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Identity theft results in aggregated restitution.

Byline: Barbara L. Jones

Minimum restitution means minimum per victim, even where there are 66 of them, the Supreme Court ruled on Jan. 3, agreeing with the Dakota County District court and the Court of Appeals. It upheld an order of a total of $66,000 restitution from Emile Rey, who pleaded guilty to one count of identity theft. He asserted the restitution order violated substantive and procedural due process and was an unconstitutional fine. The court disagreed and denied his request to declare the restitution statute unconstitutional, vacate the restitution order and remand for a hearing or a Blakely trial on aggravating factors that increase a sentence. Home Depot data breach The trouble for the victims began when Home Depot was hacked, resulting in a huge data breach. The breach has been said to affect 60 million credit card holders. In this case, all the cards involved were issued by Wells Fargo. The defendant used cloned credit cards copies of cards with the magnetic strip information from a real card encoded on them to purchase gift cards. He and an accomplice were arrested using a cloned card at a Target store in Eagan. A search of the accomplices residence turned up 66 credit cards. Only six victims returned victim-impact statements to the court and none requested restitution. The District Court ordered the mandatory minimum for each of the 66 victims under Minn. Stat. sec. 609.527, subd. 4(b). Unlike other proceedings for restitution under Minn. Stat. 611A.045, the identity-theft statute does not expressly require a District Court to consider the amount of economic loss suffered by the victim or the defendants ability to pay when ordering restitution. The unanimous decision was written by Justice G. Barry Anderson wrote. The known unknown The court first turned to the argument that the identity theft statute violates procedural due process. The defendant argued that the standards set out by the U.S. Supreme Court in 1976 in Mathews v. Eldridge were not met. The balancing test established in Mathews requires the court to consider the private interests involved; the risk of erroneous deprivation and the value, if any, of procedural safeguards; and the governments interest and the burdens that additional requirements would entail. But the Supreme Court first said that Mathews may not apply to a criminal prosecution and that the defendant received the full range of procedural protections afforded to all defendants. But it also said that the defendants claim would fail even if Mathews applied. The defendant argued that the risk of erroneous deprivation was so high that the law should be deemed unconstitutional. But the court found that there was no risk of erroneous deprivation and that the defendant was really arguing that sentence called for erroneous compensation. Reys argumentthat the procedures afforded will result in erroneous deprivations because some victims may receive more in restitution payments than their actual loss or harmtakes aim at the substance of the law, not the adequacy of the procedures, Anderson wrote. There was no dispute that the defendant had notice of the restitution amount and could have requested a hearing, but did not. The court also found no substantive due process claim. Substantive due process protection prohibits the government from arbitrary, wrongful actions regardless of the fairness of the procedures used to implement them. The statute does not implicate a fundamental right and is subject to a rational-basis level of review, the court said. Under that standard a law will be upheld when it provides a reasonable means to a permissive objective and is not arbitrary or capricious. The defendant acknowledged that the state has a legitimate interest in compensation of identity-theft victims, but argued that the statute is arbitrary because some victims might receive restitution payments in excess of their actual losses. That does not make the statute arbitrary, Anderson wrote. The United States and Minnesota Constitutions do not require the Legislature to devise precise solutions to every problem, the court observed. The court also noted that identity-theft victims may suffer losses that are distinct from those of other crimes because the damage is hard to discover and measure. A minimum amount of restitution is rational because of the difficulty in even discovering the harm. The mandatory-minimum-restitution requirement in the identity-theft statute accounts for the known unknown: harm exists, but its nature and extent are often latent, the court said. Unconstitutional fine The defendant then asked the court to follow United States v. Bajakajian, a 199 U.S. Supreme Court case that held that forfeiture of money for violating currency-reporting requirements was a form of criminal punishment subject to the Excessive Fines Clause of the Eighth Amendment to the United States Constitution. But restitution is not a fine, the Minnesota Supreme Court said. It will be paid to the victims, not to the state, the court reasoned. We recognize that, like the forfeiture in Bajakajian, the restitution order here was part of Reys sentence, yet so are nearly all restitution orders, it concluded.

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Publication:Minnesota Lawyer
Date:Jan 9, 2018
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