7th Circuit: Southern District must recalculate restitution in fake credit card case

  • Print
Listen to this story

Subscriber Benefit

As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe Now
This audio file is brought to you by
Loading audio file, please wait.
  • 0.25
  • 0.50
  • 0.75
  • 1.00
  • 1.25
  • 1.50
  • 1.75
  • 2.00

The U.S. District Court for the Southern District of Indiana will need to recalculate the restitution owed by an Indiana woman who was convicted of stealing thousands of dollars by creating fake credit cards after the 7th Circuit Court of Appeals vacated its remanded order for a second time.

In 2015, according to court documents, Ana Alverez – with two other participants, Victor Verejano‐Contreras and Guillermo Bacallao‐Fernandez — created 647 fake credit cards and made $52,631.15 in fraudulent purchases

Verejano‐Contreras absconded and is currently a fugitive. Bacallao‐Fernandez pleaded guilty in 2018 to one count of misprision of a felony and was sentenced to 12 months’ probation and ordered to pay $1,000 in restitution; the restitution was imposed on a joint and several basis with his co‐defendants.

Alverez pleaded not guilty and went to trial in March 2019. The jury convicted her on all counts: three counts of access device fraud and 10 counts of aggravated identity theft.

In August 2019, the district court held a hearing and Alverez was sentenced to 60 months incarceration. The Southern Indiana District also ordered Alverez to pay over $50,000 in restitution.

However, inconsistencies in various sentencing records regarding the amount of restitution, as well as the number of victim payees, created confusion regarding the order.

At the sentencing hearing, the district court orally imposed $52,562.15 in restitution payable to three victim financial institutions according to the “proportions … laid out in the presentence report [(“PSR”)],” but the PSR left the proportions “TBD.” The written judgment ordered restitution of $52,561.151 to five financial institutions and described how the total loss amount should be divided.

The judgment further specified that Alverez was jointly and severally liable for the restitution with her co‐defendant, Bacallao‐Fernandez. It also set forth a payment plan, providing that “[a]ny unpaid restitution balance during the term of supervision shall be paid at a rate of not less than 10% of the defendant’s gross monthly income.”

Alverez appealed, arguing the restitution order was unlawful for several reasons, most significantly due to the discrepancies among the PSR, oral sentencing, and entered judgment.

Instead of responding to Alverez’s brief, the government filed a motion to remand. It agreed that 7th Circuit should vacate the judgment and remand to allow the district court to correct the restitution order, and the motion was granted to vacate the judgment and remand for further proceedings.

On remand, the government sought an order requiring Alverez to pay $16,652.90 in restitution even though it maintained that trial evidence established actual losses of at least $52,631.15 to five banks. In light of the order, the government did not request restitution to be paid to the two institutions not mentioned during the sentencing hearing.

Also the government credited Alverez for the $34,141.23 that had been forfeited to the Carmel Police Department after her arrest in 2015 along the $1,000 in restitution her co-defendant Bacallao-Fernandez had been ordered to pay.

In response, Alverez maintained that any restitution order would be improper, but “[w]ithout waiving [that] argument,” she agreed that the credits the government applied to the restitution amount were correct. Alverez further argued that the restitution obligation should be joint and several for all three defendants or, in the alternative, the court should apportion the restitution among all three defendants after a hearing at which a determination of their relative culpability and of each defendants’ ability to pay can be litigated.

Additionally, Alverez observed she was found indigent when she was indicted.  Appointed counsel has represented her throughout these criminal proceedings.

Thus, Alverez requested “a hearing … to determine how and when payments should be made” and her “ability to pay as required by 18 U.S.C. § 3664(f)(3)(B).” She asserted that she would use the requested hearing to establish that “based on her economic circumstances, current[] and projected, and her medical disabilities, she should be ordered to pay only a nominal, periodic amount [toward any restitution entered] as provided by 18 U.S.C. § 3664(f)(3)(B).”

In reply, the government contended the apportionment of restitution was not appropriate and Alverez’s indigency should not “reduce any restitution order to a ‘nominal periodic amount.’”

The district court did not hold a hearing as Alverez requested.  Instead, four days after the government filed its reply brief, the court entered its amended restitution order. It found the defendant was not entitled to a reduction because of indigency and it accepted the government’s restitution request of $16,652.90.

Then the court ordered Alverez to pay restitution to the original three victims in the amounts requested by the government. However, the order did not set a payment schedule, and was silent on joint and several liability.

On the second appeal, Alverez argued the district court erred in three ways: first, when it changed course from the first restitution order and made Alverez solely responsible for restitution, instead of jointly and severally liable with her co‐defendants; second, when it did not set a schedule for Alverez’s restitution payments per 18 U.S.C. § 3664(f)(2); and third, when it did not hold another sentencing hearing on restitution, which Alverez argues was required by the Due Process Clause or 18 U.S.C. § 3553(c).

The government agreed a remand is appropriate with respect to the first and second issues, but it disagreed on the third.

“The district court procedurally erred when it did not address Alverez’s argument for joint and several liability and explain why sole liability — a more onerous sentence — was appropriate after remand,” 7th Circuit Senior Judge Joel Flaum wrote for the court.

Flaum also noted the government did not dispute Alverez’s indigency and did not challenge the necessity of a payment schedule in this case. On remand, the district court was instructed to address “Alverez’s arguments concerning her ability.”

On the final point, the appellate court found since the second restitution order was vacated on the first two points, it need not opine on what procedures were necessary prior to its entry.

“However, as noted above, the district court is not precluded from exercising its discretion to hold another sentencing hearing on remand,” Flaum wrote, citing United States v. Harris, 813 F. App’x 710, 713–14 (2d Cir. 2020) and United States v. Robl, 8 F.4th 515, 528–29 (7th Cir. 2021).

The case is United States of America v. Ana Alverez, 21‐1119.

Please enable JavaScript to view this content.

{{ articles_remaining }}
Free {{ article_text }} Remaining
{{ articles_remaining }}
Free {{ article_text }} Remaining Article limit resets on
{{ count_down }}