The Third Circuit has issued an important restitution decision that significantly narrows the scope of recoverable losses under the Mandatory Victims Restitution Act (“MVRA”). In United States v. Abrams, the Court held that attorneys’ fees may not be included in restitution orders, even when those fees were incurred by victims while cooperating with the government’s criminal investigation.
The Case
Appellant Abrams was convicted of an extensive fraud scheme arising out of a clean-energy startup. The district court ordered restitution totaling more than $1 million to defrauded investors. After post-sentencing briefing, the court amended its judgment to include nearly $100,000 in attorneys’ fees incurred by victims during their participation in the government’s investigation and prosecution. On appeal, Abrams challenged only the fee component of the restitution order.
The Holding
The Third Circuit affirmed the convictions and the underlying restitution award, but vacated the portion of the restitution order awarding attorneys’ fees. The Court held that 18 U.S.C. § 3663A(b)(4) does not authorize restitution for legal fees, rejecting the government’s reliance on the statute’s residual phrase permitting restitution for “other expenses incurred during participation in the investigation or prosecution.”
The Court’s Reasoning
The MVRA allows restitution for “lost income and necessary child care, transportation, and other expenses” incurred during participation in a criminal investigation or prosecution. Applying traditional tools of statutory interpretation, the Court concluded that the enumerated items reflect modest, attendance-related out-of-pocket costs, such as missing work to meet with investigators or travel to court. Attorneys’ fees, by contrast, are fundamentally different in nature and scale, involving professional advocacy rather than incidental participation. The Third Circuit also noted that Congress expressly authorized restitution for certain professional services elsewhere in the MVRA (e.g., medical and rehabilitative services), underscoring the absence of any similar authorization for attorneys’ fees.
Breaking from Other Courts
In reaching its decision, the Third Circuit expressly abrogated prior Middle District of Pennsylvania decisions that had allowed restitution to include attorneys’ fees. Additionally, in declining to permit restitution for attorneys’ fees, the Third Circuit expressly rejected the approach taken by the Second Circuit, which has allowed recovery of such fees under the MVRA’s residual clause. Other circuits have addressed the issue only indirectly, assumed the availability of fees without deciding the question, or resolved cases on plain-error grounds. This emerging divergence among the circuits, particularly between the Third and Second Circuits raises the possibility that the Supreme Court may ultimately be called upon to resolve the issue.
Why This Matters
After Abrams, the rule in the Third Circuit is clear: MVRA restitution covers direct losses and incidental participation costs, but not attorneys’ fees. Courts may not use the statute’s residual language to shift victims’ legal bills onto criminal defendants.
The Mandatory Victims Restitution Act (MVRA), enacted in 1996, requires defendants convicted of certain federal crimes to pay monetary restitution to the victims. Defendants convicted of crimes that occurred prior to the 1996 MVRA have raised constitutional challenges to the imposition of MVRA restitution, arguing that retroactively increasing the penalty for a crime after it has already been committed violates the Ex Post Facto Clause of the Constitution.
Previously, Federal Circuit Courts of Appeals split in deciding whether MVRA restitution was a criminal punishment subject to the Ex Post Facto clause (Third, Fifth, Sixth, and Eleventh Circuits) or a civil remedy seeking the nonpunitive and equitable goal of compensating crime victims and restoring them to the position they occupied before the crime, and therefore not subject to the Ex Post Facto clause (Seventh and Eighth Circuits). In its January 20, 2026 unanimous opinion in Ellingburg, the Supreme Court resolved this split by holding that MVRA restitution is “plainly criminal punishment for purposes of the Ex Post Facto Clause,” and reinforcing the constitutional protections against retroactive penal legislation.
Background of the Ellingburg Case
Holsey Ellingburg, Jr. was convicted of a 1995 bank robbery (before the enactment of the MVRA in 1996). However, his sentencing occurred after the law came into effect and Ellingburg was sentenced to 27 years in prison and ordered to pay $7,567.25 in MVRA restitution. While incarcerated, Ellingburg paid down $2,054 towards his restitution obligation. But when he was released from prison in 2022, the government claimed that he now owed $13,476 in restitution due to interest accruing on his unpaid debt. Ellingburg challenged the enforcement of this restitution order, arguing that applying the 1996-enacted MVRA to his 1995 crime violated the Ex Post Facto Clause, which prohibits laws that retroactively increase the punishment for criminal acts.
Legal Journey
The United States District Court for the Western District of Missouri rejected Ellingburg’s challenge, holding that restitution under the MVRA was not considered criminal punishment and thus not subject to the Ex Post Facto Clause. This decision was affirmed by the United States Court of Appeals for the Eighth Circuit, which held that restitution under the MVRA was “designed to make victims whole, not to punish perpetrators” and therefore was “essentially a civil remedy created by Congress” and had only been “incorporated into criminal proceedings for reasons of economy and practicality.”
Supreme Court’s Analysis
The Supreme Court’s unanimous decision, delivered by Justice Kavanaugh, reversed the Eighth Circuit’s ruling. The Court’s analysis focuses on the statutory text and structure of the MVRA, noting that it explicitly labels restitution as a “penalty” for a criminal “offense” and imposes it during sentencing alongside other criminal punishments. This characterization aligns restitution with traditional forms of criminal punishment, thereby subjecting it to the constraints of the Ex Post Facto Clause.
The Court emphasized that restitution is ordered only after a criminal conviction and is imposed at a sentencing proceeding where the government, not the victim, is the party adverse to the defendant. This procedural context further supports the view that restitution under the MVRA is punitive in nature.
Additionally, the Court highlighted that the MVRA is codified in Title 18, “Crimes and Criminal Procedure,” and that the statutory provisions authorizing restitution orders are contained in chapters related to sentencing provisions. This placement within the criminal code reinforces the punitive character of restitution.
Importantly, the Court clarified that “our ruling today does not mean that a restitution statute can never be civil,” but was based on the specific statutory text and structure of the MVRA.
Conclusion
Ellingburg v. United States is an important decision that has solidified constitutional rights of criminal defendants regarding restitution and the Ex Post Facto Clause’s prohibition of retroactive penal laws. By affirming that restitution under the MVRA is criminal punishment, the Supreme Court has offered a reminder of the judiciary’s vital role in safeguarding individual rights and maintaining the integrity of the Constitution in the face of legislative changes.
