How We Do It: A 20-Year $63 Million Federal Restitution Battle Ends

We recently achieved a rare and meaningful result for a longtime client: the expiration of a federal restitution judgment more than twenty years after sentencing, following decades of litigation with the U.S. Attorney’s Office’s Financial Litigation Unit (“FLU”).

The Original Case and Sentence

In 2003 our client was charged in a federal HUD loan-fraud prosecution in the Eastern District of New York. In December 2005, the district judge imposed a non-custodial sentence together with a restitution order of approximately $63 million. In 2008, the restitution was reduced to approximately $33 million by writ of error coram nobis, relying on the Second Circuit’s decision in United States v. Boccagna, 450 F.3d 107 (2d Cir. 2006). That decision requires that restitution be offset by the fair market value of recovered property, a principle often overlooked in complex financial cases.

Two Decades of Government Collection Efforts

Thereafter, Levitt & Kaizer continued to represent our client as FLU periodically renewed its collection efforts, dutifully sending client 45-page financial questionnaires inquiring about the client’s and his family’s income and assets. At several junctures during those 20 years, the government “shook the trees,” serving hundreds of subpoenas, conducting numerous depositions, and interviewing tenants, bankers, business associates and family members, seeking to increase our client’s restitution payments. 

Throughout the 20-years, our client complied fully with his obligation to pay 10% of his monthly income toward restitution. With our assistance, he truthfully completed FLU financial statements every year. Importantly, the client accurately disclosed that his spouse had independently built a successful resort hotel from the ground up. Although the client had located the property and was president of the corporation that owned the hotel, receiving a modest salary (a portion of which he always paid toward restitution), his spouse was the hotel’s sole owner.   

Defeating a Nominee Theory

As the twenty-year statutory life of the restitution judgment neared its end in 2023, the client’s spouse decided to sell the hotel. The government responded by asserting that the client rather than his spouse was the true beneficial owner and placed a lien on the hotel to thwart its scheduled sale. The sale price was over $13,000,000. Closing was pushed back. The government's claim that the spouse was merely a nominee is a theory frequently advanced by FLU in high-dollar restitution cases. 

We demonstrated, through documentation and testimony, that the spouse was the true party in interest, having built, operated, and owned the hotel independently. The matter was ultimately resolved by a nominal payment to FLU from the sale proceeds, avoiding protracted litigation and preserving the integrity of the client’s compliance history.

Consistent with our advice, the client continued making monthly payments equal to 10% of his modest income for the next two years rather than escalating the dispute. Over decades of practice, we have learned that FLU—like many government collection units—operates a volume business, and is often satisfied by steady, good-faith payments rather than years of additional litigation.

A Rare Outcome: Restitution Expired

Just days ago—three days before the twenty-year expiration date—the client received a letter from the Financial Litigation Unit stating:

“Your liability to pay the restitution judgment imposed by the Court has expired.”

Total paid by client: A small fraction of the total restitution imposed, despite the client’s numerous real estate and investment holdings.  

In our experience, such letters are exceedingly rare. This result reflects not only careful legal strategy, but also the client’s discipline, patience, and willingness to endure long-term scrutiny. He can now move forward free from government oversight, able to build equity and pursue new ventures without fear that success itself will trigger renewed enforcement efforts.

Long-Term Federal Defense Requires Long-Term Strategy

This case underscores a reality often missed: federal criminal cases do not always end with judgment. Restitution enforcement can last decades, and meaningful defense work frequently occurs long after the courtroom lights are off.

Levitt & Kaizer remains committed to representing clients for the long haul, particularly in complex financial cases where patience, credibility, and persistence can ultimately make all the difference.

Nicholas Kaizer

Levitt & Kaizer

(212) 480-4000