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United States v. Weimer

United States District Court, N.D. Iowa, Central Division

November 25, 2014

UNITED STATES OF AMERICA, Plaintiff,
v.
SHIRLEY WEIMER, Defendant

Page 923

For Shirley Weimer, Defendant: Aaron D Hamrock, Timothy Francis McCarthy, II, LEAD ATTORNEYS, McCarthy & Hamrock, PC, West Des Moines, IA.

For Ashley Straight, Defendant: Bradley Ryan Hansen, LEAD ATTORNEY, Federal Public Defender's Office, Sioux City, IA.

For USA, Plaintiff: Forde Fairchild, LEAD ATTORNEY, Assistant U.S. Attorney, Sioux City, IA.

Page 924

MEMORANDUM OPINION AND ORDER REGARDING INTEREST ON RESTITUTION ORDER

MARK W. BENNETT, UNITED STATES DISTRICT JUDGE.

TABLE OF CONTENTS

I. INTRODUCTION

II. BACKGROUND

A. Facts

B. Procedure and Restitution Claims

III. DISCUSSION

A. Statutory Authority to Order Restitution

B. Standard for Determining Whether Restitution is Owed

1. Is State Farm a Victim?

2. What is the Full Amount of State Farm's Loss?

C. Imposition of Pre- and Postjudgment Interest

1. Pre- and Postjudgment Interest under the VWPA

2. Pre- and Postjudgment Interest under the MVRA

3. Analysis

D. Calculating the Appropriate Interest Award

1. The Amount Subject to the Award of Interest

2. Date From Which to Calculate Interest

3. The Rate At Which To Calculate Interest

E. Payment Schedule

IV. CONCLUSION

Page 925

I. INTRODUCTION

Like a good neighbor, State Farm was there for the defendant,[1] Shirley Weimer (Weimer), in March of 2009. After Weimer filed an insurance claim for a fire that burned down her rental property, " the good neighbor," State Farm, distributed $78,593.25 to Weimer for the fire-related losses. Unbeknownst to State Farm at that time, Weimer, the " bad neighbor," had spearheaded a criminal arson conspiracy to burn down the rental property and defraud her " good neighbor" of the insurance proceeds.

On April 1, 2014, Weimer pleaded guilty to Count 1 of her Indictment, Conspiracy to Use Fire to Commit Wire Fraud, 18 U.S.C. § 1343, pursuant to a binding plea agreement. See Fed. R. Crim. P. 11(c)(1)(C). Per this plea agreement Weimer was sentenced on November 25, 2014, to 120 months imprisonment and " complete restitution." [2] Because the parties did not address what the term " complete restitution" means -- I do. The question I address is whether one of the Nation's largest insurance companies, " the good neighbor," is entitled to pre- and postjudgment interest on restitution from Weimer, " the bad neighbor" ?[3] More precisely, are both pre- and postjudgment interest on restitution under the Mandatory Victims Restitution Act (MVRA), 18 U.S.C. § § 3663A-3664, allowable when the MVRA is silent on this question?

Further complicating the above questions is the fact that the parties' Rule 11(c)(1)(C) binding plea agreement, which I accepted, does not specifically address the issue of whether to include interest on the restitution. Rather, her plea agreement provides for " full restitution," and " [c]omplete restitution shall be due and payable at or before the time of sentencing." In addition, citing to 18 U.S.C. § 3663A, Weimer's PSIR indicates that restitution is " mandatory" and provides an " Amount of Loss" of $78,593.25, but the PSIR does not include an interest calculation.

Below, I initially discuss the undisputed facts from the record, following which I summarize the legal proceedings that occurred before Weimer's sentencing hearing. After, I explain the statutory authority of federal district courts to order restitution based on the MVRA, and its predecessor, the Victim and Witness Protection

Page 926

Act (VWPA). Then I explain the two-step standard courts apply to determine whether restitution should be ordered, and why I am permitted to award restitution to State Farm. After discussing relevant case law addressing the issue of the imposition of pre- and postjudgment interest, I give my rationale for including prejudgment interest in this case. That discussion is followed by an explanation of the calculations for the appropriate prejudgment interest amount to be awarded to State Farm based on the Treasury Bill rate. Ultimately, pursuant to the MVRA, I award restitution in an amount that includes pre- and postjudgment interest. The live victim impact statement in this case shed light on the far-reaching social and economic impacts of insurance fraud.[4]

II. BACKGROUND

The facts below are undisputed and taken from the sentencing record. Approximately one week before March 2, 2009, the defendant, Weimer, approached Lisa Young (Young), who rented a home from Weimer, with a proposition. Weimer " offered Young $10,000 to burn the home [she rented from Weimer] down so she (the defendant) could defraud State Farm Insurance out of money." The rental home was insured against " accidental fire" by State Farm. After some consideration, Young agreed to partake in Weimer's scheme. Following her conversation with Weimer, Young recruited her ex-husband, Melvin Young, to assist her in the conspiracy. Young promised Melvin that she would split the agreed upon $10,000 with him.

On March 1, 2009, Young; her daughter, Ashley Straight; and Melvin entered the residence to remove clothes and animals. After Young and Straight exited the home, Melvin proved to be a rotten arsonist: " Melvin unsuccessfully attempted to burn down the residence by setting the living room curtains on fire with a newspaper." Aside from " smoldering throughout areas of the home," the fire never caught on to the rest of the residence.

That same day, Young, undeterred, recruited another potential firebug, her son, Gerald Straight, with the same proposal: if Gerald set the house on fire, Young would pay him half of the $10,000 she was promised by Weimer. Gerald accepted Young's offer. Young's children--Ashley and Gerald--drove to the residence " [s]ometime between midnight and 4:00 a.m. on March 2, 2009." Ashley and Gerald entered the residence, and " Gerald lit blankets on fire near an electrical outlet in his mother's bedroom." The burners returned sometime later to the scene to witness their incendiary fire. Subsequently, the two arsonists drove to their grandmother's residence, where all three ( i.e., Young, Ashley, and Gerald) were staying the night. Once there, the children informed Young that the home was on fire.

At 8:00 a.m. on March 2, 2009, Young called the defendant to confirm that the

Page 927

home was successfully set on fire. Later that morning, Weimer paid Young $1,000 in cash, and Weimer promised the remaining balance to Young once Weimer collected the insurance proceeds from State Farm. Keeping her word, Young gave Gerald $500 from the $1,000 down payment.

Weimer wasted no time submitting an insurance claim to State Farm; she " claim[ed] the fire was accidental" on the day the home was set on fire. Once the insurance claim was received, State Farm entered the claim into their computer network in Phoenix, Arizona. The claim was assessed by a State Farm " claims adjuster" in Lincoln, Nebraska, who called Weimer to talk about the submitted insurance claim. During the phone call, Weimer fraudulently claimed that the fire that destroyed her home was accidental. From March 30, 2009 to February 21, 2011, Weimer received four checks from State Farm, totaling $78,593.25, for the fire-related losses: (1) $33,700.53 on March 30, 2009; (2) $3,900 on May 8, 2009; (3) $3,900 on May 26, 2010; and (4) $37,092.72 on February 21, 2011.

B. Procedure and Restitution Claims

On April 1, 2014, Weimer appeared before United States Magistrate Judge Leonard Strand to plead guilty to Count 1 of her eight-count Indictment. Count 1 charged Conspiracy to Use Fire to Commit Wire Fraud, in violation of 18 U.S.C. § 1343. Judge Strand recommended that I formally accept Weimer's plea pursuant to a binding plea agreement with the government. See Fed. R. Crim. P. 11(c)(1)(C).

In Weimer's plea agreement, the parties reached a general agreement as to restitution. Paragraph 23 of Weimer's plea agreement, initialed by Weimer, provides:

Defendant agrees defendant will be required to pay full restitution to all victims of the offense(s) including relevant conduct victims. Defendant further understands the amount of loss sustained by each victim will be determined during the course of preparation of the presentence investigation report . . . Defendant understands full restitution will be ordered regardless of defendant's financial resources . . . Complete restitution shall be due and payable at or before the time of sentencing. Defendant agrees to cooperate in efforts to collect the restitution obligation, by set-off of program payments, execution on exempt and non-exempt property and/or any other means the United States deems appropriate . . .

Notably, the parties did not stipulate to a precise amount of restitution in Weimer's plea agreement.

The only place where an exact amount for restitution is suggested to me is in the PSIR. The PSIR cites to the MVRA and states that " [r]estitution is mandatory in this case." The PSIR identifies the " Amount of Loss" caused by Weimer's criminal conduct in Count 1 to be ...


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