concurring in part and dissenting in part:
I concur wholeheartedly in the judgment and in all but two Parts of the majority’s opinion. I dissent, however, from Parts IV and V-A.
In Part IV, the majority holds that the district court adequately considered Smith’s ability to pay before it found, as a factual matter, that he will be able to produce one of the largest restitution awards ever imposed in this circuit—nearly $12.8 million—within five years of his release from prison. Because I do not believe that *627the record supports either the majority’s holding or the district court’s finding, I would reverse the district court on this ground.1
In Part V-A, the majority holds that the district court under-valued the collateral held by Smith’s institutional victims when it calculated the total loss attributable to his criminal conduct. The majority thus concludes that the court overstated the amount properly compensable by restitution to this extent. Because I believe that the majority mischaracterizes the nature of the victims’ loss and because I believe that the district court’s valuation of the collateral was proper, I would affirm the district court on this ground.
I
A
The Victim and Witness Protection Act of 1982 (“VWPA”) provides that:
The court, in determining whether to order restitution under section [3663] of this title and the amount of such restitution, shall consider the amount of the loss sustained by any victim as a result of the offense, the financial resources of the defendant, the financial needs and earning ability of the defendant and the defendant’s dependents, and such other factors as the court deems appropriate.
18 U.S.C. § 3664(a) (1988) (emphasis added). In determining whether district courts have satisfied this obligation, at least three of our sister circuits “have invoked their supervisory power to require district courts to make specific factfindings” on the considerations identified in this provision. United States v. Bruchey, 810 F.2d 456, 458-59 (4th Cir.1987) (citing United States v. Hill, 798 F.2d 402, 406-07 (10th Cir.1986), and United States v. Palma, 760 F.2d 475, 480 (3d Cir.1985)). We, however, have rejected their lead.
In United States v. Cannizzaro, 871 F.2d 809 (9th Cir.), cert. denied, 493 U.S. 895, 110 S.Ct. 245, 107 L.Ed.2d 195 (1989), we noted that “[t]here is no textual support for [the] contention that the district court must make findings of fact concerning [the defendant’s] financial condition before imposing restitution [under the VWPA].” Id. at 810. We explained:
There is a material difference between requiring a district court to make findings of fact and requiring it to consider certain factors. Findings of fact can only be made on the basis of a formal adversarial record; the parties must be permitted to present testimonial and documentary evidence; one party or the other must carry the burden of proof as to each contested issue. For example, where the amount or type of restitution is disputed, the government must demonstrate, by a preponderance of the evidence, the loss sustained by the victim; the defendant carries the burden, again by a preponderance of the evidence, of demonstrating his financial resources (or lack thereof), as well as the financial needs of his dependents. 18 U.S.C. § 3664(d).
On the other hand, requiring the district court to consider certain factors grants the court broad discretion to determine the type and amount of evidence it deems relevant. We have no authority to modify the statutory scheme by narrowing that discretion. “The test is whether the district court complied with the applicable [statute]. If the [statute] do[es] not require a detailed explanation of the court’s decision, the district court need not volunteer one....” United States v. Gomez, 846 F.2d 557, 560 (9th Cir.1988).
Id.
The majority is therefore correct to hold that the district court had no obligation to state on the record the reasons that led it to conclude why $12.8 million was an appropriate sum. See ante at 623. The court had an obligation only to consider the factors enumerated in the statute, and the court expressly stated that it undertook the *628proper considerations when it announced its decision.
B
The majority’s holding on this point, however, only answers half of Smith’s argument. Smith has not simply tried to persuade us to adopt the procedural prophylactic — the explicit factfinding requirement— that some of our sister circuits have endorsed; he has also argued that there is inadequate support in the record for the district court’s order. On this score, his argument is persuasive. ■
Cannizzaro did not and could not hold— as the majority implicitly does here — that a restitution order is essentially unreviewable so long as the district court simply states on the record that it has weighed the appropriate statutory considerations. If the court’s order utterly lacks factual support in the record, then a mere conclusory assertion that the court has engaged in the required analysis cannot suffice to uphold the order. Even though the manner by which the court reached its result may not be an abuse of discretion, the substantive result itself still can be. See United States v. Angelica, 859 F.2d 1390, 1392 (9th Cir.1988) (court still reviews restitution orders that comply with the statutory limits and procedural requirements of the VWPA for an abuse of discretion); Schmidt v. Herrmann, 614 F.2d 1221, 1224 (9th Cir.1980) (abuse of discretion standard means that court will reverse where it has “ ‘a definite and firm conviction that the court below committed a clear error of judgment in the conclusion it reached upon a weighing of the relevant factors’ ” (citations omitted). Such is the case here.
Indeed, the apparent divergence between the defendant’s ability to pay and the amount of the restitution order is more extreme in this case than in any decision cited by either party and than any reported decision of which I am aware — including all the decisions that have vacated restitution orders. For example, in United States v. Mahoney, 859 F.2d 47 (7th Cir.1988), the Seventh Circuit invalidated an order that had been entered against a defendant who, like Smith, had been convicted of defrauding financial institutions. The district court had ordered the defendant, who was free on probation, to pay $288,655 over the course of a five-year period despite an annual salary of only $30,000. In reversing, a unanimous court of appeals explained:
the restitution order itself — which requires the defendant to make full restitution (totalling over $288,000) over the requisite five-year period of payment— leaves little doubt that the judge simply forgot or disregarded the defendant’s ability to pay and the needs of his dependent wife as well. We fail to perceive how this defendant, a man without any tangible assets and a $30,000 annual salary — will somehow be able to repay a debt totalling more than nine times his annual salary in five years.
859 F.2d at 51 (emphasis in original); see also United States v. Clark, 901 F.2d 855 (10th Cir.1990) (district court abused its discretion in requiring defendant with negative cash flow to pay over $153,000 in restitution). By comparison, the district court in this case has ordered an incarcerated defendant with current liabilities of $10.8 million and an annual cash flow of negative $183,000 to produce $12.8 million within five years of his release from prison at the age of fifty-eight. To comply with this order, Smith will have to produce a monthly income of over $213,000 — after taxes and necessary living expenses — in each of the first sixty months after his release from prison. The contrast to the order in Mahoney hardly counsels affirmance.
Nor is the Mahoney decision only illustrative on a factual level. Like this court in Cannizzaro, the Mahoney court explicitly rejected the idea that district courts must make specific factfindings on the considerations enumerated in the VWPA. See Mahoney, 859 F.2d at 49-50; see also United States v. Gomer, 764 F.2d 1221, 1222 (7th Cir.1985). Nonetheless, the court refused to accept at face value the district court’s bare assertion that it had properly discharged its statutory obligation; the court recognized its own obligation to look *629behind the district court’s order to evaluate the sufficiency of the evidence in the record. Because that evidence could in no way support the restitution order, the court reversed.
Here, too, one can only conclude that the district court “simply forgot or disregarded” the evidence that was put before it regarding Smith’s ability to pay. Mahoney, 859 F.2d at 51. Like the order at issue in Mahoney, the order at issue here also requires the defendant to make full restitution, which is at least prima facie evidence of a failure to balance the statute’s competing considerations.2 Even a summary glance at the presentence report, which the government has not challenged, indicates that the order is wholly unrealistic. At the time of sentencing, Smith claimed total assets of only $7,750; liabilities of $10.8 million; a monthly income of $5,000; and monthly expenses of $20,250. He claimed to have thirty-seven personal debts and no remaining corporate ownership interests. His federal tax returns for the three years immediately preceding the court’s order, which are also part of the record, demonstrate negative personal income for each of those years as well. In addition, as Smith’s counsel has argued, it is clear that Smith will have even less of the youth, credit, and assets necessary to support the court’s order when he finally is released from custody at the end of his ten-year term, and at that point, his felony conviction will likely handicap his employment efforts and earning potential even further.
The government has challenged none of this evidence. Nor has it presented any contrary evidence of its own to suggest that Smith may have access to additional assets or funds currently hidden from the court’s view. Bather, in its effort to justify the district court’s order, the government has simply pointed to two prior decisions by this court that have upheld restitution awards — United States v. Ruffen, 780 F.2d 1493 (9th Cir.), cert. denied, 479 U.S. 963, 107 S.Ct. 462, 93 L.Ed.2d 407 (1986), and United States v. Keith, 754 F.2d 1388 (9th Cir.), cert. denied, 474 U.S. 829, 106 S.Ct. 93, 88 L.Ed.2d 76 (1985) — and to Smith’s past fortunes, which it claims are strong evidence of his ability to accumulate wealth.
Neither of these arguments, however, is persuasive. First, our decisions in Ruffen and Keith simply stand for the proposition that the VWPA does not bar sentencing courts from imposing restitution upon defendants who are indigent at the time of sentencing. Neither case denies the fact that the VWPA requires courts to balance competing considerations and to weigh factors relating to the defendant’s ability to pay. Indeed, both cases explicitly recognize the Act’s affirmative balancing requirement. See Ruffen, 780 F.2d at 1495; Keith, 754 F.2d at 1393. Second, courts have made clear that evidence of past earnings alone will not suffice to satisfy the Act; the relevant question is whether the defendant’s present condition and future prospects, when viewed at the time of sentencing, support the inference of an ability to fulfill the court’s order. See, e.g., United States v. Atkinson, 788 F.2d 900, 903 (2d Cir.1986). It is simply beyond dispute that the conditions which produced Smith’s high-flying days in the seventies have irretrievably passed.
C
Nonetheless, the majority refuses to grant — or even to deny — that the overwhelming weight of the evidence leads to the “ ‘definite and firm conviction that the court below committed a clear error of *630judgment in the conclusion it reached upon a weighing of the relevant factors.’ ” Schmidt, 614 F.2d at 1224 (defining abuse of discretion standard) (citations omitted). Rather, the majority effectively holds that by reciting the magic words — by simply stating that it “ ‘considered] the financial resources of [Smith], and the financial needs and earning ability of [Smith] and his dependents’ ” — the district court “satisfied the requirements of the Act.” Ante at 623 (quoting district court’s order). Although acknowledging, as it must, that the prospects for Smith’s compliance with the order are not great, the majority discounts this concern by noting that Smith can always petition for an extension of time or seek a “remittitur” when the deadline for final payment approaches. See ante at 624.
Under the majority’s holding, therefore, a district court in the Ninth Circuit may now order full restitution under the VWPA — even where the evidence before it overwhelmingly indicates that the defendant will not be able to pay — so long as it performs the procedural formality of stating that it has considered the defendant’s ability to pay. I cannot agree. Courts that elect to impose the criminal penalty that the VWPA authorizes must have an adequate basis in the record for doing so. Where they do not, it is no answer to the claim that they have abused their discretion to suggest that they might later retreat from their orders in subsequent proceedings. Indeed, the prospect of a future retreat from the order we uphold today in no way rebuts the contention that that order lacks support in the record and constitutes an abuse of discretion; if anything, the majority’s invocation of that prospect supports Smith’s contentions.
In my view, the majority has elected to emphasize one purpose of the VWPA to the detriment of its other, competing purposes. An award under the VWPA, it must be remembered, is a criminal, not a civil penalty. Its primary function is to serve “the traditional purposes of punishment — it can deter potential offenders, serves society’s legitimate interest in peaceful retribution, and can be a useful step toward rehabilitation.” United States v. Ciambrone, 602 F.Supp. 563, 568 (S.D.N.Y.1984). Congress did not intend for the VWPA to serve as a substitute for a civil damages award. See id.; United States v. Satterfield, 743 F.2d 827, 836-37 (11th Cir.1984) (referring to the VWPA’s legislative history); United States v. Brown, 744 F.2d 905, 908-11 (2d Cir.) (same), cert. denied, 469 U.S. 1089, 105 S.Ct. 599, 83 L.Ed.2d 708 (1984). As the Seventh Circuit explained in Mahoney:
it is most paramount that the defendant, in the all-important rehabilitative process, have at least a hope of fulfilling and complying with each and every order of the court. Thus, an impossible order of restitution, as made in this case, is nothing but a sham, for the defendant has no chance of complying with the [order], thus defeating any hope of restitution and impeding the rehabilitation process.
Mahoney, 859 F.2d at 52.
I therefore dissent from Part IV of the majority’s opinion.
II
As the foregoing indicates, I believe that the district court’s $12.8 million figure is impermissibly high in light of the available evidence regarding Smith’s ability to pay. Unlike my colleagues, however, I would affirm the district court’s order if the evidence did suggest an ability to pay.
The majority reverses because it concludes, in Part V-A, that the district court undervalued the collateral property held by Smith’s victims when it attempted to calculate the total loss that they incurred from his fraud. In the majority’s view:
Smith should receive credit against the restitution amount for the value of the collateral property as of the date title to the property was transferred to either [Queen City] Savings & Loan or Gibraltar. As of that date, the new owner had the power to dispose of the property and receive compensation.
Ante at 625 (emphasis added). I disagree and therefore dissent from Part V-A of the majority’s opinion as well.
*631A
A restitution order under the VWPA may require that the defendant:
(1) in the case of an offense resulting in damage to or loss or destruction of property of a victim of the offense—
(A) return the property to the owner of the property or someone designated by the owner; or
(B) if return of the property under subparagraph (A) is impossible, impractical, or inadequate, pay an amount equal to the greater of—
(i) the value of the property on the date of the damage, loss, or destruction, or
(ii) the value of the property on the date of sentencing, less the value (as of the date the property is returned) of any part of the property that is returned. ...
18 U.S.C. § 3663(b)(1) (1988).3
Smith’s argument, which the majority accepts, is that the district court failed to give adequate credit under this provision for the value of the real estate that secured his five fraudulent loans. See ante at 625. It is no secret that the value of West Texas real estate steadily declined during the 1980’s, and Smith essentially contends that the court calculated the restitutionary value of the collateral properties at an unfairly late date during the course of that decline. The result, Smith implies, is that the restitution order improperly ascribes to his illegal conduct losses that are actually attributable to market forces. In Smith’s view, the appropriate setoff date for each of the five respective properties is the date on which Queen City “took control” of that particular property upon foreclosure.
To assess the validity of Smith’s argument, however, one must first understand precisely what loss the court’s restitution order is meant to restore. In this case, the “stolen property” was capital — loan proceeds that were fraudulently procured and interest payments that were fraudulently denied. Because Smith cannot return the actual loan proceeds that he fraudulently took and because the value of capital increases with time, it follows that Smith’s victims are entitled to an award of restitution under subsection 3663(b)(l)(B)(ii). In other words, they are entitled to the present value of the stolen capital: whatever amount of money Queen City would have had on the date of Smith’s sentencing if it had not been defrauded into loaning its money to Smith. See 18 U.S.C. § 3663(b)(l)(B)(ii) (1988).4
Understanding that what Smith stole was capital, the district court did not abuse its discretion. It declined to grant Smith credit for some of the collateral property until after his victims had recovered proceeds from the disposition of that property, and it valued any property that remained unsold at sentencing as of that date. As a matter of dollars and cents, the court’s valuation was correct.
B
The majority reaches the opposite conclusion only because it erroneously treats the five collateral properties as if they are somehow equivalent to the stolen capital. In the majority’s view, when Queen City and Gibraltar assumed title to those properties, they effectively received some of their money back. See ante at 624-25. That suggestion cannot withstand scrutiny. After all, Queen City would not have invested in Smith’s Texas properties if it had not been defrauded into believing that they were reasonable investments. As it turned out, the cash-flow projections for the five borrowing corporations were largely fictional, and the mortgage proceeds, which were in every case designated for development of the underlying property, were sub*632stantially diverted to Smith’s previous creditors and to other illegitimate uses. To allow Smith to claim credit for the collateral properties as of the date Queen City took title is to allow him some of the benefit of his fraudulent bargain. What Smith stole was capital, and to restore his victims to the status quo ante, he must return the present value of that capital. See United States v. Angelica, 859 F.2d 1390, 1394 (9th Cir.1988) (no abuse of discretion in denying credit for defendant’s offer of unwanted substitute property).
Moreover, Smith has not argued that he deserves credit for the value of the collateral as of the date his victims assumed title to the property. If that were the applicable rule of law, then a mortgagee who possessed title before he became aware of a fraudulent borrower’s scam would ultimately be forced to set off the value of the collateral he received in that scam at a point before he even knew that he should be trying to get rid of it. What Smith has argued is that he deserves credit for the collateral as of the date his victimized mortgagees “took control” of the properties. But such argument misses the mark as well. A setoff valuation at that time would also be inappropriate because, as the majority’s holding implies, “control” cannot be remunerative without title.
Nor does our decision in United States v. Tyler, 767 F.2d 1350 (9th Cir.1985), upon which both the majority and Smith rely, support the court’s holding. See ante at 624-25. A defrauded lender’s assumption of title over collateral property that is itself part of the fraud is in no way analogous to a timber owner’s recovery of stolen timber.
In my view, the district court acted well within its authority when it determined that Queen City “received” compensation when it received actual, capital proceeds and not on the earlier dates when it “took control” of or title to the five Texas properties. See 18 U.S.C. § 3663(e)(1) (1988). I would therefore affirm the district court’s valuation of the victims’ losses, and I dissent from my colleagues’ contrary conclusion.
Ill
In light of the foregoing, I concur in the judgment and in Parts I, II, III, and V-B of the court’s opinion. I dissent from Parts IV and V-A.
. As appellant’s counsel noted during oral argument, we review the district court’s findings of fact for clear error and its decision to order restitution on the basis of those findings for an abuse of discretion.
. See Bruchey, 810 F.2d at 458 ("the VWPA implicitly requires the district judge to balance the victim’s interest in compensation against the financial resources and circumstances of the defendant — all while remaining faithful to the usual rehabilitative, deterrent, retributive, and restrictive goals of criminal sentencing"); Mahoney, 859 F.2d at 49 (quoting Bruchey); United States v. Peden, 872 F.2d 1303, 1310 (7th Cir. 1989) (same); United States v. Atkinson, 788 F.2d 900, 903 (2d Cir.1986) (VWPA requires "balancing of the victim’s loss against the defendant’s resources and circumstances”); cf. United States v. Mitchell, 893 F.2d 935, 936 (8th Cir. 1990) (order of restitution under Federal Sentencing Guidelines must be based upon "an informed decision” regarding the defendant’s ability to pay).
. The parties apparently agree — and logic suggests — that this is the applicable provision. Compare 18 U.S.C. § 3663(b)(1) with 18 U.S.C. §§ 3663(b)(2)-(4).
. As an economic and arithmetical matter, one should be able to determine this number by multiplying the total proceeds loaned to Smith by the real rate of return on all of Queen City’s "non-Smith” capital from the respective dates on which the loans closed until the date of sentencing.