The White Collar Appeal: Sixth Circuit Permits the Government to Resurrect a Request for Restitution that the Government Previously Waived

• Even where the government explicitly waived any request for restitution in an initial sentencing phase, it is permitted to seek restitution at resentencing following a successful sentencing appeal by a defendant, the Sixth Circuit held in United States v. Miclaus.  In United States v. Miclaus, the defendant won a sentencing appeal, only to have the district court impose the same prison term on remand, plus a new restitution order.
• The reason for this surprising outcome is that the Sixth Circuit has aligned with one side of an entrenched circuit split that holds that a resentencing following a general remand should proceed from an entirely clean slate, unburdened by any prior sentencing proceedings.
• Miclaus thus is a cautionary tale that defendants should think carefully when appealing their sentences and should look for ways to cabin the scope of remand if successful.

Background

Radu Miclaus was convicted of participating in a cybercrime gang that ran a number of schemes over nearly a decade.  The gang—the “Bayrob Group”—generated millions of dollars through schemes involving eBay, cryptomining, malware, identify theft, and other technological mischief.  In the sentencing phase, Miclaus’s presentence report alluded to potential restitution and stated that the government would provide restitution information “at a later date,” but the government never did so.  Then at the sentencing hearing, the government represented that nobody was seeking restitution, and the district court imposed a sentence of 216 months’ imprisonment and no restitution.  Yet just a few weeks later, a codefendant who had pleaded guilty pretrial appeared for sentencing, and the district court imposed restitution in an amount that eventually reached approximately $850,000.

Miclaus appealed, and the Sixth Circuit reversed the district court’s application of certain sentencing enhancements and remanded for resentencing.  On remand, both Miclaus and the government argued that the remand order was limited and asked the district court not to conduct de novo resentencing.  But, the government added, if the district court determined that the remand was general, it would request restitution equal to the amount the district court had ordered in the case of Miclaus’s codefendant.

The district court concluded that the remand was general and that it could consider every aspect of Miclaus’s sentence anew—not just the enhancements that the Sixth Circuit had reversed.  The government asked that the district court impose restitution, and Miclaus did not attempt to rebut the calculation or otherwise object to the imposition of restitution.  The district court then imposed the same 216-month sentence it originally had imposed, but this time with an $850,000 restitution order, as well.

Holding

The Sixth Circuit approved of the district court imposing restitution on Miclaus during the resentencing, but not the process in which the district court had determined the amount. Because Miclaus had not objected at sentencing, the court applied plain-error review, a difficult standard for defendants to meet because it requires showing that the error (1) was obvious or clear, (2) affected the defendant’s substantial rights, and (3) seriously affected the fairness, integrity, or public reputation of the judicial proceedings.”

On the scope of resentencing and imposition of restitution, the Sixth Circuit held that a general remand wipes the slate clean and permits either party to raise new issues—even issues that it waived or forfeited in the first go-round—at resentencing.  In doing so, the Sixth Circuit adhered to one side of a long-standing circuit split regarding the scope of remand for resentencing. Aligned with the Sixth Circuit are the Sixth, Ninth, Tenth, and Eleventh Circuits.  On the other side, the D.C., First, Fifth, and Seventh have held that, absent express direction otherwise, the district court should consider only new arguments or facts that become relevant as a result of the appellate court’s decision.

Having determined that clean-slate resentencing was appropriate, the Sixth Circuit saw no error whatsoever in the imposition of restitution notwithstanding the government’s earlier failure to seek it.  Among other things, the Mandatory Victim Restitution Act required the district court to impose restitution—if anything, its earlier failure to impose restitution was reversible error.

Nevertheless, the Sixth Circuit concluded that the district court plainly erred when it based the restitution order on evidence never disclosed to Miclaus.  The restitution amount imposed on Miclaus matched the amount the district court had imposed on Miclaus’s codefendant.  That amount derived from victim-impact statements and other information that was part of the record in the codefendant’s case but had remained under seal and never been provided to Miclaus.  On appeal, Miclaus argued, the government conceded, and the Sixth Circuit agreed this constituted plain error.  So the court vacated the restitution order and remanded for a redo of the restitution calculation. 

Key Takeaways

Following remand, defendants should preserve arguments about the scope of resentencing.  Miclaus is a reminder that there is an entrenched circuit split regarding the scope of resentencing following remand.  Some circuits have held that resentencing is de novo and district courts may consider any valid argument or evidence; some have held that resentencing should be limited to arguments that are newly relevant as a result of the appellate decision; and one—the Second Circuit—has said basically that “it depends.” Although Miclaus likely is not a good vehicle to resolve that circuit split—the Sixth Circuit reviewed for plain error; the government conceded there was a procedural defect that required vacatur and remand—the Supreme Court may eventually grant cert to resolve this split.  Defendants thus should preserve this issue where applicable.

Be careful what you wish for.  Poor Radu Miclaus won his initial appeal yet ended up with an even worse sentence as a result. The Sixth Circuit saw no issue with that, acknowledging that “a defendant being resentenced on remand risks . . . a harsher sentence.”  Defense counsel should advise clients of this risk—however remote—in writing so that they can be sure clients understand the landscape (and cannot blame their lawyers later if they end up in Miclaus’s position).

Consider framing sentencing appeals to narrow the scope of a potential remand.  In Miclaus, both sides agreed that the court’s original remand was general, not limited.  Defendants in the Sixth Circuit and others who permit de novo resentencing following a general remand should consider whether they can focus their appeals on issues that, if successful, will result in a limited remand that does not permit de novo resentencing.  Although a determined district court nevertheless may be able to impose the same (or a worse) sentence following a limited remand, a limited remand should offer some protection against the possibility.

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