United States v. Metz

Citations: 791 F. Supp. 2d 533; 2011 U.S. Dist. LEXIS 124071; 2011 WL 5027384Docket: Criminal Action 5:09CR51

Court: District Court, N.D. West Virginia; October 18, 2011; Federal District Court

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Bernie D. Metz pleaded guilty to embezzling from the Center Valley Federal Credit Union (CVFCU) and money laundering, resulting in a restitution order of $4,857,869. The CVFCU is recognized as the statutory victim, but the United States Attorney's Office (USAO) sought to ensure that all affected credit union members were compensated. Over 3,000 notifications were sent to CVFCU customers, leading to thirty-eight responses from individuals claiming harm due to Metz's actions, all of whom had previously been informed by the National Credit Union Association (NCUA) that their claims lacked supporting evidence.

In a memorandum filed before sentencing, the USAO argued that only the NCUA Board could be recognized as a victim entitled to restitution, though it acknowledged the Elks Lodge as a direct victim. The court, during the sentencing hearing held on February 24, 2011, confirmed the restitution amounts: $4,657,869 to the NCUA Board and $200,000 to the Elks Lodge. Additionally, the court allowed a ninety-day period for the USAO to identify any other potential victims for restitution consideration and ordered the preparation of a memorandum regarding the thirty-eight claimants' eligibility for restitution.

On March 16, 2011, the United States submitted a memorandum to the Court identifying which entities qualify as "victims" for restitution purposes, accompanied by four binders of related records. Key points include: (1) the NCUA Board, as the liquidating agent, is the sole entity recognized as a victim entitled to restitution, having stepped into the shoes of the CVFCU; (2) most individual claimants, except for the Elks Lodge and "DV," cannot demonstrate direct and proximate harm from the defendant's embezzlement; and (3) established statutory procedures exist for submitting claims to the NCUA Board during credit union liquidation, negating the need for further court review. The Court concluded that no provable direct loss resulted from the defendant's actions to any claimants. 

According to the Crime Victims' Rights Act (CVRA), a "crime victim" is defined as someone directly and proximately harmed by a federal offense. Restitution is only available to victims of the specific offense of conviction. Generally, when a financial institution is wronged, the institution itself is the victim, not individual depositors or shareholders. Legal claims for losses affecting multiple depositors must be pursued by the institution or its receiver. The NCUA Board, upon determining a federal credit union's insolvency, becomes the liquidating agent and assumes all rights associated with the credit union, including the authority to adjudicate claims. Furthermore, courts lack jurisdiction over claims related to assets of credit unions under NCUA’s liquidation authority, except as outlined in § 1787(b).

The government’s memorandum details the identity of entities entitled to "victim" status for restitution purposes, following an extensive analysis of credit union records for thirty-eight claimants and communication with the NCUA Board. Claimants were given the chance to meet with the USAO and the investigating agent to discuss their claims. It was clarified that the NCUA Board, succeeding the credit union's rights, is recognized as the victim of the defendant’s embezzlement and is entitled to all restitution. The USAO indicated that their review did not find supporting documentary evidence for the claims made by most members.

The memorandum, submitted on March 16, 2011, includes summaries of the claims and the documentation reviewed. The NCUA Board, as the liquidating agent, holds the legal right to collect obligations owed to the credit union and its members, and to disburse assets according to established payout priorities. While the NCUA Board allowed members to submit supporting documents, only two claimants provided such evidence. The majority did not utilize the mandatory administrative review process, leading to the Court’s lack of jurisdiction over their claims. 

Even if restitution were possible for individual claimants, the absence of documentation complicates the determination of owed amounts. Most claimants reported issues such as incorrect balances and unauthorized withdrawals without providing proof of loss directly linked to the embezzlement. Additionally, claims from former employees for severance pay due to job loss and one claim regarding vehicle insurance related to a loan were noted. However, these claims primarily relied on speculation rather than substantiated evidence.

Two claimants, not affiliated with the CVFCU, claimed they were owed funds for products and services provided to Metz's restaurant, "Roadworthy," due to the CVFCU's closure. The court recognized their potential financial harm but determined that they could not be classified as "victims" eligible for restitution because either their account discrepancies were unverified, or their losses were not directly linked to the defendant's embezzlement. The NCUA Board, as the liquidating agent, is designated as the legitimate victim for restitution purposes, and no evidence connected the claimants' losses to the defendant's actions. Additionally, the claimants did not exhaust their mandatory administrative remedies, which deprived the court of jurisdiction over their disputes. As a result, the court ruled that these claimants were not entitled to court-ordered restitution and directed the Clerk to transmit the memorandum opinion and order to the relevant parties, including the claimants and their counsel. 

The court also referenced the NCUA's role as an independent federal agency overseeing credit unions and noted that both claimants had already received reimbursement from the NCUA Board. The interpretation of "victim" under various federal statutes was discussed to clarify eligibility criteria for restitution. The document further indicated that claims from other parties were reviewed, with some being reimbursed, while one claimant's request was rejected due to lack of direct causation from the defendant's criminal acts.