In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 13‐1349
UNITED STATES OF AMERICA,
Plaintiff‐Appellee,
v.
YAIR BERKOWITZ,
Defendant‐Appellant.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 09 CR 144 — Virginia M. Kendall, Judge.
____________________
ARGUED SEPTEMBER 25, 2013 — DECIDED OCTOBER 22, 2013
____________________
Before WOOD, Chief Judge, and FLAUM and SYKES, Circuit
Judges.
FLAUM, Circuit Judge. Yair Berkowitz, together with a host
of others, participated in a massive tax fraud scheme with
the object of filing false tax returns in the names of over 3,000
unknowing, incarcerated, or deceased people. The scheme
netted over $10 million in refund payments from the IRS and
2 No. 13‐1349
state tax agencies before it was discovered. Yair1 is the son of
the scheme’s mastermind, and was a player in the conspiracy
by 2003. He was arrested in 2009 and pleaded guilty to one
count of wire fraud in 2011. At sentencing, the district court
followed the Presentence Report’s (“PSR”) recommendation
and ordered Yair to pay more than $4 million in restitution
along with his prison sentence; his restitution liability was
joint and several along with his co‐defendants. Yair appeals
only the amount of the restitution award. We find the award
appropriate and affirm the district court.
I. Background
A. Facts
The Berkowitz family has had run‐ins with the IRS be‐
fore. Yair’s father, Marvin, has a long history of running
schemes to defraud state and federal tax authorities.2 His
sons and many other confederates have all been involved at
various points and in various capacities. Yair began partici‐
pating in his father’s exploits in 1999 or 2000. Yair acquired
the taxpayer information of dead people and used it to help
prepare fraudulent tax returns seeking refunds from the IRS.
In 2000, he traveled to Miami to get the same type of taxpay‐
er information for federal prisoners.
The scheme prosecuted in this case began in 2003 and
was broken up in 2009. Fifty‐eight different individuals re‐
1 Several members of the Berkowitz family were involved in this tax
fraud scheme, so we refer to them by their first names.
2 In 2003, authorities learned of another of Marvin’s schemes and he
fled to Israel to avoid prosecution. Marvin, Yair’s brother Yehuda, and
several others were indicted for tax fraud conspiracy in that case.
No. 13‐1349 3
ceived federal or state refund checks as part of the conspira‐
cy. Participants in the fraud filed more than 3,000 false state
and federal tax returns claiming refunds. For his part, Yair
received pre‐addressed, pre‐stamped tax returns from
Marvin in Israel. Yair mailed the returns from various U.S.
postal codes so as not to arouse IRS suspicion. He controlled
accounts where the proceeds were deposited and addresses
where checks were mailed. When refund checks issued, Yair
traveled to various locations to pick them up from and make
cash payments to co‐conspirators. He would then mail the
checks to Marvin in Israel or otherwise disperse the pro‐
ceeds.
In 2006, IRS agents interviewed Yair and told him that
money he had received from Marvin was obtained by fraud.
Yair denied any knowledge of the scheme at this time. He
proceeded to ratchet down his direct involvement, as did the
dozen or so people he was directly controlling in the collec‐
tion of the fraudulent returns. But Yair continued to receive
money from Marvin and other co‐conspirators after 2006
and met with an undercover IRS agent about expanding the
fraud in early 2007. The scheme was eventually uncovered,
leading to the arrest of Yair (along with many co‐
conspirators) on August 3, 2009.
B. Procedural History
A grand jury returned a fifty‐one count indictment on
August 4, 2009, charging Yair, Marvin, and nine others with
conspiracy to defraud the IRS, wire fraud, and mail fraud.
Yair was named in several counts, but pleaded guilty only to
Count 51, wire fraud. The conduct alleged in this count was
a February 12, 2006 PayPal transfer of $250 from an account
in Chicago to a different account in Minneapolis. In the plea
4 No. 13‐1349
agreement, Yair accepted responsibility for his part in the
conspiracy and acknowledged his awareness of his father’s
fraudulent activities. The district court sentenced Yair to six‐
ty‐two months imprisonment, followed by two years of su‐
pervised release. Yair challenges neither of these punish‐
ments, only the $4,069,091.96 in restitution imposed by the
court.
The district court calculated the restitution award using
loss figures provided in the PSR. The Government argued
that the intended losses from the overall scheme were rough‐
ly $65 million and that the actual losses were around $10
million. But the PSR recommended—and the government
agreed—to narrow these amounts for Yair. The PSR conclud‐
ed that when the universe of losses was limited to the dozen
or so people that Yair interacted with or directed regularly in
the course of the scheme, the intended loss amount was
around $19 million and the actual loss $4,069,091.06.
Yair objected to these amounts at sentencing, both for the
purposes of calculating his offense level and for fixing the
restitution amount. He claimed that the loss amount was not
reasonably foreseeable to him, an argument which the dis‐
trict court rejected after weighing the arguments from both
sides. The court did not reweigh the evidence when it im‐
posed restitution, however, because the analysis would have
been duplicative of the calculations it already performed.
II. Discussion
Ordinarily, we would review the district court’s authority
to issue a restitution order de novo and its calculation of res‐
titution amount for abuse of discretion. United States v. Rand,
403 F.3d 489, 493 (7th Cir. 2005). But here we engage in the
No. 13‐1349 5
even more deferential plain‐error review. Yair’s objections in
the district court to the restitution award were nonspecific,
but his objections to loss amount (which should mirror the
objections to restitution in this case) argued only that the
numbers were too large because they included losses not
foreseeable to him. His arguments on appeal have a different
flavor: Yair now contends that the district court exceeded its
statutory authority in awarding restitution because the court
charged him for conduct not attributable to him, and be‐
cause it did not adequately demarcate the contours of the
scheme or make the necessary findings of fact connecting
Yair’s conduct to the loss. Because these arguments are dif‐
ferent from the one raised below, we will overturn the dis‐
trict court only if we find error that would deprive Yair of his
“substantial rights.” United States v. Randle, 324 F.3d 550, 555
(7th Cir. 2003).
Federal courts enjoy no inherent power to order restitu‐
tion—they may only do so where authorized by statute. Id.
The relevant statute in this case is the Mandatory Victims
Restitution Act of 1996 (“MVRA”). 18 U.S.C. § 3663A. As the
name suggests, this law requires the district court to award
restitution in certain circumstances. Restitution under the
MVRA functions as a civil remedy “engraft[ed] … onto a
criminal statute,” and is therefore calculated by looking sole‐
ly to the victim’s loss and not to the perpetrator’s ability to
pay. United States v. Martin, 195 F.3d 961, 968 (7th Cir. 1999).
The MVRA specifically defines the “victims” to whom
restitution must be made:
[A] person directly and proximately harmed as
a result of the commission of an offense for
which restitution may be ordered including, in
6 No. 13‐1349
the case of an offense that involves as an ele‐
ment a scheme, conspiracy, or pattern of crimi‐
nal activity, any person directly harmed by the
defendant’s criminal conduct in the course of
the scheme, conspiracy, or pattern.
§ 3663A(a)(2). Under certain circumstances, the government
can be a victim under the MVRA. United States v. Sapoznik,
161 F.3d 1117, 1121 (7th Cir. 1998).
Yair contends that the restitution order is excessive. First,
he argues that it charges him for the conduct of others, in‐
stead of limiting the award to losses attributable to his spe‐
cific conduct in furtherance of the scheme. But notable in the
statutory language is the expansiveness of restitution au‐
thorized for crimes involving a “scheme, conspiracy, or pat‐
tern.” An individual convicted of such a crime is jointly and
severally liable for the losses caused by his or her co‐
conspirators. See, e.g., United States v. Dokich, 614 F.3d 314,
318 (7th Cir. 2010). For this reason, we have squarely rejected
the theory that co‐conspirator restitution liability under the
MVRA is as limited as Yair contends. Moreover, the PSR and
the district court limited Yair’s liability to losses resulting
from his actions and from the actions of those he controlled
or worked with regularly. Thus, the restitution order here is
linked to his specific participation in the scheme, even if we
were to accept Yair’s limited view of co‐conspirator restitu‐
tion liability.
Yair next argues that the district court’s restitution award
lacked statutory authority because the judge did not make
sufficient factual findings to support it. We disagree. It is
true that the court engaged in no protracted discussion of
restitution at sentencing and that it adopted the findings of
No. 13‐1349 7
the PSR. But Yair overlooks the court’s earlier discussion of
the same figures when it was calculating Yair’s offense level.
In compiling a PSR for crimes causing a loss, the proba‐
tion office calculates both the intended loss and the actual
loss caused by the scheme, and offenders are sentenced to
imprisonment based on the greater of these amounts.3 The
district court pulled the restitution amount from the PSR’s
actual loss calculation. There is nothing untoward about do‐
ing so, and it was Yair’s burden to demonstrate the PSR’s un‐
reliability. United States v. Artley, 489 F.3d 813, 821 (7th Cir.
2007). Nor is it uncommon for the amount of the restitution
award to mirror actual loss. Dokich, 614 F.3d at 319–20 (not‐
ing that where a defendant intends a large amount of loss he
should be sentenced according to that amount but ordered
to pay restitution according to the actual loss). The district
court did not engage in a lengthy discussion of the restitu‐
tion order, but it was not required to do so, especially when
Yair did not raise any specific objections to the restitution
calculation at the time of sentencing. See United States v. Has‐
sebrock, 663 F.3d 906, 925 (7th Cir. 2011). We decline Yair’s in‐
vitation to impose a requirement on district courts to rehash
their offense level findings at the restitution phase where no
3 District courts can get into trouble if they rely unquestioningly on
these figures, however, because the loss amount for sentencing considers
not just the conduct underlying the conviction but “relevant conduct”
accompanying it. Calculations for restitution are not so permissive. Rand,
403 F.3d at 494. They are rigidly compartmentalized to the actual losses
resulting from the conduct of the convicted offenses. Hughey v. United
States, 495 U.S. 411, 422 (1990). At Yair’s sentencing, the district court
engaged in no such error; all losses are attributable to the scheme for
which Yair pleaded guilty.
8 No. 13‐1349
new objections are raised and a simple “ditto” explains the
award.
III. Conclusion
We find no error in the district court’s calculation of the
restitution amount, and therefore AFFIRM Yair’s sentence.