76 F.4th 955
9th Cir.2023Background
- In 2020 the CARES Act created PPP loans and EIDL loans to assist businesses during the COVID pandemic; an eight-person conspiracy fraudulently obtained and laundered millions in these funds.
- Vahe Dadyan and Artur Ayvazyan submitted false PPP applications and funneled proceeds into co-conspirators’ real-estate transactions; neither used funds for legitimate payroll expenses.
- A jury convicted Dadyan and Ayvazyan of conspiracy, fraud, money-laundering, and related counts; Dadyan received ~1 year, Ayvazyan 5 years.
- The district court ordered restitution based on the full losses caused by the conspiracy: about $10.7 million for Dadyan (excluding losses before he joined) and about $17.7 million for Ayvazyan.
- On appeal the defendants challenged restitution as (1) improperly based on entire-conspiracy losses rather than only losses they personally caused; (2) exceeding Guidelines “loss” amounts; (3) factually unsupported; and (4) violating due-process and jury-trial rights. The government largely defended the restitution calculation.
- The Ninth Circuit affirmed restitution in all respects except it vacated and remanded to amend Dadyan’s judgment to expressly state his restitution is joint and several with certain co-defendants.
Issues
| Issue | Plaintiff's Argument (United States) | Defendant's Argument (Dadyan/Ayvazyan) | Held |
|---|---|---|---|
| 1) Co-conspirator liability for full-conspiracy losses | USA: MVRA permits holding conspirators jointly and severally for all victims harmed by the entire scheme | Dadyan/Ayvazyan: Restitution should be limited to losses they personally caused via loan applications they submitted | Held: Affirmed — under MVRA and Riley a conspirator may be held jointly and severally liable for all reasonably foreseeable losses caused by the conspiracy |
| 2) Whether Guidelines loss caps restitution | USA: MVRA’s “value” calculation can differ from Guidelines loss; restitution may exceed Guidelines amount where MVRA instructs | Ayvazyan: Restitution (~$17.7M) impermissibly exceeded the district court’s Guidelines “actual loss” finding (~$1.5M–$3.5M) | Held: Rejected — no categorical rule that Guidelines loss limits MVRA restitution; the statutes and purposes differ |
| 3) Clear-error challenge to factual restitution calculation | USA: Presented evidence (declaration/table, tracing of proceeds, IP/address links) sufficient by preponderance | Ayvazyan: Government’s loan table was cryptic; some loans may have been legitimate; challenged reliability | Held: Affirmed — defendant failed to identify specific errors; preponderance-standard and district court’s reasonable inferences were satisfied |
| 4) Sixth Amendment / due-process jury-trial demand for restitution facts | USA: Precedent allows judge to resolve restitution facts by preponderance | Ayvazyan: Constitution requires jury finding beyond reasonable doubt on facts underpinning restitution | Held: Rejected as foreclosed by Ninth Circuit precedent; issue preserved but not meritorious |
| 5) Form of restitution liability in judgment | USA: Concedes Dadyan’s restitution runs jointly and severally and judgment should be amended | Dadyan: Requests limited remand to correct judgment language | Held: Remanded — vacate and amend Dadyan’s judgment to explicitly state joint-and-several liability |
Key Cases Cited
- United States v. Gagarin, 950 F.3d 596 (9th Cir.) (standard of review for restitution and valuation methods)
- United States v. Nosal, 844 F.3d 1024 (9th Cir.) (Guidelines-loss and restitution calculations are not identical)
- United States v. Riley, 335 F.3d 919 (9th Cir.) (conspirator may be vicariously liable for losses caused by co-conspirators)
- United States v. Anderson, 741 F.3d 938 (9th Cir.) (caution that Guidelines loss and restitution serve different purposes)
- United States v. Catherine, 55 F.3d 1462 (9th Cir.) (MVRA can include prejudgment interest in restitution)
- United States v. George, 949 F.3d 1181 (9th Cir.) (foreclosing jury-trial/due-process challenge to judge-found restitution facts)
- United States v. Waknine, 543 F.3d 546 (9th Cir.) (requirements for reliability of victim affidavits and proof in restitution determinations)
- United States v. Dokich, 614 F.3d 314 (7th Cir.) (discussing implications when government declines to appeal Guidelines calculation)