Case o' The Week: Stretch on Loss Gets Sentence Tossed - Gainza and Guideline Loss Calculations for Identity and ATM Schemes

 "The lesson in this case is that trying is not the same as succeeding."

United States v. Gainza, 2020 WL 7222136, *1 (9th Cir. Dec. 8, 2020), decision available here.

Players: Decision by Judge McKeown, joined by Judge Nguyen and visiting DJ Vitaliano. Nice win for ED AFPD David Porter.  

Facts: Gainza and his co-D set up “skimmers” in ATMs, along with hidden cameras to capture pin numbers. Id. at *1. Though over eight hundred people used these compromised ATMs, only 37 reported fraudulent access. Id. at *2.

  Gainza and his co-D were arrested, charged with conspiracy to possess at least fifteen counterfeit access devices, bank fraud, access device fraud, possession of device-making equipment, and aggravated identity theft. Id. They plead guilty to all charges.

  Over defense objection, at sentencing the district court calculated guideline loss by multiplying the number of people that visited the ATMs by $500 (resulting in loss amounts of several hundred thousand dollars). Id. The pair were hit with a twelve offense level by virtue of these loss amounts, and sentenced to four and five years. Id.

 Issue(s): “The issue on appeal . . . is how much loss the scheme caused.” Id. at *1. “[T]he Guidelines recommend that a minimum of $500 in loss be applied for each account number that Gainza and Gabriele-Plage obtained. The pivotal question, then, is how many account numbers [they] obtained.” Id. at *3.

Held: “In calculating the loss amount, the district court concluded that Gainza and Gabriele-Plage obtained account information for each person who visited the ATMs while the cameras and skimmers were installed. But while there is evidence that Gainza and Gabriele-Plage hoped to obtain account information for each ATM customer, there is insufficient evidence that they succeeded in doing so. The district court's conclusion to the contrary was clear error, so we promptly vacated the sentences and remanded the cases for resentencing.” Id. at *1.

  “The government offered insufficient evidence that the defendants obtained or used 852 account numbers. And while the government showed how many people used the ATMs while the skimmers were installed, it did not provide any evidence of the skimmer success rate, either for these transactions or even for hypothetical transactions. Without this evidence, the record cannot support a finding that Gainza and Gabriele-Plage obtained information ‘that can be used to initiate a transfer of funds’ from each ATM customer. 18 U.S.C. § 1029(e)(1). And while it is true that the sentencing judge ‘need only make a reasonable estimate of the loss,’ U.S.S.G. § 2B1.1 cmt. n.3(C), that estimate must be based on facts, not conjecture.” Id. at *3.

 Of Note: The Ninth had decided the sentences were erroneous several months before the opinion was ready. To its great credit, way back in October the panel issued an order “vacating the sentences and remanding for expeditious sentencing.” Id. at *1 & n.1. The happy result? Both defendants were sentenced to time served, long before this opinion was even issued. Id. This is an admirable approach (particularly in the era of COVID): would be nice to see these expedited orders more often, in defense sentencing wins.

 How to Use: Note an important caveat: Judge McKeown doesn’t say the government couldn’t prove possession of cards or account numbers – just that it failed to do so here. She works through cases where the government met that burden, where defendants had spreadsheets with credit card numbers, possessed stolen cards, or used account numbers. Id. at *3. Very fact-based stuff, making Gainza an important Guidelines read.                                            

For Further Reading: Who will get the COVID vaccines, and when? In a courageous letter, Oregon Chief D.J. Hernandez argued that criminal defendants should get a shot (pun intended). See article here. 

  California is deciding vaccine schedules now. Incarcerated folks should be in Phase 1b, before the judiciary. See OpEd here.  

 

WC Fields quote from https://www.quotemaster.org/trying+and+succeeding

Image of COVID vaccine from https://www.usatoday.com/story/news/health/2020/12/07/covid-vaccine-pfizer-board-member-disagrees-us-distribution-plan/3860363001/ 

Steven Kalar, Federal Public Defender N.D. Cal. Website at www.ndcalfpd.org

 

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Case o' the Week: Ninth Delivers Intent-ional Reversal -- Alhaggagi and Specific Intent for Terrorism Enhancement in Material Support cases

By simple "cause and effect," one who works with terrorists is necessarily motivated to intimidate or coerce the U.S. government -- right?

Mr. August Gugelmann and Ms. Mary McNamara

Nope: not in the Ninth. 

United States v. Alhaggagi, 2020 WL 6192982 (9th Cir. Oct. 22, 2020), decision available here.

Players: Admirable decision by Judge Milan Smith, joined by District Judge Ezra.

Dissent by Judge Hurwitz.

Huge win after epic district court and appellate battles, for ND Cal CJA Panel attorneys August Gugelmann and Mary McNamara, Swanson & McNamara LLP.  (Note that Mary is also our Northern District CJA Liaison Attorney, as well as the Ninth Circuit's CJA representative to the national Defender Services Advisory Group).

 Facts: Twenty-one-year old Alhaggagi trolled Shia and Sunni users of group chats on the internet, provoking fights between the two. Id. at *2. He bragged about plans to commit terrorist acts, and his “chat persona” made extravagant claims such as like having access to bazookas. Id. 

This chatter drew the attention of the FBI, who arranged a meeting with an undercover agent. The pair discussed bombs, but Alhaggagi got cold feet and cut off communications with the agent. Id. at *3.

  Alhaggagi then began chatting online with ISIS supporters. Id. On two occasions, Alhaggagi agreed to open social media and email accounts for these ISIS members. Id. These accounts were later used by an ISIS propaganda organization to report ISIS attacks in Iraq. Id.

   After Alhaggagi was charged he plead open to, among other counts, attempting to provide material support to a designated foreign terrorist organization, in violation of 18 U.S.C. § 2339B(a)(1). Id. at *4. The PSR put his offense level at 26, with a guideline range of 46-57 months. Id. The government argued for a “terrorism enhancement,” that skyrocketed the offense level to 38: a range of 360-564 months. Id.

  After a two-day evidentiary hearing, the court imposed the terrorism enhancement. Id. at *4.

 Issue(s): “[W]e consider whether the district court abused its discretion in applying the terrorism enhancement in sentencing Alhaggagi.” Id. at *5.

   “The [ ] question is whether Alhaggagi’s conduct satisfies the first prong: whether his attempt to provide material support to a terrorist organization by opening social media accounts was ‘calculated to influence or affect the conduct of government by intimidation or coercion, or to retaliate against government conduct.’” Id. at *7.

 Held: “Alhaggagi contends the district court erred in applying the terrorism enhancement because it centered its analysis on ISIS, not on Alhaggagi’s conduct or mental state. The enhancement, Alhaggagi argues, specifically requires the district court to consider the latter, whereas the offense itself implicates the former. Alhaggagi concludes that because the district court failed to determine whether he knew how the accounts he opened were to be used, it could not find that he specifically intended that the accounts be used to coerce or intimidate a government. We agree.” Id. at *7.

   “The district court did not make sufficient factual findings concerning Alhaggagi's knowledge of how the accounts he opened were to be used. Although Alhaggagi participated in a chatroom replete with posts praising ISIS, denouncing the United States, and planning ‘to kindle strife and chaos’ in the United States through Twitter, there is no evidence that Alhaggagi saw those posts, opened the accounts because of those posts, or had contact with the authors of the posts . . . .” Id. at *9.

  “We therefore conclude that clear and convincing evidence does not establish Alhaggagi opened social media accounts calculating that they would be used to retaliate against government action, and the district court erred by applying the sentencing enhancement.” Id. at *10.

 Of Note: Judge Milan Smith, nominated by President Bush, authors this brave decision reversing a terrorism enhancement. 

  By contrast, Judge Hurwitz (nominated by President Obama) authors a vigorous dissent that would uphold the district judge's imposition of the enhancement. See id. at *11.

The Honorable Judge Andrew Hurtwitz

 

 Alhaggagi again illustrates that politics can be a lousy predicator of a jurist’s particular vote in a criminal case.

How to Use: This great mens rea decision demands that the government meet a high evidentiary burden to show Alhaggagi’s intent. Id. at *6. Turn to Alhaggagi when specific intent is required in a guideline enhancement.

For Further Reading: For more background on this fascinating case, and a report on this high-profile NorCal sentencing hearing, see, California man sentenced to more than 15 years in ISIS support case, available here.

 

  

Image of counsel August Gugelmann and Mary McNamara from https://www.beaumontenterprise.com/crime/article/Oakland-man-who-pleaded-guilty-to-terror-charges-15668554.php#photo-15886933 .

Image of the Honorable Judge Andrew Hurwitz fromhttp://cronkitenewsonline.com/2012/03/arizona-supreme-court-justice-moves-closer-to-federal-judgeship/index.html 

 

Steven Kalar, Federal Public Defender N.D. Cal.  Website at www.ndcalfpd.org

 

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