US v. Kaczmarski

Decision Date15 August 1996
Docket NumberCriminal Action No. 95-616-01.
Citation939 F. Supp. 1176
PartiesUNITED STATES of America v. Jan KACZMARSKI, a/k/a John Kaczmarski.
CourtU.S. District Court — Eastern District of Pennsylvania

Alicia Strohl, Asst. U.S. Atty., United States Attorney's Office, Philadelphia, PA, for the Government.

Hope C. Lefeber, Philadelphia, PA, for defendant Kaczmarski.

Thomas A. Bergstrom, Malvern, PA, for defendant Rusznica.

MEMORANDUM

DALZELL, District Judge.

A jury convicted defendant Jan Kaczmarski and two co-defendants of, inter alia, bank fraud in violation of 18 U.S.C. § 1344. After a sentencing hearing this day, this Memorandum will explain in some detail how we resolved the contested sentencing issue of the amount of "loss" pursuant to U.S.S.G. § 2F1.1(b)(1).

I. Factual Background1

Robert Sroka was arrested in April, 1995, in connection with a series of bank frauds and shortly thereafter began cooperating with the Government in an attempt to reduce the sentence he faced. As part of his plea agreement with the Government, Sroka promised to assist in the investigation of other crimes. To this end, Sroka solicited defendant Jan Kaczmarski in June, 1995, to commit a not particularly esoteric type of bank fraud. Sroka testified that he selected Kaczmarski because they had before succeeded in exactly the same type of bank fraud together. Unbeknownst to Kaczmarski and the other defendants, Sroka taped virtually all of his conversations with them.2

The plan called for Kaczmarski to recruit someone to produce fraudulent identification documents for the purpose of opening bank accounts in Philadelphia. Sroka testified that they targeted Philadelphia banks because all that is needed to open an account in that City is a valid Social Security number that has actually been issued by the Social Security Administration and a picture identification in the same name as the Social Security card. By contrast, in New York City and elsewhere, banks require several more identification documents. For his part, Sroka agreed to obtain stolen checks from the mail for deposit and procure the Social Security cards. Once the checks had been deposited, the same individual who opened the accounts was supposed to withdraw all of the money on deposit.

To advance their plan, Kaczmarski recruited defendant Andrzej Sliwowski to procure the false identification and defendant Zdzislaw Rusznica (a/k/a "Mr. Ziggy") to open the accounts. Like Sroka, Kaczmarski, Sliwowski and Rusznica are all Polish nationals. Sroka introduced to the group State Department Agent Robert Bradley, who was working undercover, to provide a validly-issued Social Security card in the unlikely name of Patrick McDonnell. Exh. 21. Sliwowski then altered a Polish (not Irish) passport using the Patrick McDonnell name and Rusznica's photograph. Exh. 22. With the Social Security card and doctored passport in hand, Rusznica opened bank accounts at both CoreStates and Mellon Banks in Philadelphia in August, 1995.

Once the accounts had been opened, the plan called for Sroka to deposit stolen checks into them via an automated teller machine. After the checks had cleared, Rusznica was to enter each bank and withdraw in increments all of the money on deposit. Sroka, however, did not actually have a supply of stolen checks, although the FBI created the illusion that he did. The banks, in cooperation with the FBI, issued deposit slips that made it appear as if Sroka had deposited a total of $104,520 in checks into the accounts, even though, in fact, no money was actually deposited into either account. All together, Sroka "deposited" three checks totalling $48,200 into CoreStates and another three checks totalling $56,320 into Mellon. Exhs. 23-28.

On September 15, 1995, the defendants, Sroka, and Bradley drove to Philadelphia intending to withdraw $9,800 from CoreStates and an additional $8,600 from Mellon. The defendants drove first to a CoreStates branch where Rusznica presented for payment a check for $9,800 made out to "Cash" drawn on the FBI-controlled accounts. Exh. 33. Federal officials closed in and arrested the defendants on the spot.

II. Legal Analysis
A. Amount of "Loss"

Pursuant to U.S.S.G. § 2F1.1(b)(1), the fraud guidelines are driven by the amount of "loss" to the victims attributable to the defendants. United States v. Coyle, 63 F.3d 1239, 1250 (3d Cir.1995). The base offense level for a fraud crime is six, but that level is enhanced depending on the amount of "loss" the fraud caused.

The Government claims that the loss in Kaczmarski's case was $104,520, arguing that he intended to withdraw all of the money said to be on account at the banks and would have done so if he had not been apprehended first. The Government therefore argues for a six-level specific offense characteristic enhancement. U.S.S.G. § 2F1.1(b)(1)(G).

Kaczmarski and his co-defendants,3 not surprisingly, disagree. They contend that the enhancement should be limited, at most, to two levels pursuant to § 2F1.1(b)(1)(C) because the loss was only $9,800, i.e., the amount of the check that Rusznica presented to CoreStates for payment. At the antipode, the loss was zero, so the argument goes, because there was no possibility of any true "loss" because it was the fiction of a sting operation.

"Loss" is defined in the application notes to § 2F1.1 as "the value of the money, property, or services unlawfully taken." U.S.S.G. § 2F1.1, Application Note 7. This application note also refers the reader to the commentary to § 2B1.1, the guideline for larceny, embezzlement, and theft. Id. "The Commentary to § 2B1.1 emphasizes the amount taken from the victims as the primary measure of loss." United States v. Maurello, 76 F.3d 1304, 1309 (3d Cir.1996) (emphasis in original). Although the fraud guideline's explicit cross-reference to the theft guidelines "suggests that the same measurement of loss — amount taken — should be used in both cases", our Court of Appeals has refused to impose the identical loss valuation analysis for both crimes in all cases. Id. (citing United States v. Kopp, 951 F.2d 521, 529 (3d Cir.1991)).

More specifically, in fraud cases,

`loss' is, in the first instance, the amount of money the victim has actually lost (estimated at the time of sentencing), not the potential loss as measured at the time of the crime.4 However, the `loss' should be revised upward to the loss that the defendant intended to inflict, if that amount is higher than actual loss.

Kopp, 951 F.2d at 536 (footnote added). In applying Kopp's "flexible, fact-driven concept of loss", United States v. Dickler, 64 F.3d 818, 825 (3d Cir.1995), we need not determine the loss with mathematical "precision" so long as we make a "reasonable estimate of the loss, given the available information." U.S.S.G. § 2F1.1, Application Note 8.5

There is no question here that Mellon and CoreStates did not suffer any "actual loss". Indeed, it was impossible for there to have been any actual loss in this sting operation for the simple reason that there was never any money on deposit in the accounts to lose. Some courts have held that the "loss" under § 2F1.1 is zero when there is no realistic possibility of actual economic loss including, as here, in Government sting operations. See, e.g., United States v. Galbraith, 20 F.3d 1054, 1059 (10th Cir.) (in sting operations, "the loss subjectively intended by a defendant should not control `when the economic reality is that the probable or actual loss could not in any circumstances have exceeded a discernible lesser amount.'") (citation omitted), cert. denied, ___ U.S. ___, 115 S.Ct. 233, 130 L.Ed.2d 157 (1994); United States v. Watkins, 994 F.2d 1192, 1196 (6th Cir.1993) ("A second limitation on the broad reach of the `intended loss' rule is that the intended loss must have been possible to be deemed relevant. Regardless of the defendant's intent, the defendant may not be sentenced on the basis of harm that he or she was incapable of inflicting.") (citations omitted); cf. United States v. Schneider, 930 F.2d 555, 559 (7th Cir.1991) (Posner, J.) (The "estimate of the loss" must bear "relation to economic reality").

Although there is little question that applying Kopp and its progeny to Kaczmarski's case raises genuine metaphysical difficulties,6 there can be no question that Kaczmarski himself intended to withdraw all of the approximately $100,000 on account at both Mellon and CoreStates Banks. For example, on September 12, 1995, three days before Rusznica attempted the withdrawal in Philadelphia, Kaczmarski questioned Sroka on the amount that they would be able to withdraw from the accounts:

Kaczmarski: How much will you withdraw? 100,000?
Sroka: It's on two checks. On two books. 100,000. 56 is on Mellon, and 48 is on the ... on Corestate sic.
Kaczmarski: That's enough for now. You won't be able to withdraw any more.

Exh. 18 at 2. It will be noted that Kaczmarski mentions the $100,00 sum, not Sroka. Indeed, the testimony depicts other instances of Kaczmarski talking up the scope of the intended fraud. See, e.g., Exh. 16 at 2, quoted below at p. 15.

We hold, accordingly, that Kaczmarski intended to cause a "loss" to Mellon and CoreStates of $104,520, and thus an upward enhancement of six offense levels is warranted.

B. Sentencing Factor Manipulation

Although he does not use this locution, Kaczmarski also raises the troubling issue of sentencing factor manipulation. "Sentencing factor manipulation occurs when the government engages in improper conduct that has the effect of increasing a defendant's sentence." United States v. Okey, 47 F.3d 238, 240 (7th Cir.1995). The issue has most often been raised in drug cases in which an undercover agent convinces a defendant to buy or sell a greater quantity of drugs than the defendant intended.

Kaczmarski argues that it is unfair to impose a specific offense characteristic enhancement based on a "loss" of $104,520 when that amount was entirely within the...

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