Eleventh Circuit Court of Appeals - Published Opinions

Friday, July 27, 2007

Robertson: Lawsuit Settlement not part of Restitution Owed

In U.S. v. Roberston, No. 06-13267 (July 27, 2007), the Court affirmed fraud convictions but reversed a portion of the restitution order.
The defendant purchased software from Novell, a software manufacturer, at discount prices, fraudulently claiming to be an education institution. He then resold the software to a Novell distributor, Network Systems, who itself was not authorized to purchase software from another firm than Novell.
The Court rejected Robertson’s challenge to the sufficiency of the evidence, pointing to the circumstantial evidence of fax transmissions.
The Court also affirmed the imposition of a sentence enhancement based on the use of "sophisticated means." The Court pointed to Robertson use of fictional entities to take advantage of discounted prices.
The Court also affirmed a restitution calculation, for payment to Novell, based on the wholesale prices of all the software Robertson purchased, minus the amount Novell obtained in a settlement of a lawsuit against Network Systems arising out of Network Systems’ sales of Robertson-supplied software. The Court noted that Robertson received a benefit when wholesale, not retail, prices were used. The Court also rejected as "baseless" the argument that the software was "unique," not "fungible" goods, for which replacement cost might be the right measure.
The Court, however, agreed with Robertson that he should not have been ordered to pay $125,000 in restitution to Network Systems. This amount represented the amount Network Systems paid Novell to settle a lawsuit brought by Novell against Network Systems for Network Systems’ unauthorized sales of Robertson-bought software. The Court found that too little was known about the nature of the lawsuit for this settlement to be deemed "reasonably foreseeable" to Robertson and thus owed in restitution.