U.S. v. Barnes

• Citation: 117 F.3d 328
• Decision Date: 11 June 1997
• Docket Number: No. 96-2303,96-2303
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Arthur BARNES, Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

Page 328

117 F.3d 328

UNITED STATES of America, Plaintiff-Appellee, v. Arthur BARNES, Defendant-Appellant.

No. 96-2303.

United States Court of Appeals, Seventh Circuit.

Argued Oct. 22, 1996.

Decided June 11, 1997.

Tina L. Nommay, Robert N. Trgovich (argued), Office of the United States Attorney, Fort Wayne, IN, for Plaintiff-Appellee.

Donald C. Swanson, Jr., Matthew J. Rentschler (argued), Swanson & Campbell, Fort Wayne, IN, for Defendant-Appellant.

Before BAUER, ESCHBACH and COFFEY, Circuit Judges.

COFFEY, Circuit Judge.

Arthur Barnes was convicted before a jury in the United States District Court for the Northern District of Indiana on four counts of unlawfully acquiring and redeeming food stamps, in violation of 7 U.S.C. § 2024(b) and (c). The district court thereafter sentenced Barnes to eighty-seven months imprisonment. We affirm.

I. BACKGROUND

A. Factual Background

Arthur Barnes ("Barnes" or "Arthur") owned and operated two small grocery stores in Fort Wayne, Indiana. The U.S. Department of Agriculture ("D.O.A.") authorized both stores, Barnes Grocery and Family Market, ¹ to accept food stamp coupons as payment for specified grocery items pursuant to the federal government's Food Stamp Program. ² As an authorized retailer, Barnes was entitled to receive full value credit for any food stamps he legally received upon submitting them, together with a completed redemption certificate, to his local bank. By doing so, he effectively warranted that the food coupons redeemed were accepted in accordance with Food Stamp Program regulations. During 1992, Barnes personally redeemed $1,000,412.00 of food stamp coupons on behalf of Barnes Grocery and Family Market. That same year, the two stores' combined actual sales totalled a mere $343,697.00. From 1987 to 1994, ³ Barnes redeemed $3,524,754.00 of food stamp coupons to his bank and, in turn, the government, despite the fact that his two stores' operations generated only $1,283,232.00 in gross sales throughout that seven-year period.

While working at Family Market on October 27, 1993, and November 1, 1993, Barnes himself purchased, at an "exchange rate" of sixty-seven percent, $420.00 and $500.00 of pre-designated food stamps for $280.00 and $334.00 in cash, respectively, from an undercover D.O.A. agent. On four other occasions, six of Barnes' employees, including his brother, Philip Barnes ("Philip"), also purchased pre-designated food stamp coupons from undercover D.O.A. agents. The D.O.A. was able to recover most of the coupons after they had been redeemed through Barnes' bank.

On June 23, 1994, Philip voluntarily informed a D.O.A. agent, one Brian Crow, that Barnes had instructed him, as well as his co-employees, LaTonya Armstrong, Henry Armstrong, George Barnes, Leon Sullivan and Seth Townsend, to purchase food stamps for cash at a rate of $0.67 on the dollar. Philip also explained to Crow that Barnes usually deposited coupons into the Barnes Grocery and Family Market bank accounts so that cash would be available to fuel future food stamp purchases. A 1992 audit of Barnes' banking activity revealed that ninety-five percent of his total deposits for that year consisted of food stamp coupons.

B. Procedural Background

The Government filed an Indictment on October 26, 1994, charging Barnes with two counts of knowingly acquiring food stamp coupons through unauthorized means in violation of 7 U.S.C. § 2024(b), and two counts of redeeming food stamp coupons knowing the same to have been unlawfully procured in violation of 7 U.S.C. § 2024(c). Specifically, Counts I and II stemmed from the two occasions upon which Barnes personally exchanged food stamp coupons for cash with D.O.A. agents, whereas Counts III and IV related to the vast discrepancy between food stamp redemptions and gross sales figures for Barnes Grocery and Family Market during 1992. After a two-day trial commencing March 20, 1995, a jury found Barnes guilty on all four counts of the Indictment. He subsequently filed a Motion for Judgment of Acquittal After Verdict of Guilty; and in the Alternative Motion for New Trial, which the district court denied.

On March 25, 1996, the district court sentenced Barnes to eighty-seven months imprisonment, having enhanced his punishment by seventeen levels pursuant to sections 2F1.1 and 3B1.1 of the United States Sentencing Guidelines ("U.S.S.G."). Thirteen of those levels were attributable to the fact that Barnes' violation of 7 U.S.C. § 2024(b)(1) resulted in a "loss" exceeding $2,500,000.00, with the remaining four levels added for his role as a leader or organizer of criminal activity involving five or more individuals.

II. ISSUES

Barnes presents this court with three issues of consideration on appeal. First, he argues that the district court erroneously denied his Motion for Judgment of Acquittal on Counts III and IV of the Indictment because the Government proffered

insufficient evidence to prove that he "knowingly" redeemed illegally-obtained food stamp coupons in violation of 7 U.S.C. § 2024(b). Second, Barnes asserts that the sentencing court's imposition of a thirteen level sentence enhancement under U.S.S.G § 2F1.1 was improper because the figures used to calculate "loss" were unreliable, and even if such were not the case, that "loss" was overstated by sixty-seven percent. Finally, he contests the four level U.S.S.G. § 3B1.1 sentence enhancement for his "leadership" role in the offense. With his appeal grounded in issues arising under Counts III and IV of the Indictment issued against him, it warrants noting that Barnes does not dispute the jury's determination that on two separate occasions he personally exchanged food stamp coupons with D.O.A. agents for cash.

III. DISCUSSION

A. Sufficiency of Evidence as to Counts III and IV

The federal statute governing food stamp fraud, as contained in Counts III and IV of the Indictment returned against Barnes, provides that "whoever knowingly uses, transfers, acquires, alters, or possesses coupons or authorization cards in any manner not authorized by [the statute] or the regulations" is subject to a fine and imprisonment. 7 U.S.C. § 2024(b)(1) (emphasis added). ⁴ An "unauthorized" manner of transferring or acquiring food stamp coupons within the meaning of the statute is one wherein such coupons are not used to "purchase food in retail food stores ... at prices prevailing in such stores." 7 U.S.C. § 2016(b). On appeal, Barnes does not question whether the actus reus component of § 2024(b)(1) is presently satisfied; it is beyond dispute that his employees "transfer[red or] acquire[d] ... coupons in [a] manner not authorized by [the statute] or regulations." Rather, he submits that the only evidence which the Government presented with regard to its charges in Counts III and IV--the vast discrepancy between actual food stamp redemptions and gross sales figures--was insufficient to establish his mens rea of "knowledge" as required by 7 U.S.C. § 2024(b)(1). ⁵ In doing so, he characterizes the inference drawn between such evidence and his state of mind as "an unwarranted leap of faith in the Government's case."

"In challenging the sufficiency of the evidence to support [a] conviction, [Barnes] bears a heavy burden." United States v. Hill, 40 F.3d 164, 166 (7th Cir.1994), cert. denied, 514 U.S. 1029, 115 S.Ct. 1385, 131 L.Ed.2d 238 (1995). Indeed, as this court has reiterated time and again, "[w]hen reviewing challenges to sufficiency of evidence supporting a conviction we consider the evidence at trial in the light most favorable to the government; if we conclude that any rational trier of fact could have found that the essential elements of the crime were proven beyond a reasonable doubt, we will reject the defendant's sufficiency challenge." United States v. Hatchett, 31 F.3d 1411, 1416 (7th Cir.1994) (citations and quotations omitted). This deferential standard looms as a difficult obstacle for Barnes to overcome. United States v. Alcantar, 83 F.3d 185, 189 (7th Cir.1996).

At trial, the Government carried, and a jury deemed it to have satisfied, the burden of proving beyond a reasonable doubt that Barnes "knowingly" acquired and redeemed food stamps having a value of more than $100.00, in a manner not authorized by statute or regulation. 7 U.S.C. § 2024(b) (1993); see Liparota v. United States, 471 U.S. 419, 422, 105 S.Ct. 2084, 2086, 85 L.Ed.2d 434 (1985); United States v. Abdelkoui, 19 F.3d 1178 (7th Cir.1994). As explained above, Barnes primarily asserts that the government presented insufficient evidence to establish that he possessed the requisite mens rea to have committed food stamp fraud, and therefore, the district court improperly denied his Motion of Acquittal on Counts III and IV. In considering his argument, we are mindful that the Government does not bear an unduly heavy burden when prosecuting alleged violators of § 2024(b)(1). Liparota, 471 U.S. at 434, 105 S.Ct. at 2092. It need not introduce any extraordinary evidence that would conclusively demonstrate Barnes' state of mind. Id. "Rather, as in any other criminal prosecution requiring mens rea, the Government may prove by reference to the facts and circumstances surrounding the case that [Barnes] knew his conduct was unauthorized or illegal." Id. (emphasis added).

We are of the opinion that when considering the totality of all the facts and circumstances surrounding this case, we are only left to conclude that Barnes knew his employees at Family Market and Barnes Grocery were acquiring food stamps illegally, and as such, it was not improper for the district court to have denied his Motion of Acquittal. On four different occasions, various Family Market and Barnes Grocery employees exchanged cash for food stamps with undercover agents. Barnes' own brother, Philip, explained to a D.O.A. agent that Barnes had instructed him, as well as his co-employees, to purchase food stamps at a rate of $0.67 on the dollar. Tellingly, on ...