This past April, the U.S. Court of Appeals for the D.C. Circuit ruled that an organization generally may not recoup the costs of conducting an internal investigation as restitution from an individual who has been convicted of a federal crime. In so ruling, the highly influential appellate panel split with at least six other sister circuits, including the U.S. Court of Appeals for the Second Circuit, which have consistently taken the view that such costs properly fall within the scope of restitution statutes. The issue, which should be of great interest to increasingly cost-conscious in-house counsel, is now ripe for possible review by the U.S. Supreme Court.
‘United States v. Papagno’
The defendant in the recent D.C. Circuit case, United States v. Papagno , No. 09-3002, —F.3d—, 2011 WL 1544507 (D.C. Cir. April 26, 2011), was employed as a computer specialist at the Naval Research Laboratory in Washington. Beginning in 1997, Victor Papagno methodically stole computers, monitors, printers and other related items. By August 2007, he had taken home 19,709 pieces of computer equipment—an average of 37 items per week, every week, for 10 years. According to the court, the laboratory apparently never noticed the property was missing.
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