Argued: October 18, 2017
from an order of the United States District Court for the
Southern District of New York, Alvin K. Hellerstein,
Judge, denying defendant's postsentence motion
to reduce or eliminate his remaining restitution obligation
by the amounts recovered by his crime victim in its civil
litigation against other persons, see 18 U.S.C.
§§ 3663A, 3664. The district court denied the
motion on the ground that defendant did not show that those
recoveries were for the same loss he caused or that the
victim has been fully compensated for the loss he caused it.
Defendant contends principally that the court erred in ruling
that he had the burden of proving that the losses were the
same, and in not concluding that the victim's recoveries
reduced or eliminated defendant's restitution obligation.
We conclude that the district court's ruling that
defendant had the burden of proof on these issues was within
the court's discretion and that there were no errors in
the court's ruling.
THOMAS, Assistant United States Attorney, New York, New York
(Joon H. Kim, Acting United States Attorney for the Southern
District of New York, Michael Ferrara, Assistant United
States Attorney, New York, New York, on the brief), for
C. WOLFE, New York, New York, for Defendant-Appellant.
Before: KEARSE, CABRANES, and WESLEY, Circuit Judges.
KEARSE, CIRCUIT JUDGE
Jason Smathers, who was convicted in 2005, following his plea
of guilty, of conspiring, in violation of 18 U.S.C. §
371, to misappropriate and sell property of America Online
("AOL"), and was ordered to, inter alia,
pay AOL restitution in the amount of $84, 000, appeals from a
June 22, 2016 order of the United States District Court for
the Southern District of New York, Alvin K. Hellerstein,
Judge, denying his motion, made pro se, for
a reduction of his remaining restitution obligation by
amounts recovered by AOL in civil litigation against other
persons. The district court ruled that Smathers failed to
show that those amounts recovered by AOL were compensation
for the same loss caused by Smathers or that AOL has been
fully compensated for the loss caused by Smathers. On appeal,
Smathers, represented by counsel, contends principally that
the district court erred in imposing on him "the full
burden" (Smathers brief on appeal at 26) of proving that
AOL's recoveries were for the same loss caused by
Smathers and that the court clearly erred in finding that the
losses were not the same. He also complains that the district
court denied his motion without a hearing. Concluding that
his contentions lack merit, we affirm.
record of Smathers's prosecution, United States v.
Smathers, S.D.N.Y. No. 04CR1273, shows the following. In
2005, Smathers, represented by counsel, pleaded guilty to
conspiring from about April 2003 through about April 2004, in
violation of 18 U.S.C. § 371, to affect interstate
commerce by relaying and retransmitting deceptive emails in
violation of the CAN-SPAM Act, 18 U.S.C. § 1037, and to
transmit in interstate commerce a stolen list of AOL customer
names, having a value of $5, 000 or more, in violation of 18
U.S.C. § 2314. In furtherance of the conspiracy,
Smathers, an employee of AOL, misappropriated an AOL customer
list containing approximately 92 million screen names.
Smathers sold that list ("the Smathers List") to
Sean Dunaway for $28, 000; Dunaway sold that list to Braden
Bournival; Bournival used it to send to AOL customers between
three and seven billion unsolicited email advertisements (or
"spam, " see The American Heritage Dictionary
of the English Language at 1678 (5th ed. 2011) (defining
"spam" as, inter alia, "[u]nsolicited
email, often of a commercial nature, sent indiscriminately to
multiple mailing lists, individuals, or newsgroups")).
AOL estimated that the cost of processing those spam emails
was about 10 cents per 1, 000 emails, amounting to $300,
was sentenced principally to 15 months' imprisonment, to
be followed by three years of supervised release, and was
ordered to pay restitution to AOL. In determining the amount
of Smathers's restitution obligation under the Mandatory
Victims Restitution Act ("MVRA"), see 18
U.S.C. §§ 3663A and 3664, the district court noted
that Smathers's plea agreement stated that the loss to
AOL was $300, 000; but the court declined to order Smathers
to pay restitution in that amount because, inter
alia, some portion was overhead rather than
out-of-pocket expense, and it thought that ordering him to
pay $300, 000 would give AOL a windfall. Instead, trebling
the $28, 000 that Smathers had received for selling the AOL
list, the court ordered Smathers to pay restitution in the
amount of $84, 000. The judgment so ordered but stated that
the "Total Loss" was "$300, 000."
Judgment, August 17, 2005.
Smathers's First Attempt To Reduce His Restitution
March 2007, Smathers's attorney sent a letter to the
district court stating, inter alia, that AOL had
commenced a civil suit, America Online, Inc. v.
Hawke, 04-259-A (E.D. Va.) ("Hawke
Litigation"), against Davis Wolfgang Hawke, Bournival
(who had purchased the Smathers List from Dunaway), and
others. (See Letter from Susan C. Wolfe to Honorable
Alvin K. Hellerstein dated March 26, 2007 ("2007 Wolfe
Letter"), at 3.) The letter stated that the
Hawke Litigation docket indicated that AOL had
reached an undisclosed settlement with Bournival and had
obtained a $12, 834, 553.82 default judgment against Hawke
and two others; and that "various internet news
sources" stated that AOL had collected some $95, 000 and
a Hummer vehicle in that litigation. (Id.) Smathers
contended that the $95, 000 alone exceeded his entire
restitution obligation (see 2007 Wolfe Letter at 3)
and asked the court to determine the full amount of AOL's
recoveries and to determine whether or to what extent his
restitution obligation should be modified pursuant to 18
U.S.C. § 3664(j)(2).
response, the court gave Smathers "permission to file a
motion for appropriate relief based on affidavits and
competent proof." Order dated March 26, 2007 ("2007
Order"). No such motion was forthcoming.
Smathers's Subsequent Requests for Reduction
years later, Smathers sent a pro se letter to the
district court "request[ing] a status conference
regarding the restitution ordered in his case."
(Letter from Jason Smathers to Honorable Alvin K. Hellerstein
dated March 2, 2015 ("Smathers 2015 Letter"), at
1.) He stated that restitution payments had been made by
Dunaway in Dunaway's criminal case and that payments had
been made by Bournival in AOL's civil
litigation--referred to in the 2007 Wolfe Letter. He stated
that those payments were for the same loss that he had caused
(see Smathers 2015 Letter at 1 n.1) and that he
believed that "the restitution ordered in his
case" had therefore been "collected in full already
through third party payments" (id. at 1).
district court responded that a status conference was not
appropriate because there were no ongoing proceedings before
the court. It stated that any request for relief should be
made by motion, showing the court's jurisdiction and the
reasons supporting the relief requested.
a year later, Smathers brought his present pro se
Motion To Compel Proper Enforcement of Restitution Order and
Injunction, ("2016 Restitution Reduction Motion"),
repeating his contention that the restitution payments made
by Dunaway and the payment by Bournival in settlement of
AOL's civil suit were for the same loss caused by
Smathers and were sufficient in amount to extinguish
Smathers's restitution obligation. No details were cited,
and no affidavits or other evidentiary materials were
submitted. Instead, Smathers argued that the government
"should . . . have access" to the sealed documents
in the AOL civil litigation, "should be in the position
to determine all payments made for the same action and reduce
the restitution amount by these third party payments, "
and should be ordered to "reduce [Smathers's]
restitution amount" by the amounts paid by Dunaway and
Bournival. (Id. at 2; see id. at 3.)
district court ordered the government to respond to the
motion and to "make timely appl[icatio]n . . . to unseal
any relevant case files or ...