US v. Gibson, CR 94-4016.

• Decision Date: 23 January 1995
• Docket Number: No. CR 94-4016.,CR 94-4016.
• Court: U.S. District Court — Northern District of West Virginia
• Parties: UNITED STATES of America, Plaintiff, v. Kippard Randall GIBSON, Defendant.

873 F. Supp. 1339

UNITED STATES of America, Plaintiff, v. Kippard Randall GIBSON, Defendant.

No. CR 94-4016.

United States District Court, N.D. Iowa, Western Division.

January 23, 1995.

Assistant U.S. Atty. Timothy T. Jarman, Sioux City, IA, for the U.S.

Peter E. Van Etten, Sioux City, IA, for defendant Kippard Randall Gibson.

ORDER

BENNETT, District Judge.

In this federal criminal case, the defendant pleaded guilty to three counts of an indictment charging him with distribution of methamphetamine. The indictments followed controlled buys of methamphetamine from the defendant by a confidential informant. At sentencing, the government sought restitution of the "buy money" used by the confidential informant to purchase the methamphetamine from the defendant. Restitution of "buy money" is an issue that surprisingly has been rather infrequently litigated. The court incorporated in its sentencing judgment this written ruling, which details its reasons for denying restitution of "buy money" in this case.

I. BACKGROUND

On three occasions during early November, 1993, a confidential informant equipped with a wireless transmitter made controlled buys of methamphetamine from defendant Kippard Randall Gibson, once at Gibson's residence in Sioux City, Iowa, and on the other two occasions at other locations in Sioux City, Iowa. The controlled buys were in the amounts of $260, $500, and $1,250, or a total of $2,010.¹ DCI Laboratory testing confirmed the substance purchased in each case to be d-methamphetamine, with the following net mixture weights and "actual" weights based on purity: 3.62 grams (.94 "actual"); 7.05 grams (1.69 "actual"); and 21.18 grams (4.40 "actual").

On May 25, 1994, a Northern District of Iowa Grand Jury returned an indictment against Gibson charging him with three counts of distribution of methamphetamine in violation of 21 U.S.C. § 841(a)(1), (b)(1)(C). Each count carried a possible maximum sentence of 20 years and fine of $1,000,000.00. Gibson was arraigned on June 14, 1994, and was released on an unsecured bond of $5,000. Gibson was cooperative during the period of his pretrial supervision, and ultimately pleaded guilty to all three counts of the indictment on September 28, 1994. Sentencing took place on January 23, 1995. At the sentencing hearing, the United States was represented by Timothy T. Jarman, Assistant U.S. Attorney. Defendant was represented by counsel Peter E. Van Etten of Sioux City, Iowa.

At the sentencing hearing, the government sought restitution of the "buy money" used by the confidential informant to purchase methamphetamine from Gibson in order to establish the necessary evidence for Gibson's indictment. In this ruling, to be attached to the judgment in this criminal case, the court details its reasons for denying the government's request for restitution of the "buy money" in this case.

II. LEGAL ANALYSIS

A. Introduction

Relatively few decisions address the specific questions presented here concerning whether the court in sentencing a criminal defendant may order restitution of "buy money" used by undercover agents or confidential informants to purchase illegal drugs or other contraband from the defendant in order to establish evidence leading to the indictment of the defendant. The Eighth Circuit Court of Appeals has not yet had the opportunity to address this question, but has not left this court wholly without guidance. The Eighth Circuit Court of Appeals has observed that

under the Sentencing Reform Act of 1984, Pub.L. No. 98-473, Title II, § 212(a)(2), 98 Stat. 1837, 1991, 1999 (codified, as amended, at 18 U.S.C. §§ 3556 (authorizing restitution generally), 3583(d) (restitution as a condition of supervised release)), sentencing courts have broad discretion to order restitution. E.g., United States v. Mitchell, 893 F.2d 935, 936 (8th Cir.1990); accord United States v. Teehee, 893 F.2d 271, 273 (10th Cir.1990); United States v. Bruchey, 810 F.2d 456, 458 (4th Cir.1987) (pre-Guidelines). However, this discretion is limited by the Victim and Witness Protection Act of 1982 (VWPA), Pub.L. No. 97-291, § 5, 96 Stat. 1248, 1253 (codified, as amended, at 18 U.S.C.A. § 3663) (West 1985 & Supp.1990). Title 18 U.S.C.A. § 3663(a) (West Supp.1990) (emphasis added) provides that "the court, when sentencing a defendant convicted of an offense under title 18 and designated subdivisions of 49 U.S.C. § 1472, may order, in addition to or, in the case of a misdemeanor, in lieu of any other penalty authorized by law, that the defendant make restitution to any victim of such offense."

United States v. Owens, 901 F.2d 1457, 1458 (8th Cir.1990). Under the Victim and Witness Protection Act, 18 U.S.C. §§ 3663-3664 (VWPA), the indigency of the defendant does not bar a restitution order, but 18 U.S.C. § 3664(a)² provides for consideration of the defendant's financial condition in determining the amount and appropriateness of restitution. Id. at 1459. Thus, the Eighth Circuit Court of Appeals "would encourage sentencing courts, when ordering restitution under the VWPA, to make specific findings of fact about the defendant's financial resources, financial needs and earning ability and the defendant's financial obligations to his or her dependents, if any," in order to facilitate effective appellate review of restitution orders. Id.

When restitution is ordered as a condition of supervised release,³ however, it is not subject to the restriction in the VWPA, 18 U.S.C. § 3663(a), making restitution available only for offenses under title 18 and certain offenses under title 49. United States v. West, 942 F.2d 528, 532 (8th Cir. 1991). Rather, supervised release is governed by 18 U.S.C. § 3583, and

section 3583(d) permits the court to order restitution as provided by § 3563(b)(3), which in turn incorporates sections 3663-64, but without the limitations of section 3663(a).

Id. (emphasis in the original). The Eighth Circuit Court of Appeals therefore concluded that the court ordering restitution as a condition of supervised release must still consider the factors identified in § 3664, which include the defendant's financial condition. Id. at 532-33. In light of these principles, the court turns to consideration of the specific questions presented here: 1) whether the court may order restitution of "buy money" pursuant to the VWPA, a question other courts have answered in the negative, and 2) whether the court may order restitution of "buy money" as a condition of supervised release, a question on which courts have split. The court concludes that even if the answer to both questions is yes, the court will not order restitution in this case.

B. Restitution Of "Buy Money" Under The VWPA

Although few courts have addressed the issue, these courts have uniformly held that restitution of "buy money" may not be ordered pursuant to the VWPA in sentencing a criminal defendant. Recognizing that "any loss for which restitution is ordered must result directly from the defendant's offense," the Ninth Circuit Court of Appeals concluded that "the costs of investigating and prosecuting an offense are not direct losses for which restitution may be ordered." United States v. Salcedo-Lopez, 907 F.2d 97, 98 (9th Cir.1990) (citing, inter alia, United States v. Kenney, 789 F.2d 783, 784 (9th Cir.1986)). Thus, the court concluded that the United States did not "lose" any "buy money" used to obtain evidence of criminal activity, nor was it a "victim" as required for restitution under the VWPA:

The government's confidential informant paid Salcedo in order to obtain evidence of Salcedo's criminal activity. The government did not "lose" money as a direct result of Salcedo's activities; it spent money to investigate those activities. The government's payments to Salcedo are no more directly related to the crime than any payments the government may have made to the informant. These costs are "too remote to form the basis for restitution." Kenney, 789 F.2d at 784 (quotation omitted).

For similar reasons, the government is not a victim under the Act. Salcedo did not defraud the government. The government wanted false identification papers as evidence of criminal activity and obtained them; the government got what it paid for.

Id. More recent cases follow the Ninth Circuit's reasoning in Salcedo-Lopez that the government is not a "victim" as far as loss of "buy money" goes.

In United States v. Gibbens, 25 F.3d 28 (1st Cir.1994), the First Circuit Court of Appeals also concluded that the government is not a "victim" within the purview of the VWPA, and, thus, is not entitled to restitution, when it "provokes the commission of a crime that, by design, directly results in depletion of public coffers." 25 F.3d at 29, 32-35. In Gibbens, the defendant had been approached by a government agent with whom he entered into a series of purchases of food stamps at a deep discount, which the defendant then resold at a substantial profit. Id. at 29-30. The government sought restitution of the difference between the aggregate face-value of the food stamps handled by the defendant and the amount the defendant paid to acquire those stamps on the black market from the government agent. Id. at 30. The court examined the text of the VWPA, and concluded that the government had not sustained a passive loss, but had made voluntary outlays for the procurement of evidence. Id. at 33. The court placed particular emphasis on the fact that "the government instigated the particular incidents for which it now claims the right of restitution — indeed, had there been no official participation, the claimed losses would not have eventuated." Id. at 33. The court concluded that in light of the statutory language and legislative history of the VWPA, and the plain meaning of the word "victim" chosen by Congress, "calling the organization that sets up a sting and carries it out a victim is like calling the rabbit who lurks in Houdini's hat a magician." Id....