Restitution Transfer and Recoupment

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Restitution Transfer and Recoupment (RTR)

A method of converting losses or damages attributable to an outside party, and costs associated with recoupment, into restitution and restitution finance payments

Provisional Patent 60/812,178 filed 06/08/2006. Contact John Frederic Kosanke for license

Permission is granted for this material to be freely copied and distributed with credit cited. Claims listed as such may not be modified.

  • Preliminary Investigation
  • Rights Transfer
  • Debt Assignment
  • Containment
  • Payment Negotiation
  • Supervision
  • Final Settlement

1. Preliminary Investigation

  • Victim or victim’s associate reports loss/ damage
  • RTR agency conducts or assists victim in level I. investigation (Internet, videos, audios, satellite, forensics, &c)
  • Bonding agency immediately engages in level I. bonding, marks and tracks suspect(s)

2. Rights Transfer

  • Victim and RTR agency quantify restitution debt based on direct and secondary losses and damages.
  • RTR agency makes initial or lump sum payment to victim in exchange for restitution rights once chances of full recoupment are deemed likely.

3. Debt Assignment

  • RTR agency proceeds to level II. (in depth) investigation where necessary
  • RTR agency projects cost of recovery and adjusts tentative recoupment payment/ supervision plan
  • RTR agency provisionally assigns debt to the extent assignable

4. Containment

  • Level II. bonding prior to contact with suspect
  • RTR or bonding agency marks or otherwise contains suspect to prevent further aggression or escape.
  • RTR agency determines confiscability of contingent property in lieu of default or debtor’s failure to negotiate, or obtains insurance against such a scenario.

5. Payment Negotiation

  • RTR agency directly or indirectly contacts suspect and presents settlement figure &/or offers negotiation as means to avoid charge and/or arrest. Suspect given ample opportunity for defense or clarification wherever possible.
  • RTR agency conducts negotiation and adjusts recoupment plan based on any new information received.
  • RTR agency conducts level III. investigation based on new information received during negotiation.
  • RTR agency and suspect negotiate &/or agree to revised comprehensive debt and payment plan.

6. Supervision

  • Level III. Bonding &/or direct supervision to assure payment and fulfillment of agreement
  • Level IV. investigation to assure continued fulfillment of agreement

7. Final Settlement

  • RTR agency makes any remaining payments to victim or victim’s estate.
  • After receiving final payment, RTR agency issues certificate of settlement to both debtor and victim.

RTR Process

Step 1. Preliminary Investigation

Reporting

  • Victim or victim’s associate reports loss/ damage. Associate may be an insurance company, estate representative, or other professional or personal associate. Where restitution rights for a death are purchased by, or otherwise transferred to, the RTR agency, the beneficiaries will likely be friends, acquaintances, or associates of the deceased who have been affected emotionally and/or financially by the event. In this case, an estate fund can be set up, which may involve disbursal over an agreed time.

Level I. Investigation

  • RTR agency conducts or assists victim in level I. investigation (Internet, videos, audios, satellite, forensic identification, &c) in order to determine the appropriate debt assignee(s), approximate cost of recoupment, approximate bonding requirements, and interest projection.

Level I. Bonding

  • Bonding agency immediately engages in level I. bonding, marks and tracks suspect &/or liquid assets.

Step 2. Rights Transfer

Debt Quantification

  • Victim and RTR agency quantify debt based on direct and secondary losses and damages.

Purchase

  • RTR agency makes initial or lump sum payment to victim in exchange for restitution rights once chances of full recoupment are deemed likely.
  • This instrument generally applies to the purchase of RTR rights from an uninsured party (victims who wish to be compensated) by an RTR agent - where there is no previous coverage for the loss or damage. Restitution rights grantor specifies losses and/or damages that occurred, and accepts payment for restitution from agency in exchange for restitution rights transfer. Payment may be monetary or take the form of protection as added coverage.
  • Restitution rights can also be transferred through a contract of adhesion (i.e. an insurance policy).
  • Where victim agrees to partial compensation, he must sign a waiver.

Step 3. Debt Assignment

Level II. Investigation

  • RTR agency proceeds to level II. (in depth) investigation where necessary. RTR enabled agency conducts investigation to pinpoint the party/ies to which loss or damage is attributable. Agency may subcontract function, or use available information for assignment of debt.

RTR agency projects cost of recovery and adjusts tentative recoupment payment/ supervision plan

  • RTR financed costs may include those involved in any investigation necessary for a clear assignment of debt, and any costs involved in apprehension of or arbitration concerning the debtor. A debtor with an unfavorable background may also be required to pay the costs of job placement and/or training, and/or any supervision necessary to assure that required payments are made. Since the financing party will need to recoup the costs, such costs will tend to be kept at competitive levels and spread out over a sufficient time frame in order to avoid default.

RTR agency provisionally assigns debt to the extent assignable

Step 4. Containment

Level II. Bonding

  • Level II. bonding prior to contact with suspect

Marking Target

  • RTR or bonding agency marks or otherwise contains suspect, or reasonably liquid assets/ real property belonging to suspect, that exceeds value to be recouped, in order to prevent further aggression or [escape].

Marking Contingent Target

  • RTR agency determines confiscability of contingent property in lieu of default or debtor’s failure to negotiate, or obtains insurance against such a scenario.

Contract Containment

  • RTR enabled agency contracts with appropriate agency to contain or mark individual(s) to which loss is attributable. In some cases, apprehension may be necessary.

Step 5. Payment Negotiation

Contact

  • Agency negotiates with attributee, directly or through mediation, regarding amount and time of payment, and any other terms. This step may entail several meetings or other communications in order to establish the costs and other factors involved. While arrest and criminal prosecution are to be of last resort, they may be used as points of negotiation or incentives for participation in an RTR program. The RTR agency recoups costs involved in RTR through a garnishment scheme, automatic debit, or other arrangement with the debtor party at an interest rate agreeable to the arbitrator and/or debtor. An RTR enabled agency will also need to keep its package sufficiently attractive to the debtor to be seen as a viable alternative to one offered by a competing agency. Even where given few choices, a debtor will generally find it to be in his best interest to pay the costs associated with restitution in order to avoid a criminal record, incarceration, or other unpalatable alternatives.
  • RTR agency directly or indirectly contacts suspect and presents settlement figure &/or offers negotiation as means to avoid charge and/or arrest. Suspect given ample opportunity for defense or clarification wherever possible.

Adjustment

  • RTR agency conducts negotiation and adjusts recoupment plan based on any new information received.

Level III. Investigation

  • RTR agency conducts level III. investigation based on new information received during negotiation.

Debt Package Settlement

  • RTR agency and suspect negotiate &/or agree to revised comprehensive debt and payment plan.

Step 6. Supervision

Note: The following costs will have been included in the negotiated payment plan from Step 5.

Level III. Bonding

  • Level III. bonding, electronic or other tagging, &/or direct supervision to assure payment and fulfillment of agreement
  • Agency contracts with appropriate outside agencies regarding any necessary supervision or surveillance required for guarantee of payment by debtor, or other required services. Bonded agency accepts debt obligation in the event of default., or for further loss or damage to claimant or RTR agency.

Level IV. Investigation

  • Level IV. investigation to assure continued fulfillment of agreement
  • A separate bonding agency or other vehicle may be used to guarantee receipt of funds, where investment by insurer is limited by law or resources to a smaller fraction of funds than are required for an RTR arrangement, or where a direct RTR investment is considered too risky.

Step 7. Final Settlement

Final Payment

  • RTR agency makes any remaining payments to victim or victim’s estate.

Certificate of Settlement

  • After receiving and disbursing final payment, RTR agency issues certificate of settlement to both debtor and victim. Participating agencies (associates, actuaries, bonding agencies, financing agencies, legal council, arbitrators) may also receive a CS if appropriate.

Features:

  • Triple bonding levels at steps 1, 4, and 6
  • Investigation at levels 1, 3, 5, and 6
  • Rights transfer formats: adhesion and ex post facto
  • Estate fund for death restitution


Additional Comments

  • RTR arrangements will have few opponents - even from among legislators and judiciaries. Public courts find it in their best interest to have their case loads reduced, while legislatures welcome alternatives to costly and overstrained prison systems.
  • Injured parties should be receptive to RTR arrangements because they eliminate the burden of participation in the process of restorative justice without eliminating compensation for their losses or damages. Their injuries need not be compounded by such added costs and concerns. Further, since insurers will be able to reduce their rates as a result of the added income, insurance consumers will likely enjoy the benefits of a buyer’s market.
  • Insurance contracts into which RTR clauses could be inserted include any P&C or H&L policy where an injury or loss is a result of human action or negligence. Examples include business continuation insurance, contract insurance (breach of contract), theft, bodily injury, vandalism, auto liability, or health & life.
  • This method does not apply to acts or negligence by the insured, in which a manufacturer, service provider, or other party, took reasonable measures to insure the safety of the users of his product or service, or where the insured has agreed to accept responsibility for any loss resulting from acts or omissions.

Principal Problems Solved by RTR

1) Many loss/damage victims are uninsured and uncovered. RTR assists uninsured victims of loss or damage by compensating them.

2) Criminal records damage reputations, job prospects, and lives. RTR allows aggressors alternatives to criminality, and gives them the means to get back on their feet.

3) Prisons have become crowded, and are expensive to maintain. By providing alternatives, RTR helps save public money otherwise spent on the housing of prisoners.

4) Public court dockets are backlogged in most regions. RTR saves time and costs associated with standard adjudication via the public courts, and reduces caseloads for judges.

Primary Beneficiaries of RTR

  • Loss/ damage victims are restored.
  • Individuals slated for jail or criminalization find alternatives

Claims Summary

  • Method of restitution rights transfer via ex post facto contract
  • Multiple-level method of RTR investigation.
  • Method of marking of party to which loss is attributable
  • Method of arrest/ criminal prosecution avoidance
  • Method of recovery negotiation with loss/ damage attributee
  • Multiple-level method of debt recovery supervision and bonding
  • Method of RTR restitution to estate fund for death benefits
  • Method of arrest/ prosecution warning for negotiation/ incentive for participation in restitution

See also

Guiding principles

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