United States v. Shah

In the

United States Court of Appeals
For the Seventh Circuit

No. 10-1184

U NITED S TATES OF A MERICA,
Plaintiff-Appellee,

v.

M ANU S HAH and S HAH E NGINEERING, INC.,
Defendants-Appellants.

Appeal from the United States District Court
for the Central District of Illinois, Division.
No. 3:07-cr-30003-JES-BGC— Jeanne E. Scott, Judge.

A RGUED N OVEMBER 1, 2010 —D ECIDED D ECEMBER 16, 2011

Before R OVNER, W OOD , and T INDER, Circuit Judges.
T INDER, Circuit Judge. Manu Shah pled guilty to
two counts of mail fraud and one count of submitting
false documents; Shah Engineering pled guilty to one
count of mail fraud. See 18 U.S.C. §§ 1001, 1341. Their
sentences included an order of restitution of $10 million
for which they are jointly and severally liable. They
appeal from the district court’s January 15, 2010, order
2 No. 10-1184

that denied them the credit they claim is due toward
restitution. They seek “full, dollar-for-dollar credit for
the value of the monies and securities that Mr. Shah
deposited with the Clerk of Court at the time of
their deposit,” which deposits were made pre-judgment.
For the reasons following, we dismiss Shah’s appeal
and affirm the district court’s judgment against Shah
Engineering.

I. Background
Manu Shah was the sole shareholder, owner, and opera-
tor of Shah Engineering, Inc., a Chicago-based corporation.
Shah Engineering worked for many years as a contractor
and subcontractor for numerous Illinois governmental
entities, including the Illinois Department of Transporta-
tion (“IDOT”), the Illinois State Tollway Authority, and
the City of Chicago. In connection with these contracts,
Shah and Shah Engineering prepared and submitted
invoices for the work performed. The invoices were
supposed to be supported by documentation of the hours
worked, costs, and expenses associated with the contracts,
which documentation was to be maintained by Shah
Engineering.
In 2003, IDOT decided to audit Shah and Shah Engineer-
ing. During its review of Shah Engineering’s records,
IDOT uncovered numerous irregularities and falsified
documents, and it alerted the United States Attorney’s
office. On January 22, 2007, Shah and Shah Engineering
were charged with mail fraud in violation of 18 U.S.C.
§ 1341 and Shah was charged with submitting false docu-
ments in violation of 18 U.S.C. § 1001.
No. 10-1184 3

On February 1, 2007, Shah waived indictment and pled
guilty to all charges against him pursuant to a binding
plea agreement, which contained a waiver of Shah’s
right to appeal. Later that month, Shah Engineering
likewise waived indictment and pled guilty to one count
of mail fraud. Shah’s plea agreement acknowledged that
the court may order restitution. The agreement set forth
certain obligations that Shah agreed to undertake includ-
ing:
The defendant will deposit the sum of $2,500,000
with the Clerk, U.S. District Court, by certified
check, money order, or stock certificates (if accept-
able with the Court) within 15 (fifteen) days of the
filing of this agreement. The defendant will deposit
an additional $1,000,000.00 to this fund each 30
(thirty) days after the initial deposit for a period of
90 days, until a total of $5,500,000 in principal is on
deposit. . . . The defendant agrees to the entry of
any order necessary for the Clerk to invest the
funds in an interest-bearing account.
The clerk will hold this deposit in escrow . . . . The
funds in escrow shall be used for the payment of
any order of the Court for restitution to the victims
of these offenses and the remainder will be used to
pay the fine to be imposed on Shah Engineering,
Inc. Once the fine, restitution and special assess-
ments ordered are fully satisfied, the remainder, if
any, less the 10% accumulated interest, should be
returned to the defendant. Should the restitution
order exceed the amount on deposit, the defendant
will be obligated to pay the balance within 30 days.
4 No. 10-1184

Shah Plea Agreement ¶ 14 (emphases added). In consider-
ation of these deposits, the United States Attorney
agreed that it would not institute any “forfeiture actions
to forfeit property as the proceeds of the unlawful activity
outlined in the information.” Id. ¶ 16. The parties
further agreed that Shah “demonstrated . . . acceptance of
personal responsibility for [his] criminal conduct
in accordance with Section 3E1.1 of the Sentencing Guide-
lines,” a “two-level reduction in the offense level is appro-
priate,” and Shah qualified for an additional one-point
reduction under § 3E1.1(b)(2), if such reduction was
available. Id. ¶ 18(b). The plea agreement was signed
by Shah’s two trial attorneys, the Assistant United States
Attorney (“AUSA”), and Shah himself.
Shah Engineering entered into a plea agreement
that stated “an appropriate sentence for this offense will
be a term of probation and a fine up to the amount
of $500,000.00, and an order for restitution to the victim(s)
of this offense in an amount determined by the Court”
and “[t]he fine shall be satisfied by the funds submitted
to the Clerk of the Court pursuant to paragraph 14 of
the plea agreement executed by Manu Shah.” Shah
Eng’g Plea Agreement ¶ 11. Its plea agreement, like
Shah’s, contained a waiver of appeal rights. The plea
agreement was signed by Shah on behalf of Shah Engineer-
ing, defense counsel, and the AUSA. Both plea agreements
were filed with the district court on January 22, 2007.
At Shah’s plea hearing, the magistrate judge reviewed
with Shah in detail the plea agreement, including para-
graph 14 regarding the deposits to be made. (The parties
No. 10-1184 5

consented to proceeding before the magistrate judge.)
The judge questioned whether the Clerk could accept
stock certificates, and the AUSA said that “the intent
here is to make sure that there is a pool for restitution
when that figure is decided by the Court . . . and anything
that goes towards that intent is acceptable to the govern-
ment.” (emphasis added). The judge and deputy
clerk clarified that the Clerk’s “office said that holding
stock certificates is satisfactory[.]” At that point, the
judge expressed concern about how the stock certificates
would be valued. Shah stated that he understood
his obligation under paragraph 14 and thought he
could fulfill it. The judge then recited the express language
stating that “[t]he clerk will hold this deposit in escrow”
and “[t]he funds in escrow shall be used for the payment
of any order of the Court for restitution to the victims
of these offenses and the remainder will be used to pay
the fine imposed on Shah Engineering.” The AUSA added
that the agreement contemplated that any monies remain-
ing after payment of restitution and the fine “would be
returned to Mr. Shah.” The judge confirmed that was
Shah’s understanding as well. He also confirmed
Shah’s understanding that “ ‘[s]hould the restitution order
exceed the amount on deposit, the defendant will be
obligated to pay the balance within 30 days.’ So if this
money that is up is short, then you have 30 days to pay
the difference, understood?” Shah answered, “Yes.”
At the end of the hearing, the magistrate judge asked
defense counsel if he had reviewed the government’s
proposed order concerning paragraph 14 of the plea
agreement. Shah’s counsel stated that he had read it
6 No. 10-1184

and had “no objection.” The judge said that the order
would be entered that day. As promised, later that day
the court issued an order regarding the deposits Shah
agreed to make with the Clerk. The order stated that it
was “[p]ursuant to the Plea Agreement filed on January
22, 2007, and local Rule 67.2,” and instructed Shah
to deposit $2.5 million by February 7, 2007, and to make
three deposits of $1 million each by March 7, 2007, April
9, 2007, and May 7, 2007. The order said that “if
the deposits made by the defendant are cash or
cash equivalents, the Clerk of the Court is directed
to invest such in an interest-bearing account with
the Registry Account by the defendant and retain
said funds until further order of the Court.” With respect
to deposits of stock certificates, the order provided
that “the Clerk of the Court shall hold such until further
order of the Court.” And on February 27, 2007, at Shah
Engineering’s plea hearing, the magistrate judge thor-
oughly reviewed the plea agreement, including the provi-
sions regarding restitution with the corporate representa-
tive, who stated that he understood the terms of
the agreement.
The magistrate judge determined that the guilty pleas
of Shah and Shah Engineering were knowing and volun-
tary and that the crimes charged were supported by
an independent factual basis as to each element of
the offenses. He recommended that the guilty pleas
be accepted and the defendants be adjudged guilty.
No objections were filed to these recommendations and
the district judge accepted them. Sentencing was set for
June 4, 2007.
No. 10-1184 7

Shah did not adhere to the deadlines for making depos-
its. However, the Clerk received, on Shah’s behalf,
about $2.5 million in stock certificates on March 23, 2007,
about $2 million in stock certificates on May 17, 2007,
about 250,000 shares in stock certificates worth about
$1 million on August 24, 2007, and 21,666 shares in
stock certificates on February 27, 2008, with a total fair
market value of about $5.5 million at the time of deposit.
(Apparently the last deposit did not add any value to
the total.) The parties do not dispute that these were
the stocks’ worth in the market as of the dates of deposit.
The judge repeatedly continued sentencing to allow for
the completion of the audit of Shah Engineering’s con-
tracts, calculation of the loss and restitution amounts, and
sufficient preparation and narrowing of the issues by the
parties. Meanwhile, the stocks Shah deposited with the
Clerk during a historic bull market, see Oliver Silverstein,
Historic, Multi-Year Bull Market in U.S. Stocks Likely Over,
InsideIn form ationD aily.info (Nov. 18, 2007),
http://insideinformationdaily.info/Historic-Multi-Year-
Bull-Market-in-U.S.-Stocks-Likely-Over.htm (“I believe this
is the END of the bull market in stocks that we’ve grown
up with. I believe you’ve just seen an historic top.”),
depreciated significantly. Shah contends that their value
had fallen to below $2 million about one year after deposit.
Not all the stocks went down in value though; a few
actually appreciated. In July 2007, Shah’s stockbroker,
Michael Brcic, contacted a Clerk’s office employee by email
and advised that some of the deposited stocks were
nearing a “target price” (i.e., the price at which Brcic had
agreed with Shah to sell them) and requested that they be
8 No. 10-1184

“swapped” for other stock of equal or higher value. The
Clerk’s employee responded that “it is not the Court’s
intention that the stock be ‘swapped’ out at anytime [sic],
whether or not it gets to the target price.” The record
contains no indication that Shah or his counsel contacted
the government, the district judge, or the magistrate judge
to make a request to sell any of the stocks on deposit.
On April 29, 2008, the district judge held a hearing
attended by Shah, Shah Engineering, and counsel.
The AUSA stated that the parties’ sentencing memoranda
revealed they were far apart on the amount of the loss
and restitution, but they had been trying to reach
an agreement. The government was seeking “an excep-
tional showing of acceptance of responsibility,” which
would allow “Shah to earn back that acceptance of respon-
sibility that is now no longer in the Pre-Sentence Report.”
(Just three months before, the government had expressed
concerns over whether Shah was living up to his obliga-
tions under the plea agreement, claimed that “documenta-
tion supplied by Shah cannot be trusted,” and asserted that
he was obstructing justice in the course of negotiating the
loss and restitution amount.) To that end, the parties
agreed that before sentencing, Shah would post the total
amount of an agreed upon loss/restitution figure of $10
million. The government asked for a six-month continu-
ance of the sentencing hearing to allow Shah to accomplish
this. The AUSA stated that Shah committed to a payment
plan regarding the amounts “to be posted.” The AUSA
continued:
No. 10-1184 9

But at the end, by the time the sentencing comes
up, the full ten million dollars in cash; not in stock
or any other negotiable instruments; but the ten
million dollars will be posted with the Court and
subject to be paid out as restitution at the time.
That is our goal . . . to make sure that the victims
are made whole, or as close as possible, at the time
of sentencing.
(emphasis added). The court invited a response by
defense counsel, and Shah’s attorney confirmed that the
parties had agreed to a restitution amount of $10 million.
Counsel stated, however, that a lot of Shah’s money was
illiquid and “we need to work with other people to make
sure that this money is properly loaned to Mr. Shah in
order to make restitution.” He explained:
Mr. Shah posted five and a half million dollars of
stock at the beginning of this case . . . [which] is
now worth I think 4.1 million dollars.
What we are going to do . . . is to move around
some of the stock, sell some, cash it in, and then
every month make a payment to the escrow in the
amount of a half million dollars.
At the end of the six months we should have
approximately 8 million dollars or 8.5 million
dollars in that escrow. There would then be a bal-
loon payment which would be made on November
15th which would be the balance of the 10 million
dollars.
10 No. 10-1184

(emphases added). Shah’s counsel stated that some of
the defrauded agencies actually owed Shah money for
work performed, to the tune of $1.5 million. He intended
to work with the government to try to use that
money toward the $10 million. The court then confirmed
defense counsel’s understanding that the parties agreed the
amount of loss and amount of restitution would be
$10 million. At that point, the court advised:
In the event you, counsel, and his financial advi-
sors, think it advisable to sell the stock that was
deposited, if you are all agreeable to do that and
put forth a plan on how to do it, and substitute the
cash, I would entertain this during this six months
hiatus; rather than just have it diminish in value, if
you think that’s the way it’s going.
I leave that to you to request that. But if it’s a
joint request and a means for doing it is put forth
that sounds sensible, I would entertain that.
The court asked Shah if he had heard what had been
represented in court and whether that was agreeable to
him; Shah answered, “Yes.”
On June 16, 2008, the district court entered an order
memorializing Shah’s agreement “to pay amounts of at
least $500,000 per month toward a possible order
of restitution from May, 2008 through November 23, 2008,
to equal a total of $10,000,000.” The court ordered
that “[t]he money deposited shall be held by the Clerk in
the Court’s Registry Fund.” In July, August, and Septem-
ber 2008, Shah deposited payments of $500,000 each
for an additional $1.5 million. He made no more
payments, however.
No. 10-1184 11

On November 16, 2008, the defendants filed Defendants’
Supplemental Commentary on Sentencing Factors, noting
that the court’s June 16 order memorialized Shah’s agree-
ment to pay $500,000 per month from May to November
2008, “toward a possible order of restitution.” They
acknowledged that Shah “agreed to post $5,500,000 of stock
with the U.S. District Court Clerk’s Office in escrow to
pay restitution” and referred to “the stock being held
in escrow.” (emphases added). They also noted that
the AUSA’s email of April 24, 2008, indicated “that
the dollar value of Shah’s stocks being held in escrow was
now $4,184,430.00” and that during the April 29
hearing, “the Court advised the government that
Shah should be able to swap out stocks held in escrow so
that he was not force[d] to incur stock losses.” (emphases
added). The defendants said that the stock market contin-
ued to suffer and that “the value of the stock posted
by Shah is now worth approximately $1,989,303.”
They asserted that “Shah initially posted an amount
sufficient to cover all purported civil and criminal
loss sustained by the governmental entities.” Since that
time, however, the amount of the loss increased and
Shah’s assets decreased. The defendants requested “a
restitution order which would provide Shah with addi-
tional time to pay the agreed upon restitution” and sug-
gested “that certain target prices can be agreed upon
for stocks held in escrow so that these stocks can be con-
verted to cash in a better market,” and that “[t]he stocks
being posted can be held in escrow with an instruction
that the stock be transferred to the government at the
end of the restitution period if the stock has not
already been sold or replaced by cash.” (emphases added).
12 No. 10-1184

On June 23, 2009, the government filed an Updated
Commentary on Sentencing Factors, noting that “[a]s of
June 19, 2009, the amount in escrow was $1.5 million posted
as cash, and securities valued at $2,442,661.00, for a total
of $3,942,661.00.” (emphasis added). It also noted that
the parties stipulated to a loss amount of $10 million;
however, the victims had requested restitution totaling
$13,258,101.13.
On June 25, 2009, days before sentencing, the defendants
filed an addendum to Defendants’ Supplemental Commen-
tary on Sentencing Factors, which stated:
Shah took steps early on to ensure that restitution
would be paid by depositing stock and cash into an
escrow. . . .
Mr. Shah agreed to pay $10,000,000.00 in restitu-
tion . . . . Prior to agreeing to the restitution, Mr.
Shah had deposited the market value of $5.5
million in stock after entering into the Plea Agree-
ment. . . . [T]he value of the escrow account has
drastically declined . . . .
Mr. Shah expected to make the required restitu-
tion payments before the sentencing hearing
scheduled for June 30, 2009. . . . Mr. Shah intends to
make the full restitution payment but will need a
reasonable amount of time in order for the posted
equities to appreciate in value. Mr. Shah’s financial
consultant believes that the equities currently
being held in escrow will appreciate in value over
the next few years. . . . As the market value of the
equities increase, the equities can be sold and the
cash distributed to the agencies.
No. 10-1184 13

(emphasis added). Invoking fairness, the defendants
asserted that “Shah should be credited with the value of
the stock and cash he deposited ($7.0 million) or be given
time to allow these stocks to appreciate in value.” They
proposed terms for a restitution agreement, including
that “Shah posted $5.5 million in stock in three install-
ments in 2007,” “Shah made cash payments in the amount
of $1.5 million in 2008,” and “[t]he current escrow balance
in the possession of the Government is $2.44 million”
(emphasis added). The defendants also proposed terms
for the restitution order, including that “[t]he Clerk’s
Office shall take possession of all securities and
cash currently being held in the escrow account,” “[t]he
cash currently being held in the escrow shall be immedi-
ately distributed to the agencies,” and “Shah shall
begin liquidating equities currently being held in escrow.”
A sentencing hearing for the defendants was held June
30, 2009. The government recommended that Shah get
a three-point reduction for acceptance of responsibility.
In connection with that recommendation, Shah’s counsel
asserted:
. . . [W]e figured what’s the worst case scenario and
we came up with five and a half million and that’s
what Mr. Shah put up in the escrow. And unfortu-
nately, Monday morning quarterback, he should
have put it up in cash. He didn’t. In his mind the
stock’s been doing well, he put up stocks in escrow
and they plummeted.
I don’t think Mr. Shah should be faulted for that.
I mean he still put a good faith amount of money
14 No. 10-1184

up. And that again . . . goes to acceptance of re-
sponsibility.
(emphasis added). Counsel continued, “because of
the market, because of his assets, because of the
equities and the escrow, he could not live up to the 500,000
dollars a month that he was supposed to pay.”
Counsel noted that at one time, Shah’s financial
advisor had wanted to liquidate some of the stocks,
the Clerk’s office wouldn’t allow it, but the court said
that they should be able to sell the stock. Counsel con-
ceded, however, that “[u]nfortunately, the market
kept going down.” He also noted that Shah’s equities
were “in escrow with the Court” and asked for a restitution
order that would allow Shah five years to pay.
Counsel suggested that the financial advisor work with
the government “to set target prices for certain stocks . . .
and that those stocks be liquidated and the money
be immediately transferred to the Court for restitution
allocation.” (emphasis added).
The district court sentenced Shah to 41 months of
imprisonment and sentenced Shah Engineering to
two years probation and ordered it to pay a $500,000 fine.
The court ordered the defendants, jointly and severally,
to pay restitution in a total amount of $10 million. The
court said that “[t]he amounts that have been held in
an escrow account with the Court are to be sold within
the next 30 days. I’m sorry if amounts go up and
amounts come down, but I’m not going to risk any
more going down, which is as likely as going up.”
The court ordered that $1 million be paid toward restitu-
No. 10-1184 15

tion within 60 days and the balance paid in 18 months.
Defense counsel asked whether the financial advisor could
trade a stock in escrow for other stock, and the court
said not unless the government stipulated that it would
agree to that.
Judgments were entered July 7, 2009, and included
restitution orders in the amount of $10 million. Shah’s
judgment provided that a “$300.00 special assessment
is due within 30 days of judgment date” and directed the
Clerk “to apply $1,500,00 [sic] in cash paid by the defen-
dant to the victims of the instant offense. Stocks in escrow
to be sold within 30 days.” (emphasis added). It also
ordered Shah “to sign any documents necessary to com-
plete sales” and “to pay $1,000,000.00 of restitution
within 60 days and the balance within 18 months of
judgment date.” Shah Engineering’s judgment contained
similar language and ordered payment of a $400 special
assessment and $500,000 fine. The judgments held
the defendants jointly and severally liable for the
total restitution ordered.
Neither defendant challenged the judgments by
filing a notice of appeal within the time allotted by Fed. R.
App. P. 4(b)(1)(A)(i) (then ten days), or filed a motion
pursuant to Fed. R. Crim. P. 35(a) to “correct a sentence
that resulted from arithmetical, technical or other
clear error.” The Clerk did not sell the stocks within
30 days of the judgment. By this point, though, the value
of the stock was on the rise and neither Shah nor
the government brought the Clerk’s inaction to the district
court’s attention.
16 No. 10-1184

On August 12, 2009, the government moved for a turn-
over order directing the Clerk to transfer the $1.5 million
Shah deposited into the Court Registry Fund to the restitu-
tion balance. Later that same day, the government
moved to withdraw the motion because the Clerk already
had administratively transferred (on August 5, 2009)
the funds to the restitution account.
The U.S. Department of Justice sent Shah a Notice
of Intent to Offset, dated October 1, 2009, indicating a
balance due on his criminal judgment debt of $8,499,600.
This reflected the $1.5 million transfer and an addi-
tional $400 payment. The Notice said that any and all
payments due to Shah from the federal government,
including federal income tax refunds and federal benefits
payments, would be offset to pay the amount of the debt.
Later, on December 11, 2009, the defendants’ new
attorney entered an appearance and filed a motion
seeking an order that defendants “be given full, dollar-for-
dollar, credit for the entire $7 million restitution
paid during 2007 and 2008 at the values as they were at the
time of their respective payments.” The motion requested
the district court stay the seizure of any other property
to satisfy the restitution “because the government
now maintains that approximately $5.5 million more
is owed than is actually owed.” The defendants argued
that Shah surrendered control over the securities when
he delivered them to the Clerk and the securities were
payments of restitution. They also argued that the Clerk,
the court, or the government made the decision to hold
the securities that were deposited and should have con-
No. 10-1184 17

verted them to cash when Shah deposited them. And
the defendants asserted that the diminution of the value
of the securities was not caused by their criminal conduct
and the payments were intended as restitution payments.
The government responded that the stock was deposited
into escrow as security and the defendants should
get credit toward restitution for the value of any security
at the time of its sale. It also argued that the “defendants
understood and acknowledged all along that the securities
were in escrow” and they bore the potential risks (and
gains).
On January 15, 2010, the district court denied the defen-
dants’ motion. The court rejected the claim that Shah
made a restitution payment in 2007, finding that such a
claim did “not comport with the facts.” It determined that
the stock was deposited into escrow as security for
the defendants’ restitution obligation, a conclusion it
found supported by the terms of the Plea Agreement
and Shah’s representations through counsel at the April
29, 2008, hearing. Citing Capos v. Mid-America National
Bank of Chicago, 581 F.2d 676 (7th Cir. 1978), the court
determined that the net proceeds from the sale of
the securities, not the value of the securities at the time
they were posted, should be applied to the restitution
obligation. It concluded that the two Ninth Circuit cases
cited by defendants, United States v. Smith, 944 F.2d 618
(9th Cir. 1991), and United States v. Tyler, 767 F.2d 1350
(9th Cir. 1985), were inapplicable because Shah “deposited
the stock as security and retained a right to recover
the stock upon payment of the restitution.” Noting the
government’s representation that Shah was not in compli-
18 No. 10-1184

ance with the payment schedule in the judgment (he did
not make his first $1 million restitution payment within
60 days), the court declined to stay the government’s
collection efforts. The court also noted that at that time
“the stock deposited by Shah remains in the Clerk’s
possession.”
On January 20, 2010, the Clerk of Court withdrew the
shares of stock that Shah had deposited and asked Merrill
Lynch to sell them. The Clerk indicated that the funds
would be applied to Shah’s restitution order.
On January 22, 2010, the defendants filed a notice
of appeal indicating that they were seeking relief “from the
Opinion entered in this matter by [the district court] on
January 15, 2010[.]” Following oral argument in this
court, the government moved the district court to supple-
ment the record on appeal with a copy of the report
of restitution receipts and disbursements maintained
by the district court’s financial administrator. The district
court granted the motion and supplemented the
record with the U.S. Courts Case Inquiry Report, dated
November 4, 2010. The report reflects the sale of the
stock and the credit to the defendants, indicating
that $5,311,425.83 has been collected toward restitution and
that on March 17, 2010, Shah was credited with
$3,776,000.44, presumably from the sale of the stock.
According to the report, Shah’s total outstanding debt
is $4,688,974.17 (including the special assessment and
restitution) and Shah Engineering’s total outstanding debt
is $5,188,974.17 (including the fine and special assessment).
No. 10-1184 19

II. Discussion
The defendants maintain that “Shah’s payment of $5.5
million in stock certificates was a payment of restitution”
and they should be given “full credit for the $5.5 million
in securities that [Shah] paid in restitution.” Because
restitution in criminal cases can only be ordered for losses
attributable to the charged offense(s), see, e.g., Hughey
v. United States, 495 U.S. 411, 413 (1990), they argue that
the diminution in the value of the securities after
Shah deposited the stock certificates cannot be attribu-
table to them. The government responds that the defen-
dants’ appeal waivers bar this appeal, and the defendants
reply that the government failed to timely assert
waiver, thus waiving this waiver argument. Because
the defendants cite no authority for their waiver argument,
it is deemed waived. See United States v. Thornton, 642
F.3d 599, 606 (7th Cir. 2011). But the defendants
have another argument — that the appeal waivers do not
reach the issues on appeal.
Our first task is to confirm that we have jurisdiction
to hear this appeal. E.g., United States v. Harvey, 516
F.3d 553, 556 (7th Cir. 2008). An appeal may be available
when a district court imposes a restitution obligation,
at certain concrete stages of enforcement, see, e.g., United
States v. Sloan, 505 F.3d 685, 687 (7th Cir. 2007) (garnish-
ment order); United States v. Kollintzas, 501 F.3d 796, 800-02
(7th Cir. 2007) (same), or when a defendant has a fair
argument that he has satisfied his restitution obligation,
see, e.g., United States v. Lilly, 206 F.3d 756, 763 n.4 (7th Cir.
2000) (defendant sought a determination in accordance
with the court’s authority over conditions of his supervised
20 No. 10-1184

release that restitution obligation had been satisfied). But
this case was not at any of these points when the defen-
dants appealed from the January 15, 2010, order. What the
defendants really are asserting is that the restitution
orders, entered back in July 2009, should have been $4.5
million — not $10 million. Clearly, they are not contending
that they should get credit for the value of the securities on
the date of sentencing — the value then was even less than
the value on the date of sale. And by arguing that the credit
eventually given toward restitution is not enough, they
are not disputing what the Clerk obtained from the sale
of the securities, but rather are disputing that restitution
was computed correctly at the time their sentences
were imposed.
So is their appeal timely? When the district court
entered judgment in July 2009, the Federal Rules of Appel-
late Procedure stated: “In a criminal case, a defendant’s
notice of appeal must be filed in the district court within
[10] days after . . . the entry of . . . the judgment. . . .”
Fed. R. App. P. 4(b)(1)(A)(i). If this appeal is actually an
appeal of the restitution orders, the defendants failed to
timely appeal from the district court’s judgment that
ordered restitution. But Rule 4(b)’s time limit is “not
jurisdictional and is merely a claim-processing rule that
can be forfeited.” United States v. Neff, 598 F.3d 320, 323 (7th
Cir. 2010). We enforce this time limit “when the appellee
stands on its rights[.]” United States v. Rollins, 607 F.3d 500,
501 (7th Cir. 2010) (government argued court lacked
jurisdiction over appeal which was filed more than ten
days after the district court’s order). Here, the government
did not assert the untimeliness of the challenge to the
No. 10-1184 21

restitution amount or the appeal until filing its supplemen-
tal brief in this court. Perhaps the government did not
contest the timeliness because the district court’s view on
whether the defendants would be credited with $5.5
million toward restitution was unknown until it issued its
January 15, 2010, decision.
And that brings us to another question: Do the defen-
dants’ appellate waivers waive the issues raised in
this appeal? “We may not address the merits of [a defen-
dant’s] argument . . . if we conclude that he waived the
right to appeal the restitution order.” United States
v. Worden, 646 F.3d 499, 502 (7th Cir. 2011). Waivers in
plea agreements are generally valid if they are knowing-
ly and voluntarily made, though we enforce a waiver
only if the disputed appeal comes within the ambit of
the waiver. See United States v. Quintero, 618 F.3d 746,
750 (7th Cir. 2010). We interpret the terms of the
plea agreement according to the parties’ reasonable
expectations and construe any ambiguities in the light
most favorable to the defendant. Id. at 751. We also con-
sider the plea colloquy to determine if the district
court properly informed the defendant that the waiver
may bar the right to appeal. Id.
Shah’s plea agreement contained a broad waiver of
the right to appeal:
The defendant is aware that federal law . . .
affords a defendant a right to appeal a final deci-
sion of the district court and that federal law . . .
affords a defendant a right to appeal the . . . sen-
tence imposed. Understanding those rights, and
22 No. 10-1184

having thoroughly discussed those rights with the
defendant’s attorney, the defendant knowingly and
voluntarily waives the right to appeal any and
all issues relating to this plea agreement and the
conviction and to the sentence, including any fine or
restitution, within the maximum provided in the
statutes of conviction, and the manner in which the
sentence, including any fine or restitution, was
determined, on any ground whatever, in exchange
for the concessions made by the United States in
this plea agreement, unless otherwise stated in this
paragraph. The defendant retains the right to
appeal his sentence if there is the imposition of a
prison sentence above 41 months.
Shah Plea Agreement ¶ 10 (emphasis added). Likewise,
Shah Engineering’s plea agreement contained a waiver,
though not as broad as Shah’s:
The Corporation is aware that Title 18, United States
Code, Section 3742 affords a defendant a right to
appeal the sentence imposed. The Corporation know-
ingly waives the right to appeal any sentence within
the maximum provided in the statutes of conviction, or
the manner in which that sentence was determined, on
the grounds set forth in Title 18, United States Code,
Section 3742, or on any ground whatsoever, in ex-
change for the concessions made by the government in
this Plea Agreement so long as the monetary fine
imposed upon the Corporation by the Court, not
including restitution, does not exceed $500,000.00.
Shah Eng’g Plea Agreement ¶ 12.
No. 10-1184 23

Our review of the transcripts of the plea colloquy for
both Shah and Shah Engineering confirms, as the magis-
trate judge found and the district court accepted, that the
defendants knowingly and voluntarily waived their rights
to appeal. As for Shah, the court addressed the
appeal waiver: “It is a blanket waiver unless you’re
sentenced to a period of imprisonment above 41
months. So if it is 41 months and one day, all of your
appeal rights are reinstated.” The AUSA clarified that
the appeal rights reinstated would be just to the length
of the sentence and that any challenge to the
proceedings was “waived in all circumstances.” Shah’s
counsel agreed, and Shah himself said that he understood.
He also said that he understood that if a sentence of 41
months and one day or more was imposed, he had the
ability to appeal the sentence, “but not anything other than
that.” The court also discussed the appeal waiver
with Shah Engineering, noted that paragraph 12 was the
waiver of the right to appeal, and said, “What the corpora-
tion’s [sic] doing here is waiving any and all rights to
any and all appeals unless the monetary fine
exceeds $500,000[.]” Shah Engineering’s representative
agreed with the court’s interpretation.
The district court did not sentence Shah to a term of
imprisonment greater than 41 months and did not impose
a fine in excess of $500,000 on Shah Engineering, so the
exceptions to the appeal waivers do not apply, and we
consider whether the issues in this appeal fall within the
scope of the waivers. Shah waived “the right to appeal
any and all issues relating to this plea agreement and the
conviction and to the sentence, including any fine or restitu-
24 No. 10-1184

tion . . . and the manner in which the sentence, including
any fine or restitution, was determined, on any ground
whatever[.]” Without hesitation, we conclude that Shah
waived his right to appeal his restitution order. So, if he
is attempting to do so now, then his appeal should be
dismissed.
As we have noted, however, Shah Engineering’s waiver
is not as broad as Shah’s. It waived only “the right
to appeal any sentence within the maximum provided in
the statutes of conviction . . . on any ground whatsoever.”
The statute of conviction, 18 U.S.C. § 1341, does not
provide for restitution, and Shah Engineering did
not specifically waive the right to appeal restitution.
That puts Shah Engineering in a position like that of
the defendant in United States v. Behrman, 235 F.3d
1049, 1052 (7th Cir. 2000), where we held that a waiver
of the right to challenge “any sentence within the maxi-
mum provided in the statute(s) of conviction” did not
extend to the right to appeal restitution. But during
the plea colloquy, the magistrate judge interpreted the
appeal waiver language as waiving “all rights to any and
all appeals unless the monetary fine exceeds $500,000,”
and the corporation’s representative agreed. This gives
us pause. The magistrate judge’s oral interpretation
was incomplete and, by omitting key, restrictive language
(“provided in the statutes of conviction”), attributed
more breadth to the scope of the waiver than the
language will bear. We do not treat Shah Engineering’s
oral agreement with this interpretation as enlarging the
scope of the written waiver which provides otherwise,
particularly given the government’s concession at
No. 10-1184 25

oral argument that its waiver argument is fairly weak as
to Shah Engineering. Thus, we do not conclude that
Shah Engineering’s appeal waiver bars its right to appeal
the restitution order.
We note that Shah Engineering is defunct and unlikely
to pay anything toward the restitution order, and the
defendants are jointly and severally liable for the restitu-
tion ordered. So, even if the only appeal we consider
is Shah Engineering’s, we recognize that the practical effect
of our decision also falls on Shah. And an equally prag-
matic consideration is that Shah and Shah Engineer-
ing presented joint arguments on all points without
any differentiation between them. Therefore, although
Shah Engineering’s appeal is the only matter properly
before us as a jurisdictional matter, we will discuss
the arguments presented as though they are made by both
defendants.
Turning to the merits, the defendants argue that Shah
gave up all control over the stocks when he deposited
them with the Clerk, and, consequently, the decline in
value was on the Clerk’s watch. In their view, the district
court’s January 15, 2010, order rested on the erroneous
assumption that Shah had control over the stocks. In
a related argument, they assert that the “Risk Of
Loss Passes to the Holder Of The Funds And The
Victims Once The Wrongdoer Relinquishes The Stolen
Assets, And Restitution Must Be Premised Exclusively
On Losses Caused By The Charged Criminal Conduct.”
The government responds that the district court
correctly found that the stock certificates were in escrow
26 No. 10-1184

as security for restitution and Shah bore the risk of
a decrease in their value. The government asserts that
Shah had control over the stocks and could have sold or
exchanged them for other stocks, under an appropriate
plan, but didn’t because “the market kept going down.”
It also asserts that Shah deposited the stocks when
they were “doing well” and wanted to profit from their
expected appreciation.
The defendants point to various portions of Shah’s
plea agreement and other parts of the record to support
their claim that Shah gave up control of the stocks when
he deposited them. For example, they state that “[t]he
plea agreement contains no provision that once the pay-
ments were made that Shah would have any authority or
duty to manage them.” True, but the defendants conve-
niently overlook a key purpose of the stock deposit,
as stated in the plea agreement and at the plea hearing: to
appease the government so it would not initiate for-
feiture proceedings against Shah. One way to appease
the government was by creating a pool for future restitu-
tion. And Shah exercised control in choosing how to
contribute to that pool— he could have sold the stocks
at the outset and deposited cash instead.
The defendants also claim that Shah’s attempts to sell
the securities were thwarted, citing the July 2007
email exchange between his broker and the Clerk’s office.
They make more of this exchange than the record will
bear, however. Shah never made a motion with the
district court — the judge — seeking to swap out stocks. And
Brcic didn’t ask for permission to sell stock and deposit
No. 10-1184 27

the proceeds with the Clerk; he simply wanted to change
the stocks in the account. Tellingly, at the April 29, 2008,
hearing, the district judge clearly stated that if
Shah wanted to sell the stocks on deposit, substitute
the cash, and avoid future diminishing value, all he had
to do was put together a plan, and the court “would
entertain it.” So Shah had the option to sell the stock,
albeit with the court’s approval. The defendants do not
assert, and the record does not show, that he ever
took advantage of this opportunity, notwithstanding
his expressed desire to exert control over the stocks. The
reason was revealed at sentencing: “Unfortunately,
the market kept going down.” Shah’s actions and inaction
show that he only wanted to exert control over the
stocks when he stood to gain, not when he would
sustain a loss.
As further evidence of Shah’s lack of control over the
securities, the defendants point to the Clerk’s eventual
initiation of the securities’ sale, which they assert
was without notice to or consultation with Shah, and the
government’s taking of the cash portion of the funds
on deposit. They claim that the Clerk’s action
demonstrates the securities could have been sold at
an earlier time without Shah’s involvement. However,
the defendants ignore a salient fact: all of these actions
occurred after the district court had sentenced the defen-
dants and entered judgment including the restitution order
against them. The court did not order that the stocks on
deposit be sold or direct Shah to sign any documents
needed to effect the sales before it ordered restitution. Shah
lost control over the stock when restitution was ordered,
28 No. 10-1184

not before. And Shah had notice of the impending sale — he
was present at sentencing when the court ordered the
Clerk to sell the stocks. Neither the district court, the Clerk,
or the government exercised authority to remove the funds
or securities on deposit before sentencing and entry of
judgment. And any control that the Clerk had over the cash
or securities before restitution was ordered was a result of
Shah’s agreement to deposit them with the Clerk as a
showing of his acceptance of responsibility. The Clerk did
no more than hold the cash and securities as per Shah’s
plea agreement.
The defendants’ related argument is that “[o]nce the
assets are surrendered or taken, subsequent events have
no bearing on restitution values.” They rely on United
States v. Burger, for the rule that restitution in criminal
cases can only be ordered for “actual damages
flowing from the specific crime charged in the indictment
of which the defendant is convicted.” 739 F.2d 805, 811
(2d Cir. 1984); see also Hughey, 495 U.S. at 413. But no
one disputes that the restitution order of $10 million
reflects the victims’ losses caused by the conduct
of conviction. Similarly, neither United States v. Smith,
944 F.2d 618 (9th Cir. 1991), nor United States v. Tyler,
767 F.2d 1350 (9th Cir. 1985), helps the defendants. In
these cases, at the time of sentencing, the victims had
received some or all of the property illegally taken or
some other compensation. See Smith, 944 F.2d at 625
(victims had received partial compensation for their loss
through seizure of collateral property); Tyler, 767 F.2d
at 1352 (stolen timber was returned to the government
on the day of the theft). In contrast, here, the victims
No. 10-1184 29

received nothing before sentencing. Shah did not give
the securities to the victims; he deposited them with
the Clerk for future use toward payment of restitution.
Without a restitution order, the court could not disburse
the money to the victims. The defendants argue that
Shah “was powerless to protect the securities from the
vagaries of the market.” Even if so, he could have protected
the pool that was made available for restitution by deposit-
ing cash, not stocks, into the account. He chose
stocks because “they were doing well” and he apparently
wanted to reap their gains in the market. However, he
does not want to bear the loss.
Now we come to the crux of the defendants’ argument:
the deposited securities were payments of restitution.
The defendants claim that the language of Shah’s
plea agreement demonstrates that the stocks were the
payment of restitution. But they overread the agreement
as expressly providing that “restitution may be made
by ‘certified check, money order or stock certificates. . . .’ ”
The agreement actually states: “The defendant will deposit
the sum of $2,500,000 with the Clerk, U.S. District Court,
by certified check, money order or stock certificates . . . .
The clerk will hold this deposit in escrow. . . . The funds in
escrow shall be used for the payment of any order of the
Court for restitution to the victims of these offenses . . . .”
This language does not provide that the stock certificates
were payment of restitution. The language is forward-
looking. Both the “in escrow” and “shall be used for
the payment of any order . . . . for restitution” phrases belie
the defendants’ interpretation. The defendants do not
offer any explanation as to how the stocks could be actual
30 No. 10-1184

payment of restitution when they were deposited long
before the amount of restitution was determined by the
court or ordered to be paid.
In arguing that the stocks were not security, the defen-
dants assert that there was no reason to hold the funds
as security. They point out that Shah had signed the
plea agreement, pled guilty, and deposited the funds, and
the government has broad authority under 18 U.S.C.
§§ 3663-3664 to pursue funds in his possession to satisfy
his sentence. The defendants fail to acknowledge the twin
purposes of Shah’s deposit of the funds: (1) to avoid
the government’s pursuit of forfeiture actions against
his property, and (2) to demonstrate an acceptance of
responsibility and earn the government’s recommendation
for a reduction in his guideline offense level by creating
a pool of funds for restitution. The latter purpose was
confirmed at the April 29, 2008, hearing.
The defendants argue that the district court misinter-
preted defense counsel’s remarks at that hearing as
stating that Shah intended to make all payments by
cash, including the already deposited securities. They
assert that Shah’s counsel described only how Shah
would meet his remaining restitution obligations. Along
similar lines, they claim that Shah intended to sell the
stock in his personal possession, not the stock on deposit,
to obtain additional amounts toward restitution.
The defendants find support in counsel’s assertion that
Shah had posted $5.5 million in stock, and in every month
for the next six months, he would make a payment of one-
half million dollars, resulting in about $8 million or $8.5
No. 10-1184 31

million dollars in escrow at the end of six months. They
argue that these figures add up only if the total includes
the $5.5 million in securities already deposited.
The district court did not misinterpret defense counsel’s
statements. The AUSA clearly explained that Shah
had agreed to a payment plan under which, by sentencing,
“the full ten million dollars in cash; not in stock or
other negotiable instruments” will be posted with the
court and subject to be paid out as restitution to make
the victims whole. Shah’s attorney agreed that the parties
had reached a restitution agreement and at no time ob-
jected to the assertion that $10 million in cash would
be posted. Nor did defense counsel dispute that the
end goal was to make the victims whole at the time
of sentencing. The defendants knew that the stocks had
not been sold and they had fallen in value to about
$4.1 million. Although the math “doesn’t add up” unless
the value of the stock at the time of deposit rather than at
the time of the April 29 hearing is included, the district
court’s interpretation is reasonable and accounts for
the view, no doubt hoped for by Shah, that the stocks
would re-gain some of their lost value.
We disagree that the government acknowledged that
the cash and securities deposited by Shah and held by
the Clerk “constituted restitution that had been paid.”
True, the government requested the court at sentencing
to order that “any restitution . . . not being held by . . . the
court clerk, be ordered to be paid within 30 days.” This
was not an acknowledgment that restitution had already
been paid, but rather that Shah had agreed the funds
on deposit would be used toward a restitution payment.
32 No. 10-1184

This understanding is consistent with paragraph 14 of
Shah’s plea agreement, which the AUSA referenced
in making the above statement. The government simply
recognized that the funds and stock on deposit were
held as assurance for Shah’s payment of a future order
of restitution, and the future had arrived. It was time
for the court to determine how much restitution was
owed and to order Shah and Shah Engineering to pay it.
Once restitution was ordered, not before, the funds and
securities on deposit could be used to make restitution
payments to the victims.
Furthermore, if Shah’s stock deposits were restitution
payments as of the time of their deposit with the Clerk, the
defendants might have another problem. The Mandatory
Victims Restitution Act (“MVRA”) requires the court
to order that the defendant make restitution to the vic-
tim(s) of the crimes in cases such as this. 18 U.S.C.
§ 3663A(a)(1), (c); see United States v. Leahy, 464 F.3d
773, 793 (7th Cir. 2006) (stating that MVRA requires
restitution order for offense against property including
offense committed by fraud). The MVRA also requires
the court to determine the loss caused by the offense, id.
§ 3663A(b)(1)(B), which includes a deduction for “the
value (as of the date the property is returned) of any part
of the property that is returned,” id. § 3663A(b)(1)(B)(ii);
see also United States v. Swanson, 394 F.3d 520, 528 (7th
Cir. 2005) (requiring deduction for value of property
returned to victim and amount that defendant repaid to
the victim before the indictment was returned).
If the stock deposits were restitution payments valued
at $5.5 million, then the loss amount should have
No. 10-1184 33

been reduced to $4.5 million. Yet Shah agreed to a restitu-
tion amount of $10 million, and the defendants did
not object to that amount at sentencing. (No one made
any comments on Shah Engineering’s behalf at sentencing.)
By accepting the restitution amount without objection
and not seeking a returned property deduction for
the value of the stock deposited, the defendants may
have waived any argument that the deposits were restitu-
tion payments that should have been credited toward
restitution. See United States v. Staples, 202 F.3d 992, 995
(7th Cir. 2000) (holding defendant waived right to appeal
his criminal history calculation by stating he had no
objection to the PSR). But the government raised
this waiver argument for the first time in its supplemental
brief, and thus has waived waiver. See United States v.
Fields, 371 F.3d 910, 916 n.3 (7th Cir. 2004); United States
v. Caputo, 978 F.2d 972, 975 (7th Cir. 1992). So we review
for plain error. See United States v. Drake, 456 F.3d 771,
776 (7th Cir. 2006).
There was no such error. Shah never returned any
property to the victims; he deposited the stock with the
Clerk. Thus, the securities cannot be said to have
been “returned” within the meaning of § 3663A(b)(1)(B)(ii).
Cf. United States v. Shepard, 269 F.3d 884, 887-88 (7th
Cir. 2001) (“So long as [the victim] regained beneficial
use of the property, it has been ‘returned’ ” within the
meaning of the MVRA). Moreover, the defendants’ failure
to object to the restitution amount ordered further supports
the conclusion that the defendants well understood
that the stock certificates on deposit were not themselves
restitution payments.
34 No. 10-1184

As the government asserts, “[i]f Shah’s stock deposits
had been restitution payments, then his interest in setting
target prices for the ‘stocks held in escrow’ would have
been both gratuitous and officious.” The same holds
true for Shah’s request for an additional three years’
time “to pay the agreed upon restitution” to allow the
stocks time to regain their lost value and “be converted
to cash in a better market.” Similarly, Shah proposed
a restitution order that provided for “[t]he Clerk’s Office
[to] take possession of all securities and cash currently
being held in the escrow account,” for “[t]he cash currently
being held in the escrow [to] be immediately distributed
to the agencies,” and for “Shah [to] begin liquidating
equities currently being held in escrow.” If the stocks
had been restitution payments, then the Clerk already
would have total control of them, and Shah would have
had no ability to liquidate or interest in the stocks.
And, tellingly, at the last opportunity before sentencing,
Shah requested that he either be given credit for the value
of the stock and cash as of the time of deposit or to be
given additional time to allow the stocks to appreciate
in value. This reveals his understanding that the stocks
were not restitution payments at the time of deposit.
Shah sought the benefit from the stocks’ appreciation
and recognized that he needed time to meet his restitution
obligation. The district court correctly found that “[t]he
Defendants’ claim that Shah made a [restitution] payment
in 2007 simply does not comport with the facts.”
If the deposited stock certificates weren’t restitution
payments, then what were they? The defendants contend
that the district court erred in finding that the stock
No. 10-1184 35

was security for future restitution payments. A “security”
is “[c]ollateral given or pledged to guarantee the fulfill-
ment of an obligation; esp., the assurance that a
creditor will be repaid. . . .” Black’s Law Dictionary 1475
(9th ed. 2009). It makes sense to view the stock certificates
as security for Shah’s future payment of the anticipated
restitution order. The plea agreement contemplated
that Shah may be ordered to pay restitution; it also stated
that the funds, whether certified check, money order,
or stock certificates, on deposit would be used to
pay the anticipated restitution order (and fine and special
assessments). And at the plea hearing, the parties con-
firmed their intent to create a pool of funds
from which restitution payments could be made.
Shah deposited the stock and cash in an effort to assure
the government that funds would be available to satisfy
a restitution order absent any forfeiture actions. But
for the deposited funds, the government likely would
have initiated a forfeiture action to ensure that
property was available to satisfy the restitution
obligation or would have sought prejudgment
attachment of Shah’s property. See 18 U.S.C. § 3613(f)
(enforcement of restitution order); 28 U.S.C. §§ 3101
(allowing government to seek prejudgment remedy),
3102(a) (providing that any property attached “may be
held as security to satisfy such judgment . . . as the United
States may recover”). Hence, Shah deposited the stock
(and cash) with the Clerk to guarantee the fulfillment of his
future obligation to pay a restitution order.
In arguing that the stocks were not security, the defen-
dants rely on United States v. Rosebush, 45 F. Supp. 664
(E.D. Wis. 1942), for the proposition that “[t]he transfer
36 No. 10-1184

of possession of the stock, although unrecorded on
the books of its issuing corporation, conveys the interest
of the holder.” Id. at 667 (citation omitted). Rosebush
is inapposite because it actually involved a sale
and transfer of stock to the buyer. And as Rosebush
stated: “The essence of the transfer is the intent of
the owner to transfer the title and ownership.” Id. It is
the intent of the owner, here, presumably Shah; not
the recipient, the Clerk, that matters. The only reasonable
inference from the record is that, at the time of deposit,
Shah did not intend to transfer the title and ownership
of the deposited securities. Indeed, the parties agreed
that if the fine, restitution, and special assessments
ordered did not exceed the amount on deposit, then
the remainder, less interest to the Clerk, would be returned
to Shah.
The defendants also argue that the stocks were not
held in an escrow account. They assert, without any
support, that “[t]here are no such things as escrows
in criminal cases.” But see United States v. Lilly, 206
F.3d 756, 758 (7th Cir. 2000), in which the government froze
the defendant’s and his wife’s assets and forced the sale
of some assets including their home, the proceeds of
which were placed in an escrow account pending the
government’s investigation. Moreover, the plea agreement
clearly identifies the funds on deposit, including the
stock certificates, as “in escrow.” The AUSA referenced
the stocks and amounts held “in escrow.” And Shah’s
counsel repeatedly referred to the stock and cash “held
in escrow” and “the escrow,” both at the April 2008
hearing and the June 2009 hearing as well as in
No. 10-1184 37

numerous pre-sentencing filings with the district court.
Even the court described the stocks as being held “in an
escrow account.” Consistent with that understanding, the
judgment ordered the “[s]tocks in escrow to be sold within
30 days.”
The plea agreement also identifies a “triggering event”
that authorizes the release of the funds, after which
Shah could potentially regain the funds: a court order
for restitution and payment of a fine. The funds were to
be used “for the payment of any order of the Court for
restitution” and the remainder was to be used “to pay
the fine” imposed on Shah Engineering: “Once the fine,
restitution, and special assessments ordered are fully
satisfied, the remainder, if any, less the 10% accumulated
interest, should be returned to the defendant.” The defen-
dants argue that Shah never contemplated that any funds
would be returned to him. If so, that seems to be
because the parties anticipated that the total restitution
and fine would exceed the amount on deposit. And at
Shah’s plea hearing, the court confirmed that the
parties agreed that any monies remaining on deposit after
payment of restitution and a fine “would be returned
to Mr. Shah.” Even if criminal cases do not ordinarily
involve escrows, Shah agreed to place a deposit in escrow
in this case.
In sum, the language of the plea agreement, the parties’
agreement as expressed and confirmed at Shah’s plea
hearing, in subsequent filings and hearings, and as demon-
strated by Shah’s conduct from the time of his plea
through sentencing, all support the district court’s
38 No. 10-1184

view that Shah, like the government, understood
and intended that the stock be held in escrow as security
for payment of the defendants’ yet-to-be-determined
restitution obligation. Therefore, the record supports
the district court’s finding that the stock was deposited
in escrow as security for the defendants’ restitution
obligation.
This determination affects our conclusion with regard
to who bore the loss for the securities’ decline in value.
In Capos v. Mid-America National Bank of Chicago, a borrower
put up stocks as collateral for a loan and the stocks de-
clined precipitously while the bank was holding them.
581 F.2d at 678. Capos brought a securities action against
the bank, which counterclaimed for payment of principal
and interest on the loans secured by the depreciated stock.
Id. at 677. The district court entered judgment against
Capos and in favor of the bank on the counterclaim.
Id. Capos appealed, and we, looking to Illinois law and
the Restatement of Security, held that “[t]he pledgee is
not liable for a decline in the value of pledged
instruments, even if timely action could have prevented
such decline.” Id. at 680-81 (quotation omitted). We
noted: “At any point prior to the stock’s value becoming
less than the amount owed, Capos could have instructed
the bank to sell the stock and liquidate the debt. Thereafter,
he could have acquiesced in [the bank’s] suggestion
that the stock be sold. The loss in the stock’s value was,
quite simply, an investment loss, the investment was
Capos’, not [the bank’s], and any negligence in not cutting
the losses was at least equally his.” Id. at 680.
No. 10-1184 39

The facts of Capos are similar to those here. The stocks
Shah deposited fell in value. Shah doesn’t want to bear
the loss even though he knew the stocks were declining
and failed to take any action. Of course, Capos was a
civil action involving a private loan and Illinois law,
whereas this is a criminal case. So Capos is merely analo-
gous, not controlling. But the analogy is apt. Shah did
not give up all control over the securities deposited. It
is true that the plea agreement authorized the Clerk
to invest the funds in an interest bearing account. But
that didn’t happen. And in any event, the order entered
following the plea provided that “[i]f the deposits
are made by depositing stock certificates, the Clerk of
the Court shall hold such until further order of the Court.”
The defendants didn’t object to this treatment of the
stock. Like Capos, Shah could have requested the court
to sell the stock; indeed, the court practically invited him to
do so to avoid further diminution in value of the securities.
Shah deposited the stock because it was “doing well”
and he sought to capitalize on the continued appreciation.
Otherwise, he could have, and likely would have, sold the
stock and deposited cash instead. Contrary to the defen-
dants’ claim that deciding this appeal against them will
“result in a substantial deterrent to the much favored
advance payment of restitution and be contrary to public
interest,” our decision will encourage criminal defendants
to deposit cash rather than securities in the event they wish
to avoid the risk of the market.
40 No. 10-1184

III. Conclusion
The Notice of Appeal states that the defendants are
seeking relief from the district court’s January 15, 2010,
order, but they are really appealing the restitution orders.
Therefore, Shah’s appeal waiver bars his appeal and his
appeal is D ISMISSED.
The district court correctly found that the stock was
deposited into escrow as security for the defendants’
payment of their anticipated restitution and fine obliga-
tions and not as actual restitution payments. We accord-
ingly A FFIRM the district court’s restitution judgment
against Shah Engineering.

12-16-11