U.S. v. Wasz, 05-1463.

• Decision Date: 14 June 2006
• Docket Number: No. 05-1464.,No. 05-1463.,05-1463.,05-1464.
• Citation: 450 F.3d 720
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Laura WASZ and Bruce Wasz, Defendants-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 720

450 F.3d 720

UNITED STATES of America, Plaintiff-Appellee, v. Laura WASZ and Bruce Wasz, Defendants-Appellants.

No. 05-1463.

No. 05-1464.

United States Court of Appeals, Seventh Circuit.

Argued February 6, 2006.

Decided June 14, 2006.

Brian Hayes (argued), Office of the United States Attorney, Chicago, IL, for Plaintiff-Appellee.

Alexander M. Salerno (argued), Chicago, IL, for Defendant-Appellant, Lara Wasz.

Richard H. Parsons, Johanna M. Chrstiansen (argued), Office of the Federal Public Defender, Peoria, IL, Defendant-Appellant, Bruce Wasz.

Before FLAUM, Chief Judge, and ROVNER and SYKES, Circuit Judges.

ROVNER, Circuit Judge.

After selling millions of dollars' worth of stolen goods on eBay, Laura and Bruce Wasz pleaded guilty to committing wire fraud in violation of 18 U.S.C. § 1343. The district court ordered them to serve prison terms of 70 and 83 months, respectively. Both defendants appeal their sentences, jointly contending that the district court overestimated the loss resulting from their criminal conduct and improperly characterized them as organizers or leaders of the offense. Finding no clear error in either sentencing determination, we affirm the sentences.

I.

Laura Wasz and her son Bruce Wasz owned three pawn shops in the Chicago area. Beginning in September 2001 and continuing until June 2003, the Waszes used those shops as a front for selling stolen goods on eBay, the popular Internet auction site. The Waszes obtained the stolen merchandise from co-defendants Peter Giannopoulos, Daniel Bonaguidi, Robert Savino, Spyros Arvanitakis, Jason Wolber, George Lukaszewski, and Kim Marx—whom the parties aptly label the "thieving co-defendants." Before they hooked up with the Waszes, the thieving co-defendants were stealing merchandise from Home Depot and similar retailers and then returning the items to the stores for cash refunds, as if they had been legitimately purchased. Over time, changes in store policies made it increasingly difficult for the thieves to return the stolen goods in exchange for cash. A timely introduction to the Waszes by a mutual acquaintance, however, provided the thieves with another outlet for the merchandise they were stealing.

The Waszes and their thieving co-defendants struck up a mutually profitable arrangement: the thieves would obtain the merchandise, and the Waszes would fence it. The thieves would steal items from home improvement and building supply stores including Home Depot, The Great Indoors, and Expo Design Center, at locations not just in the Chicago metropolitan area but also in Colorado, Kansas, Maryland, Michigan, Minnesota, Missouri, New Jersey, Ohio, Tennessee, Virginia, and Wisconsin. The Waszes often identified specific items that they wanted the thieves to steal, including kitchen appliances, garage door openers, tankless water heaters, sump pumps, snow blowers, chainsaws, pressure washers, mosquito exterminators, faucets, and household tools. On occasion, when the thieves embarked on road trips to victimize out-of-state retailers, the Waszes would advance them funds to cover their expenses. The thieves, in turn, would report by telephone on the progress of their trips. At the Waszes' instruction, the thieves would remove price tags and other identifying marks from the stolen merchandise so that the provenance of the goods would appear legitimate to buyers. The Waszes also maintained a trail of falsified paperwork on the merchandise to make it appear as though they had obtained it legitimately, and in furtherance of that effort, they had the thieves complete fictitious invoices on the goods they stole. By standing agreement, the Waszes paid the thieves cash for the stolen goods in amounts between 33 and 40 percent of their retail value.

On receipt of the contraband, Laura and Bruce Wasz divided the items between themselves, stored the merchandise at their pawn shops and other locations, and then sold the items over the Internet. Under a number of different user names, the Waszes offered the stolen goods for sale on eBay. Both described themselves as "honest" sellers and concealed from prospective buyers the fact that the merchandise was stolen. Goods were frequently described as "new," "brand new," and "new in box". The items typically were offered for sale at prices substantially below their usual retail value: the Federal Bureau of Investigation ("FBI") would later prepare an analysis indicating that the Waszes sold their most popular lines of stolen goods at prices averaging 62 percent of the goods' retail value. Needless to say, buyers snapped up the goods, unaware that they were purchasing stolen items. Over the time span of this scheme, the Waszes completed auctions of more than 13,000 items at sale prices totaling more than $2.3 million.

The government was tipped off to the scheme when a manufacturer of sump pumps complained to the FBI that its products were being offered for sale on eBay in "new in box" condition at less than their wholesale value and without the manufacturer's permission. Investigation led the government to some of the thieving co-defendants, who agreed to cooperate and in some cases engaged in electronically monitored conversations with the Waszes.

The Waszes ultimately were charged in a multi-count indictment with engaging in both mail and wire fraud in violation of 18 U.S.C. §§ 1341 and 1343, conspiring with their nine co-defendants to transport stolen goods in and receive stolen goods from interstate commerce in violation of 18 U.S.C. §§ 371 and 2315, and possessing stolen goods that had moved in interstate commerce in violation of 18 U.S.C. § 659. Both defendants pleaded guilty to Count One, which charged them with wire fraud. The thrust of that count and the companion charges of mail and wire fraud was that the Waszes had defrauded the eBay customers who had purchased stolen merchandise from them by misrepresenting themselves as honest sellers, affirmatively concealing the stolen nature of the goods they were offering for sale, and falsely representing and creating the false impression that they had legitimate possession of such merchandise and could lawfully transfer ownership of the goods to the buyers. (Like all eBay buyers and sellers, the Waszes had accepted the terms of eBay's User Agreement, which in relevant part prohibits the sale of stolen merchandise.¹) The indictment identified various mail and wire communications executed in furtherance of this fraudulent scheme. The wire communication underlying Count One was an e-mail sent from the Chicago area to San Jose, California (where eBay has its headquarters) establishing one of the Waszes' eBay accounts. R.1 at 8.

Pursuant to the United States Sentencing Guidelines, the advisory sentencing ranges for both Bruce and Laura Wasz turned in large measure on the loss attributable to their crime. Section 2B1.1 of the Guidelines, which applies to offenses involving stolen property, specifies a base offense level of 6 for the Waszes' offense, but it also mandates an increase to that offense level commensurate with the extent of the loss. See U.S.S.G. § 2B1.1(b)(1) (Nov.2001).² In her pre-sentence report ("PSRs") for each of the Waszes, the probation officer estimated that the loss in this case was between $1 million and $2.5 million dollars, an amount that called for a 16-level increase in the base offense level. See § 2B1.1(b)(1)(I). The probation officer's estimate of the loss tracked the estimate that the government had set forth in its version of the offense. Although the proceeds of the Waszes' eBay sales exceeded $2 million, the government conceded that not all of the goods sold by the Waszes were stolen. However, the Waszes had sold certain product lines on a frequent basis, and these corresponded with the types of items their thieving co-defendants had regularly stolen from retailers. A preliminary government analysis had identified ten such product lines. The Waszes had sold over 2,000 items from these lines, and sales of products in these lines had yielded $641,782.62 in gross proceeds to the Waszes. The retail value of these items totaled an estimated $1,029,907.06. R. 232, Government's Official Version of the Offense at 15 & Ex. 2.³ The probation officer agreed with the government that this analysis was adequate to establish that the loss exceeded $1 million. R. 230 at 11-12; R. 232 at 11-12.

The defendants contended that the probation officer's loss calculation was too high. With the support of a loss analysis prepared by a forensic accounting firm that they had engaged, the Waszes argued that the actual loss fell between $400,000 and $1 million, an amount that would have called for a more modest increase of 14 levels to the base offense level. See § 2B1.1(b)(1)(H). The defendants suggested that the loss could be calculated from two different perspectives: the gain realized by the Waszes on the sale of the stolen goods or the actual loss suffered by the retailers from the theft of their merchandise.

Looking at the loss in terms of what the Waszes gained from their criminal conduct, the defendants proposed that the loss was equal to the net revenue that the Waszes realized on the sales of the stolen merchandise. The Waszes' calculation of this amount began with an effort to cull from their total eBay sales during the relevant time period the revenue realized on items that were not available for sale at the stores targeted by the Waszes' thieving co-defendants and thus (presumably) had not been stolen. These include items such as cars, used goods, jewelry, clothing, computers, office supplies, health and beauty items, and eyeglasses. Removing those items yielded corrected sales figures of $1,273,237 for Laura Wasz and $991,067 for Bruce Wasz. R. 205, Hopewell Report at 5-6. In the view of the defendants' consultants, those figures then had to be reduced further to reflect the cost of generating that revenue:

[T]otal transactions—or...