First, read the Riggs v. Palmer case.
The purpose of restitution from the criminal or tortfeasor to the victim is to restore the latter to the state he was in before he was wronged.
As indicated in the first part, for torts, restitution acts as the sole deterring punishment, as well. In such a case, two birds are killed with one stone which is pleasant.
For crimes, we have to decide whether restitution serves only one purpose, namely, to make the victim whole or also the additional purpose as part of the overall punishment.
Again, Elmer’s grandfather, Francis, was dead. No restitution was possible. There was no indication that Francis “would have wanted” to avenge his own murder by depriving Elmer of the inheritance. Elmer thought that Francis might change his will, but this was not certain. But then it was not clear whether Elmer “profited from his own wrong” or just “profited.”
(It is a bad idea to second-guess Francis as to what he would have wanted. Let this case be a lesson to whoever it may concern to make their wills clearer and more precise, such as by specifying what is to be done if the testator is murdered, etc. Dworkin argues as much, too.)
However, Elmer certainly intended to profit from a wrong. His own belief in the high probability of losing the inheritance may be used to condemn him.
The question then is, should the gains from a criminal act be taken away from the criminal even if these gains are not used as restitution to the victim?
For example, Rothbard would say yes.
This also makes sense from the utilitarian point of view. Why are the punishments for crimes relatively harsh, anyway? To compensate for the fact that not all criminals are caught or that for any person contemplating a crime there is some possibility that he will get away with it.
A potential criminal would then think: “There is an 80% chance that I’ll evade capture if I steal $100,000. But if I am caught, then I’ll both lose the loot and get 5 years in prison.” It is intended by the legislature that this choice be tough. If Elmer keeps the inheritance, then the whole crime might just be worth it for him, the punishment imposed by the court notwithstanding. This defeats the purpose of criminal law to make it so that crime for the most part does not pay. The legislators are undone. And we don’t want that.