225 F.3d 54 (1st Cir. 2000), 99-1756, US v. Coviello
|Docket Nº:||99-1756, No. 99-1782, No. 99-1783, No. 99-1814|
|Citation:||225 F.3d 54|
|Party Name:||UNITED STATES OF AMERICA, APPELLEE, V. GERALD P. COVIELLO, DEFENDANT, APPELLANT. UNITED STATES OF AMERICA, APPELLEE, V. ROBERT S. SIMONS, DEFENDANT, APPELLANT. UNITED STATES OF AMERICA, APPELLEE, V. MARC N. ROSENGARD DEFENDANT, APPELLANT. UNITED STATES OF AMERICA, APPELLEE, V. MAXINE SIMONS DEFENDANT, APPELLANT.|
|Case Date:||September 07, 2000|
|Court:||United States Courts of Appeals, Court of Appeals for the First Circuit|
Heard June 7, 2000
As amended September 28, 2000.
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS. Hon. George A. O'Toole, Jr., U.S. District Judge.
[Copyrighted Material Omitted]
[Copyrighted Material Omitted]
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John J. Barter for appellant Gerald P. Coviello.
James L. Sultan, with whom Charles W. Rankin, Michelle Menken, and Rankin & Sultan were on brief, for appellants Robert Simons and Maxine Simons.
Paul M. Yee for appellant Marc N. Rosengard.
Ben T. Clements, Assistant United States Attorney, with whom Donald K. Stern, United States Attorney, was on brief, for appellee.
Before Torruella, Chief Judge Lipez, Circuit Judge and Schwarzer, Senior District Judge.[*]
Lipez, Circuit Judge.
Crazy Bob's, a discount computer products store in Wakefield, Massachusetts, sold stolen Microsoft software. The owners of Crazy Bob's, Robert Simons and his wife Maxine, 1 and several employees were charged with, inter alia, a conspiracy to transport stolen property in interstate commerce. Robert and Crazy Bob's buyer, Marc Rosengard, pled guilty and now appeal their sentences. Maxine and Gerald Coviello (a friend of Robert's who sold some of the stolen merchandise) went to trial, and now appeal their convictions and sentences.
The central issue, common to all appellants, is whether the district court erred in calculating the "loss" caused by the crime under the United States Sentencing Guidelines. See USSG § 2B1.1(b)(1). The appellants also assert other sentencing errors: (1) the Simonses and Rosengard argue that they were not "in the business" of receiving and selling stolen property, id. § 2B1.1(b)(4)(B); (2) Robert argues that restitution and supervised release should not be imposed because of errors in his Fed. R. Crim. P. 11 colloquy; (3) Coviello argues that he was a "minimal" or "minor" participant, USSG § 3B1.2; and (4) Rosengard claims he was entitled to a greater downward departure. Maxine and Coviello raise trial errors as well, claiming that the court should have dismissed the stolen property counts because the physical discs containing the software were "virtually worthless" and that the court should not have given a "willful blindness" jury instruction. Maxine also challenges the district court's ruling that the government could impeach a witness by establishing that the witness had been represented by Maxine's trial counsel during grand jury proceedings. We reject all of these arguments and affirm the convictions and sentences.
During the 1990s, Robert and Maxine Simons operated a discount computer products outlet in Wakefield, Massachusetts known as Crazy Bob's. In 1994, Robert and Maxine met David LaPointe and, acting through Crazy Bob's, began purchasing computer diskettes, tapes, and CDs which had been stolen from KAO Infosystems ("KAO"), a computer disc manufacturer. LaPointe obtained the products through several KAO employees, including John Costello. Each shipment of stolen goods was either delivered by LaPointe to Crazy Bob's or picked up from Costello's shed by Marc Rosengard, a long-time employee and buyer for Crazy Bob's.
In June 1996, LaPointe obtained more than 10,000 Microsoft Windows 95 ("Windows") CD-ROMS, which were sold to Crazy Bob's for fifteen dollars each even though the wholesale value was approximately $165 per disc. Almost all of the discs were sold to Crazy Bob's without any legitimate packaging materials, such as Microsoft boxes, licenses, manuals, or certificates of authenticity. Instead, the discs were packaged on spindles of 100 discs each and shrink-wrapped in plastic. Crazy
Bob's then resold the stolen Windows discs to companies in Great Britain and California. LaPointe told Crazy Bob's buyer Rosengard that he insisted on cash for the Windows discs so that there would be no "paper trail." This request was approved by Bob and Maxine Simons and more than $240,000 in cash was delivered to LaPointe over the course of several transactions, mostly by Rosengard. Maxine often structured these payments so that each check for cash would be for less than $10,000, thereby avoiding the requirement that banks file with the Treasury Department a currency transaction report of any cash transaction of $10,000 or more.
In December 1996, LaPointe met with Rosengard and Robert Simons to negotiate the sale of at least 32,000 Microsoft Office 97 Professional Edition ("Office") CD-ROMs. Robert agreed to pay LaPointe in a series of installment payments because, as Robert explained, he would have to sell the discs slowly to avoid attracting suspicion. Maxine Simons then wrote a $116,000 check to Costello for his role in obtaining the stolen property, falsely documenting his status with the IRS so that he would appear to be a Crazy Bob's employee. Like the Windows discs, the Office discs did not contain Microsoft packaging materials and were on spindles of 100 discs apiece. As the stolen discs did not include the "key codes" necessary to access the software, Rosengard and other Crazy Bob's employees devised a formula for creating their own key codes and printed key code stickers. Between February and July 1997 Crazy Bob's sold a total of 13,962 Office discs, at prices ranging from fifty to one hundred dollars per disc, for a total of $908,108.
On March 22, 1997, Costello was arrested by the FBI. At Robert's direction, Crazy Bob's began executing documents to transfer $425,000 of stolen property proceeds from Crazy Bob's bank account through another account, which was then closed so that checks could be distributed to Bob, Maxine, and their children. When the FBI interviewed Maxine about Costello, she informed them that he was a "consultant" for the store and that LaPointe had sold back-up tapes to Crazy Bob's on one occasion.
Crazy Bob's was able to remove at least 8,000 of the Office discs before the FBI obtained a search warrant and seized the remainder. Robert then offered to sell the 8,000 discs to Jasper "Jay" Knabb, who operated a computer store in North Carolina, informing him that they were "hot" and would need to be sold out of the country and for cash. Knabb reported these conversations to Microsoft and to the FBI, and agreed to cooperate. Knabb then told Robert that he had a customer in South America who would buy the discs. After settling on a price, they agreed that defendant Gerald Coviello (a friend of Robert's) would handle the transaction and receive ten dollars per disc (which amounted to over $80,000) for his troubles. Coviello negotiated a cash payment from Knabb and set a meeting in a restaurant parking lot to deliver the discs. At that meeting, he was arrested.
Robert, Maxine, Coviello and Rosengard (along with three co-defendants not parties to this appeal) were all indicted for conspiracy to transport stolen property in interstate commerce, in violation of 18 U.S.C. § 371. Robert, Maxine, and Rosengard were charged with sixteen counts of interstate transportation of stolen property. See id. § 2314. Robert and Maxine were also charged with one count of conspiracy to launder money, in violation of 18 U.S.C. § 371, and eleven counts of money laundering, in violation of 18 U.S.C. § 1956(a)(1)(B)(i). 2 Finally, Maxine was charged with three counts of structuring to evade reporting requirements, in violation of 31 U.S.C. § 5324, and one count of making false statements to federal agents, in violation of 18 U.S.C. § 1001.
Robert and Rosengard pled guilty and were sentenced to seventy months and thirty-three months imprisonment, respectively. Maxine and Coviello were convicted on all counts following a jury trial, and were sentenced to thirty-three and thirty months each.
We will first address the loss calculation issue, raised by all appellants, and then turn to the other sentencing and trial error issues.
II. Loss Calculation
The Simonses, Coviello and Rosengard all argue that the district court misapplied Section 2B1.1(b)(1) of the Sentencing Guidelines. Section 2B1.1(b)(1) provides for enhancements to the base offense level in cases involving the transfer of stolen property depending on the amount of "loss." The application notes explain that "'[l]oss' means the value of the property taken, damaged, or destroyed" and that "[o]rdinarily, when property is taken or destroyed the loss is the fair market value of the particular property at issue." USSG § 2B1.1(B)(1) (Comment n.2); see also United States v. Carrillo-Figueroa, 34 F.3d 33, 43 (1st Cir. 1994); United States v. Skrodzki, 9 F.3d 198, 203 (1st Cir. 1993). We note that "the loss need not be determined with precision" and that the court need only "make a reasonable estimate of the loss, given the available information." USSG § 2B1.1 (Comment n.3); see also United States v. Paquette, 201 F.3d 40, 44 (1st Cir. 2000).
The district court calculated the loss by considering the "valu[e] of the property at the time it [was] taken from the rightful owner." Applying this standard, the court determined that Microsoft was the owner of the property for purposes of § 2B1.1(b)(1) (despite the fact that the discs were stolen from KAO) and that the loss should be based on...
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