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United States v. Palma

decided: April 16, 1985.

UNITED STATES OF AMERICA, APPELLEE
v.
JOSEPH PALMA, APPELLANT



Appeal from the United States District Court for the Middle District of Pennsylvania (D.C. Crim. No. 84-00039-01).

Seitz, Gibbons, and Sloviter, Circuit Judges.

Author: Seitz

SEITZ, Circuit Judge.

In this appeal Joseph Palma challenges the constitutionality of the restitution provisions of the Victim and Witness Protection Act of 1982 (the "VWPA"). 18 U.S.C. §§ 3579 and 3580 (1982). While Palma pled guilty to criminal charges and does not contest the validity of the plea on appeal, he appeals from the sentence to the extent that it orders restitution pursuant to the VWPA. Jurisdiction for this appeal exists pursuant to 28 U.S.C. § 1291 (1982).

I.

On March 26, 1984, Palma pled guilty to charges of embezzling a substantial sum of money from his employer, the Old Forge Bank of Old Forge, Pennsylvania (the "Bank"), in violation of 18 U.S.C. § 656 (1982). To assist the district court in imposing a sentence, the probation service of the court conducted a presentence investigation. The presentence report, in accordance with Rule 32(c) of the Federal Rules of Criminal Procedure, contained information pertaining to the degree of harm sustained by the Bank. The report also contained an analysis of Palma's financial circumstances and included a financial statement submitted by Palma.

The report indicated that the Bank had sustained losses in the amount of $1,581,200, that it was insured for losses resulting from embezzlement, and that the insurance policy carried a $10,000 deductible. Palma's financial statement revealed that he had a certificate of deposit with the Bank for approximately $79,000, and had accrued benefits in an employee profit sharing plan in excess of $30,000.

Palma and his attorney were afforded an opportunity to review the presentence report prior to sentencing. At the sentencing hearing Palma presented witnesses who testified as to his good character and his reputation as a hard-working and loving family man. Mrs. Palma testified that her husband had been employed with the Bank for a period of twelve years and had been making approximately $300 per week in his last year of employment. She also testified that in 1983, Palma had opened a small grocery store. On cross-examination, Mrs. Palma testified that she was aware that her husband gambled and that she would sometimes accompany him to Atlantic City where they were treated like a king and queen. Palma did not testify in his own behalf.

At the close of Palma's presentation of witnesses, the attorneys for each side were permitted to make statements to the court. Palma's counsel stated, without contradiction from the Government, that Palma admitted to having misappropriated the $1,521,200, but claimed to have gambled away the entire sum. The attorney then argued that given Palma's present net worth and future earning capacity, it would be impossible for him to repay the entire amount embezzled.

The district court sentenced Palma to five years imprisonment and ordered him to pay a fine of $5,000. Although the court expressed some doubt about Palma's ability to repay the full amount in question, it further directed that

pursuant to the Victim and Witness Protection Act of 1982 as a special condition of parole the defendant is ordered to make restitution to the [Bank] in the sum of $1,581,200 in such installments that shall not be later than five years after the end of the term of imprisonment previously imposed.

App. at 39. Subsequently, Palma moved to have the restitution provisions of the VWPA declared unconstitutional. The district court denied the motion, and Palma appealed.

II.

Palma reasserts his constitutional challenge on appeal. In the alternative, he contends that the district court abused it discretion in ordering him to make restitution of the full amount embezzled. We will address Palma's constitutional arguments first. In so doing, we note that at least five other circuits have upheld the restitution provisions of the VWPA against similar constitutional challenges. See United States v. Keith, 754 F.2d 1388 (9th Cir. 1985); United States v. Watchman, 749 F.2d 616 (10th Cir. 1984); United States v. Brown, 744 F.2d 905 (2d Cir.), cert. denied, 469 U.S. 1089, 105 S. ...


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