United States v. Kyung Sik Kim

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT
________________________ FILED
U.S. COURT OF APPEALS
No. 03-11016 ELEVENTH CIRCUIT
________________________ March 30, 2004
THOMAS K. KAHN
D. C. Docket No. 02-00393-CR-2-1 CLERK

UNITED STATES OF AMERICA,
Plaintiff-Appellant,

versus

KYUNG SIK KIM,
a.k.a. John Kim,
Defendant-Appellee.

________________________

No. 03-11022
________________________

D. C. Docket No. 02-00600-CR-1-1

UNITED STATES OF AMERICA,
Plaintiff-Appellant,

versus

IN OK KIM,
a.k.a. Cindy Kim,
Defendant-Appellee.
 ________________________

Appeals from the United States District Court
for the Northern District of Georgia
_________________________

(March 30, 2004)

Before ANDERSON and BLACK, Circuit Judges, and NANGLE*, District Judge.

BLACK, Circuit Judge:

In this sentencing guidelines case, Appellee Kyung Sik Kim pled guilty to

conspiracy to defraud the United States, in violation of 42 U.S.C. § 1760(g) and

18 U.S.C. § 371. His wife, Appellee In Ok Kim, pled guilty to fraudulently

obtaining government assistance, in violation of 42 U.S.C. § 1760(g). At

sentencing, the district court granted each Appellee a downward departure from

the guidelines based on their extraordinary restitution. The Government appeals.

We hold extraordinary restitution, whether paid before or after adjudication of

guilt, may, in the unusual case, support a departure from the guidelines, so we

affirm the downward departure.

I. BACKGROUND

*
Honorable John F. Nangle, United States District Judge for the Eastern District of
Missouri, sitting by designation.

2
 This case arises from Appellees’ scheme to defraud the Special

Supplemental Food Program for Women, Infants, and Children (WIC). WIC is a

federal program designed to provide “supplemental foods and nutrition education”

to “pregnant, postpartum, and breastfeeding women, infants, and young children

from families with inadequate income.” 42 U.S.C. § 1786(a). WIC is

administered in Georgia by the Georgia Department of Human Resources through

local offices. WIC operates much like a food stamp program. Individuals who

qualify to receive WIC benefits receive food vouchers through local WIC offices.

Here, the relevant local WIC office was Southside Healthcare, Inc. At all

relevant times, Southside employed Valencia Grant as a senior WIC clerk.

Through her employment, Grant became acquainted with Carolyn Mitchell, an

eligible recipient of Southside’s WIC vouchers.

During May 1996, Mitchell recruited Grant into a scheme to defraud WIC.

Grant used her position to steal unclaimed WIC vouchers from Southside.

Mitchell then approached Appellees to sell these vouchers because Appellees were

retailers who participated in WIC. Appellees bought vouchers from Mitchell at a

discount while depositing the full amount of the voucher into their bank accounts.

Over the three years that this scheme lasted, Appellees, Mitchell, and Grant

3
defrauded the United States of $268,237.03. Appellees’ share was roughly two-

thirds of these fraudulently obtained funds.

After they were indicted, Appellees negotiated plea agreements. Mr. Kim

pled guilty to conspiracy to defraud the United States, in violation of 42 U.S.C.

§ 1760(g) and 18 U.S.C. § 371. Mrs. Kim, on the other hand, pled guilty to

fraudulently obtaining government assistance, in violation of 42 U.S.C.

§ 1760(g).1 Under their plea agreements, Appellees agreed to pay restitution in the

amount of the entire fraud, $268,237.03, before sentencing, but expressly reserved

the right to move the sentencing judge pursuant to U.S.S.G. § 5K2.0 (1997) for a

downward departure on the basis of “extraordinary restitution.”

On the same day Appellees pled guilty, they tendered $50,000 in personal

funds as restitution. At sentencing, Appellees paid their remaining restitution by

presenting a check for $218,237.03, and moved for a downward departure under

U.S.S.G. § 5K2.0 (1997) on the basis of their extraordinary restitution. In support

of their motion, Appellees asserted they went to significant lengths to obtain this

money in the three short months between their guilty pleas and the sentencing

hearing. Appellees contacted their family and friends in the United States and

South Korea to secure loans so they could pay the United States full restitution.

1
Mrs. Kim pled guilty despite the fact that she had passed a lie detector test.

4
After receiving permission from the trial court, Mrs. Kim traveled to South Korea

and executed $97,000 in promissory notes, to be repaid within the following year

at 9 percent interest, from four families who were friends of her parents. Mrs.

Kim’s brother-in-law, Nelson Ahn, liquidated $50,000 of his stock portfolio to

make another loan to the Kims at no interest. Mrs. Kim also asked her parents to

lend her and her husband $25,000 at no interest. Mr. Kim obtained additional

loans of $10,000 and $11,000 from two friends in Georgia. Finally, Appellees

withdrew the remaining balance of $25,000 from their savings account.

Applying the 1997 sentencing guidelines,2 the pre-sentence investigation

report recommended that the district court sentence Mr. Kim at level 13, criminal

history category II, with a resulting guideline range of 15–27 months’

imprisonment, and Mrs. Kim at level 10, criminal history category I, with a

resulting guideline range of 6–12 months’ imprisonment. The district court,

however, found Appellees’ restitution was extraordinary and granted their motion

for a downward departure. Although the Government argued that Appellees were

providing restitution only as an attempt to receive a reduced sentence, the district

2
The district court applied the 1997 sentencing guidelines because they were in effect at
the time of the offense and application of the 2002 guidelines would have violated the Ex Post
Facto Clause. See U.S.S.G. § 1B1.11(b)(1) (2002).

5
court rejected that argument and found as a fact that their real reason was remorse.

Specifically, the district court explained:

The comments that [Appellees and their lawyers] all have made about
the embarrassment, the humiliation, the shame, the sorrow they
exhibited by finding themselves in this situation was so apparent to
me. In my view their efforts to come up with this large amount of
money is extraordinary, and the steps they’ve undertaken to come up
with this money is extraordinary.

Accordingly, the district court departed downward and sentenced both

Appellees at offense level 9. Mrs. Kim was sentenced to two years’ probation,

four months of which to be served as in-home detention. Likewise, Mr. Kim was

sentenced to five years’ probation, six months of which to be served as in-home

detention. The Government appealed.

II. STANDARD OF REVIEW

Whether extraordinary post-adjudication restitution is a discouraged or

prohibited factor is a question of law subject to de novo review. 18 U.S.C.

§ 3742(e)(3)(B)(ii) (requiring de novo review when a sentence departure “is not

authorized under section 3553(b)”); Koon v. United States, 518 U.S. 81, 100, 116

S. Ct. 2035, 2047 (1996) (“[W]hether a factor is a permissible basis for departure

under any circumstances is a question of law, and the court of appeals need not

defer to the district court’s resolution of the point.”); see also 18 U.S.C. 3553(b)

6
(allowing sentencing courts to depart when they find “that there exists an

aggravating or mitigating circumstance of a kind, or to a degree, not adequately

taken into consideration by the Sentencing Commission”). Since Congress passed

the PROTECT Act, the district court’s conclusion that Appellees’ restitution was

extraordinary enough on these facts to warrant a departure is now also subject to

de novo review.3 18 U.S.C. § 3742(e)(3)(B)(iii) (requiring de novo review when

“the sentence is outside the applicable guideline range, and the sentence departs

from the applicable guideline range based on a factor that is not justified by the

facts of the case”). Nevertheless, we emphasize that the PROTECT Act does not

remove any of the district court’s traditional discretion in conducting fact finding,

so the district courts factual findings remain subject to clearly erroneous review.4

Id. § 3742 (stating that appellate courts “shall accept the findings of fact of the

district court unless they are clearly erroneous”).

3
Previously, we reviewed a district court’s decision to depart for abuse of discretion.
Koon, 518 U.S. at 100, 116 S. Ct. at 2047–48. In 2003, however, Congress enacted the
Prosecutorial Remedies and Other Tools to end the Exploitation of Children Today Act of 2003
(PROTECT Act). Pub. L. No. 108-21, § 1, 117 Stat. 650 (2003). Among other things, the
PROTECT Act altered the standard of review we apply when considering most challenges to
sentencing departures. See 18 U.S.C. § 3742. Retroactive application of the PROTECT Act’s
appellate standards of review does not violate the Ex Post Facto Clause, United States v.
Saucedo-Patino, ___ F.3d ___ (No. 03-10946, Jan. 27, 2004), so we therefore apply the current
statutory standard of review provisions.
4
Furthermore, if the issue here involved whether “the sentence departs to an unreasonable
degree from the applicable guideline range,” 18 U.S.C. § 3742(e)(3)(C), we would “give due
deference to the district court’s application of the guidelines to the facts,” id.

7
 III. DISCUSSION

A. Extraordinary Restitution as a Permissible Basis for Departure

“To determine whether a factor which takes a case outside the heartland

should result in a different sentence, a district court must first decide whether the

factor is forbidden, encouraged, discouraged, or unaddressed by the guidelines as

a potential basis for departure.” United States v. Hoffer, 129 F.3d 1196, 1200

(11th Cir. 1997) (citation omitted). Accordingly, we first analyze whether

extraordinary restitution is a prohibited or discouraged factor5 upon which to

depart downward. This distinction is critical. While district courts may never

depart on the basis of prohibited factors, Koon, 518 U.S. at 95–96, 116 S. Ct. at

2045, district courts may occasionally depart on the basis of discouraged factors,

id. at 96, 116 S. Ct. at 2045. However, discouraged factors support departures

“only if the factor is present to an exceptional degree or in some other way makes

5
The difference between discouraged factors and encouraged factors already taken into
account by the applicable guideline is purely semantic, not legal. Koon instructs that “[i]f the
special factor is a discouraged factor, or an encouraged factor already taken into account by the
applicable Guideline, the court should depart only if the factor is present to an exceptional degree
or in some other way makes the case different from the ordinary case where the factor is present.”
518 U.S. at 96, 116 S. Ct. at 2045 (citation omitted). No legal consequences attach to this
distinction because both categories only permit departures under identical circumstances. For the
sake of simplicity, therefore, we frame the issue as deciding whether extraordinary restitution is a
prohibited or discouraged factor.

8
the case different from the ordinary case where the factor is present.” Id. (citation

omitted).

We now join the Second, Third, Fourth, Sixth, Seventh, Eighth, and Ninth

Circuits and hold that extraordinary restitution is not a prohibited factor.6 See

United States v. Broderson, 67 F.3d 452, 458–59 (2d Cir. 1995) (affirming a

district court’s downward departure based in part on the defendant’s restitution

6
The Government suggests that the federal circuits are split when it contends that the
Second, Fifth, and Sixth Circuits have held restitution to be a prohibited factor. See, e.g., United
States v. Carpenter, 320 F.3d 334, 343 (2d Cir. 2003); United States v. Akin, 62 F.3d 700, 702
(5th Cir. 1995); United States v. DeMonte, 25 F.3d 343, 346 (6th Cir. 1994); United States v.
Flowers, 55 F.3d 218, 222 (6th Cir. 1995)). We doubt there is a circuit split because none of
these cases hold extraordinary restitution to be a forbidden factor. Admittedly, in Carpenter the
Second Circuit explained that because “restitution before conviction cannot justify a downward
departure, we do not think that compliance with court-ordered restitution after conviction and
sentencing can.” Carpenter, 320 F.3d at 343 (emphasis added). However, the Second Circuit
had previously stated that restitution is a discouraged factor. United States v. Broderson, 67 F.3d
452, 458–59 (2d Cir. 1995). Under Second Circuit law, because Broderson was decided by a
prior panel, and Carpenter was not an en banc decision, Broderson is the controlling precedent.
See Shattuck v. Hoegl, 523 F.2d 509, 514 n.8 (2d Cir. 1975) (explaining that subsequent panel
decisions, “not being an en banc decision, may not be viewed as having overruled our earlier
[panel decision]”). In Akin, the Fifth Circuit merely dealt with restitution as a basis for reduction
within the guidelines, not departure from the guidelines. Akin, 62 F.3d at 702 (concluding that
“the district court properly refused to reduce its calculation of loss by the amount of the
restitution”). In DeMonte, the Sixth Circuit expressly stated that “we have acknowledged that
restitutionary payments may constitute ‘exceptional circumstances’ that justify a downward
departure.” DeMonte, 25 F.3d at 346 (citing United States v. Brewer, 899 F.2d 503, 509 (6th Cir.
1990)). Finally, Flowers only involved defendants who returned money they had fraudulently
obtained through a check kiting scheme, Flowers, 55 F.3d at 222, not defendants who obtained
loans to pay restitution. More fundamentally, Flowers suffers from the same defect as
Carpenter—it is not binding Sixth Circuit law on this issue because it was simply a panel
decision issued after DeMonte. See United States v. Washington, 127 F.3d 510, 517 (6th Cir.
1997) (“‘The prior decision remains controlling authority unless an inconsistent decision of the
United States Supreme Court requires modification of the decision or this Court sitting en banc
overrules the prior decision.’” (quoting Salmi v. Sec’y of Health and Human Servs., 774 F.2d
685, 689 (6th Cir. 1985)).

9
even though it could be justified “only as a ‘discouraged departure’” given that,

“[o]rdinarily, payment of restitution is not an appropriate basis for downward

departure under Section 5K2.0 because it is adequately taken into account by

Guidelines Section 3E1.1”); United States v. Lieberman, 971 F.2d 989, 996 (3d

Cir. 1992) (affirming a district court’s downward departure on the basis of the

defendant’s acceptance of responsibility as primarily demonstrated by his

restitution); United States v. Hairston, 96 F.3d 102, 108 (4th Cir. 1996) (holding

that “restitution, although taken into account in the guideline permitting a

reduction for acceptance of responsibility, can provide a basis for a departure

when present to such an exceptional degree that it cannot be characterized as

typical or ‘usual’” (citation omitted)); United States v. DeMonte, 25 F.3d 343, 346

(6th Cir. 1994) (stating that “we have acknowledged that restitutionary payments

may constitute ‘exceptional circumstances’ that justify a downward departure”

(citing United States v. Brewer, 899 F.2d 503, 509 (6th Cir. 1990)); United States

v. Bean, 18 F.3d 1367, 1369 (7th Cir. 1994) (“Undoubtedly there are

circumstances that would justify using § 5K2.0 to [depart downward on the basis

of restitution] beyond [the] two levels [of reduction provided by § 3E1.1].”);

United States v. Oligmueller, 198 F.3d 669, 672 (8th Cir. 1999) (affirming a

district court’s downward departure on the basis of extraordinary restitution

10
because “[w]e have previously held that cases can fall outside the heartland when

there are extraordinary efforts at restitution” (citing United States v. Garlich, 951

F.2d 161, 163 (8th Cir. 1991)); United States v. Miller, 991 F.2d 552, 553–54 (9th

Cir. 1993) (holding that district courts may depart downward on the basis of

restitution when it (1) “shows acceptance of responsibility,” (2) “was substantially

greater than that contemplated by the Commission when drafting section 3E1.1,”

and (3) “the magnitude of the departure [is] commensurate with the level of the

defendant’s acceptance of responsibility”).7

In particular, we conclude that the Sentencing Commission never prohibited

the district court from considering Appellees’ extraordinary restitution as a basis

for downwardly departing from the sentencing guidelines because we are

persuaded by the Fourth Circuit’s mode of analysis in Hairston, 96 F.3d at

107–08. There, the Fourth Circuit was presented with the question whether

extraordinary restitution was a discouraged or prohibited factor. Id. at 107. In

Koon, the Supreme Court had instructed that “[i]f the special factor is a

7
Our conclusion also appears consistent with the law in the First and D.C. Circuits. See
United States v. Rivera, 994 F.2d 942, 956 (1st Cir. 1993) (holding that “ordinary restitution
circumstances . . . do not warrant a downward departure,” but stating in dicta that “a special need
of a victim for restitution, and the surrounding practicalities, might, in an unusual case, justify a
departure” (citations omitted)); see also United States v. Rhodes, 145 F.3d 1375, 1382–83 (D.C.
Cir. 1998) (finding Hairston’s rule persuasive in concluding that post-conviction rehabilitation is
a discouraged factor).

11
discouraged factor, or an encouraged factor already taken into account by the

applicable Guideline, the court should depart only if the factor is present to an

exceptional degree or in some other way makes the case different from the

ordinary case where the factor is present.” Koon, 518 U.S. at 96, 116 S. Ct. at

2045 (citation omitted). Applying Koon, the Fourth Circuit concluded

extraordinary restitution was not a forbidden factor because “[n]owhere in the

Guidelines is restitution listed as a proscribed factor.” Hairston, 96 F.3d at 107.

Likewise, the Fourth Circuit also noted that restitution was not expressly listed as

a discouraged or encouraged factor for departure from the guidelines. Id.

However, the Fourth Circuit recognized restitution was listed as a factor

supporting reduction within the guidelines. Id. (citing U.S.S.G. § 3E1.1, cmt.

n.1(c) (1995)). Accordingly, this question appeared to fall through the cracks of

the rigid categories set forth in Koon because the Sentencing Commission did not

seem to discourage, prohibit, or encourage departures on the basis of extraordinary

restitution. To resolve this dilemma, the Fourth Circuit crafted a new rule: “When

the Commission designates a factor as a basis for a reduction within the

Guidelines, this implies that the factor is discouraged as a basis for departure from

the Guidelines, or alternatively, that the factor is encouraged—at least as a basis

for reduction—but has already been taken into account.” Id.

12
 We agree with the Fourth Circuit’s statement of this rule. Like Hairston, we

note in the instant case that although the 1997 sentencing guidelines do not list

restitution as a prohibited factor for departure from the guidelines, U.S.S.G.

§ 5H1.1–5H1.12 (1997), restitution is listed as a factor supporting reduction

within the guidelines, U.S.S.G. § 3E1.1, cmt. n.1(c) (1997).8 We therefore

conclude that extraordinary restitution is a discouraged factor.9

8
The 1997 sentencing guidelines direct district courts that “[i]f the defendant clearly
demonstrates acceptance of responsibility for his offense, decrease the offense level by 2 levels.”
U.S.S.G. § 3E1.1(a) (1997). In determining whether the defendant clearly accepted
responsibility, Application Note 1(c) instructs district courts that an appropriate consideration is
whether the defendant made “voluntary payment of restitution prior to adjudication of guilt.”
U.S.S.G. § 3E1.1, cmt. n.1(c) (1997).
9
Two further arguments bear mention. First, contrary to the Government’s contention,
Appellees’ compliance with their legal duty to pay restitution before sentencing under the plea
agreement does not transform their restitution into a prohibited factor. In Hoffer, this Court held
that a defendant’s acquiescence in a civil forfeiture requiring him to disgorge $50,000 of profits
from drug trafficking was a prohibited factor on which to depart downward. 129 F.3d at 1204.
We explicitly decline to extend Hoffer to cases involving restitution as a basis for departure,
because Appellees’ restitution required under their plea agreement is not analogous to mandatory
forfeiture. Appellees voluntarily sought loans from family members. The plea agreement did not
require them to take this additional action. In short, Appellees’ voluntary actions in obtaining
loans were not a prohibited factor under Hoffer because they do not fall within Hoffer’s rubric.
Second, the recent amendment to the sentencing guidelines, in light of the PROTECT
Act, sheds no light on our analysis. U.S.S.G. app. C, amend. 651, at 347 (2003). Even if the
recent amendment now prohibits district courts from departing downward on the basis of
extraordinary restitution, see U.S.S.G. § 5K2.0(d)(2) (2003) (prohibiting district courts from
departing based on the “defendant’s acceptance of responsibility”); id. § 5K2.0(d)(5) (prohibiting
district courts from departing based on the “defendant’s fulfillment of restitution obligations only
to the extent required by law including the guidelines (i.e., a departure may not be based on
unexceptional efforts to remedy the harm caused by the offense)”), our conclusion that
extraordinary restitution is merely a discouraged factor under the 1997 guidelines disposes of its
relevance. Since we already concluded that extraordinary restitution was merely discouraged
under the 1997 guidelines, the current amendment is a substantive change that cannot be applied
retroactively. See U.S.S.G. § 1B1.11(b)(2) (1997); see also United States v. Descent, 292 F.3d

13
 Still, the Government argues that departures based on restitution paid after

adjudication of guilt are prohibited rather than discouraged because the Sentencing

Commission has prohibited departures on the basis of socio-economic status.

U.S.S.G. § 5H1.10 (1997). We disagree. On the contrary, we conclude

extraordinary restitution paid after adjudication of guilt is not a forbidden factor

for two reasons. First, if departures based on extraordinary post-adjudication

restitution were forbidden by § 5H1.10, then departures based on extraordinary

pre-adjudication restitution would also be forbidden—restitution always involves

money, which necessarily implicates socio-economic status. But this distinction

would be illogical because we already held that pre-adjudication restitution is

merely a discouraged factor.

Second, distinguishing between defendants who paid restitution before

adjudication and those who paid after adjudication, ironically, would violate

§ 5H1.10’s prohibition of departures based on socio-economic status. If

extraordinary restitution were a basis of departure available only to those

defendants who were able to collect enough money to pay restitution before

pleading guilty, this would discriminate against those defendants who were too

poor to collect enough money to pay restitution until after pleading guilty.

703, 707–08 (11th Cir. 2002).

14
Significantly, although Appellees are not rich, they started paying restitution

before adjudication by tendering $50,000 of their life savings with their guilty

plea, but were financially unable to complete their restitution until they obtained a

large number of loans in the three short months between adjudication and

sentencing. If Appellees had been rich, they would have tendered the entire

amount of their restitution before they pled guilty.

In short, we refuse to follow the Government’s suggestion that we

discriminate against Appellees’ socio-economic status for the sake of remaining

neutral with respect to all defendants’ socio-economic status. Instead, we are

persuaded by the comments of the late Senior Circuit Judge Celebrezze:

[A] defendant . . . should be judged by his actions. The fact that he
may have some economic means should neither be held for him or
against him. To suggest that when a defendant is affluent, his
attempts at restitution can never qualify as an exceptional
circumstance[] is as repugnant to equal protection ideology as to hold
the lack of ability to make restitution against an indigent defendant.
It is clear that in some cases, the methods by which a defendant
makes restitution may qualify as an exceptional circumstance, above
and beyond what is considered in the Guidelines.

United States v. DeMonte, 25 F.3d 343, 355 (6th Cir. 1994) (Celebrezze, J.,

concurring in part and dissenting in part).

B. Whether Appellees’ Restitution Was Extraordinary Enough

15
 Having decided that extraordinary post-adjudication restitution is merely a

discouraged, not prohibited, factor upon which to depart downward, we proceed to

discuss whether Appellees’ payment of restitution was extraordinary enough to

remove it from the heartland of restitution cases and warrant a downward

departure. See Koon, 518 U.S. at 96, 116 S. Ct. at 2045; Hoffer, 129 F.3d at 1201.

Although this is a very close issue, we conclude the district court properly found

Appellees’ payment of restitution was extraordinary enough to remove it from the

heartland of cases because it demonstrated their sincere remorse and acceptance of

responsibility.

Instead of creating concrete legal rules with which to determine whether

particular payments of restitution are extraordinary enough to warrant downward

departures, courts have looked to a wide range of factors, such as the degree of

voluntariness, the efforts to which a defendant went to make restitution, the

percentage of funds restored, the timing of the restitution, and whether the

defendant’s motive demonstrates sincere remorse and acceptance of responsibility.

See, e.g., Oligmueller, 198 F.3d at 672 (emphasizing timing, voluntariness, efforts

at restitution, and percentage of funds restored); Hairston, 96 F.3d at 108–09

(emphasizing the percentage of funds restored, efforts at restitution, voluntariness,

timing, and motive); DeMonte, 25 F.3d at 347 (emphasizing voluntariness);

16
Lieberman, 971 F.2d at 996 (emphasizing timing and percentage of funds

restored). We believe this is the proper inquiry.

Emphasizing the voluntariness, timing, and motive of Appellees’ restitution,

the Government argues this case remains within the heartland because Appellees

did not pay restitution until after they had been criminally indicted, as part of a

negotiated plea agreement, and in the hope of receiving a reduced sentence.

Appellees, on the other hand, emphasize their restitutionary efforts, percentage of

funds restored, and their sincere remorse, and suggest four factors that remove this

case from the heartland. First, Appellees personally benefitted from only about

two-thirds of the loss $268,037.18 loss, yet they provided restitution for the entire

loss caused by the fraud. Second, they came up with this money by liquidating

three-fourths of their life savings and obtaining nearly $200,000 in loans from

friends and family. Third, Mrs. Kim passed a lie detector test and would not have

pled guilty to her misdemeanor charge and borrowed nearly $200,000 except to

show her extreme remorse. Fourth, Appellees began making restitution on the

same day they were adjudicated guilty and paid the rest before sentencing. Fifth,

Appellees’ reason for making restitution was their sincere remorse.

Comparing the Government’s factors to Appellee’s factors, the

Government’s factors are less significant than Appellees’ factors. We agree with

17
the Government that the timing of Appellees’ payment—specifically, their failure

to pay restitution before criminal indictment, and only pursuant to a negotiated

plea agreement—cuts against the voluntariness of their act and militates against

granting a downward departure. However, we see no need to draw a bright line

rule that limits departures based on extraordinary restitution to those defendants

who paid restitution before indictment and not pursuant to a plea agreement. Such

a rule would impermissibly favor economically privileged defendants who have

readily available funds. Additionally, the district court already rejected the

Government’s factual argument that Appellees’ motive was to receive a reduced

motive. After considering the evidence before it, the district court concluded that

Appellees were motivated by remorse and “the embarrassment, the humiliation,

the shame, the sorrow” they felt about their actions. We cannot find that the

district court was clearly erroneous when it made this factual finding.

Instead, Appellees’ factors are more significant and balance in favor of

granting a departure from the guidelines. First, Appellees paid roughly 140

percent of the amount from which they personally benefitted. Even though

Appellees had agreed to pay restitution for the whole amount of the fraud in their

plea agreement, the fact that they made and carried out their commitment to pay

back money they never received simply demonstrates their extraordinary remorse.

18
Second, like the district court, we are impressed at the lengths to which Appellees

went in obtaining the money to make restitution. Appellees dipped significantly

into their life savings and voluntarily undertook an enormous amount of debt, to

wit, almost $200,000. Third, Mrs. Kim particularly went out of her way to

demonstrate her remorse because, despite passing a lie detector test and pleading

guilty to a misdemeanor charge, she solicited her relatives to secure enormous

loans to pay off her restitution obligation. Fourth, Appellees also began paying

what they could by liquidating $50,000 of their life savings when they pled guilty,

and then paid the balance of their restitution obligation three short months later at

sentencing. Finally, it is significant that the district court found as a fact that

Appellees’ reason for making restitution was their sincere remorse. Simply put,

Appellees are the rare defendants who demonstrated their extraordinary remorse

and acceptance of responsibility by making extraordinary restitution.

IV. CONCLUSION

For the foregoing reasons, extraordinary restitution, whether paid before or

after adjudication, is merely a discouraged factor on which to depart downward.

Furthermore, the district court properly found that Appellees’ payment of

restitution was extraordinary enough to remove this case from the heartland and

19
justify a downward departure because it demonstrated Appellees’ sincere remorse

and acceptance of responsibility.

AFFIRMED.

20
NANGLE, District Judge, concurring:

I concur in the opinion in this case because the Panel very carefully finds

that “extraordinary restitution” is merely a “discouraged” and not a “prohibited”

factor. Additionally, the Panel correctly finds that the District Court’s findings are

subject to the clearly erroneous rule. I write only to emphasize the closeness of

the question and the narrow and limited basis for the affirmance herein.

As stated in the opinion and as reflected in the facts before the District

Court, the remorse of the defendants was truly “extraordinary.” Indeed, in more

than 30 years as a district judge, I have never participated in, or had brought to my

attention, any previous case in which a defendant’s restitution justified a departure

downward. This 30-year period included cases occurring well before the

Sentencing Guidelines were adopted (wherein a defendant’s restitution could

arguably have supported a lesser sentence).

The Panel confirms the four factors that support the District Court’s finding

that the defendants were motivated by remorse. It should also be noted that the

defendants had no assurance that their restitution efforts would be rewarded by the

District Court at sentencing, since the government clearly indicated in the plea

agreement that it would oppose such a downward departure.

21
 The district judge had the opportunity to assess, face-to-face, the Kims’

remorse in making full restitution. Based upon the totality of the circumstances

and the presence of factors indicative of the Kims’ remorse, the District Court’s

finding regarding extraordinary restitution is not clearly erroneous.

22