Disbursement of Restitution Funds to Victims

Chapter 8[1]

DISBURSEMENT OF RESTITUTION FUNDS TO VICTIMS

Victims should be reimbursed for their losses before other costs are paid (Rubin, 1997), and efficient and timely distribution of restitution payments is essential if victims are to be returned, as nearly as possible, to their precrime condition. A justice system that operates on principles of restorative justice focuses on the needs of victims and repairing the harm caused by the criminal offense.

PROMISING PRACTICES FOR DISBURSING RESTITUTION

Based on the responses to the survey and literature reviews, the following are promising practices for disbursement of restitution. Similar information has been presented in previous chapters regarding monitoring and enforcement and collection of restitution. Where practices or examples overlap, information in earlier chapters is referenced.

·The restitution program designates a specific agency(ies) and assigns trained individuals within the agency to disburse restitution payments. This is clearly communicated to victims, offenders, and other stakeholders in the justice system and the community.

·The restitution program has procedures in place for maintaining contact with victims to:

inform them of the case disposition (e.g., restitution amount ordered);
advise them of arrangements for the offender to pay restitution (e.g., lump sum, regular payments);
explain whom to contact with questions or concerns;
communicate when and how disbursements will be made; and
update records regarding victims’ addresses and other information related to restitution.

·Disbursement of restitution takes first priority over disbursement of other funds collected from offenders.

·The restitution disbursement agency/staff use accepted accounting standards for processing restitution payments.

·Victims receive information about other courses of action they may pursue, such as civil remedies, for their losses and/or other victim compensation programs.

·Available funds are used to pay restitution owed to victims whose claims have previously been unsatisfied because of failure of the offender in their case to complete his/her restitution obligation.

·Efforts are made to locate “lost” victims for disbursement of restitution.

AGENCIES AND STAFF RESPONSIBLE FOR DISBURSING RESTITUTION

As shown in Figure 8a, respondents to the survey indicated that in nearly half (46%) of the programs, restitution was distributed by the court clerk. However, more than one-third (36%) said disbursements were through the adult probation agency and slightly more than one-fourth (26%) were handled by juvenile probation agencies. (Percentages of agencies disbursing restitution total more than 100% because, in some jurisdictions, more than one agency performed this task.) Besides the agencies shown in Figure 8a, respondents reported the following types of agencies that disburse restitution payments to victims:

·Collections/Revenue Agencies (9 responses),

·Diversion or Pretrial Programs (7 responses),

·Juvenile or Family Courts (2 responses),

·Private and/or Nonprofit Agencies (2 responses),

·Restitution Center (1 response), and

·Criminal Records Department (1 response).

As with previously discussed aspects of restitution management, staff who handle disbursements should be trained for these duties. They not only need to handle the fiscal management aspects of their job effectively, but they also need to understand and deal empathetically with victims who may contact them regarding payments. The effects of victimization and appropriate ways of responding to victims should be included in training programs for those who disburse funds.

CONTACT WITH VICTIMS

Victims need to know the disposition of the case and the arrangements made for restitution payment, such as the total amount ordered, how the offender will pay, if not in a lump sum, and when and how disbursements are made. Those supervising the offender and monitoring restitution payments should inform victims of their role and how victims can keep in touch if questions or problems arise. Figure 8b shows the agencies that are most likely to have post-sentencing communication with victims based on the results of the survey undertaken for this project. (Percentages total more than 100% because multiple agencies report handling these responsibilities in some jurisdictions.) Adult and juvenile probation agencies, victim/witness, prosecution, and adult parole are the agencies most likely to communicate with victims.

Several other types of agencies not shown in Figure 8b were listed by respondents as having responsibility for postsentencing contact with victims, including:

·Collections agencies (5 responses),

·Victims compensation programs (3 responses),

·Diversion programs (2 responses),

·Paroling authority (1 response),

·Domestic Violence Shelter (1 response), and

·Nonprofit agency (1 response).

Exhibit 8a provides an example of an agency’s policy and procedures that illustrate specific attention to communication with victims.

Santa Barbara County, California Probation Department

Adult Manual – Financial Procedures

The supervision officer must notify victims about any Court hearings which might impact the collection of restitution, particularly those involving modification of restitution amount or payment.

The supervision officer must also notify victims of any change to probationer’s status, i.e. death, revocation, commitment, etc., which affects the stoppage of restitution payments.

Communication with victims about the payment of restitution should be designed to fit the agency’s and the victim’s needs. Ideally, both verbal and written communication should be provided, although with large caseloads, verbal communication with every victim may not be possible. However, some contact with victims might be conducted by volunteers, and agencies such as probation and parole might explore collaborative efforts with victim/witness programs. At minimum, victims should receive written information they can keep and refer to at a later time. Some key issues to address in verbal and written communications with victims include:

·Case name and number;

·Sentence or diversion agreement and what the sentence or diversion agreement means in understandable language;

·Amount of restitution ordered;

·How the offender is ordered to pay restitution (e.g., lump sum, regular payments);

·To whom the offender is ordered to pay restitution (e.g., Court Clerk, Probation Department);

·When and how the money will be disbursed to the victim;

·Whom to contact with questions;

·How to report a change of address for the victim and the importance of doing so; and

·Other options victims may pursue, such as civil remedies.

At any time a change occurs, procedures should be in place to notify the victim. Such changes might include an alteration in the amount of restitution or the payment schedule, steps being taken if the offender is in arrears with restitution payments, the offender’s leaving or entering a custody facility, and changes in program personnel who will be handling the victim’s case.

PRIORITY OF DISBURSEMENT

As with collection and crediting of restitution payments, distributing them to victims also should take precedence over other payments. Ranking of payments may be determined by legislation or agency policy. Iowa and Wisconsin have mandated the priority of restitution payments in public laws, as shown in Exhibits 8b and 8c.

Similarly, the Utah Department of Corrections has established priorities for payments in its Adult Probation and Parole Manual, as show in Exhibit 8d.

Iowa Statutes

Chapter 910 - Restitution

910.2 Restitution or community service to be ordered by sentencing court.

In all criminal cases in which there is a plea of guilty, verdict of guilty, or special verdict upon which a judgment of conviction is rendered, the sentencing court shall order that restitution be made by each offender to the victims of the offender’s criminal activities, to the clerk of court for fines, penalties, surcharges, and to the extent that the offender is reasonably able to pay, for crime victim assistance reimbursement, court costs, court-appointed attorney’s fees, or the expense of a public defender when applicable, or contribution to a local anticrime organization. However, victims shall be paid in full before fines, penalties, and surcharges, crime victim compensation program reimbursement, court costs, court-appointed attorney’s fees, the expenses of a public defender, or contribution to a local anticrime organization are paid. In structuring a plan of restitution, the court shall provide for payments in the following order of priority: victim, [italics added] fines, penalties, and surcharges, crime victim compensation program reimbursement, court costs, court-appointed attorney’s fees, or the expense of a public defender, and contribution to a local anticrime organization.

Wisconsin Register

Financial Obligations (s. DOC 328.07, Wis. Adm. Code)

(4) The department [of corrections] cashier shall disburse money paid by a probationer as soon as possible after it is received, but need not make a disbursement of less than $10 unless it is for a final payment.

. . . .

(6) The department cashier shall disburse payments made by the probationer in the following order:

(a) Payment of restitution, and interest on restitution if applicable [italics added].

(b) Payment of fines and related payments in the order specified. . .

(d) Payment of attorney fees.

Utah Department of Corrections

Adult Probation and Parole Manual

CCr06/03.01

C. If not specified, distribution priority will be:

1.restitution [italics added];

2.supervision fees or community correctional center service fees;

3.offender loans;

4.public defender fees (recoupment fees);

5.Court- or Board-ordered fines and fees; and/or

6.other obligations.

ACCOUNTING STANDARDS FOR RESTITUTION PAYMENTS

Accounting practices for receiving payments were discussed in the previous chapter. Accounting standards for disbursement of payments should be integrated with collection practices, and they are treated separately in this document only for purposes of discussion and conceptual clarity. Again, rather than highlighting specific programs, several documents were reviewed and information is combined to offer a comprehensivedescription of accounting standards for disbursement.[2] The following practices are recommended based on this review.

Internal Controls

As with receipts, disbursements must be managed so the possibility of mishandling or fraud is minimized or eliminated. This can be facilitated by the separation of staff duties for disbursement of funds, handling checks or other payment instruments appropriately, and maintaining an audit trail of payment transactions.

Separation of Staff Duties for Disbursement of Restitution Funds

Several tasks are involved in making restitution payments to victims including preparing checks, recording the payments, logging returned checks, and researching the addresses of victims with whom contact has been lost. To the extent possible, each of these tasks, as well as reconciling bank statements with cashed checks, should be handled by different personnel. This separation of duties among staff makes it much more difficult for an individual staff member to misdirect funds. Not only should duties be distributed among staff, but a system of checks and balances, with staff checking others’ work also is advisable for avoiding mistakes as well as possible dishonesty. Every decision about the operation of the program should be made with the goal of ensuring that victims receive the maximum reimbursement possible for their losses at the hands of criminal offenders.

Safeguard Checks and Other Payment Instruments

All checks used for disbursing funds to victims should be prenumbered and printed on paper that makes counterfeiting difficult. Checks should be issued only in numerical order, and any unused checks should be kept in a secure place. If a check is voided for some reason and a replacement check is issued, the numbers of the two checks should be cross referenced. The replacement check might be issued with a notation such as, “Replacement for check number 555.”

Audit Trail

Records should be maintained of all disbursement activities so that payment transactions can be traced easily. This should include, at minimum, a cash disbursement journal including the date, payee, check number, case number, and amount of the check. An account ledger for each individual victim also should be maintained, and each payment should be credited to it. It should include the date, check number, and amount of the check.

Disbursements

Throughout the restitution process, from a first complaint to law enforcement through the supervision of offenders owing restitution, procedures should be in place for obtaining and updating information about victims. To distribute payments to victims efficiently, the program must have a current name and address, and the court or paroling authority must furnish accurate information about the amount of restitution ordered and payment requirements (e.g., lump sum, monthly payments). A frequently cited complication for disbursing restitution is losing track of victims’ whereabouts. This is likely to be more problematic when there are significant time lapses before payments begin or between payments. Victims may give up on receiving payments and may make life changes without thinking to advise the agency handling restitution disbursements. Processes for finding victims with whom contact has been broken will be discussed later in this chapter, but at every contact with victims it is advisable to confirm the person’s address and phone number; a request for changes in name or address could be included routinely with every check to help remind victims of the importance of keeping this information current.

Several important decisions must be made by the agency handling restitution payments including the types of payment instruments that will be used, the frequency of payments, and the amount of payments. Each of these is discussed briefly.

Types of Payment Instruments

In the previous chapter on collection of restitution, acceptable types of payment instruments were discussed. Usually, payments are limited to those that ensure the money is collectible, such as cash, money orders, or cashier’s checks. However, other options, such as credit/debit cards and personal checks were discussed as well. There also are options for the way payments are made to victims. In most cases, agencies want offenders to make payments to the agency rather than directly to the victim so collections can be documented.

The most common method of disbursing restitution to victims is to collect the money from the offender, deposit it in an agency account, and then write a check to the victim from that account. However, another option that is used by some agencies is to have the offender make the payment with a money order. This is given to the agency handling disbursements, and staff record it as they would any other payment. Instead of depositing the money order and writing a check to the victim, the money order is sent directly to the victim. If this method is used, agency staff must be sure to post each payment by the offender, issue a receipt to the offender, copy the money orders and correspondence to victims, and log each disbursement. Careful documentation is even more important with this method because the agency will not have canceled checks to verify the victim received the payment. Occasionally, offenders will make payments directly to victims with cash, checks, or money orders. Usually, this is discouraged because the supervising agency is not able to document payments and must count on the offender and victim to inform staff of the payments. Without the brokerage of the agency, there is more possibility for mistakes or disagreements concerning the status of accounts and the accuracy of records.

Disbursement Schedule

A regular schedule of disbursements should be established, and it should focus on distributing restitution funds to victims as quickly as possible after receipt. If offenders pay with personal checks, the agency will need to wait long enough to be sure the check has cleared the bank before issuing payment to the victim. However, with money orders, cash, cashier’s checks and similar types of guaranteed payment instruments, the money is available as soon as it is processed by the collecting agency.

Payment schedules may be established in at least two ways. The one that is probably the most common is to disburse to victims at regular intervals – usually either weekly or monthly -- the amount the offender has paid. The other is to distribute payments to victims when the amount collected reaches a certain figure. For example, the victim might be paid anytime the amount of money received on his or her behalf reaches $10.00 or more. Whichever process is used, it should be explained to the victim so he or she will know what to expect.

Communication with Victims

It is helpful to let victims know their account balance with each payment. With computerized programs, or even with manual systems, the check stub or attached correspondence should indicate the balance owed prior to the current payment, amount of the present payment, and the balance owed after this payment.

In the event too much money is sent to the victim in error, the agency must request reimbursement. Instructions as to how to return or handle the overdisbursement should be sent to the victim.

Unclaimed Funds

Occasionally, checks will be returned as undeliverable. The agency should have procedures in place for handling unclaimed funds. Generally, returned checks should be posted as such to the victim’s account. A policy should be adopted, also, in the event checks are not returned but are not cashed. After a prescribed period (e.g., six months) stop-payment orders should be placed on the checks.

Lost or Stolen Checks

The agency should have a policy regarding the handling of lost or stolen checks sent to victims. A stop-payment order should be issued when a lost or stolen check is reported. Additionally, the agency should adopt procedures regarding reissuing such checks. For example, will the check be written immediately or only during the regular cycle of payments? Will the victim have to pay any bank related charges for stopping payment or reissuing a check?

Records and Reports

Bank Statements

Bank statements should be reconciled monthly, and checks that have been cashed by victims should be filed numerically with the bank statements. These can easily be cross-referenced with a particular victim’s account if necessary for documentation.

Closed Accounts

When a restitution account has been paid in full and all the money has been disbursed to victims, photocopies of the offender’s and victim’s accounts should be made and placed in both the offender’s and victim’s files in the respective agencies that maintain these. The original records should be maintained by the staff who perform the accounting functions.