United States of America v. Qurashi, No. 10-348 (2d Cir. 2011)

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10-348-cr USA v. Qurashi 1 2 UNITED STATES COURT OF APPEALS 3 FOR THE SECOND CIRCUIT 4 5 6 August Term 2010 (Argued: November 15, 2010 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Decided: March 8, 2011) Docket No. 10 348-cr -----------------------------------------------------x UNITED STATES OF AMERICA, Appellee, -- v. -IMRAN QURASHI, Defendant-Appellant. -----------------------------------------------------x B e f o r e : NEWMAN, WALKER, and POOLER, Circuit Judges. Appeal from an order of restitution entered by the United 24 States District Court for the Eastern District of New York 25 (Sandra J. Feuerstein, Judge) following Defendant-Appellant Imran 26 Qurashi s plea of guilty to a nine-count indictment for insurance 27 fraud. 28 prejudgment interest to the restitution awarded to the defrauded 29 insurers. 30 included in a criminal restitution order to ensure that a Qurashi argues it was error for the district court to add We hold that a prejudgment interest award can be 1 1 victim s losses are fully compensated. 2 the district court to conform the statement of reasons supporting 3 the sentence to Qurashi s stipulation with the government. 4 5 6 7 8 9 10 11 12 13 14 15 16 17 We also remand to allow AFFIRMED and REMANDED. NORMAN TRABULUS, New York, NY, for Defendant-Appellant. CHARLES P. KELLY, Assistant United States Attorney (Loretta E. Lynch, United States Attorney for the Eastern District of New York, Emily Berger, Assistant United States Attorney, on the brief), Brooklyn, NY, for Appellee. JOHN M. WALKER, JR., Circuit Judge: Defendant-Appellant Imran Qurashi ( Qurashi ) appeals from a 18 January 16, 2010 order of restitution entered by the United 19 States District Court for the Eastern District of New York 20 (Sandra J. Feuerstein, Judge) following his guilty plea to a 21 nine-count indictment charging him with insurance fraud. 22 argues that the district court abused its discretion by including 23 prejudgment interest in the restitution awarded to the defrauded 24 insurers. 25 prejudgment interest can be awarded in a criminal restitution 26 order to ensure that a victim s losses are fully compensated. 27 reject Qurashi s argument that he was prejudiced by the district 28 court s failure to determine the victims losses within the 90- 29 day statutory window. 30 court to conform the statement of reasons supporting the sentence Qurashi We affirm the district court s judgment and hold that We Finally, we remand to allow the district 2 1 to Qurashi s stipulation with the government. 2 3 4 BACKGROUND Qurashi twice faked his brother s death to collect millions 5 of dollars in life insurance proceeds; it was only after the 6 second time that he was caught. 7 his brother, Adnan Qurashi ( Adnan ), purchased two $3 million 8 life insurance policies on Adnan s life from the Metropolitan 9 Life Insurance Company ( MetLife ) and New York Life Insurance In 1993 and 1994, Qurashi and 10 Company ( New York Life ). 11 both companies that falsely asserted that Adnan had died in a car 12 accident in Pakistan. 13 Qurashi more than $6 million on the policies. 14 In 1995, Qurashi submitted claims to The following year, the insurers paid Adnan, still very much alive, returned to the United States 15 from Pakistan in November 1998, whereupon he assumed a new 16 identity as Qurashi s fictitious cousin Hassan Khan. 17 with success, Qurashi upped the ante: between 2000 and 2004, he 18 purchased eight $10 million life insurance policies on Hassan 19 Khan s life from four insurance companies. 20 itself in 2004: Hassan Khan was purportedly killed in a traffic 21 accident in Pakistan, and Qurashi falsely claimed proceeds on all 22 eight policies. 23 refused to pay and opened investigations. 24 Flushed History repeated This time, however, the insurance companies An indictment returned on June 28, 2005 charged Qurashi and 3 1 Adnan with one count of conspiracy to commit mail fraud and eight 2 counts of mail fraud. 3 entered a guilty plea, District Judge Sandra J. Feuerstein 4 sentenced him in October 2008 to concurrent imprisonment terms of 5 60 months on the conspiracy charge and 108 months on the mail 6 fraud charges, plus three years of supervised release. 7 Feuerstein deferred the determination of restitution, at the 8 government s request, to allow time to ensure that every 9 insurance company had been accounted for. Adnan remains a fugitive. After Qurashi Judge Qurashi agreed to 10 waive his right to appeal the sentence as long as the sentence 11 is 121 months or less. 12 because Qurashi s waiver referred only to the prison term, it 13 does not bar this appeal from the restitution order. 14 The government concedes, however, that On January 22, 2009, the government submitted a proposed 15 order of restitution, to which Qurashi objected. 16 Feuerstein referred the determination of restitution to 17 Magistrate Judge A. Kathleen Tomlinson, who held a hearing and 18 issued a report and recommendation. 19 the report and recommendation, and rejected Qurashi s objections. 20 Judge Feuerstein entered judgment and signed a Statement of 21 Reasons regarding Qurashi s sentence on January 16, 2010, and 22 shortly thereafter overruled Qurashi s objection that the 23 restitution order was untimely. The order included prejudgment 24 interest at a rate of 4 percent. This appeal, confined to the 4 Judge The district court adopted 1 restitution order, followed. 2 3 DISCUSSION 4 Qurashi argues that the district court erred by including 5 prejudgment interest in its restitution award to New York Life 6 and MetLife. 7 their money would have been used if it had not been paid out to 8 Qurashi, he contends that prejudgment interest compensates the 9 insurers for more than their actual losses. Because the insurers failed to demonstrate how Qurashi further 10 claims that he was prejudiced by the district court s failure to 11 comply with a 90-day statutory deadline for determining the 12 victims losses. 13 We review orders of restitution deferentially, and will 14 reverse only for abuse of discretion. United States v. 15 Boccagna, 450 F.3d 107, 113 (2d Cir. 2006) (internal quotation 16 marks omitted). 17 challenged ruling rests on an error of law [or] a clearly 18 erroneous finding of fact, or otherwise can not be located within 19 the range of permissible decisions. 20 v. Gonzalez, 420 F.3d 111, 120 (2d Cir. 2005)). Such abuse can be found only where the Id. (quoting United States 21 22 23 24 I. Prejudgment Interest In February 1996, MetLife paid Qurashi $3,201,592.76 on Adnan s life insurance policy, and New York Life paid Qurashi 5 1 $3,069,616.44 the following month on a similar policy. The 2 district court ordered restitution of those insurance payments, 3 which Qurashi had obtained both by overstating his and Adnan s 4 net worth when he purchased the policies and by submitting a 5 fraudulent death certificate to verify Adnan s purported death. 6 The restitution order also required Qurashi to pay prejudgment 7 interest on those sums at 4 percent to compensate the insurers 8 for the loss of the use of their money. 9 district court erred in awarding prejudgment interest. Qurashi argues that the He does 10 not, however, challenge the rate, other than to note that the 11 rate claimed was less than the rate of return on portfolio 12 investment. 13 The Mandatory Victims Restitution Act ( MVRA ) requires that 14 a defendant convicted of specific offenses in which an 15 identifiable victim or victims has suffered a . . . pecuniary 16 loss be ordered to make restitution to the victim. 17 § 3663A(a)(1), (c)(1). 18 to . . . the greater of . . . the value of the property on the 19 date of the loss or on the date of sentencing, less the value 20 (as of the date the property is returned) of any part of the 21 property that is returned. 22 order of restitution, the court shall order restitution to each 23 victim in the full amount of each victim s losses as determined 24 by the court and without consideration of the economic 18 U.S.C. The defendant must pay an amount equal Id. § 3663A(b)(1)(B). 6 In each 1 circumstances of the defendant. 2 Id. § 3664(f)(1)(A). Qurashi s appeal poses a question of first impression in 3 this Circuit: whether a criminal restitution order may include 4 prejudgment interest. 5 recently affirmed a district court s inclusion of lost investment 6 returns in a restitution order. 7 App x 71 (2d Cir. 2009). 8 from three retirement accounts, two of which would have 9 increased in value by the date of the sentencing had the assets In a non-precedential summary order, we United States v. Scott, 321 F. The defendant in Scott had stolen money 10 remained in those accounts. 11 that the funds would have remained in those accounts but for 12 the theft. 13 value of the stolen property, the funds in the retirement 14 accounts, at the time of sentencing was the nominal value of the 15 stolen funds plus the subsequent investment gains lost as a 16 result of the theft, which meant the district court had 17 appropriately included in the restitution award the investment 18 earnings that would have accrued as of the date of sentencing. 19 Id. 20 Id. Id. at 72. It was also apparent Given those facts, we concluded that the actual The MVRA requires sentencing courts to order restitution of 21 the property s value on the date of sentencing if that figure 22 is greater than the property s value on the date of loss. 23 U.S.C. § 3663A(b)(1)(B). 24 calculating the value that the affected investment accounts would 18 The district court in Scott did so by 7 1 have reached as of the sentencing date had the money not been 2 stolen. 3 and New York Life did not document what would have happened to 4 the insurance proceeds they paid to Qurashi. 5 requested prejudgment interest and supported those requests with 6 affidavits of company officials, neither made any representations 7 as to how their money would have been used absent Qurashi s 8 fraud. 9 investment accounts whose gains and losses between the date of 10 11 See Scott, 321 F. App x at 72. In this case, MetLife Although both The funds were not, as in Scott, stolen from specific the fraud and the date of the sentencing could be tracked. Qurashi argues that the absence of tracking is a fatal flaw. 12 Prejudgment interest is only appropriate, he contends, where a 13 victim had a contractual right to interest on the funds at issue. 14 Absent a showing as to what MetLife and New York Life would have 15 done with the money that went to Qurashi, he argues, the district 16 court erred in awarding prejudgment interest on that amount. 17 Ordinary prejudgment interest, in Qurashi s view, amounts to an 18 award of expectation damages and therefore exceeds the proper 19 scope of restitution. 20 [T]he purpose of restitution is essentially compensatory: 21 to restore a victim, to the extent money can do so, to the 22 position he occupied before sustaining injury. 23 F.3d at 115. 24 to make victims of crime whole, to fully compensate these Boccagna, 450 The primary and overarching goal of the MVRA is 8 1 victims for their losses and to restore these victims to their 2 original state of well-being. 3 Simmonds, 235 F.3d 826, 831 (3d Cir. 2000)). 4 significant that the statute mandates that courts order 5 restitution to each victim in the full amount of each victim s 6 losses as determined by the court[.] 7 (emphasis added). 8 recover more than his due. 9 419, 424 (2d Cir. 2004). 10 Id. (quoting United States v. We think it 18 U.S.C. § 3664(f)(1)(A) However, the award cannot allow[] a victim to United States v. Nucci, 364 F.3d We have construe[d] value as used in the MVRA to be a 11 flexible concept to be calculated by a district court by the 12 measure that best serves Congress s statutory purpose. 13 Boccagna, 450 F.3d at 115. 14 Boccagna were for real property, and flexibility was necessary 15 because the law recognizes a number of reasonable measures of 16 property value. 17 inhere in value determinations where the property lost is cash, 18 accounting for the time-value of money requires no less 19 flexibility. 20 victims for the full amount of each victim s losses, there is 21 no reason to exclude losses that result from the deprivation of 22 the victim s ability to put its money to productive use. 23 light of the inherent difficulty of determining in the but for 24 world the earnings that would have resulted from the use of the Id. The value determinations at issue in Although the same complexity does not If sentencing courts are required to compensate 9 In 1 wrongfully acquired funds, prejudgment interest stands in to 2 provide a rough but fair approximation of such losses. 3 Where Congress has not spoken specifically to the 4 availability of interest, courts are to resolve the question by 5 appraising the congressional purpose in imposing [the statutory 6 obligation] and in the light of general principles deemed 7 relevant by the Court. 8 373 (1947). 9 losses is advanced by allowing prejudgment interest, the Rodgers v. United States, 332 U.S. 371, The MVRA s purpose of compensating victims for their 10 essential rationale for which is to ensure that an injured 11 party is fully compensated for its loss. 12 Cement Div., Nat l Gypsum Co., 515 U.S. 189, 195 (1995). 13 Recognizing that a victim s losses may change in value between 14 the date of the loss and the date of sentencing, the MVRA 15 mandates that the higher of those figures be used for restitution 16 purposes. 17 reserves under mattresses for safekeeping. 18 Qurashi would presume that victims do precisely that, placing on 19 them the burden of showing how they would have used the lost 20 funds in order to justify an award of prejudgment interest. 21 MVRA does not impose such a requirement. 22 City of Milwaukee v. Money is not static, and companies do not store their The rule urged by The We hold that the MVRA allows a sentencing court to award 23 prejudgment interest in a criminal restitution order to ensure 24 compensation in the full amount of each victim s losses. 10 18 1 U.S.C. § 3664(f)(1)(A). The district court therefore acted 2 within its discretion in awarding prejudgment interest on funds 3 that it determined MetLife and New York Life would have otherwise 4 put to productive use. 5 decisions of our sister circuits, which have approved the 6 inclusion of prejudgment interest in restitution orders under the 7 MVRA and its precursor, the Victim and Witness Protection Act 8 ( VWPA ). 9 1059 (9th Cir. 2004); United States v. Shepard, 269 F.3d 884, 886 This outcome is consistent with the See, e.g., United States v. Gordon, 393 F.3d 1044, 10 (7th Cir. 2001); Gov t of the Virgin Islands v. Davis, 43 F.3d 11 41, 47 (3d Cir. 1994); United States v. Hoyle, 33 F.3d 415, 420 12 (4th Cir. 1994); United States v. Patty, 992 F.2d 1045, 1050 13 (10th Cir. 1993); United States v. Rochester, 898 F.2d 971, 983 14 (5th Cir. 1990). 15 Gordon sensibly suggests a rule that prejudgment interest be 16 awarded unless evidence indicates the victim would not have put 17 the funds to productive use. 18 district court s award of prejudgment interest for embezzled cash 19 and shares of stock as to which Cisco Systems, the victimized 20 corporation, had completely liquidated its other holdings 21 before discovering the fraud. 22 Regarding interest as simply a proxy for a lost opportunity, 23 the Ninth Circuit found that awarding prejudgment interest 24 reflects the productive purposes for which a profit maximizing The Ninth Circuit upheld the Gordon, 393 F.3d at 1059. 11 1 entity like Cisco uses its cash reserves, even if the company 2 would not necessarily have placed its stock proceeds in an 3 interest bearing account absent the embezzlement. 4 quotation marks omitted). 5 that the district court abused its discretion in awarding 6 prejudgment interest for securities that Cisco had no intention 7 of completely liquidating. 8 securities could not constitute an actual loss to the victim, 9 because it would be too speculative to conclude that Cisco would 10 have liquidated these securities and placed the cash proceeds in 11 an interest bearing account or used them for some other 12 productive purpose. 13 omitted). 14 as to when a district court s inclusion of prejudgment interest 15 would constitute an abuse of discretion. 16 in the absence of evidence that New York Life and MetLife would 17 not have put the money at issue to productive use, no such abuse 18 occurred here. 19 Id. (internal However, the Ninth Circuit also found Id. Prejudgment interest on such Id. at 1059-60 (internal quotation marks We need not, in the case before us, definitively opine It is plain to us that, Prejudgment interest does not, as Qurashi argues, amount to 20 expectation damages. Expectation damages strive to place an 21 aggrieved party in the same economic position it would have been 22 in had both parties fully performed their contractual 23 obligations. 24 v. Bressler, 977 F.2d 720, 729 (2d Cir. 1992)). Boccagna, 450 F.3d at 119 (quoting Bausch & Lomb 12 Criminal 1 restitution, by contrast, is not concerned with a victim s 2 disappointed expectations but only with his actual loss. 3 In Boccagna, the U.S. Department of Housing and Urban Development 4 ( HUD ) acquired title to dozens of properties after a developer 5 defaulted on its fraudulently obtained HUD-guaranteed mortgage 6 loans, which were meant to encourage development of affordable 7 housing. 8 nominal price to a New York City agency for development as 9 low-income housing, and sought restitution for the difference Id. at 109-10. Id. HUD then sold the properties for a 10 between the discounted sale price and fair market value. Id. at 11 110. 12 the benefit of its bargain, namely affordable housing, the Second 13 Circuit concluded that restitution would, in effect, be 14 expectation damages, which cannot be awarded under the MVRA. 15 Id. at 119. 16 guarantee the benefit of any bargain, but is designed to ensure 17 that the insurer victims are fully compensated for their actual 18 loss, which includes the loss of the ability to put their money 19 to productive use. Because HUD sold the properties at a discount to achieve Here, the prejudgment interest award is not meant to 20 21 22 II. Timeliness of Restitution Award When a victim s losses are not ascertainable by the date 23 that is 10 days prior to sentencing, the MVRA provides that the 24 court shall set a date for the final determination of the 13 1 victim's losses, not to exceed 90 days after sentencing. 2 U.S.C. § 3664(d)(5). 3 restitution hearing on February 11, 2009, more than 90 days 4 following his October 29, 2008 sentencing, and the district court 5 did not enter the restitution order until September 30, 2009. 6 The district court rejected Qurashi s objection that the 7 restitution determination was untimely, which he renews on 8 appeal. 9 18 Magistrate Judge Tomlinson held Qurashi s During the pendency of this appeal, the Supreme Court 10 decided Dolan v. United States, 130 S. Ct. 2533 (2010). 11 Interpreting § 3664(d)(5), the Court held that a sentencing 12 court that misses the 90-day deadline nonetheless retains the 13 power to order restitution - at least where . . . the sentencing 14 court made clear prior to the deadline s expiration that it would 15 order restitution, leaving open (for more than 90 days) only the 16 amount. 17 made clear at sentencing that it would order restitution, and 18 therefore retained the power to do so. 19 provided that, in the unlikely instances where that delay does 20 cause the defendant prejudice - perhaps by depriving him of 21 evidence to rebut the claimed restitution amount - the defendant 22 remains free to ask the court to take that fact into account upon 23 review. 24 prejudiced by the delay, we find no evidence of prejudice and Dolan, 130 S. Ct. at 2537. Id. at 2542. Here, the district court The Supreme Court further Although Qurashi argues that he was 14 1 therefore conclude that the district court properly asserted its 2 authority to award restitution. 3 4 III. Statement of Reasons 5 Following his guilty plea, Qurashi and the government 6 stipulated to a Sentencing Guidelines offense level of 30 and a 7 Guidelines range of 97 to 121 months. 8 a sentence at the lower part of the range. 9 Judge Feuerstein imposed a sentence consistent with this The government recommended On October 29, 2008, 10 stipulation: concurrent imprisonment terms of 60 months on the 11 conspiracy charge and 108 months on the mail fraud charges, plus 12 three years of supervised release. 13 Reasons that she signed more than a year later, on January 16, 14 2010, Judge Feuerstein noted that the court had imposed an above- 15 range sentence for offense level 28, for which the imprisonment 16 range is 78 to 97 months. 17 sentence within the range established by Guidelines level 30, 18 Judge Feuerstein characterized the sentence as above-range for 19 Guidelines level 28. However, in the Statement of Thus, despite the stipulation to a 20 Qurashi has requested that we remand to allow the district 21 court to amend the statement of reasons to reflect or otherwise 22 account for the stipulation. 23 this request. 24 from the stipulation may have been inadvertent, a remand is The government has no objection to As it appears that the district court s departure 15 1 appropriate. See United States v. Stuckey, 317 F. App'x 48, 51 2 (2d Cir. 2009) (remanding to allow district court to correct 3 erroneous failure to complete the Statement of Reasons portion 4 of the judgment form). 5 purpose of allowing the district court to amend the statement of 6 reasons to correctly reflect or otherwise account for the 7 parties stipulation. We therefore remand for the limited 8 9 10 CONCLUSION We have considered Qurashi s remaining arguments and find 11 them to be without merit. For the foregoing reasons, the 12 judgment of the district court is AFFIRMED. 13 the district court to amend the statement of reasons supporting 14 Qurashi s sentence. 16 We REMAND to allow

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