Not Close Enough for Government Work – Estimate of Restitution Reversed: US v. Sheffield, Eleventh Circuit Court of Appeals, Filed October 1, 2019

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Not Close Enough for Government Work – Estimate of Restitution Reversed: US v. Sheffield, Eleventh Circuit Court of Appeals, Filed October 1, 2019

Is it always okay for the government to estimate restitution amounts? When is close enough for government work not close enough for government work?

When you’re a prosecutor who calculated a defendant’s restitution amount, it comes to $3,461,638, you acknowledge it’s not the right dollar amount, and you just don’t care. In U.S. v. Sheffield, the prosecutor didn’t care and the trial court didn’t care, but the Eleventh Circuit vacated a restitution order and sent the case back with instructions to get it right…

Below, I’ll discuss what happened in US v. Sheffield and what the Eleventh Circuit had to say about when an estimate of restitution is okay and when the government must provide an exact restitution amount.

Estimate of Restitution not Good Enough When There are Exact Figures Available

In US v. Sheffield, the defendant pled guilty to a fraudulent tax credit scheme that involved claiming a $1000 tax credit on thousands of tax returns where the filers did not qualify for the credit.

The government introduced a spreadsheet of the names of the taxpayers and the amount of the tax refunds that were issued – totaling $3,461,638 – to show the amount of restitution owed. At sentencing, Sheffield pointed out that there were duplicative entries on the spreadsheet and therefore the restitution amount must be lower than $3,461,638.

The government acknowledged that there were duplicative entries and that at least one taxpayer was listed twice in the same year but said that the burden is on the defendant to point out why the spreadsheet was inaccurate and what the restitution amount should be.

The trial court agreed with the government that “restitution does not have to be calculated with absolute precision,” and, since Sheffield did not have her own list of the duplicative entries, ordered her to pay the restitution.

Who Has the Burden of Proof to Establish the Amount of Restitution?

The burden of proof is on the government to prove the amount of restitution by a preponderance of the evidence:

At sentencing, the government bore the burden of demonstrating the loss sustained by the IRS by a preponderance of the evidence. See 18 U.S.C. § 3664(e); United States v. Baldwin, 774 F.3d 711, 728 (11th Cir. 2014).

It is not up to the defendant to prove the restitution amount. But does restitution have to be calculated “with absolute precision?” Is it ever okay for the government to provide an estimate of restitution amounts?

When is an Estimate of Restitution Okay?

In some cases, an estimate of restitution is okay when it is impossible to determine the exact amount:

The “use of estimation” is permitted because “it is sometimes impossible to determine an exact restitution amount.” United States v. Futrell, 209 F.3d 1286, 1291–92 (11th Cir. 2000). In some cases, therefore, the government is allowed to submit, and the district court is permitted to use, a “reasonable estimate” of that amount. See, e.g., United States v. Gushlak, 728 F.3d 184, 196 (2d Cir. 2013) (explaining that “a ‘reasonable approximation’ will suffice, especially in cases in which an exact dollar amount is inherently incalculable”).

That doesn’t mean that it is okay to provide an estimate of restitution amounts because the prosecutor is lazy and can’t take the time to be exact. It also doesn’t mean that the burden of proof shifts to the defendant to correct the prosecutor’s mistakes – especially when the prosecutor acknowledges on the record that their restitution amounts are flawed.

When Should Restitution Amounts Be Exact?

If it is possible to determine the exact restitution amount, the government must calculate the exact amount and an estimate is not okay.

For example, in Sheffield’s case, each fraudulent tax credit was for exactly $1000, and the government knew exactly how many fraudulent tax credits were involved:

Here the losses suffered by the IRS due to the tax credit scheme were definite and easy to calculate. Because each fraudulent tax credit triggered a refund of $1,000 — not a penny more, not a penny less — figuring out the loss only required a simple mathematical exercise, i.e., multiplying each false tax credit by $1,000. Given that the government must put forth “reliable and specific evidence” to support a restitution award, see United States v. Stein, 846 F.3d 1135, 1156 (11th Cir. 2017), it is not too much to require precision in a case like this one.

The Eleventh Circuit held that, once the government knew there were duplicate entries on their spreadsheet, even if it was only one, “it could not carry its burden without correcting the spreadsheet.”

Why Does it Matter?

The Court notes that:

  • 90% of restitution orders are uncollectible;
  • It is unlikely that Sheffield or her codefendants will ever be able to pay the restitution amount;
  • The highest estimate of the amount from the duplicate entries is only $136,000 – .04% of the total restitution amount; and
  • On remand, the restitution amount will be approximately the same and Sheffield most likely will still not pay the money.

It matters because it is wrong. It matters because any attorney who handled a civil case the way the prosecutor handled Sheffield’s case would be sued for malpractice.

It matters, according to the Eleventh Circuit, because Sheffield has the “right not to be sentenced on the basis of inaccurate or unreliable information,” and she has the right to not be forced to pay restitution she is not responsible for:

So one may wonder why it is that we are reversing a multi-million dollar restitution order when the result on remand is likely to be approximately the same and payment (at least full payment) is unlikely. The reason is a simple one. Ms. Sheffield has the “right not to be sentenced on the basis of inaccurate or unreliable information,” United States v. Giltner, 889 F.2d 1004, 1008 (11th Cir. 1989), and is not required to pay restitution she is not responsible for.

Although Sheffield’s conviction is not overturned and her sentence is unchanged apart from the restitution calculations, the Eleventh Circuit took the opportunity to remind the government’s attorneys that they are attorneys and the courts will not always look the other way when they commit what would be malpractice in any other context…

Federal Criminal Appellate Attorney in Columbia, SC

Elizabeth Franklin-Best is a federal white collar criminal defense and federal appeals lawyer located in Columbia, SC.

For more information, call us at (803) 331-3421 or send us an email to set up a consultation about your case.

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