State of Minnesota
                            in Court of Appeals
              C2-95-2725, C4-95-2726, C6-95-2727, C1-96-23,
                C3-96-24, C5-96-25, C9-96-27, C0-96-28

     State of Minnesota,
     Respondent (C2-95-2725, C4-95-2726, C6-95-2727, C0-96-28),

Appellant (C1-96-23, C3-96-24, C5-96-25, C9-96-27),

Christopher Edward Harvey,
     Appellant (C2-95-2725),

Respondent (C1-96-23),
     Ida Elaine Scherbring,
     Appellant (C4-95-2726),

Respondent (C5-95-25),
     Katie Lynn Przybylski,
     Appellant (C6-95-2727),

Respondent (C3-96-24),
     Whitley Shay Thompson,
     Respondent (C9-96-27),
     Darrick (NMN) Thompson,
     Appellant (C0-96-28).
     Filed May 14, 1996
Davies, Judge

Winona County District Court

File Nos. K1941464, K9941454, K8941462, K6941749, K6941752

Hubert H. Humphrey III, Attorney General, 1400 NCL Tower, 445 Minnesota
St., St. Paul, MN 55101 (for State)

Julius E. Gernes, Winona County Attorney, Nancy L. Buytendorp, Assistant
County Attorney, 171 W. Third St., Winona, MN 55987-3166 (for State)

John M. Stuart, State Public Defender, Lawrence Hammerling, Deputy State
Public Defender, Suite 600, 2829 University Ave. S.E., Minneapolis, MN
55414-3230 (forHarvey, Scherbring, Przybylski, Thompson, Thompson)

Considered and decided by Davies, Presiding Judge, Parker, Judge, and
Schumacher, Judge.

1. Restitution may be ordered for welfare fraud up to the county's net

2. The net loss for welfare fraud is the difference between the amount
received and the amount to which the recipient was lawfully eligible under
any benefits program.

3. An obligor parent's child support payments to a county are meant to
reimburse the county for AFDC lawfully paid. Unless in excess of lawful
AFDC, these payments should not be considered when calculating the
restitution amount in a welfare fraud case.

4. Restitution in a welfare fraud case may include the value of food stamps
fraudulently obtained. But, in calculating that value, a recipient's
unearned income should be reduced by the amount of AFDC payments ordered to
be repaid as restitution.

DAVIES, Judge (Hon. Lawrence T. Collins, District Court Trial Judge)

This is a consolidated appeal from five guilty pleas to criminal welfare
fraud. The appeals raise issues concerning the proper calculation of
restitution. We affirm.
Christopher Edward Harvey and Katie Lynn Przybylski

Przybylski and Harvey lived with their child for several months during
which Przybylski received AFDC from Winona County. Przybylski
misrepresented that Harvey was not living in the home and thus her benefits
through the ``absent parent'' AFDC program were unlawful. During the period
in question, Harvey paid to Winona County child support, which only
partially reimbursed the county for its AFDC payments.

Przybylski pleaded guilty to one count of welfare fraud in violation of
Minn. Stat. §𨵘.98, subd. 1,393.07, subd. 10(c) (1), and609.52,
subd. 3(2) (1994). Harvey pleaded guilty to one count of aiding and
abetting welfare fraud in violation of the same statutory provisions. In
separately titled cases, the court held them jointly and severally liable
for restitution in ``the amount [Winona County] actually lost due to ***
[their] conduct.''

The court, in calculating the amount of that loss (and, thus, the amount of
restitution owed), accepted Harvey's argument that the restitution amount
should reflect only the AFDC benefits in excess of the amounts to which
Przybylski would have been entitled had she properly claimed benefits under
the ``unemployed parent'' AFDC program (another program apparently
available to her). The State on appeal argues that the entire amount of
benefits she received should constitute the restitution amount, without
setting off benefits otherwise lawfully available.

The court rejected the parents' argument that the restitution amount should
be reduced by 100 percent of the amount of child support Harvey paid to the
county. The court ruled that those payments were irrelevant to restitution.
Harvey and Przybylski appeal that decision.
                       Ida Elaine Scherbring

Scherbring pleaded guilty to welfare fraud in violation of the same
statutory provisions involved in the Harvey and Przybylski cases. She
similarly misrepresented to Winona County that the father of her child was
absent from her home (he is not a party). She appeals the restitution order
on the same ground that Harvey and Przybylski do: that restitution should
have been reduced by the child support payments that the child's father
made during the period of the offense.

The State, in turn, cross-appeals the restitution order on two grounds. The
first is an issue involved in the Harvey and Przybylski cases: that the
restitution amount should equal the total amount of benefits received, not
just the benefits in excess of those Scherbring was properly entitled to
under the unemployed parent program.

The State's second issue on appeal concerns the trial court's method of
calculating the overallotment of food stamps. Food stamp allotment is
limited in part by unearned income: the lower the unearned income (which
includes AFDC payments), the higher the food stamp allotment. The trial
court ruled that the AFDC overpayments, which must now be repaid in
restitution, should not be considered in the retroactive calculation of
unearned income for the period in question. The State argues that the AFDC
overpayments should be factored into the calculation because they
constitute actual income received.
           Whitley Shay Thompson and Darrick NMN Thompson

The Thompsons wrongfully failed to report family earnings during the time
they received AFDC and food stamp benefits from Winona County. They both
pleaded guilty (in separately titled cases) to wrongfully obtaining
assistance in violation of essentially the same statutory provisions
involved in the other cases. The State again appeals because the trial
court made the same ruling as in the Scherbring case with respect to
calculation of the food stamp overallotment and the resulting restitution

I. Should the amount of restitution ordered after a welfare fraud
conviction be reduced by the amount of benefits to which the recipient
would have been lawfully entitled?

II. When calculating the amount of restitution for welfare fraud resulting
from a misrepresentation that one parent was absent from the household,
should an obligor parent's child support payments be offset against the
restitution owed?

III. When calculating a food stamp overallotment, should the court consider
fraudulently obtained AFDC payments as part of the recipient's unearned
income during the period in question, even though those amounts must now be
repaid as restitution?

A trial court has broad discretion in awarding restitution. In re
Welfare of D.D.G., 532 N.W.2d 279, 280 (Minn. App. 1995), review
denied (Minn. Aug. 30, 1995). The issues presented in this appeal, however,
are questions of law, which we review de novo. Frost-Benco Elec. Ass'n v.
Minnesota Pub. Utils. Comm'n, 358 N.W.2d 639, 642 (Minn. 1984).

When deciding restitution, a trial court must consider
        (1) the amount of economic loss sustained by the
        victim as a result of the offense; and

(2) the income, resources, and obligations of the defendant.

Minn. Stat. 𨺻A.045, subd. 1 (1994). If a trial court seeks, in
setting restitution, to compensate for loss, as it did in these
consolidated cases, then the amount should be based on the victim's injury.
State v. Fader, 358 N.W.2d 42, 48 (Minn. 1984).

Under the criminal welfare fraud provisions, the ``amount of assistance
incorrectly paid'' is defined as
        the difference between the amount of assistance
        actually received on the basis of misrepresented or
        concealed facts and the amount to which the
        recipient would have been entitled had the specific
        concealment or misrepresentation not occurred.

Minn. Stat. 𨵘.98, subd. 3 (1994). Minn. Stat. 𨵘.98, subd. 4
(1994), provides for recovery of that amount ``as a debt due the
county or the state'' (emphasis added). The debt amount is also the proper
restitution figure.
     I. Offset of AFDC Restitution by Amount of Lawful Benefits

In those cases involving a claimed offset of lawful benefits, the trial
court ruled that under Minn. Stat. 𨵘.98, subd. 3, the restitution
amount should reflect only the excess benefits the recipients received over
what they would have received under the ``unemployed parent'' program. We
agree. Minn. Stat. 𨺻A.045, subd. 1, requires the trial court to
consider the victim's loss when making a restitution decision. Minn. Stat.
𨵘.98, subd. 3, provides for consideration of what the recipient
would have been entitled to had the misrepresentation not occurred; the
statute's plain meaning requires consideration of the recipient's
eligibility for non-fraudulent benefits.

For the proposition that the restitution award should equal the full amount
of AFDC disbursed, the State relies on the supreme court's decision in
State v. Ibarra, 355 N.W.2d 125 (Minn. 1984). In Ibarra, the
appellant had been convicted of welfare fraud for misrepresenting that her
children's father was absent from the household. Id. at 128. She
argued that her conviction should be reversed on the ground that the State

did not prove her ineligible for any benefits under any
program. Id. at 131. The supreme court rejected her argument,
holding that the State must only prove ineligibility under the program
through which assistance was obtained. Id. at 132.

We agree with the trial court that Ibarra does not mandate recovery
of all AFDC benefits disbursed, without setoff. Although the case holds
that the State need not prove, as an element of the crime, that the
recipient was not eligible for benefits under any program, the Ibarra
court did not address the restitution issue we face here, that is,
calculating the net ``assistance incorrectly paid.''

The State also argues that it is impossible to view respondents as
``eligible'' retroactively under the ``unemployed parent'' program because
that program requires proof of participation in job search and training
efforts. Respondents did not do that here and the State claims they might
have benefitted from the ``unemployed parent'' program and thus needed less
assistance than that with which the trial court credited them.

Although the State's concern is legitimate, we must construe criminal
statutes strictly against the state as long as that construction does not
render them meaningless. State v. Zacher, 504 N.W.2d 468, 473 (Minn.
1993). Further,
        [w]hen the words of a law in their application to an
        existing situation are clear and free from all
        ambiguity, the letter of the law shall not be
        disregarded under the pretext of pursuing the

Minn. Stat. 𨻝.16 (1994); accord McCaleb v. Jackson, 307 Minn.
15, 17 n.2, 239 N.W.2d 187, 188 n.2 (1976). The statute here requires an
offset of restitution by the amount to which the recipient would have been
entitled absent the fraud; we cannot accept the State's argument that this
only refers to some other amount under the same program, especially because
the programs, though different in name, are all related and administered by
the same agency.
      II. Offset of AFDC Restitution by Child Support Payments

Under Minn. Stat. 𨵘.74, subd. 5 (1994), a recipient of public
assistance assigns to the county the rights to child support payments in
order to reimburse the county for its AFDC payments to the recipient. Thus,
once the assignment takes place, the AFDC recipient has no remaining rights
to the child support payments unless they exceed AFDC benefits. There is no
suggestion here that support payments exceeded lawful -- and retained --
AFDC payments. We therefore hold that the support payments should not be
considered for the purposes of calculating the amount of restitution owed.
 III. Inclusion of AFDC Overpayments as Income in Calculation of Food
                       Stamp Restitution Amount

Although the food stamp program is federal, the crime of fraudulently
obtaining food stamps is prosecuted under state law. Specifically, Minn.
Stat. 𨷡.07, subd. 10(c) (1994), provides that food stamp fraud is
considered a violation of Minn. Stat. 𨵘.98, the provision involved
in the above two issues. Thus, the restitution considerations are the same.

Food stamp allotment calculations include consideration of the recipient's
``unearned income,'' which includes AFDC payments. In these cases, the
trial court concluded that because respondents must now, as a result of
their convictions, pay back some of the AFDC payments, those amounts should
not be included in respondents' ``unearned income'' when retroactively
determining the food stamp overallotment for restitution.

The State relies heavily on Abernathy v. Yeutter, 725 F.Supp. 459
(W.D. Mo. 1989). In Abernathy, the court affirmed the Secretary of
Agriculture's interpretation of a federal regulation(1)

        [Footnote] (1)This regulation, 7 CFR § 273.18(c)
        (1) (ii), is similarly worded to our statute on the
        determination of food stamp overallotment, requiring
        comparison of ``the difference between the allotment
        the household received and the allotment the
        household should have received.''

on calculation of food stamp overallotments, which included AFDC
overpayments as part of the recipient's income (used to determine the
proper food stamp allotment) for the period in question. Id. at 469.

We are not persuaded to follow this non-binding civil precedent in the
present case. The Abernathy court, as was required, deferred heavily
to the Secretary's interpretation. Id. at 464. We are not so
restricted, as we review the legal issue de novo. Additionally, we believe
that double restitution would result if the ordered restitution of AFDC
overpayments is ignored in determining the food stamp overallotment.
Restitution must aim to compensate the State for its actual loss, and no

We hold that in calculating food stamp overallotment under Minn. Stat.
𨵘.98, subd. 3, the AFDC overpayments during that period, which now
must be repaid in restitution, should not be considered part of the
recipient's ``unearned income.''

The restitution amount should be no more than the excess amount received
because of the fraud. Child support payments to a county do not offset the
restitution obligation unless those payments are in excess of lawful AFDC.
When calculating the food stamp overallotment, fraudulently received AFDC
benefits that must now be repaid as restitution are not part of the
recipient's ``unearned income'' for the period in question.