United States v. Kim, 021921 FED5, 18-51024

Docket Nº:18-51024
Opinion Judge:JAMES L. DENNIS, CIRCUIT JUDGE:
Party Name:UNITED STATES OF AMERICA, Plaintiff - Appellee v. OJIN KIM, Defendant-Appellant
Judge Panel:Before DENNIS, SOUTHWICK, and HO, Circuit Judges.
Case Date:February 19, 2021
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit

UNITED STATES OF AMERICA, Plaintiff - Appellee

v.

OJIN KIM, Defendant-Appellant

No. 18-51024

United States Court of Appeals, Fifth Circuit

February 19, 2021

Appeal from the United States District Court for the Western District of Texas

Before DENNIS, SOUTHWICK, and HO, Circuit Judges.

JAMES L. DENNIS, CIRCUIT JUDGE:

Defendant Ojin Kim pleaded guilty, pursuant to a plea agreement, to one count of criminal copyright infringement, 17 U.S.C. § 506(a)(1)(A) and 18 U.S.C. § 2319(b)(1). The district court sentenced Kim to 46 months' imprisonment and ordered him to pay $606, 250 in restitution to the copyright owner, Scientific Games Corporation. On appeal, Kim seeks to vacate the order of restitution, contending that it is in excess of the statutory maximum because it exceeds the amount of the victim's actual loss. We agree, and therefore we VACATE the restitution order and REMAND to the district court for redetermination of restitution. On the other hand, we DISMISS Kim's challenge to the imposition of a sentencing enhancement because it is barred by his appeal waiver.

I. Facts and Procedural Background

The Odessa Police Department and the Ector County Sheriff's Office, in conjunction with the FBI, investigated illegal game rooms in Odessa, Texas that were the source of numerous complaints of crime and violence in the area. The FBI's investigation focused on the distributors of counterfeit gaming software. Pursuant to this investigation, Odessa officers and FBI agents executed a search warrant at OK Marketing Game Room in Odessa in February 2016. The game room contained several "Life of Luxury" ("LOL") video slot machine games. The LOL game machines contained motherboards, which include memory chips that hold the software for the games. Scientific Games Corporation is a legitimate business that produces and sells LOL game machines and owns the copyright to LOL software stored on the motherboard of each LOL machine. The computer motherboards seized from OK Marketing Game Room were found to contain memory chips with counterfeit Scientific Games labels, which indicated infringing copies of the gaming software in violation of federal copyright laws.

During the search, officers also located an empty box with a return address from Ozz Microsystem-located on Kinghurst Street in Houston, Texas-a company eventually connected to Ojin Kim. A Confidential Human Source (CHS) knowledgeable in game room operations and gaming equipment purchased 24 counterfeit LOL motherboards from Ojin Kim and his co-defendant, Hans Kim.

In July 2016, the Ector County Sheriff's Office executed a search warrant at a different game room in Odessa, the Best/Blue, and seized the motherboard from each gaming machine at that location, many of which were LOL motherboards. The owner of Best/Blue, Ok Cha Muraki, told the deputies that she purchased motherboards from Kim. Muraki said that Kim told her that the motherboards had been made in China, which explained why they were sold cheaply for only $300-$400 each. Muraki further reportedly stated that she owed Kim more than $200, 000 for prior purchases of gaming equipment, including motherboards. On November 21, 2016, the FBI seized ten LOL motherboards from the Ozz offices in Houston. On the same day, the FBI interviewed Kim, who admitted that he knowingly sold counterfeit copies of LOL software.

Kim pleaded guilty to one count of criminal copyright infringement. In the factual basis of his plea agreement, Kim agreed that he caused a financial loss to Scientific Games of $30, 000, which was calculated by multiplying 24, the number of counterfeit LOL motherboards that the CHS purchased from Kim, by the retail value of $1, 250 per motherboard. Kim also agreed to pay restitution to "include all amounts discovered through investigation into his criminal activity as described and set out in the Indictment." Additionally, Kim's plea agreement stated: The Defendant waives the right to appeal any aspect of the conviction and sentence, and waives the right to seek collateral relief in post-conviction proceedings, including proceedings under 28 U.S.C. § 2255. This waiver does not apply to ineffective assistance of counsel or prosecutorial misconduct of constitutional dimension of which the Defendant did not have knowledge at the time of sentencing.

The presentence report (PSR) stated that Kim was accountable for the sale of 485 counterfeit motherboards for a total loss of $606, 250. The probation office arrived at this figure through two separate calculations. First, mirroring the plea agreement, the PSR stated that Kim was accountable for a loss of $30, 000 based on the counterfeit motherboards he sold to the CHS. This calculation multiplied the approximate retail value of a LOL motherboard, $1, 250, by 24, the number of motherboards purchased by the CHS from Kim and his co-defendant. Second, the PSR stated that Kim was responsible for the sale of an additional 461 counterfeit motherboards for a loss of $576, 250. To arrive at this number, the probation office relied on the statement by Muraki, owner of the Best/Blue game room, that she owed Kim $200, 000. The PSR stated that this $200, 000 "could have bought 461 motherboards at an average cost of $434 each." The PSR then multiplied the approximate retail value of a LOL motherboard, $1, 250, by 461 to arrive at the alleged loss to Scientific Games of $576, 250. It is this calculation that Kim challenged in the district court and on appeal.

These calculations impacted facets of both Kim's recommended sentence of imprisonment and the amount he owed in restitution. First, because the loss amount exceeded $550, 000, the PSR applied a 14-level sentencing enhancement pursuant to U.S.S.G. § 2B1.1(b)(1)(H), resulting in a Guideline range of 46 to 57 months. Second, the PSR concluded that Kim owed Scientific Games restitution of $606, 250. Because Scientific Games owns the copyright to LOL, the PSR identified it as the "victim" of Kim's criminal copyright infringement for purposes of restitution.

While Kim agreed he owed restitution of $30, 000 to Scientific Games based on the 24 motherboards that the CHS purchased from Kim and his co-defendant, he objected to the additional $576, 250 in calculated loss based on the statements of Best/Blue game room owner Muraki. In his objections to the PSR, Kim argued that Muraki did not purchase the gaming boards from him, but instead that Muraki purchased the Best/Blue game room with the gaming machines already in place. He also stated that the sales he made to the Best/Blue "were for bill acceptors, monitors, power supplies, wiring, and spare parts, not motherboards." Finally, Kim argued that Muraki did not owe him $200, 000-for motherboards or anything else-because Kim had required cash on delivery.

At sentencing, Kim reiterated his objection to the total loss and restitution calculations, again asserting that Muraki did not owe him $200, 000 and that he did not sell her counterfeit motherboards; rather, he insisted that he only sold her other equipment and cabinets. In support of these assertions, Kim submitted an affidavit from Muraki in which she stated that because she purchased the game room from another individual, it was already stocked with games and their motherboards. She further stated she did not purchase motherboards from Kim and did not owe him $200, 000 because she always paid in cash on delivery. Kim also submitted the affidavit of Ju Kim, a technician who worked for Muraki, that confirmed Muraki's statements that she did not purchase motherboards from Kim and did not owe him any money.

The Government called FBI special agent Rick Drebenstedt to testify at sentencing. Drebenstedt testified that he had interviewed Muraki about a month after he searched her game room and that during the interview Muraki told him that "she had gotten equipment or supplies from Ojin Kim in Houston, Texas" and "[t]hat during the course of transactions with [Kim], that [Muraki] had received equipment and motherboards, and that [Muraki] owed an outstanding debt of $200, 000 to [Kim]." Drebenstedt further testified that the motherboards from the 103 gaming machines that were seized from the Best/Blue game room "were purchased from Ojin Kim in Houston, Texas," and that the large majority of those were Life of Luxury machines. On cross examination, Drebenstedt admitted that he did not know how many of the 103 confiscated motherboards were LOL motherboards, and that he had no documentation to indicate that Muraki owed Kim $200, 000 for prior purchases. He also stated that Muraki never specified how many motherboards she purchased from Kim or what portion of the $200, 000 she owed was for motherboards or for other equipment.

The district court denied Kim's objections to the total loss and restitution amounts without explanation. Kim requested a downward variance based on the nature and circumstances of the offense, arguing that the guidelines overstated the seriousness of the offense. The district court denied Kim's variance motion and stated that, based on the 18 U.S.C. § 3553(a) factors, the guidelines range was reasonable. The court sentenced Kim to 46 months in prison and three years of supervised release. The court further found that Kim owed restitution of $606, 250.

On appeal, Kim challenges the district court's conclusion that he was responsible for the additional $576, 250 in losses, asserting that this calculation was based on speculation-i.e., the supposed amount of counterfeit LOL motherboards that Muraki could have purchased from Kim at a discounted price, based on Muraki's statement that she owed Kim $200, 000, if it was assumed that the entire amount was spent on counterfeit LOL motherboards. Kim argues...

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