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National Crime Victim Law Institute

Local #46 Metallic Lathers Union and Reinforcing Iron Workers and Its Associated Benefit and Other Funds

June 09, 2009

Local # 46 Metallic Lathers Union and Reinforcing Iron Workers and its associated benefit and other funds (Local 46 or petitioner), filed a petition for writ of mandamus in the Second Circuit challenging the district court’s determination that it was not a crime victim and therefore not entitled to restitution. The defendant pled guilty to an indictment charging him with one count of conspiracy to launder money based on his actions as president of a company that installed rebar on union job-sites. Local 46 filed a motion to compel restitution before the federal magistrate judge, arguing that defendant’s plea entitled it to restitution pursuant to the Crime Victims’ Rights Act of 2004 (CVRA), 18 U.S.C. § 3771, and the Mandatory Victims Restitution Act of 1996 (MVRA, 18 U.S.C. §§ 3663A-64). Local 46 based its entitlement to restitution on the fact that defendant’s money laundering scheme included off-the-books cash payments to employees that had the effect of avoiding significant benefit contributions to the unions required by the collective bargaining agreements entered into between Local 46 and defendant. The federal magistrate denied the motion to compel restitution and the district court adopted the magistrate judge’s report and recommendation in its entirety, including its finding that Local 46 was not a crime victim under the CVRA or MVRA because Local 46 had not been directly and proximately harmed by defendant’s money laundering scheme. The district court found that because the offense was complete before defendant made the cash payments to his employees, any harm to Local 46 was not sufficiently causally connected to the money laundering conspiracy.

On its mandamus petition to the Second Circuit, Local 46 argued that there was a sufficient causal connection because defendant’s cash payments to his employees were the financial transactions that completed the money laundering conspiracy. The Second Circuit denied the petition. Applying the definition of victim under the MVRA, the court held that the district court did not abuse its discretion in concluding that Local 46 was not directly and proximately harmed by the offense as the crime was complete before defendant made the cash payments to employees. In reaching this conclusion, the court noted that “petitioner has argued this case under the provision of the MVRA concerning offenses that involve a conspiracy,” and therefore the court was not required to address whether the outcome of the case would be different if analyzed under the CVRA’s definition of crime victim.

A copy of this decision can be found on Westlaw at: 2009 WL 1587278 or on Lexis at: 2009 U.S. App. LEXIS 12309