United States v. Shah
665 F.3d 827
| 7th Cir. | 2011Background
- Shah pled guilty to mail fraud and Shah Eng’g pled guilty to mail fraud; restitution set at $10 million, joint and several liability.
- Shah deposited stock certificates and cash with the Clerk in escrow as security toward restitution, not as outright payment.
- The district court ordered stocks be held in escrow and later, after sentencing, ordered sale to satisfy restitution.
- The value of the escrowed stock declined since deposit due to market fluctuations, raising questions about loss allocation.
- Shah challenged whether the escrowed securities should credit restitution dollar-for-dollar for their value, and whether Shah Eng’g’s waiver covered restitution-appeal challenges.
- The Seventh Circuit ultimately dismissed Shah’s appeal and affirmed the district court’s restitution judgment against Shah Eng’g; it held Shah Eng’g’s waiver did not bar the appeal on restitution issues.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Shah’s appeal is timely and barred by waivers | Shah’s appeal diverts from district judgment; waivers bar it | Waivers may not bar Shah Eng’g’s appeal; scope uncertain | Shah’s appeal timing and waivers do not bar Shah Eng’g; dismissal of Shah’s appeal; affirm restitution judgment against Shah Eng’g. |
| Whether stock deposits were restitution payments or security | Deposits were payments toward restitution | Deposits were security held in escrow, not actual payments | Deposits were security for future restitution, not payments; proceeds from sale apply to restitution. |
| Whether the loss from stock decline is Shah’s responsibility | Losses fall on Shah as depositor of securities | Losses should be borne by escrow holder due to risk transfer upon deposit | Loss attributed to Shah as security for restitution; Capos analogy supports Shah bears the loss. |
| Whether MVRA deductions reduce restitution for deposited stock | Value of stock at time of deposit should reduce restitution | Deposits not restitution payments, MVRA deduction not applicable | MVRA deduction not applicable to treated security; restitution calculation upheld. |
Key Cases Cited
- Capos v. Mid-America National Bank of Chicago, 581 F.2d 676 (7th Cir. 1978) (loss from depreciated collateral; pledgee not liable for decline in value)
- United States v. Lilly, 206 F.3d 756 (7th Cir. 2000) (escrow use in criminal investigations supported by court)
- United States v. Behrman, 235 F.3d 1049 (7th Cir. 2000) (waiver scope depends on exact language of plea agreement)
- United States v. Worden, 646 F.3d 499 (7th Cir. 2011) (waivers may bar appeal if within scope; analyze colloquy and agreement)
- United States v. Thornton, 642 F.3d 599 (7th Cir. 2011) (claims of procedural waivers; jurisdiction and timing)
- United States v. Rol lins, 607 F.3d 500 (7th Cir. 2010) (appellate timeliness as non-jurisdictional rule)
- Hughey v. United States, 495 U.S. 411 (1989) (MVRA restitution framework noted)
- Leahy, 464 F.3d 773 (7th Cir. 2006) (MVRA loss calculation; deduction for value of returned property)