USA v. Hassan, 99-2423

• Decision Date: 01 May 2000
• Docket Number: No. 99-2423,99-2423
• Citation: 211 F.3d 380
• Parties: (7th Cir. 2000) United States of America, Plaintiff-Appellee, v. Emad Jamal Hassan, Defendant-Appellant
• Court: U.S. Court of Appeals — Seventh Circuit

Page 380

211 F.3d 380 (7th Cir. 2000)

United States of America, Plaintiff-Appellee, v. Emad Jamal Hassan, Defendant-Appellant.

No. 99-2423

In the United States Court of Appeals For the Seventh Circuit

Argued February 9, 2000

Decided May 1, 2000

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 98 CR 613-2--David H. Coar, Judge.

Before Bauer, Easterbrook, and Ripple, Circuit Judges.

Bauer, Circuit Judge.

On November 20, 1998, after a bench trial, the district court found Emad Jamal Hassan guilty on two counts of food stamp fraud in violation of 7 U.S.C. sec.sec. 2024(b) and (c) and one count of conspiracy pursuant to 18 U.S.C. sec. 371. On May 18, 1999, Hassan was sentenced to thirty-seven months incarceration, three years of supervised release, and ordered to pay restitution in the amount of $1,031,873. Hassan appeals the district court's calculation of the total loss amount for sentencing purposes.

Background

In February 1994, Yousef Hassan, Emad's brother, opened the Halsted Street Market, a small neighborhood grocery store located at 7548 N. Halsted Street in Chicago. Yousef applied for a federal food stamp license with the USDA to enable the store to accept food stamps from customers. On the application, Yousef estimated the annual gross sales for the Halsted Market as $280,000 and the annual eligible food sales (food items eligible to be purchased with food stamps) as $200,000. The USDA approved the application and the store received its food stamp license in mid-May 1994. Emad worked at the store and functioned as its manager. He ran the day-to-day operations of the store. He was assisted by his wife, Cathi, who worked in the store on a part- time basis.

Yousef, with the help of Maher Nubani, opened eight different bank accounts for the store between 1994 and 1995. From June 2, 1994 through April 21, 1995, Yousef and Emad redeemed over $1.2 million worth of food stamps in the Halsted Street Market bank accounts. Of the $1.2 million, a substantial amount of the food stamps were exchanged for cash in transactions with other neighborhood grocers who were not licensed to accept food stamps. Typically, Yousef and Emad purchased food stamps from other store owners at discounts, often 10%, deposited the stamps into their various bank accounts, and then collected full remuneration from the government.

At the trial, an official from the USDA testified that licensed store owners who illegally obtain stamps typically sell them to other licensed store owners to avoid being detected by the USDA for excessively high food stamp redemptions. The USDA monitors the actual redemptions of authorized food stores and compares those to the reported level of sales of the stores. Halsted Market's suspiciously high food stamp redemption rate alerted the USDA that there may be fraud afoot.

On September 1, 1998 both Yousef and Emad were indicted and charged with one count of conspiracy to defraud the United States government and commit food stamp trafficking and two counts of food stamp trafficking. Yousef has not been arrested and is considered a fugitive. Emad was arrested in Arlington, Texas and transferred to the Northern District of Illinois on August 28, 1998 to await trial. Emad then waived his right to a jury trial.

Maher Nubani, who owned and operated his own food store, testified he was barred from participating in the food stamp program because of a conviction in 1990 for food stamp fraud. Yousef and Emad regularly gave him cash in amounts ranging from $500 to $3,000 so that he would purchase food stamps from his customers at a discounted rate. He gave the food stamps to Yousef and Emad, who redeemed the food stamps through the Halsted Market bank accounts. Between May 1994 and February 1995 Nubani redeemed approximately $10,000 to $15,000 a month in food stamps through Yousef and Emad and the Halsted Market bank accounts.

Yousef and Emad prepared and signed bank deposit slips and food stamp redemption certificates and deposited the food stamps into the Halsted Market accounts to seek reimbursement for the face value of the food stamps from the government. The USDA's account at the Federal Reserve then credited their accounts. Yousef and Emad withdrew the money and gave the cash value of the food stamps back to the store owners minus their 10% commission.

Nubani also testified that he personally witnessed, on multiple occasions, other grocery store owners illegally deliver and sell thousands of dollars worth of food stamps to Yousef and Emad, including Qais Nofal, Abed Mustafa, and Bashar Sweiss. Nubani stated that Yousef told him he only bought food stamps from people he knew because he was wary of undercover agents and that he did not want to take any chances with his food stamp license. Yousef also told Nubani that he only purchased stamps from other owners, never customers, to avoid the undercover agents. Nubani witnessed Yousef and Emad paying store owners for the food stamps they had redeemed for them from their bank accounts. Cathi Hassan also testified that Yousef told her not to buy stamps from customers. While working at the market she saw other Arabic males bring both Emad and Yousef large quantities of food stamps. Each night large amounts of food stamps were delivered to the apartment she shared with Emad and Yousef where they counted thousands of dollars worth of food stamps and prepared them for deposit.

On November 20, 1998, Emad was found guilty on all counts. On May 18, 1999 a sentencing hearing was held. Emad filed numerous objections to the probation officer's Sentencing Guideline calculations that were contained in the presentence investigation report. Specifically, Emad challenged the calculation of the amount of food stamp fraud loss attributable to him under sec. 2F1.1(b)(1). The PSR recommended and the government adopted a fraud loss estimate of $1,031,873. This figure was based on the testimony of Cathi Hassan in which she testified that when the store first opened the total gross sales averaged about $1000 to $1,200 a day. After about five months and until April 1995, sales decreased to between $300 and $500 because the cooler broke and meat sales ceased. These figures are similar to the figures Yousef used in his application for the food stamp license. Legitimate sales during this time were approximately $209,700. The loss figure was derived by subtracting Halsted Market's actual total sales from its actual food stamp redemption ($1,241,573) for a total of $1,031,873.

Emad appeals this calculation.

Analysis

Emad argues that the district court improperly shifted the burden of proof to him in calculating the loss. Section 2F1.1(b) of the Sentencing Guidelines applies to crimes of fraud and deceit, which is included under 18 U.S.C. sec. 2024(b) and (c). Under the Guidelines, if the amount of loss is over $2,000, the sentence is enhanced according to the amount of loss caused. See sec. 2F1.1(b)(1). The district court's finding of a loss amount of $1,031,873 resulted in an eleven- point offense level enhancement which raised his minimum sentence from 6 months to 37 months.

The calculation of the amount of loss by the district court is reviewed for clear error while the determination of the meaning of "loss" is reviewed de novo. United States v. Brown, 136 F.3d 1176 (7th Cir. 1998).

Under U.S.S.G. sec. 2F1.1(b)(1), a district court may increase the sentence of one who has...