United States v. Scott, William L. ( 2001 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 00-3676
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
WILLIAM SCOTT,
Defendant-Appellant.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 00 CR 312--Suzanne B. Conlon, Judge.
Argued April 5, 2001--Decided May 11, 2001
Before BAUER, RIPPLE, and EVANS, Circuit
Judges.
EVANS, Circuit Judge. Despite receiving
rather favorable treatment under the
federal sentencing guidelines, William
Scott appeals his sentence, arguing that
his case--which involves phony "access
devices"--should have been resolved even
more favorably under a guideline
regarding "attempts" to commit a crime, a
guideline the district judge declined to
employ.
In November of 1999, Scott was arrested
by Chicago police officers while
attempting to make a $1,500 purchase with
a counterfeit credit card bearing the
name of Kevin Minter. Searches of his car
and person recovered two more counterfeit
credit cards, and a check disclosed they
were recently used to incur $8,500 in
fraudulent charges. Unfortunately, this
encounter with the police didn’t teach
Scott a lesson: He was released without
being formally charged, only to return to
hot water a few months later.
In February 2000, Scott was stopped by
DEA agents at Chicago Midway Airport as
he was about to board a flight to
California. A search uncovered a
computerized list of 414 cloned telephone
numbers, with corresponding electronic
serial numbers and handwritten directions
explaining how to clone cellular phones.
Scott also possessed a credit card
"wedge" that can be used to read account
information from legitimate credit cards.
Scott and his traveling companion at
Midway were also holding some $25,000 in
cash when they were stopped.
As a follow-up to the Midway stop, Scott
turned over to postal inspectors some 60
cards and equipment he used to make them
into phony, but usable, credit cards.
Scott also acknowledged that at one time
he possessed an additional 140 credit
cards that, in many instances, he
manufactured into counterfeit credit
cards. He explained that he purchased the
200 cards from the person who created the
phony "Kevin Minter" cards he used to
make fraudulent purchases in November of
1999.
Scott was charged in a 2-count
indictment with knowingly possessing 15
or more counterfeit access devices with
intent to defraud in violation of 18
U.S.C. sec.1029. The access devices were
the 414 cloned telephone numbers he
possessed at Midway Airport and the 60
counterfeit credit cards he turned over
after his Midway arrest. Scott pled
guilty, without a plea agreement, to both
counts of the indictment, admitting that
he possessed the cloned telephone numbers
so he could "basically use them for
telephone calls without paying for the
calls." He also admitted possessing the
60 counterfeit credit cards "to obtain
some things of value [he] wouldn’t have
to pay for if [he] used those credit
cards."
At his sentencing hearing, Scott made
several arguments in an attempt to reduce
the amount of loss attributable to him
for purposes of calculating his
positioning on the sentencing guideline
grid. His final argument, the one he
makes on this appeal, is that guideline
sec.2X1.1, which concerns "attempts" to
commit a crime, governs his case.
The district court rejected Scott’s
argument, proceeding instead under the
fraud and deceit guideline, sec.2F1.1. As
we shall see, the court made the right
choice.
Guideline sec.2F1.1, which covers "Fraud
and Deceit," carries a base offense level
of 6. Scott then received a 6-level
increase in his base offense level
pursuant to sec.2F1.1 (b)(1)(G) for a
loss attributable to him to the tune of
$71,400. That figure was reached by
adding the actual charges--$8,500--made
by Scott on the cards seized from him by
Chicago police department officers in
November; the charge Scott was trying to
make on the phony card when he was
arrested--approximately $1,500; losses
attributed to the 414 cloned cellular
telephone numbers at $100 per number--
$41,400; and losses attributed to the 200
counterfeit cards Scott said he had at
$100 per card--$20,000. Scott also
received a 2-level increase in the base
offense level pursuant to guideline
sec.2F1.1(b)(2) for more than minimal
planning, but that was offset by a 2-
point reduction for acceptance of
responsibility. Scott’s adjusted base
offense level of 12, with a criminal
history category of I, put him in a
sentencing range of 10 to16 months
imprisonment. The district court,
however, granted the government’s motion
for an upward departure to criminal
history category II to better reflect the
true nature of Scott’s criminal history.
But oddly, that inflicted no pain as
Scott’s sentencing range only moved to 12
to 18 months imprisonment, and he
received a 16-month sentence, a term
which could have been imposed without an
upward departure.
As Scott sees it, his sentencing range,
even after the upward departure, should
have only been 6 to 12 months based on an
adjusted offense level of 9 rather than
12. He saves himself 3 levels by using
sec.2X1.1 as his starting point instead
of sec.2F1.1. His basis for using
sec.2X1.1 is simple: he caused an actual
loss of $8,500 and was on the verge of
completing an additional $1,500 loss in
November of 1999. Everything else was
only "intended losses" as he had not
completed all acts necessary to carry out
the frauds, i.e., he had not yet cloned
any cell phones and the other credit
cards were not used. Thus, he argues, he
only partially completed any additional
offenses, and he’s entitled to lop 3
points off his guideline grid under
sec.2X1.1 because what he did was no more
than an "attempt." We reject this
argument.
In this day and age, when most people
pay for things of value with plastic and
cellular telephones are everywhere, the
fraudulent use of these "access devices"
results in staggering losses in the
economy. See Theresa L. Kruk, Annotation,
What Constitutes Violations of 18
U.S.C.A. sec.1029, Prohibiting Fraud or
Related Activity in Connection With
Credit Card or Other Credit Access
Devices, 115 A.L.R. Fed. 213 (1993). A
key to the effectiveness of sec.1029 in
combating credit fraud is a broad, open-
ended definition of an "access device" so
as to accommodate future technological
developments. Scott’s credit cards and
his cloned telephone numbers fit nicely
under the definition of "access
devices," and no one even argues that
they don’t. But the argument that a full
crime is not completed until an access
device is actually used, and that
everything short of actual use is no more
than an "attempt" triggering sec.2X1.1 of
the guidelines, must fail. Scott’s mere
possession of the access devices
completed the crime: Nothing more was
necessary.
The guidelines merely assign a monetary
value to each illegal device, with $100
being the minimum. This amount has been
raised to $500 per device, but Scott got
nailed when the 1998 edition of the
guidelines, with its $100 limit, was in
effect. Had the new guideline been in
effect, his chargeable loss would have
been more than $200,000 and his
sentencing range would have been 18 to 24
months, insuring a greater sentence than
the 16 months he received.
By employing the $100 per device kicker,
Scott actually caught a break. His
"intended loss" could have been much
higher. Given these facts, it would have
been quite reasonable to peg the loss at
over $800,000 for he charged $8,500 using
two counterfeit credit cards that were
found in his possession when he was
arrested in November 1999. Thus, an
intended loss of $4,250 per card could be
established for the 200 blank credit
cards he possessed. See United States v.
Chernoff, 23 F.3d 411 (7th Cir. 1994)
(where 750 accounts had been accessed,
and actual loss as to one-third of the
victims was $135,000, total intended loss
equals $405,000); see also guideline
sec.2F1.1, application note 9 ("For the
purposes of subsection (b)(1), the loss
need not be determined with precision.
The court need only make a reasonable
estimate of the loss, given the available
information.").
Scott places great emphasis on
application note 10 to sec.2F1.1, which
reads, "In the case of a partially
completed offense . . . the offense level
is to be determined in accordance with
the provisions of sec.2X1.1." Notably,
however, no similar provision exists when
discussing the $100 loss figure to be
applied to access devices under
application note 4 to sec.2B1.1. Nowhere
in application note 4 does it state that
the offense level is to be determined in
accordance with the provisions of
sec.2X1.1 when the loss is valued at
$100. The absence of such language is
telling.
On top of all this, we recently
precluded the type of argument Scott is
now making in United States v. Strozier,
981 F.2d 281 (7th Cir. 1992). There, a
defendant deposited $405,000 worth of bad
checks into his bank account. He was able
to withdraw only $36,000 from the account
before his scheme was revealed.
Nevertheless, the loss attributable to
him was $405,000. Id. at 282-83. On
appeal, he argued that he was guilty of
only a partially completed offense on the
basis of the same application note that
Scott relies on. Id. at 285. We
disagreed:
Initially, we note that the defendant’s
plea of guilty to the substantive,
completed offense of fraud is powerful
evidence that he merited no reduction for
the allegedly uncompleted nature of his
scheme.
. . . .
. . . In our view, the defendant did not
"partially" complete his offense, nor was
the fraud to which he pled guilty part of
a "larger, attempted fraud." The
defendant completed his [fraud] when he
set up the two fraudulent accounts; what
he did not get around to completing was
inflicting on Fidelity all the loss his
actions clearly indicate he planned.
So, for all these reasons, we must
reject Scott’s appeal. As to one minor
matter, however, he comes out on top. The
district court ordered restitution
totaling $8,921.80 (we assume interest of
some sort was added to the $8,500 figure)
based on actual use of the two cards in
November 1999. Although this was surely
"relevant conduct," it was not "charged
conduct," so without covering the topic
in a plea agreement (recall, Scott pled
guilty without an agreement), restitution
under the Mandatory Victim Restitution
Act cannot be awarded. See United States
v. Menza, 137 F.3d 533 (7th Cir. 1998).
Accordingly, the restitution order is
stricken, but in all other respects the
judgment of the district court is
AFFIRMED.