December 19, 2008 — Today the U.S. Court of Appeals for the Eleventh Circuit agreed with arguments advanced by Professor Paul G. Cassell of the S.J. Quinney College of Law and held that anyone who is injured as the result of a financial fraud are “crime victims” protected by the Federal Crime Victims Rights Act (CVRA). The ruling could have major implications for the prosecution of financial fraud crimes in the future and will significantly expand restitution available for those crimes.
On December 2, 2008, Professor Cassell and Sarasota Florida Attorney Alan E. Tannenbaum filed an emergency petition on behalf of Janis W. Stewart and 111 victims of a financial fraud committed by Philip William Coon. The petition challenged a ruling by U.S. District Judge Elizabeth A. Kovachevich on November 21, 2008, that these borrowers on loans from Coast Bank were not “crime victims” of Coon’s criminal conspiracy because they were not specifically listed in the criminal charges against him. The petition contended that, because the borrowers suffered financial losses from the fraud, they are “victims” entitled to the protections of the federal Crime Victim’s Rights Act. The petition cited documents showing that Coon received more than $1.1 million from his crime, which he used to buy overseas vacations, fine wine, expensive jewelry, a $20,000 piano, and other luxury items. The petition stated that “while Coon was enjoying the high life on his ill-gotten gains, the borrowers were all paying interest on the money financing it.” The petition sought restitution for the borrowers.
The borrowers’ petition arose out of scheme by Coon to “skim points” off of residential mortgage loans. On November 5, 2008, Coon pled guilty to the scheme in U.S. District Court in Tampa. One hundred and twelve borrowers of these loans then filed a motion with Judge Kovachevich to be recognized as “victims” of his crime of conspiracy because they had to pay extra on their mortgages because of the crime. Judge Kovachevich denied the motion because the government’s charges only specifically listed Coast Bank, Coon’s employer, as the victim of the crime.
In a ruling released today in Atlanta, Georgia, the Eleventh Circuit held that borrowers were protected “victims” under the Crime Victims Rights Act (CVRA) because they suffered financial harms because the became legally obligated to pay the point that Coon skimmed off the loan and had to pay interest on the point. The Eleventh Circuit stated: “The CVRA does not limit the class of crime victims to those whose identity constitutes an element of the offense or who happen to be identified in the charging document. . . . Under the plain language of the statute, a party may qualify as a victim, even though [he] may not have been the target of the crime, as long as [he] suffers harm as a result of the crime’s commission.”
Cassell described the ruling as an important victory for crime victims. “Today’s ruling means that all those who have been harmed by a financial crime are entitled to be protected in the federal criminal justice system. They are entitled to confer with the prosecutor on the charges, to obtain restitution for the crime, and to make a statement at sentencing about the proper punishment for the crime.”
Alan Tannebaum stated, “We intend to go back into district court and seek restitution for the victims who have been harmed by this crime. The defendant lived the high life through this crime, and the victims should not be left bearing the financial burden.”