United States v. Elbea Malone
2014 U.S. App. LEXIS 5961
| 7th Cir. | 2014Background
- Malone, a cattle feedlot operator, and Anderson (GLS president) engaged in check-kiting and then fraud to cover overdrafts; they sold non‑existent cattle to victim Larry O’Hern for $400,000.
- Malone deposited the $400,000 into an overdrawn account and later refunded O’Hern $115,000 after the fraud was discovered.
- O’Hern took cattle from Malone’s lot and obtained liens and later filed a pending state civil suit over related claims.
- Malone pled guilty to one count of bank fraud and one count of money laundering and was sentenced; the district court ordered $285,000 restitution (the $400,000 minus $115,000) jointly and severally with Anderson.
- Malone challenged restitution, arguing the district court misapplied the MVRA complexity exception, failed to account for O’Hern’s self‑help recoveries and liens, and should have delayed or reduced restitution under 18 U.S.C. § 3664(d)(5).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether MVRA required restitution to O’Hern or complexity exception excused it | Malone: district court should apply complexity exception; sentencing should be delayed or restitution declined because calculation is complicated by state suit and offsets | Government: MVRA mandates restitution; complexity exception inapplicable because amount is straightforward | Court: MVRA applies; district court did not abuse discretion in declining complexity exception; restitution mandatory here |
| Proper restitution amount calculation | Malone: restitution should be reduced by value O’Hern recovered via self‑help, unpaid care offsets, and liens | Government: only amounts returned by defendant count; third‑party recoveries or civil remedies are not relevant | Court: Only $400,000 (loss) minus $115,000 (refund) = $285,000; self‑help cattle, care fees, liens irrelevant unless converted to cash from defendant |
| Burden of proof on loss and offsets | Malone: government failed to prove loss accounting and offsets by preponderance; district court did not find offsets | Government: bears burden to prove loss; defendant should prove any returns from defendant | Court: Government proved loss; Malone bore burden to prove offsets from defendant and failed to show Anderson owned seized cattle |
| Whether restitution determination should have been delayed under §3664(d)(5) | Malone: pending state litigation made losses uncertain and required delay within 10 days before sentencing | Government: losses ascertainable; no need to delay | Court: No delay required; restitution amount clear from cash paid and refunded; postponement unnecessary |
Key Cases Cited
- United States v. Robers, 698 F.3d 937 (7th Cir. 2012) (defines “property” for restitution as the same type of property stolen)
- United States v. Gallant, 537 F.3d 1202 (8th Cir.) (civil suit may be considered but is typically of little relevance to MVRA complexity analysis)
- United States v. Reifler, 446 F.3d 65 (2d Cir. 2006) (discusses complexity exception and when restitution determinations may be unduly burdensome)
- United States v. Rand, 403 F.3d 489 (7th Cir. 2005) (standard of review: restitution orders reviewed de novo; amounts for abuse of discretion)
- United States v. Gushlak, 728 F.3d 184 (2d Cir. 2013) (complexity‑exception decisions reviewed for abuse of discretion)
- United States v. Wirth, 719 F.3d 911 (8th Cir. 2013) (discusses appellate review of complexity exception application)
- United States v. Black, 116 F.3d 198 (7th Cir. 1997) (court must view record as whole; isolated comments do not show misunderstanding)
- United States v. Scheinbaum, 136 F.3d 443 (5th Cir. 1998) (placing burden on defendant to prove returns from defendant for offsets)