United States v. Kamal Qazah

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 14-4204
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v.
KAMAL ZAKI QAZAH, a/k/a Keemo,
Defendant - Appellant.
No. 14-4366
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v.
NASSER KAMAL ALQUZA,
Defendant - Appellant.
Appeals from the United States District Court for the Western
District of North Carolina, at Charlotte. Frank D. Whitney,
Chief District Judge. (3:11-cr-00373-FDW-DSC-3; 3:11-cr-00373-
FDW-DSC-10)
Argued: September 16, 2015 Decided: November 17, 2015
Before WILKINSON, NIEMEYER, and DUNCAN, Circuit Judges.
Affirmed in part, vacated in part, and remanded for resentencing
by published opinion. Judge Niemeyer wrote the opinion, in
which Judge Wilkinson and Judge Duncan joined.
ARGUED: Milton Gordon Widenhouse, Jr., RUDOLF, WIDENHOUSE &
FIALKO, Chapel Hill, North Carolina, for Appellants. Michael E.
Savage, OFFICE OF THE UNITED STATES ATTORNEY, Charlotte, North
Carolina, for Appellee. ON BRIEF: Christopher W. Adams,
CHRISTOPHER W. ADAMS LAW OFFICE, Charleston, South Carolina, for
Appellant Nasser Kamal Alquza. Jill Westmoreland Rose, Acting
United States Attorney, Asheville, North Carolina, Anthony J.
Enright, Assistant United States Attorney, OFFICE OF THE UNITED
STATES ATTORNEY, Charlotte, North Carolina, for Appellee.
2
NIEMEYER, Circuit Judge:
A jury convicted Kamal Zaki Qazah and his uncle Nasser
Kamal Alquza of conspiracy, in violation of 18 U.S.C. § 371, by
conspiring to receive and transport stolen cigarettes in
interstate commerce, in violation of 18 U.S.C. §§ 2314 and 2315;
conspiracy to commit money laundering, in violation of 18 U.S.C.
§ 1956(h); and money laundering, in violation of 18 U.S.C.
§ 1956(a)(3). In addition, Qazah was convicted of receiving
cigarettes purportedly stolen in interstate commerce, in
violation of 18 U.S.C. §§ 2315 and 21. The district court
sentenced Qazah to 216 months’ imprisonment and Alquza to 108
months’ imprisonment.
On appeal, Alquza challenges the district court’s denial of
his motion to suppress evidence recovered from a search of his
house, as well as several other evidentiary rulings made at
trial. Qazah challenges the court’s denial of his motion to
sever his trial from Alquza’s. And both defendants challenge
their sentences, primarily on the ground that the district court
erroneously calculated the “loss” for which they are responsible
under the Sentencing Guidelines by relying on the retail value
of the purportedly stolen cigarettes, rather than their
wholesale value. For the reasons that follow, we affirm the
defendants’ convictions, vacate their sentences, and remand for
resentencing.
3
I
During 2010 and 2011, Qazah, in conspiracy with others,
purchased thousands of cases of purportedly stolen Marlboro
brand cigarettes from undercover law enforcement officers, who
had represented that the cigarettes had been stolen from Philip
Morris USA trucks in Virginia or Tennessee before being brought
to North Carolina or South Carolina for sale. Each case of
cigarettes contained 60 cartons, with each carton containing 10
packs. Qazah sold the purportedly stolen cigarettes, on which
state taxes had not been paid, to coconspirators who operated
convenience stores in South Carolina, allowing Qazah to make a
substantial profit in the process.
Qazah eventually brought his uncle, Alquza, into the
conspiracy in order to make additional money by laundering the
undercover officers’ cash proceeds from the cigarette sales.
The two men provided the officers with checks drawn on various
accounts in exchange for approximately $275,000 in cash.
In November 2011, the undercover officers arranged with
Qazah the final controlled purchase of purportedly stolen
cigarettes, agreeing to deliver 1,377 cases of cigarettes to a
warehouse owned by Alquza on November 30, 2011, for $1.8
million. Instead of completing that transaction, however, law
enforcement officers arrested Qazah and Alquza at Qazah’s house,
where they also executed a search warrant and recovered, among
4
other things, $1.3 million in cash and a notebook in which Qazah
had recorded his cigarette sales to various retailers. That
same day, officers executed another search warrant at Alquza’s
house, recovering, among other things, relevant financial
records and false identification documents.
Prior to trial, Alquza filed a motion to suppress the
evidence seized during the search of his house on the ground
that the warrant authorizing the search incorporated an
attachment, Attachment B, that described the items to be seized
from Qazah’s house, not Alquza’s. At the hearing on the motion,
the ATF agent who served as the lead case agent for the
investigation and an Assistant U.S. Attorney acknowledged that,
when they applied for the search warrant for Alquza’s house,
they mistakenly included the Attachment B they had prepared in
connection with the search of Qazah’s house. While both
versions of Attachment B included a similar list of items to be
seized, many of the items were linked to the particular
defendant and his businesses, which were different in each
Attachment B. The version of Attachment B attached to the
warrant authorizing the search of Alquza’s house included the
following list of items, with the material in brackets showing
what had been intended in lieu of the underlined material:
The following records, documents, and items that
constitute evidence, contraband, fruits, and/or
5
instrumentalities of violations of Title 18 U.S.C.
1956(a)(3)(B):
1. Cash or United States currency, cigarettes,
documentation of personal and business bank account
numbers, bank statements, investment account
statements, safety deposit boxes, and other financial
statements for Kamal QAZAH and 7 Stars Auto [Nasser
ALQUZA and May Hassouneh], or in nominee names, for
the periods 2009 through current. Documentation will
also include all written or electronic
correspondences, canceled checks, deposit slips, and
signature cards. Documentation of asset ownership for
Kamal QAZAH and 7 Stars Auto [Nasser ALQUZA and May
Hassouneh]. Furthermore, documentation showing the
use of straw parties or fictitious names to conceal
individual assets for the years 2009 through current.
2. All corporate and individual bookkeeping records
and other financial records including balance sheets,
deposit and withdrawal sheets, statements of assets,
statements of cash flows, statements of liabilities,
general ledgers, general journals, subsidiary ledgers,
gross receipts, safety deposit box, cash receipts,
disbursement records, accounts receivable and
payable[,] ledgers and records [for] KQ LLC, City Food
Mart LLC and Z and Z of Columbia LLC and 7 Stars Auto
owned by Kamal QAZAH [Kamal, LLC, Complete
Construction, LLC, and any other businesses owned by
Nasser ALQUZA].
(Emphasis added). Both versions of Attachment B also included a
third paragraph, which listed various types of “[d]igital
[e]vidence” and did not mention either Qazah or Alquza.
Thus, the version of Attachment B that the ATF agent and
the Assistant U.S. Attorney intended to include for Alquza’s
house would have specified documents relating to “Nasser ALQUZA
and May Hassouneh” in paragraph one, rather than those relating
to “Kamal QAZAH and 7 Stars Auto.” And, in paragraph two, the
correct attachment would have specified documents relating to
6
“Kamal, LLC, Complete Construction, LLC, and any other
businesses owned by Nasser ALQUZA,” rather than documents
relating to “KQ LLC, City Food Mart LLC and Z and Z of Columbia
LLC and 7 Stars Auto owned by Kamal QAZAH.”
The Assistant U.S. Attorney testified that while he and the
ATF agent had printed and included the wrong Attachment B in the
packet that they physically brought to the magistrate judge to
sign, he had previously emailed the entire search warrant and
application for it to the magistrate judge’s chambers and that
this email version included the correct version of Attachment B
for Alquza’s warrant. When the ATF agent and Assistant U.S.
Attorney went into the judge’s chambers, the judge had the
correct version of the documents open on her desk and looked
down at them when she referenced a detail that had been included
in the ATF agent’s affidavit. She then asked the ATF agent for
his copy of the warrant -- which contained the mistakenly
switched Attachment B -- signed it, and handed it back to the
ATF agent, who filed a copy with the clerk’s office.
Government witnesses also testified that the search of
Alquza’s residence was conducted on the same day as the search
of three additional locations in South Carolina, as well as the
execution of 11 arrest warrants. In preparation for the
“takedown,” agents held a briefing that provided an overview of
the investigation for the approximately 100 officers that would
7
be participating in the warrants’ execution. In advance of the
briefing, one of the undercover officers, using the correct
version of Attachment B, prepared a summary list of the items
for which the search team at Alquza’s residence should be
looking. The leader of that search team, Agent Sherry Hamlin,
testified that she received that summary list at the briefing
and relied on it when supervising the search. On the morning of
the search, she also had a copy of the signed warrant, which
contained the incorrect version of Attachment B. When she
examined the warrant and its attachments, however, she noticed
no discrepancy. She explained, “When I did look at the search
warrant, I remember seeing the name ‘Kamal [Qazah],’ but I also
kn[e]w that he was related to this investigation.” She
testified that it was only after she received a call from
Alquza’s wife following the search that she “looked at [the
warrant] more closely and realized” the error.
Following the hearing, the district court denied the motion
to suppress, finding as fact that the warrant’s inclusion of the
incorrect attachment was a clerical error. The court concluded
that even if the error had rendered the warrant defective, the
evidence recovered in the search was admissible under the good-
faith exception to the exclusionary rule recognized in United
States v. Leon, 468 U.S. 897 (1984).
8
At the six-day trial, the jurors heard extensive testimony
from two of the undercover officers who had conducted the
transactions with Qazah and Alquza and saw excerpts from
recordings made by the officers. They also heard testimony from
two coconspirators, who explained that they had purchased
cigarettes from undercover officers and then immediately resold
them to Qazah. Both of these witnesses testified that they
understood the cigarettes to have been stolen and that they
discussed that understanding with Qazah. Following the
government’s case in chief, Qazah testified on his own behalf
and admitted that he had purchased more than 1,000 cases of
cigarettes supplied by the undercover officers and that he had
been planning on purchasing 1,300 cases directly from the
undercover officers on the day that he was arrested. Qazah
further admitted that the undercover officers had represented
that the cigarettes they were supplying were stolen.
Nonetheless, he maintained that, notwithstanding the officers’
representations, he believed that the cigarettes were
counterfeit, rather than stolen.
The jury convicted Qazah and Alquza of conspiracy, in
violation of 18 U.S.C. § 371, by conspiring to receive,
transport, and sell stolen property in interstate commerce, in
violation of 18 U.S.C. §§ 2314 and 2315; conspiracy to commit
money laundering, in violation of 18 U.S.C. § 1956(h); and money
9
laundering, in violation of 18 U.S.C. § 1956(a)(3). Qazah was
also convicted of receiving and selling property stolen in
interstate commerce, in violation of 18 U.S.C. §§ 2315 and 21.
Following their convictions, the Probation Officer prepared
a presentence report for each defendant. The report for Qazah
recommended that he be held responsible for 8,112.66 cases of
cigarettes, with a retail value of $24,337,980, and the report
for Alquza recommended that he be held responsible for 2,909.66
cases, with a retail value of $8,728,980. Based on those loss
amounts, the reports applied a 22-level enhancement to Qazah’s
offense level, pursuant to U.S.S.G. § 2B1.1(b)(1)(L) (2012), and
a 20-level enhancement to Alquza’s offense level, pursuant to
U.S.S.G. § 2B1.1(b)(1)(K) (2012). The presentence report for
Qazah also recommended applying a two-level adjustment to his
offense level for obstruction of justice based on false
statements that he made during his initial appearance before a
magistrate judge.
Both defendants objected to the presentence reports’ use of
the cigarettes’ retail value in calculating the loss amount,
arguing that the cigarettes’ wholesale value should have been
used instead. Using wholesale value would have lowered each
defendant’s offense level by two levels. The district court,
however, rejected the defendants’ argument, relying on
Application Note 3 of U.S.S.G. § 2B1.1 to conclude that the
10
cigarettes’ retail value was the appropriate measure of loss.
Qazah also objected to the application of a two-level
enhancement for obstruction of justice, and the court also
rejected that challenge. But in doing so, the court relied not
on statements made by Qazah during his initial appearance, but
on his testimony at trial that he did not think the cigarettes
were stolen, finding that, by giving this testimony, Qazah had
committed perjury.
After concluding that the correct Sentencing Guidelines
range for Qazah was 235 to 293 months’ imprisonment, the court
sentenced him to 216 months’ imprisonment. And after it
concluded that the correct Sentencing Guidelines range for
Alquza was 121 to 151 months, it imposed a sentence of 108
months’ imprisonment.
These appeals followed.
II
Alquza first contends that the district court erred in
denying his motion to suppress the evidence seized from his
house, arguing that, “because the search warrant for [his]
residence identified items and business entities that were
exclusively associated with Qazah[,] [t]he warrant [did] not
satisfy the Fourth Amendment’s particularity requirement.” He
also contends that the district court erred in relying on the
11
good-faith exception to the exclusionary rule recognized in
United States v. Leon, 468 U.S. 897 (1984), arguing that Leon’s
good-faith exception does not apply here (1) because “the
magistrate judge fail[ed] to perform [her] proper, neutral and
detached function”; and (2) because the warrant here was “so
facially deficient that the executing officer could not
reasonably have assumed the warrant was valid.”
The government contends that, despite the inclusion of the
wrong attachment, the search warrant for Alquza’s house
satisfied the Fourth Amendment’s particularity requirement, as
it described in detail the things to be seized, from whom they
were to be seized, and from where they were to be seized,
thereby providing sufficient guidance to executing officers.
The government further contends that “even if the warrant were
deficient [because of the inclusion of the incorrect version of
Attachment B], suppression would not be appropriate” under Leon
“because law-enforcement officers acted in good-faith reliance
on the warrant” and because “the error did not involve the kind
of wrongdoing that suppression could meaningfully deter.”
The Fourth Amendment requires that, in the ordinary course,
searches and seizures be conducted pursuant to a warrant issued
“upon probable cause, supported by Oath or affirmation, and
particularly describing the place to be searched, and the
persons or things to be seized.” U.S. Const. amend. IV. When
12
officers obtain a search warrant but the requirements of the
Fourth Amendment are nonetheless violated, evidence recovered
during the search may, in certain egregious cases, be excluded
at trial, such as, for instance, when “the issuing magistrate
wholly abandon[s] his judicial role” or when the warrant issued
is “so facially deficient -- i.e., in failing to particularize
the place to be searched or the things to be seized -- that the
executing officers cannot reasonably presume it to be valid.”
Leon, 468 U.S. at 923. But, in the ordinary course, the
exclusion of evidence is not the proper remedy. See id. at 918
(“[S]upression of evidence obtained pursuant to a warrant should
be ordered only on a case-by-case basis and only in those
unusual cases in which exclusion will further the purposes of
the exclusionary rule”). The Leon Court held that, in the
circumstances before it, the exclusionary rule should not be
applied to bar the government from introducing “evidence
obtained by officers acting in reasonable reliance on a search
warrant issued by a detached and neutral magistrate,” even
though the warrant was ultimately found to be invalid. Id. at
900.
In this case, Alquza contends that two of the extreme
circumstances recognized in Leon as justifying the exclusion of
evidence obtained pursuant to a warrant apply here, arguing that
the magistrate judge abandoned her judicial role in signing a
13
warrant containing the incorrect Attachment B and that the
warrant therefore was so facially deficient that the executing
officers could not have reasonably assumed that it was valid.
We disagree.
The error in this case was a technical one, as the district
court found, which did not influence the warrant’s issuance, nor
adversely affect its execution. Alquza does not contend that
probable cause was lacking or that the applicant’s affidavit
misstated any facts. Nor does he identify any defect in the
email version of the warrant that the magistrate judge reviewed
to make her decision to issue it. Moreover, he does not
complain that the actual search conducted or the items seized
were unauthorized by the correct version of the warrant.
The record supports the district court’s findings that the
magistrate judge made her decision to issue the warrant based on
the email copy that was sent to her by the Assistant U.S.
Attorney and that the email version included the correct version
of Attachment B. When she signed the physical copy of the
warrant presented to her by the AFT agent and the Assistant U.S.
Attorney, she assumed, as did the agent and the Assistant U.S.
Attorney, that she was signing the same version. In addition,
the search team executed the warrant by seizing items based on a
summary list prepared from the correct version of the warrant.
Consequently, both the issuance and the execution conformed to
14
the warrant as if it had contained the correct version of
Attachment B. The only discrepancy in the process was that the
actual warrant that was signed by the magistrate judge and given
to Alquza contained the wrong version of Attachment B. The
executing officer did not realize the discrepancy until after
the search had been completed, when Alquza’s wife called the
officer.
In these circumstances, we conclude that the judicial
officer did not wholly abandon her judicial role in issuing the
warrant. See Leon, 468 U.S. at 923. Nor did she “merely rubber
stamp[] the warrant.” United States v. Gary, 528 F.3d 324, 329
(4th Cir. 2008). To the contrary, she examined the email
version of the proposed warrant, which was the correct version,
before deciding to sign it, although she unwittingly signed an
incorrect version. And Alquza does not challenge the correct
version that was considered by the judge.
We also conclude that the warrant was not so facially
deficient as to preclude the officers performing the search from
forming an objectively reasonable belief in its validity. See
Leon, 468 U.S. at 923. The signed warrant correctly identified
the place to be searched and included an Attachment B, albeit
the incorrect one, that correctly listed many of the items to be
seized. Moreover, when the executing officer looked at the
signed version of the warrant, she saw Qazah’s name but
15
reasonably concluded that its inclusion was not peculiar because
she knew that Qazah was a central figure in the conspiracy.
More importantly, the executing officer was not relying on her
personal reading of the warrant’s Attachment B to inform her of
the items that her team was authorized to seize. Instead, she
reasonably relied on the summary list that her colleagues had
prepared and given to her in advance of the search -- a summary
list that was based on the correct version of the search
warrant. As a result, in actual fact, the officers of the
search team executed the warrant in a manner that was both
consistent with the warrant that they thought they had received
and consistent with the warrant that the magistrate judge had
intended to issue. In light of these circumstances, we conclude
that the officers of the search team reasonably believed that
the search that they were conducting was authorized by a valid
warrant. See Massachusetts v. Sheppard, 468 U.S. 981, 990-91
(1984) (concluding that the evidence recovered during a search
of the defendant’s home need not be suppressed even though the
warrant’s description of the items to be seized was “completely
inaccurate,” id. at 988 n.5, as a result of a “technical error
on the part of the issuing judge,” id. at 984).
Most important to the analysis, however, is our conclusion
that the suppression of evidence recovered in this case would
have almost no deterrent effect because the officers were, at
16
bottom, acting in good faith. The Supreme Court has repeatedly
explained that the exclusionary rule’s “sole purpose . . . is to
deter future Fourth Amendment violations” and that exclusion is
appropriate only when “the deterrence benefits of suppression .
. . outweigh its heavy costs.” Davis v. United States, 131 S.
Ct. 2419, 2426-27 (2011). The Davis Court explained that the
key to this balancing analysis is the relative culpability of
the police officer’s conduct:
The basic insight of the Leon line of cases is that
the deterrence benefits of exclusion vary with the
culpability of the law enforcement conduct at issue.
When the police exhibit deliberate, reckless, or
grossly negligent disregard for Fourth Amendment
rights, the deterrent value of exclusion is strong and
tends to outweigh the resulting costs. But when the
police act with an objectively reasonable good-faith
belief that their conduct is lawful, or when their
conduct involves only simple, isolated negligence, the
deterrence rationale loses much of its force, and
exclusion cannot pay its way.
Id. at 2427-28 (emphasis added) (internal quotation marks,
alterations, and citations omitted); see also Herring v. United
States, 555 U.S. 135, 144 (2009) (“To trigger the exclusionary
rule, police conduct must be sufficiently deliberate that
exclusion can meaningfully deter it, and sufficiently culpable
that such deterrence is worth the price paid by the justice
system”).
Given that the officers here were, at most, guilty of
simple negligence in failing to recognize the document-assembly
17
error before executing the warrant and that, in any event, they
acted in good faith, Leon and its progeny compel the conclusion
that the district court correctly denied Alquza’s motion to
suppress.
III
The defendants’ other significant issue on appeal arises
from their contention that the district court erred in enhancing
their offense levels and, consequently, their sentencing ranges
under the Sentencing Guidelines by holding them accountable for
a loss under U.S.S.G. § 2B1.1(b)(1) based on the retail value of
the purportedly stolen cigarettes. The defendants maintain that
the district court was, instead, required to use the cigarettes’
wholesale value, which would represent the loss sustained by the
cigarettes’ manufacturer, from whom the cigarettes were
purportedly stolen.
In rejecting the wholesale value of the cigarettes as the
appropriate measure of loss, the district court relied on
U.S.S.G. § 2B1.1(b)(1) and Application Note 3(A) to conclude
that it should apply the “greatest intended loss” as between the
wholesale and retail value of the cigarettes, regardless of
whether that value in fact represented a loss. As the court
explained:
[Y]ou go to intended loss. And under intended loss
you look at what is the greatest intended loss,
18
particularly with a government sting operation where
you have no loss. So isn’t the issue were they going
to be selling them wholesale or are they knowingly
going to be pushing them further down to get to retail
outlets?
* * *
[I]t is the Probation Office’s position that . . . the
greater intended loss would ultimately be retail.
* * *
The court, for the reasons raised by the United States
and the Probation Office, as well as this own court’s
discussion of the sentencing guidelines, finds that
the appropriate value is retail value for determining
the loss amount.
(Emphasis added).
When questioned by counsel for the defendants about where
the court derived the conclusion that it must apply the greatest
value, the court directed counsel to both U.S.S.G. § 2B1.1(b)(1)
and the Application Notes under it, stating:
Apply -- the greatest is under 2B1.1(b)(1). And then
you look by the word “loss” and it says apply the
greatest. So it is greater intended loss [as
indicated in Application Note 3(A)].
* * *
Apply the greatest. That’s where it comes from.
Loss. Apply the greatest. So that’s greatest
intended loss. All right.
Accordingly, the court concluded that the loss resulting
from the defendants’ offenses should be based on the retail
value of $3,000 per case, as distinct from the wholesale value
of $2,126 per case. The district court’s use of retail value,
19
as opposed to wholesale value, increased both defendants’
offense levels by two levels and consequently increased their
recommended sentencing ranges.
As recognized by the district court, the defendants’
offense levels are properly determined under U.S.S.G.
§ 2B1.1(b)(1), which correlates a defendant’s offense level with
the amount of the “actual loss” or the “intended loss” resulting
from the commission of an offense. See U.S.S.G. § 2B1.1 cmt.
n.3(A). In this case, because the defendants’ offenses occurred
during the course of an undercover sting operation, the parties
agree, as did the district court, that the “intended loss,”
rather than the “actual loss,” is the relevant measure. See id.
§ 2B1.1 cmt. n.3(A)(ii).
In the version of the Sentencing Guidelines used in
sentencing the defendants, the Application Notes explain that
the “intended loss” is determined by “the pecuniary harm that
was intended to result from the offense.” U.S.S.G. § 2B1.1 cmt.
n.3(A)(ii) (2012) (emphasis added). * The Notes provide further
that “[t]he court need only make a reasonable estimate of the
loss” and that its estimate “shall be based on available
information, taking into account, as appropriate and practicable
* Effective November 1, 2015, the Sentencing Commission
amended Application Note 3(a) to define “intended loss” as “the
pecuniary harm that the defendant purposefully sought to
inflict.” U.S.S.G. § 2B1.1 cmt. n.3(A)(ii).
20
under the circumstances,” a number of factors, including “[t]he
fair market value of the property unlawfully taken” and “[t]he
approximate number of victims multiplied by the average loss to
each victim.” Id. § 2B1.1 cmt. n.3(C). Thus, as we have
observed previously, “[t]he general rule is that loss is
determined by measuring the harm to the victim” of the offense
committed. United States v. Ruhe, 191 F.3d 376, 391 (4th Cir.
1999); see also id. at 380, 390-92 (applying the rule to
determine loss resulting from the crime of transporting stolen
property in interstate commerce). The victim, of course, is
determined by the nature of the offense and the impact of its
violation.
The relevant offense for this determination of loss is the
charge that the defendants participated in a conspiracy to
receive, transport, and sell stolen goods -- specifically, over
8,000 cases of Marlboro cigarettes manufactured by Philip Morris
-- in violation of 18 U.S.C. §§ 2314 and 2315. Even though the
cigarettes were not in fact stolen, but were instead supplied to
the defendants by undercover agents in a sting operation, the
defendants were told -- and they believed -- that they were
receiving cigarettes stolen from Philip Morris trucks in either
Virginia or Tennessee. See 18 U.S.C. § 21 (defining stolen
property to include property which was represented by law
21
enforcement and persons under their direction to be stolen and
which the defendant believed to be stolen).
Thus, for the purpose of determining the loss that was
intended to result from the offense, see U.S.S.G. § 2B1.1 cmt.
n.3(A)(ii), the court must identify and focus on the intended
victim or victims of the offense of receiving and selling stolen
property. Had the cigarettes actually been stolen, the most
obvious victim would have been the property’s true owner, which
the defendants believed to be Philip Morris, the cigarettes’
manufacturer. This makes Philip Morris the most obvious
intended victim of the conspiracy offense. And Philip Morris’
loss would have been the amount of money that it would have
otherwise received for selling the purportedly stolen
cigarettes, a figure that the record indicates was an average of
$2,126 per case.
But Philip Morris was not necessarily the only intended
victim of the defendants’ scheme. For example, other potential
intended victims might well have included the States that were
denied cigarette taxes that otherwise would have been paid in
this case, at roughly $300 per case. It is also conceivable
that the defendants and their coconspirators intended to harm
legitimate retailers by enabling conspiring retailers to sell
the cigarettes at a discount, thus possibly depriving legitimate
retailers of sales as a result. If legitimate retailers were
22
found to be among the class of intended victims, then it would
likely have been appropriate for the district court to estimate
their losses in its loss calculations as well.
These questions about the identity of the intended victims
and their losses are ultimately questions of fact for the
district court to resolve as part of its loss calculations under
the Sentencing Guidelines.
The district court in this case appeared to conclude,
without making any such inquiries, that the cigarettes’ retail
market value was the appropriate measure of loss simply because
the Guidelines required it to apply the “greater intended loss,”
and the cigarettes’ retail value was greater than their
wholesale value. We do not suggest that the retail value of the
cigarettes is necessarily an incorrect measure here, but the
district court did not explain how the retail value represented
loss. Rather, it justified its use of retail value on the
ground that the defendants intended, in their scheme, to sell
the cigarettes at retail. That the defendants sold the
cigarettes at retail, however, does not necessarily indicate
that the retail value is an approximate measure of loss. Loss,
by definition, would require a victim and would represent an
amount that is lost or taken away from the victim. See Merriam-
Webster’s Collegiate Dictionary 736 (11th ed. 2007) (defining
“loss” and “lost”). This is consistent with what the Sentencing
23
Guidelines provide and with what we have previously held. See
Ruhe, 191 F.3d at 391. In this limited respect, we therefore
conclude that the district court’s reasoning was in error. See,
e.g., United States v. Machado, 333 F.3d 1225, 1228 (11th Cir.
2003) (joining other circuits in concluding that loss must be
measured “within the factual circumstances presented” and
therefore may not necessarily be the property’s retail market
value). Accordingly, we vacate the defendants’ sentences and
remand for resentencing, allowing the district court to expand
its inquiry into the intended victim or victims of the relevant
offenses and to recalculate the defendants’ sentencing ranges
based on its findings and conclusions about the amount of loss
that they intended to result from their commission of the
offense or offenses.
IV
Finally, the defendants contend that the district court
erred in making several other rulings during trial and
sentencing. We affirm each, however, concluding that they merit
only brief discussion.
First, Alquza contends that the district court abused its
discretion by allowing the government to present (1) evidence of
statements he made to the undercover officers about his prior
experience dealing with stolen goods and (2) evidence of false
24
identification documents recovered during the search of his
home. He argues that the district court should have excluded
this evidence under Federal Rule of Evidence 404(b)(1), which
specifies that “[e]vidence of a crime, wrong, or other act is
not admissible to prove a person’s character in order to show
that on a particular occasion the person acted in accordance
with the character.” The Rule provides further, however, that
such evidence “may be admissible for another purpose, such as
proving motive, opportunity, intent, preparation, plan,
knowledge, identity, absence of mistake, or lack of accident.”
Fed. R. Evid. 404(b)(2); see also United States v. Queen, 132
F.3d 991, 997 (4th Cir. 1997). In the context of this case, we
conclude that the district court acted within its discretion in
admitting the challenged evidence under Rule 404(b)(2).
Second, Alquza contends that the district court abused its
discretion by allowing the government to present evidence that
the Federal Reserve Board had investigated the large sums of
money being wired overseas to Jordan through a bank account that
Alquza jointly controlled, maintaining that this evidence was
both “completely irrelevant” and “highly prejudicial.” The
district court correctly concluded, however, that Alquza’s
counsel opened the door to this evidence by asking one of the
undercover officers whether there was any evidence that Alquza
“was wiring hundreds of thousands of dollars in and out of the
25
United States.” Again, we conclude that the district court
acted within its discretion in admitting this evidence.
Third, Qazah contends that the district court abused its
discretion in denying his motion to sever his trial from
Alquza’s. He bases this argument on the district court’s
admission of evidence seized during the search of Alquza’s
house, as well as its admission of evidence concerning Alquza’s
prior illegal conduct. Qazah argues that this evidence would
not have been admissible had he been tried alone; that it “had
an unfair tendency to cast [him] in a bad light with the jury”;
and that the district court was therefore compelled to grant a
severance to enable him to receive a fair trial. This argument,
however, lacks any merit. When defendants are properly charged
together, a district court should grant severance under Federal
Rule of Criminal Procedure 14 “only if there is a serious risk
that a joint trial would compromise a specific trial right of
one of the defendants, or prevent the jury from making a
reliable judgment about guilt or innocence.” Zafiro v. United
States, 506 U.S. 534, 539 (1993). Because Alquza comes nowhere
close to satisfying this standard, the court correctly denied
his motion to sever.
Fourth, Qazah contends that the district court erred at
sentencing by applying a two-level adjustment for obstruction of
justice under U.S.S.G. § 3C1.1, based on its conclusion that
26
Qazah committed perjury when he testified at trial that he
thought the cigarettes were counterfeit, rather than stolen.
Specifically, Qazah maintains that the district court erred by
applying the enhancement without making factual findings that he
(1) gave false testimony, (2) concerning a material matter, (3)
with the willful intent to deceive. See United States v.
Dunnigan, 507 U.S. 87, 95 (1993) (holding that when a district
court bases an obstruction of justice enhancement on the
defendant’s trial testimony, the court must “make[] a finding of
an obstruction of . . . justice that encompasses all of the
factual predicates for a finding of perjury”); United States v.
Perez, 661 F.3d 189, 193 (4th Cir. 2011) (concluding that, under
Dunnigan, “[i]f a district court does not make a specific
finding as to each element of perjury, it must provide a finding
that clearly establishes each of the three elements”). We
conclude, however, that the district court’s findings that Qazah
obstructed justice sufficiently “encompasse[d] all of the
factual predicates for a finding of perjury.” Dunnigan, 507
U.S. at 95. First, the court found that Qazah actually knew the
cigarettes were stolen, despite testifying at trial that he
thought they were counterfeit, thus establishing the first
element of perjury -- i.e., that Qazah gave false testimony.
The court further found that whether Qazah thought he was
handling stolen cigarettes or counterfeit cigarettes “was the
27
central issue for the jurors,” thus establishing the materiality
of the false testimony. And, finally, the willfulness element
of perjury was encompassed by the court’s findings that Qazah
had “categorically denied” knowing that the cigarettes were
stolen and that this denial was the “core of his testimony.”
Fifth, and finally, both defendants challenge the
reasonableness of their sentences. Specifically, Qazah contends
that his sentence of 216 months’ imprisonment is “greater than
necessary” and that the district court “placed undue emphasis on
the seriousness of the offense and general deterrence” in
arriving at that sentence. Alquza similarly argues that the
district court failed “to make adequate findings of the 18
U.S.C. § 3553(a) factors.” We find no merit to either of these
contentions. Throughout the sentencing hearings, the district
court explained its chosen sentences by reference to the
§ 3553(a) factors, and the defendants have not shown that the
district court abused its discretion in selecting an appropriate
sentence in light of those factors. See Gall v. United States,
552 U.S. 38, 41 (2007).
* * *
In sum, we affirm both defendants’ convictions but vacate
their sentences, remanding to allow the district court to
28
reevaluate its loss finding in light of our opinion and to
resentence the defendants.
AFFIRMED IN PART, VACATED IN PART,
AND REMANDED FOR RESENTENCING
29