U.S. v. Mount, 92-1087

• Decision Date: 25 June 1992
• Docket Number: No. 92-1087,92-1087
• Citation: 966 F.2d 262
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. John R. MOUNT, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 262

966 F.2d 262

UNITED STATES of America, Plaintiff-Appellee, v. John R. MOUNT, Defendant-Appellant.

No. 92-1087.

United States Court of Appeals Seventh Circuit.

Argued May 29, 1992.

Decided June 25, 1992.

Norman R. Smith, Asst. U.S. Atty., Suzanne M. Wissmann, argued, Criminal Div., Fairview Heights, Ill., for U.S.

Edward R. Joyce, argued, St. Louis, Mo., for John R. Mount.

Before CUDAHY, EASTERBROOK, and RIPPLE, Circuit Judges.

EASTERBROOK, Circuit Judge.

Ticket scalpers, like arbitrageurs in stock markets and dealers in gems, move assets in scarce supply toward those willing to pay the most for them. If promoters of an opera or rock concert underestimate the demand for the tickets and set prices too low, the initial buyers make a profit, while scalpers receive compensation for the service of moving the tickets from those who first acquire them to those who value them more highly. Promoters lose nothing from scalping in such cases, and everyone else may gain. See Stephen K. Happel & Marianne M. Jennings, Assessing the Economic Rationale and Legal Remedies for Ticket Scalping, 16 J. Legislation 1, 12-14 (1989).

Sometimes, however, promoters know that their prices are less than the market will bear. The smash hit play with a six-month wait for seats, the restaurant that always has a line snaking out the door, and the host for the Super Bowl, all charge less than customers would pay. They do so year in and year out, so mistaken estimates of demand cannot explain the practice. Both sides must gain something from the arrangement, whether the information other patrons provide or being able to discuss the event with additional friends. See Gary S. Becker, A Note on Restaurant Pricing and Other Examples of Social Influences on Price, 99 J.Pol.Econ. 1109 (1991). Scalping raises the effective price to the final customer without producing income for the promoter, so if the promoter's interests lie in holding price below the short-term market-clearing level, the promoter will oppose scalping.

Promoters of sporting events routinely oppose scalping and seek legislation against the practice, suggesting not only that they are willing to set prices below the level fans will pay but also that they want the monetary cost borne by the fan in the seat to fall below the market-clearing level. About half of the states and many cities have enacted laws regulating the resale of tickets. Happel & Jennings, 16 J. Legislation at 2-3; see also Thomas A. Diamond, Ticket Scalping: A New Look at an Old Problem, 37 U.Miami L.Rev. 71 (1982) (lower but earlier count). Efforts to suppress commerce lead to black markets, and often the black marketeers must evade other laws as well.

Steven Gray offered John Mount, a ticket broker, 30 strips of tickets to post-season games of the Minnesota Twins in 1991. Each strip contained tickets for the league playoffs and the World Series. Each strip had a face value of $400, which the Twins would collect from their customers. Although a strip contained eight tickets, as few as two games might be played in Minneapolis (if the Twins were swept in the league championship and so did not play in the World Series). The baseball club would repurchase unused tickets from owners, but only at face value. Scalpers who paid more were at risk, either from un-played games or unpopularity of the contests. But because the demand for playoff and World Series tickets is so high, Mount agreed to pay $1,000 per strip, anticipating betting against the Twins in Las Vegas in order to hedge his risks.

There was a catch. Baseball clubs do not sell strips of tickets to brokers. Season ticket holders get first call; blocs of tickets go to the league, to the press, and to the opposing team. Any tickets left over are sold on a first-come, first-serve basis, with strict limits on the number of tickets any fan may buy. Gray told Mount what Mount had to know anyway: that he obtained the strips by fraud. The stipulation of facts and the information provided at sentencing are not clear on the method, but apparently Gray or a friend who worked for the Twins used a ruse to obtain the tickets from the Twins' vault before they went on sale. Eventually the Twins would take an inventory, so the plan must have contemplated a way to avert a report that the tickets had been stolen. A stolen-ticket alert would have made the tickets in Mount's hands worthless (or caused his customers to come looking for him, if he sold them ducats that were ripped up at the gate in Minneapolis). Mount's concern was not, however, that the Twins get paid so much as it was that the tickets not be reported missing and presumed stolen.

Over the course of two weeks, Gray and Mount negotiated the details of delivery and payment in a series of telephone conversations. Mount wanted to pay by cashier's check so that he could document his expenses for tax purposes. Gray was not interested in leaving a paper trail and said that the deal had to be in cash, on top of which his trip had to be brief so that the money or the tickets could be back in the Twins' vault by the end of the day. Mount negotiated a check for $30,000 and bought 30 money orders of $1,000 apiece, to protect himself against theft while allowing him to buy fewer than all of the strips if the seating locations were not as promised or something seemed fishy.

Gray and Mount completed their transaction, with Mount buying all 30 strips. But things did not go as Mount planned. He never made it to Las Vegas. Gray had been cooperating with federal agents. The telephone conversations had been taped, and the agents swooped down shortly after the money orders and tickets changed hands. The Twins got the strips back, the $30,000 was seized for forfeiture, and Mount pleaded guilty to wire fraud, in violation of 18 U.S.C. § 1343. He was sentenced to six months' imprisonment and protests that this was based on an incorrect application of the sentencing guidelines.

Guideline 2F1.1, which applies to wire fraud, establishes a base offense level of 6. The district judge added 3 more after concluding that the offense involved a "loss" of more than $10,000 but less than $20,000, see § 2F1.1(b)(1)(D), and another 2 on finding that "the offense involved ... more than minimal planning", § 2F1.1(b)(2)(A). Subtracting 2 for acceptance of responsibility yielded an offense level of 9, which, when combined with a criminal history category of II, generated a sentencing range of 6-12 months. The court gave Mount the lowest sentence in the range. Mount's calculation, by contrast, omits all enhancements and produces a final offense level of 4 and a range of 0-6 months' imprisonment.

The prosecutor observes that the court selected a sentence, six months, that appears in both ranges. He contends that the choice of offense levels therefore makes no difference. If the range does not affect the outcome, we may affirm without deciding whether the district judge figured correctly. Overlapping ranges make it possible for judges to give sentences that are lawful no matter which way they resolve a point of law, and "[i]t is hard to think of any reason for the Sentencing Commission to have gone to such lengths to build overlapping into the table if it did not expect this feature to reduce the number of disputes that needed to be adjudicated in the application of the guidelines." United States v. Dillon, 905 F.2d 1034, 1037 (7th Cir.1990), quoting from United States v. Bermingham, 855 F.2d 925, 930 (2d Cir.1988).

The prosecutor's argument, however, assumes that judges choose one "right" sentence rather than...