Dr. M Blatstein's Blog, Preparation, Sentence Mitigation, White-Collar

RESTITUTION – FINES – FORFEITURE – FRP/Financial Responsibility Program

I) Financial Responsibility Program

BOP suggests a minimum for participation in the FRP of $25/quarter, an affordable amount for many. You do not want to use your Commissary Trust Account as your Bank, keeping thousands, if you have a court-ordered financial penalty. WHY? 

The DOJ would love to come in and take 75%, but the BOP fights this as they need everyone to spend their money in the BOP Commissary, which they have already budgeted for their operating costs. Federal prisoners are allowed to spend $360/month that is used for things like phone calls, emails, clothing and basic hygiene.

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The BOP Financial Responsibility Program Statement: P5380.08, 

  • All sentenced inmates with financial obligations will develop a financial plan.
  • Appropriate consequences will be incurred for inmates who refuse to participate.
  • Inmates in “REFUSE” status will be held to the same FRP restrictions, e.g., lowest housing, no special purchases, and not eligible for community-based programs.
  • An inmate will be considered to have limited financial resources when he or she does not have enough institution earnings or trust fund account deposits to make a minimum IFRP payment of $25 per quarter.
  • A defendant’s obligation to pay a special assessment ceases five years after the date the judgment was imposed.
    Inmates who fail to pay their assessments during the five-year period become absolved of this responsibility. (18 U.S.C. §3013.)
  • The amount you end up paying, either monthly or quarterly, is between you and your Case Manager or Unit Team. For example, if you are receiving 3-500 hundred dollars per month, you may be willing to offer $50 – $75 dollars per month or per quarter. If you are receiving thousands per month, you may consider offering $2- 300 per month. But if you have no financial penalty, then you can do whatever you want.
  • Institution Monthly/Quarterly Repetitive Withdrawals. Repetitive withdrawals from the inmate’s Trust Fund Account will be used for all inmates who elect to make financial payments, which will be made once each quarter during the last month of each quarter (December, March, June, and September).
  • Effects of Non-participation:
    • The inmate will not receive any furlough (other than emergency or medical)
    • The inmate will not receive performance pay above the maintenance pay level, or bonus pay, or vacation pay
    • …inmates will not be permitted to participate in activities outside the secure perimeter, such as speaking engagements
    • No UNICOR
    • The inmate shall be subject to a monthly commissary spending limit of $25 (excluding purchases of stamps and telephone credits).
    • The inmate will be quartered in the lowest housing status.
    • No incentives for participation in RDAP.
    • No early Release Benefits
    • No GTC
    • Limited FSA Programming
    • The inmate’s score on “Responsibility” on the Custody Classification form (BP-338), is to be zero,

II) RESTITUTION – FINES – FORFEITED PROPERTY

STATE Courts: Consider the financial condition of the defendant.

FEDERAL Courts: Restitution, Full Amount is Mandatory

  • The government can collect that restitution for up to 20 years following release from Halfway House.
  • There Are No Exemptions when it comes to collecting restitution.
  • State exemptions like the homestead exemption don’t apply under federal law.
  • But if the government has already filed a lien on your house, it is still good after 20 years.
  • If you can pay a small portion or all of your restitution, your attorney can share with the court that they have those funds in an escrow account and can give them to the court clerk after sentencing.
  • Your judge will recognize your efforts.

Restitution: Compensation for the victim doesn’t consider the defendant’s financial condition.

Fines are for Punishment.

Forfeited Property (Punishment)

You may not get credit for it on the restitution side—that’s why it’s important to include this when negotiating your Plea [or knowing what your restitution will be after release from prison and Supervised Release, as your earning capacity is expected to be significantly less; 100/M0?].

  • That’s why it’s important to negotiate before your Plea.

 

18 U.S.C. §3013 (a) and (b) talks about how the court determines the manner and schedule of Restitution payments

  • Defendants’ Resources:
    • Solely controlled by the defendant, or
    • Jointly Controlled with others
  • What will be this person’s projected earnings?
    • Are they educated?
    • Are they not educated?
    • What are their other anticipated financial obligations?
  • The statute clearly states that the government (your Judge) is the only party authorized to modify the payment schedule. Therefore, it’s crucial to cultivate a strong relationship with your Probation Officer. This proactive step simplifies the process and provides peace of mind.
  • Check that the ‘No Interest Box’ is checked on the J&C order and mentioned in the PSI.

 

III) AFTER BOP

YOUR RESTITUTION PAYMENT ($ or %) WAS ALREADY NEGOTIATED INTO YOUR PLEA

  • It’s alarming to see that 25% of your paycheck can be deducted right off the top, and this is calculated after taxes, not before you’ve covered your essential expenses. This is a substantial amount that can deeply impact your financial situation.
  • For those who rely solely on Social Security, the fact that up to 25% can be taken away makes it even more difficult to manage day-to-day needs.
  • It’s crucial to realize that this percentage should be viewed as a ceiling for negotiations, not a starting point.
  • I strongly encourage aiming for around 15% because that extra 10% can lead to meaningful relief for individuals facing financial struggles.
  • Don’t underestimate how much even a small change can improve your quality of life—every dollar matters when trying to get by.

In the past, many individuals would cease payments after finishing their probation due to a lack of oversight. However, that’s no longer acceptable. Failing to pay your restitution can lead to serious consequences, making your life significantly more difficult. Worse yet, the Financial Litigation Unit will require you to complete a detailed legal form outlining your expenses. Falsifying any information on this form could result in additional charges against you. It’s crucial to stay compliant to avoid these pitfalls.

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SUPERVISED RELEASE – COMMUNICATION WITH YOUR PO IS KEY

Restitution is mandatory; the PO won’t send you back to prison but don’t buy or lease expensive houses or cars if you can’t pay because they will make your life more difficult.

The Financial Litigation Unit

If you stop making payments 20 years after your Halfway House Release Date, be aware that the Government’s Financial Litigation Unit (FLU) has powerful tools at its disposal. They can impose liens on your home, and in many cases, those liens linger in your financial history.

  • Furthermore, they have the authority to garnish your wages and Social Security income, and they can place liens on your properties and assets.
  • They can also take stocks, bonds, trusts, Social Security retirement benefits, and your children’s college funds. Remember that all these assets are at risk due to your restitution.
  • The Financial Litigation Unit requires defendants to fill out Financial Affidavits every few years.
    • Do not lie

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Community Property (Married at The Time Charged) State v Community Property Law (IRS)

  • This situation can affect your inheritance and influence the assets of your spouse and children. It can also impact stocks, bonds, trusts, Social Security retirement benefits, and your children’s college funds. Remember that all these assets are at risk due to their actions. Stay informed and take proactive steps to protect what matters most.

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Another reason to have Great Communication with Your Probation Officer,

  • I took the initiative to resolve this matter on my own. I formally asked my officer to petition the judge to reduce my monthly payment to just $25.00. My timely and detailed monthly statements to Probation demonstrated my financial need. To prevent any errors in the future, I arranged for this amount to be automatically deducted from my bank account for the next 99 years. This ensured consistency and peace of mind in managing my obligations.
  • Federal Criminal Justice Act: the courts will not appoint counsel to help you lower your Restitution payments.

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18 U.S. Code § 3613 – Civil remedies for satisfaction of an unpaid fine

The liability to pay restitution shall terminate on the date that is the later of 20 years from the entry of judgment or 20 years after the release from imprisonment of the person ordered to pay restitution.  In the event of the death of the person ordered to pay restitution, the individual’s estate will be held responsible for any unpaid balance of the restitution amount.

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18 U.S. Code § 3613A – Effect of default

a (1) If the court finds that the defendant has defaulted on a fine or restitution payment, it may revoke probation or supervised release as per section 3565. Additionally, the court can modify the terms of probation or supervised release, resentence the defendant under section 3614, hold the defendant in contempt, issue a restraining order or injunction, order the sale of the defendant’s property, accept a performance bond, set or revise a payment schedule, or take other necessary actions to enforce compliance with the fine or restitution order.

(2) In deciding what action to take, the court shall consider the defendant’s employment status, earning potential, financial resources, the intentionality in failing to comply with the fine or restitution order, and any other factors that may influence the defendant’s ability to comply with the order of a fine or restitution.

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18 U.S. Code § 3614 – Resentencing upon failure to pay a fine or restitution

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IV) The Fairness in Restitution (FIR) Act.

 

 

Restitution is mandated in around 15% of federal criminal convictions each year, serving as a means to compensate victims rather than to penalize defendants. However, in many cases, it becomes excessively burdensome, fails to reflect the actual harm done, and lacks sufficient evidence to justify the amounts ordered. It’s crucial to reassess how restitution is applied to ensure it truly serves its intended purpose.

Even after completing a prison sentence, individuals often struggle with restitution orders that impede their ability to rebuild their lives and support their families. Many who served short sentences face these financial burdens for years or even decades, making restitution feel like a “life sentence.” Federal restitution laws have become increasingly punitive, highlighting the need for advocacy for a fairer system.

Changes to federal restitution law have become increasingly punitive, raising concerns about fairness for defendants. Ladies of Hope Ministries has partnered with the National Association of Criminal Defense Lawyers to address these issues to create the Fairness in Restitution (FIR) Act, advocating for a more just system that respects everyone’s dignity.

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The FIR Act would improve federal restitution law by:

  1. Ensuring fairness, proportionality, and accuracy in the amount of restitution owed.

  • Require that the Government show actual loss sustained by a victim as a direct and proximate result of the defendant’s actions.
  • Eliminate joint and several liability and ensure that defendants are only responsible for financial losses they themselves caused.
  • Provide a right to an evidentiary hearing for proving or disproving the amounts included in a restitution order.

  1. Preventing restitution obligations from becoming overly onerous or lengthy.

  • Change the statutory period of liability from 20 years to 10 years and prevent extensions, which are not authorized under current law but often permitted by courts.
  • Allow courts to consider the economic circumstances of a defendant so that defendants are not burdened with unfair and unrealistic restitution requirements.
  • Prevent the seizing or garnishing of wages, benefits, or certain other amounts if it would render the defendant poor enough to qualify for the appointment of counsel under federal guidelines.
  • Allow defendants to petition for a change in their restitution order if their economic circumstances change.

  1. Helping victims recover while also helping defendants avoid burdensome debts.

  • Require that any amounts collected by the Government first go to satisfaction of a restitution order, in cases where both restitution and forfeiture are required.
  • Allow settlements of restitution obligations, which would guarantee an amount of restitution for victims instead of the false promise of unrealistic restitution orders.
  • Exempt any reduction in restitution amount owed from being counted as income for tax purposes.

We hope you will join us in this effort to improve this often-overlooked area of federal criminal law that is in urgent need of reform. Please reach out to your contacts at either of our organizations to become a part of our coalition fighting for Fairness In Restitution.

Respectfully,

Ladies of Hope Ministries

National Association of Criminal Defense Lawyers

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