NOTICE: This opinion is subject to motions for reargument under V.R.A.P. 40 as well as formal
revision before publication in the Vermont Reports. Readers are requested to notify the Reporter
of Decisions by email at: JUD.Reporter@vermont.gov or by mail at: Vermont Supreme Court, 109
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before this opinion goes to press.


                                            2017 VT 82

                                           No. 2016-162

State of Vermont                                                Supreme Court

                                                                On Appeal from
   v.                                                           Superior Court, Chittenden Unit,
                                                                Criminal Division

Diane E. Stewart                                                April Term, 2017


James R. Crucitti, J.

David Tartter, Deputy State’s Attorney, Montpelier, for Plaintiff-Appellee.

Matthew F. Valerio, Defender General, and Dawn Matthews, Appellate Defender, Montpelier,
 for Defendant-Appellant.


PRESENT: Reiber, C.J., Skoglund, Robinson and Eaton, JJ., and Dooley, J. (Ret.),
         Specially Assigned


        ¶ 1.   ROBINSON, J. This case requires us to consider whether a bank is entitled to

restitution as a “direct victim” of a crime when it incurred financial harm by reimbursing an

accountholder for funds it had previously drawn from the account to pay a check that turned out

to be forged. Defendant, who was convicted of embezzling from her former employer, appeals

the trial court’s restitution order that required her to pay the bank the amount that she had

embezzled, arguing that the bank is not a direct victim of the crime and therefore is not entitled to

restitution. We affirm.

        ¶ 2.   The relevant facts are as follows. From December 2014 to July 2015, defendant

was a secretary at a law firm. In June 2015, she took two checks from the law firm, made each

payable to herself in the amount of $2500, forged an authorized signer’s signature, and deposited
them in her TD Bank account. In July, defendant’s employer discovered that she had stolen the

two checks and reported the incident to the police. The employer also filed a claim with its bank,

People’s United (the bank), and the bank reimbursed the employer’s account for the funds it had

cleared through the employer’s account pursuant to the forged checks. The bank reported that it

had no insurance to cover this loss.

       ¶ 3.    Defendant was arraigned on two counts of felony embezzlement in August 2015.

In October, she entered a plea agreement with the State and pleaded guilty to one count of

embezzlement; the State dismissed the other count. The court placed defendant on probation and

deferred her sentence for three years.

       ¶ 4.    At the restitution hearing, the bank sought restitution in the amount of $5000 to

cover the loss it incurred as a result of these events.1 In its written decision, the court concluded

that defendant must pay restitution to the bank. The court distinguished the bank from an insurer

that could not receive restitution because the bank was “not in the business of taking payments in

order to cover for the loss of others.” It concluded that the bank was entitled to receive restitution

because it “incurred a material loss as a direct victim.” Defendant appealed.

       ¶ 5.    The only issue on appeal is whether the bank in this case is a “victim” under

Vermont’s restitution statute. We review without deference the trial court’s interpretation of the

term “victim” as used in Vermont’s restitution statute. See State v. Gorton, 2014 VT 1, ¶ 8, 195

Vt. 460, 90 A.3d 901. Citing to our prior precedent, defendant contends that the bank is not entitled

to restitution because it is not a “direct victim” of the crime. She argues that the bank only incurred

harm due to its relationship with her employer, and thus the harm was an indirect consequence of

defendant’s actions. She also argues that the bank cannot receive restitution because it has

alternative civil remedies.



       1
           The employer also sought restitution for various expenses apart from the actual
embezzled funds. We do not elaborate because defendant does not challenge the trial court’s
rulings concerning restitution to the employer.
                                                2
        ¶ 6.    We conclude that the bank was a direct victim and affirm the trial court’s restitution

order. Even though Vermont’s restitution statute defines “victim” narrowly, in this case, as a result

of its own legal obligations relative to the forged checks, the bank was harmed financially as a

direct result of defendant’s crime. The cases relied upon by defendant do not persuade us

otherwise, as the bank here was harmed as a direct result of defendant’s crime, and the bank is not

an insurer.    The availability of civil remedies to the bank likewise does not undercut the

applicability of the restitution statute.

        ¶ 7.    We note at the outset that our restitution statute is drawn narrowly. Pursuant to 13

V.S.A. § 7043(a)(1), the trial court is to consider restitution “in every case in which a victim of a

crime . . . has suffered a material loss.” Section 5301(4) defines victim as “a person who sustains

physical, emotional, or financial injury or death as a direct result of the commission or attempted

commission of a crime.” “The Legislature’s use of the words ‘direct result’ indicates that it

intended to provide restitution only to direct victims of crime.” State v. Thomas, 2010 VT 107,

¶ 17, 189 Vt. 106, 14 A.3d 961. Thus, Vermont’s restitution statute “has a narrow definition of

victim” as compared to other states’ statutes. Id.

        ¶ 8.    Even with this narrow definition, as a result of its own legal obligations, the bank

in this case was directly harmed by defendant’s crime. A bank may not charge a customer’s

account for a check that is not properly payable, and because a forged check is not properly

payable, the bank is therefore obligated to reimburse the account if it pays out a forged check. See

9A V.S.A. § 4-401(a); J. Walter Thompson, U.S.A., Inc. v. First BankAmericano, 518 F.3d 128,

132 (2d Cir. 2008) (“In most cases, a drawee/payor bank is strictly liable for charging its

customer’s account for a forged or altered check pursuant to Section 4-401”); Braden Furniture

Co., Inc. v. Union State Bank, 109 So.3d 625, 630 (Ala. 2012) (explaining that under the UCC, “if

a drawee bank debits a drawer’s account for an improperly payable item, the drawee bank is

obligated to recredit the drawer’s account”); Monreal v. Fleet Bank, 735 N.E.2d 880, 881-82 (N.Y.

2000) (citing § 4-401 for proposition that “[a] check bearing a forgery of the customer’s signature
                                                  3
is an ‘item’ not ‘properly payable and therefore may not be charged against the customer’s

account”). Even though the money to pay the forged check was initially drawn from the

employer’s account, defendant effectively stole from the bank and not the employer because of the

bank’s obligation to reimburse the employer for the money paid pursuant to forged checks.

          ¶ 9.    In that respect, State v. Thomas, relied upon by defendant, is readily

distinguishable. 2010 VT 107, 189 Vt. 106, 14 A.3d 961. In that case, the defendant was convicted

of aggravated assault. The victim sought treatment at a hospital, and the trial court ordered the

defendant to pay restitution to the hospital for an outstanding bill that the victim did not pay. We

reversed the trial court’s order, noting that the restitution statute defined “victim” narrowly and

concluding that the hospital’s financial injury was only an “indirect result” of the defendant’s

crime. Id. ¶ 17. Therefore, the hospital was not a direct victim and could not receive restitution.

Id. In Thomas, the hospital’s harm was indirect because it was the result of the victim’s failure to

pay an outstanding bill, and not directly because of the defendant’s actions. Unlike the hospital in

Thomas, the bank in this case suffered direct, not “consequential,” harm, and “there is a direct link

between the crime and the restitution.” State v. Forant, 168 Vt. 217, 223, 719 A.2d 399, 403

(1998).

          ¶ 10.   Nor does our decision in State v. Webb undercut our analysis. 151 Vt. 200, 559

A.2d 658 (1989). In Webb, the defendant was convicted of driving under the influence. The trial

court ordered the defendant to pay restitution to the insurance company that insured a building that

the defendant damaged during the commission of the crime. We reversed, reasoning that the

Legislature did not intend for the term “victim” to be interpreted so broadly, and concluded that

restitution “may not include payments to insurers of direct victims.” Id. at 202, 559 A.2d at 660.

          ¶ 11.   Defendant’s argument fails for two reasons. First, the bank is not an insurer. The

bank does not accept a premium in exchange for assuming the risk of fraudulent withdrawals.

Other courts have rejected this argument for the same reason. See People v. Saint-Amans, 32

Cal.Rptr.3d 518, 524 (Cal. Ct. App. 2005) (“The bank did not insure [the victim’s] account against
                                               4
the risk of appellant’s crime, receive compensation for doing so, or contract to assume economic

liability for appellant’s crime”); State v. Hennenfent, 490 N.W.2d 299, 300 (Iowa 1992) (“[Banks]

are not in the business of insuring against anticipated risks, and they are not compensated for

assuming such risks. Nor did they voluntarily contract with [the victim] to assume liability for the

damages arising out of [the defendant’s] criminal misconduct.”); State v. Poole, 279 S.W.3d 602,

607 (Tenn. Crim. App. 2008) (“The bank was not an insurer in the present case; it did not insure

the account against the risk of the [d]efendant’s crime, receive compensation for doing so, or

contract to assume economic liability for the [d]efendant’s crime.”). Although the courts in these

jurisdictions interpret their restitution statutes more broadly than we do, their understanding of

whether a bank is an insurer is unrelated to their definition of “victim,” and as such their reasoning

is persuasive.

       ¶ 12.     Second, even if the bank had acted as an insurer, this case would be more analogous

to State v. Bonfanti, 157 Vt. 625, 603 A.2d 365 (1991). In Bonfanti, the defendant was convicted

of arson after he burned down his own building. The trial court ordered him to pay restitution to

the insurance company that paid off his mortgage. We affirmed. We explained that the holding

in Webb did not mean that insurance companies could never receive restitution, but instead that

the insurer of a party directly harmed by a crime was not entitled to restitution because it was one

step removed from the crime. Id. at 627, 603 A.2d at 366. We rejected the defendant’s argument

that the real victim of the crime was the bank that held his mortgage because the bank did not

suffer any harm and the restitution scheme “assumes the ‘victim’ of a crime suffers some sort of

wrong for which restitution compensates.” Id. at 628, 603 A.2d at 367 (citation omitted).

Furthermore, “[t]he nature of the arrangement between the insurance companies, the mortgage

holder and defendant was that if a fire occurred, the insurance companies, not the bank, would

absorb the loss.” Id. at 628, 603 A.2d at 367. Thus, the insurance company was entitled to

restitution as the direct victim of the crime.


                                                  5
       ¶ 13.   In this case, the employer suffered only a temporary loss of the embezzled funds

because the bank reimbursed it for the amount that it originally took from the employer’s account

to pay the forged checks. For that reason, the employer in this case would not be able to receive

restitution for the embezzled money because it did not suffer “a material loss.” 13 V.S.A.

§ 7043(a)(1). The relationship between the three parties in this case is similar to those in

Bonfanti—the bank was positioned to absorb the loss when defendant deposited the two forged

checks into her own account because the bank was obligated to refund the account. Restitution is

appropriate in cases such as this one where defendant’s crime directly harms the bank that must

reimburse a customer’s account for embezzled funds.

       ¶ 14.   Lastly, we reject defendant’s argument that the bank may not receive restitution

because alternative civil remedies are available to it. We have established that “restitution is not

a substitute for an award of civil damages.” Forant, 168 Vt. at 225, 719 A.2d at 404. The test,

however, for determining whether a party is a victim for the purposes of restitution is not whether

they may pursue another remedy. The test is whether there is a “direct link between the crime and

the restitution,” and we conclude that the bank’s harm is directly related to defendant’s actions in

this case. Id. at 223, 719 A.2d at 403.2

       Affirmed.

                                               FOR THE COURT:



                                               Associate Justice




       2
          Although defendant briefly raised this argument regarding People’s United’s alternative
remedies, the parties did not address the issue of how the relationship between the two banks may
impact restitution. More specifically, the parties did not analyze whether TD Bank was obligated
to refund People’s United for the amount that defendant embezzled. Because this issue was not
briefed, we do not address it.
                                                  6
