United States District Court, E.D. New York
OPINION & ORDER
ALLYNE R. ROSS, District Judge.
On February 18, 2014, defendant Eugene Gourevitch pleaded guilty to Count Three of the superseding information, charging wire fraud in violation of 18 U.S.C. § 1343. Dkt. #19. On June 16, 2014, this court sentenced Gourevitch to a 63-month term of imprisonment followed by three years of supervised release. Dkt. #29. The Judgment stated that the court would "defer assessment of restitution for a period of 90 days to permit a determination, which it is not now possible to make, as to the identity of the victim." Id. at 6. The 90-day period has now elapsed. For the reasons set forth below, the court finds that it is still not possible to make a determination as to the identity of the victim, and therefore the court will not enter a restitution order.
Under the Mandatory Victim Restitution Act of 1996 ("MVRA"), courts shall award restitution in any sentencing proceeding for an offense against property under Title 18 in which "an identifiable victim or victims has suffered a physical injury or pecuniary loss." 18 U.S.C. § 3663A(c)(1)(A)(ii). "[T]he purpose of restitution is essentially compensatory: to restore a victim, to the extent money can do so, to the position he occupied before sustaining injury." United States v. Boccagna, 450 F.3d 107, 115 (2d Cir. 2006).
By its plain language, the MVRA requires restitution only where the offense had an "identifiable victim or victims." 18 U.S.C. § 3663A(c)(1)(B). The statute defines a "victim" as "a person directly and proximately harmed as a result of the commission of an offense for which restitution may be ordered." 18 U.S.C. § 3663A(a)(2). "The MVRA is clear that restitution can only be imposed to the extent that the victims of a crime are actually identified. Identification of victims is a statutory prerequisite to the application of the MVRA." United States v. Catoggio, 326 F.3d 323, 328 (2d Cir. 2003) (internal citation omitted). Moreover, "a restitution order must be tied to the victim's actual, provable, loss." United States v. Zangari, 677 F.3d 86, 91 (2d Cir. 2012).
The MVRA "places responsibility for identifying the victims of the defendant's offense on the government." United States v. Reifler, 446 F.3d 65, 121 (2d Cir. 2006). The government, "after consulting, to the extent practicable, with all identified victims, " must provide the probation officer with "a listing of the amounts subject to restitution." 18 U.S.C. § 3664(d)(1). The probation officer must include information in the pre-sentence report that is "sufficient for the court to exercise its discretion in fashioning a restitution order, " including information on the losses sustained by victims and the defendant's financial circumstances. 18 U.S.C. § 3664(a); see Fed. R. Crim. P. 32(c)(1)(B) ("If the law permits restitution, the probation officer must conduct an investigation and submit a report that contains sufficient information for the court to order restitution."). When preparing the pre-sentence report, "[i]f the number or identity of victims cannot be reasonably ascertained, or other circumstances exist that make this requirement clearly impracticable, the probation officer shall so inform the court." 18 U.S.C. § 3664(a). If the victims' losses cannot be determined by a date ten days before sentencing, the government or probation officer must inform the court, and "the court shall set a date for the final determination of the victim's losses, not to exceed 90 days after sentencing." 18 U.S.C. § 3664(d)(5).
In resolving any dispute regarding the "proper amount or type of restitution, " the court must apply a preponderance of the evidence standard. 18 U.S.C. § 3664(e). The government has the burden of proving "the amount of the loss sustained by a victim as a result of the offense, " while the defendant has the burden of demonstrating his financial resources. Id. "The burden of demonstrating such other matters as the court deems appropriate shall be upon the party designated by the court as justice requires." Id. The court "may require additional documentation or hear testimony" relating to restitution, including in camera review of evidence, 18 U.S.C. § 3664(d)(4), and "may refer any issue arising in connection with a proposed order of restitution to a magistrate judge or special master, " 18 U.S.C. § 3664(d)(6). This discretionary language grants the district court authority to determine which additional procedures are warranted. See United States v. Sabhani, 599 F.3d 215, 258 (2d Cir. 2010) ("We have noted, in the context of contested issues regarding the propriety of a restitution award, that the sentencing procedures employed to resolve such disputes are within the district court's discretion so long as the defendant is given an adequate opportunity to present his position."); accord United States v. Maurer, 226 F.3d 150, 151-52 (2d Cir. 2000) (per curiam).
In this case, because Gourevitch pleaded guilty to wire fraud, it is undisputed that he committed an offense against property under Title 18 that triggers the restitution provisions of the MVRA. However, the court finds that the record does not establish by a preponderance of the evidence that an "identifiable victim" incurred a pecuniary loss. 18 U.S.C. § 3663A(c)(1)(B).
The government's sentencing memorandum describes the conduct underlying Gourevitch's wire fraud offense:
In July 2012, Gourevitch admitted that he had engaged in the instant wire fraud scheme. Specifically, Gourevitch told the government that earlier in the spring of 2012, he told the individual identified as "John Doe #1" in the Information that he could invest John Doe's money in the initial public offering (IPO) of Facebook stock at approximately $40 per share. Gourevitch paid a friend $100, 000 to set up a company called Konnektix Ventures. Konnektix Ventures, in turn, opened a bank account at Signature Bank and a trading account with Interactive Brokers. To further conceal his own involvement, Gourevitch directed his friend to have signatory authority on the Konnektix accounts at both Interactive Brokers and Signature Bank.
Gourevitch then told John Doe #1 to send the funds for the Facebook stock investment to the Konnektix Ventures account at Signature Bank. In order to conceal John Doe #1's anticipated ownership of the stock, John Doe #1 first transferred the $6 million he intended to invest in the Facebook IPO to an intermediate company, Sorgente Ltd., controlled by Gourevitch, who then caused the money to be transferred to the Konnektix Ventures account at Signature Bank. Finally, Gourevitch directed his friend to transfer $5 million to the Interactive Brokers account, leaving $1 million in place at Signature Bank. Bank records corroborate Gourevitch's admissions. Gourevitch did not inform John Doe #1 of these transfers.
Gov't Sentencing Mem., Dkt. #24 at 2. Based on these facts, the pre-sentence report filed by the Probation Department on April 29, 2014, initially recommended that restitution be made to John Doe #1 under the MVRA. Dkt. #22, ¶ 90.
However, in a subsequent submission filed with the court under seal on June 9, 2014, the government raised factual questions regarding the identity of the victim of Gourevitch's wire fraud offense. Dkt. #26 at 4. According to the government, the funds that John Doe #1 transferred to Gourevitch came from a corporate account, and the ownership of that corporation could not be determined. Id. In an addendum to the pre-sentence report filed under seal on June 13, 2014, the Probation Department recommended, based on the government's letter, that the court defer a final determination of restitution for a period not later than 90 days after sentencing, in accordance with 18 U.S.C. § 3664(d)(5). Dkt. #27. The addendum stated that if a victim could be identified during that period, the Probation Department would issue another addendum recommending an award of restitution for that victim. Id. However, if no victim could be identified, the Probation Department would issue an addendum recommending that no restitution order be entered. Id. In accordance with the Probation Department's recommendation, at Gourevitch's sentencing on June 16, 2014, the court deferred the assessment of restitution for a 90-day period to allow more time to determine the identity of the victim. Dkt. #29 at 6.
The 90-day period has now elapsed, and, in a letter filed under seal on September 15, 2014, the government takes the position that the identity of the victim of the wire fraud scheme cannot be determined. Dkt. #32. Based on the government's letter, the Probation Department issued another addendum to the pre-sentence report on September 22, 2014, recommending that no restitution order be issued. Dkt. #34. Having reviewed the detailed information set forth in the sealed submissions, the court finds that the government has provided ample ...