United States v. Skrodzki

Opinion

USCA1 Opinion

UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT

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No. 93-1339

                              UNITED STATES OF AMERICA,

                                      Appellee,

                                          v.

                                  MARK A. SKRODZKI,

                                Defendant, Appellant.

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                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                          FOR THE DISTRICT OF MASSACHUSETTS

                 [Hon. Frank H. Freedman, Senior U.S. District Judge]
                                          __________________________

                                 ____________________

                                        Before

                         Torruella and Stahl, Circuit Judges,
                                              ______________
                           and DiClerico,* District Judge.
                                           ______________

                                 ____________________

            Stewart T.  Graham, Jr., by  Appointment of the  Court, with  whom
            _______________________
        Graham & Graham was on brief for appellant.
        _______________
            C. Jeffrey Kinder, Assistant United  States Attorney, with whom A.
            _________________                                               __
        John Pappalardo, United States Attorney, was on brief for appellee.
        _______________

                                 ____________________

                                  November 17, 1993
                                 ____________________

        _____________________
        *Of the District of New Hampshire, sitting by designation.

DICLERICO,  District Judge.   The  defendant challenges
                              ______________

             the twenty-seven month sentence imposed under the Sentencing

             Guidelines  after  he   pleaded  guilty  to  one   count  of

             interstate transportation of stolen property in violation of

             18  U.S.C.      2314,   and  four   counts  of   structuring

             transactions to evade reporting requirements in violation of

             31  U.S.C.     5324(a)(3).1    On  appeal,  he  asserts  the

             district court improperly  (1) included the loss  of eighty-

             three2 computer boards  ("boards") as relevant  conduct when

             determining  his  sentence  and (2)  imposed  a  sentence in

             excess of  Guideline provisions  by calculating  his offense

             level based upon an inflated value of the victim's loss.  We

             affirm.

                                         I.  

                                      BACKGROUND

                  Digital  Equipment  Corporation  ("DEC")  employed  the

             defendant  as  a  packaging   engineer  at  its   Westfield,

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             1The  court  dismissed   six  counts   of  the   Superseding
             Indictment on motion of the United States.

             2In  their   briefs,  the   defendant  and   the  government
             mistakenly  stated that  the  number  of  boards  viewed  as
             relevant conduct was  seventy-three.  At oral  argument, the
             defendant conceded that  the appropriate number  was eighty-
             three.

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                                          2

Massachusetts plant.  He earned an hourly wage of $15.50 for

             an approximate annual salary of $32,240.

                  Beginning in 1988 and continuing through 1990 and while

             employed at DEC,  the defendant sold 241  DEC boards without

             invoices,  receipts or  other  documentary  evidence of  the

             transactions to Execudata,  a sole proprietorship owned  and

             operated  by Peter  Marcantonio.   From  1989 through  1990,

             Marcantonio  wire-transferred  $959,293 to  the  defendant's

             account  at  United Cooperative  Bank  in West  Springfield,

             Massachusetts  ("United Cooperative")  and  $196,473 to  the

             defendant's  account at First  Union Bank in  Pompano Beach,

             Florida ("First Union").   Unlike the defendant, Marcantonio

             maintained business records that included the serial numbers

             of the 241 DEC boards.

                  After being alerted by United Cooperative of suspicious

             cash withdrawals, the Internal Revenue Service ("IRS") began

             investigating the defendant's activities.  During the course

             of this  investigation, IRS  agents showed  DEC officials  a

             list of serial numbers provided to them by Marcantonio.  DEC

             security officers  reviewed the Westfield  plant's inventory

             and discovered that  112 of the 241 boards  had been removed

             from the  stockroom without authorization.   The  government

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was unable  to trace  the other 129  boards to  determine if

             they were stolen.  

                  After the  grand jury returned a Superseding Indictment

             on  July 23,  1992,  the defendant  pleaded  guilty to  four

             counts  of   structuring  currency  transactions   to  evade

             reporting  requirements  and  to  one  count  of  interstate

             transportation of stolen property.

                  At the  defendant's sentencing hearing,  the government

             conceded it could  trace to the Westfield  plant's stockroom

             only   112  of  the   241  boards  the   defendant  sold  to

             Marcantonio.  The  government also conceded that  a majority

             of the  missing  boards were  used.   On  the basis  of  the

             government's concessions, the district court found DEC could

             not confirm the  number of missing boards that  were used or

             new.    The  district court  concluded  that  the Sentencing

             Guidelines  did not require a precise determination of DEC's

             loss and  permitted it to  infer the  amount of loss  on the

             basis  of  reasonable  reliable  information, including  the

             scope of the operation.   The district court also noted that

             the probation department  may have had the right  to use the

             retail value of  the boards to value DEC's  loss.  The court

             found the  loss was more  than $800,000, but did  not exceed

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$1,489,746,  the retail  value  suggested  by  DEC  for  new

             boards.3   The district  court adopted the  factual findings

             and  Sentencing  Guideline  application  in the  presentence

             report and determined that the defendant's offense level was

             seventeen  and his  criminal  history category  was I.   See
                                                                      ___

             U.S.S.G.   2B1.2 (1992).4   The defendant was sentenced to a

             term  of twenty-seven months'  imprisonment on one  count of

             interstate transportation of stolen property and to the same

             term  to  be  served concurrently  on  the  four structuring

             counts.  This appeal ensued.

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             3In  its brief,  the  government  states  that  the  figures
             provided by DEC reflect the price for new boards.  Brief for
             the Appellee at 5.

             4U.S.S.G.   2B1.2 provides in pertinent part:
                  "(a)  Base Offense Level:  4
                  (b)  Specific Offense Characteristics
                       (1)  If  the value of the stolen property exceeded
                            $100, increase by the corresponding number of
                            levels from the table in  2B1.1."
             U.S.S.G.   2B1.1(b)(1) provides in pertinent part:
             "If the  loss exceeded $100,  increase the offense  level as
             follows:
                  Loss (Apply the Greatest)          Increase in Level  .
                  ____                               _________________
             . .
                  (N) More than $800,000             add 13 . . . ."

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II. 

                                      DISCUSSION

                  A.  Relevant Conduct

                  The defendant asserts the government failed to prove by

             a  preponderance of  the evidence  that eighty-three  boards

             were stolen and  the court improperly included  those boards

             as  relevant conduct in determining his sentence.  According

             to the defendant, there are alternative explanations for the

             disappearance  of the eighty-three boards.  He denies having

             access  to all  areas in  which the  boards were  stored and

             refutes  the hearsay  statements  to  the  contrary  by  DEC

             employees  mentioned in  the presentence  report.   He  also

             argues  that at the sentencing hearing, the court implicitly

             found  the eighty-three  boards were  not  stolen.5   Absent
                                 
             ____________________

             5After the defendant  objected to the contents  of paragraph
             19 of the presentence report, the court stated "I'm going to
             allow paragraph 19 to remain intact.  Because once again, it
             does not reveal that the boards  in fact were stolen.  So  I
             don't see  any impact  on the  defendant in  that scenario."
             While the defendant believes that the court implicitly found
             that the boards were not stolen, the court was not precluded
             from  later finding,  on  the  basis  of  other  information
             contained in the presentence report, that the boards were in
             fact  stolen.   It merely  noted that  paragraph 19  made no
             mention that the eighty-three boards were stolen.  Paragraph
             19 of the presentence report provides:
                  IRS Agents contacted  DEC with the list  of serial
                  numbers  of computer  boards  sold by  Skrodzki to
                  Marcantonio.  After a thorough review of inventory
                  records, DEC security  determined that 112  of the
                  boards including the  29 listed in the  indictment

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                                          6

proof the  boards were  stolen, the  defendant contends  the

             district  court could not  have considered them  as relevant

             conduct.

                  The district  court may include  relevant conduct--"the

             same  course of  conduct or  common  scheme or  plan as  the

             offense  of   conviction"--in  its   determination  of   the

             applicable offense level.  U.S.S.G.   1B1.3(a)(2).  "For two

             or more  offenses to constitute  part of a common  scheme or

             plan, they must be substantially connected  to each other by

             at least one  common factor, such as common  victims, common

             accomplices,  common purpose,  or  similar modus  operandi."
                                                        _______________

             U.S.S.G.   1B1.3, comment. (n.9).  To sentence the defendant

             for relevant conduct,  the court must be  satisfied that the

             government  demonstrated by a  preponderance of the evidence

             that  the  defendant   unlawfully  transported  eighty-three

             stolen boards.   See  United States  v. Estrada-Molina,  931
                              ___  ________________________________

             F.2d 964, 966 (1st Cir. 1991) (government's demonstration by

             a  preponderance of  evidence of  defendant's capability  of

             producing   negotiated  but   undelivered  drugs   permitted
                                 
             ____________________

                  should  still  be  in   DEC  stockrooms.     These
                  stockrooms  are not secure  areas and Skrodzki had
                  access to any equipment  stored in the stockrooms.
                  The computer boards  are no larger than a  11 x 14
                  notebook  and  could  easily  be  concealed  in  a
                  briefcase.   However,  their  retail value  ranges
                  from $1,350 to $18,970 apiece. 

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                                          7

district court to  impose a sentence that  included relevant

             conduct).   We review  for clear  error the  court's finding

             that the defendant  transported eighty-three stolen  boards.

             See id.
             ___ ___

                  District courts are vested with discretion to determine

             whether  to conduct  an evidentiary  hearing  on a  disputed

             factual  issue.  Fed.  R. Crim.  P. 32(c)(3)(A)  ("The court

             shall  afford the defendant  and the defendant's  counsel an

             opportunity to comment  on the [presentence] report  and, in

             the discretion of the court, to introduce testimony or other

             information  relating  to  any  alleged  factual  inaccuracy

             contained in it.");  see United States  v. Garcia, 954  F.2d
                                  ___ ________________________

             12, 19 (1st  Cir. 1992); United States v.  Gerante, 891 F.2d
                                      _________________________

             364, 367 (1st Cir. 1989).  Whether or not it determines that

             an  evidentiary hearing  is  necessary, "[i]n  resolving any

             reasonable  dispute  concerning a  factor  important to  the

             sentencing determination,  the court  may consider  relevant

             information without  regard to  its admissibility  under the

             rules of  evidence applicable  at trial,  provided that  the

             information has sufficient indicia of reliability to support

             its  probable  accuracy."    U.S.S.G.     6A1.3(a),  (policy

             statement  ("p.s.")); United  States v.  Zuleta-Alvarez, 922
                                   _________________________________

             F.2d  33, 35-36  (1st Cir.  1990)  (interpreting U.S.S.G.   

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6A1.3),  cert. denied, 111  S. Ct. 2039  (1991).  Therefore,
                      _____ ______

             the  court  may  consider  reliable  hearsay.    U.S.S.G.   

             6A1.3(a),  p.s.; id. comment.; United States v. Aymelek, 926
                              ___           ________________________

             F.2d  64, 68  (1st Cir.  1991);  Gerante, 891  F.2d at  367.
                                              _______

             Evidentiary hearings are not always necessary to demonstrate

             reliability of the  evidence.  Hearsay statements  contained

             in  presentence reports,  affidavits, documentary  exhibits,

             and submissions  of counsel are  often a reliable  source of

             information  to  resolve a  dispute.   See United  States v.
                                                    ___ _________________

             Shattuck,  961 F.2d  1012, 1015  (1st  Cir. 1992);  see also
             ________                                            ___ ____

             United States v. Silverman, 976 F.2d 1502, 1510-13 (6th Cir.
             __________________________

             1992), cert. denied, 113 S. Ct. 1595 (1993).
                    _____ ______

                  The defendant did not dispute that a DEC employee would

             testify  to  the  statements  mentioned  in the  presentence

             report concerning the source or  value of the boards nor did

             he request  an evidentiary  hearing on  his alleged  greater

             access  to the  stockrooms or  any other issue  in dispute.6

             The defendant also has not asserted he was not provided with

             an adequate opportunity to comment on the presentence report

             and persuade the district court to follow his own version of

____________________

             6At  the   hearing,  defense  counsel   submitted  that  the
             defendant was prepared to testify  that he did not have free
             access  to the stockroom.  However,  no explicit request for
             an evidentiary hearing was made by counsel.

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                                          9

the  facts and recommendations.   By expressly  adopting the

             findings contained in  the presentence report,  the district

             court  chose  to  credit  the  presentence  report  and  the

             information contained  therein as having  sufficient indicia

             of reliability.   See United States v. Curran, 967 F.2d 5, 6
                               ___ _______________________

             (1st  Cir. 1992) (court correctly relied on $10,000 interest

             calculation  mentioned in  the  presentence report);  United
                                                                   ______

             States  v. Sherbak,  950  F.2d 1095,  1099  (5th Cir.  1992)
             __________________

             (court expressly adopted facts set forth in the  presentence

             report as to  the amount of marijuana with  which one of the

             defendants was involved, implicitly weighed the positions of

             the  probation  department  and the  defense,  and  chose to

             credit the probation  department's facts);  see also  United
                                                         ___ ____  ______

             States  v.  Gracia,  983  F.2d  625,  629  (5th  Cir.  1993)
             __________________

             ("Presentence reports generally bear  indicia of reliability

             sufficient  to  permit  reliance thereon  at  sentencing.");

             United States v.  Robins, 978 F.2d 881, 889  (5th Cir. 1992)
             ________________________

             (District court  may properly rely on  "presentence report's

             construction  of  evidence  to resolve  a  factual  dispute,

             rather  than relying  on  the  defendant's  version  of  the

             facts."); United  States v. Wilkinson, 926 F.2d  22, 29 (1st
                       ___________________________

             Cir.)  ("[P]resentence   reports  are   normally  considered

             reliable  sources  of  information,  upon  which  sentencing

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courts  may rely .  . . ."),  cert. denied, 111  S. Ct. 2813
                                           ____________

             (1991).  The court relied on the statements contained in the

             presentence  report  to  determine  whether  the  government

             demonstrated  by a preponderance of the evidence the eighty-

             three boards were stolen.7    The     presentence     report

             mentioned several common  factors that  connect the  twenty-

             nine  boards the  defendant knew  were  stolen and  admitted

             transporting and the eighty-three boards the court  included

             as relevant conduct.  All 112 of  the boards were taken from

             DEC's  Westfield plant and  the defendant had  access to the

             stockrooms where they were stored.  The defendant sold these

             same  112 boards to  Marcantonio without providing  him with

             any  receipts or  other  documentation.    In  exchange  for

             boards,  Marcantonio   wire-transferred  over   one  million

             dollars  to the  defendant's  United Cooperative  and  First

             Union bank accounts.  When  he was questioned by the  IRS as

             to the source of the boards, the defendant explained that he

             had  purchased them  from an  individual,  Bill Harrison  of

             Atlanta,  Georgia, but was unable to provide the agents with
                                 
             ____________________

             7No  remand is necessary  to require  the court  pursuant to
             Fed. R.  Crim. P. 32(c)(3)(D)  to attach its findings  as to
             disputed issues to the presentence report, see United States
                                                        ___ _____________
             v. Gerante, 891  F.2d 364, 370 (1st Cir.  1989), because the
             __________
             court,  here, expressly adopted  the facts as  determined in
             the  presentence report.  See United  States v. Sherbak, 950
                                       ___ _________________________
             F.2d 1095, 1099 (5th Cir. 1992).

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                                          11

Harrison's address or phone number, to produce any receipts,

             or  otherwise  to verify  the  purchases.   The  IRS  agents

             attempted to verify  the purchases but were unable  to do so

             because  none of the  fifteen William Harrisons  of Atlanta,

             Georgia, who were contacted had ever heard of the defendant.

             The defendant  also told  IRS agents  that he had  purchased

             boards from  American Exchange of  Worcester, Massachusetts.

             Once again, investigators were unable to verify the validity

             of the  defendant's  explanation  because  no  such  company

             exists  in Worcester.   Furthermore, during the  time period

             that he sold  boards to Marcantonio, the  defendant admitted

             to structuring  cash withdrawals  so as  to evade  reporting

             requirements.

                  On  the basis  of  the  information  contained  in  the

             presentence report,  the court could  have reasonably  found

             the government proved by a preponderance of the evidence the

             eighty-three boards were stolen and the defendant engaged in

             the "same course of conduct or common scheme or plan  as the

             offense of  conviction."   See U.S.S.G.    1B1.3(a)(2).   It
                                        ___

             properly  included  the   boards  as  relevant  conduct   of

             interstate transportation of stolen property.  The defendant

             has failed to establish that the district court's finding is

             clearly erroneous.

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                                          12

B.  Valuing the loss

                  The  defendant   next  contends   the  district   court

             improperly  inflated  the  value of  the  victim's  loss and

             imposed an illegal sentence.  Because DEC does not sell used

             boards,  the defendant asserts  no fair market  value exists

             for used boards and therefore the court should have employed

             the   boards'  cost  of  production  to  value  DEC's  loss.

             According to the defendant, if the court finds that a market

             value can be  established to value  DEC's loss, that  market

             value should  be  based on  the  secondary market  for  used

             boards.

                  We review  de novo the district  court's interpretation
                             __ ____

             and application of the Sentencing Guidelines.  United States
                                                            _____________

             v. Mullins, 992 F.2d 1472, 1478-79 (9th Cir.), cert. denied,
             __________                                     _____ ______

             113  S. Ct. 2997 (1993); United  States v. St. Cyr, 977 F.2d
                                      _________________________

             698,  701  (1st  Cir.  1992).     After  we  determine   the

             Guideline's  meaning  and  scope,  we  review  the  district

             court's factual  findings underlying  the sentence  only for

             clear error.  Mullins, 992 F.2d  at 1479; St. Cyr, 977  F.2d
                           _______                     _______

             at 701; see  also United States  v. Pavao,  948 F.2d 74,  77
                     ___  ____ _______________________

             (1st Cir. 1991).

                  A  product's  fair  market  value  ordinarily  is   the

             appropriate  value of the victim's loss.   U.S.S.G.   2B1.1,

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comment.  (n.2); see  United States  v.  Colletti, 984  F.2d
                              ___  ___________________________

             1339, 1345 (3d Cir. 1992) (finding made pursuant to U.S.S.G.

                2B1.1 that  stolen gems  had  an actual  market value  of

             $626,000  rather than  a  discounted  value  for  which  the

             retailer would sell  them or the wholesale  replacement cost

             of  the gems not clearly  erroneous); see also United States
                                                   ___ ____ _____________

             v. Larracuente, 952 F.2d 672,  674-75 (2d Cir. 1992)  (court
             ______________

             correctly found pursuant to  U.S.S.G.   2B5.3 that value  of

             high quality  "bootlegged" videotapes  was the  same as  the

             retail price  of licensed  copies).  "The  loss need  not be

             determined  with precision,  and may  be  inferred from  any

             reasonably  reliable  information available,  including  the

             scope of the operation."   U.S.S.G.   2B1.1, comment. (n.3);

             see  Mullins, 992  F.2d  at 1479  (citing U.S.S.G.    2B1.1,
             ___  _______

             comment.  (n.3));  Pavao,  948  F.2d  at  77  (same).    The
                                _____

             defendant bears  a heavy  burden of  demonstrating that  the

             district  court's finding is  clearly erroneous in  light of

             the   Guideline's  allowance  that  the  loss  need  not  be

             determined with precision.  

                  The presentence  report, the  defendant's objection  to

             the  report, and  the submissions  of  counsel provided  the

             district  court with the following information from which it

             could determine  the value of  the loss.  Although  it could

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                                          14

not determine  the  number of  boards  that were  used,  DEC

             provided information  as stated  in  the presentence  report

             that  the  retail value  of  the 112  missing  boards ranged

             between $1350 and $18,970 per  board.  DEC reported that the

             fair  market value of  the twenty-nine boards  the defendant

             admitted  he knew were  stolen and transported  was $278,800

             and  the  value  of the  eighty-three  boards  considered as

             relevant  conduct  was  $1,210,946.    The  defendant's bank

             statements also revealed that during the time he sold boards

             to  Marcantonio, he  received over  one  million dollars  in

             payment.   In his objection  to the presentence  report, the

             defendant   supplied   the  court   with   information  that

             Marcantonio sold  used boards  on the  secondary market  for

             between $5200  and  $6500  per  board.   At  the  sentencing

             hearing, defendant's counsel proffered that the proper value

             of  the boards was  DEC's cost of  production, approximately

             $600 per  board, and the government conceded that a majority

             of the boards were used.  

                  The district court  had a broad range of  values before

             it  and  made  its  determination   on  the  basis  of  that

             information.  While the district  court did not set forth in

             great detail the method it used to calculate the loss, there

             was  adequate  evidence  in  the  record  for  the court  to

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                                          15

determine  that the  value of  the  missing boards  exceeded

             $800,000.   See Colletti, 984  F.2d at 1345.   The court did
                         ___ ________

             not need  to value  the boards precisely  and could  use the

             information  before it  to infer  that the  loss of  the 112

             boards  exceeded $800,000.   See U.S.S.G.    2B1.1, comment.
                                          ___

             (n.3).  We  cannot say that the district  court's finding is

             clearly erroneous.       For these reasons,  the judgment of

             the district court is

                  Affirmed.
                  _________

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