Monday, May 15, 2006

Walmart Benefits from Restitution Reform

The other day, I was updating a handout I use for presentations on financial abuse and decided to check up on a project I list in the "Best Practices” section. It's a program created to revamp Vermont’s restitution recovery system, which got started after a 2001 state auditor's report revealed that only 13 cents of every dollar owed for restitution had been collected during the previous year.

The way the program works is that rather than funneling monthly payments directly from criminals to victims, victims are paid what they're owed from a fund generated by a 15% surcharge on criminal and traffic court fines. The Vermont Center for Crime Victims Services assumes the debt and collects from offenders.

The program is innovative in a couple ways. Trained professionals, rather than individual victims, are the ones tracking down perps' assets, hopefully resulting in improved recovery rates. Also, victims don’t need to wait months or years to collect; they’re paid, up to $10,000, immediately after sentencing. The approach is also fairer. Traditionally, the victims most likely to collect restitution are those who have the resources to hire lawyers.

Although the program is considered a success, the program's founders soon realized that thousands in payouts (almost 20% of the fund) had gone to big businesses including Wal-Mart, Rite Aid and Banknorth. Clearly, businesses, especially small ones, are impacted by crime, but the Vermont program was created to help ordinary people, not publicly traded multinational corporations. In response, they went back to the state Legislature, and successfully got a new bill passed to clarify the fund's intent.

More on restitution:
In January 2005 the GAO released a report, "Criminal Debt: Court Ordered Restitution Amounts Far Exceed Likely Collections For the Crime Victims in Selected Financial Fraud Cases," which reviewed five federal financial crime cases. Only 7% of the ordered restitution had been paid despite the fact that the defendants had reported significant wealth or assets prior to their judgments. The report also includes recommendations for better enforcement of restitution, which includes encouraging prosecutors to place more pressure on offenders to pay off restitution and fines prior to sentencing as part of plea agreements. They also suggest that asset forfeiture measures be taken earlier in investigations. The report is available at

For more on approaches states have used to improve their restitution systems, see the excellent Office for Victims of Crime publication Making Restitution Work, Legal Series Bulletin #5.

Other approaches that made my “Best Practice” list are:

Dakota County, Minnesota’s probation department allows probationers to pay off restitution by doing community service. They work for minimum wage, and the county pays victims from a restitution fund.

South Carolina allows probationers to pay off unpaid supervision fees with community service. Offenders are supposed to pay a $40 fee each time they meet with probation officers.

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