Lagos v. United States

OCTOBER TERM, 2017 577

Syllabus

LAGOS v. UNITED STATES

certiorari to the united states court of appeals for the fth circuit No. 16–1519. Argued April 18, 2018—Decided May 29, 2018 Petitioner Sergio Fernando Lagos was convicted of using a company he controlled to defraud a lender of tens of millions of dollars. After the fraudulent scheme came to light and Lagos' company went bankrupt, the lender conducted a private investigation of Lagos' fraud and partici- pated as a party in the company's bankruptcy proceedings. Between the private investigation and the bankruptcy proceedings, the lender spent nearly $5 million in legal, accounting, and consulting fees related to the fraud. After Lagos pleaded guilty to federal wire fraud charges, the District Court ordered him to pay restitution to the lender for those fees. The Fifth Circuit affrmed, holding that such restitution was re- quired by the Mandatory Victims Restitution Act of 1996, which re- quires defendants convicted of certain federal offenses, including wire fraud, to, among other things, “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 attend- ance at proceedings related to the offense,” 18 U. S. C. § 3663A(b)(4). Held: 1. The words “investigation” and “proceedings” in subsection (b)(4) of the Mandatory Victims Restitution Act are limited to government investigations and criminal proceedings and do not include private in- vestigations and civil or bankruptcy proceedings. The word “investiga- tion” appears in the phrase “the investigation or prosecution.” Because the word “prosecution” must refer to a government's criminal prosecu- tion, this suggests that the word “investigation” refers to a govern- ment's criminal investigation. Similar reasoning suggests that the im- mediately following reference to “proceedings” refers to criminal proceedings. Furthermore, the statute refers to the victim's “partici- pation” in the “investigation,” and “attendance” at “proceedings,” which would be odd ways to describe a victim's role in its own private investi- gation and as a party in noncriminal court proceedings, but which are natural ways to describe a victim's role in a government's investigation and in the criminal proceedings that a government conducts. Moreover, the statute lists three specifc items that must be reim- bursed: lost income, child care expenses, and transportation expenses. These are precisely the kind of expenses that a victim is likely to incur 578 LAGOS v. UNITED STATES

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when missing work and traveling to participate in a government investi- gation or to attend criminal proceedings. In contrast, the statute says nothing about the kinds of expenses a victim would often incur during private investigations or noncriminal proceedings, namely, the costs of hiring private investigators, attorneys, or accountants. This supports the Court's more limited reading of the statute. A broad reading would also require district courts to resolve diffcult, fact-intensive disputes about whether particular expenses “incurred during” participation in a private investigation were in fact “necessary,” and about whether proceedings such as a licensing proceeding or a Con- sumer Products Safety Commission hearing were suffciently “related to the offense.” The Court's narrower interpretation avoids such con- troversies, which are often irrelevant to the victim because over 90% of criminal restitution is never collected. The Court's interpretation means that some victims will not receive restitution for all of their losses from a crime, but that is consistent with the Mandatory Victims Restitution Act's enumeration of limited categories of covered expenses, in contrast with the broader language that other federal restitution statutes use, see, e. g., 18 U. S. C. §§ 2248(b), 2259(b), 2264(b), 2327(b). Pp. 580–584. 2. That the victim shared the results of its private investigation with the Government does not make the costs of conducting the private in- vestigation “necessary . . . other expenses incurred during participation in the investigation . . . of the offense.” § 3663A(b)(4). That language does not cover the costs of a private investigation that the victim chooses on its own to conduct, which are not “incurred during” partici- pation in a government's investigation. Pp. 584–585. 864 F. 3d 320, reversed and remanded.

Breyer, J., delivered the opinion for a unanimous Court.

Daniel L. Geyser argued the cause for petitioner. With him on the briefs were Peter K. Stris, Douglas D. Geyser, and Randolph L. Schaffer, Jr. Michael R. Huston argued the cause for the United States. With him on the brief were Solicitor General Francisco, Acting Assistant Attorney General Cronan, Eric J. Feigin, and William A. Glaser.*

*Briefs of amici curiae urging reversal were fled for the National Asso- ciation of Criminal Defense Lawyers by Stuart Banner and Barbara E. Bergman; and for Shon Hopwood by Gregory M. Lipper.  Cite as: 584 U. S. 577 (2018) 579

Opinion of the Court

Justice Breyer delivered the opinion of the Court. The Mandatory Victims Restitution Act of 1996 requires defendants convicted of a listed range of offenses to “reimburse the victim for lost income and necessary child care, transportation, and other expenses incurred during participation in the investigation or prosecu- tion of the offense or attendance at proceedings related to the offense.” 18 U. S. C. § 3663A(b)(4) (emphasis added). We must decide whether the words “investigation” and “pro- ceedings” are limited to government investigations and crim- inal proceedings, or whether they include private investiga- tions and civil proceedings. In our view, they are limited to government investigations and criminal proceedings.

I The petitioner, Sergio Fernando Lagos, was convicted of using a company that he controlled (Dry Van Logistics) to defraud a lender (General Electric Capital Corporation, or GE) of tens of millions of dollars. The fraud involved gener- ating false invoices for services that Dry Van Logistics had not actually performed and then borrowing money from GE using the false invoices as collateral. Eventually, the scheme came to light. Dry Van Logistics went bankrupt. GE investigated. The Government indicted Lagos. Lagos pleaded guilty to wire fraud. And the judge, among other things, ordered him to pay GE restitution. The issue here concerns the part of the restitution order that requires Lagos to reimburse GE for expenses GE in- curred during its own investigation of the fraud and during its participation in Dry Van Logistics' bankruptcy proceed- ings. The amounts are substantial (about $5 million), and primarily consist of professional fees for attorneys, account- ants, and consultants. The Government argued that the District Court must order restitution of these amounts under 580 LAGOS v. UNITED STATES

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the Mandatory Victims Restitution Act because these sums were “necessary . . . other expenses incurred during partici- pation in the investigation . . . of the offense or attendance at proceedings related to the offense.” § 3663A(b)(4). The District Court agreed, as did the U. S. Court of Appeals for the Fifth Circuit. 864 F. 3d 320, 323 (2017). Lagos fled a petition for certiorari. And in light of a division of opinion on the matter, we granted the petition. Compare United States v. Papagno, 639 F. 3d 1093, 1100 (CADC 2011) (subsection (b)(4) of the Mandatory Victims Restitution Act does not cover private investigation costs), with United States v. Elson, 577 F. 3d 713, 726–729 (CA6 2009) (statute not so limited); United States v. Hosking, 567 F. 3d 329, 331–332 (CA7 2009) (same); United States v. Stennis-Williams, 557 F. 3d 927, 930 (CA8 2009) (same); United States v. Amato, 540 F. 3d 153, 159–163 (CA2 2008) (same); United States v. Gordon, 393 F. 3d 1044, 1056–1057 (CA9 2004) (same). II The Mandatory Victims Restitution Act is one of several federal statutes that govern federal court orders requiring defendants convicted of certain crimes to pay their victims restitution. It concerns “crime[s] of violence,” “offense[s] against property . . . , including any offense committed by fraud or deceit,” and two specifc offenses, one concerning tampering with a consumer product and the other concern- ing theft of medical products. 18 U. S. C. § 3663A(c)(1)(A). It requires, in the case of property offenses, return of the property taken or its value, § 3663A(b)(1); in the case of bodily injury, the payment of medical expenses and lost in- come, § 3663A(b)(2); in the case of death, the payment of fu- neral expenses, § 3663A(b)(3); and, as we have said, supra, at 579, in all cases, “reimburse[ment]” to “the victim for lost income and necessary child care, transportation, and other expenses incurred during participation in the investigation or prosecution of the  Cite as: 584 U. S. 577 (2018) 581

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offense or attendance at proceedings related to the of- fense.” § 3663A(b)(4) (emphasis added). We here consider the meaning of that italicized phrase. Specifcally, we ask whether the scope of the words “investi- gation” and “proceedings” is limited to government investi- gations and criminal proceedings, or whether it includes pri- vate investigations and civil or bankruptcy litigation. We conclude that those words are limited to government investi- gations and criminal proceedings. Our conclusion rests in large part upon the statute's word- ing, both its individual words and the text taken as a whole. The individual words suggest (though they do not demand) our limited interpretation. The word “investigation” is di- rectly linked by the word “or” to the word “prosecution,” with which it shares the article “the.” This suggests that the “investigation[s]” and “prosecution[s]” that the statute refers to are of the same general type. And the word “prosecution” must refer to a government's criminal prosecu- tion, which suggests that the word “investigation” may refer to a government's criminal investigation. A similar line of reasoning suggests that the immediately following reference to “proceedings” also refers to criminal proceedings in par- ticular, rather than to “proceedings” of any sort. Furthermore, there would be an awkwardness about the statute's use of the word “participation” to refer to a victim's role in its own private investigation, and the word “attend- ance” to refer to a victim's role as a party in noncriminal court proceedings. A victim opting to pursue a private in- vestigation of an offense would be more naturally said to “provide for” or “conduct” the private investigation (in which he may, or may not, actively “participate”). And a victim who pursues civil or bankruptcy litigation does not merely “atten[d]” such other “proceedings related to the of- fense” but instead “participates” in them as a party. In con- trast, there is no awkwardness, indeed it seems perfectly natural, to say that a victim “participat[es] in the investiga- 582 LAGOS v. UNITED STATES

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tion” or “attend[s] . . . proceedings related to the offense” if the investigation at issue is a government's criminal investi- gation, and if the proceedings at issue are criminal proceed- ings conducted by a government. Moreover, to consider the statutory phrase as a whole strengthens these linguistic points considerably. The phrase lists three specifc items that must be reimbursed, namely, lost income, child care, and transportation; and it then adds the words, “and other expenses.” § 3663A(b)(4). Lost income, child care expenses, and transportation ex- penses are precisely the kind of expenses that a victim would be likely to incur when he or she (or, for a corporate victim like GE, its employees) misses work and travels to talk to government investigators, to participate in a government criminal investigation, or to testify before a grand jury or attend a criminal trial. At the same time, the statute says nothing about the kinds of expenses a victim would often incur when private investigations or, say, bankruptcy pro- ceedings are at issue, namely, the costs of hiring private in- vestigators, attorneys, or accountants. Thus, if we look to noscitur a sociis, the well-worn Latin phrase that tells us that statutory words are often known by the company they keep, we fnd here both the presence of company that sug- gests limitation and the absence of company that suggests breadth. See, e. g., Yates v. United States, 574 U. S. 528, 543 (2015). We add a practical fact: A broad reading would create sig- nifcant administrative burdens. The statute provides for mandatory restitution, and the portion we construe is limited to “necessary . . . other expenses.” § 3663A(b)(4) (emphasis added). The word “necessary” would, if the statute is broadly interpreted, invite disputes as to whether particular expenses “incurred during” participation in a private inves- tigation or attendance at, say, a bankruptcy proceeding were in fact “necessary.” Such disputes may become burdensome in cases involving multimillion dollar investigation expenses for teams of lawyers and accountants. A district court  Cite as: 584 U. S. 577 (2018) 583

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might, for example, need to decide whether each witness in- terview and each set of documents reviewed was really “nec- essary” to the investigation. Similarly, the statute also lim- its restitution to expenses incurred only during “attendance at proceedings related to the offense, ” ibid. (emphasis added), inviting disputes as to whether, say, a licensing pro- ceeding, a human resources review, an in-house disciplinary proceeding, a job interview, a Consumer Product Safety Commission hearing, or a neighborhood watch meeting quali- fed as “proceedings” suffciently “related to the offense” so as to be eligible for restitution. To interpret the statute broadly is to invite controversy on those and other matters; our narrower construction avoids it. And one begins to doubt whether Congress intended, in making this restitution mandatory, to require courts to re- solve these potentially time-consuming controversies as part of criminal sentencing—particularly once one realizes that few victims are likely to beneft because more than 90% of criminal restitution is never collected. See GAO, Federal Criminal Restitution: Most Debt Is Outstanding and Over- sight of Collections Could Be Improved 25 (GAO–18–203, 2018) (explaining that the Justice Department considers 91% of outstanding criminal restitution to be “uncollectible”). There are, of course, contrary arguments—arguments fa- voring a broad interpretation. The Government points out, in particular, that our narrow interpretation will sometimes leave a victim without a restitution remedy suffcient to cover some expenses (say, those related to his private inves- tigation) which he undoubtedly incurred as a result of the offense. Leaving the victim without that restitution rem- edy, the Government adds, runs contrary to the broad pur- pose of the Mandatory Victims Restitution Act, namely, “to ensure that victims of a crime receive full restitution.” Dolan v. United States, 560 U. S. 605, 612 (2010). But a broad general purpose of this kind does not always require us to interpret a restitution statute in a way that favors an award. After all, Congress has enacted many dif- 584 LAGOS v. UNITED STATES

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ferent restitution statutes with differing language, govern- ing different circumstances. Some of those statutes specif- cally require restitution for the “full amount of the victim's losses,” defned to include “any . . . losses suffered by the victim as a proximate result of the offense.” See 18 U. S. C. §§ 2248(b), 2259(b), 2264(b), 2327(b). The Mandatory Victims Restitution Act, however, contains no such language; it spe- cifcally lists the kinds of losses and expenses that it covers. Moreover, in at least one other statute Congress has ex- pressly provided for restitution of “the value of the time rea- sonably spent by the victim in an attempt to remediate the intended or actual harm incurred by the victim from the of- fense.” § 3663(b)(6). Again the Mandatory Victims Resti- tution Act has no similar provision. And given those differ- ences between the Mandatory Victims Restitution Act and other restitution statutes, we conclude that the considera- tions we have mentioned, particularly those based on a read- ing of the statute as a whole, tip the balance in favor of our more limited interpretation. We add that this interpretation does not leave a victim such as GE totally without a remedy for additional losses not covered by the Mandatory Victims Restitution Act. GE also brought a civil lawsuit against Lagos for the full extent of its losses, and obtained an over-$30 million judgment against him. The Government says that GE has largely been unable to collect on that judgment, but there is no rea- son to think that collection efforts related to a criminal resti- tution award would prove any more successful. The Government makes one additional argument. It points out that GE shared with the Government the informa- tion that its private investigation uncovered. And that fact, the Government says, should bring the expenses of that in- vestigation within the terms of the statute even if the “in- vestigation” referred to by the statute is a government's criminal investigation. The short, conclusive answer to that claim, however, lies in the fact that the statute refers to “nec-  Cite as: 584 U. S. 577 (2018) 585

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essary child care, transportation, and other expenses in- curred during participation in the investigation or prosecu- tion of the offense.” § 3663A(b)(4) (emphasis added). It does not refer to expenses incurred before the victim's par- ticipation in a government's investigation began. And the Government does not deny that it is those preparticipation expenses—the expenses of conducting GE's investigation, not those of sharing the results from it—that are at issue here. We therefore need not address in this case whether this part of the Mandatory Victims Restitution Act would cover similar expenses incurred during a private investiga- tion that was pursued at a government's invitation or re- quest. It is enough to hold that it does not cover the costs of a private investigation that the victim chooses on its own to conduct. * * * For the reasons stated, we conclude that the words “inves- tigation” and “proceedings” in the Mandatory Victims Resti- tution Act refer to government investigations and criminal proceedings. Consequently Lagos is not obliged to pay the portion of the restitution award that he here challenges. We reverse the Court of Appeals' judgment to the contrary, and we remand the case for further proceedings consistent with this opinion. It is so ordered.