U.S.A v. Sweeney

• Citation: 611 F.3d 459
• Decision Date: 13 July 2010
• Docket Number: 09-1823.,No. 09-1759,09-1759
• Parties: UNITED STATES of America, Appellee,v.Michelle Ann SWEENEY, Appellant.United States of America, Appellee,v.Jon Henry Sweeney, Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

611 F.3d 459

UNITED STATES of America, Appellee,

v.Michelle Ann SWEENEY, Appellant.

United States of America, Appellee,

v.Jon Henry Sweeney, Appellant.

Nos. 09-1759, 09-1823.

United States Court of Appeals Eighth Circuit.

Submitted: Feb. 10, 2010.

Filed: July 13, 2010.

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John Charles Brink, I, argued, Charles L. Hawkins, Minneapolis, MN, for appellant.

Michelle E. Jones, AUSA, argued, Minneapolis, MN, for appellee.

Before LOKEN, Chief Judge,¹ GRUENDER and BENTON, Circuit Judges.

GRUENDER, Circuit Judge.

Jon and Michelle Sweeney owned and operated Micro-Star Technology, a company that manufactured and sold cable television equipment. A federal grand jury charged the Sweeneys with manufacturing and distributing cable descramblers intended for unauthorized interception of cable signals and conspiracy to do so see 47 U.S.C. § 553; 18 U.S.C. § 371, and currency structuring see 31 U.S.C. § 5324. The grand jury also charged Mr. Sweeney with bankruptcy fraud see 18 U.S.C. § 152. A jury found the Sweeneys guilty on all the submitted counts, except the jury acquitted Mr. Sweeney of the bankruptcy fraud charge. The district court ² sentenced Mr. Sweeney to 70 months' imprisonment and a $150,000 fine and Mrs. Sweeney to 42 months' imprisonment and a $125,000 fine. The Sweeneys now appeal their convictions and sentences. For the following reasons, we affirm.

I. BACKGROUND

From approximately 1995 to 2001, the Sweeneys owned and operated Micro-Star Technology. Micro-Star manufactured cable television descramblers and other cable television equipment, which it then sold to wholesalers and distributors. Cable television providers encrypt their cable signals, and the descrambler function contained in some cable boxes reverses that encryption, allowing for a clear picture to be viewed.³ Micro-Star manufactured and sold several models of descramblers, and one of their best-selling models was the ViewMaster 4000. Most of the descramblers Micro-Star sold were “nonaddressable,” meaning that they would not respond to signals from a cable provider that restrict the viewer's access to encrypted programs. In this way, users of the ViewMaster 4000 and other descramblers could obtain cable programming without paying for it. Descramblers, whether addressable or not, also have legitimate uses: they allow users to save descrambler rental fees by informing their cable provider that they already own a descrambler and asking to be charged only for programming, and they allow users to display one cable signal on several different televisions.

Additionally, Micro-Star sold “authorization control devices,” such as the PiO. These devices can be installed before a cable provider's descrambler and block the cable provider's access control signals. Like a nonaddressable descrambler, they allow the user to view cable programming without paying for it. The authorization control devices too have a potentially legitimate function in that they can be used to block access to certain signals, thereby serving as a parental control device.

The Sweeneys employed several people at Micro-Star to manufacture descramblers. For instance, Mrs. Sweeney recruited her neighbor, Bonnie Mertes, who assembled descramblers between 1995 and 2000. Initially, Mrs. Sweeney paid Mertes in cash. Later, although Mertes was working for Micro-Star, her paychecks came from Nurses, Inc., a company owned by Mrs. Sweeney's sister-in-law. Mertes's daughters also worked for Micro-Star intermittently, testing the circuit boards that were used in the descramblers.

At trial, the Government first presented evidence relating to the charges of assisting in the unauthorized interception of cable signals and conspiracy. Mertes testified about Micro-Star's operations, including its manufacturing process, its payroll, and the tasks of various employees. Robert Kramer testified that he earned between $800 and $1,000 each week repairing defective Micro-Star descramblers. He also described the technical advice he gave Mr. Sweeney about competitors' descramblers. Additionally, Daniel Quade and Abe Paquette, who operated Core Innovation Systems, testified about their weekly purchases of large numbers of ViewMaster 4000s from Micro-Star and their distribution to other wholesalers and end-users. Quade testified that he believed most purchasers of the ViewMaster 4000 intended to use the device to steal cable programming. He went on to say that his customers reported that the ViewMaster 4000 devices were working as intended, successfully descrambling cable programs.

Michael Muller testified as an expert witness, providing technical information about descramblers based on his work as a product security specialist and manager at Motorola. Muller explained that nonaddressable descramblers, such as the ViewMaster 4000, ignore access restrictions included in a cable provider's signal and that authorization control devices, such as the PiOs, remove the access control instructions that a cable box would otherwise receive. Consequently, both types of equipment allow their users to view cable television programming without paying for it. Muller also testified that the only purpose of the nonaddressable function in a descrambler is to allow for the theft of cable programming.

Several law enforcement officers also testified at trial, including Officer Steve Miller of the Elk River Police Department, who testified about his involvement in executing a search warrant at Micro-Star's facility. While police were executing the warrant, Mr. Sweeney arrived. The following exchange took place during Officer Miller's testimony:

Q. Did you see him [Mr. Sweeney] or did you have interaction with him shortly after he arrived at the business?

A. I was in the front and he came in. He identified himself with a formal Minnesota driver's license. I asked him if he wanted to give a statement, read him his Miranda warning. He requested to call an attorney-

Mr. Sweeney objected and moved for a mistrial, citing Doyle v. Ohio, 426 U.S. 610, 96 S.Ct. 2240, 49 L.Ed.2d 91 (1976). The Government claimed that the disclosure of Mr. Sweeney's invocation of his right to counsel was inadvertent. The district court offered a curative instruction, but the defendants both declined that offer. The district court then denied the motion for a mistrial.

After presenting its evidence relating to the charges of assisting in the unauthorized interception of cable signals and conspiracy, the Government turned to the currency structuring charges. The indictment alleged thirteen counts of currency structuring. Count 8 alleged that the Sweeneys aided and abetted each other in illegally structuring the payment for a Chrysler Town and Country minivan. Steven Carbone, the dealership's finance manager, testified that he told the Sweeneys that he was required to file a currency transaction report for any cash transaction over $10,000. Mr. Sweeney responded, “Then let's not put $10,000 down.” Mr. Sweeney gave Carbone $10,000 in cash, and Carbone immediately returned $100 of it to Mr. Sweeney. Mrs. Sweeney then wrote a check for the balance of $22,263.22. Count 9 alleged that Mr. Sweeney illegally structured another transaction involving a vehicle, this time the purchase of a Ford Focus. Having already paid a $50 cash deposit, Mr. Sweeney again paid $9,900 in cash and the balance of $749.75 by check. When the salesman, Richard Wolfe, commented that this was a large amount of cash, Mr. Sweeney replied, “Yeah, if you spent $10,000 in cash, you would have to report it to the IRS.”

Counts 10 through 20 charged Mrs. Sweeney with illegally structuring transactions at First National Bank of Elk River. Each count corresponded to a different $9,900 cash withdrawal or deposit by Mrs. Sweeney between March 11, 2002, and December 1, 2003. The district court dismissed as multiplicitous all but one of these counts, leaving only Count 15 to be submitted to the jury. Count 15 described a $9,900 cash withdrawal by Mrs. Sweeney on October 28, 2002. However, the district court allowed the Government to introduce evidence of the other ten transactions, described in Counts 10 through 14 and 16 through 20, along with other cash transactions not specifically identified in the indictment. And several bank employees testified about an inquiry that Mrs. Sweeney made on March 11, 2002, regarding currency transaction reporting requirements. In response to Mrs. Sweeney's inquiry, bank employees informed her that any cash transaction in excess of $10,000 had to be reported.

The jury found the Sweeneys guilty on the charges of assisting in the unauthorized interception of cable signals and conspiracy to do so. Mr. Sweeney was acquitted on the bankruptcy fraud count. The jury further found Mr. Sweeney guilty of illegally structuring currency transactions related to both vehicle purchases. Mrs. Sweeney was also found guilty of illegally structuring the purchase of the minivan and structuring a currency transaction at the First National Bank of Elk River. The district court denied the Sweeneys' motions for judgment of acquittal and for a new trial.

At sentencing, the parties agreed and the district court concluded that section 2B5.3 of the United States Sentencing Guidelines applied to the Sweeneys' convictions for assisting in the unauthorized interception of cable signals and conspiracy. Section 2B5.3 provides for a base offense level of 8 and for an enhancement based on the amount of loss, termed the “infringement amount.” The arguments at sentencing focused primarily on the proper method for calculating the infringement amount. The district court found that $6,435,602, the gross revenues of Micro-Star, was a reasonable estimate of the infringement amount. The district court also credited an alternative infringement amount of $62,531,621, based on calculations by FBI Special Agent Dean Chappell and Brian Richert, a director of financial planning...