In 1996, amid a nationwide push against violent crime, Congress passed the Mandatory Victims Restitution Act. Originally designed to compensate individual victims of violent crimes in federal cases, its use has since expanded to entities such as classes of investors seeking financial redress for incidents of corporate crime.
A 2005 General Accounting Office report found that the law led to a four-fold increase in the amount of criminal debt amassed by white collar criminals in federal prosecutions. Then-Senator Byron Dorgan of North Dakota, who had requested the GAO report, complained the government was too slow in collecting this debt. But the Department of Justice responded that by its very nature, this personal debt owed by often-incarcerated individuals was difficult to collect.
A more recent case, however, made it clear that federal prosecutors conducting MVRA cases could seek deeper pockets in search of collecting these debts. Corporations would now have a major new concern about their expanded liability for crimes committed by their employees and management teams.
In 2019, a federal judge in New York ruled that a group of shareholders of a Canadian mining company qualified as victims under the MVRA, apparently the first time the act was used to resolve a case against a legal entity rather than a person.
The plea agreement the company, OZ Africa, had signed with the U.S. Department of Justice three years earlier had not contemplated court-ordered restitution—since the MVRA had never before been used this way—and that omission raised the possibility the defendant could pay as much as four times the damages it had initially expected.
In the wake of this ruling, Jesse Van Genukten, now an associate at Latham & Watkins LLP, wrote in an influential law review article, “court-ordered restitution for corporate criminal liability is likely here to stay.”
John Ettorre is an Emmy-award-winning writer, based in Cleveland. His work has appeared in more than 100 publications, including the New York Times and the Christian Science Monitor.
