United States v. Coleman Carpenter, 2016 U.S. App. LEXIS 21031

Background

Coleman Carpenter, a grain elevator manager for Bunge, purchased commodities using inflated futures prices beyond his authority from 2009–2013 and misrepresented transactions to Bunge HQ.
Bunge discovered the scheme in 2013, retained Thompson Coburn to review transactions and assist the government, and the government indicted Carpenter; he pleaded guilty to one count of mail fraud.
The PSR and parties used different methods to compute loss: PSR used a one-day CBOT high price method; the government and Carpenter’s plea agreement used a two-day CBOT high price method (yielding ≈ $937,000 loss for sentencing purposes).
The district court used the one-day method for restitution, awarding $1,473,980 in overpayments, and also awarded $87,536.65 (90% of claimed) in outside attorney fees and expenses, for total restitution of $1,561,516.25.
Carpenter appealed, challenging the restitution amount and the inclusion of attorney fees; the Eighth Circuit reviewed for abuse of discretion (restitution) and clear error (amount findings).

Issues

Issue	Plaintiff's Argument (Carpenter)	Defendant's Argument (Bunge/Government)	Held
Proper method to calculate restitution loss (one-day vs two-day CBOT high price)	One-day method overstates loss; calculating precise times is unworkable; two-day method (used in plea) is proper	Either method is reasonable; one-day is permissible and still a conservative underestimate of actual loss	Court affirmed district court’s choice of the one-day method and upheld $1,473,980 restitution (no clear error)
Whether Bunge sustained a loss when it later sold commodities (impact on restitution)	Bunge recouped overpayments on resale, so no net loss / restitution not appropriate	Loss measured by lost profits (difference between authorized and unauthorized purchase price) and is independent of resale price	Court held Bunge’s lost profits were properly measured by the purchase-price differential and upheld restitution calculation
Inclusion of outside counsel attorney fees in restitution under 18 U.S.C. § 3663A(b)(4)	Fees incurred after the government began its investigation were not "necessary" and therefore not recoverable	Prior Eighth Circuit precedent allows attorney/investigative costs caused by fraud; fees are part of victim’s losses if shown necessary	Court vacated the award for attorney fees and remanded for district court to make specific findings whether post-investigation fees were "necessary"; otherwise reduce disallowed amounts
Insurance set-off claim	Carpenter sought set-off if Bunge’s insurer pays related claims	Government: restitution goes to insurer if insurer pays; defendant not entitled to set-off	Court rejected set-off argument (defendant must pay restitution to insurer under MVRA)

Key Cases Cited

United States v. Chalupnik, 514 F.3d 748 (8th Cir. 2008) (standards for restitution review and amount findings)
United States v. DeRosier, 501 F.3d 888 (8th Cir. 2007) (district court has wide discretion ordering restitution; attorney fees may be included when caused by fraud)
United States v. Parish, 565 F.3d 528 (8th Cir. 2009) (reasonable estimate of loss acceptable when precise calculation is difficult)
United States v. Papagno, 639 F.3d 1093 (D.C. Cir. 2011) (victim’s internal investigation costs not "necessary" when not requested by prosecutors)
United States v. Akbani, 151 F.3d 774 (8th Cir. 1998) (attorney and investigative costs may be included in restitution when caused by the defendant’s fraud)
United States v. Piggie, 303 F.3d 923 (8th Cir. 2002) (approving inclusion of investigative costs in restitution)
United States v. Mancini, 624 F.3d 879 (8th Cir. 2010) (no set-off against restitution when insurer pays victim; restitution owed to insurer)
United States v. Frazier, 651 F.3d 899 (8th Cir. 2011) (government bears burden to prove restitution amount by a preponderance)
United States v. Scott, 448 F.3d 1040 (8th Cir. 2006) (district court’s loss estimation standard)