Sheehan v. Saoud et al

Filing 166

MEMORANDUM OPINION AND ORDER DENYING MOTION FOR SUPPLEMENTAL RESTITUTION DKT. NO. 157 . Signed by District Judge Irene M. Keeley on 2/5/2016. (Copy counsel of record)(jmm)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
MARTIN P. SHEEHAN, Trustee of the
Bankruptcy Estate of AGS, Inc.,
Plaintiff,
v.

//

CIVIL ACTION NO. 1:11CV163
(Judge Keeley)

ALLEN G. SAOUD,
Defendant.
MEMORANDUM OPINION AND ORDER DENYING
MOTION FOR SUPPLEMENTAL RESTITUTION [DKT. NO. 157]
On April 17, 2015, Fred D. Scott (“Scott”), a former defendant
and cross-claimant in this civil case, filed a motion seeking
supplemental restitution based on his designation as a victim in a
related criminal case, United States v. Saoud, Case No. 1:12CR113
(Dkt. No. 157).1

Allen G. Saoud (“Saoud”), the defendant in both

this case and the criminal case, opposed Scott’s motion on May 1,
2015

(Dkt.

No.

159).

The

issue

presented

is

whether

Scott

improperly filed his motion for criminal restitution pursuant to 18
U.S.C. § 3664 in this civil case.

For the reasons that follow, the

Court answers that question in the affirmative and DENIES Scott’s
motion (Dkt. No. 157).

1

Unless otherwise noted, the citations in this opinion refer
to the instant case, 1:11CV163.

SHEEHAN V. SAOUD

1:11CV163

MEMORANDUM OPINION AND ORDER DENYING
MOTION FOR SUPPLEMENTAL RESTITUTION [DKT. NO. 157]
BACKGROUND
I.

The Criminal Case
On June 4, 2013, Saoud was indicted in a thirty-two count

second superseding indictment (Case No. 1:12CR113, Dkt. No. 56).
Those charges included allegations of health care fraud, aggravated
identity theft, concealment of material facts in a health care
matter, making and subscribing a false tax return, aiding and
assisting in the preparation and presentation of a false and
fraudulent return, corrupt endeavor to obstruct and impede the due
administration

of

internal

revenue

laws,

falsification

of

bankruptcy documents, bankruptcy fraud, and false statement to a
federal official.

Id.

On June 25, 2013, following a ten-day

trial, a jury returned a verdict of guilty on twenty-two counts
(Case No. 1:12CR113, Dkt. No. 106).

On July 2, 2013, the Court

entered an order adjudging Saoud guilty of thirteen counts of
health care fraud, one count of aggravated identity theft, one
count of concealment of material facts in a health care matter, one
count

of

corrupt

endeavor

to

obstruct

and

impede

the

due

administration of internal revenue laws, five counts of bankruptcy
fraud, and one count of false statement to a federal agent (Case
No. 1:12CR113, Dkt. No. 115).

2

SHEEHAN V. SAOUD

1:11CV163

MEMORANDUM OPINION AND ORDER DENYING
MOTION FOR SUPPLEMENTAL RESTITUTION [DKT. NO. 157]
On March 25, 2014, the Court sentenced Saoud to a total of 99
months

of

incarceration,

three

years

of

supervised

release,

forfeiture of $1,243.118.29, and a $2,630,000.00 fine (Case No.
1:12CR113, Dkt. No. 170).2

Importantly, it left open the issue of

restitution for 90 days pursuant to 18 U.S.C. § 3664(d)(5) (Case
No. 1:12CR113, Dkt. No. 171).

On June 5, 2014, the Court entered

an amended judgment and commitment order directing Saoud to pay a
total of $265,330.04 in restitution (Case No. 1:12CR113, Dkt. No.
196).

Relevant to the issues raised here, the Court designated

Scott as a victim and awarded him a total of $92,603.00 for
attorneys’ fees stemming from this civil case (Case No. 1:12CR113,
Dkt. No. 197).
II.

The Civil Case
On October 13, 2011, in his capacity as Trustee of AGS,

plaintiff Martin Sheehan (“Sheehan”) sued Saoud and Scott, among
other

defendants,

under

federal

bankruptcy

law

and

the

West

Virginia Uniform Fraudulent Transfers Act, W. Va. Code § 40-1A-1,
et seq. (Dkt. No. 3).

Scott in turn filed a crossclaim against

Saoud (Dkt. No. 19).

Saoud filed a motion to dismiss both the

2

The United States Court of Appeals for the Fourth Circuit
later affirmed Saoud’s convictions. See United States v. Saoud,
No. 1:12CR113, 2014 WL 7210734, at *1 (4th Cir. Dec. 19, 2014).
3

SHEEHAN V. SAOUD

1:11CV163

MEMORANDUM OPINION AND ORDER DENYING
MOTION FOR SUPPLEMENTAL RESTITUTION [DKT. NO. 157]
complaint and Scott’s cross-claim against him, but subsequently
withdrew those motions (Dkt. No. 48).

Saoud then answered the

complaint and asserted a crossclaim against Scott (Dkt. No. 55).
On October 6, 2014, Sheehan filed an amended complaint against
Saoud and Scott (Dkt. No. 86).3

Scott answered the amended

complaint on October 8, 2014 (Dkt. No. 87), followed by Saoud, who
filed his answer on October 10, 2014 (Dkt. No. 88).

With his

answer, Saoud refiled his crossclaim against Scott stemming from
the sale of Saoud’s shares in CWVD.

Id. at 8.

On October 20, 2014, Scott moved for summary judgment on both
the complaint and Saoud’s crossclaim (Dkt. No. 89). On January 28,
2015, and as amended on February 18, 2015, the Court granted
Scott’s motion for summary judgment as to Saoud’s counterclaim
(Dkt. No. 136 at 4-9).
On February 18, 2015, the Court held a final pre-trial
conference in this matter, during which it dismissed Scott as a
defendant (Dkt. No. 137). At that time, Scott voluntarily withdrew
his request to pursue a cross-claim against Saoud.

3

Id.

Sheehan also named several individual and corporate
defendants, all of whom are irrelevant to the instant motion (Dkt.
No. 86).
4

SHEEHAN V. SAOUD

1:11CV163

MEMORANDUM OPINION AND ORDER DENYING
MOTION FOR SUPPLEMENTAL RESTITUTION [DKT. NO. 157]
On March 3, 2015, following a two-day trial, the jury returned
a verdict for Saoud (Dkt. No. 150).

On April 1, 2015, Sheehan

filed his notice of appeal, which is currently pending in the
United States Court of Appeals for the Fourth Circuit (Dkt. No.
153).

The parties did not appeal the Court’s ruling granting

summary judgment to Scott, and Scott is not a party to the appeal
(Dkt. No. 164 at 3).
On April 17, 2015, Scott filed a motion in the instant case
seeking supplemental restitution based on his status as a victim of
Saoud’s criminal conduct (Dkt. No. 157).

According to Scott, he

was unaware of his additional losses – attorneys’ fees and costs in
defending the civil litigation – at the time of Saoud’s sentencing.
Id. at 3.

He therefore seeks to recover $74,487.46, of which he

claims he first became aware when his role in the civil case
concluded on February 18, 2015.

Id.

Saoud opposed Scott’s motion on May 1, 2015, arguing that (1)
it is “unclear” whether Scott’s motion is properly before the
Court, given the appeal in the case; and (2) Scott cannot seek
criminal

restitution

in

a

civil

case,

particularly

after

he

voluntarily withdrew his cross-claim (Dkt. No. 159).
On June 26, 2015, the Court ordered Saoud and Scott to file
supplemental briefs addressing the issues of jurisdiction and
5

SHEEHAN V. SAOUD

1:11CV163

MEMORANDUM OPINION AND ORDER DENYING
MOTION FOR SUPPLEMENTAL RESTITUTION [DKT. NO. 157]
whether Scott could seek criminal restitution in a civil case (Dkt.
No. 160).4

Scott supplemented his motion on July 13, 2015, arguing

that he should be permitted to seek criminal restitution in this
civil case (Dkt. No. 164 at 2).
supplement,

contending

that

On July 27, 2015, Saoud filed his

Scott’s

request

restitution is untimely (Dkt. No. 165 at 2).

for

supplemental

The motion is now

fully briefed and ripe for disposition.
APPLICABLE LAW
Restitution is a mandatory component of a federal sentence
where, as here, the crime involves fraud and deceit, 18 U.S.C. §
3662(a)(2),

or

where

an

identifiable

victim

has

suffered

a

pecuniary loss, 18 U.S.C. § 3662(c)(1)(B). Further, restitution
should be awarded for the full amount of loss suffered. 18 U.S.C.
§ 3664(f).
Under the Mandatory Victims' Restitution Act ("MVRA"), 18
U.S.C. § 3663A, a victim is defined as "a person directly and
proximately harmed as a result of the commission of an offense for
which restitution may be ordered, including, in the case of an
offense that involves as an element a scheme, conspiracy, or

4

The parties do not dispute that Scott’s motion is properly
before this Court because it is unrelated to the appeal. See Doe
v. Public Citizen, 749 F.3d 246, 258 (4th Cir. 2014).
6

SHEEHAN V. SAOUD

1:11CV163

MEMORANDUM OPINION AND ORDER DENYING
MOTION FOR SUPPLEMENTAL RESTITUTION [DKT. NO. 157]
pattern of criminal activity, any person directly harmed by the
defendant's

criminal

conduct

conspiracy, or pattern."

in

the

course

of

the

scheme,

18 U.S.C. § 3663A(a)(2).

Procedurally, the MVRA requires the Court to determine a
victim’s losses at sentencing, or if the victim’s losses are not
ascertainable at sentencing, within 90 days of sentencing.
U.S.C. § 3664(d)(5).

18

“The fact that a sentencing court misses the

statute’s 90-day deadline, even through its own fault or that of
the Government, does not deprive the court of the power to order
restitution.”

Dolan v. United States, 560 U.S. 605, 611 (2010).

If the victim “subsequently discovers further losses,” he must
petition the Court for an amended restitution order within “60 days
after discovery of those losses.”

18 U.S.C. § 3664(d)(5).

The

Court will only grant such a petition “upon a showing of good cause
for the failure to include such losses in the initial claim for
restitutionary relief.”

Id.
ANALYSIS

The sole issue before the Court is whether Scott can seek
restitution – which he admits stems from Saoud’s conviction in a
criminal case – in this civil lawsuit.5
5

Scott’s entitlement to

Saoud’s arguments that Scott filed this motion untimely or
waived his right to restitution by withdrawing his cross claim are
7

SHEEHAN V. SAOUD

1:11CV163

MEMORANDUM OPINION AND ORDER DENYING
MOTION FOR SUPPLEMENTAL RESTITUTION [DKT. NO. 157]
restitution

stems

from

the

MVRA.

That

statute

contemplates

potential victims petitioning the Court – in the criminal case –
within

60

3664(d)(5).

days

of

discovering

further

losses.

18

U.S.C.

§

Although criminal restitution “rests with one foot in

the world of criminal procedure and sentencing and the other in
civil

procedure

and

essentially “penal.”

remedy,”

the

fact

remains

that

it

is

United States v. Bruchey, 810 F.2d 456, 461

(4th Cir. 1987) (internal citations and quotations omitted).

The

Fourth Circuit has directed that courts “separate as best they can
the predominately penal elements of criminal restitution by court
order and the purely civil elements of a private compensation
agreement . . . .”
matter . . . .”

Id.

Simply put, restitution “is not a civil

United States v. Hairston, 888 F.2d 1349, 1355

(11th Cir. 1989).
To that end, the Fourth Circuit has differentiated between a
criminal restitution order and a civil lawsuit initiated by a
victim.

See Bruchey, 810 F.2d at 461.

Of course, a victim may

file a civil lawsuit against a criminal defendant.

Id.

A victim

also may receive criminal restitution in addition to compensation
in a civil case.

Hairston, 999 F.2d at 1355.

Neither scenario is

only relevant if Scott can pursue restitution in this civil case
(Dkt. No. 165).
8

SHEEHAN V. SAOUD

1:11CV163

MEMORANDUM OPINION AND ORDER DENYING
MOTION FOR SUPPLEMENTAL RESTITUTION [DKT. NO. 157]
at

play

here.

Rather,

Scott

is

restitution using this civil case.

seeking

to

reopen

This he cannot do.

criminal
If Scott

wishes to seek supplemental restitution, he must comply with §
3664(d), which requires him to file a petition in Saoud’s criminal
case.
For the reasons discussed, the Court DENIES Scott’s motion for
supplemental restitution (Dkt. No. 157).
It so ORDERED.
The Clerk is directed to transmit copies of this Order to
counsel of record.
DATED:

February 5, 2016.
/s/ Irene M. Keeley
IRENE M. KEELEY
UNITED STATES DISTRICT JUDGE

9