Law.com Subscribers SAVE 30%
Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.
Supreme Court Forecloses Reimbursement for Certain Internal Investigations Under Mandatory Victims Restitution Act
On May 29, 2018, the U.S. Supreme Court ruled in Lagos v. United States, 584 U.S. ___ (2018), that corporate victims of criminal offenses cannot recover expenses incurred from internal investigations that the federal government has neither requested nor required under the Mandatory Victims Restitution Act of 1996, 18 U.S.C. §3663A (MVRA). In its decision, the Court declined to address whether, going forward, such victims can recover costs from internal investigations initiated at the government's behest under the statute. Prior to this holding, a number of federal courts held that corporate victims were eligible for restitution for the costs incurred from their internal investigations and referrals to law enforcement — regardless of whether the government requested or required such investigations. These courts ordered restitution to reflect these costs on grounds that internal investigations: 1) are a foreseeable result of the crimes enumerated in the MVRA; and 2) provide invaluable assistance to government investigations and proceedings.
However, the Court's unanimous decision in Lagos effectively overruled these decisions and poses a setback for companies victimized by criminal conduct in determining what steps to take in reaction to the disclosure of the conduct. The companies likely have no choice but to conduct exhaustive internal investigations to identify the scope of the crime and to receive cooperation credit pursuant to the recently-updated Department of Justice Manual. See, U.S. Dep't of Justice, Justice Manual §9-28.000, Principles of Federal Prosecution of Business Organizations. In doing so, they should be aware of the real possibility that they cannot recover the costs incurred from these investigations through restitution and may have to pursue the funds solely through civil litigation. Should companies elect to minimize costs by declining to investigate internally — or by conducting a small-scale investigation — they risk the full extent of the crime remaining undetected and forego the ability to earn cooperation credit with the government. Moreover, public companies face the added dilemma of having to explain to their shareholders what steps they took to investigate the conduct and prevent future incidents, while also being mindful of the fiscal consequences of full-scale investigative work that might not be reimbursed.
The Emergence of Federal Restitution
Restitution is intended to restore a victim, to the extent possible, to "the position he occupied before sustaining injury." United States v. Boccagna, 450 F.3d 107, 115 (2d Cir. 2006). When a restitution statute applies, the government bears the burden of proving by a preponderance of the evidence the amount of loss that a victim sustained. However, a restitution award "need only to be a reasonable estimate of the victim's actual losses" and courts must resolve uncertainties in favor of the victim. See, United States. v. Donaghy, 570 F. Supp. 2d 411, 423 (E.D.N.Y. 2008).
This premium content is locked for Entertainment Law & Finance subscribers only
ENJOY UNLIMITED ACCESS TO THE SINGLE SOURCE OF OBJECTIVE LEGAL ANALYSIS, PRACTICAL INSIGHTS, AND NEWS IN ENTERTAINMENT LAW.
- Stay current on the latest information, rulings, regulations, and trends
- Includes practical, must-have information on copyrights, royalties, AI, and more
- Tap into expert guidance from top entertainment lawyers and experts
Already a have an account? Sign In Now Log In Now
For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473
Bankruptcy Sales: Finding a Diamond In the Rough
There is no efficient market for the sale of bankruptcy assets. Inefficient markets yield a transactional drag, potentially dampening the ability of debtors and trustees to maximize value for creditors. This article identifies ways in which investors may more easily discover bankruptcy asset sales.
Judge Rules Shaquille O'Neal Will Face Securities Lawsuit for Promotion, Sale of NFTs
A federal district court in Miami, FL, has ruled that former National Basketball Association star Shaquille O'Neal will have to face a lawsuit over his promotion of unregistered securities in the form of cryptocurrency tokens and that he was a "seller" of these unregistered securities.
Why So Many Great Lawyers Stink at Business Development and What Law Firms Are Doing About It
Why is it that those who are best skilled at advocating for others are ill-equipped at advocating for their own skills and what to do about it?
Blockchain Domains: New Developments for Brand Owners
Blockchain domain names offer decentralized alternatives to traditional DNS-based domain names, promising enhanced security, privacy and censorship resistance. However, these benefits come with significant challenges, particularly for brand owners seeking to protect their trademarks in these new digital spaces.
Supreme Court Rules Rejection of Trademark License Does Not Rescind Rights of Licensee
Mission Product Holdings, Inc. v. Tempnology, LLC The question is whether a debtor's rejection of its agreement granting a license "terminates rights of the licensee that would survive the licensor's breach under applicable nonbankruptcy law."