Bankruptcy/Special Fee Shifting Statute: Fifth Circuit Court Of Appeals Affirms Almost $16 Million Criminal Restitution Order To GECC For Legal, Expert, And Consulting Fees In Bankruptcy Fraud Proceedings

 

Basis For Order Was The Mandatory Victims Restitution Act.

 

    Although not a California case, USA v. Lagos, No. 16-20146 (5th Cir. Mar. 23, 2017 revised) (published) was interesting for purposes of illustrating that significant attorney's fees and related costs can be awarded as part of restitution entered in criminal cases. Lagos involved a nearly $16 million restitution award in a federal criminal proceeding against the defendant and in favor of General Electric Capital Corp. (GECC), the victim-lender in wire fraud counts, resulting in an eventual guilty plea by defendant to six counts in the criminal case. The restitution encompassed legal, expert, and consulting fees incurred by GECC primarily in a related bankruptcy case involving fraud proceedings. The Fifth Circuit affirmed, because such an award in its view was allowable under the Mandatory Victims Restitution Act, 18 U.S.C. §§ 2, 1343, 1344, disagreeing with a more narrow view of the statute by the D.C. Circuit Court of Appeals.