United States v. Ricky C. Williams ( 1997 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 97-1817MN
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United States of America, *
*
Appellee, * Appeal from the United States
* District Court for the District
v. * of Minnesota.
*
Ricky Curtis Williams, *
*
Appellant. *
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Submitted: October 23, 1997
Filed: November 5, 1997
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Before FAGG, WOLLMAN, and MORRIS SHEPPARD ARNOLD, Circuit Judges.
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FAGG, Circuit Judge.
Ricky Curtis Williams trafficked in cloned cellular telephones. A cloned cell
phone is one that has been programmed with the electronic serial number and mobile
identification number of a legitimate cellular-service subscriber. Because billing is
keyed to these numbers, all calls made from the cloned telephone are charged to the
legitimate customer, who naturally refuses to pay. The cellular telephone companies
end up absorbing the loss.
Williams pleaded guilty to one count of aiding and abetting fraud in connection
with access devices in violation of 18 U.S.C. § 1029(a)(5) (1994) and 18 U.S.C. § 2(a)
(1994). Williams committed the offense to which he pleaded guilty on May 30, 1996,
but Williams admitted he began selling cloned cell phones in 1994. According to the
district court’s loss calculation, Williams’s illegal trade cost several cellular telephone
companies a total of $211,786.73, a sum that added eight levels to Williams’s base
offense level. See U.S. Sentencing Guidelines Manual (U.S.S.G.) § 2F1.1(b)(1)(I)
(1995). The district court ordered restitution in this amount under the Mandatory
Victims Restitution Act of 1996 (MVRA or the Act), which applies in sentencing
proceedings when the defendant has been convicted on or after the Act’s effective date
of April 24, 1996. See 18 U.S.C.A. § 3663A(a)(1) (West Supp. 1997). Although
Williams’s plea agreement stated “[t]here . . . is no agreement as to restitution,”
Williams construes this to mean “there [was] ‘no agreement’ as to the amount of
restitution.” The plea agreement also said the district court “will have the power to order
[Williams] to pay full restitution to any victims of his offense conduct from January 1,
1994 to May 30, 1996,” and Williams acknowledges that “under the plea agreement the
[district] [c]ourt had authority to order full restitution.” Thus, we conclude Williams did
agree in his plea agreement to pay restitution to cellular companies beyond what was
mandated solely for his offense of conviction. Williams appeals his sentence. We affirm.
Williams first challenges the district court’s loss calculation. We review for clear
error. See United States v. Manzer, 69 F.3d 222, 228 (8th Cir. 1995). Unsurprisingly,
Williams kept no records documenting his illegal phone sales, so the district court
computed the financial losses Williams imposed on the cellular companies indirectly, as
follows. First, the affected companies identified all the cloned telephones on which calls
to Williams were placed between January and June 1996. The district court then
calculated the total loss by adding up the charges for all calls made from these
telephones during the same six-month period. Williams points out this calculation
method takes for granted that Williams sold the cloned telephones on which calls to him
were placed. Williams questions this assumption, contending he could have received
calls in connection with his legitimate cellular telephone business from cloned
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phones he did not sell. Although the district court could not eliminate this possibility,
“[t]he court need only make a reasonable estimate of the loss, given the available
information.” U.S.S.G. § 2F1.1, comment. (n.8). “[T]he loss need not be determined
with precision.” Id.; see also Manzer, 69 F.3d at 228. We are satisfied the district
court’s calculation represents a reasonable estimate of the companies’ losses. For one
thing, only calls placed during the first six months of 1996 were taken into account,
despite the fact Williams had been selling cloned telephones since 1994. Further, the
district court’s calculation method could not capture losses from purchasers who
bought cloned phones from Williams but did not happen to call him between January
and June 1996. Besides, Williams admitted he had been frequently called by persons
to whom he had sold cloned telephones. We find no clear error.
Next, Williams contends applying the MVRA to order restitution in his case
violates the Ex Post Facto Clause. Because Williams raises this issue for the first time
on appeal, we may vacate the restitution order only if the district court committed plain
error. See Fed. R. Crim. P. 52(b); United States v. Olano, 507 U.S. 725, 732 (1993).
“To fall within the ex post facto prohibition, a law must be retrospective--that is ‘it
must apply to events occurring before its enactment’--and it ‘must disadvantage the
offender affected by it’ by altering the definition of criminal conduct or increasing the
punishment for the crime.” Lynce v. Mathis, 117 S. Ct. 891, 896 (1997) (quoting
Weaver v. Graham, 450 U.S. 24, 29 (1981)). Williams argues the MVRA
retrospectively increased his punishment for illegal phone sales Williams made before
the Act’s effective date of April 24, 1996.
The changes wrought by the MVRA do work to Williams’s disadvantage.
Before the MVRA became effective, the Victim and Witness Protection Act (VWPA)
authorized but did not compel district courts to order restitution, see 18 U.S.C. §
3663(a)(1) (1994), and required courts to consider the defendant’s financial resources
in deciding whether to order restitution, see id. § 3664(a). By contrast, the MVRA
makes restitution mandatory for certain crimes, see 18 U.S.C.A. § 3663A(a)(1) (West
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Supp. 1997), including an offense (like Williams’s) committed by fraud, see id. §
3663A(c)(1)(A)(ii), and the Act mandates that restitution shall be ordered “without
consideration of the economic circumstances of the defendant,” id. § 3664(f)(1)(A).
The question remains, though, whether these changes increase Williams’s punishment.
In rejecting an Ex Post Facto Clause challenge to an order of restitution under
the Child Support Recovery Act of 1992 (CSRA), we recently said “restitution is not
‘punishment’ within the meaning of the ex post facto clause.” United States v.
Crawford, 115 F.3d 1397, 1403 (8th Cir. 1997), cert. denied, 66 U.S.L.W. 3297 (U.S.
Oct. 20, 1997) (No. 97-497). With regard to restitution under the MVRA, however,
we believe the wording of the Act compels an opposite conclusion because the MVRA
provides that the district court shall order restitution “in addition to . . . any other
penalty authorized by law. . . .” 18 U.S.C.A. § 3663A(a)(1). The plain meaning is that
restitution under the MVRA is a penalty. The CSRA, on the other hand, states
violators “shall be punished as provided in subsection (b),” 18 U.S.C. § 228(a) (1994),
and then separately provides for restitution in section 228(c). We conclude an order
of restitution under the MVRA is punishment for Ex Post Facto Clause purposes.
Accord United States v. Baggett, Nos. 96-50492/50494/50495/50515, 1997 WL
594626, at *2-3 (9th Cir. Sept. 29, 1997); United States v. Thompson, 113 F.3d 13, 15
n.1 (2d Cir. 1997).
Nevertheless, the restitution order in this case does not violate the Ex Post Facto
Clause because the MVRA does not apply retrospectively here. We recognize the
MVRA required the district court to order Williams to pay full restitution for losses
arising from illegal sales Williams made before the MVRA became effective. See 18
U.S.C.A. § 3663A(a)(3) (West Supp. 1997) (“The court shall . . . order, if agreed to
by the parties in a plea agreement, restitution to persons other than the victim of the
offense.”); id. § 3664(f)(1)(A) (mandating restitution for full amount of losses). But the
date of the offense to which Williams pleaded guilty was May 30, 1996, more than a
month after the MVRA took effect. When Williams trafficked in cloned phones on that
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date, he had fair warning his criminal conduct could trigger mandatory restitution under
§ 3663A(a)(3) to persons other than the victim of his May 30 offense, and “that is all
the Ex Post Facto Clause requires,” United States v. Cooper, 63 F.3d 761, 762 (8th Cir.
1995) (per curiam), cert. denied, 116 S. Ct. 1548 (1996); see also Crawford, 115 F.3d
at 1403.
Again for the first time on appeal, Williams contends the MVRA violates the
Eighth Amendment because unlike the VWPA, the MVRA prevents the district court
from recognizing poverty as a factor at sentencing. Contrary to Williams’s view, the
MVRA requires the district court to schedule restitution payments taking into account
the defendant’s resources, projected earnings, and financial obligations--factors courts
considered under the VWPA in deciding whether to order restitution. Compare 18
U.S.C.A. § 3664(f)(2) (West Supp. 1997) with 18 U.S.C. 3664(a) (1994). The district
court may also direct the defendant to make only nominal payments under appropriate
circumstances. See 18 U.S.C.A. § 3664(f)(3)(B) (West Supp. 1997). Finally, Williams
claims the MVRA violates the Eighth Amendment by permitting imprisonment for
indigence. Because Williams does not assert he has suffered or is about to suffer this
punishment, his premature claim is not ripe for review. See Cheffer v. Reno, 55 F.3d
1517, 1523-24 (11th Cir. 1995).
We affirm Williams’s sentence.
MORRIS SHEPPARD ARNOLD, Circuit Judge, concurring.
I concur in the judgment of the court, but write separately to expose to view a
difficulty that the case raises in my mind.
The district court equated the loss to the relevant companies with the amount
of gain to the users of the pirated cellular telephones. In the first place, we do not
know, and the government could not tell us at oral argument, how much of this amount
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might ultimately be collected from the unauthorized consumers of the telephone services.
More fundamentally, however, I believe that the measure of loss employed in this case
is completely inappropriate, because the gain to the perpetrators of a crime such as this
one may not (indeed, almost always will not) equal the loss to the victims. The cellular
telephone market is surely not perfect, and the price charged for cellular telephone calls
therefore will not equal the cost to telephone companies of providing those calls. In
other words, while a company may charge a customer, say, one dollar for making a
certain call, the marginal cost to that company of providing that call may be only one
cent. It makes no sense to make a defendant responsible for a dollar when the call cost
only a penny to provide.
The telephone companies' loss actually has two components. The first, as we have
hinted, is the marginal cost to the companies of the pirated calls. The second is the
legitimate business lost from the users of the pirated telephones, some of whom would,
it seems likely, have paid for some amount of cellular calls had Williams not made the
cloned telephones available to them. The loss attributable to this component of the
companies' total losses will be their expected profit from these lost calls (here properly
using the actual price of the calls, but subtracting the marginal cost of providing them
because the companies would have had to incur that cost anyway if they had actually
been providing the calls). One cannot simply assume that all of these calls would have
been made, however, for the cloned-telephone users would certainly not have made
thousands of dollars worth of calls if they had actually had to pay for them.
The method that the district court used, in contrast to the method outlined above,
does not properly calculate loss; it instead compensates the telephone companies for the
telephone users’ unlawful gain. This method would be appropriate (and even then the
marginal cost of providing the calls would have to be subtracted) only if the relevant
cellular-telephone companies were operating at 100% capacity when the pirated calls
were made, so that every pirated call made prevented a legitimate (and therefore profit-
making) call from being made. Then the price-based calculation would be an
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appropriate approximation of opportunity cost, assuming that the marginal cost was
small. But because it is highly unlikely, despite the government's creative response at
oral argument, that all the pirated calls were made to the exclusion of legitimate calls,
this method of measuring the loss simply misses the mark.
While it therefore seems to me that the district court committed plain error in
applying the measure of loss that it did, the record does not reveal that Mr. Williams's
substantial rights were affected, because it is not at all clear that he was prejudiced by
the error. The record does not include data sufficient to support a conclusion that the
error was prejudicial, and this is a matter on which the defendant has the burden of
persuasion. See United States v. Olano, 507 U.S. 725, 734 (1993). Appellant,
moreover, did not assert plain error on appeal, and in such circumstances I think that
it would be the rarest case, in fact, one in which an injustice was overtly manifest in the
record, that would call for a reversal of a judgment. Since, as I have said, this record
contains no data from which one could conclude that Mr. Williams's sentence was
grossly excessive (or, indeed, that it was excessive at all), I concur in the judgment of
the court.
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
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