for Financial and Emotional
The principle of restitution is an integral part of virtually
every formal system of criminal justice. It holds that, whatever
else society does to punish its wrongdoers, it should also
insure that the criminal is required, if possible, to restorethe
victim to his or her prior state of well-being.
The payment of restitution by perpetrators can mark the end
of a financial nightmare for fraud victims. It not only serves
to right a wrong, it often allows them to return to whatever
level of financial security they enjoyed before the crime.
The biggest dream for those who have suffered from financial
crime is getting some money back, preferably from the people
who stole it from them.
However, in reality, very few fraud perpetrators actually
pay restitution. Many perpetrators will have spent the money
and have no discernible resources with which to repay victims.
In other cases, perpetrators will have placed assets in the
names of others or hidden money in offshore accounts, so
victims usually collect only pennies on the dollar of what
they are owed, or get nothing at all.
One telemarketer recently told a prosecutor:
'I'd rather spend a million dollars fighting extradition
than paying it back in restitution to the victims'.
There have been attempts to deal with this problem by assigning
fraud investigators to track the assets of suspected perpetrators
before they are indicted.
Most restitution payments begin only after the defendant is
released. So even if the court orders full restitution to
victims, the collection and distribution of payments is often
difficult, especially if perpetrators are sentenced to long
periods of incarceration.
Additionally, victims not officially included in formal indictments
are ineligible to receive any restitution unless their repayment
is part of a plea negotiation.
Some losses may at least be tax-deductible so consult a qualified
tax advisor or the taxation department to see if your losses
U.S. courts must order restitution for federal fraud crimes
committed after April 24, 1996, regardless of the defendant's
ability to pay. The court sets the amount of restitution,
the order in which victims will be paid (if there are multiple
victims, usually those with the most pressing financial needs
are paid first), and conditions for repayment. Even the process
of having to notify all the victims in a big fraud case is
an overwhelming undertaking.
You will be required to submit a documented account of your
financial losses before the judge orders restitution. So
the first thing you should do is collect and save any paperwork
that directly relates to your loss.
Seasoned litigators know that it is one thing to obtain a
judgment and quite another to collect it.
As a tool to preserve wealth, offshore trusts are effective
because a creditor with a U.S. judgment will still face significant
hurdles before actually being able to get any of the trust's
assets. Because some jurisdictions will not recognize foreign
judgments, the creditor may be forced to re-litigate its
entire case against the trust locally.
Also restrictive for a creditor is the fact that these havens
do not allow lawyers to take matters based on a contingency
fee. Worse still, they then provide that the losing party
to a lawsuit must pay all of the victor's expenses, including
As such, the process may prove prohibitively expensive for
an individual creditor when the potential reward is so uncertain.
The effectiveness of offshore trusts for asset protection
purposes remains clear and explains how settlements, if offered
at all, range from only 20-50 cents on the dollar.
Seizure and Forfeiture of Assets.
Within the federal prosecutor's office, the Financial Litigation
Unit (FLU) works to uncover any assets the crook may have
that could be sold, seized, or forfeited to satisfy the restitution
debt. Liens on assets are enforceable for twenty years from
the time they are released from prison. Some scammers try
to use bankruptcy protection to make it harder for their
victims to collect anything but under federal law, they cannot
file bankruptcy to discharge their legal obligation to pay
court-ordered restitution or civil judgments.
What is civil forfeiture?
There are two kinds of forfeiture: criminal and civil. The
former is part of a criminal case against a defendant. The
other is an entirely separate civil action.
While there is a parallel criminal arrest and prosecution,
in the overwhelming majority of civil forfeiture cases, there
are important reasons why the government must have civil
forfeiture, in addition to criminal.
First, criminal forfeiture is unavailable if the defendant
is dead or is a fugitive. There is simply no criminal case
in which to pursue forfeiture.
Second, a majority of forfeiture cases are uncontested, often
because the defendant sees no point in claiming property
that connects him to the crime. Civil forfeiture allows disposal
of these cases administratively.
Third, criminal forfeiture statutes are not comprehensive.
Some cases must be done civilly simply because there is no
criminal forfeiture statute.
Fourth, criminal forfeiture in a federal case requires a federal
conviction. If the defendant was convicted in a state case,
the federal forfeiture must be a civil forfeiture.
Fifth, criminal forfeiture is limited to the property of the
defendant himself, not associates or family members who may
have taken possession of the assets.
Civil Recovery for Fraud Victims
Although many crime victims and their families have some knowledge
about the legal system, they are often unaware that there
are two systems of justice available in which to hold the
offender accountable—the criminal justice system and
the civil justice system.
Civil recovery is another option for recovering your financial
losses, especially those not considered in the criminal justice
system. Civil recovery is an action separate from the criminal
prosecution, and filing a civil action does not preclude
you from requesting restitution in the criminal case. So,
if you believe the fraud perpetrator has assets, you may
be able to recover some losses through a civil lawsuit.
Civil cases are private matters. You have to initiate the
action and hire a lawyer at your own expense. Contact your
state or local bar association or the National Crime Victim
for the names of attorneys who specialize in this area of
law to determine if your case is appropriate for civil action.
Unlike the criminal justice process, the civil justice system
does not attempt to determine an offender’s guilt or innocence,
or to incarcerate the offender. Rather, civil courts
attempt to ascertain whether an offender or a third-party
is civilly liable for the injuries sustained as a
result of the crime.
The civil legal system offers crime victims another opportunity
to secure what they seek most – justice. Regardless
of whether there was a successful criminal prosecution–or
any prosecution at all–victims can bring their claims
before the court and ask to have the responsible parties
held accountable. In the civil justice system, offenders
are held accountable, not to the state, but to the victims
who suffered the direct impact of the crime. While money
awarded in civil lawsuits can never fully compensate a victim
for the trauma of victimization or the loss of a loved one,
it can provide valuable resources to help crime victims rebuild
If your loss is small, you may want to investigate filing
a claim in small claims court where you do not require a
There is a common thread that links many 'membership' businesses
such as campground membership resorts, resort membership
resale businesses, travel clubs, video dating services and
some 'business opportunities'.
The consumer is sold a future service contract (membership)
and told that they have three days in which to cancel.
Actually, where there is a statutory cancellation period,
the statute allows the consumer to cancel within 3 (or 7
or 10 depending on the statute) without paying ANY damages
whatsoever. The 3-day period is a 'super remedy' that doesn't
allow the business to keep any money. After three days, normal
contract damage law still applies.
If the consumer hasn't caused $5,000 in damages, they are
not obligated to pay a $5,000 sales price, or the business
is not allowed to keep the full $5,000 if already paid. The
business can only keep actual damages (for instance, the
cost of a 1 hour sale pitch and a glossy brochure).
Many consumers are really beat up with this misrepresentation.
Many state Assistant AGs, and at least one FTC attorney,
has said that after three days, that's it, you lose everything.
Mark Fleming, a class action attorney from Seattle has yet
to find a judge that agrees.
Leisure Time Resorts of America (now Thousand Trails), paid
out over $1,000,000.00 in consumer refunds in a class action
lawsuit he finished last year. LTRA said the consumer had
to pay the full sales price whether the consumer wanted to
keep the membership or not.
The judge disagreed and the consumers won.
The court ruled that a business that requires full forfeiture
on a future services contract has engaged in a deceptive
As a matter of common sense, the business has been relieved
from performing years of membership services. Therefore,
how can it be entitled to full payment?
Nor does it make sense for the business to argue that the
consumer should be forced to remain a member against their
will. Unfortunately, we are used to the concept of having
to pay in full on a contract because we have driven the vehicle
off the lot, taken the TV home, etc.
When 'you have the goods,' you pay the price. When it's a
future services contract, you only pay the damages (if any).
It was discovered from reviewing financial statements that
the campground membership industry considers its satisfied
customers as 'loss leaders.' The profit is in the ones who
are disgusted with misrepresentations made at the point of
sale, or move, and simply walk away from their money because
of the 'no refund' language in the contract.
Fleming feels that one area that doesn't get enough press
is the successful individual consumer lawsuit. If an individual
sues, proves a deceptive trade practice, and gets their money
back, nobody really knows.
Only appellate cases are reported so that other attorneys
can find them, and a business is not likely to appeal and
have everyone know that one of its business practices is
Consumers are constantly 'reinventing the wheel' when it comes
to proving that a particular business practice is illegal.
Many 'traditionally suspect businesses' (membership sales,
furnace installers, dating services, etc.) do not even show
up to defend a lawsuit.
They will pound their chests until the day of trial and then