Trump's pardons have shortchanged fraud victims of millions of dollars in restitution, lawyers say

Yahoo

20 hours ago

In April, fresh off a presidential pardon that sprung him from prison, convicted fraudster Jason Galanis embarked on a new and audacious legal fight: an attempt to recover money that he had already paid back his victims.
As part of his 2017 sentence, a federal judge ordered Galanis to pay more than $80 million in restitution for his various fraudulent schemes. But when President Donald Trump commuted Galanis' 189-month prison sentence in March as part of a flurry of pardons, Galanis' pardon warrant stipulated that "no further fines [and] restitution" should be collected.
Days later, Galanis asked a federal judge to order the government to return some $2 million he had already paid, arguing that because the government had not yet released those funds to his victims, Galanis was entitled to them.
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"Put very simply, the funds were taken for a particular purpose," attorneys for Galanis wrote last month in a letter to the judge. "It is indisputable that that purpose no longer exists and thus ... the funds must be returned."
U.S. District Judge Kevin Castel, the judge overseeing Galanis' case, ruled Wednesday that he cannot recoup the $2 million. But some legal experts say Galanis' bid to retrieve those restitution funds reflects a broader symptom of what they say is Trump's unprecedented use of executive pardon powers.
"Typically, the Department of Justice does not recommend a pardon in cases in which the candidate owes a significant amount of restitution ... so these pardons that wipe out large financial obligations are very unusual in their effect," former U.S. pardon attorney Liz Oyer, who is not involved in the case, told ABC News.
By Oyer's count, the recipients of Trump's second-term clemency cumulatively owed more than $1 billion in restitution -- money intended for the victims of fraudulent schemes. Instead, according to Oyer, "victims are just out all of the money that they expected to be repaid as part of restitution, due to the pardons."
"The victims are the losers," Oyer said. "Those are people who have a legal entitlement under federal law to be repaid their losses ... and the president is overriding that legal requirement ... to the great detriment of people who, in some cases, have lost their life savings."
Those victims include a Native American tribe, an Arizona teachers' pension fund, and even a Republican governor.
In Galanis' case, prosecutors wrote that the victims of his scheme include "pension funds held for the benefit of, among others, transit workers, longshoremen, housing authority workers, and city employees."
The majority of the victims are shareholders in companies like Nikola, whose disgraced founder and chief executive, Trevor Milton, was sentenced to four years in prison for lying about the viability of his electric vehicle technology.
Prosecutors had asked a federal judge to order Milton to pay more than $600 million in restitution, which they said was "the approximate amount of damages to investors in this case." Milton was pardoned before a judge had a chance to approve that figure, but experts said judges typically hew closely to prosecutors' calculations.
Asked in a local news interview in March whether he would repay the victims of his fraudulent scheme, Milton said he "wouldn't pay them back," but offered an alternative: "I've got a few big ventures I'm working on right now, I'd definitely be open to helping those people in the future."
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"I'm not heartless," he added. "As a matter of fact, I feel for these people probably more than most."
Pardon recipients who owed outstanding restitution at the time they were pardoned include Carlos Watson, the founder and CEO of Ozy Media who pleaded guilty to fraud charges and owed nearly $37 million in restitution, and Ross Ulbricht, the Silk Road founder serving life in prison for an online drug scheme, who was ordered to pay almost $184 million in restitution.
Other pardon recipients include Todd and Julie Chrisley, the reality television celebrities sentenced to more than seven years in prison for tax evasion and bank fraud, whose attorney suggested to TMZ that they may seek to recoup some of the $17 million in restitution that they'd already begun to pay.
Former Las Vegas councilwoman Michele Fiore, who spent some $70,000 in donations to a slain police officer fund on personal expenses, including cosmetic surgery, was also pardoned. Trump issued Fiore's pardon before her sentencing, but experts say restitution generally aligns with the cost of the purported fraud scheme.
Nevada Gov. Joe Lombardo, a fellow Republican, testified at trial that he had donated to Fiore's fund and was a victim of her fraud. Another victim, Harry Mohney, a strip club owner who donated $2,000 to the fund, said he was "distressed" to learn that Fiore would not have to pay restitution.
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"It certainly pisses me off to a great extent," Mohney told ABC News. "It's unfair that she never has to repay the people she got the money from under false pretenses, but there's nothing I can do about that."
In a statement to ABC News, White House spokesperson Harrison Fields said that Trump is "using his pardon power to offer people second chances at life."
"The Founding Fathers gave the President the pardon power to provide mercy where the President alone deems it necessary," Fields said.
Legal experts ABC News spoke with said it's unclear to what extent victims could seek to claim the restitution they're still owed following Trump's pardons. One option would be to file a civil lawsuit to reclaim damages, but that can be a lengthy and expensive proposition.
"Restitution makes it so easy -- you don't have to pay a lawyer, you don't have to go to court," said Mark Osler, an expert on clemency at the University of St. Thomas in Minnesota. "You can see why that would be a victim's first choice for how to be made whole."
Experts who spoke with ABC News struggled to cite past examples of fraudsters who were granted clemency prior to fulfilling their restitution obligations. Oyer said Trump's commutation of restitution payments is without precedent.
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"This is not normal," Oyer said.
The Justice Department, on its website, cautions fraud victims seeking restitution that "the chance of full recovery is very low," and that "while defendants may make partial payments toward the full restitution owed, it is rare that defendants are able to fully pay the entire restitution amount owed."
Nevertheless, experts say that regardless of whether victims ever completely recoup their lost money, restitution obligations remain an important mechanism in the criminal justice system.
"One of the purposes of restitution, even if it's never fully repaid, is to ensure that the perpetrator of the crime cannot enrich themselves first, while they still owe money to victims," Oyer explained. "And that's exactly what [Trump's] pardons facilitate happening."
Trump's pardons have shortchanged fraud victims of millions of dollars in restitution, lawyers say originally appeared on abcnews.go.com