The United States Law Week

CitiGroup Restitution Case Rejected by Supreme Court (1)

Jan. 7, 2019, 2:39 PMUpdated: Jan. 7, 2019, 3:59 PM

The U.S. Supreme Court rejected an appeal today over the dissent of Justices Neil M. Gorsuch and Sonia Sotomayor that could have made it harder for the government to get criminals to pay restitution to victims in a case involving two men who defrauded Citigroup.

It’s the two justices’ latest tag-team on criminal justice issues. In November they dissented from their colleagues’ refusal to take up a case about confronting witnesses at trial.

This latest case asked whether the high court’s prior rulings requiring jury findings beyond a reasonable doubt for increasing criminal penalties and imposing fines likewise applies to restitution.

In rejecting the appeal, the justices failed to take up what Marco Luis and Joshua Hester argued is an important issue with “wide-ranging impact.”

Gorsuch and Sotomayor seemed to agree with that assessment.

“Restitution plays an increasing role in federal criminal sentencing today,” Gorsuch wrote for the pair. “The effects of restitution orders, too, can be profound,” he noted. “Failure or inability to pay restitution can result in suspension of the right to vote, continued court supervision, or even reincarceration.”

The roots of this case arose in the mid-2000s, when long-time friends Luis—who “had the know-how"—and Hester—a “career marijuana dealer” who had the cash—began investing in property together, the government’s brief opposing Supreme Court review recounted.

They used straw buyers and falsified paperwork to buy two California properties totaling over $2.5 million. For financing they got two loans from CitiGroup totaling over $500,000.

One of the properties defaulted in 2008 and the fraudulent nature of the loans was discovered during an investigation of Hester’s marijuana operation.

Luis and Hester were both convicted of money laundering and sentenced to prison.

But on top of that the judge ordered them to pay six-figure criminal restitution to CitiGroup under the Mandatory Victims Restitution Act. The act requires trial judges—not juries—to make fact findings to determine how much, if any, restitution should be ordered.

But a jury needed to make that restitution finding beyond a reasonable doubt, they argued.

That argument resonated with Gorsuch and Sotomayor, falling two short of the four justices needed to agree to review a case, saying nothing of the five needed to win a majority on the nine-member court.

“If the government’s arguments appear less than convincing, maybe it’s because they’re difficult to reconcile with the Constitution’s original meaning,” Gorsuch wrote in dissent. “It’s hard to see why the right to a jury trial should mean less to the people today than it did to those at the time of the Sixth and Seventh Amendments’ adoption.”

Justice Samuel A. Alito Jr. also wrote separately on the issue, penning a short concurrence explaining why he agreed with the decision not to hear the case. The argument that Gorsuch and Sotomayor are making, Alito wrote, “represents a questionable interpretation of the original meaning of the Sixth Amendment.”

The case is Hester v. United States, U.S., 17-9082, review denied 1/7/19.

(additional reporting throughout )

To contact the reporter on this story: Jordan S. Rubin in Washington at jrubin@bloomberglaw.com

To contact the editors responsible for this story: John Crawley at jcrawley@bloomberglaw.com; Jessie Kokrda Kamens at jkamens@bloomberglaw.com

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