U.S. v. Haddad

• Decision Date: 14 September 2006
• Docket Number: No. 05-3086.,05-3086.
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Anwar HADDAD, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

462 F.3d 783

UNITED STATES of America, Plaintiff-Appellee, v. Anwar HADDAD, Defendant-Appellant.

No. 05-3086.

United States Court of Appeals, Seventh Circuit.

Argued June 5, 2006.

Decided September 14, 2006.

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Madeleine S. Murphy (argued), Office of the United States Attorney, Chicago, IL, for Plaintiff-Appellee.

Abner J. Mikva, Kathryn Wycoff (argued), Law Student, Chicago, IL, for Defendant-Appellant.

Before BAUER, ROVNER, and WILLIAMS, Circuit Judges.

BAUER, Circuit Judge.

A jury found Anwar Haddad was guilty of one count of wire fraud and two counts of money laundering, in violation of 18 U.S.C. § 1343 and 18 U.S.C. § 1957. Haddad's store, R & F Grocery ("R & F"), was authorized to sell certain approved food items for food stamps. The evidence showed that he defrauded the United States Department of Agriculture ("USDA") by exchanging food stamps for cash, keeping a cut of the transactions for himself.

Haddad was sentenced to concurrent terms of 51 months' imprisonment on all three counts and two years of supervised release. The district court ordered him to pay $801,067.37 in restitution. Haddad appeals, arguing that the district court erred when it denied his request to give an entrapment instruction to the jury. He further contends that the evidence was insufficient to support a conviction under 18 U.S.C. § 1957. Haddad adds that the district court erred in its supplemental jury instruction for 18 U.S.C. § 1957. Finally, he appeals the district court's loss amount determination. We affirm the judgment of the district court.

I. Background

In August of 1999, Haddad became a part owner in R & F, a small, "mom and pop" business. In January of 2000 he became the full owner. As part of the USDA's Food Stamp Program, R & F was an authorized vendor to sell food to recipients of food stamp benefits. Food stamp benefits are distributed to low-income families to help them buy certain staple food items. Rather than using paper food stamps, in recent years the benefits have been provided through an electronic transfer card (known as a LINK card in Illinois) that operates like a debit card. Qualified families receive benefits once a month, with the benefit amount automatically transferred to a recipient's LINK card around the first of the month. The Food Stamp Program provides authorized vendors with specialized, point-of-sale machines that deduct money from the LINK card when food is purchased. Once the recipient's identity is confirmed by entering his or her unique PIN number, the machine checks the balance on the card and then authorizes or denies the sale via a message on the point-of-sale machine. The food stamp sales are totaled up in the machine at the end of each day. The Food Stamp Program then reimburses the store the following day through an electronic deposit of funds that transfers directly into the store's designated business bank account.

The application process for the Food Stamp Program is fairly rigorous, and requires vendors to submit supporting documentation and appear at the Food and Nutrition Service (a division of the USDA) for training. During the training sessions, a program specialist describes the rules and regulations of the Food Stamp Program, noting in detail which items can and cannot be sold for food stamp benefits. Applicants are specifically told that they cannot sell ineligible items or exchange cash for food stamp benefits, and that doing so could result in a permanent disqualification from the program as well as criminal prosecution. After the training, applicants must appear for an interview with a program specialist. At the interview, the program specialist reviews the application with the applicant and ensures that the applicant understands the Food Stamp Program's rules and regulations. At the close of the interview, the applicant signs two forms. The first form, the "Retailer Training Acknowledgment", states that the applicant understands the rules and regulations of the program, including the prohibition against exchanging food stamps for cash. The second form acknowledges that the applicant was trained on the point-of-sale machine and the applicant agrees not to use it to process food stamps for cash.

On behalf of R & F Grocery, Haddad filed an application in 1999 to continue R & F's previous participation in the Food Stamp Program with co-owner A. Saman. Haddad signed the application himself and indicated in the application that the gross sales for 1998 had been $192,868 and the eligible retail food sales during that year had been $127,938.

In the summer of 2002, the Chicago Police Department ("CPD") alerted the United States Postal Inspection Service ("USPIS") and the USDA to suspected food stamp fraud at R & F. The CPD reported that large numbers of people were gathering outside R & F around midnight on the first of each month. The agencies reviewed R & F's food stamp redemptions since 2000 and noticed an unusually high volume of redemptions. As a result, the USPIS and the USDA initiated a full investigation into R & F's practices.

The USDA compiled a comprehensive list of R & F's food stamp redemptions beginning on February 1, 2000. R & F's monthly food stamp redemptions steadily increased from February of 2000, when the monthly redemption was $13,587.81, until July of 2002, when R & F redeemed $63,587.81 in food stamp benefits. In the first five days of August 2002 alone, R & F redeemed $22,269.24. Redemptions for the entire 30-month period of the scheme to defraud totaled $1,117,325.15. Essentially, R & F's sales went from an average of $10,661.50 per month in 1998 to an average of $37,244.17 per month for the 30-month period charged in the indictment.

A significant part of the investigation occurred on the days surrounding August 1, 2002. Detective William Lesko of the CPD's Financial Crimes Unit videotaped the activity immediately outside R & F from 11:30 p.m. on July 31, 2002 until 2:30 a.m. on August 1, 2002. The videotape showed customers lining up outside of the store prior to midnight on August 1. Shortly before midnight, an individual exited the store and motioned for the crowd to move over to one side. The crowd grew around midnight, with the parking lot so full of people that the crowd spilled out into the street. When customers left the store, hardly anyone carried bags of food even though R & F's records show an average of $49.99 per transaction in food stamp charges for the two-hour period.

At trial, CPD Sergeant Stanley Snarkis testified that he and two other officers went to R & F after midnight on August 1, 2002, and observed 75 to 100 people in the parking lot. The officers tried to get in the store around 1:45 a.m. but had a hard time because 15 to 20 people were "jam packed" into a small vestibule in the store. Sergeant Snarkis observed two lines of people, one to the cash register and a second line off to one side. He identified Haddad as the individual operating the cash register.

Later in the day, around 9:40 p.m., a confidential informant ("CI") went into R & F and exchanged food stamp benefits for cash with Haddad. Prior to the exchange, USPIS inspector Lee Jones equipped the CI with a concealed recording device and gave her a LINK card with $366 worth of food stamp benefits. Jones monitored the transaction. When the CI returned, she handed Jones the recording device, the LINK card, and $180 cash along with eight LINK transaction receipts. The receipts showed that R & F charged $366.64 on the LINK card. The CI did not purchase any food.

The recorded conversation between Haddad and the CI was played at trial. The CI asked Haddad if she could "do [her] LINK." Haddad told her, "not right now." She asked if she could come back tomorrow because she needed money. He asked where her man was, and she told Haddad that he was in jail. The CI also told him that she had a three-year-old child. Haddad asked her what kind of work she did and the CI said "I hustle." Haddad said, "come on in, dear, I'm, I'm going to help you today." He asked her, "How much you gonna do?" and she replied, "All of it." Haddad then charged $366.64 to her card and provided her with $180 in cash.

Also on August 1, 2002, USPIS agents went to R & F to identify the employees working at the store and to determine if they understood the Food Stamp Program rules. Haddad was working behind the counter. Inspector Alvin Dvorak asked Haddad if he would complete a USDA questionnaire with him regarding the Food Stamp Program. During the interview Dvorak asked the questions in English and noted Haddad's answers on the form because Haddad said he could not read or write in English. Inspector Dvorak rephrased questions if Haddad indicated that he did not understand them.

On August 5, 2002, federal agents from the USDA and the USPIS arrested Haddad outside of R & F. Other agents effected a search warrant for the R & F premises and seized invoices and business documents in the store. Haddad was then taken to USPIS headquarters for processing and questioning.

Haddad gave a statement admitting that he had been trafficking in food stamps using the point-of-sale machine at R & F foods. He stated that his employees exchanged food stamp benefits for cash on August 1, 2002, starting around 12:30 a.m. and ending at around 1:30 a.m., for a total of $7,000 to $9,000 in charges. Haddad admitted that he instructed his employees to exchange food stamps for cash and that he had been making similar transactions for about a year.

At trial, Daniel Berwick, an IRS special agent, explained the financial analysis he had conducted from R & F's bank records and other financial data. His goal was to determine if any money laundering had occurred and to see whether R & F's food inventory purchases justified its food stamp benefit redemptions. He examined the bank records for the R & F account at Marquette National Bank, the account Haddad...