United States v. David Neil Yeager , 331 F.3d 1216 ( 2003 )

[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR TH E ELEV ENTH C IRCUIT FILED
____________________________ COURT OF APPEALS
U.S.
ELEVENTH CIRCUIT
No. 02-11265 MAY 29, 2003
____________________________ THOMAS K. KAHN
CLERK
D. C. Docket No. 01-00084-CR-RV
UNI TED STA TES OF A MER ICA,
Plaintiff- Appe llee,
versus
DAV ID N EIL Y EAG ER,
Defen dant-A ppellant.
____________________________
Appe al from th e United States D istrict Cou rt
for the Southern District of Alabama
____________________________
(May 29, 2003)
Before BIRC H, DUB INA and K RAVIT CH, Circuit Judges.
BIRCH, Circuit Judge:
We hereby VACATE our prior opinion in this case, filed on 12 March 2003,
and substitute this opinion in its place.
In this cas e, an app eal of con viction an d senten ce of certain federa l mail
fraud offenses relating to the distribution of pharmaceuticals, we consider the
proper loss calculation under U.S .S.G. § 2F1.1 w hen a defendant wh o possesses a
restricted right to distribute a product fraudulently diverts that product to non-
authorized buyers. We find that the appropriate focus of the loss calculation is the
marginal value of the unrestricted right to distribute over the restricted right, and
we find that a reasonable estimate of this value is the profit obtained by the
defend ant from non-au thorized sales. In ad dition, w e consid er the arg ument th at,
in a conspiracy of two people, only one person’s sentence may be enhanced for
playing a leadership role in the offense. Rejecting this assertion, we find that each
participant can be sentenced as a leader assuming that both exercise authority and
control over a distinct portion of the criminal activity. On these and related issues,
we AFFIRM.
I. BACKGROUND
David Neal Yeager worked as the vice president of sales and marketing for
Respiratory Distributors, Inc. (“Distributors”), a small compan y located in Foley,
Alabama, whose business it was to distribute prescription drugs at wholesale prices
to pharmacies or other outlets. Richard Po well, the owner of D istributors, also
2
owne d Resp iratory D ruggist, I nc. (“Dr uggist”) , a mail-or der pha rmacy th at sold
prescription drugs directly to home health patients.
Misrepresenting himself as a vice president for Druggist, Yeager contacted
Boehringer Ingelheim Pharmaceuticals, Inc. (“BIPI”) in March 1996 to negotiate a
contract for Druggist to sell Atrovent®, a prescription drug for the treatment of
respiratory conditions created and manufactured by BIPI, to Druggist’s home
health patients. Yeager negotiated the contract without the immediate knowledge
of Powell. Under the terms of the contract, BIPI would supply Atrovent at $28.78
per box. BIPI offered Druggist this low price on Atrovent based on the
understanding that it would only be resold to Druggist’s home health patients, and
not to other pharmacies or w holesalers.
To ensure that Druggist sold only to its home health patients, BIPI required
Druggist to submit both an initial utilization report and supplemental reports every
month thereafter, which would list detailed information about all patients receiving
Atrov ent throu gh Dr uggist. B ased on these utiliza tion repo rts, BIP I wou ld
determin e the pro per amo unt of A trovent to ship. U nder the contract, B IPI cou ld
immediately terminate its relationship with Druggist if these reports were not filed
or if any A trovent w as diverte d to non -home health pa tients.
3
Pow ell conten ds he w as unaw are until S eptemb er 1996 that any of his
companies had a contract with BIPI for the distribution of Atrovent. Throughout
this time period and despite the restricted distribution contemplated under the
contract w ith BIP I, Yeag er repeate dly diver ted large s hipmen ts of Atr ovent to
unauthorized buyers. These shipments were sent to the unauthorized buyers by
interstate co mmerc ial carrier. Durin g the relev ant perio d, the gro ss profit to
Powell’s corporations from these sales was $687,000. BIPI itself marketed
Atrov ent to w holesale d istribution compa nies, like D istributor s, at a price g enerally
higher th an the D ruggist c ontract p rice. The crux of the fraud ulent con duct in th is
case was that Yeager ob tained Atrovent at the low price offered under the Drugg ist
contract a nd then diverted the prod uct to D istributor s. Distrib utors the n re-sold
Atrovent at a market advantage, effectively undercutting BIPI’s own distribution
scheme.
Both the initial utilization report and the monthly utilization reports required
under the contract were not submitted. By January 1997, BIPI was concerned
about the reporting failures and suspected that diversion of Atrovent was
occurring. In March 1 997, a representative of BIPI co ntacted Powell to discuss
BIPI’s concerns and to insist on the prompt and proper disclosure of patient
information. Following this contact, Yeager and Powell agreed to continue the
4
extremely profitable deception of BIPI by submitting false and fraudulent
utilization reports containing the type of information that BIPI had requested.
Yeage r prepar ed and submitted the repo rts to BIP I. Both Y eager an d Pow ell
instructed employees of Distributors and Druggist in conduct designed to conceal
their sche me – fo r examp le, by answ ering the shared telephon e line as “R DI” to
draw attention away from the Distributors operation.
In June 1997, unsatisfied with the reports, BIPI requested an on-site audit of
the facilities in Foley, Alabama. Yeager and Powell were both present for and
participants in the audit. The documents obtained by BIPI representatives during
the audit were continuations of the Druggist/Distributors shell game; in the words
of a BIPI representative, the documents were “worthless.” R3 at 150. Pow ell
ordered employees to set up rows of empty boxes in the warehouse, with boxes of
Atrovent only on top, to give the appearance that their on-hand inventory of
Atrovent was much larger than in reality to create the impression that Atrovent was
not being diverted to other purchasers. Powell testified at trial that, had he and
Yeager turned over the true inventory records, their scheme would have been
revealed. Yeager planned the BIPI visit and ensured that employees followed the
instructions designed to deceive the visitors.
5
After the audit, Yeager continue to remit utilization reports that did not
contain accurate and complete information for the patients to which Druggist was
supposedly distributing Atrovent. BIPI learned in December 1997 that the FBI
was conducting a criminal investigation related to the Atrovent sales, and BIPI
terminate d its relation ship w ith Dru ggist/D istributor s the follo wing m onth.
Both Y eager an d Pow ell were in dicted fo r their use of the m ail system to
further their fraudulent scheme. Yeager refused to cooperate with federal
authorities and put the government to its proof. Powell pled guilty pursuant to a
written plea agreement, under which he is currently serving approximately one
year in prison. He cooperated with federal authorities in the investigation and
testified against Yeager during a three-day trial in August 2001. A unanimous jury
found Yeage r guilty on seven co unts of m ail fraud, in violation of 18 U .S.C. §
1341, based on seven shipments of Atrovent diverted by Yeager from August 1996
to Aug ust 199 7 to una uthorize d custom ers throu gh the m ail, and of conspir acy to
commit mail fraud, also in violation of 18 U.S.C. § 1341. The district court
sentenced Yeager to 33 months in prison, followed by three years of supervised
release, and ordered that Yeager be jointly and severally liable with his co-
conspir ator Po well for the paym ent of $6 87,000 in restitutio n to BIP I.
6
II. DISCUSSION
A. Sufficiency of Evidence for Mail Fraud Conviction
Yeager argues that the evidence presented at trial cannot sustain his fraud
conviction because the government failed to prove that BIPI reasonably relied on
his misrepresentations. He argues that the misrepresentations made could have
been easily confirmed false if BIPI had felt the need to investigate their veracity,
and that BIPI’s failure to do so precludes his conviction under the mail fraud
statute. According to Yeager, BIPI wanted to flood the market and make as much
profit as possible from Atrovent, because that drug was soon losing its patent
protectio n. Thu s, BIPI did not c are wh ether D istributor s/Drug gist was adherin g to
the terms of the distribution contract by selling only to home health patients and
could n ot have r easonab ly relied on any false in formatio n prov ided by Y eager as to
the customer list. The government argues that reasonable reliance is not required
to be pro ved for convictio n.
We review de novo the legal q uestion o f wheth er sufficie nt eviden ce exists
in the reco rd to sup port a gu ilty verdict. United States v. Tinoco, 304 F.3d 1088,
1122 ( 11th C ir. 2002 ), petition for cert. filed (U.S. D ec. 2002 ) (No. 0 2-786 8).
“When condu cting the review of the record, w e view the evidence in the light most
favorab le to the go vernm ent and r esolve all r easonab le inferen ces and c redibility
7
evaluations in favor of the jury’s verdict.” Id. (quoting United States v. To, 144
F.3d 7 37, 743 (11th C ir. 1998 )). The v erdict w ill be uph eld unles s no reas onable
jury cou ld have f ound g uilt beyon d a reaso nable do ubt. Id.Under 18 U.S.C. § 1341, a person who, having devised a scheme to defraud,
mails any matter through the Postal Service or any commercial interstate carrier for
the purpose of furthering or ac complishing that scheme, comm its a federal offense
punishable by fine and up to five years of imprisonment. The federal mail fraud
statute prohibits the use of the mail to further “scheme[s] . . . to defraud.” 18
U.S.C . § 1341 . The us e of the m ail to furth er these sc hemes is a distinct ev il
punish able wh ether or n ot the sch eme resu lts in com pleted co mmon -law fra ud.
Because the statute prohibits the “scheme to defraud,” the government is not
required to prove all of the elements of completed common-law fraud to sustain a
convictio n. Neder v. United States, 527 U.S. 1, 24-25, 119 S. Ct. 1827, 1841
(1999 ).
The Supreme Court in Neder identified materiality a s a necess ary eleme nt,
and said in dicta that “[t]he common-law elements of ‘justifiable reliance’ and
‘damages,’ for example, plainly have no place in the federal fraud statutes.” 527
U.S. at 24-25, 119 S.Ct. at 1841. We have stated previously that proof of actual
reliance b y the victim and pro of of da mages a re not req uired, United States v.
8
Brown, 79 F.3d 1550, 1557 n.12 (11th Cir. 1996) (citing Pelletier v. Zweifel, 921
F.2d 1465, 1498 (11th Cir. 1991), but we have never clearly stated that proof that
the victim reasonably relied on the misrepresentation is unnecessary. In fact, our
decision in Brown can be re ad to ho ld the op posite: tha t “a ‘schem e to defra ud’ . .
. has not been proved where a reasonable juror would have to conclude that the
represen tation is ab out som ething w hich the [ victim] sh ould, an d could , easily
confirm – if they wished to do so – from readily available external sources.” 79
F.3d at 1 559.
The argument that proof of reasonable reliance is unnecessary has a logical
appeal: if it is true, as we have held, that the government is not required to prove
the actual reliance of the victim on the defendant’s misrepresentations, then it does
not make sense to require the government to prove that the non-required reliance
was reasonable. On the other hand, the elements of reasonable reliance and
materiality analytically overlap; both concern the expected effectiveness of the
misrepr esentation s, and it is d ifficult to d escribe p recisely w hich elem ent is
fulfilled b y differen t forms o f proof and arg ument.
As Yeager presents the reasonable reliance element, it requires proof that the
particular victim in this case, armed with his or her own knowledge and experience
with the situation, did not and could not easily disprove the misrepresentations
9
throug h access to held or r eady info rmation . Reason able relian ce, thus, is in this
construct a subjective requirement that turns on the particularized response of the
actual victim. The Supreme Court in Neder quoted the Restatement (Second) of
Torts § 538 (1 977) to define a m aterial matte r funda mentally a s an obje ctive test –
as one that “a reasonable man would attach importance to its existence or
nonex istence in d eterminin g his cho ice of actio n in the tra nsaction at questio n.”
527 U .S. at 21 n .5, 119 S .Ct. at 184 0 n.5. T he prob lem, as in m ost attemp ts to
apply an objective test, is in determining how many of the victim’s peculiar
characteristics to impute to the hypothetical reasonable man. The more
characteristics we impute, and we seem to impute quite a few characteristics here
in the Eleventh Circuit, the closer the materiality element approaches the
suppo sedly distin ct elemen t of reaso nable relia nce.
While it might be possible to extricate distinct analytical principles from
both elements and, then, determine the exact extent of necessary proof for federal
fraud ca ses in gen eral, it is not n ecessary to do so in this specif ic case. Fir st,
Yeager’s defense at trial is better cast as a challenge to BIPI’s actual reliance on
the misrepresentations. Yeager’s defense challenges the idea that BIPI ever relied
on the false customer lists – according to Yeager, BIPI never cared about the
customer lists because it was motivated solely by the idea of profits before
10
Atrovent’s patent expired. This argument does not challenge whether BIPI, having
accepted the misrepresentations, did so reasonably. It questions whether BIPI ever
accepted the misre presenta tions in th e first place , that is, wh ether BI PI actua lly
relied on the misre presenta tions. W e have cle arly held, h owev er, that actual
reliance h as no pla ce in a pro secution for fede ral mail fra ud. Pelletier, 921 F.2d at
1498.
Second, assuming that Yeager’s concept of reasonable reliance is required as
a necessary element of federal mail fraud, and assuming that his defense at trial
qualifies a s a challen ge to reas onable r eliance, su fficient ev idence o f reason able
reliance was entered at trial. BIPI’s efforts to monitor the distribution of Atrovent
under its contract with Druggist constituted reasonable reliance on the
misrepresentations made by Yeager in the course of the scheme to defraud. On-
site audits and requests for corrected and complete information by BIPI were
deflected by active deception by Yeager. The type of information misrepresented,
including the lists of patients to whom Druggist was supplying Atrovent, was not
easily obtainable by BIPI from another source. We find BIPI’s efforts to be
reasonable, rep eated attempts to v erify the accuracy of Yeage r and Dru ggist’s
represen tations, an d the com mon law definition of fraud does no t require th em to
undertake the type of rigorous investigation necessary to pierce the facade
11
presente d by the d efendan t. See, e.g., Restatement (Second) of Torts §§ 540, 541
(1977 ).
B. Jury Instructions
Yeager also argues that the district court erred by failing to give to the jury
his preferred instruction on the requirement of reasonable reliance. “We review a
district court’s refusal to give a particular jury instruction for abuse of discretion.”
United States v. C ornillie, 92 F.3d 1108, 1109 (11th Cir. 1996) (per curiam). The
failure of a district co urt to giv e an app ropriate in struction is reversib le error where
the requested instruction “(1) was correct; (2) was not substantially covered by the
charge actually given; and (3) dealt with some point in the trial so important that
failure to g ive the req uested in struction seriously impaired the defen dant’s ab ility
to conduct his defense.” United States v. C hastain, 198 F.3d 1338, 1350 (11th Cir.
1999) , cert. denied sub nom. Morris v. United States, 532 U.S. 996, 121 S.Ct. 1658(2001).
Yeager’s requested instruction provided, in relevant part, that
A scheme to defraud h as not be en prov ed wh ere reaso nable
jurors would have to conclude that the representation is about
something which the alleged victim, Boehringer, should, and could,
easily confirm – if it wished to do so – from readily available sources
including inform ation it should, and could, easily have obtained from
the defendant in a timely fashion as specifically set forth in the
executed agreem ent.
12
R1-42. The district court rejected Yeager’s proposed instruction, explaining that
the topic was substantially and correctly covered by its preferred charge, drawn
from th e Eleven th Circu it’s Pattern Jury Ins tructions .
First, procedurally, though Yeager did object after the district court refused
his proposed instruction, the grounds for objection were only that the district court
mistakenly believed that the instruction was an incorrect statement of the law, R6
at 784 (“I think it’s an accurate statement of the law.”), and that Yeager preferred
the langu age he u sed in the instructio n, id. (“I like, Judge, the way [Brown] wrote
it.). The d istrict cour t, howe ver, also r efused th e instructio n on the basis that its
subject matter was duplicative of the other instructions given: “I think the charge –
I don’t k now th at it really heig htens the standard , but I do n’t think it’s necessar y to
give it.” Id. The argument surrounding Yeager’s proposed instruction focused on
the perceived need to tell the jury that “the person or the victim has to be viewed –
that the vic tim is to be viewed as a perso n of ord inary pru dence an d a reaso nable
person.” Id. at 781. T he district c ourt po inted to th e standar d materia lity
instruction, which stated that “a material fact is a fact that would be important to a
reasonable person in deciding whether to engage or not engage in a particular
transactio n,” in dec laring Y eager’s su ppleme ntary instr uction u nnecessary. Id. at
780-81. Yeager did not object or respond to this ground for refusal, and his failure
13
to do so should remov e this issue from th e realm o f those v alidly hear d on ap peal.
See United States v. Gallo-Chomorro, 48 F.3d 502, 507-08 (11th Cir. 1995) (“To
preserve an issue for appeal, a general objection or an objection on other grounds
will not s uffice.”); United States v. D ennis, 786 F.2d 1029, 1042 (11th Cir. 1986)
(“To preserve an issue at trial for later consideration by an appellate court, one
must raise an objection that is sufficient to apprise the trial court and the opposing
party of th e particula r groun ds upo n whic h appella te relief w ill later be so ught.”).
In addition and as discussed supra, Yeage r’s defen se seeks to create
reasonable doubt as to BIP I’s actual reliance o n the mis represen tations. H is
argument essentially is that BIPI did not actually rely on any of the customer
information sent by Distributors/Druggist, and this argument, presented by
evidence throughout the course of the trial and specifically highlighted by counsel
for Yeager in closing argument, was rejected by the jury, given their unanimous
vote to co nvict. Ev en if we found that Yea ger properly pre served h is objectio n to
the instru ctions, an d even if we fou nd the ju ry instruc tions did not suff iciently
inform the jury o f their req uiremen t to find re asonab le reliance, w e wou ld find th is
error ha rmless, as it did not p rejudice Y eager’s ab ility to prese nt his def ense.
Yeager was permitted to argue his theory of defense, that Boehringer knew that
Yeager would be selling as much Atrovent as possible to as many people as
14
possible , and that B oehring er knew and app roved o f the Dis tributors /Drug gist shell
game, th rough evidenc e presen ted durin g trial and throug h his clos ing argu ment.
See R6 at 820-831. The jury could have accepted this defense and acquitted
Yeage r by refer ence to th e instructio ns, particu larly the m ateriality instr uction.
Therefore, we can find no error in the refusal of the reasonable reliance instruction.
C. Loss Enhancement
Turning to Yeager’s sentencing following his conviction at trial, Yeager
argues that the district court improperly enhanced his sentence based on the
amount of gain flowing from his fraudulent conduct without first making the
preliminary determination that some loss accrued from the conduct. Although we
generally review the district court’s interpretation of the United States Sentencing
Guidelines de novo, the loss ca lculation a t the heart o f U.S.S .G. § 2F 1.1 1 is a
factual de terminatio n that w e review for clear e rror. United States v. Toussaint, 84
F.3d 1 406, 14 07 (11 th Cir. 19 96).
Under the 2000 Guidelines, the base offense level for offenses involving
fraud is 6; this base offense level is increased up to 18 levels based on the amount
1
Under the current version of the Guidelines, § 2F1.1 has been incorporated into §
2B1.1.
15
of loss o ccasione d by the fraud. See U.S.S.G. § 2F1.1(a), (b) (2000). 2 Gener ally
speaking, “[l]oss is the value of the money, property, or services unlawfully taken.”
U.S.S .G. § 2F 1.1 com ment. (n .8). Los s, as und erstood under th e Guid elines, is
often no t calculable with pr ecision; th erefore, w e require the district c ourt on ly
“make a reasonable estimate of the loss, given the available information.”
U.S.S.G. § 2F1.1 comment. (n.9). The court, however, cannot merely speculate as
to the pro per amo unt of lo ss, United States v. Sepulveda, 115 F .3d 882 , 890 (1 1th
Cir. 1997), and, if the amount suggested by the government is contested, the
government must support its estimate with “reliable and specific evidence.”
United States v. Renick, 273 F.3d 1009, 1025 (11th Cir. 2001) (per curiam).
Yeager contends that the district court did not and could not find that BIPI
suffered a loss fro m his fra udulen t condu ct, because BIPI made a s ubstantia l profit
from the sale of Atrovent to Druggist. The government responds, and the district
2
The district court used the 2000 edition of the Sentencing Guidelines to sentence
Yeager, given the ex post facto concerns inherent in applying more recent versions. The general
rule is that a defendant is sentenced under the version of the Guidelines in effect on the date of
sentencing, barring any ex post facto concerns. United States v. Bailey, 123 F.3d 1381, 1403
(11th Cir. 1997). Yeager, sentenced on 20 February 2002, would have been sentenced under the
2001 Guidelines, including those amendments made effective on 1 November 2001. Under the
2001 Guidelines, the calculated loss would result in a 14-level enhancement of Yeager’s offense
level, compared to the 10-level enhancement arising under the 2000 Guidelines, the version in
effect during the commission of the criminal conduct at issue. This increased penalty after the
commission of the offense raises ex post facto concerns which were properly addressed by the
district court’s use of the 2000 Guidelines version. Therefore, all citations to the Sentencing
Guidelines herein are to the 2000 version unless specifically noted.
16
court acc epted, tha t BIPI lo st profit fr om Y eager’s d iversion : Yeage r wron gfully
sold Atrovent to non-authorized customers, using the low contract price from BIPI
to bolster sales, and BIPI was denied the opportunity to sell Atrovent through
establishe d chann els to these non-au thorized custom ers at a hig her price .
However, the district court found itself unable to reasonably estimate this loss,
based u pon co nflicting a nd con fusing a ccounts at trial by ex perts w ho attem pted to
quantify the prof it shortfall.
Instead, the court found that Yeager, the defendant, and Powell, the owner of
Drug gist and D istributors, gained $687,0 00 for th ose corp orations by their p ursuit
of the scheme to defraud, and the court used this gain as a proxy for loss for
purposes of sentencing. The $687,000 figure represents the profit made by the
corporations by selling Atrovent to non-authorized customers during the relevant
conspiratorial time period – the difference between the price at which Atrovent was
obtained under the legitimate contract with BIPI, and the price at which Yeager
sold Atrovent to non-au thorized customers.
To analyze whether the district court was correct in its sentencing
determinations, we initially must decide whether BIPI suffered any “loss,” as that
term is understood under the Guidelines, from Yeager’s conduct. “[L]oss is the
value of the mon ey, prop erty, or ser vices un lawfully taken.” U .S.S.G . § 2F1 .1
17
comm ent. (n.8) . Yeage r argues that BIP I made a substan tial profit o ff of its
relationship with Druggist/Distributors, and any loss identified by the government
is oppo rtunity-co st loss, loss based o n the victim ’s inability to use mo ney or as sets
in a more profitable way becau se of the perpetrated fraud. Opp ortunity-cost loss
may not be considered at sentencing: “[Loss] does not, for example, include
interest the victim could have earned . . . had the offense not occurred.” Id.
What “m oney, pr operty, o r services ” were “u nlawfu lly taken” b y Yeag er in
this case? Though the government intimates that we should focus on the value of
the diverted drugs themselves in estimating the loss, we think that a more proper
focus would be on Yeager’s “theft” of distribution privileges. BIPI granted
Drug gist the res tricted righ t to distribu te Atrov ent and c harged Drug gist a certain
price per box for that privilege. Yeager fraudulently diverted Atrovent to other
purcha sers, effec tively con verting th e restrictive distributio n license f rom B IPI into
an unrestricted distribution license. Abstracted out, Yeager took the unrestricted
right to distribute Atrovent. This right obviously has some value, and we agree
with the district court that BIPI suffered an actual loss under the Guidelines based
on the “th eft” of this right. Th e loss calcu lation, ther efore, sh ould be an attemp t to
determine the value of the purloined portion of the distribution right – the
addition al benefit o f unrestr ained dis tribution stolen by Yeage r throug h fraud .
18
The value of an unrestricted distribution right is the difference between the
cost at w hich a dis tributor c an obtain a produ ct and the price at w hich he c an re-sell
that prod uct on th e marke t as a wh ole. The value of a restricted distributio n right is
the difference between the cost at which a distributor can obtain the product and
the price at which he can re-sell that product to the restricted market. Therefore,
the marginal value of the unrestricted distribution right over the restricted
distribution right is the price differential between the open market and the
restricted m arket.
It was not clear error for the district court to accept the profit made by
Distributors through unrestricted sale of Atrovent during the time of the conspiracy
as a reaso nable estim ate of the m arginal v alue of th e purloin ed right. 3 Distributors’
profit would be expected to correlate with the profit BIPI could have made through
its own sales of A trovent to these no n-autho rized pu rchasers .
3
Accepting the gross profit from unauthorized sales as an estimate of the marginal value
of the unrestricted distribution right presumes that the value of Atrovent on the restricted market
is very low or zero. In this case, the restricted market (Druggist’s legitimate home health
patients) could absorb only a certain amount of Atrovent. After the exhaustion of legitimate
patients, the value of Atrovent on the restricted market is zero; there are no customers remaining
to whom Druggist legitimately could sell Atrovent at any price. Therefore, the marginal value of
the unrestricted right to distribute, or, at least, a reasonable estimate of the value based on the
evidence presented to the district court, is the entire profit made by Yeager/Distributors on the
open market, with a set-off of zero representing the value of Atrovent on the exhausted
restrictive market.
19
Though we perhaps approach the issue in a manner different than the district
court, in that we use the $687,000 figure as a direct estimate of the value of the
proper ty taken th rough fraud, ra ther than as an estim ate of gain from th e schem e to
be used as a prox y for suc h value, w e canno t fault the re sult at sente ncing. W e
agree with the district court that the loss involved in this case was not merely an
opportunity-cost loss but rather was a definite loss for which sentencing
adjustments are appropriate, and, further, we agree that $687,000, the amount of
profit obtained through sales of Atrovent on the unrestricted market by
Distributors, is a r easonable estim ate of the loss inflicted on BIP I through Y eager’s
fraudu lent cond uct. Acc ording ly, we fin d that the d istrict cour t did not e rr in
imposing a sentencing enhancement based on a loss calculation of $687,000.
D. Role Enhancement
Yeager argues that the government failed to prove that he exercised any
influence or control over another participant in the conspiracy and that, therefore,
his sentence cannot be increased for playing an aggravating role under the
Guidelines. According to Yeager, because only he and Powell were indicted for
the conduct at issue, and because Powell had already received a role enhancement
for his involvement, it is inconceivable that Yeager also could be eligible for the
enhanc ement.
20
We rev iew the s entencin g court’s factual fin dings fo r clear erro r and its
application of the sentencing guidelines to those facts de novo. United States v.
Humber, 255 F.3d 1308, 1311 (11th Cir. 2001). The government bears the burden
of proving by a preponderance of the evidence that the defendant had an
aggrav ating role in the off ense. United States v. Alred, 144 F .3d 140 5, 1421 (11th
Cir. 199 8).
Unde r the Gu idelines, a f our-lev el increase in the app licable off ense leve l is
appropriate if the defendant “was an organizer or leader of a criminal activity that
involve d five or more p articipants or was otherw ise extens ive.” U.S .S.G. §
3B1.1(a). If the defendant was a “manager or supervisor (but not an organizer or
leader) and the criminal activity involved five or more participants or was
otherw ise extens ive,” then the offen se level sh ould be increased by three. Id. at
(b). When the defendant is “an organizer, leader, manager, or supervisor” in any
other criminal activity (that is, any criminal activity not involving five or more
participan ts and no t extensiv e), then h is offens e level sho uld be in creased b y two.
Id. at (c). The district court imposed the two-level § 3B1.1(c) enhancement on
Yeager.
Accor ding to th e comm entary, “[t]o qualify fo r an adju stment u nder this
section, the defendant must have been the organizer, leader, manager, or supervisor
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of one or more other participants.” U.S.S.G. § 3B1.1 comment. (n.2). Yeager
latches onto this commentary as support for his argument that, in a conspiracy of
two people, only one can be sentenced for a leadership role. However, we do not
think this argum ent flow s from th e comm entary. W hen a co nspiracy involve s only
two participants, each participant can be a “organizer, leader, manager, or
supervisor” in the criminal conduct when each participant takes primary
responsibility for a distinct component of the plan and exercises control or
influence over the other participant with respect to that distinct component of the
plan. The record is replete with instances from which the district court could have
conclud ed that Y eager directed or o rganized or led P owell in the cond uct of cer tain
elements of the criminal scheme. Even more telling, the record indicates that
Yeager directed other employees of Druggist and Distributors to undertake tasks
designed to further the scheme.
In additio n, the fact th at Pow ell may ha ve receiv ed an ad justmen t at his
sentencing does not require us to depart from an independent consideration of the
propriety of an enhancem ent for Yea ger. We are quite sure that Y eager’s
participation in the scheme, as proved at trial, highlights the leadership role he
played in the plan to defraud BIPI, r egardles s of the re sult of P owell’s s entencin g.
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We find no error in the district court’s imposition of a two-level enhancement
based o n that lead ership ro le.
E. Restitution Order
Finally, Yeager contends that the district court imposed a restitution order
without any evidence of an identifiable victim who suffered loss or any finding that
Yeage r had the ability to pa y. A distr ict court’s r estitution o rder is ge nerally
reviewed for abuse of discretion, but the legality of that order is reviewed de novo.
United States v. D avis, 117 F.3d 459, 462 (11th Cir. 1997). As we have discussed,
there is evidence of a loss suffered by BIPI and attributable to Yeager’s fraudulent
conduct. Accordingly, we find no merit in Yeager’s argument that there was no
identifiable victim on which to predicate a restitution order.
As to Y eager’s ar gumen t that the dis trict court e rred by f ailing to tak e into
account his ability to pay restitution, we note that restitution is mandatory, without
regard to a defendant’s ability to pay, when the crimes of conviction are fraud- or
deceit-ba sed offe nses un der Title 1 8 of the U nited Sta tes Cod e. 18 U.S .C. §
3663A . Yeage r was co nvicted o f mail frau d and co nspiracy to comm it fraud in
violation of 18 U.S.C. §§ 1341 and 1343, and these offenses are of the type for
which mandatory restitution is appropriate under § 3663A. Therefore, the district
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court did not err in failing to take Yeager’s financial situation into account before
ordering restitution.
III. CONCLUSION
We co nclude th at the gov ernmen t submitte d adequ ate proo f of reaso nable
reliance to sustain Yeager’s conviction, and that Yeager failed to properly preserve
the grou nds for his objec tion to the refusal o f the reaso nable relia nce instru ction.
In additio n, we fin d that the p rofits ma de on th e open m arket are a reasona ble
estimate of the value of a stolen right to unrestricted distribution; therefore,
Yeager’s challenge of the loss calculation under U.S.S.G. § 2F1.1 fails. The
district court also did not err by imposing a role enhancement and restitution order.
Based on the foregoing discussion, we find no error in Yeager’s conviction or
sentencing. We AFFIRM.
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