United States of America v. Liang et al

Filing 12

ORDER Granting 4 Joint MOTION for Order Under 18 U.S.C. Section 3663A(c)(3); and Denying 6 Motion for Restitution. Signed by District Judge Sean F. Cox. (JMcC)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
United States of America,
Plaintiff,
v.

Criminal Case No. 16-20394
Misc. Case No. 17-50280
Misc. Case No. 17-50336

James Robert Liang, et al.,
Defendants.

Sean F. Cox
United States District Court Judge

______________________________/
ORDER
GRANTING MOTION FOR ORDER UNDER 18 U.S.C. § 3663A
AND DENYING MOTIONS/REQUESTS FOR RESTITUTION
On January 11, 2017, the United States and Volkswagen AG entered into a Plea
Agreement under Fed. R. Civ. P. 11(c)(1)(C) and the United States filed the Third Superceding
Information in Criminal Case Number 16-20394, charging Volkswagen AG with three counts: 1)
“18 U.S.C. § 371 – Conspiracy to Defraud the United States, to Commit Wire Fraud, and to
Violate the Clean Air Act” (Count 1); 2) “18 U.S.C. § 1512 – Obstruction of Justice” (Count 2);
and 3) “18 U.S.C. § 542 – Entry of Goods by False Statement” (Count 3).
On January 25, 2017, the United States Government filed an “Unopposed Motion and
Memorandum To Authorize Alternative Victim Notification Procedures Pursuant To 18 U.S.C. §
3771(d)(2).” (D.E. No. 39). In that motion, the Government acknowledged that it has various
obligations under the Crime Victims’ Rights Act, 18 U.S.C. § 3771 (“the CVRA”). The
Government’s motion explained that it would be impractical to identify, and provide individual
notice of every public proceeding to, each potential victim directly or proximately harmed by the

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charged scheme to defraud in the criminal cases. Pursuant to 18 U.S.C. § 3771(d)(2), the
Government asked the Court to adopt a reasonable procedure for providing notice to the
potential crime victims in these criminal cases – allowing the Government to provide notice to
the victims via three different websites maintained and regularly updated by the Government.
This Court granted the Government’s motion and issued an “Order Establishing
Procedure For Crime Victim Notification Pursuant To 18 U.S.C. § 3771(d)(2)” on February 7,
2017.
This Court later directed the Government to include information on those websites
advising victims that they may submit written victim impact statements to the Court, via the
assigned probation officer, which had to be received by April 12, 2017. (See D.E. No. 76). This
Court confirmed that the Government promptly updated its websites to contain that information.
Those websites also provided victim impacts forms that could be used.
Two miscellaneous cases were filed in this Court by alleged victims of the criminal
offenses charged in the criminal case against Volkswagen AG (ie., individuals who claimed to
have purchased affected Volkswagen vehicles).
Miscellaneous Case Number 17-mc-50280 was opened after Oleg Yarin filed a pro se
“Motion For Establishment Of Crime Victim Status And Assertion Of All Crime Victim’s
Rights.” Mr. Yarin identifies himself as the owner of a Volkswagen vehicle who opted out of
the civil settlements in the multi-district litigation in California (In re Volkswagen “Clean
Diesel” Mktg., Sales Practices, and Prod. Liab. Litig., No. 3:15-md-02672-CRB (N.D. Cal.)).
Mr. Yarin also indicates that he filed his own lawsuit against Volkswagen AG, that has since
been transferred and made part of the multi-district litigation in California. In his various filings,

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Mr. Yarin: 1) asserts that the Court should not accept the Rule 11 Agreement pertaining to
Volkswagen AG; and 2) asks the Court to award Mr. Yarin (and others) restitution against
Volkswagen AG in connection with the criminal case.
In response, the Government acknowledges that Mr. Yarin is a crime victim for purposes
of the CVRA. The Government, however, asks the Court to reject Mr. Yarin’s request for
restitution and find that the requirements of 18 U.S.C. § 3663A(c)(3) are satisfied because
individual restitution determinations in these criminal cases would unduly protract the litigation.
On March 6, 2017, Miscellaneous Case Number 17-mc-50336 was opened. In that
miscellaneous case, counsel representing a number of alleged victims filed an “Objection To
Plea Agreement Pursuant To Crime Victims’ Rights Act” (D.E. No. 2 in Case No. 17-mc-50336)
wherein counsel requested that this Court either reject the Rule 11 Agreement pertaining to
Volkswagen AG “or, in the alternative, to defer a decision on whether or not to accept the
proposed plea agreement until the Court has received and reviewed a presentence report,
including any victim impact statements to be submitted and any submissions from their counsel
detailing the reasons why the Objecting Victims” believe the plea agreement should be rejected.
(Id. at 3).
On that same date, March 6, 2017, the Government and Volkswagen AG filed, in the
criminal action, a “Joint Motion In Support Of Order Under 18 U.S.C. § 3663A(c)(3) Finding
That Individual Criminal Restitution Is Not Appropriate.” (D.E. No. 63 in Criminal Case No.
16-20394). In that submission, the Government and Volkswagen AG asked the Court to find
that the CVRA’s requirements are satisfied because individual restitution determination in these
criminal cases would unduly protract the litigation. That is, they asked the Court to find that

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restitution is not appropriate in this matter, and overrule the objections filed in the miscellaneous
cases. That motion states that the Department of Justice “is acutely aware of the need to
recompense victims for the Volkswagen fraud and has taken enormous efforts to that end,” and
explains that two civil settlements in the civil multi-district litigation case against Volkswagen
AG in California “provide an efficient and comprehensive mechanism for achieving consumer
restitution.” (Id. at 2-3). The motion explains that mechanism. Later, the Government filed the
same or similar filing in both of the miscellaneous cases. (See D.E. No. 6 in Case No. 17-mc50280; D.E. No. 4 in Case No. 17-mc-50336).
In addition, counsel for the alleged victims in Case No. 17-mc-50336 filed a motion
asking the Court to provide restitution to victims in the criminal cases. (See D.E. No. 6 in Case
No. 17-mc-50336).
All of the motions concerning restitution have been fully briefed and the Court concludes
that oral argument is not necessary. See Local Rule 7.1(f)(2), U.S. District Court, Eastern
District of Michigan
On March 10, 2017, this Court held a plea hearing in the criminal case against
Volkswagen AG. At that time, Volkswagen AG entered a guilty plea to Counts 1, 2, and 3 of the
Third Superceding Information. This Court accepted that guilty plea on behalf of the
corporation. After having done so, this Court noted that under Rule 11(c) of the Federal Rules of
Criminal Procedure, this Court may accept the Rule 11 Agreement, may reject it, or may defer its
decision on whether to accept or reject it until after having reviewed a presentence report.
The Court then allowed both the Government and Defense Counsel to be heard as to their
respective positions as to how the Court should proceed. Both the Government and Defense

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Counsel urged the Court to accept the Rule 11 Agreement and proceed directly to sentencing at
the March 10, 2017 hearing.
The Court then indicated that it would allow any victims, or represented victims, to be
heard by the Court. The Court noted that Mr. Yarin had filed a miscellaneous case, and the
Court had reviewed the filings in that case prior to the hearing. Mr. Yarin did not appear at the
March 10th hearing. Attorneys for the group of alleged victims that filed Miscellaneous Case
Number 17-50336, however, did appear for the March 10th hearing and were allowed to present
their views as to how the Court should proceed. Those alleged victims urged the Court, through
their counsel, to either reject the Rule 11 Agreement or to take it under advisement.
At the conclusion of the March 10th hearing, this Court took the Rule 11 Agreement
under advisement, and referred the matter to the Probation Department for the preparation of a
presentence report. The Court set a sentencing hearing for April 21, 2017.
At the April 21, 2017 hearing, the Court noted that one important aspect of the Rule 11
Agreement under consideration is that it provides for no restitution for victims in connection
with this criminal case. Pages 14 to 15 of the Rule 11 Agreement state as follows:
E.

Restitution

No order of restitution is appropriate in this case pursuant to 18 U.S.C. §
3663A(c)(3), as the number of identifiable victims is so large as to make
restitution impracticable and/or determining complex issues of fact related to the
cause or amount of victims’ losses would complicate or prolong the sentencing
process to a degree that the need to provide restitution to any victim is
outweighed by the burden on the sentencing process. Moreover, as noted in
Paragraph 2(A) above, the Defendant has already agreed to compensate members
of the class in In re Volkswagen “Clean Diesel” Marketing, Sales Practices, and
Products Liability Litigation, No. 3:15-md-2672 (N.D. Cal.), which consists of
individuals who purchased affected vehicles described in Exhibit 2.
(Rule 11 Agreement at 14-15).
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At the April 21, 2017 Sentencing Hearing, the Court allowed all alleged victims who
wished to be heard by the Court to express their respective positions concerning restitution. The
Court also read and considered all written submissions filed in both the of the miscellaneous
cases and all of the written victim impact statements submitted to the Court.1
After careful deliberation, having considered the competing arguments, as well as all
written motions and submissions to the Court, this Court finds, pursuant to 18 United States
Code Section 3663A, that from the facts on the record, that determining complex issues of fact
related to the cause or amount of victims’ losses would complicate or prolong the sentencing
process to a degree that the need to provide restitution to any victim is outweighed by the burden
on the sentencing process. Accordingly, the Court:
1)

OVERRULES the victim objections to the Rule 11 Agreement, made in
connection with Miscellaneous Cases 17-mc-50336 and 17-mc-50280, and those
made via written impact statements;

2)

DENIES all motions and requests for restitution in Miscellaneous Cases 17-mc50336 and 17-mc-50280; and

3)

GRANTS the Joint Motion for Order under 18 U.S.C. Section 3663A in Criminal
Case Number 16-20394 and related motions/requests made in Miscellaneous
Cases 17-mc-50336 and 17-mc-50280.

The Court further ORDERS, that as to Miscellaneous Cases 17-mc-50336 and 17-mc50280, this is a final order that closes those cases.
IT IS SO ORDERED.

1

Those victim impact statements were collected by United States Probation Officer
assigned to the case and were provided to the Court along with the Presentence Report.
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s/Sean F. Cox
Sean F. Cox
United States District Judge
Dated: April 21, 2017
I hereby certify that a copy of the foregoing document was served upon counsel of record on
April 21, 2017, by electronic and/or ordinary mail.
s/Jennifer McCoy
Case Manager

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