Does Restitution Cover a Victim's Private Investigation Costs? Not After Lagos

In Lagos v. United States (2018), the Supreme Court limited what victims can recover as restitution for investigation costs. A defendant does not have to repay a victim's costs for its own private investigation or for civil or bankruptcy cases under this part of the law, and that can cut a restitution bill substantially.

The decision interprets the Mandatory Victims Restitution Act (MVRA), 18 U.S.C. § 3663A. That law requires federal courts to order restitution to victims of many crimes.

What Is Criminal Restitution?

Restitution is a court order to pay a victim back for losses caused by the crime. For many federal crimes, the judge must order it, even if neither the victim nor the prosecutor asks. Restitution is meant both to discourage crime and to help victims recover.

Restitution is common in theft and fraud cases and other financial crimes, where a victim lost money.

Criminal Restitution

A fine is different. A fine is paid to the government, not the victim. Its sole purpose is punishment, and it does not necessarily help the victim at all. State courts have their own restitution laws, which can differ.

The Supreme Court's Unanimous Decision in Lagos v. United States

Part of the MVRA requires the defendant to "reimburse the victim for lost income and necessary child care, transportation, and other expenses incurred during participation in the investigation or prosecution of the offense or attendance at proceedings related to the offense."

In Lagos, the victim was a lender, General Electric Capital Corporation, that had been defrauded. The lower courts ordered Lagos to pay about $5 million of the lender's fees for attorneys, accountants, and consultants. Those fees came from the lender's own private investigation and from a related bankruptcy case.

The Supreme Court, in an opinion by Justice Breyer, ruled for Lagos. It held that "investigation" and "proceedings" in this part of the law mean only government investigations and criminal proceedings. They do not include private investigations or civil or bankruptcy proceedings.

The Court relied on the law's wording and its list of specific costs, like lost income, child care, and transportation. It also noted the practical problem of courts having to fight over which private investigation costs were "necessary." It would be very hard to judge which parts of a victim's own investigation, outside the government's control, were truly needed.

The original article added another practical point: many defendants cannot afford to pay victims back after conviction. A broad reading of the MVRA could pile on orders that are nearly impossible to pay, adding to the courts' workload without actually helping victims. In the original author's view, that concern made a narrow reading more sensible.

What Lagos Means for You

If you are facing restitution in federal court, Lagos can limit the bill. Costs a victim spent on its own private investigation, or on civil or bankruptcy cases, generally cannot be included under this provision.

Victims can still sue for those costs in civil court. The original article read the ruling as pointing to civil lawsuits as the better path when, for example, a large company suffers big financial losses. Restitution still covers the victim's actual losses from the crime.

It also saw Lagos as a signal that the Supreme Court does not favor ever-growing restitution bills, and that there is at least some loose ceiling on what courts can make defendants pay.

One question Lagos left open: the Court did not decide whether a victim's attorney fees for taking part in the government's investigation or prosecution can count as "other expenses" under this provision.

In practice, the restitution figure usually first appears in the presentence report (PSR). Ask for an itemized list of what the victim claims, and check each item against Lagos. Objections to the PSR are due within 14 days after you receive the draft (Fed. R. Crim. P. 32(f)).

Facing a federal sentence? Book a consultation to talk it through with Brandon Sample.