Lagos v. United States

Sergio Fernando Lagos owned a company that obtained loans from General Electric Capital Corporation by submitting false invoices. He pleaded guilty to wire fraud and was sentenced to 97 months in prison, and ordered to pay about $16 million in restitution to the victim. The government also sought over $5 million for costs incurred during investigation, prosecution, and legal proceedings, claiming it as a victim under the Mandatory Victims Restitution Act. The district court granted the request, and the Fifth Circuit affirmed. The Supreme Court unanimously reversed, holding that the MVRA does not cover the government's internal investigation or prosecution costs because they were not directly and proximately caused by the offense, but were voluntarily incurred by the government in performing its sovereign functions.

The U.S. Supreme Court unanimously (9-0) reversed the lower court rulings, holding that the MVRA does not allow restitution for the government’s internal investigation and legal costs, and remanded the case for further proceedings consistent with its opinion.

Whether the Mandatory Victims Restitution Act authorizes a federal court to order a criminal defendant to reimburse the United States for costs incurred during its own investigation and prosecution of the offense.

The decision significantly limits the government's ability to recover its own investigation and prosecution expenses from convicted defendants, clarifying that restitution under the MVRA is reserved for direct victim losses. It protects defendants from bearing the sovereign costs of criminal enforcement and reinforces the narrow causation standard for mandatory restitution in federal criminal cases.