United States v. Batson

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA,  No. 09-50238
Plaintiff-Appellee,
v.  D.C. No.
2:08-cr-00855-PA
ALMA BATSON,
OPINION
Defendant-Appellant.

Appeal from the United States District Court
for the Central District of California
Percy Anderson, District Judge, Presiding

Argued and Submitted
January 12, 2010—Pasadena, California

Filed June 21, 2010

Before: William C. Canby, Jr., Cynthia Holcomb Hall, and
Diarmuid F. O’Scannlain, Circuit Judges.

Opinion by Judge Canby

9073
9076 UNITED STATES v. BATSON

COUNSEL

Jennifer Y. Chou, Assistant United States Attorney, Los
Angeles, California, for the plaintiff-appellee.

Kathryn A. Young, Deputy Federal Public Defender, Los
Angeles, California, for the defendant-appellant.

OPINION

CANBY, Circuit Judge:

This appeal presents a question of first impression in this
circuit, namely, whether federal courts may order restitution
as a condition of supervised release for offenses set forth in
Title 26 of the United States Code (the Internal Revenue
Code). Having been subjected to such an order, appellant
Alma Batson argues that the authority of the federal courts to
order restitution is limited to restitution authorized or required
by the Victim and Witness Protection Act (“VWPA”) and the
Mandatory Victims Restitution Act (“MVRA”), neither of
 UNITED STATES v. BATSON 9077
which includes restitution for violations of Title 26. We reject
Batson’s contention and hold that the district court was autho-
rized to order restitution for a violation of Title 26 as a condi-
tion of supervised release by 18 U.S.C. § 3563(b)(2), which
grants courts broad discretion to order restitution as a condi-
tion of probation, and 18 U.S.C. § 3583(d), which makes that
grant applicable to supervised release.

We agree with Batson, however, and the government con-
cedes, that restitution so ordered must be limited to the
offense of conviction when, as here, that offense does not
involve an element of a “scheme, conspiracy, or pattern of
criminal activity.” 18 U.S.C. § 3663A(a)(2). For this reason,
we vacate the order of restitution and remand to the district
court for the limited purpose of determining the proper
amount of restitution due for the offense of conviction and for
entry of an order accordingly.

Background

For three years Batson operated a tax return preparation
business that falsified tax returns in order to precipitate unde-
served tax refunds. She was indicted on one count of conspir-
acy to commit tax fraud in violation of 18 U.S.C. § 371, six
counts of willfully aiding and assisting in the preparation of
fraudulent tax returns in violation of 26 U.S.C. § 7206(2), and
two counts of making a false statement to a government agent
in violation of 18 U.S.C. § 1001(a)(2). Batson subsequently
pled guilty to one count of aiding and assisting in the prepara-
tion of a single fraudulent tax return, the loss caused by that
conduct apparently being somewhere between $4,571 and
$8,028. Batson stipulated in her plea colloquy that the taxpay-
ers for whom she had prepared returns collectively received
at least $965,673 in refunds to which they were not entitled.1
1
We use the term “taxpayers” loosely. As the record shows, many of the
7,000 or so taxpayers paid no taxes at all.
9078 UNITED STATES v. BATSON
The district court sentenced Batson to 12 months of impris-
onment followed by 12 months of supervised release as well
as a fine of $6,000 and a special assessment of $100. The
court reserved decision on the issue of restitution, indicating
that it would amend the order of judgment and commitment
to include an order of restitution if necessary. Meanwhile, the
Government reduced its request for restitution from $965,673
to $176,854, an amount representing only those overpayments
not amenable to collection from the payees by the Internal
Revenue Service.

About three months later, the district court issued an
amended order of judgment and commitment identical to its
predecessor in all respects except for the addition of a condi-
tion of supervised release requiring Batson to pay restitution
in the amount of $176,854.2 Batson timely appealed. We have
jurisdiction pursuant to 18 U.S.C. § 3742 and 28 U.S.C.
§ 1291.

Standards of Review

Provided that an order of restitution is within the bounds of
the statutory framework, we review the order for an abuse of
discretion. United States v. Gordon, 393 F.3d 1044, 1051 (9th
Cir. 2004). We review the legality of an order of restitution
de novo and the factual findings supporting such an order for
clear error. Id.
2
Batson contends that the restitution was not ordered as a condition of
supervised release because the order set forth several other conditions and,
then on a separate page, imposed restitution “pursuant to 18 U.S.C.
§ 3663A [the MVRA].” We reject Batson’s contention. The reference to
the MVRA was clearly an error. There is no question that the district court
reserved for later decision, and the parties briefed and argued, the question
whether the court could order restitution as a condition of supervised
release. The restitution order concluded by stating that “the defendant
shall pay the amount of restitution as of her supervised release pursuant
to 18 U.S.C. §§ 3563(b)(2) and 3583(d).” In context it appears clear that
“a condition” was inadvertently omitted after “restitution as.” The district
court may correct the judgment on remand.
 UNITED STATES v. BATSON 9079
Discussion

Batson argues that the district court lacked the authority to
order restitution as a condition of supervised release for an
offense under Title 26 and, furthermore, that the court abused
its discretion by ordering restitution in an amount greater than
the loss caused by the conduct underlying the offense of convic-
tion.3 We consider each argument in turn.

1. The District Court Did Not Err in Ordering
Restitution as a Condition of Supervised Release

[1] The power to order restitution is not inherent in the fed-
eral courts; it is conferred only by statute. See United States
v. Brock-Davis, 504 F.3d 991, 996 (9th Cir. 2007). The
VWPA and MVRA are two such statutes. The VWPA, on the
one hand, grants courts the discretion to order restitution for
certain offenses set forth in Titles 18, 21, and 49 of the United
States Code. 18 U.S.C. § 3663. The MVRA, on the other
hand, requires courts to order restitution to any person who
suffered a physical injury or pecuniary loss as a direct or
proximate result of the commission of (1) a crime of violence,
(2) an offense against property under 21 U.S.C. § 856(a) or
Title 18, or (3) an offense under 18 U.S.C. § 1365, relating to
the act of tampering with consumer products. Id. § 3663A.

[2] These two statutes, however, are not the only statutory
sources of authority for orders of restitution by federal courts.
3
Batson also argues that the Government’s claim for restitution is barred
by laches because the Government acted too slowly in halting Batson’s
activities. As a matter of discretion, we find this argument unpersuasive.
Moreover, laches traditionally is not a defense against the United States.
See Olshausen v. Comm’r, 273 F.2d 23, 28-29 (9th Cir. 1960). Even if that
doctrine is not as rigid as it once was, see NLRB v. P*I*E Nationwide,
Inc., 894 F.2d 887, 894 (7th Cir. 1990), it does not apply here. Like the
Second Circuit, “[w]e have found no case applying a laches defense in the
criminal context.” United States v. Milstein, 401 F.3d 53, 63 (2d Cir.
2005) (per curiam). We accordingly reject Batson’s contention.
9080 UNITED STATES v. BATSON
The crucial statutes here are 18 U.S.C. § 3563(b) (the “Proba-
tion Statute”), which authorizes courts to order restitution as
a condition of probation, and 18 U.S.C. § 3583(d), which
extends that authority to supervised release.

a. The Probation Statute Grants Federal Courts the
Authority to Order Restitution as a Condition of
Probation for Any Criminal Offense

The starting point for our discussion is, as always, the plain
language of the statute. See Brock-Davis, 504 F.3d at 996.
Regarding restitution, the Probation Statute authorizes courts
to

provide, as [a] further condition[ ] of a sentence of
probation . . . that the defendant . . . make restitution
to a victim of the offense under section 3556 (but not
subject to the limitation of section 3663(a) or
3663A(c)(1)(A)).

18 U.S.C. § 3563(b)(2).

[3] The quoted language and cited statutory sections make
it perfectly clear that restitution imposed as a condition of
probation is not subject to the limitations of the VWPA and
MVRA. The quoted passage requires a court ordering restitu-
tion as a condition of probation to adhere to section 3556,
which in turn requires adherence to the provisions of the
VWPA and MVRA, but without “the limitation[s] of section
3663(a) or 3663A(c)(1)(A).” Id. § 3563(b)(2). Those limita-
tions confine restitution under the VWPA and the MVRA to
particular offenses.4 The express exemption from these limita-
4
The limitation of the VWPA from which supervised release restitution
orders are exempted is the requirement that the offense of conviction or
the offense charged in a plea agreement be
an offense under [title 18], section 401, 408(a), 409, 416, 420, or
422(a) of the Controlled Substances Act (21 U.S.C. 841, 848(a),
 UNITED STATES v. BATSON 9081
tions forecloses Batson’s contention that the district court’s
restitution authority is confined to the offenses covered by the
VWPA and the MVRA. The district court is therefore autho-
rized by § 3563(b)(2) to order restitution as a condition of
probation to the victim of any criminal offense, including
those in Title 26, for which probation is properly imposed.

A consistent line of decisions supports this interpretation of
§ 3563. In United States v. Nachtigal, 507 U.S. 1 (1993) (per
curiam), the Supreme Court recognized the authority of fed-
eral courts “to attach a host of discretionary conditions to [a]
probationary term” pursuant to § 3563(b), id. at 2, and, more
specifically, to order restitution as a condition of probation for
offenses set forth in the Code of Federal Regulations, id. at 5
n.* (“Under 18 U.S.C. § 3563(b), a court may require, among
other things, that the defendant . . . pay restitution [as a condi-
tion of probation]”). In addition, several of our sister circuits
have recognized, directly or tangentially, the authority of
courts to order restitution as a condition of probation for
offenses under Title 26. See, e.g., United States v. May, 568
F.3d 597, 607 n.6 (6th Cir. 2009); United States v. Nolen, 523
F.3d 331, 332 (5th Cir. 2008); United States v. Lewis, 235
F.3d 215, 219 (4th Cir. 2000); United States v. Bok, 156 F.3d
157, 166-67 (2d Cir. 1998). Although we have not directly

849, 856, 861, 863) (but in no case shall a participant in an
offense under such sections be considered a victim of such
offense under this section), or section 5124, 46312, 46502, or
46504 of title 49, other than an offense described in section
3663A(c).
18 U.S.C. § 3663(a). The limitation of the MVRA from which supervised
release restitution orders are exempted is the requirement that the offense
of conviction or the offense charged in a plea agreement be
(i) a crime of violence, as defined in section 16; (ii) an offense
against property under this title, or under section 416(a) of the
Controlled Substances Act (21 U.S.C. 856(a)), including any
offense committed by fraud or deceit; or (iii) an offense described
in section 1365 (relating to tampering with consumer products).
Id. § 3663A(c)(1)(A).
9082 UNITED STATES v. BATSON
held the same until today, we have recognized the authority
of courts to order restitution as a condition of probation for
offenses under Title 41 and, in the same opinion, affirmed an
order imposing restitution as a condition of probation for an
offense under Title 26. United States v. Gamma Tech Indus.,
Inc., 265 F.3d 917, 923, 924 n.7, 931 (9th Cir. 2001). We
have no doubt, therefore, of the authority of federal courts to
order restitution as a condition of probation for offenses not
set forth in the VWPA or the MVRA.

b. The Supervised Release Statute Grants Federal
Courts the Authority to Order Restitution as a
Condition of Supervised Release for Any
Criminal Offense

[4] Despite its expansive terms, the Probation Statute does
not, on its own, grant courts the authority to order restitution
as a condition of supervised release. That authority comes
from 18 U.S.C. § 3583(d) (the “Supervised Release Statute”),
which extends the reach of the Probation Statute to supervised
release. The version of the statute in effect at the time of Bat-
son’s indictment, which is essentially identical to the one cur-
rently in effect, provides in pertinent part that

[a] court may order, as a further condition of super-
vised release . . . any condition set forth as a discre-
tionary condition of probation in section 3563(b)(1)
through (b)(10) and (b)(12) through (b)(20), and any
other condition it considers to be appropriate.

18 U.S.C.A. § 3583(d) (West July 2008).5 Thus the district
5
Because § 3583(d) subsequently underwent only a single, minor revi-
sion that does not affect the issue in our case, see Judicial Administration
and Technical Amendments Act of 2008, Publ. L. No. 110-406, § 14(b),
122 Stat. 4291, 4294 (Oct. 13, 2008), our analysis of the Supervised
Release Statute as it then stood is equally applicable to the statute in its
present state.
 UNITED STATES v. BATSON 9083
court’s authority to order restitution as a condition of super-
vised release is just as broad as its authority to order restitu-
tion as a condition of probation. Accordingly, the Supervised
Release Statute, together with the Probation Statute, unam-
biguously authorizes federal courts to order restitution as a
condition of supervised release for any criminal offense,
including one under Title 26, for which supervised release is
properly imposed.

In reaching this conclusion, we note that nothing in the text
of the VWPA or the MVRA remotely indicates that Congress
sought by those acts to constrain the pre-existing authority of
federal courts to order restitution. That pre-existing authority
had evolved from the Federal Probation Act, 18 U.S.C.
§ 3651 (repealed 1987), and was maintained in the Sentencing
Reform Act of 1984 (“SRA”), which contains the Probation
Statute. See Pub. L. No. 98-473, § 212(a)(2) (codified as
amended at 18 U.S.C. § 3563(a), (b)(1)-(2)). We had also rec-
ognized the authority of courts to order restitution not limited
to specific offenses as a condition of probation. See, e.g.,
United States v. Green, 735 F.2d 1203, 1205 (9th Cir. 1984)
(“In criminal tax cases, a district court may rely on [the FPA]
to condition probation on the defendant’s restitution of his
outstanding tax liability.”); cf. Burns v. United States, 287
U.S. 216, 220-21 (1932) (“The [FPA] authorizes courts of
original jurisdiction . . . to place the defendant upon probation
for such period and upon such terms and conditions as they
may deem best.”) (internal quotation marks omitted).

Neither the VWPA, enacted in 1982, nor the MVRA,
enacted in 1996, disturbed this well-established authority. The
VWPA merely added to it; the VWPA permitted courts, for
the first time, to order payment of restitution independent of
a sentence of probation. The MVRA merely added a congres-
sional mandate requiring an order of restitution for defendants
convicted of certain crimes. It did not repeal the SRA, which
Congress had enacted more than a decade earlier, and its text
9084 UNITED STATES v. BATSON
does not diminish the long-standing authority of federal courts
to order restitution as a condition of probation.

Finally, § 5E1.1(a)(2) of the United States Sentencing
Guidelines (“Guidelines”), while not controlling, calls for res-
titution as a condition of probation or supervised release “if
the offense is not an offense for which restitution is autho-
rized under [the VWPA] but otherwise meets the criteria for
an order of restitution under that section.” U.S. Sentencing
Guidelines Manual § 5E1.1(a)(2) (2008). Promulgated nearly
nine years prior to the enactment of the MVRA,
§ 5E1.1(a)(2), originally designated § 5E4.1(a), was plainly
intended to bridge the gap between the VWPA and the many
offenses beyond its purview. See U.S. Sentencing Guidelines
Manual § 5E4.1(a) (1988) (“Restitution shall be ordered for
convictions under . . . [the VWPA], and may be ordered as a
condition of probation or supervised release in any other
case.”); U.S. Sentencing Guidelines Manual app. C and 383
(1991) (explaining that the aim of section 5E1.1, which had
been amended in 1991, is “to require [rather than permit] res-
titution as a condition of probation or supervised release for
offenses not set forth in [the VWPA]”).

[5] Accordingly, we hold that 18 U.S.C. § 3563(b)(2),
which grants federal courts broad discretion to order restitu-
tion as a condition of probation, and 18 U.S.C. § 3583(d),
which extends that grant to supervised release, authorizes fed-
eral courts to order restitution as a condition of supervised
release for any criminal offense, including those set forth in
Title 26, for which supervised release is properly imposed.

II. Restitution is Limited to the Loss Sustained by the
Government as a Result of the Offense of Conviction

Batson further argues that the district court erred by order-
ing restitution in an amount beyond the loss caused by the
conduct underlying the offense of conviction—in this case,
aiding and assisting in the preparation of a particular fraudu-
 UNITED STATES v. BATSON 9085
lent tax return. She contends that the VWPA and MVRA limit
restitution to the offense of conviction unless the offense of
conviction “involves as an element a scheme, conspiracy, or
pattern of criminal activity.”6 18 U.S.C. § 3663(a)(1)-(2); id.
§ 3663A(a)(1)-(2). Although this issue was fully briefed on
both sides, the Government conceded Batson’s point in a let-
ter to this court filed just prior to oral argument. We neverthe-
less briefly address the question presented, as it is one of first
impression in this circuit.

[6] The statutory language supports the limitation of resti-
tution to the offense of conviction. Although restitution as a
condition of probation (and by extension, supervised release)
is not limited to the offenses specified in the VWPA and
MVRA, restitution otherwise is to be ordered “under section
3556.” 18 U.S.C. § 3563(b)(2). Section 3556 provides for
orders of restitution in accordance with the VWPA and
MVRA. The VWPA provides that “[t]he court, when sentenc-
ing a defendant convicted of an offense [under listed titles or
statutes] may order . . . restitution to any victim of such
offense.” 18 U.S.C. § 3663(a)(1)(A) (emphasis added). The
language of the MVRA is equally singular: “when sentencing
a defendant convicted of an offense described in subsection
(c), the court shall order . . . that the defendant make restitu-
tion to the victim of the offense.” 18 U.S.C. § 3663A(a)(1)
(emphasis added). The natural reading of these provisions is
that restitution is authorized for the offense of conviction and
not for other related offenses of which the defendant was not
convicted.

[7] It is no surprise, therefore, that in Hughey v. United
States, 495 U.S. 411 (1990), the Supreme Court held that fed-
eral courts may order restitution under the VWPA “only for
the loss caused by the specific conduct that is the basis of the
6
The Government concedes that the offense of conviction in this case
does not involve as an element a scheme, conspiracy, or pattern of crimi-
nal activity.
9086 UNITED STATES v. BATSON
offense of conviction.” Id. at 413. Subsequent amendments to
the VWPA created an exception to Hughey when the crime of
conviction includes as an element a scheme, conspiracy or
pattern of criminal activity (which the parties agree is not the
case here), but otherwise Hughey’s limitation remains in
effect. United States v. Lawrence, 189 F.3d 838, 846 (9th Cir.
1999).

[8] Although we have not yet applied the rule of Hughey
to awards of restitution ordered as a condition of supervised
release, there is no reason why it does not apply. As the Sec-
ond Circuit Court of Appeals recently observed, “every other
circuit that has considered this question has applied Hughey
to awards of restitution . . . under 18 U.S.C. §§ 3583(d),
3563(b)(2).” United States v. Varrone, 554 F.3d 327, 334 (2d
Cir. 2009) (citing United States v. Frith, 461 F.3d 914, 920
(7th Cir. 2006); United States v. Romines, 204 F.3d 1067,
1069 (11th Cir. 2000); Gall v. United States, 21 F.3d 107, 110
(6th Cir. 1994); United States v. Rosser, 963 F.2d 368 (4th
Cir. 1992) (unpublished per curiam)). We now join our sister
circuits in holding that an award of restitution ordered as a
condition of supervised release can compensate “only for the
loss caused by the specific conduct that is the basis of the
offense of conviction,” Hughey, 495 U.S. at 413, so long as
that offense does not involve an element of scheme, conspir-
acy or pattern of criminal activity. The district court, there-
fore, erred in ordering restitution in an amount beyond the
loss sustained by the Government as a result of the offense of
conviction.

Conclusion

We conclude that the district court acted within its statutory
authority in ordering restitution as a condition of supervised
release in connection with Batson’s conviction of an offense
set forth in Title 26 of the United States Code. See 18 U.S.C.
§§ 3563(b)(2), 3583(d).
 UNITED STATES v. BATSON 9087
[9] We also conclude that the district court erred in order-
ing restitution in excess of that resulting from the offense of
conviction. We therefore vacate that part of the sentence that
orders restitution. Because the amount of loss attributable to
the offense of conviction is disputed and the record does not
permit us to resolve that dispute here, we remand this matter
to the district court for appropriate proceedings to ascertain
the correct amount and for amendment of the judgment by
entry of a new order of restitution.7

SENTENCE VACATED IN PART; REMANDED with
instructions.

7
At oral argument the Government requested that we remand for a total
resentencing, so that the district court could reconsider the $6,000 fine in
light of the new, lowered restitution amount. We decline to expand our
mandate to a total resentencing for that purpose. The district court
imposed the fine and imprisonment without condition at the time that it
reserved decision on the doubtful question of restitution. There is no indi-
cation that the amount of the fine was conditioned on the amount of resti-
tution, and we decline to reopen the matter. See United States v. Matthews,
278 F.3d 880, 889 (9th Cir. 2002) (en banc) (stating that court may limit
scope of issues for which it remands after appeal of sentence).