Restitution Follies: Heads, you win; Tales, I lose

Ward Farnsworth, guest-blogging at Volokh Conspiracy because he has a book to sell, offers some insight into the law of restitution.  For context, bear in mind that restitution is meant to make someone whole, to restore them to the status quo ante as if whatever bad thing that happened never happened.  Because victims.

I steal your $100 and use it to place a bet at a casino. I get lucky and win $100,000. Do I owe you the whole $100,000? Indeed I do. You can collect it all from me in a suit for restitution.

The case shows why it sometimes isn’t enough to make wrongdoers just pay for the harm they cause. The harm to you was $100; merely paying it back would leave me too well off and would tempt me to do it again (assuming I’m not in prison!). Sure, you could sue in tort and try to argue for punitive damages, but those are discretionary and are sure to be much smaller. You would be much better off bringing a restitution claim and asserting that the winnings are yours as a matter of right.

For those of you who see this as, perhaps, a bit one-sided, maybe even a bit too much like a lottery win masquerading as restitution,  bear in mind that the miscreant not only owes the full $100,000, but can’t deduct from it the cost of his flight to Vegas, the hotel room, the costs associated with the big win.

But if you have a keen eye, you will note that the rationale isn’t that the victim is due more than his $100, the amount initially lost, but that if the miscreant was allowed to enjoy the bounty of his having stolen the $100, it would leave him too well off.  By most definitions, that would make it punitive.

That’s not to say that the miscreant should be allowed to enjoy the bounty, but that it’s not restitution.  After all, if he lost the bet, he would still owe the $100.  If they aren’t in it together for the loss, then they aren’t in it together for the win. But that’s not the law.

Now suppose I buy my chips at the casino using the hundred dollars I took from you plus five thousand dollars of my own. I mix the chips together; it’s impossible to say which were bought with your money and which with mine. I bet a pile of the chips — a hundred dollars’ worth, in fact — and win handsomely. How do we know which of the winnings I owe you? It’s easy: all of them. The law assumes the stolen funds were the source of my gains unless I can prove they weren’t because I kept the good and bad money separate. This we call a tracing fiction. We can’t really say whether the winnings came from the stolen money, but we pretend we can because throwing up our hands in futility creates an intolerable outcome.

Money, you see, is fungible. One $100 bill looks sufficiently like the others that we don’t get too hung up on which $100 did the trick.  And once we co-mingle the nasty $100 bill with other $100 bills, it’s like a virus that infects them all.  In civil asset forfeiture, we call this substitute proceeds, meaning that any proceeds will do when it comes to not depriving the “victim” of his due.

So you worked for 30 years, saved your pennies, bought a beautiful house and used sweat equity to enlarge and enhance it, making it your pride and joy, not to mention the sweetest house on Primrose Lane.  But someone says that during the course of your long career, you glommed $100 from them you didn’t deserve, and since then your house enjoyed a huge increase in value.  Part of that increase was the normal appreciation of home values (arguendo), but part of it was due to the improvements you made since the day you glommed that nasty $100, which as it happened you used to pay the bar tab for the bottle of Crystal you drank that night.

Remember, heads they win. Tales you lose. It’s possible some judge will shake off the silliness, and just order you to give back the $100 from wherever you happen to stash your cash, but then, it’s similarly possible that the judge will roar his disapproval over your living too well at the victim’s expense.  And that, in a nutshell, is the law of restitution.

5 thoughts on “Restitution Follies: Heads, you win; Tales, I lose

  1. PDB

    I thought that they assess restitution on a principle of proportionality when money is commingled. So, if I commingle $5000 of my own money, and $100 of stolen money. then 100/5100 = 1.96% is subject to forfeiture. So if I bet $100 and win $100K, then I’d only have to pay back $1960 in restitution.

    Does the law vary by jurisdiction? I seem to recall from my federal criminal law class that the circuits are split on this issue. What about state courts? Does your description pertain to New York, or is that how most/all states are? Thanks.

    1. SHG Post author

      You might want to try clicking on the source link if you want answers to your questions as to the nature of the examples, since they’re quotes (that’s what the whole indentation thingy means). As to proportionality, that’s part of a huge battle in restitution law. It remains to be seen where it fleshes out, but it is not, as you presume, a given.

  2. Jake DiMare

    So when this nation finally faces the horror of its history the descendents of the beneficiaries of the theft of land from its native inhabitants and those who profited from slavery will not only owe what was stolen in land value and labor, but the profit of it as well? I hope I live to see the day.

Comments are closed.