groups have provided family members and victims with a forum in which to share common experiences, fears, and concerns, helping to eliminate feelings of loneliness, shame, and fear.

Fraud strikes victims of all age groups and characteristics. Victims are often linked by common experiences and reactions based on their victimization. An effective strategy for addressing the special needs of fraud victims may be to establish a support group.

One way of reaching out to fraud victims is to increase opportunities that allow them to help themselves. Unfortunately, many victims are too embarrassed to acknowledge their victimization in a group setting. Victim/witness coordinators may find it helpful to talk with support groups such as Gamblers Anonymous and Alcoholics Anonymous to learn of their strategies.

Establishing a fraud victim support group does not have to be time-intensive for victim/witness coordinators, especially if they bring local mental health practitioners and prosecutor-based victim assistance providers together to set up the group. One reason for involving local prosecutor-based victim advocates is that many fraud crimes are prosecuted at the local level, and many local prosecutor-based programs provide services only to victims of violence. Support gleaned from participation in a support group may be the only assistance local fraud victims receive.

 9.Expanding the Support Group to Include Family Members

Consideration should be given to including family members and friends of fraud victims in support groups, as they may have experienced emotional trauma at the victimization of a loved one. Additionally, their participation may increase

  • Fraud victim participation,
  • Their understanding of the emotional impact of fraud so they can better support the fraud victim, and
  • Overall community awareness of fraud.

10.Conducting the Support Group

A trained counselor should facilitate support group discussions. Counselors should be familiar with local resources for assisting fraud victims. Issues which might be addressed in the session can range from preventing revictimization to discussing feelings such as self-blame and a loss of trust in others. In addition to counselors' experiences, supportive listening from other fraud victims can help heal victims' psychological wounds and rebuild confidence and self-esteem.

There are a number of practical issues to consider before establishing a fraud support group:

  • Finding a meeting site (centrally located and easily accessible by public transportation)
  • Determining transportation needs (especially of disabled or elderly victims)
  • Naming the support group (for example, "Fight Against Fraud," to remove some of the stigma attached to support groups)
  • Identifying discussion topics and appropriate speakers (for example, addressing credit problems, tax-related consequences of fraud, or participation in the criminal or civil justice process)
  • Developing a media strategy to publicize the support group (airing meeting dates, times, and locations through local radio, television, and newspaper community calendars or other public venues, or mailing promotional flyers to local organizations, such as legal aid clinics, chambers of commerce, churches, or other community gathering places)

Additionally, victim/witness coordinators, law enforcement personnel who investigate fraud crimes, prosecutors, consumer protection agencies, nonprofit victim advocacy organizations, and other appropriate persons should be included in the support sessions to provide the following:

  • Training for group leaders on victim participation in the criminal justice process and support services available from criminal justice personnel
  • Information about the investigation and prosecution of fraud cases, including realistic expectations for restitution and other avenues of financial recovery and the difficulty of investigating and prosecuting mass victim cases
  • Referral information for emergency financial and emotional support
  • Consumer protection tips and suggestions to reduce the likelihood of revictimization

Consideration should also be given to including victims who have completed their participation in the criminal justice process. No one knows better the emotional and financial toll of fraud crimes than those who have been victims in the past; however, care should be given to the selection of appropriate victims who can serve in that capacity.

11.Locating Support Group Sponsorship

There are several avenues that victim/witness coordinators can take in developing fraud support groups. They may wish to work with agencies that already facilitate support groups. Agencies to consider include local mental health service agencies and nonprofit advocacy organizations.

Victim/witness coordinators may also want to solicit sponsorship of fraud support groups from sources not typically considered. These sources might include the following:

  • Departments of psychology or schools of social work in universities or colleges, where graduate students may be willing to trade time for experience
  • Volunteer programs that focus on certain populations of citizens (for example, senior citizen centers or action organizations)
  • Consumer protection agencies, which may be willing to replicate the support group in cities where they have affiliate chapters or offices
  • Professional associations and licensing and regulatory agencies, which may be willing to sponsor the support group to offset any reputation for fraud that their business or profession may have

Many of these agencies already produce valuable consumer protection training materials and fraud alerts and may be willing to make such resources available in mass quantities for inexpensive or free distribution to support group participants.

B.Restitution

The payment of restitution by perpetrators can mark the end of a financial nightmare for fraud victims. To most victims, and fraud victims in particular, restitution not only serves to right a wrong, it often allows victims to return to whatever level of financial security they enjoyed before the crime.

However, in reality, very few fraud perpetrators actually pay restitution. Many perpetrators will have spent the money and have no discernible resources with which to repay victims. In other cases, perpetrators will have placed assets in the names of others or hidden money in offshore accounts. Even if the court orders full restitution to victims, the collection and distribution of payments is often difficult, especially if perpetrators are sentenced to long periods of incarceration. Additionally, victims not included in formal indictments are ineligible to receive any restitution unless their repayment is part of a plea negotiation.

1.Provisions Under the Mandatory Victims' Restitution Act

Restitution is commonly defined as the court-ordered repayment of victims' financial losses by convicted defendants. The Mandatory Victims' Restitution Act (MVRA), enacted on April 24, 1996, as part of the Antiterrorism and Effective Death Penalty Act, reforms federal restitution and its enforcement. The Act's purpose is "to ensure that the offender realizes the damage caused by the offense and pays the debt owed to the victim as well as to society." Several provisions of the law represent significant changes affecting fraud victims.

In federal crimes, such as mail or wire fraud, committed after the Act's enactment, the court must order restitution to each victim in the full amount of each victim's losses, regardless of the defendant's ability to pay. The only exceptions to this requirement occur if

  • The court makes a finding that the number of identifiable victims is too large, making restitution impracticable, or
  • Determining complex issues of fact related to victims' losses would complicate or prolong the sentencing process to a degree that it outweighs the need to provide restitution.

2.Determining Restitution Awards

Most fraud cases meet the requirements for mandatory restitution. Moreover, under the MVRA, very little of a criminal defendant's property is exempt from seizure for restitution. However, the following types of property are exempted:

  • Wearing apparel and school books
  • Fuel, provisions, furniture, and personal effects up to $1,650
  • Books and tools of a trade, business, or profession up to $1,100
  • Unemployment benefits
  • Undelivered mail
  • Certain annuity and pension payments
  • Workers' compensation
  • Judgments for support of minor children
  • Certain service-connected disability payments
  • Stipends earned under the Federal Job Training Partnership Act

3.Determining Victims' Losses

Losses for which courts can order restitution ordinarily include these:

  • Money lost directly in the fraudulent act
  • Expenses for travel to and from court proceedings (except where expenses were reimbursed by the government)
  • Child care
  • Lost wages
  • Payments for medical or mental health treatment for conditions caused by the crime

Victims of fraud crimes often incur additional expenses, outside of those listed above. However, the court is restricted in the types of losses it can include in restitution orders. Financial losses that usually cannot be included in the restitution order include these:

  • State or federal taxes, including interest, penalties, or fines
  • Unpaid or promised interest
  • Expenses for private legal representation
  • Fees for tax advisors, accountants, or other professionals

4.Delaying Final Orders of Restitution

In rare instances, an identified victim can request that the Assistant U.S. Attorney or U.S. Probation Office inform the court that all of his or her losses cannot be verified within 10 days of sentencing and request that the issuance of the final order of restitution be delayed. However, victim/witness coordinators should not provide victims with this option routinely, as its application can affect the appeals process and delay the start of the sentence. Victim/witness coordinators should consult, and receive approval from, the Assistant U.S. Attorney before they notify victims of this option. Victims should be advised that courts grants these delays only in the most extreme cases.

5.Amending Orders of Restitution

Some losses may become known well after sentencing. Identified victims can petition the court for an amended restitution order within 60 days of learning of additional, qualified financial losses. An amended restitution order may be granted only upon a showing of good cause for failing to include the losses in the victims' initial claim for restitution. Victims should be advised to contact an attorney, the probation officer, Assistant U.S. Attorney, or victim/witness coordinator to learn of the procedures necessary to file such a petition. Victim/witness coordinators should first contact the Financial Litigation Unit, EOUSA, or other appropriate agency before advising a victim about requesting an amendment. For example, in cases where provisions under newly enacted laws affect the standing restitution order, victim/witness coordinators should advise victims to seek private counsel before proceeding with a request for amendment.

6.Collecting Information on Victims' Financial Losses

Upon the request of a probation officer, but no later than 60 days from the date initially set for sentencing, attorneys for the government (most often Assistant U.S. Attorneys) provide probation officers with a list of victims' financial losses. These losses are included in probation officers' pre-sentence investigative reports, which are presented to the court for review prior to sentencing. A pre-sentence investigative report provides the court with information about a defendant's personal, educational, and criminal background, as well as specific information about the current crime, including the physical, emotional, and financial impact on the victim.

Before submitting pre-sentence investigative reports to the court, probation officers are required, to the extent practicable, to provide all identified victims with this information:

  • Conviction of the offender, including charges
  • Amounts subject to restitution, according to the U.S. Attorney
  • Scheduled date, time, and place of the sentencing hearing
  • Opportunity for the victim to submit information about his or her financial losses (through a victim impact statement)
  • Availability of a lien in favor of the victim
  • Opportunity to file, with the probation officer or the court, a separate affidavit relating to the amount of the victim's losses subject to restitution

7.Restitution Payment Plans and Options

After reviewing the pre-sentence report and victims' reported losses, the court determines the amount of restitution owed to each victim and establishes how restitution will be paid. The court considers the total amount of restitution, number of victims, and defendant's assets when determining how restitution should be paid.

Under the new MVRA, the court may order payment in these forms:

  • Single, lump-sum payments
  • Partial payments at specified intervals
  • In-kind payments (return of property; replacement of property; or, with victims' approval, services rendered to the victims or another person or organization)
  • Combinations of payments at specified intervals

The statute seems to prefer immediate payment. If the court finds that the interests of justice require other than immediate payment, the payment schedule shall be the shortest time in which full payment can reasonably be made.

8.Restitution Based on Victims' Financial Needs

If more than one victim sustains a loss requiring restitution by a defendant, the court may consider the economic circumstances of each victim when setting the order and method of payment. Victim/witness coordinators play a critical role in alerting probation officers and attorneys to the dire financial circumstances of a victim so the court can consider ordering payment to him or her first. If more than one defendant is convicted and contributed to victims' losses, the court may make each defendant liable for the full payment or may apportion liability to reflect each defendant's economic circumstances and level of contribution to the crime.

Additionally, the MVRA requires that direct victims of the fraud receive restitution before the government (where it is also a victim) or any source of collateral payment, such as insurance companies or reparation boards.

9.Effects of Other Financial Recovery on Court-Ordered Restitution

A restitution award must be reduced by any amount the victim later receives as compensation for the same loss in a federal or state civil proceeding.

10.Changes in Defendants' Economic Circumstances

After sentencing, if a material change in the defendant's economic circumstances affects his or her ability to meet restitution obligations, the court can modify the payment provisions of the restitution order. Changes in a defendant's economic circumstances can be brought to the court's attention in these ways:

  • By the defendant, who is required to notify both the court and the U.S. Attorney's Office
  • By the government
  • By the victim

After the court has been notified of a defendant's changed economic circumstances, the Attorney General must notify victims of those changes. Therefore, victim/witness coordinators should advise victims to tell them of any address changes so the coordinators can notify the Financial Litigation Unit and the Clerk of Court. A defendant's liability to pay restitution lasts for 20 years from the date of the judgment or, if a defendant goes to jail, for 20 years after he or she is released. However, the liability also terminates on the death of the defendant. The government is responsible for monitoring and enforcing the restitution order until the defendant's liability terminates.

Victims should be advised that if they learn of any changes in defendants' economic circumstances, they should notify the U.S. Attorney's Office that handled the prosecution of the case.

11.Distribution of Restitution

For crimes occurring after April 24, 1996, the U.S. Clerk of Court is charged with the collection and distribution of restitution. It is important that victim/witness coordinators advise victims of their responsibility to notify the Clerk of Court or U.S. Atttorney's Office, depending on local practice, of any change in their mailing address while restitution is still owed to them, pursuant to 18 U.S.C. 3612 (b)(1)(6). Victim/witness coordinators should provide victims with the correct change-of-address forms or tell them how to request such forms.

12.Damage Awards Made to Prisoners

Victim/witness coordinators should be aware of a statute that may provide an additional avenue for the collection of court-ordered restitution for some victims. Specifically, the law states, "Any compensatory damages awarded to a prisoner in connection with a civil action brought against any Federal, State, or local jail, prison, or correctional facility or against any official or agent of such jail, prison, or correctional facility, shall be paid directly to satisfy any outstanding restitution orders pending against the prisoner. The remainder of any such award after full payment of all pending restitution orders shall be forwarded to the prisoner." Pub. L. 104-134, Title I, 101, 110 Stat. 1321-77, codified as a note under 18 U.S.C. 3626.

13.Nonpayment of Restitution

Several sanctions can be imposed if the defendant does not comply with the restitution order. It may comfort the victim to know that the court may take these steps:

  • Revoke the defendant's probation or other supervised release.
  • Modify the terms of the defendant's probation or supervised release.
  • Re-sentence the defendant.
  • Hold the defendant in contempt of court.
  • Enter a restraining order or injunction.
  • Order the sale of the defendant's property.
  • Accept a performance bond.
  • Adjust the defendant's payment schedule.

14.Suggested Victim Service Strategies

Victim/witness coordinators may wish to consider taking the following steps to help victims with restitution:

  • Inform victims of the need to collect documents that substantiate their financial losses. These are some of the types of relevant documentation:
    • Receipts for cash, stocks, bonds, etc.
    • Bank and investment statements
    • Insurance and mortgage premiums
    • Money orders
    • Cashier's checks
    • Canceled checks
    • Travel-related bills for court appearances (if not paid by the government)
    • Statement of lost wages from employers
    • Bills for medical services and counseling
    • Other written correspondence from the defendant that would verify the scheme or loss
  • Help victims complete restitution worksheets, where practical.
  • Consult with prosecutors and probation officers to ensure that all identified victims are listed in restitution paperwork and that the full amount of restitution is ordered.
  • In cases where a plea agreement will be accepted, work with prosecutors to ensure all identified victims (and where appropriate, unidentified victims) are listed in the agreement, along with provisions for the payment of full restitution to victims.
  • Work with prosecutors to develop protocols by which to identify victims who have the greatest financial need so defendants can be ordered to pay restitution to those victims first.
  • Provide victims with an impact statement, explain how it will be used and presented to the court, and inform victims of their right to attend and to request to speak at sentencing events.
  • Inform victims that all changes in address should be directed to the victim/witness coordinator, who will forward them to the Financial Litigation Unit and the Clerk of Court. Liens attached to the defendant's property may be used to satisfy the restitution debt, and these liens are enforceable for 20 years from the time an offender is released from prison.
  • Provide victims with information about the procedures required to amend restitution orders in the event they discover financial losses after the determination of the original restitution order.
  • Remind victims of their right to request that the Clerk of Court issue an abstract of judgment certifying that a judgment has been entered in favor of the victim in the amount specified in the restitution order. This abstract of judgment can be registered, recorded, docketed, or indexed according to the rules and requirements of the state where the district court is located. This abstract of judgment then becomes a lien on the defendant's property in the state where the district court is located to the same extent as a judgment of a state court in that state.

C.Asset Forfeiture

Federal forfeiture laws allow the government to forfeit property involved in certain federal crimes. In the case of fraud offenses, criminal forfeiture is governed by federal RICO and money-laundering statutes, and civil forfeiture is governed by money-laundering statutes. The laws also permit the Attorney General, through a designated official, to pardon (forgive) the property after it is forfeited and direct it to victims. Victims of federal fraud crimes may have a legitimate claim to this pardoned property. Due to recent changes in Department of Justice forfeiture regulations, victims can petition the Attorney General, FBI, DEA, INS, or the agency initiating the seizure to recover some or all of their financial losses caused by the fraud. Criminal investigations often include efforts to identify and seize property for forfeiture.

The federal government attempts to notify victims of their right to petition for the forfeited property, but because of the nature of the crime, some victims cannot be identified and contacted. Victims who learn of the forfeiture through other sources, such as the media, can still petition for return of their loss. Because the petition must be filed prior to the disposal of the forfeited property, the victim should contact and submit a petition to the agency managing the forfeiture as soon as possible after receiving notice of the forfeiture.

By petitioning, the victim (or "petitioner") is asking the government to return the money lost as a result of the fraud crime. Returning the full amount is called remission of the loss, while returning some is a mitigation of the loss. To remit, the government official must find that the petitioner did not contribute to, participate in, benefit from, or act in a willfully blind manner toward the commission of the fraud crime. Even petitioners not meeting these criteria will be considered for mitigation. Victims should be aware, however, that there is no absolute legal right to participate in the distribution of the forfeited assets. When the losses of victims are greater than the value of the forfeited property, the victims will receive a pro rata amount of the total.

A petition for remission or mitigation of forfeiture often includes the following items of information:

  • Amount of money lost and copies of documentation to support the loss
  • Details about the crime and how the petitioner was a victim of the crime
  • Statement explaining that the petitioner played no part in the commission of the crime
  • Statement that the petitioner does not have insurance or other means to recover the amount of the loss sought
  • Precise description of the forfeited property

The petitioner should contact the federal seizing agency that investigated the violation or the U.S. Attorney prosecuting the case to obtain information about the forfeited property, such as when and where it was seized and the statute allowing the government to forfeit it. If the proceedings were held in court, the federal court and docket number should also be obtained. A sample petition form is included in Appendix B. Where appropriate, victim/witness coordinators should help victims fill out the form. References to forfeiture regulations that permit victims to file a petition are also included in Appendix B.

1.Case Studies

Although forfeiture can be a slow and frustrating experience for victims, it is working in a growing number of cases. Consider these two examples:

On December 20, 1990, Aaron Keith Lovett was convicted in the Western District of Oklahoma of interstate transportation of fraudulently obtained funds, money laundering, and monetary transactions in property derived from unlawful activity. Mr. Lovett took money from the bank accounts of Rubylea Hall, his nearly blind and sickly 82-year-old grandmother, by withdrawing money personally and by utilizing letters signed by Mrs. Hall directing the banks to close her accounts and release the money to Lovett. Mrs. Hall denies signing the documents allowing the transfer of funds. With these funds, Lovett purchased a house and several vehicles. Mrs. Hall filed a claim to the property bought with the fraudulently acquired funds. The court awarded Mrs. Hall $76,031.89, which was forfeited from the bank account of Mr. Lovett; a 1990 GMC pickup truck valued at $15,000; a GMC Suburban valued at $17,000; and real property appraised at $118,000.

On February 18, 1992, John G. Westine, Jr., was convicted in the Southern District of Ohio of wire fraud, mail fraud, money laundering, and interstate transportation of goods acquired by fraud. Mr. Westine, through a telemarketing scheme that sold shares of nonexistent oil and gas interests, defrauded numerous individuals out of approximately $3.2 million. He purchased several assets with the proceeds of his illegal activities, including a parcel of real estate in Malibu, California. These assets were seized in the criminal case, under criminal forfeiture provisions, and subsequently were forfeited. Approximately 90 victims of the fraud filed petitions in the ancillary forfeiture proceeding. The final order of forfeiture ordered a sale of the forfeited assets and pro rata distribution to the 90 claimants.

The following table summarizes other recent examples of successfully forfeited assets returned to fraud victims. These cases, retrieved from the files of the Department of Justice, may provide further insight into the amount of money victims can recover through forfeiture. In these examples, the mechanisms used to return funds to the victims varied, and included stipulations, plea agreements, and the petition for remission or mitigation process.

  

Examples of Forfeited Assets Returned to Fraud Victims

Type of Scam Number of Victims Amount Recovered and Returned to Victims
money fraudulently withdrawn from bank accounts

one

$226,031.89 in funds and property
"full coverage" insurance which coal miners did not receive

2,500

$600,000 distributed in varying amounts
telemarketing scheme that sold shares of nonexistent oil and gas companies

90

$3.2 million divided pro rata among the 90
sale of cars with rolled-back odometers

20

$23,425 plus value of a house distributed in varying amounts
purported purchase of luxury automobiles, never delivered to customers

not available

in excess of $2,790,000
office supply fraud

not available

$3.5 million divided among victims
loans never received in fraudulent brokering services

440

$250 returned to each ($110,090 total)
consumer fraud scheme

1,300

$745,034.74 divided among victims
bank fraud in 72 countries

thousands

$600 million seized to date, to be distributed to victims in varying amounts
fraudulent billing practices in trucking companies

26

$75,710.90 to be distributed in varying amounts

 2.Suggested Victim Service Strategies

Victim/witness coordinators may wish to help victims gather information for inclusion on the petition for remission or mitigation of forfeiture. Needed information may be gathered from court documents, especially information that may not be known to victims, such as details of the crime and information on the forfeited property. Victim/witness coordinators should provide assistance in the completion of the petition for remission or mitigation of forfeiture, where practical. A sample petition can be found in Appendix B.

D.Civil Actions

Victim/witness coordinators, within the bounds of office or agency policy, are ideally suited to build bridges of information, knowledge, and understanding between crime victims and the justice process. By establishing rapport with victims, coordinators play a critical role in encouraging them to seek information about important criminal justice-related subjects, rights, and remedies. However, many jurisdictions, and prosecutors' offices in particular, prohibit victim/witness coordinators from providing victims with information about their right to pursue avenues of civil recovery.

Prosecutors' reluctance to incorporate civil recovery information in their victim assistance policy may come from a feeling that civil litigation is outside their expertise. That is understandable. However, simply providing information that in no way promises or implies a successful outcome, refers legal representation, offers legal advice, or judges the appropriateness of a case should not compromise the integrity of prosecutors' offices or victim assistance personnel.

While this section advocates sharing information on the civil justice process with appropriate victims, its does not suggest that victim/witness coordinators provide legal advice or act independently in determining the appropriateness of such a referral. Rather, victim/witness coordinators should act in tandem with Assistant U.S. Attorneys in determining if cases may in fact be appropriate for civil litigation, especially in cases where no criminal action will be taken.

Additionally, the information contained in this section is limited to civil actions initiated due to fraudulent acts. This information is not intended to be a comprehensive overview of the civil process; rather, it is intended to inform the reader of other options available to fraud victims in the recovery of financial losses.

1.Civil Recovery: An Important Tool in the Recovery of Financial Losses

Today, civil courts are more disposed than ever to extend favorable consideration to victims' remedies against perpetrators or against third parties whose negligence caused or exacerbated their victimization. Many of the legal issues involved in civil litigation remain somewhat a mystery, simply because the law tends to be technical and difficult for the average person to understand. As a result, while many victims have a general feeling that the legal system provides them with various rights and remedies, they may not understand those rights.

Knowing of their options and rights to pursue civil recovery is critical for fraud victims for a number of reasons:

  • In cases where victims will not be listed on criminal indictments, their ability to recover losses in the criminal justice process is limited at best. Civil recovery may be their only option for financial recovery. This is especially important in fraud crimes where hundreds or thousands of victims may be affected.
  • In cases where the U.S. Attorney's Office declines the prosecution of a case, civil recovery may be the only legal avenue a victim has to pursue financial recovery.
  • There is no certainty that all financial losses will be known at the time criminal cases are settled and restitution is ordered. Nor is it certain that judges will agree to amend standing restitution orders. Civil recovery may provide victims with an additional legal avenue to collect full financial losses.
  • Under the Mandatory Victims' Restitution Act of 1996, only certain losses can be compensated. Civil recovery may provide victims an opportunity to collect losses not considered in criminal cases, such as interest; penalties; fines; or fees for tax advisors, accountants, or other professional services.
  • Victims who have suffered great emotional trauma can seek additional financial remuneration through awards of punitive damages, which are not allowed in the criminal justice process.
  • Because the investigation of fraud crimes can be complex and lengthy (especially in cases of mass victimization or where defendants have holdings offshore), victims who wish to pursue civil recovery may be excluded from doing so due to statutes of limitations. Armed with information about their option for civil recovery, victims can move to initiate civil actions in a timely manner or petition the court to toll or stop the statute of limitations.
  • Victims can consult with civil attorneys to learn if they have legal standing to initiate civil actions against individuals or entities (third parties to a civil action) in addition to defendants (first parties) in an effort to pursue full or additional financial recovery.

2.Overview of the Civil Process

There are several basic differences between criminal and civil actions. One difference is that in criminal proceedings, the state is the plaintiff because criminal defendants violate state laws when they injure their victims. Private citizens do not prosecute criminal actions. However, in civil matters, victims are required to initiate the actions, and such actions must be filed within a specified time frame (statute of limitations). Civil actions do not result in the incarceration of defendants but are limited to assessing monetary damages.

Pre-trial Proceedings. To initiate a civil action, plaintiffs file a complaint in civil court alleging they were injured by the wrongful, unlawful conduct of the defendant. Defendants must respond to the allegations within a certain time or default judgments are entered against them. While the complaint need not be formal or elaborate, it must set forth enough information about the allegations that defendants can properly prepare a defense.

Once a defendant has answered a complaint, the defendant may file a responsive pleading, asking the court to dismiss the case because of procedural deficiencies in plaintiffs' pleadings. A lack of jurisdiction, improper service of process, statutes of limitations, or substantive legal defenses would be examples of responsive pleadings. Other examples include pleadings that no duty was owed to plaintiffs or that the victims' losses are not the legal liability of the defendant.

Defendants can file other motions that may result in the dismissal of the case before trial. For example, the defendant could argue that even if plaintiffs' allegations are taken as true, the law is such that defendants cannot be held liable. These types of motions (called demurrers) ask the court to dismiss the charge through summary judgment. If the court grants such motions, the plaintiffs lose the opportunity to continue the case or to present evidence. Just as in criminal actions, the court's rulings are almost always appealable.

After the civil court has ruled on preliminary motions, and if the plaintiff's case has not been dismissed due to various legal motions, pretrial preparations begin. Those preparations include performing legal research, investigating the facts and circumstances of the case, interviewing witnesses, obtaining relevant documents, and taking depositions from all parties to the civil action, where appropriate.

Civil Trials. Once the case has been thoroughly researched, and if it has not been settled, it goes to trial before a judge or jury. At the trial, witnesses are called, and both the plaintiff and defendant introduce evidence. Often, evidence that is not admissible in criminal actions (such as illegally seized evidence) may be admitted in a civil action.

Another difference between criminal and civil actions is that in a civil action, a judge or jury is only required to find the defendant responsible "by a preponderance of evidence" or 51 percent of the evidence presented. In criminal actions, the judge or jury's burden of proof is "beyond a reasonable doubt."

If the defendant prevails, the matter is over unless the plaintiff appeals. If the plaintiff prevails, the judge or jury may award damages and the matter is over unless the defendant appeals. Judges and juries hearing civil actions have extremely far-ranging discretion in assessing damages and awards. As in a criminal action, the judge or jury can award compensatory damages to reimburse plaintiffs for their actual losses (akin to restitution). Unlike a criminal action, civil suits can go farther, as judges or juries can punish defendants by assessing punitive damages for the harm they have caused plaintiffs.

Civil Judgments. Judgments are the formal recordings of verdicts and awards in civil actions. They are usually enforceable in the courts of other states through the "full faith and credit" clause of the U.S Constitution. (To ensure enforcement in other states, where allowed, victims are required to register abstracts of judgment in the counties in which they believe defendants have real property or holdings.) Judgments for willful and malicious acts, like most judgments awarded to violent crime victims, cannot be discharged (or removed) through bankruptcy. However, this is a complex subject, and expert legal opinion should be sought if the issue arises.

3.Other Civil Recovery Options

Third-Party Civil Actions. In some cases, victims can file additional civil complaints against individuals or entities that may have legal culpability for the unlawful actions of the defendant. Such civil actions are commonly called third-party suits. Most often third-party suits originate when victims file a complaint that the third-party litigant is jointly or solely responsible for the defendant's ability to gain access to them through willful negligence or other conduct that assisted or facilitated the victimization. Examples of third-party litigants may include banks or mortgage and insurance companies.

Small-Claims Court. In cases where the amount of financial loss falls below a certain dollar amount, victims can file suit for remuneration in small-claims court. Because each state sets different limits on small claim actions, victims should seek legal counsel or contact the Clerk of Court in the jurisdiction in which the action will be filed to learn of actual dollar limits. Some jurisdictions set amounts as low as $500, while others set limits as high as $5,000. In many jurisdictions, plaintiffs need not be represented by legal counsel and can conduct the proceedings themselves. Lastly, in most small-claims courts, filing fees are waived if plaintiffs can show proof of indigence. Once again, victims should be advised to check with the Clerk of Court to determine specific requirements.

4.Sources for Collection of Civil Judgments

Winning the civil suit is only half the battle. The other half consists of collecting court-ordered judgments from defendants. The scope of sources for the collection of civil judgments is as broad as the ingenuity of those who are assisting the victim, most often attorneys specializing in civil actions. The following are some examples of sources of judgment collection; however, this is not an exhaustive list. Please note that many of these sources can also be pursued in collecting court-ordered restitution as well.

Income. Depending on individual state laws, victims and their attorneys can look at defendants' sources of income for possible collection of judgments. The following sources should be considered:

  • Wages
  • Benefits (pension payment, annuities)
  • Unearned income (dividends, interest, gifts)
  • Disbursals from trust funds
  • Tax refunds
  • Government entitlements
  • Payouts from life insurance policies

Property and Holdings. Victims and their attorneys will want to examine defendants' property and holdings when attempting to collect civil judgments. These assets may include the following:

  • Personal property (cars, boats, jewelry, furnishings)
  • Real property (home, land, rentals)
  • Future interest in real and personal property through wills, trusts, etc.
  • Interests in partnerships (especially doctors and lawyers)
  • Bank accounts
  • Financial holdings (stock, bonds, mortgages)
  • All other debts owed the perpetrator

Windfall Assets. When attempting to collect civil judgments, victims and their attorneys should be mindful of unusual situations whereby defendants come into sums of money that no one could have anticipated. Examples of windfalls include these:

  • Lottery, sweepstakes, or other winnings
  • Sudden, unexpected inheritances
  • Valuable inventions or patent royalties

Family Wealth. Some defendants, while not especially well off at the time of the litigation, may receive money in the future because they come from wealthy families. An example of future judgment collectibility might involve an established trust from which a defendant stands to benefit in the future.

Insured Defendants. A significant but often overlooked option for judgment collection involves insured defendants: persons who are covered by insurance policies that may, in certain instances, provide funds from defendants' insurance carriers with which to satisfy civil judgments. Insured defendants often include physicians, attorneys, investment bankers, registered security and commodity traders, real estate and land agents, financial advisors, accountants, insurance agents, etc. Three conditions must be met in order to collect from insurance carriers:

  • Defendants must be insured.
  • Their policies must provide coverage for whatever they did to the plaintiff/victim.
  • The insured defendant must have been found to be liable to the plaintiff, or at least, the insurer must decide that settling the case will be in the company's best interest.

Insurance carriers have no desire to protect insured clients from their own willful, criminal behavior. Consequently, almost all policies contain exclusions for wrongs that are expected or intended by the insured. The insured's policy must be reviewed carefully by an attorney well versed in civil litigation of insured defendants.

E.Reparation Boards and Administrative Action Review Committees

In certain instances, victims (known as complainants) may be eligible to seek financial recovery by filing a complaint with governmental or state agencies that regulate the actions of licensed professionals. Consumer complaints for losses caused, in the opinion of the victim, by improper actions or conduct on the part of the licensed or regulated professional can be filed for consideration of financial remuneration. Consumer complaints or disputes may be reviewed, investigated, and resolved by a reparation board or through an administrative action review committee. The purpose of reparation boards and administrative action review committees is to resolve consumer complaints in an inexpensive, expeditious, fair, and impartial forum. Such complaints may result in the following:

  • Findings of no responsibility on the part of the licensed professional
  • Recovery of financial losses by the complaining consumer
  • Revocation, suspension, or other sanctions against the professional's license

1.Filing a Complaint or Claim for Reparation or Administrative Action

The filing requirements for a complaint or claim vary for each regulatory agency. At a minimum, claims must normally show the following:

  • The individual (known as the respondent) against whom the recovery is sought was registered with the regulatory agency at the time the alleged violation occurred.
  • The complaint was filed within a specified period.
  • Respondents are not in bankruptcy or receivership proceedings.
  • Financial losses do not exceed the cap on reparations or administrative actions.
  • The claim (or complaint) is not being considered in arbitration or a civil court.

2.Legal Representation

The need to hire an attorney varies with each case. Many reparation boards or administrative action review committees allow victims to represent their own interests throughout the entire process, especially if the financial loss is low and the facts of the claim are straightforward. In other cases, the reparation board or administrative action review committee will advise victims to hire legal representation. Many reparation boards and administrative action review committees provide legal counsel to explain complaint procedures and hearing proceedings.

3.Costs Associated with Filing Complaints or Actions

Once again, the fees and costs vary with each reparation board or administrative action review committee, but there is normally a nominal filing fee to initiate complaints or actions. This amount can be a set fee or can be pro-rated based on the amount of damages or financial recovery sought. Filing fees are normally awarded as costs if the outcome favors the victim. Sometimes awards include victims' legal costs and travel-related costs, but not normally.

4.Reparation or Administrative Action Process

The process of adjudicating complaints filed with reparation boards or administrative action review committees is similar to that of civil court proceedings, but it is often more informal. After a complaint is filed, it is sent to the respondent for an answer. Upon receipt of the respondent's answer, a screening committee reviews the claim to verify that all eligibility requirements are met. The case is then referred to either a judgment officer (who usually hears cases with small financial losses or undisputed claims) or an administrative law judge (who usually hears complicated cases or those that may result in large awards).

Each party is responsible for gathering evidence to support his or her own case and for responding to discovery requests. After discovery is completed, written facts are reviewed to determine if an oral hearing is warranted. If the complaint is straightforward or if the respondent fails to answer the complaint, the judgment officer may issue a summary judgment (in favor of either party), and the case is settled. In more complicated cases, a formal hearing (normally conducted as a public hearing) is set before an administrative law judge, and all facts surrounding the complaint are reviewed. At the conclusion of the presentation of evidence, both parties have an opportunity to file post-hearing comments and to reply to the other's comments. After review of these filings, the administrative law judge renders his or her decision in writing. Decisions of the administrative law judge are appealable if the complaint is heard in a formal hearing. Appeals can be heard within the reparation board or forwarded to the U.S. Court of Appeals.

5.Length of Time for Resolution

Just as in the criminal and civil justice system, the time from the filing of a complaint to formal disposition can vary. Cases are, however, normally disposed of sooner than those in the justice process.

6.Distribution of Financial Awards

If the findings of the reparation board or administrative action review committee go against the respondent and he or she is assessed monetary penalties, the respondent will have a specified time in which to pay the complainant, unless the finding is appealed. If the respondent has failed to pay the victim by the required settlement date, his or her license may be suspended until payment is made. Awards by reparation boards and administrative action review committees are enforceable as liens in the District Court where the respondent lives or has a principal place of business.

7.Counter-suits

Respondents are allowed to counter-sue consumers, but only based upon the facts of the complaint.

8.Identifying Reparation Boards and Administrative Action Review Committees

Victim/witness coordinators should consider making contact with state and federal regulatory agencies that oversee professional licensing and review to determine the existence of reparation or administrative action review committees, along with information about eligibility requirements and filing procedures. Victim/witness coordinators may wish to include agencies such as these:

  • Federal securities and commodity trading commissions, such as the Commodity Futures Trading Commission, which has a reparation board for handling and resolving consumer complaints (Three Lafayette Centre, 1155 21st Street, N.W., Washington, DC, 20581; 202-418-5250)
  • State agencies regulating the licenses of building contractors, insurance agents, real estate agents, accountants, tax advisors, investment bankers, financial planners, etc.
  • The U.S. Attorney General's Division of Fraud and Consumer Protection, which has information on state recovery funds, such as the California Department of Real Estate Recovery Fund (919-227-9789)
  • National and state Better Business Bureaus (National Council of Better Business Bureaus, Inc., 4200 Wilson Blvd., Suite 800, Arlington, VA 22203-1838; 703-276-0100)
  • Federal Trade Commission

Victim/witness coordinators may also wish to call the Federal Government Information Center (800-688-9889) for assistance in obtaining appropriate government agency phone numbers.

Additionally, victim/witness coordinators may wish to share with each other the contact information they collect concerning reparation and administrative actions. This practice will help to ensure that victims who reside in one part of the country but have cases originating in other parts of the country are well served.

Back to PSVF Table of Contents

Archive iconThe information on this page is archived and provided for reference purposes only.