(c) 2014-2017, Brenda Grantland, Esq., updated 05/24/2017
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I first entered the newly emerging field of crime victims’ rights litigation in the spring of 2009, when I began representing Ritchie Capital Management, an investment fund manager and several funds it manages, who were victims of the Minnesota Ponzi scheme of Thomas Petters.
In October 2008, simultaneously with Petters’ arrest, the federal government filed a civil injunction and receivership action under 18 U.S.C. § 1345, froze all the defendants’ assets, and obtained a restraining order with a litigation stay preventing creditors and victims from suing any of the defendants or their companies. From that point on, Petters’ victims were held at bay while the court system, government lawyers, criminal defense counsel, bankruptcy trustees and two court-appointed receivers made decisions about disposition of the seized assets — largely without regard for the wishes or rights of the victims. Today, over 8 years later, most of the victims have not been paid anything. Our figures from several years back showed the Receivers and bankruptcy trustees had spent over $ 105 million of the seized assets on legal and professional fees (with millions more in fee requests in the pipeline), while victims have been paid nothing.
After over 30 years’ experience defending asset forfeiture cases I had become accustomed to the havoc criminal and asset forfeiture cases can wreak on innocent third parties — defendants’ relatives, landlords, business partners, lien holders, etc. — but I never expected crime victims to be treated just as badly or worse. Congress enacted legislation specifically to protect crime victims — the Mandatory Victim Restitution Act of 1996 and the Crime Victims’ Rights Act of 2004. But do they work?
For several years of non-stop litigation, my office and the other lawyers on our team tried our best to assert our client’s rights under the Crime Victims’ Rights Act (“CVRA”) and the Mandatory Victim Restitution Act (“MVRA”). We learned from reported cases and from lawyers around the country that these statutes are being implemented as written in some jurisdictions, while other courts ignore these laws and exploit every loophole to resist giving victims any rights under the two statutes. That is exactly what the courts did in the Petters case — exploit every loophole, even inventing some new ones, in order to avoid giving victims their rights. When the Eighth Circuit slammed their door on us they did not even give reasons for the denial.
We asked the Supreme Court to grant review. After teasing us with a request for further briefing, the Supreme Court denied certiorari.
It is easy to see why courts and prosecutors might be reluctant to implement these statutes. They created revolutionary changes in the way criminal cases are litigated. Since our country’s founding, criminal courts have always been a two-party system — the only parties being the prosecution and the criminal defendants. Neither party has any natural motivation to protect crime victims — in fact it runs counter to their interests. Defendants do not want to pay restitution. Prosecutors get greater recognition for their successful criminal convictions and large forfeiture judgments, and naturally prefer that the assets be forfeited to the government (where it can be paid out to law enforcement agencies) rather than paid to victims in restitution. In many cases it is the victims’ money that the government forfeits. When a criminal is running a Ponzi scheme, his business is not making any real profits, and all of the assets of the business in reality belong to the investors or victims that the criminal took the assets from. When the government forfeits property it always pays itself first, and sometimes doesn’t pay victims back at all.
The CVRA imposes specific duties on prosecutors and judges to ensure that victims are afforded their rights under the statutes, but compliance varies greatly among courts. In some jurisdictions, a prosecutor’s failure to perform his/her duties under the CVRA or MVRA has even been cited by the court as a reason to deny victims relief under the statute! Fortunately, the CVRA gave crime victims the right to enforce their CVRA rights themselves, including the right to appellate review of any orders denying CVRA rights.
Ignorance of the law is the greatest obstacle to affording crime victims the rights Congress intended them to have. As more victims learn of these rights and take an active role in ensuring that they are enforced, these victims’ rights statutes will begin to perform their intended functions.
If you, a client, or someone you know, is a victim of a federal crime, please take the time to acquaint yourself with the provisions of these statutes and insist on their enforcement.
Here are links to other research materials I have written or compiled on the subjects of crime victims’ rights and restitution.
An overview of crime victims rights and restitution law — (c) 2011, Brenda Grantland, Esq.
Statutes and research materials on victims’ rights & restitution — a collection of victims’ rights statutes, regulations and links to articles