David B. Smith, Esq.: Restitution and Forfeiture Expert

We were honored to host David B. Smith, Esq., a federal restitution and forfeiture collection specialist, as our June 2023 White Collar Support Group Tuesday Night Speaker Series presenter. David spoke about what happens when the government comes back for the money years after a case closes, and what the sentencing judge can still do about it. You can watch the full recording above.

If a letter just arrived from a unit of the U.S. Attorney’s office you have never heard of, asking you to swear to everything you own, this is the hour to spend. So is it if you are pre-sentence and the restitution number is being set now, or if you are the spouse who will live inside whatever payment gets agreed to. The demand is not the last word, and almost nobody in the room, including the judge, knows it.

Why your restitution and forfeiture numbers are often wrong

Picture the member who fought hard on every count, won a few of those fights, and then learned years later that the one number still following him around had been set by a lawyer who had never handled one before. That is much of David’s practice.

many of my clients come to me after being poorly represented in those areas and and as a result, getting a forfeiture, um, judgment or a restitution judgment or both, uh, that are not correct and that over penalize them.

Sit with that if your case is still open. By the time these clients reach David the appeal is gone, and collateral relief under section 2255 is a long shot. The number gets fixed once. Getting it right the first time is a different project from fighting it later, and it starts in the first days after agents show up, long before anyone in the room says the word restitution. It is why we point members toward forensic accountants, toward bringing financial experts in early, and toward the sentencing and mitigation work that shapes the judgment.

What happens when the financial litigation unit reopens your restitution

You served the sentence, finished supervised release, heard nothing from the U.S. Attorney’s office for years, and got some distance into building a new life. Then a new assistant U.S. attorney or a paralegal picks up your file, and the financial litigation unit gets in touch. They want to know what you can pay, so they want your finances.

A federal financial statement arrives and you swear to what is on it. David is emphatic that refusing to fill it out is the wrong move, and that some of the questions are genuinely ambiguous. Soon after it goes back, a number comes back: this much per month, often a reasonable one. Many of the people doing this work are not nasty people.

some of them are extremely aggressive, and they may expect you to basically, um, you know, live in poverty to to continue to pay off your your judgment.

This is where people freeze. Restitution is the collateral consequence that outlasts all the others, and the one our members hear least about beforehand, so the demand lands as though it were final. Members carrying a tax count have a second problem underneath it: restitution and tax loss are two numbers built two different ways, and the one the collections unit enforces is the first.

The two statutes that let a judge cap what you pay

The demand is not final. If the collections unit will not come down to something reasonable, the move is back to the judge who sentenced you, to set the monthly number and to keep the government from taking everything you own.

One of the two is 28 U.S.C. 3013, a provision of the Federal Debt Collection Procedures Act written to let a judge prevent undue hardship to the debtor. A second statute does the same work over what you can be made to pay. David told the room to call him personally if anyone could not write the citations down fast enough, which tells you how rarely they come up. How he puts them in front of a judge who does not know they exist is the hour.

He had a case running in the Southern District of New York that week, over the government’s move to take part of a client’s social security check, meager enough already. A good judge, he said, who had never heard of either statute, and he did not think the prosecutor had either.

Then the questions start, and they take most of the night. One member asks whether the government can renew a twenty year restitution judgment for another twenty, and David’s answer turns on there being no published decision on it anywhere in the country. Another wants to settle with her victim directly, for less than the judgment says. A third cannot find out whether a dollar of what she has paid ever reached a victim. Our panel with the Women’s White Collar Defense Association takes up the same thread.

About David B. Smith

David is one of the few attorneys in the country, and possibly the only one, who specializes in restitution and forfeiture collection cases. He has more than 40 years of white collar criminal experience, has argued over one hundred federal criminal appeals as both prosecutor and defense attorney, and has litigated in the Supreme Court of the United States. Best Lawyers in America named him among the preeminent white collar defense lawyers from 2012 through 2023, and he has chaired the Forfeiture Committee of the National Association of Criminal Defense Lawyers since 1990. He prosecuted for nearly a decade at the Justice Department and the Eastern District of Virginia.

David joined us on Zoom on Tuesday, June 20, 2023. He was nobody’s lawyer that night, so treat this as a starting point rather than legal advice.