984 F.3d 181
2d Cir.2020Background
- Between 2007–2011 Razzouk, a Con Edison electrical design manager, steered contracts and approvals to Rudell & Associates, owned by his friend, resulting in overpayments for work not performed.
- In 2011 Razzouk pleaded guilty (pursuant to a cooperation agreement) to one count of accepting bribes under 18 U.S.C. § 666(a)(1)(B) and three counts of tax evasion; he admitted failing to report bribery proceeds as income.
- Two forensic accounting firms (KPMG and Grassi) estimated Con Edison’s loss from the scheme at roughly $5.9–6.0 million; restitution agreements allocated much of the payment in favor of Con Edison and its insurer.
- At sentencing in 2018 the district court ordered Razzouk to pay $6,867,350.51 to Con Edison (including $771,021.50 in investigative costs) and $1,982,238.34 to the IRS.
- On appeal Razzouk challenged (1) the district court’s statutory authority under the MVRA to order restitution to Con Edison for a § 666 bribery conviction and (2) the factual calculation of loss; the government sought remand limited to the investigative-costs issue in light of Lagos v. United States.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether MVRA applies to § 666(a)(1)(B) bribery conviction | MVRA applies because the manner in which the offense was committed deprived Con Edison of a property (pecuniary) interest | § 666 does not mention "property," so MVRA's "offense against property" provision should not apply | Court held MVRA may be applied by examining facts and manner of commission; Razzouk’s conduct deprived Con Edison of a property interest, so MVRA restitution is authorized |
| Whether district court clearly erred in calculating Con Edison’s loss (forensic-accountant estimates) | Forensic reports (Grassi/KPMG) provided a reasonable approximation and sound methodology supporting ~$5.9M loss | Identified discrete alleged errors (~$189k) and challenged control over certain payments | Court found no clear error; accepted Grassi’s estimate as a reasonable approximation supported by sound methodology |
| Whether investigative costs ($771,021.50) are recoverable under MVRA after Lagos | Government conceded Lagos may limit recovery of private victims’ investigative costs and urged remand for district court to apply Lagos | Razzouk did not oppose remand | Court vacated restitution as to investigative costs and remanded for reconsideration under Lagos (which limits reimbursable costs to government investigations/proceedings absent further factual findings) |
Key Cases Cited
- Lagos v. United States, 138 S. Ct. 1684 (2018) (clarifies MVRA limits investigative-costs recovery to government investigations/proceedings)
- Taylor v. United States, 495 U.S. 575 (1990) (use of the verb "committed" suggests focus on manner of commission)
- United States v. Pescatore, 637 F.3d 128 (2d Cir. 2011) (examined facts of defendant’s conduct rather than categorical elements when applying MVRA)
- United States v. Bengis, 631 F.3d 33 (2d Cir. 2011) (holding smuggling scheme deprived victim of money to which it was entitled and qualified as an "offense against property")
- United States v. Gushlak, 728 F.3d 184 (2d Cir. 2013) (MVRA requires a reasonable approximation of loss supported by sound methodology)
- United States v. Ritchie, 858 F.3d 201 (4th Cir. 2017) (upholding consideration of offense facts to determine MVRA applicability)
- United States v. Collins, 854 F.3d 1324 (11th Cir. 2017) (declining to apply a categorical approach to MVRA "offense against property" determination)