Lagos v. United States

Under the Mandatory Victims Restitution Act, reimbursement awards to victims are limited only to expenses incurred during government investigations and criminal proceedings, but do not include expenses incurred during private investigations or civil proceedings.

Petitioner was found guilty of using his company to defraud a lender of tens of millions of dollars. After discovering Petitioner’s scheme, the lender spent almost five million dollars conducting a private investigation and participating in bankruptcy proceedings against Petitioner’s company. Petitioner plead guilty to fraud and the District Court ordered him to pay the lender restitution fees pursuant to the Mandatory Victims Restitution Act of 1996, which requires defendants convicted of some federal crimes 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. §363A(b)(4).  The Fifth Circuit affirmed. The Supreme Court granted certiorari to determine the meaning of “investigation” and “proceedings” under the Act. The Court reasoned that a broad reading of the provision would result in significant administrative burdens and unnecessary controversy. Therefore, the Court construed the language narrowly, and unanimously held that the provision is restricted to expenses incurred during government investigations and criminal proceedings. The Court further held that a victim may not recover expenses incurred during private investigations or civil proceedings. REVERSED and REMANDED.