Mrs. Finley's difficult situation. The Court's authority does not extend beyond the ability to request this placement, but the Court will do what it can in this regard.
B. Interest on Fine
Finley paid the full amount of the $ 50,000 fine imposed by this Court on July 11, 1991, approximately three weeks after the court of appeals issued its mandate affirming his conviction and sentence. Shortly thereafter, however, he learned of the government's position that he owed approximately $ 16,500 in interest on the fine for the period following sentencing during which it remained unpaid. See 18 U.S.C. § 3565(c)(1) (repealed; applicable to offenses committed prior to Nov. 1, 1987) (imposing interest on past due fines at the rate of 1.5 percent per month). Finley argues that he was unaware interest was accruing in the interim that the fine remained unpaid and that he should either be relieved of the interest entirely or that it should be calculated at the lower rate which applies to offenses after the date on which his occurred. See 18 U.S.C. 3612(f)(2) (applicable to offenses committed on or after Nov. 1, 1987) (imposing interest at rate equal to coupon issue yield equivalent of auction of United States Treasury Bills).
Although the judgment order in this case is silent as to when Finley was required to pay the fine, the Court finds him obligated to pay interest nonetheless under the relevant statutory provisions. The now-repealed version of the statute applicable to Finley's offense provides:
A judgment imposing the payment of a fine or penalty shall --
(A) provide for immediate payment unless, in the interest of justice, the court specifies payment on a date certain or in installments . . . .
18 U.S.C. § 3565(b)(1) (repealed). Unfortunately, this Court's judgment order failed to specify whether the fine was payable immediately or at a later date. In light of the statutory requirement that one date or another be specified, the order was therefore ambiguous as to when the fine would become "past due" for purposes of the interest provisions set forth in § 3565(c)(1). Compare 18 U.S.C. § 3572(d) (payment of fine due immediately unless court provides for payment on a date certain or in installments). Under these circumstances, were it the case that interest did not accrue upon fines which are deferred, the Court would be inclined to relieve Finley of the obligation to pay interest. However, the statute provides that interest at the "past due" rate must be assessed even when the sentencing court explicitly provides for payment at a later date. 18 U.S.C. § 3565(b)(2).
Thus, whatever Finley may have understood as to when the fine was payable, there could have been no reasonable question as to his obligation to pay interest for the period during which the fine remained unpaid.
The Court also declines to order interest calculated at the lower rate provided for in the current version of the statute. See 18 U.S.C. § 3612(f)(2). Finley cites no authority which would permit the Court to leaf through the old and new versions of the statute and invoke current provisions when they are favorable even though they are inapplicable to his offense. Section 3565 governs offenses committed prior to 1987 and this provision gives the Court no discretion to set interest at a rate other than the one set forth in the statute. See 18 U.S.C. § 3565(b)(2), (c)(1) (repealed) (interest "shall be computed on the unpaid balance at the rate of 1.5 percent per month"). Compare 18 U.S.C. 3612(f)(2) (permitting modification of interest on fines by the court).
C. Restitution to the Government
The evidence at trial demonstrated that Finley had accepted bribes totalling $ 25,000, and the Court ordered him to pay restitution in this amount. Finley challenges the propriety of restitution on three grounds. First, he argues that the judgment order was invalid as to the restitution because the order neither identified the purported victim of Finley's misconduct nor specified to whom restitution was to be made. Next, he argues that the evidence at trial demonstrated that the government did not in fact supply the money which he accepted as bribes.
Finally, Finley contends that restitution is improper in this case because the government cannot be deemed a legitimate victim entitled to restitution even if it did supply the money which funded the bribes he received. Because the Court concludes that the government cannot qualify as a "victim" to whom restitution may be ordered assuming it did supply the bribe money in this case, the Court need not address Finley's first two arguments.
As the government points out, Finley did not challenge the propriety of the restitution order on appeal. Nonetheless, his failure to raise the issue at that time does not constitute a waiver of his right to raise it now under Rule 35. As my brother Judge William T. Hart has observed:
Rule 35(a) provides that an illegal sentence may be corrected at any time. It would be inconsistent with that Rule to hold that despite the fact that the Rule can be invoked at any time, issues raised pursuant to that Rule will be considered waived if not raised on direct appeal. Such a position is also inconsistent with the rule that illegal sentences must be corrected sua sponte by the court. See Lee v. United States, 400 F.2d 185, 188 (9th Cir. 1968); United States v. Allen, 733 F. Supp. 1186 (N.D. Ill. 1990).
United States v. Makres, 741 F. Supp. 727, 729 (N.D. Ill. 1990), judgment aff'd, 937 F.2d 1282 (7th Cir. 1991). See United States v. Kovic, 830 F.2d 680, 684 (7th Cir. 1987) (an issue is waived for purposes of subsequent collateral review of federal sentence when it could and should have been raised on direct appeal or in Rule 35 motion), cert. denied, 484 U.S. 1044, 108 S. Ct. 778, 98 L. Ed. 2d 864 (1988). See also Callanan v. United States, 364 U.S. 587, 589 n.3, 81 S. Ct. 321, 322, 5 L. Ed. 2d 312 n.3 (1961); United States v. Gelb, 944 F.2d 52, 54 (2d Cir. 1991); Popeko v. United States, 513 F.2d 771, 773 (5th Cir.), cert. denied, 423 U.S. 917, 96 S. Ct. 225, 46 L. Ed. 2d 146 (1975).
Under the provisions of the Victim and Witness Protection Act ("VWPA") which govern in this case, 18 U.S.C. § 3579(a)(1) (repealed),
the court is authorized to order "that the defendant make restitution to any victim of [a Title 18] offense." The Act further provides that a restitution order may require a defendant who has committed an offense which results "in damage to or loss or destruction of property of a victim of the offense" to either return the property to its owner or reimburse the owner for the loss or damage. Id. § 3579(b)(1).
The courts appear to agree that when the government is the unwitting victim of a defendant's misdeeds, restitution may be ordered. See, e.g., United States v. Hand, 863 F.2d 1100 (3d Cir. 1988) (defendant ordered to reimburse government for the expense of prosecution which resulted in mistrial due to her improper contact as a juror with the defendant in that case); United States v. Ruffen, 780 F.2d 1493, 1496 (9th Cir.) (defendant who caused improper payments of Aid to Families with Dependent Children benefits to individuals who would in turn kick back most of the money to him ordered to pay restitution to the government), cert. denied, 479 U.S. 963, 107 S. Ct. 462, 93 L. Ed. 2d 407 (1986). However, in this case, the government was not duped by Finley. Instead, it purposely supplied the funds used to pay Finley in the hopes of catching him in the act of accepting bribes. Consequently, Finley argues, the government suffered no real loss which is compensable through restitution.
United States v. Dougherty, 810 F.2d 763 (8th Cir. 1987), indicates that the government is entitled to restitution even if it purposely relinquished money or property to the defendant in an effort to catch him at foul play. The defendant in Dougherty was found guilty of unlawfully acquiring food stamps. He was arrested after he purchased $ 950 worth of stamps for $ 480 from an undercover agent. At sentencing, the district court ordered the defendant to pay restitution in the amount of the $ 470, the "discount" he had received when he had purchased the stamps. On appeal, he argued that the government had suffered no loss because its own agent had sold the stamps to him at half price. The Eighth Circuit disagreed:
The evidence in this case established that Dougherty unlawfully acquired $ 950 in food stamps in exchange for $ 480 in cash . . . . In effect, there was a loss to the United States Department of Agriculture in the amount of $ 470. As a result, the United States, as dispenser of the food stamps, would be the aggrieved party for purposes of restitution under 18 U.S.C. § 3651. We conclude, therefore, that the district court properly awarded restitution to the United States.
810 F.2d at 773.
The Ninth Circuit, however, has taken a contrary view. In United States v. Salcedo-Lopez, 907 F.2d 97 (9th Cir. 1990), the defendant was convicted on charges of transferring false identification documents. He was exposed by a confidential informant who had paid the defendant a total of $ 340 for three sets of forged papers with money supplied by the government. The district court ordered the defendant to pay restitution to the government in this amount. The court of appeals reversed, holding that in these circumstances the government had not experienced a loss cognizable for the purpose of restitution under the VWPA:
The government's confidential informant paid Salcedo in order to obtain evidence of Salcedo's criminal activity. The government did not "lose" money as a direct result of Salcedo's activities; it spent money to investigate those activities. The government's payments to Salcedo are no more directly related to the crime than any payments the government may have made to the informant. These costs are "too remote to form the basis for restitution."
For similar reasons, the government is not a victim under the Act. Salcedo did not defraud the government. The government wanted false identification papers as evidence of criminal activity and obtained them; the government got what it wanted.
907 F.2d at 99 (citation and footnote omitted). The court acknowledged the appeal of the government's contention that the defendant should not be permitted to profit from his crime. Id. However, the court reasoned that this was a policy argument more properly addressed to Congress. Id. In addition, it observed that the primary purpose of the VWPA was not to punish the criminal but to compensate the victim. Id. Thus, the court concluded that when the government is not truly the victim of the defendant's crime, it would have to resort to other means in order to strip the defendant of his profit. Id.
This Court finds the reasoning of Salcedo-Lopez persuasive. In this case, Finley did not defraud the government of the money he accepted in bribes. The government was aware that the bribes were being paid and, assuming the truth of the government's representations, willingly supplied the money for those bribes. In this circumstance, the government is not a "victim" whose "loss" was one Congress meant to be remedied through restitution. Rather, the amounts which the government has fronted for bribes should be considered of a kind with the other costs the government incurs in an undercover investigation, including the accommodations and living expenses provided to undercover informants, the costs of covert electronic monitoring, and the salaries of government investigators assigned to the investigation. Without question, a defendant should not be allowed to profit fortuitously from the fact that he pocketed money passed to him in a controlled transaction. Yet, as the court pointed out in Salcedo-Lopez, other avenues to disgorgement remain open to the government. 907 F.2d at 99. Fines are routinely available as a means to eliminate any profit the defendant may have reaped from his wrongdoing,
and because fines are paid to the government, they effectively serve the same end as an order of restitution to the government would. See 18 U.S.C. § 3622 (repealed; applicable to offenses committed prior to Nov. 1, 1987); § 3572(a)(3),(4), and (5) (in determining whether to impose fine and the proper amount, district court must consider the pecuniary loss inflicted upon others as a result of the offense, any restitution imposed, and "the need to deprive the defendant of illegally obtained gains from the offense"). In this case, the Court imposed a fine of $ 50,000 upon Finley, twice the amount of the bribes he had accepted. See 18 U.S.C. § 3571(d). This amount was more than adequate to meet the government's interest in securing compensation for the money it supplied in bribes and to render Finley's criminal acts monetarily profitless for him.
For the reasons set forth above, defendant Morgan Finley's motion for reduction and correction of his sentence pursuant to former Fed. R. Crim. P. 35 is granted in part and denied in part.
ILANA DIAMOND ROVNER
UNITED STATES DISTRICT JUDGE
Dated: December 17, 1991