JURIST] The US Court of Appeals for the Second Circuit [official website] ruled [decision, PDF] Thursday that lawyers' fees may be included in restitution awards granted to corporate fraud victims. The Second Circuit affirmed the lower court's decision to order Joseph Amato and John Fasciana to pay $12.8 million in restitution, including over $3 million in lawyers' fees, to their former employer, Electronic Data Systems (EDS) [corporate website], for inflating performance figures in order to receive undeserved commissions, and otherwise embezzling money from the company. Amato and Fasciana had argued that the award of the fees was not allowed under the Mandatory Victims Restitution Act of 1996 (MVRA) [text] because the costs were not directly caused by their actions, but the court disagreed:
...even assuming attorney fees and auditing costs must be a direct and foreseeable result of the offense -- such a requirement was clearly met here. Defendants perpetrated a complicated fraud against a large corporation and a number of its clients, as well as the states to which those clients were required to turn over... funds. That this fraud would force the corporation to expend large sums of money on its own internal investigation as well as its participation in the government's investigation and prosecution of defendants' offenses is not surprising. There is no doubt that EDS's attorney fees and auditing costs were a direct and foreseeable result of defendants' offenses.In July, The US Court of Appeals for the Eighth Circuit [official website] ruled [decision, PDF; JURIST report] that criminal courts have no authority to direct restitution payments [backgrounder] to anyone other than a victim. That issue came before the court in a case where the defendant was ordered to make scheduled restitution payments to a victim under the MVRA. The two had tried to make a deal reducing the amount, and a lower court had sent the remaining payments to a third party in order to settle a debt for the defendant.