People v. Kim, 91 N.Y.2d 214 (1997)
In restitution hearings, the prosecution bears the burden of proving the victim’s out-of-pocket loss by a preponderance of the evidence, which includes demonstrating the amount taken from the victim, minus any benefit conferred by the defendant.
Summary
Kim, a contractor, was convicted of grand larceny for submitting false invoices to New York City. At the restitution hearing, the court determined the city’s out-of-pocket loss based on the face value of the falsified invoices, without fully considering the value of the work Kim actually performed. The Court of Appeals held that the prosecution has the burden of proving the victim’s actual loss, which means deducting any benefit the victim received from the defendant’s actions. The case clarifies that restitution aims to compensate for actual loss, not provide unjust enrichment.
Facts
Defendant Kim, principal of Foundation Construction Consultants, contracted with New York City’s Department of Citywide Administrative Services (DCAS) for construction projects. Kim submitted payment requests with supporting invoices from subcontractors to receive payments. An investigation revealed that several invoices were falsified. The city paid Foundation approximately $2,700,000 between 1996 and 1998.
Procedural History
Kim pleaded guilty to grand larceny and falsifying business records. The Supreme Court sentenced him to 1 to 3 years for grand larceny and ordered restitution. At the restitution hearing, the court adopted the prosecution’s proposed restitution amount. The Appellate Division reversed, ordering a new hearing, finding that the burden of proof was improperly shifted to the defendant. The Court of Appeals affirmed the Appellate Division’s order.
Issue(s)
Whether, in a restitution hearing, the People bear the burden of proving the victim’s out-of-pocket loss, including subtracting any benefit conferred by the defendant to the victim.
Holding
Yes, because Penal Law § 60.27 and CPL 400.30(4) explicitly place the burden of proof on the People to demonstrate the victim’s actual out-of-pocket loss, accounting for any value or benefit conferred by the defendant.
Court’s Reasoning
The Court of Appeals emphasized that restitution is intended to compensate the victim for actual out-of-pocket losses, not to provide a windfall. It cited People v. Consalvo, stating that restitution is “the sum necessary to compensate the victim for out-of-pocket losses.” The court reasoned that this includes considering any benefit the victim received from the defendant, referencing Lama Holding Co. v. Smith Barney. The court relied on CPL 400.30 (4), which explicitly states: “At any hearing held pursuant to this section the burden of proof rests upon the people.” The Court noted that the prosecution reduced the face value of some invoices by the actual cost of services rendered by subcontractors but failed to do so for all invoices, even though the DCAS engineer certified completion of the work. The Court further noted that “the prosecution, in making a prima facie showing of the proper restitution amount was required to subtract from the face amount of the improper invoices the value of the benefit conferred in connection with the underlying projects.” The court held that the defendant should be permitted to offer evidence that the work reflected in the invoices was actually done, and that fair market value evidence of materials or services provided by the defendant is relevant. The Court acknowledged that legislative reform allowing courts discretion to place the burden of proving offsets on the defendant would be useful but that the current statute plainly places the burden on the prosecution.