USA v. Mirza Ali

Citation620 F.3d 1062
Decision Date25 August 2010
Docket NumberNos. 07-10529, 07-10539, 07-10542.,s. 07-10529, 07-10539, 07-10542.
PartiesUNITED STATES of America, Plaintiff-Appellee, v. Mirza ALI, Defendant-Appellant. United States of America, Plaintiff-Appellee, v. Sameena Ali, Defendant-Appellant. United States of America, Plaintiff-Appellee, v. Keith W. Griffen, Defendant-Appellant.
CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)

OPINION TEXT STARTS HERE

Karen L. Landau, Oakland, CA, for appellant Sameena Ali.

Chris Cannon, San Francisco, CA, for appellant Mirza Ali.

David J. Cohen, Bay Area Criminal Lawyers, PC, San Francisco, CA, for appellant Keith Griffen.

Joseph P. Russoniello, Barbara J. Valliere, and Hartley M.K. West, for appellee, the United States of America.

Appeal from the United States District Court for the Northern District of California, Claudia A. Wilken, District Judge, Presiding. D.C. No. CR-02-40081-CW.

Before: PAMELA ANN RYMER, M. MARGARET McKEOWN, and N. RANDY SMITH, Circuit Judges.

OPINION

N.R. SMITH, Circuit Judge:

This case arises from a scheme whereby Mirza Ali, Sameena Ali, and Keith Griffen (collectively Defendants) purchased Microsoft software at discounted prices then resold the software for a profit. The case calls upon us to interpret and apply the mail and wire fraud statutes, 18 U.S.C. §§ 1341 and 1343. Significantly, we hold Defendants were properly convicted of mail and wire fraud, because (1) a right to payment of money for the sale of software is “money or property” as defined in 18 U.S.C. §§ 1341 and 1343, and (2) neither statute requires a transfer directly to the defendant from the party deceived by the defendant. Further, sufficient evidence sustains all of the convictions with the exception of the promotion money laundering counts. Lastly, the district court did not err with regard to sentencing or with respect to Sameena Ali's motion for substitute counsel.

FACTUAL AND PROCEDURAL HISTORY
A. Microsoft's Software Distribution System

Microsoft sells software 1 in a variety of ways, one of which is Microsoft's Authorized Education Reseller (“AER”) program. Through the AER program, Microsoft sells Academic Edition (“AE”) software. While the AE software is in all relevant ways equivalent to the retail version, Microsoft sells its AE software only to authorized distributors, who have agreed to sell the AE software only to AERs. These AERs have agreed to sell the AE software only to qualified educational users. Microsoft charges distributors of AE software a much lower price than it charges distributors for comparable non-academic editions. Distributors in turn generally sell AE software to resellers at a lower price than non-AE software.

In order to become an AER, an entity must submit an application to Microsoft. As part of the application process, the entity promises, inter alia, to abide by the resale restrictions on AE software imposed by Microsoft. Upon approval of the application, the AER agreement requires that, if an AER sells software in violation of the agreement, the AER would be liable to Microsoft for “the difference between[Microsoft's] estimated retail price for AE product and ... commercial versions of the same products.”

B. Defendants' Buying and Selling of AER

Defendants devised a scheme to fraudulently attain AER status for various companies and then sell AE software to unauthorized users (those who did not qualify as educational users). Defendants first began purchasing AE software through a company called Samtech Research, Inc. (“Samtech”). Sameena Ali was president of Samtech and, while president, submitted an AER application to Microsoft on behalf of the company in September 1996. Microsoft reviewed and approved the application, thereby allowing Samtech to act as an AER. Over the course of the next four or five months, Samtech purchased about $3.4 million of AE product. In January 1997, Microsoft terminated Samtech's AER agreement, because Samtech was in breach of the agreement for selling AE software to unauthorized users. Undeterred, over the next four years, all three Defendants engaged in a scheme whereby they (1) created new companies under false names and (2) purchased existing companies (which were already AERs) in order to continue acquiring AE software from Microsoft. Over this period, Defendants' companies acquired approximately $30 million of AE software. Defendants did not buy AE software directly from Microsoft but rather purchased the software from other AERs. Had Microsoft known of Defendants' involvement, the parties both agree and have stipulated that Microsoft would not have authorized Defendants' companies as AERs (which would have prevented Defendants from acquiring AE product from Microsoft or other AERs). Defendants resold the AE product to 120 different entities, 90% of which were unauthorized to purchase AE software. Defendants used the mail and wires as part of this scheme.

C. Disposition of the Proceeds of the Sales

The Alis owned four bank accounts into which they deposited proceeds from the sale of the AE software. They used funds from these accounts to purchase nominee companies, additional software, and real property in the name of their son. They also transferred some of the funds from these accounts to Pakistan. Additionally, they used proceeds from the sales of AE software to purchase real property at 9900 Longview Lane, Pleasanton, California and 1069 Canyon Creek Terrace, Fremont, California. These transactions are the bases of the money laundering charges.

D. Indictment and Trial

A grand jury in the Northern District of California indicted Mirza Ali, Sameena Ali, Keith Griffen, and William Glushenko 2 of mail fraud, wire fraud, and money laundering on April 10, 2002.

On March 19, 2003, citing difficulties in the relationship with his client, Sameena Ali's appointed counsel moved to withdraw, at Sameena Ali's request. The court referred the motion to the magistrate court for further review and to determine whether Sameena Ali was eligible for appointed counsel. However before referral, the court informed counsel and Sameena Ali that they could revisit the motion if they could not mend their differences. The magistrate found that Sameena Ali was eligible for appointed counsel, but neither counsel nor Ali herself raised the motion before the court again.

On March 10, 2005, the grand jury returned a 31 count superseding indictment. Count 1 of the indictment charged conspiracy to commit mail and wire fraud under 18 U.S.C. § 371, Counts 2-5 charged mail fraud in violation of 18 U.S.C. § 1341, Counts 6-9 charged wire fraud in violation of 18 U.S.C. § 1343, Count 10 charged conspiracy to launder money under 18 U.S.C. § 1965(h), Counts 11-20 charged promotion money laundering under 18 U.S.C. § 1956(a)(1)(A)(i), Counts 21-26 charged concealment money laundering under 18 U.S.C. § 1956(a)(1)(B)(i), Counts 27-30 charged exportation money laundering under 18 U.S.C. § 1956(a)(2)(B)(i), and Count 31 charged criminal forfeiture under 18 U.S.C. § 982. Mirza and Sameena Ali were charged with all 31 counts, and Keith Griffen was charged with counts 1-9.

On March 6, 2006, Defendants waived their right to a jury trial. Instead they entered into an agreement with the government for a bench trial based on stipulated facts, but limiting the sentence to a maximum of 60 months for the Alis and 33 months for Keith Griffen. After trial, the court found all three Defendants guilty on Counts 1-9 and Mirza and Sameena Ali guilty on Counts 10-31.

E. Sentencing

The court sentenced Mirza and Sameena Ali to 60 months incarceration and three years' supervised release on each count, running concurrently, $20 million restitution, and a forfeiture judgment of about $5 million. The pre-sentence report had calculated 60 months as the appropriate range for count one and 121-151 months for counts 2-30 based on the sentencing guidelines and seriousness of the offenses. (Again, count 31 charged criminal forfeiture.) However, the report finally recommended a total sentence of 60 months, because the parties had agreed to a 60-month cap when they stipulated to the facts and agreed to the bench trial.

The court sentenced Keith Griffen to 33 months incarceration and three years supervised release (on each count), and $20 million restitution. Like the Alis, the pre-sentence report calculated a longer sentence (46-57 months) based on the guidelines, but ultimately recommended 33 months based upon the pre-trial agreement.

As to the restitution amount, the judge relied upon spreadsheets prepared by IRS agents to calculate Microsoft's loss at $20 million. The agents prepared these spreadsheets based on an analysis of Defendants' bank records as well as invoices from Microsoft's distributors. With regard to all Defendants, the court pointed out that the sentences imposed would still fit the guideline range, even if the loss amount were later determined (possibly by a higher court) to be much lower (as low as $200,000). The district court also confirmed that it would impose the same sentences even if the loss were smaller.

Defendants appeal their convictions, arguing: (1) the indictment was insufficient in that it failed to state an offense because Defendants did not take “money or property” from Microsoft; (2) there is insufficient evidence to support their convictions; and (3) their sentences are substantively unreasonable and the district court erred in its calculation of their sentences. Sameena Ali appeals the district court's actions with respect to her motion for substitute counsel.

DISCUSSION

I. A right to payment is “money or property” under 18 U.S.C. §§ 1341 and 1343.

A. Standard of Review

We review de novo a district court's construction of a criminal statute. United States v. Blixt, 548 F.3d 882, 886 (9th Cir.2008). We also review de novo a district court's denial of a motion to dismiss an indictment for failure to state an offense. Id.

B. Analysis

Mail and wire fraud are both defined as “any...

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