USA v. Clements et al

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
UNITED STATES OF AMERICA
v.
Case No. 5:23-cr-01389-MIS
KEVIN DWIGHT CLEMENTS and
KARYN L. ESTRADA,
Defendants.
RESTITUTION ORDER
THIS MATTER is before the Court on the United States of America’s (“Government”)
Sealed Request for Restitution (“Mot. for Restitution”), ECF No. 282, filed January 21, 2025. On
February 11, 2025, Defendant Karyn L. Estrada (“Estrada”) filed a Response (“Estrada Restitution
Resp.”), ECF No. 301, and Defendant Kevin Dwight Clements (“Clements”) filed a Response
(“Clements Restitution Resp.”), ECF No. 302. The Court held an evidentiary hearing on April 22,
2025. See ECF No. 314. Thereafter, on May 28, 2025, the Court issued an Order Regarding the
Discount Rate to Apply to the Restitution Order (“Order Regarding the Discount Rate”). ECF No.
315. The Government filed a Response to the Order Regarding the Discount Rate on June 26,
2025, ECF No. 317, to which Defendants timely replied, ECF Nos. 319, 321. The Court held a
status conference on September 17, 2025, see ECF No. 327, and the next day, with the agreement
of the Parties, issued an Order for Report from its Rule 706 Expert (“Order for Report”), ECF No.
328. The Rule 706 expert submitted his report (“Rule 706 Expert Report”), docketed on October
7, 2025 at ECF No. 329, to which the Government filed a response on October 21, 2025, ECF No.
331. Defendant Clements filed an untimely response to the Court’s Order for Report, maintaining
“all previous motions and objections” to an order of restitution. ECF No. 330. Upon consideration
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of the Parties’ submissions, the record, and the relevant law, the Court will GRANT IN PART
the Government’s Motion for Restitution.
I. Background
This case involves the physical and sexual abuse of minor Jane Doe (“Doe”). Defendant
Clements began sexually abusing Doe in November of 2018 when Doe was ten years old. Clements
Presentence Investigation Report (“PIR”) ¶ 10, ECF No. 214. The abuse continued for
approximately seven months. Id.
At the time, Clements was dating Doe’s mother, Defendant Estrada. Id. ¶ 8. Estrada
permitted Clements to sexually abuse Doe in exchange for cash. See id. ¶ 17; Estrada Plea
Agreement ¶ 9, ECF No. 143.
The first time Clements sexually abused Doe, “he took her into the spare bedroom in his
home, and her mother, Estrada, was in the room. Doe screamed out to her mother for help, but her
mother only watched until she (Estrada) eventually walked out of the room, leaving Doe alone in
the room with Clements.” Clements PIR ¶ 10, ECF No. 214. “Doe testified that it was painful
when Clements penetrated her vagina with his penis and that there was blood on the toilet paper
she used to wipe afterwards.” Id.
The following week, Clements grabbed Doe and threw her into the same bedroom where
the first assault occurred. Id. ¶ 11. Clements then attempted to remove Doe’s clothing. Id. As he
attempted to remove her underwear, however, Doe resisted, and Clements began to rip her
underwear off. Id. Clements then touched Doe’s genitals before vaginally penetrating her while
using his hand to hold her arms so she could not move. Id. When she cried, “Clements covered her
mouth, eventually taping her mouth with duct tape and advising Doe that if she yelled, he would
kill her.” Id. Clements also pointed a gun at Doe’s head and put a knife to her stomach while
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threatening to kill her. Id. During the assault Clements stepped on Doe’s stomach, hit her, and
kicked her in the head. Id. Although the door was closed during the assault, Doe could hear Estrada
moving around in the kitchen. Id. Doe stated she woke up the next day in the kitchen with all her
clothing on except for her underwear. Id.
On another occasion, during a trip to a store, Clements pushed Doe into his car, tied her
hands behind her back, and bound her feet. Id. ¶ 12. Clements placed Doe on the floor of the
vehicle, covered her with a blanket, and then drove them back to his residence where he advised
Doe that if she told anyone he would harm her family. Id. When they arrived at his home Doe
attempted to flee, but was caught by Clements who warned her that he would shoot her if she did
it again. Id.
During a fourth assault, Clements put Doe in a duffle bag, placed her in the trunk of his
car, and drove her to his workshop building on the Ponderosa RV Park property. Id. ¶ 14. At the
time, Clements owned the Ponderosa RV Park. Id. ¶ 6. Clements unzipped the bag and held on to
Doe, but she briefly escaped once inside the building. Id. ¶ 14. When Clements caught her, he
struck her with a board, resulting in bruising to her stomach and legs. Id. Clements then took Doe
to the other side of the building, took her clothes off, and rubbed her vagina with his hand. Id.
Clements then punched Doe in the stomach. Id. Doe’s next recollection was waking up in the
building, putting on her clothing, and returning to Clements’ home where she hid in the backyard
until Estrada returned. Id.
On another occasion, Doe fell asleep in the kitchen of Clements’ home and awoke as he
tied her arms to the bed and placed duct tape on her mouth. Id. ¶ 15. When Doe screamed, Clements
punched her in the face. Id. Doe’s next memory was waking up naked the following day with
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bruising on her right thigh and stomach. Id. Doe saw Estrada and called out to her, but Estrada
ignored her. Id.
In May of 2019, while sitting at Clements’s kitchen table, Clements turned off the lights,
grabbed Doe, and took her to the bedroom. Id. ¶ 16. Clements then pushed Doe to the floor and
directed her to get up. Id. “When Doe declined, he picked her up, threw her onto the bed and told
her to undress.” Id. When Doe again declined, Clements took off her clothes, got on top of her,
and began kissing her while striking her about her face, bruising her. Id. Doe told Clements that
she was going to tell someone what he was doing, at which time “Clements retrieved his gun and
was going to shoot Doe.” Id. The doorbell rang, however, and he left the room. Id. Doe then hid
under the bed. Id. She could hear Clements yelling, but she remained hidden until Estrada, who
was asleep, woke up. Id. Doe then asked Estrada if they could go home. Id. Estrada refused. Id.
But Doe started to give Clements “attitude” and they left. Id. While traveling back home, Estrada
yelled at Doe and told her that she should not be acting in that manner and should just “grow up
already.” Id.
On April 3, 2024, the Government charged Estrada by Information with trafficking and
aiding and abetting in violation of 18 U.S.C. §§ 1590(a) and 2. ECF No. 140. The same day,
Estrada waived indictment and pleaded guilty pursuant to a written Plea Agreement to the crime
charged in the Information. See Estrada Plea Agreement ¶¶ 2, 4, ECF No. 143; Waiver of
Indictment, ECF No. 142; Plea Min. Sheet, ECF No. 144; Estrada J. at 1, ECF No. 277. In her
Plea Agreement, Estrada admitted the following facts:
Between in or about November 2018 and May 2019, in Eddy County, in the District
of New Mexico, I, Karyn L. Estrada, knowingly provided the services of Jane Doe,
who I knew was less than 14 years old, to Kevin Dwight Clements (“Clements”).
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Specifically, during that time, I received payment of U.S. paper currency from
Clements. During that time, Jane Doe, who was then 10-years-old, was in my care,
custody, and control. I was aware that Clements sexually abused Jane Doe and that
abuse included Clements vaginally penetrating Jane Doe with Clements’ penis,
which I acknowledge constitutes aggravated sexual abuse . . . I now know that
Clements used a firearm during the commission of this offense . . . .
ECF No. 143 ¶ 9. Estrada acknowledged the Court can impose restitution. Id. at ¶ 5. The Court
sentenced Estrada to life in prison for her crime, see Estrada J. at 2, ECF No. 277, but deferred the
determination of restitution, id. at 6.
On April 17, 2024, a Grand Jury sitting in the District of New Mexico returned a
Superseding Indictment charging Clements with sex trafficking of a minor and aiding and abetting,
in violation of 18 U.S.C. §§ 1591(a)(1) and 2 (Count 1); kidnapping of a minor in violation of 18
U.S.C. § 1201(a)(1) and (g) (Count 2); possession of a firearm by a felon in violation of 18 U.S.C.
§§ 922(g)(1) and 924 (Count 3); and possession of a firearm by an unlawful user of and addicted
to a controlled substance in violation of 18 U.S.C. §§ 922(g)(3) and 924 (Count 4). Superseding
Indictment at 1-2, ECF No. 154.
On May 10, 2024, a jury found Clements guilty of all counts charged against him in the
Superseding Indictment. Verdict, ECF No. 189. The Court sentenced Clements to consecutive
terms of life imprisonment as to Counts 1 and 2, and a consecutive term of 120 months’
imprisonment as to Count 3. See Clements J. at 3, ECF No. 244. The Government agreed to dismiss
Count 4 during the sentencing hearing. See Am. Sentencing Min. Sheet at 2, ECF No. 247; Mot.
to Dismiss Count 4, ECF No. 246; Order Granting Mot. to Dismiss Count 4, ECF No. 248. The
Court deferred the determination of restitution. Clements J. at 8, ECF No. 244.
On January 21, 2025, the Government filed the instant Motion for Restitution. ECF No.
282. On February 3, 2025, the Government filed exhibits supporting its Motion for Restitution,
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see ECF No. 293, including a Psychological Evaluation by psychologist Christopher J. Alexander,
Ph.D. (“Psychological Evaluation”), ECF No. 293-7, and a report on Doe’s economic losses by
economist Jose R. Bucheli, Ph.D. (“Damages Report”), ECF No. 293-8. In the Damages Report,
Dr. Bucheli estimates the losses derived from Doe’s injuries—when considering lost earnings and
employee benefits, healthcare costs, and reduced enjoyment of life—to range from $4,930,172 to
$8,465,592 in present value dollars. Damages Report at Cover Page, 2-8, ECF No. 293-8. Dr.
Bucheli uses a discount rate of 1.5% to convert projected future estimates to present value dollars,
and states that 1.5% is “equal to the average nominal interest rate on U.S. Treasury Bills during
2003-2023.” Id. at 2. The Government requested the Court grant restitution of $4,930,172, the
lower end of Dr. Bucheli’s estimate, to be paid jointly and severally by Defendants. Mot. for
Restitution at 1, ECF No. 282.
On February 11, 2025, Estrada and Clements filed Responses objecting to the amount of
restitution. ECF Nos. 301, 302.
On April 22, 2025, the Court held an evidentiary hearing on the Motion for Restitution.
See Clerk’s Mins. of Apr. 22, 2025 Hr’g, ECF No. 314. During the hearing, the Government
introduced several exhibits without objection from Defendants, including Dr. Alexander’s
Psychological Evaluation and Dr. Bucheli’s Damages Report. See id. at 1. Counsel for Defendants
stipulated that Doctors Alexander and Bucheli qualify as experts. See id. Both experts testified at
the hearing regarding the contents of their respective reports. See id. at 1-2. During Dr. Bucheli’s
testimony, he testified that 1.5% is the rate of return on twenty-year U.S. Treasury Bills. Tr. of
Hr’g of Sep. 17, 2025 at 77:20-22.1
1 The Court’s citations to the transcript of the hearing refers to the court reporter’s original, unedited
version. Any final transcript may contain slightly different page and/or line numbers.
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On May 28, 2025, the Court issued its Order Regarding the Discount Rate. ECF No. 315.
Therein, the Court indicated that it “is not convinced that the U.S. Treasury Bill rates reflect ‘the
rate of interest that would be earned on ‘the best and safest investments.’” Id. at 2 (quoting Jones
& Laughlin Steel Corp. v. Pfeifer, 462 U.S. 523, 537 (1983) (quoting Chesapeake & Ohio Ry. Co.
v. Kelly, 241 U.S. 485, 491 (1916))). The Court opined that “[i]t seems . . . an annuity is a better
investment because it offers a higher interest rate than a U.S. Treasury Bill, and is comparably
safe.”2 Id. Thus, the Court ordered the Government to request Dr. Bucheli “submit a supplemental
report that calculates Doe’s losses in present value dollars using a discount rate that is
commensurate with current long-term annuity rates.” Id.
On June 26, 2025, the Government filed a Response, ECF No. 317, to which it attached
Dr. Bucheli’s Addendum to the Damages Report, ECF No. 317-1. The Government declined to
follow the Court’s directive and instead, without leave of the Court, unnecessarily explained what
a discount rate is and then explained why Dr. Bucheli selected the discount rate he did. Addendum
to the Damages Report at 1-2, ECF No. 317-1. As to his reasoning for selecting 1.5%, Dr. Bucheli
cited no facts and thereby declined to exercise the expertise for which he was brought into this
case. Id. Instead, he went outside his area of expertise and cited to seven legal authorities. Id. The
Court does not need his assistance with legal analysis. Additionally, and again unnecessarily, Dr.
Bucheli provided alternative methods for distributing restitution payments to Doe—i.e., a lump
sum payment or annual payments of the lump sum amount calculated at a 1.5% discount rate over
2 An annuity is an investment product that pays a customer a set amount annually in exchange for
funds initially belonging to the customer. Jeanette Beebe, What Is a Fixed Annuity? Uses in Investing, Pros, and Cons,
Investopedia (Nov. 5, 2025 at 0834 ET) https://www.investopedia.com/terms/f/fixedannuity.asp. A restitution
recipient can purchase a long-term annuity investment product from a reputable, nation-wide insurance firm. Id. The
recipient gives the firm the lump sum restitution payment and in exchange the firm guarantees the recipient an amount
of money each year equivalent to a certain percentage increase on the lump sum payment amount. Id.
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a twenty-year period. Id. at 2-3, ECF No. 317-1. Dr. Bucheli did not recalculate Doe’s losses in
present value dollars using a discount rate commensurate with current long-term annuity rates, as
the Court requested, nor did he help the Court by finding facts supporting an appropriate discount
rate. See generally id.; Order Regarding the Discount Rate at 2, ECF No. 315.
Therefore, on August 23, 2025, pursuant to Federal Rule of Evidence 706(a), the Court
appointed Matt Holt as an “expert on investing monetary awards for minors,” ECF No. 323, and
on September 18, 2025 ordered him to produce and submit to the Court and Parties a report
detailing “(1) the appropriate methodology for determining discount rates and investment rates
based on the typical, contemporary investment of a monetary award, and (2) his opinion as to what
discount rate should be applied to future damages on the order of restitution in his case,” ECF No.
328 at 1-2. Clements responded to the Court’s Order Regarding the Discount Rate, maintaining
his previous objection to the amount of restitution as “unreasonably speculative” and declaring
that the method of determining “what discount/interest rate applies and Mr. Holts[’s] Report is
immaterial” as he objects to any amount of restitution. ECF No. 330 at 1.
Mr. Holt submitted his Rule 706 Expert Report on October 7, 2025 addressing the prudent
investor rule and other fiduciary standards related to the contemporary investment methodologies
and recommending a 3.0% discount rate be applied to this case. ECF No. 329 at 2-3, 5. In response
to the Rule 706 Expert Report, the Government stated that it “stands by the pleadings, evidence,
and testimony of economic expert, Dr. Bucheli” and requests “the Court impose the restitution in
the amount determined by Dr. Bucheli.” ECF No. 331 at 4.
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II. Legal Standard
A. Restitution
Estrada pleaded guilty to, and a jury found Clements guilty of, offenses under Chapter 77
of Title 18 of the United States Code—specifically, 18 U.S.C. § 1590 as to Estrada, and 18 U.S.C.
§ 1591(a)(1) as to Clements. See Estrada J. at 1, ECF No. 277; Clements J. at 1, ECF No. 244.
Chapter 77 has a mandatory restitution provision that states, in relevant part:
(a) Notwithstanding section 3663 or 3663A, and in addition to any other civil or
criminal penalties authorized by law, the court shall order restitution for any offense
under this chapter.
(b)(1) The order of restitution under this section shall direct the defendant to pay
the victim (through the appropriate court mechanism) the full amount of the
victim’s losses, as determined by the court under paragraph (3) of this subsection.
(2) An order of restitution under this section shall be issued and enforced in
accordance with section 3664 in the same manner as an order under section 3663A.
(3) As used in this subsection, the term “full amount of the victim’s losses” has the
same meaning as provided in section 2259(c)(2) . . . .
(c) As used in this section, the term “victim” means the individual harmed as a
result of a crime under this chapter, including, in the case of a victim who is under
18 years of age, . . . the legal guardian of the victim or a representative of the
victim’s estate, or another family member, or any other person appointed as suitable
by the court . . . .
18 U.S.C. § 1593.
In turn, Section 2259(c)(2) defines “full amount of the victim’s losses” to include
any costs incurred, or that are reasonably projected to be incurred in the future, by
the victim, as a proximate result of the offenses involving the victim . . .
including--
(A) medical services relating to physical, psychiatric, or psychological care;
(B) physical and occupational therapy or rehabilitation;
(C) necessary transportation, temporary housing, and child care expenses;
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(D) lost income;
(E) reasonable attorneys’ fees, as well as other costs incurred; and
(F) any other relevant losses incurred by the victim.
18 U.S.C. § 2259(c)(2).
Pursuant to 18 U.S.C. § 3664, disputes “as to the proper amount or type of restitution shall
be resolved by the court by the preponderance of the evidence. The burden of demonstrating the
amount of the loss sustained by a victim as a result of the offense shall be on the attorney for the
Government.” 18 U.S.C. § 3664(e). Under this section, “the court shall order restitution to each
victim in the full amount of each victim’s losses as determined by the court and without
consideration of the economic circumstances of the defendant.” Id. § 3664(f)(1)(A).
“[T]he determination of restitution is not an exact science and . . . the calculation of a loss
need not be precise.” United States v. Kravchuk, 335 F.3d 1147, 1157 (10th Cir. 2003) (affirming
the amount of restitution awarded under an abuse of discretion standard). “A sentencing court may
resolve restitution uncertainties ‘with a view towards achieving fairness to the victim,’ so long as
it still makes a ‘reasonable determination of appropriate restitution’ rooted in a calculation of actual
loss.” United States v. Gallant, 537 F.3d 1202, 1252 (10th Cir. 2008) (quoting United States v.
Vaknin, 112 F.3d 579, 587 (1st Cir. 1997)); see also United States v. Serawop, 505 F.3d 1112,
1123 (10th Cir. 2007) (noting that in the Tenth Circuit restitution is not criminal punishment but
is based “in the field of compensation and remediation”). But “[s]peculation and rough justice are
not permitted,” and a district court must rely on evidence presented “with a view towards achieving
fairness to the victim” when issuing a restitution order. United States v. Ferdman, 779 F.3d 1129,
1133 (10th Cir. 2015) (internal quotation marks and citations omitted).
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Restitution may only be awarded for losses resulting from the offense for which the
defendant or defendants were convicted. United States v. West, 646 F.3d 745, 751 (10th Cir. 2011)
(citing Hughey v. United States, 495 U.S. 411, 413 (1990)). The defendant or defendants must be
both the but-for and proximate cause of the victim’s losses under 18 U.S.C. § 1593. United States
v. Anthony, 942 F.3d 955, 966 (10th Cir. 2019). If more than one defendant “has contributed to the
loss of a victim, the court may make each defendant liable for payment of the full amount of
restitution.” 18 U.S.C. § 3664(h).
B. Discount Rate
The Supreme Court has held that “in all cases where it is reasonable to suppose that interest
may safely be earned upon the amount that is awarded, the ascertained future benefits ought to be
discounted in the making up of the award.” Kelly, 241 U.S. at 490. “The discount rate should be
based on the rate of interest that would be earned on ‘the best and safest investments’” and should
“reflect[] the safest available investment.” Pfeifer, 462 U.S. at 537-38 (quoting Kelly, 241 U.S. at
491). “[T]he present value calculation is to be made by the ‘trier of fact’”—meaning the trier of
fact is to select the discount rate. See Monessen Sw. Ry. Co. v. Morgan, 486 U.S. 330, 341 (1988).
A trial court adopting a discount rate derived from an estimated rate of return minus an estimated
rate of inflation should not be reversed “if it adopts a rate between one and three percent and
explains its choice.” Pfeifer, 462 U.S. at 548-49.3
3 The Court finds the lasting impact of this portion of Pfeifer odd. Discount rates change constantly
according to the current rate of inflation and rates of return of the best and safest investments. It seems likely the
Pfiefer Court meant that a trial court at that time should not be reversed if it settles on a discount rate of one to three
percent and explains its choice. Pfeifer, 462 U.S. at 548-49. After several years there is no reason to adhere to set
range of discount rates. This Court ultimately adopts a discount rate of 3.0%, see infra III.B.(3), but four decades after
Pfeifer that is mere coincidence, just as four decades hence an appropriate discount rate is unknowable. Courts should
calculate an appropriate discount rate at the time of judgement. See Stokes v. United States, 967 F.3d 1034, 1048 (10th
Cir. 2020) (McHugh, J., concurring) (recommending the first step is to identify the best and safest investment available
to the recipient, the second step is to identify the rate of return on that investment, and the third step is to calculate the
discount rate by determining the difference between the rate of return and the rate of inflation)
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Although the Supreme Court limited Pfeifer to cases under § 5(b) of the Longshoremen’s
and Harbor Worker’s Compensation Act, its finding has been extended to many, if not most,
restitution scenarios, including in Federal Torts Claims Acts in the Tenth Circuit. 462 U.S. at 547;
Stokes v. United States, 967 F.3d 1034, 1043–44 (10th Cir. 2020); see also United States v.
Cienfuegos, 462 F.3d 1160, 1169 (9th Cir. 2006) (“While calculation of future lost income must
be based upon certain economic assumptions, the concepts and analysis involved are well-
developed in federal law, and thus the district court is not without persuasive analogy for
guidance.”) (citing Pfeifer, 462 U.S. at 533–53); United States v. Thompson, No. CR-09-88-FVS,
2013 WL 12303241, at *4 (E.D. Wash. Mar. 11, 2013) (finding the government’s use of a 4%
discount rate on future lost income “is a reasonable estimate” under Pfeifer for an order of
restitution pursuant to § 3664). Finally, when courts use a net discount rate, “the basis of the
computation must be explained and supported by competent evidence.” Hull ex. rel. Hull v. United
States, 971 F.2d 1499, 1511 (10th Cir. 1992).
III. Discussion
The Court first turns to the matter of restitution before addressing the discount rate. For the
reasons stated below, the Court finds the Government has sufficiently proven the appropriate
amount of restitution, but orders the Government recalculate restitution using a 3.0% discount rate.
A. Restitution
The Government argues that the Court should order restitution in the amount of
$4,930,172—the low end of the damages range estimated by Dr. Bucheli, see Damages Report at
Cover Page, ECF No. 293-8—jointly and severally among Clements and Estrada, Mot. for
Restitution at 5, ECF No. 282.
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Dr. Bucheli’s Damages Report calculates loss in three categories: (1) loss of earnings and
employee benefits; (2) treatment and medical care; and (3) loss of enjoyment of life. See generally
ECF No. 293-8. All three are permissible loss categories under § 2259(c)(2): “lost income,”
“medical services relating to physical, psychiatric, or psychological care,” and “other relevant
losses.” The total loss calculated by Dr. Bucheli, reduced to present value using a 1.5% discount
rate, is between $4,930,172 and $8,465,592. Damages Report at Cover page, ECF No. 293-8. The
calculation is based in part on Dr. Alexander’s Psychological Evaluation of Doe, which is also
Government-provided evidence. Id. at Cover Page; see generally Psychological Evaluation, ECF
No. 293-7.
Estrada argues that $4,930,172 is unreasonably speculative and/or excessive and is
“[p]lainly [r]etributive.” Estrada Restitution Resp. at 3, ECF No. 301. Estrada argues that “it is not
clear whether [Dr. Alexander] was able to disassociate [Doe’s] prior harms and/or already-existing
mental health issues that may have predated the offense from his report.” Id. She argues that the
loss range—$4,930,172 to $8,465,592—is unreasonable and demonstrates the speculative nature
of the estimate. Id. She further argues that Dr. Bucheli’s loss of earnings and employee benefits
figures assume that Doe graduates from high school (at a minimum), but there is no evidence that
Dr. Bucheli personally interviewed Doe to determine whether she wants to or is capable of
graduating high school. Id. She argues that the $4,930,172 request “is tantamount to a windfall for
the victim, and that is contrary to law.” Id. at 4 (citing United States v. Naphaeng, 906 F.3d 173,
179 (1st Cir. 2018)). She further claims that the retributive nature of the request is evidenced by
the fact that both Defendants have received life sentences and are indigent, and therefore neither
of them can possibly satisfy such an award. Id. (citing United States v. Patty, 992 F.2d 1045, 1052
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(10th Cir. 1993)).4 Finally, Estrada asserts that “the Government’s insistence in seeking over four
million dollars from each Defendant is undoubtedly punitive, as it will drain already very limited
funds from their inmate accounts.” Id. at 5.
Clements likewise asserts that the $4,930,172 request is unreasonably speculative,
Clements Restitution Resp. at 1, ECF No. 302, but he does not expound on the argument, see id.5
In its Response to the Order Regarding the Discount Rate, the Government increased its
total restitution request by $3,911.99 to $4,934,083.99 based on the amounts in Defendant
Estrada’s PIR Addendum: (1) $2,170 to reimburse Jane Doe’s stepmother, L.M., for Court-ordered
fees paid to Jane Doe’s Court-appointed Guardian Ad Litem (GAL), A.M., to cover 65% of A.M.’s
incurred costs while investigating whether L.M. and Jane Doe’s stepfather should receive
emergency and full custody of Jane Doe after Jane Doe ran away from Defendant Estrada’s home
“due to the circumstances of the instant offense;” (2) $437.96 to reimburse A.M., representing the
remaining 35% of fees owed to A.M. by Defendant Estrada for the same investigation; and (3)
$1,304.03 owed to Medicaid based on payments made to Presbyterian Health “for behavioral
4 To the extent that Estrada is arguing that the Court should consider Defendants’ ability to pay when
ordering restitution under 18 U.S.C. § 1593, the Court rejects the argument. Restitution under §1593 is mandatory and
the Court’s “order of restitution . . . shall direct the defendant to pay the victim . . . the full amount of the victim’s
losses . . . .” 18 U.S.C. § 1593(b)(1). Furthermore, 18 U.S.C. § 3664, which governs restitution under Chapter 77
offenses, mandates that courts order restitution for the full amount of victim’s losses “without consideration of the
economic circumstances of the defendant.” Id. § 3664(f)(1)(A); see United States v. Johnson, 183 F.3d 1175, 1179
(10th Cir. 1999) (Section 3664(f)(1)(A) requires “federal district courts to order restitution to the victim . . . regardless
of the defendant’s ability to pay.”).
5 Both Defendants appear to misunderstand the government’s restitution request. Defendant Estrada
objected to a restitution amount of $9,860,344, apparently because she believed the Government requested $4,930,172
from each defendant. Estrada Restitution Resp. at 1, ECF No. 301. Joint and several liability means instead that the
Government requested the right to obtain payment of the full amount, $4,930,172, from either Defendant Estrada or
Defendant Clements, but not both. Defendant Clements filed a Response which made same the mistake. ECF No. 302
at 1. Both Defendants, however, object to the lower amount as well. Estrada Restitution Resp. at 1, ECF No. 301;
Clements Restitution Resp. at 1, ECF No. 302.
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health and medical services for Jane Doe.” Resp. to Order Regarding the Discount Rate at 2-3,
ECF No. 317; ECF No. 231 at 5.
Defendants maintain their objections regardless of the increased request. Def.’s Reply to
Government’s Resp. at 1, ECF No. 319; Def.’s Resp. to Government’s Resp. at 1, ECF No. 321.
The Court discusses the three restitution requests based on the Damages Report before
addressing the restitution requests based on the Addendum to Estrada’s PIR.
(1) Loss of earnings and employee benefits
First, Dr. Bucheli calculated Doe’s estimated loss of earnings and employee benefits to age
67—the age she will be entitled to full social security benefits—using two scenarios. See Damages
Report at 1-4, ECF No. 293-8. Scenario 1 assumes Doe graduates from high school. See id. at 2-
3. Under Scenario 1, Doe is projected to earn $3,518,969 in cumulative wages and benefits through
age 67. Id. at 11. Scenario 2 assumes Doe obtains an associate’s degree. See id. at 5-6. Under
Scenario 2, Doe is projected to earn $4,758,725 in cumulative wages and benefits through age 67.
Id. at 13.
Relying on the Psychological Evaluation, Dr. Bucheli then calculated an “offset” scenario
to determine lost wages. See id. 4-5. The “offset” scenario assumes that, because of Defendants’
offenses, Doe (1) will not graduate high school and (2) has a 34.19% probability of employment
relative to people without disabilities. See id. In the “offset” scenario, Dr. Bucheli projected that
Doe would earn $946,454 in cumulative wages and benefits through age 67. Id. at 15.
Dr. Bucheli next calculated the amount of lost wages and benefits for Doe by age 67 by
subtracting the “offset” figure from Scenarios 1 and 2. See id. at 4-5. Thus, for Scenario 1, the
estimated loss in wages and benefits is $2,572,515. Id. at 5. For Scenario 2, the estimated loss in
wages and benefits is $3,812,271. Id.
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To establish both Scenario 1 and 2, the Government must prove by a preponderance of the
evidence that but for Defendants’ offenses Doe would have graduated from high school and, for
Scenario 2, that she would have otherwise earned an associate’s degree. 18 U.S.C. § 3664(e). The
Court therefore turns to Dr. Alexander’s Psychological Evaluation to determine if the Government
establishes, by a preponderance of the evidence, that Doe would have graduated from high school
or earned an associate’s degree but for the Defendants’ offenses.
On one hand, Dr. Alexander notes that “it is reasonable to infer that Doe sustained mild-
to moderate forms of neglect, if only academically, during her formative years,” which predate
Defendants’ actions. Psychological Evaluation at 13, ECF No. 293-7 (quotation modified). And
Dr. Alexander notes that Doe has “an underlying learning disorder,” had “to repeat kindergarten,”
and “qualified for Title I reading support in earlier grades.” Id. at 2, 14.
On the other hand, Dr. Alexander notes that although Doe was provided with reading
support for a brief period, she never had an Individualized Education Program at school, indicating
“her teachers believe[d] [she] ha[d] better potential than she demonstrated” at a young age. Id. at
11. The Court does not believe these early issues necessarily indicate Doe would not have
graduated high school even had she not been victimized by the Defendants. Furthermore, Dr.
Alexander found that Doe’s scores on tests assessing her cognitive abilities are consistent with
inattentiveness stemming from Post-traumatic Stress Disorder resulting from her ordeal rather than
“inherent problems with her memory operations.” Id. Finally, Dr. Alexander opined that Doe’s
current impediments to high school graduation, including running away and experimenting with
alcohol and drugs, are not age-typical experimentation, but rather reflect her “trauma and . . .
internal pain from the physical and sexual abuse she endured.” Id. at 14. Dr. Alexander concluded
that “[g]iven her psychological issues, it makes sense that [Doe] does not prioritize her academics”
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and external help is required “to help her graduate [from high school] or at least obtain a GED.”
Id.
Given the clear link between Doe’s current academic impediments and the offenses, and
the relatively mild issues predating the offenses, the Court finds that the Government has
established by a preponderance of the evidence that Doe would have graduated high school but for
the offenses for which Defendants were found guilty. The Court does not find, however, that Doe
would have obtained an associate’s degree. As that is the case, the Court accepts Dr. Bucheli’s use
of Scenario 1 and the offset based on Doe’s disabling psychological injuries.
The offenses for which Defendants were convicted are found to be the but-for and
proximate cause of the losses incurred by the victim due to lost income. Although Dr. Bucheli
found the loss of wages and benefits to be $2,572,515, the Court orders the Government to
recalculate the dollar amount using a 3.0% discount rate, see infra, III.C.
(2) Treatment and medical care
Second, the Government submits Dr. Alexander’s evaluation to establish that Doe has
required and will require ongoing medical treatment due to the offenses for which Defendants were
convicted. See generally Psychological Evaluation, ECF No. 293-7. Specifically, Dr. Alexander
finds that the offenses took a physical and emotional toll on Doe, “directly resulting in her post-
traumatic stress symptomatology and her need for ongoing mental health treatment.” Id. at 13.
These events have impacted her psychological and social development and Doe thus requires
“fairly intensive mental health and support services.” Id. The Court finds this evaluation
establishes by a preponderance of the evidence that the offenses for which Defendants were
convicted were the but-for and proximate cause of the treatment and medical care Doe has and
will likely require.
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Dr. Bucheli estimates that the cumulative healthcare costs Doe has and will incur because
of Defendants’ offenses are $18,969 from ages 11 to 17 and between $104,722 and $166,420 from
ages 18 through 81. Damages Report at 5-6, 16-18, ECF No. 293-8. In explaining the range of
future healthcare costs, Dr. Bucheli states:
To project the annual incremental healthcare costs for [Doe’s] adult life, I use a
growth factor of 3.12%, which is the 2004-2023 average inflation rate for medical
care, and a discount factor of 1.5%. No evidence was found in the literature on
differential healthcare costs beyond age 65, so I calculate a range to account for this
limitation. The lower bound of this range assumes no differential starting at age 65,
while the upper bound assumes that the differential is the same as in the 18-64 age
group.
Id. at 6 (citation omitted). Because there is no evidence on differential healthcare costs beyond age
65, the Court will use the lower bound of the range.
Accordingly, the Court finds that the Government has proven by a preponderance of the
evidence that the health care costs incurred and reasonably expected to be incurred by Doe because
of the Defendants’ offenses are $18,969 in child healthcare costs and $104,722 in future healthcare
costs based on a 1.5% discount rate. The Court, however, orders the Government to recalculate
the dollar amount of future healthcare costs using a 3.0% discount rate, see infra, III.C.
(3) Reduction in enjoyment of life
Third, the Government submits Dr. Alexander’s Evaluation to establish that Doe’s
enjoyment of life will be reduced due to the offenses for which Defendants were convicted. See
Damages Report at 7, ECF No. 293-8. Dr. Alexander lists many detrimental consequences
stemming from the offenses, including the physical and emotional toll on Doe, the negative impact
on her psychological and social development, ongoing internal pain, and negative impacts on
potential life milestones like dating, exploring sex, having children, and trusting adults with her
children if she has children. Psychological Evaluation at 13-15, ECF No. 293-7. Furthermore, he
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notes other lasting problems likely to stem from the offenses, including wondering whether the
recording equipment found in Clements’s room was used while she was assaulted, the past and
potential future media coverage of the case, and, most consequentially, the fact that her own mother
facilitated her abuse. Id. at 13-14. The Court finds the Government has proven by a preponderance
of the evidence that the offenses for which Defendants were found guilty are the but-for and
proximate cause of Defendant’s reduction in enjoyment of life. Doe is now in a more stable home
and no longer has contact with Defendants. See id. at 6. The Court is encouraged that, with the
correct treatment and guidance, Doe can overcome many of her struggles.
Dr. Bucheli calculated Doe’s reduction in enjoyment of life due to Defendants’ offenses to
be between $2,333,966 and $4,467,932. Damages Report at 8, 20-22. He began with a base
estimated value of life at $9.2 million (in present value dollars). Id. at 7 (citing Ted R. Miller,
Hedonic Damages: Were the Body Blows to the Golden Goose Well-Founded?, J. of Forensic
Econ., 20(2), 137–153 (2008)). He then assumed, based on Dr. Alexander’s Psychological
Evaluation, that Defendants’ offenses caused a 25% to 50% reduction in Doe’s “ability to lead a
normal life through the end of her life expectancy.” Id. Using a 2.81% growth factor and a 1.5%
discount rate to convert the estimates to present value dollars, Dr. Bucheli found applying a 25%
reduction to an estimated $9.2 million value of life results in a $2,333,966 cumulative loss over
the course of Doe’s life expectancy. Id. at 7, 20.6
6 The Court used Dr. Bucheli’s methodology for calculating a Reduction in Value of Life (25%
Impairment), see Damages Report at 7, ECF No. 293-8, but was unable to replicate Dr. Bucheli’s calculations in Table
6, id. at 19-20. The Court believes Dr. Bucheli made an error. Dr. Bucheli describes his method as using a “growth
factor” of 2.81% and a “discount factor” of 1.5% and said he used a “similar approach as above” (the Court assumes
Dr. Bucheli is referring to his calculations for Lost Wages and Future Incremental Healthcare Costs, which the Court
was able to replicate). Id. at 7. With a higher growth factor than discount factor, there should be a gradual increase in
present value year-on-year, as in Table 5 for Future Incremental Healthcare Costs. See id. at 6, 17-18. Instead, in Table
6 the 25% Impairment present value decreases year-on-year from 2025 to 2089. See id. at 19-20.
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The Government has requested restitution based on a 25% Impairment to the Reduction in
Value of Life. Mot. for Restitution at 5, 7, ECF No. 282. The Court finds that the Government has
proven by a preponderance of the evidence that Defendants’ offenses will cause at least a 25%
reduction in Doe’s enjoyment of life. The Court finds that applying a 25% reduction to Doe’s
estimated $9.2 million value of life is the appropriate amount of restitution owed for loss of
enjoyment due to Defendants’ offenses. Although Dr. Bucheli found the restitution owed to be
$2,233,966, the Court orders the Government to recalculate the dollar amount using a 3.0%
discount rate, see infra, III.C.
(4) Restitution based on the presentence report
Finally, the Government requests two types of restitution based on the Addendum to
Defendant Estrada’s PIR. See Gov’t’s Resp. to Order Regarding the Discount Rate at 2-4, ECF
No. 317; ECF No. 231 at 5-6. First, the Government requests $2,170 for L.M., Doe’s stepmother,
and $437.96 for A.M., the GAL, based on A.M.’s custody investigation precipitated by the
Defendants’ offenses. Resp. to Order Regarding the Discount Rate at 2-3, ECF No. 317;
Addendum to PIR as to Karyn L. Estrada at 5, ECF No. 231. Second, in addition to the above
Treatment and Medical Care costs estimated by Dr. Bucheli, the Government requests $1,304.03
based on medical expenses incurred in treating Doe’s “suicidal ideation” and/or “major depressive
disorder.” Resp. to Order Regarding the Discount Rate at 2-3, ECF No. 317; Addendum to PIR as
The Court attempted to replicate Table 6 and found it could approach similar numbers (within 1.9%)
by applying a 0.0281% growth rate and a 0.15% discount rate to Dr. Bucheli’s methodology. Therefore, the Court
believes Dr. Bucheli’s original calculations in Table 6 are wrong due to applying growth and discount rates off by a
factor of 100 and 10, respectively. The Court recognizes these can be common mistakes when working in spreadsheets
and does not find this error undermines its confidence in the remainder of Dr. Bucheli’s findings with respect to
restitution.
Applying a growth rate of 2.81% and a discount rate of 1.5% and using Dr. Bucheli’s described
methodology, the Court finds a 25% Impairment to Reduction in Life is $3,585,460.49. The Court, however, uses the
amount originally requested by the Government, $2,333,966. See Mot. for Restitution at 5-8, ECF No. 282.
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to Karyn L. Estrada at 5-6, ECF No. 231. The Court finds that the addendum to Defendant
Estrada’s presentence investigation report suffices to establish the requested amounts by a
preponderance of the evidence.
As to the first category, the Court finds that although the money spent by L.M. and A.M.
was due to Defendants’ offenses, neither amount is the victim’s loss and therefore neither can be
ordered as restitution. Under Chapter 77, only the victim is entitled to mandatory restitution based
on losses caused by a defendant’s offense. 18 U.S.C. § 1593(b)(1) (“The order of restitution under
this section shall direct the defendant to pay the victim (through the appropriate court mechanism)
the full amount of the victim’s losses . . . .”). And “‘victim’ means the individual harmed as a result
of a crime under [Chapter 77].” Id. § 1593(c). Neither A.M. nor L.M. qualify as victims here. The
money paid to A.M. by L.M. is a loss for L.M. and the money spent by A.M. and not reimbursed
by Defendant Estrada is a loss for A.M. L.M. and A.M. may have recourse to other legal means to
recover their funds from one or both Defendants, but neither is entitled to restitution.
The payment for medical services required due to Defendants’ offenses, however, is both
a victim’s loss and falls under a permissible loss category per § 2259(c)(2): “medical services
relating to physical, psychiatric, or psychological care.” The monetary amount is fixed based on
services rendered. Addendum to PIR as to Karyn L. Estrada at 5, ECF No. 231; see 18 U.S.C. §
3664(a). The amount has the same status as the costs incurred by Doe from age 11 to 17. See
Damages Report at 5, ECF No. 293-8. And the Court finds the Government, through the
Psychological Evaluation conducted by Dr. Alexander, has established by a preponderance of the
evidence that the medical care was required by the offenses for which Defendants were convicted.
See Psychological Evaluation at 3, ECF No. 293-7. Therefore, the Court awards as part of the full
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Restitution $1,304.03 for medical services rendered to the victim due to the offenses for which
Defendants were convicted.
B. Discount Rate
The Court now turns to selecting the appropriate discount rate by which to calculate the
present value of restitution. In Pfeifer, the Supreme Court encouraged courts not to turn “[t]he
average accident trial . . . into a graduate seminar on economic forecasting.” 462 U.S. at 548
(quoting Doca v. Marina Mercante Nicaraguense, S.A., 634 F.2d 30, 39 (2nd Cir. 1980) (noting
that forecasts of future price inflation are “too unreliable to be useful in many cases,” and
encouraging courts to use a more straightforward approach to estimating inflation)). The Pfeifer
court found a discount rate of one to three percent should not be overturned so long as the court
“explains its choice,” and mandated that District Courts “must make a deliberate choice” in
selecting a discount rate. Id. at 548, 552-53.7
These charges, combined with the Supreme Court’s mandate that discount rates should
reflect “the best and safest investments” and the “safest available investment,” led many courts to
base discount rates on U.S. Treasury Bills, finding government-backed securities a safe investment
that conformed with Pfeifer. Id. at 537-38 (internal quotation marks and citation omitted); see, e.g.,
Rhodes v. Guiberson Oil Tools, 82 F.3d 615, 622 (5th Cir. 1996) (holding the District Court
appropriately selected the U.S. Treasury Bill market rate of 7.0% as the “safest available
7 Although Pfeifer was confined to matters under § 5(b) of the Longshoremen’s and Harbor Worker’s
Compensation Act, 462 U.S. at 547, courts have generally turned to Pfeifer as controlling or persuasive authority for
all manner of restitution cases. See, e.g., Stokes v. United States, 967 F.3d 1034, 1044 (10th Cir. 2020) (finding Pfeifer
controlling in Federal Tort Claims Act cases); United States v. Cienfuegos, 462 F.3d 1160, 1169 (9th Cir. 2006)
(remanding to the district court in part because the court failed to look to Pfeifer as persuasive guidance when
calculating restitution in a criminal matter). Here, as in Stokes, the Government has cited favorably to Pfeifer and has
not argued it is inapplicable. Resp. to Rule 706 Expert Report at 4, ECF No. 331; Stokes, 967 F.3d at 1044. The Court
therefore proceeds under the Pfeifer framework.
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investment,” but impermissibly failed to subtract the rate of inflation from 7.0% to find a discount
rate); Denton v. United States, No. 87-2536-V, 1990 WL 126927, at *2 (D. Kan. Aug. 22, 1990)
(selecting a 4.84% discount rate by subtracting the 1.5% inflation rate reported by the Bureau of
Labor Statistics from the 6.34% U.S. Treasury Bill rate); United States v. Schenck, No. CR 20-19,
2023 WL 3019959, at *13 n.51 (E.D. La. Apr. 20, 2023), appeal dismissed, No. 22-30655, 2024
WL 2369447 (5th Cir. May 23, 2024) (finding a 2.0% discount rate (1) conformed with the U.S.
Treasury Bill rate of 4.5% minus the 2.0% rate of inflation as calculated from the Consumer Price
Index for the previous ten years, (2) lay within the Pfeifer range of 1.0 to 3.0%, and (3) was in line
with the Office of Management and Budget’s forecasted “real discount rate” for the next 20- to
30-year period).
But, as noted in Stokes, “Pfeifer makes no mention of which investment vehicle is
appropriate, as long as that vehicle is a safe investment.” 967 F.3d at 1044 n.9 (noting that the
district court incorrectly “implied that Pfeifer requires courts to use the ‘Treasury Bill rate’ when
calculating interest rates”).8, 9 Pfeifer did not mandate the use of U.S. Treasury Bills, it mandated
a discount rate based on the “best and safest investments” and the “safest available investment”—
and mandated that courts explain why they selected that discount rate. 462 U.S. at 537-38, 549
8 Dr. Bucheli appears to make a similar error, explaining that “U.S. Treasury securities . . . are widely
regarded as the closest to a risk-free investment . . . [and] [t]he Supreme Court approved this approach in [Pfeifer, 462
U.S. at 549-50].” Addendum to the Damages Report at 1, ECF No. 317-1. The cited pages in Pfeifer, however, do not
support this assertion. They (1) include the opinion that “a trial court adopting such an approach . . . should [not] be
reversed if it adopts a rate between one and three percent and explains its choice” and (2) discuss why the Supreme
Court rejects the Third Circuit’s advocacy for mandatory use of the “offset method” (which results in a zero percent
discount rate). 462 U.S. at 549-50. The “approach” above is subtracting the rate of inflation from a market interest
rate and does not specify on what investment product the market interest rate should be based. Id. at 548.
9 Of note, despite its emphasis on safe investments, Pfeifer itself did not reject the lower court’s
selected discount rate because it rested on an immoderately risky investment option, but rather because the lower court
improperly bound itself by the state law governing discount rates in negligence cases. 462 U.S. at 547 (“The fact that
Pennsylvania has adopted the total offset rule for all negligence cases in that forum is therefore not of controlling
importance in this case.”).
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(internal quotation marks and citation omitted); see also Stokes, 967 F.3d at 1044 (“Because the
district court did not state the basis for its chosen discount rate, we cannot determine whether this
rate is an error.”). Furthermore, since cases before Pfiefer rested on many different investment
options, it is unlikely Pfeifer closed off every investment benchmark except U.S. Treasury Bills
without mentioning U.S. Treasury Bills. See, e.g., Hoskie v. United States, 666 F.2d 1353, 1355-
56 (10th Cir. 1981) (holding a 9.5% discount rate reasonable because triple A-rated corporate
bonds were a “reasonably safe long-term investment available to the average person” and the trial
court applied 6% wage inflation prior to applying the discount rate); In re Jones, 480 F.2d 11, 29
(5th Cir. 1973) (holding a 4% discount rate reasonable based on a fixed payment annuity of 4.5%);
O’Connor v. United States, 269 F.2d 578, 585 (2d Cir. 1959) (holding a 3.5% discount rate based
on savings accounts yielding between 3.25% and 3.5% reasonable and further holding any rate
between 3% and 4.5% not wrong as a matter of law).
Courts since Pfeifer have also turned to other investment products and benchmarks when
determining the best and safest available investments. See, e.g., Stokes v. United States ex rel.
Indian Health Serv., No. CIV-17-0186-JH, 2021 WL 3909681, at *1–3 (E.D. Okla. Mar. 12, 2021)
(finding high grade municipal bonds a safe investment and, since the bond rate at the time of trial
was 2.3 to 3.0% and the applicable rate of inflation 2.62 to 2.875%, 0.0% was a reasonable discount
rate); United States v. Thompson, No. CR-09-88-FVS, 2013 WL 12303241, at *4 (E.D. Wash.
Mar. 11, 2013) (using the nominal interest rate in Canada).
Use of the U.S. Treasury Bill rate appears to be either a simplistic crutch based on the
mistaken impression that Pfeifer requires it, see Stokes, 967 F.3d at 1044 n.9; Addendum to the
Damages Report at 1, ECF No. 317-1, or a reflection of previous investment patterns when
Treasury Bills may have been preferred to other investment options, see, e.g., William P. Jennings,
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Selection of an Appropriate Discount Rate in Wrongful Death and Personal Injury Cases, 14 J.
Contemp. L. 195, 203–04 (1988) (“[M]any courts and commentators suggest the use of a ‘safe
investment’ standard which ties the discount rate to the rate offered on a particular debt instrument
. . . most frequently, government securities.”).
The Court therefore adheres to the Supreme Court’s guidance in Pfeifer that courts must
make “a deliberate choice” to use a discount rate based on the best and safest available investment,
462 U.S. at 537-38, 552-53, and the Tenth Circuit mandate in Hull that “[w]hether a net discount
rate is used or actual investment interest and inflation figures are used, the basis of the computation
must be explained and supported by competent evidence,” 971 F.2d at 1511.
Here, the Government appears to have selected a U.S. Treasury Bill rate based on the
actions of other courts and not whether such rate is the best and safest one available to the plaintiff.
See Addendum to the Damages Report at 1-2, ECF No. 317. The Court finds that, in accordance
with the Rule 706 Expert Report that the current best and safest investment available to minor
awardees of restitution is a diversified portfolio conservatively returning an inflation-adjusted rate
of 3.0%, the appropriate discount rate in this case is 3.0%. Rule 706 Expert Report at 3, ECF No.
329.
(1) Initial Government Report and Order for Rule 706 Expert Report
The Government initially used a discount rate of 1.5% based on U.S. Treasury Bills,
Damages Report at 2, ECF No. 293-8, but the Court was “not convinced that the U.S. Treasury
Bill rates reflect ‘the rate of interest that would be earned on ‘the best and safest investments,’”
Order Regarding the Discount Rate at 2, ECF No. 315 (quoting Pfeifer, 462 U.S. at 537 (quoting
Kelly, 241 U.S. at 491)). Based on its impression “that an annuity is a better investment because it
offers a higher interest rate than a U.S. Treasury Bill, and is comparably safe,” the Court ordered
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the Government and Dr. Bucheli to submit an addendum to the Damages Report recalculating
restitution “using a discount rate that is commensurate with current long-term annuity rates.” Order
Regarding the Discount Rate at 2, ECF No. 315.
Instead of complying with the Court’s orders, Dr. Bucheli submitted an addendum to his
Damages Report explaining why he used a 1.5% discount rate and, unnecessarily, how discount
rates work. ECF No. 317-1 at 1-2. Dr. Bucheli explained that he picked 1.5% because U.S.
Treasuries are “widely regarded as the closest to a risk-free investment,” the “Supreme Court
approved this approach in [Pfeifer],” other courts have used similar “below-market” discount rates,
and “other courts have regarded discount rates in the 1-2 percent range as the benchmark for
compensation.” Id. In citing cases, Dr. Bucheli goes far beyond his area of expertise. Dr. Bucheli
is an expert on restitution and, the Court must assume since Dr. Bucheli provided no basis to
believe, on deriving discount rates through facts. He is not an expert in law, nor in the legal
standards requiring certain discount rates.10 The government and Dr. Bucheli provided the Court
no facts or competent evidence in support of their rate. Id. They merely cited to other cases. Id.
This Court has an obligation to base the discount rate on adequate factual evidence, not legal
argument. Hull, 971 F.2d at 1511.
Due to Dr. Bucheli’s failure to find the restitution amount in accordance with annuity rates
or rates reflecting typical contemporary investments by restitution recipients, and pursuant to its
10 For example, Dr. Bucheli cites to Rhodes when discussing the use of “below-market” discount rates.
Addendum to Damages Report at 1, ECF No. 317-1. It appears, however, that whereas Dr. Bucheli attempts to use
Rhodes to support a low discount rate of one to three percent, Rhodes instead uses the term “below-market” to mean
an inflation-adjusted discount rate. See Rhodes, 82 F.3d at 622-23 (“[B]ecause this figure will not represent a fixed
amount, and will be subject to the effects of inflation, the factfinder must apply a below-market discount rate to
discount the future income stream amount to present value.”). The district court in that case used a market rate of
7.0%, representing the U.S. Treasury Bill market rate over a 7.5-year period between 1986 and 1992, but failed to use
the rate of inflation to find the discount rate. Id. at 622. As noted above, Dr. Bucheli is not a legal expert, and the Court
disregards his legal analysis.
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authority under Federal Rule of Evidence 706, the Court appointed Matt Holt to serve as an expert
in this matter based on his experience “investing monetary awards for minors.” Order Setting
Continuation of Restitution Hr’g, ECF No. 323. The Court requested from Mr. Holt a report
detailing “(1) the appropriate methodology for determining discount rates and investment rates
based on the typical, contemporary investment of a monetary award, and (2) his opinion as to what
discount rate should be applied to future damages on the order of restitution in this case.” Order
for Report at 1-2, ECF No. 328. In accordance with the Court’s Order for Report, Mr. Holt
submitted a report based on his “legal and practical experience with investment practices” as
“governed by the Prudent Investor Rule and related fiduciary standards.” ECF No. 329 at 1. Mr.
Holt suggested two “defensible” discount rate options: a 3.0% real discount rate based on
contemporary investment practices and 2.65% based on 30-year Treasury Inflation-Protected
Securities (“TIPS”). Id. at 1-5.
(2) Rule 706 Expert Report
Mr. Holt reported that “[a]wards made to minors are typically invested in diversified
portfolios, in accordance with applicable fiduciary duties.” Id. at 2. Trustees in New Mexico, for
example, are required to diversify portfolios.11 Id. (citing N.M. Stat. Ann. § 45-7-604). Further,
“[a] strictly Treasury-only portfolio, while secure, may not satisfy the fiduciary’s duty to balance
safety with reasonable returns.” Id. Therefore, contemporary portfolios for a minor’s award are
typically invested half in diversified equity exchanged-traded funds, forty percent in investment
grade bonds (including U.S. Treasury Bills), and ten percent in cash or cash equivalents. Id. at 3.
Based on historical returns adjusted for inflation, Mr. Holt estimated an expected real return of
11 Diversification reduces risk in investment portfolios by spreading investments across several
categories so that a loss in any one category has a minimal impact on the overall portfolio. See id. at 2-3 (citations
omitted).
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3.225%, which, rounded down to 3.0%, “would reasonably reflect prudent fiduciary investing
under current market conditions.” Id.12
Alternatively, for an investor focused only on U.S. Treasury Bills, Mr. Holt reported the
contemporary best option for the investment of a minor’s award is in TIPS because they “pay
interest on a principal amount that adjusts with the Consumer Price Index, . . . offering protection
against inflation while guaranteeing no loss of original principal at maturity.” Id. at 3-4. As of
August 21, 2025, a 30-year TIPS returns 2.65%. Id. at 4. Mr. Holt opined that using the 2.65%
discount rate based on TIPS “conforms to the Pfeifer directive when interpreted as emphasizing
safety and inflation protection, even at the expense of higher yield.” Id.
Under the Pfeifer framework, Mr. Holt recommends the TIPS-based 2.65% discount rate
be applied in this case if the primary goal is “best among the safest investments;” however, if “a
balanced standard incorporating both safety and return” or “the safest among the best-performing
investments” is the priority, then a 3.0% discount rate based on a diversified portfolio is reasonable
under Pfeifer. Id. at 4-5. Pfeifer is not clear which interpretation should take priority as it uses the
phrases “best and safest investments” and “safest available investment” in quick succession. 462
U.S. at 537-38. Overall, based on “the Court’s emphasis on conservatorship principles,” “the
fiduciary context,” and as the option “most consistent with both legal and economic logic,” Mr.
Holt recommends using “a balanced standard incorporating both safety and return,” giving a 3.0%
discount rate. Rule 706 Expert Report at 4-5, ECF No. 329. The Court includes Mr. Holt’s report
as an appendix to this Opinion, as his report is straightforward and will not risk turning this Opinion
12 In calculating a 3.225% return, Mr. Holt assumed all bond holdings would be 1.5% U.S. Treasury
Bills based on Dr. Bucheli’s report. Id. at 3 n.2.
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or others relying on it into “graduate seminar[s] on economic forecasting.” Pfeifer, 462 U.S. at
548; Appendix 1, ECF No. 335-1.
Clements filed a Response to the Court’s Order for Report which, based on counsels’
responses in the Status Conference after Mr. Holt’s appointment, the Court interprets as a
Response to the Rule 706 Expert Report. See Clerk’s Min. for Hr’g of Sep. 17, 2025, ECF No.
327. In it, Clements reiterates his previous objections to the restitution amount as “unreasonable,”
“not supported by the facts of the case or law,” and “unreasonably speculative.” ECF No. 330 at
1. Clements requests denial of both the full amount of restitution and denial of “the Government’s
Response to the Order Regarding Discount Rate to Apply to Restitution Order [ECF No. 317].”
Id. Clements also insists that it is “immaterial” how the Court determines what discount rates
applies and that Mr. Holt’s report is also “immaterial” since Defendant objects to any restitution.
Id.
The Government stands by Dr. Bucheli’s report and testimony and advocates for a 1.5%
discount rate. See Resp. to Rule 706 Expert Report at 4, ECF No. 331.
Thus, the question for the Court is what discount rate reflects the rate of interest that would
be earned on the best and safest investments currently available to Doe.
(3) The Court adopts the Rule 706 Expert Report’s reasoning and selects a discount rate
of 3.0%
Based on Pfeifer, the Court is mindful that the discount rate should reflect both the best
and safest investments available to this recipient, Doe, and that it “should not reflect the market’s
premium for investors who are willing to accept some risk of default,” meaning investors who are
willing to risk losing their entire investment. Pfeifer, 462 U.S. at 537. The Court must also explain
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its choice. Hull, 971 F.2d at 1511 (“[T]he basis of the computation must be explained and
supported by competent evidence.”).
The Court therefore follows the framework in the concurrence to Stokes v. United States in
selecting a discount rate. 967 F.3d 1034, 1048 (10th Cir. 2020) (McHugh, J., concurring). The first
step is to identify the best and safest investment available to the recipient. See id. The second step
is to identify the rate of return on that investment. Id. And the third step is to calculate the discount
rate by determining the difference between the rate of return and the rate of inflation. See id.
As to step one, based on the evidence submitted by the Parties and Mr. Holt, the Court
finds that a diversified portfolio investment holding exchanged-traded funds, bonds, and cash or
cash-equivalents, like that identified by Mr. Holt, is the best and safest investment available to
Doe. Per Mr. Holt’s Rule 706 Expert Report, awards to minors are typically invested based on the
fiduciary duties of the trustee, which require diversified portfolios to balance minimization of risk
and rate of return, making them the safest and best available option. Rule 706 Expert Report at 2,
ECF No. 329.
Conversely, the Government ignores the modifier “best” and makes no argument about
whether the U.S. Treasury Bill rate underpinning its discount rate is the “safest available
investment” or “best and safest investment[].” See generally Damages Report, ECF No. 293-8;
Addendum to the Damages Report, ECF No. 317-1; Pfeifer, 462 U.S. at 537-38 (internal quotation
marks and citation omitted). Instead, the government appears focused on the “risk-free stream of
future income to replace . . . lost wages” portion of Pfeifer, asserting that “U.S. Treasury securities
. . . are widely regarded as the closest to a risk-free investment” and incorrectly insinuating “[t]he
Supreme Court approved th[e] [U.S. Treasury Bill] approach in [Pfeifer].” 462 U.S. at 537;
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Addendum to the Damages Report at 1, ECF No. 317-1.13 As to whether U.S. Treasury Bills are
the “best” option available, the Government at most only offers that “other courts . . . have also
used similar below-market discount rates” and “other courts have regarded discount rates in the 1-
2 percent range as the benchmark for compensation.” Addendum to the Damages Report at 1-2,
ECF No. 317-1. The Court finds this unconvincing. Even if the Government had explained its
reasoning, Mr. Holt identifies a better commensurately safe available investment in TIPS, meaning
the Government discount rate should be at least 2.65%.
Dr. Bucheli is right that Pfiefer “not[es] that a [discount] rate between one and three percent
will not be reversed if the choice is explained[,]” id. at 2, but the Court believes the Government
has not sufficiently explained whether 1.5% is in line with the “best and safest investments” or the
“safest available investment[,]” 462 U.S. at 537-38 (internal quotation marks and citation omitted).
Therefore, the Court cannot adopt the Government’s reasoning without falling foul of the Pfeifer
requirement to “explain its choice,” 462 U.S. at 549, and the Hull requirement to support and
explain “the basis of the computation” with “competent evidence,” 971 F.2d at 1511.
Overall, Mr. Holt, not the Government, identified the best and safest investment option
available to minor Doe. Therefore, as to step one, the Court adopts a diversified portfolio as the
best and safest available investment option in this circumstance. See Stokes, 967 F.3d at 1048
(holding courts “must make specific findings about the current availability of a safe investment or
safe set of investments”); Hull, 971 F.2d at 1511–12 (holding the district court permissibly adopted
the plaintiff’s expert’s methodology).
13 Even if, arguendo, the Government is correct that the awardee is “entitled to a risk-free stream of
future income to replace [her] lost wages,” 462 U.S. at 537 (emphasis added), and a 1.5% discount rate based on U.S.
Treasury Bills is “risk-free” and conforms with the “best and safest” and “safest available” investment, the
Government has not explained why the 1.5% discount rate should extend beyond Lost Wages to its restitution requests
for Treatment and Medical Care, Reduction in Value of Life, and Medical Reimbursement.
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As for step two, identify the rate of return, and step three, determine the difference
between the rate of return and the inflation rate, the Court finds the inflation-adjusted rate of return
of 3.0% identified by Mr. Holt for diversified portfolios in these circumstances completes both
steps. Stokes, 967 F.3d at 1048; Hull, 971 F.2d at 1512 (affirming the district court’s adoption of
an expert’s report as a detailed basis for calculation).
C. Final Restitution Amount
The Court finds Defendants Estrada and Clements jointly and severally liable to the victim.
The Government must recalculate the full amount of Restitution owed in present value dollars
using a 3.0 % discount rate.
IV. Conclusion
In sum, the Court finds that the Government has proven by a preponderance of the evidence
that as a proximate result of Defendants’ offenses, Doe has incurred and/or can reasonably expect
to incur $4,931,476.30 in losses as calculated with a 1.5% discount rate, including $2,572,515 in
earnings and benefits, $123,691 in treatment and medical care, $1,304.30 in medical care
reimbursement, and $2,233,966 in enjoyment of life. The Government must, however, recalculate
losses using a discount rate of 3.0%.
Accordingly, it is HEREBY ORDERED that:
1. The Government’s Sealed Request for Restitution, ECF No. 282, is GRANTED
IN PART consistent with this Order;
2. The Government must recalculate losses using a discount rate of 3.0% and submit
the recalculation to the Court within seven (7) days;
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3. Defendants Kevin Dwight Clements and Karyn L. Estrada are jointly and severally
liable to Jane Doe for restitution in the amount recalculated by the Government
using a discount rate of 3.0% under 18 U.S.C. § 1593; and
4. The Court will issue an amended judgment for each Defendant reflecting the
restitution requirement.
………………………………………….
MARGARET STRICKLAND
UNITED STATES DISTRICT JUDGE
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