On February 10, 1995, Stanley Cottman and an acquaintance delivered sixty-five cable boxes to a warehouse operation in Kenilworth, New Jersey.1 At the warehouse, they spoke with a man who paid Cottman $8,650.2 Just over a week later, Cottman brought another seventy-five cable boxes to the same warehouse, where his customer paid him $10,500.3 And again, on February 21, 1995, Cottman and his partner sold another eighty-six cable boxes to the same customer, who paid $13,280.4 All told, in the month of February, Cottman sold 231 cable boxes for a total of $34,730. They were all stolen. And, to Cottman’s surprise, his customer was an undercover FBI agent.5
Undercover law enforcement agents occasionally use sting operations to investigate individuals they suspect are committing crimes. Those operations often require the agents—like the FBI agent in the case above—to act as buyers for illicit goods or services. The money they use in those transactions—in this case the $34,730 the FBI agent paid to Cottman—is called “buy money.”6 The use of buy money is essential to sting operations and as such has a lengthy history. Law enforcement pamphlets on how to use buy money have been around since at least the late 1970s.7 Usually, the suspects to whom undercover agents pay buy money are arrested and convicted of the crimes in which they were caught participating. During sentencing in those cases, district-court judges sometimes require that defendants repay the buy money they received as a condition of supervised release.8 In United States v Cottman,9 for example, the district court sentenced Cottman to ten months in prison and three years of supervised release. As a condition of supervised release, the court ordered that he pay back $32,420 of buy money.10
The federal circuit courts disagree as to whether district courts have this authority. The Third and Sixth Circuits have held that the supervised release statute does not authorize or require repayment of buy money.11 The Seventh Circuit has held that it does.12 The result of this disagreement is that whether a defendant incurs this type of serious legal financial obligation (LFO) depends on the circuit in which she is prosecuted.
This Comment first considers the source of the circuits’ disagreement. It explains that the circuits that prohibit buy-money repayment (BMR) as a condition of supervised release do so because they believe it is restitution. The Seventh Circuit, on the other hand, reasons that BMR is not restitution and as such is permissible under the catchall provision of the supervised release statute. By and large, the circuits that prohibit BMR as a condition of supervised release have not evaluated the possibility that it could be imposed under the catchall.13
This Comment agrees with the Seventh Circuit that BMR should not be considered restitution because, as the courts have already acknowledged, it does not involve payments to crime victims. It further argues, however, that even though BMR is not restitution, imposing it under the catchall is improper—but for two reasons that the Third and Sixth Circuits do not seriously consider. First, BMR conditions conflict with a comprehensive statutory scheme of criminal LFOs that already require a defendant to repay buy money. Punitive fines, criminal forfeiture, and community restitution provide ample opportunity for the defendant to disgorge her unlawful gains and face whatever harm she has caused her victims or the community. Because the process of imposing supervised release conditions does not include the same procedures and limits that are built into those other tools, imposing BMR as a condition of supervised release allows courts and prosecutors to end-run important procedural protections. These tools enshrine congressional judgments about not only the procedural protections due to defendants facing criminal LFOs, but also how proceeds from those LFOs should be disbursed. Finally, they give the government multiple avenues to seize back what it paid out.
Second, BMR conditions do not meet the substantive requirements that the supervised release statute sets for discretionary conditions. These binding statutory provisions require a judge to consider whether each condition she imposes will further the goals of specific and general deterrence, as well as rehabilitation. As a rule, monetary conditions of supervised release work against those goals. While the supervised release statute expressly allows some monetary conditions that might help to ease a defendant’s transition back to her community, BMR is distinguishable from those conditions, as it does not further that purpose. Ultimately, the external and internal constraints on discretionary supervised release conditions work together to preclude BMR as a condition of supervised release.
- 1. United States v Cottman, 142 F3d 160, 162–63 (3d Cir 1998).
- 2. Id at 163.
- 3. Id.
- 4. Id.
- 5. Cottman, 142 F3d at 163.
- 6. See Jeffrey J. Noble and Geoffrey P. Alpert, Managing Accountability Systems for Police Conduct: Internal Affairs and External Oversight 280 (Waveland 2008) (“Buy money is used in drug and narcotic cases to purchase quantities of contraband and in property cases to purchase stolen property.”). Buy money is not exclusively used to purchase narcotics; it can be used to purchase a variety of contraband or illicit items. See, for example, Cottman, 142 F3d at 168 (using the term “buy money” to refer to “the money [the FBI] paid [Cottman] to acquire the illegal cable boxes”). Police also use buy money in “reverse stings,” in which they focus on the supply side of illegal activity and sell illicit goods instead of buying them. For examples of reverse sting operations, see Ian Duncan, Federal Authorities Ensnare Criminals in ‘Reverse Stings’ (Baltimore Sun, July 27, 2013), archived at http://perma.cc/EEX7-859S; Matt Gutman, et al, How Undercover Cops in a Florida City Make Millions Selling Cocaine (ABC News, Oct 9, 2013), archived at http://perma.cc/U3NH-TCGV.
- 7. See Howard A. Katz, Narcotics Investigations: Developing and Using Informants, 7 Police L Q 5, 11 (April 1978) (describing best practices for use of buy money during criminal investigations); Robert H. Langworthy and James L. LeBeau, Temporal Evolution of a Sting Clientele, 9.2 Am J Police 101, 105–11 (1990) (explaining that the amount of buy money needed for a store-front sting is expected to increase throughout the length of the investigation).
- 8. See Sentencing Reform Act of 1984, Pub L No 98-473, 98 Stat 1987. See also Part I.A.
- 9. 142 F3d 160 (3d Cir 1998).
- 10. Id at 164.
- 11. See id at 168–70; Gall v United States, 21 F3d 107, 111–12 (6th Cir 1994).
- 12. See United States v Daddato, 996 F2d 903, 906 (7th Cir 1993).
- 13. The only Third or Sixth Circuit opinion to acknowledge this possibility is Judge Nathaniel R. Jones’s concurrence in United States v Gall, 21 F3d 107, 112–13 (6th Cir 1994) (Jones concurring). See Part III.B.