In the
United States Court of Appeals
For the Seventh Circuit
____________
Nos. 05-1463 & 05-1464
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
LAURA WASZ and BRUCE WASZ,
Defendants-Appellants.
____________
Appeals from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 03 CR 1103—Elaine E. Bucklo, Judge.
____________
ARGUED FEBRUARY 6, 2006—DECIDED JUNE 14, 2006
____________
Before FLAUM, Chief Judge, and ROVNER and SYKES,
Circuit Judges.
ROVNER, Circuit Judge. After selling millions of dollars’
worth of stolen goods on eBay, Laura and Bruce Wasz
pleaded guilty to committing wire fraud in violation of 18
U.S.C. § 1343. The district court ordered them to serve
prison terms of 70 and 83 months, respectively. Both
defendants appeal their sentences, jointly contending that
the district court overestimated the loss resulting from their
criminal conduct and improperly characterized them as
organizers or leaders of the offense. Finding no clear error
in either sentencing determination, we affirm the sen-
tences.
2 Nos. 05-1463 & 05-1464
I.
Laura Wasz and her son Bruce Wasz owned three pawn
shops in the Chicago area. Beginning in September 2001
and continuing until June 2003, the Waszes used those
shops as a front for selling stolen goods on eBay, the
popular Internet auction site. The Waszes obtained
the stolen merchandise from co-defendants Peter
Giannopoulos, Daniel Bonaguidi, Robert Savino, Spyros
Arvanitakis, Jason Wolber, George Lukaszewski, and Kim
Marx—whom the parties aptly label the “thieving co-defen-
dants.” Before they hooked up with the Waszes, the thiev-
ing co-defendants were stealing merchandise from Home
Depot and similar retailers and then returning the items to
the stores for cash refunds, as if they had been legitimately
purchased. Over time, changes in store policies made it
increasingly difficult for the thieves to return the stolen
goods in exchange for cash. A timely introduction to the
Waszes by a mutual acquaintance, however, provided the
thieves with another outlet for the merchandise they were
stealing.
The Waszes and their thieving co-defendants struck up a
mutually profitable arrangement: the thieves would obtain
the merchandise, and the Waszes would fence it. The
thieves would steal items from home improvement
and building supply stores including Home Depot, The
Great Indoors, and Expo Design Center, at locations not
just in the Chicago metropolitan area but also in Colorado,
Kansas, Maryland, Michigan, Minnesota, Missouri, New
Jersey, Ohio, Tennessee, Virginia, and Wisconsin. The
Waszes often identified specific items that they wanted the
thieves to steal, including kitchen appliances, garage door
openers, tankless water heaters, sump pumps, snow
blowers, chainsaws, pressure washers, mosquito extermina-
tors, faucets, and household tools. On occasion, when the
thieves embarked on road trips to victimize out-of-state
retailers, the Waszes would advance them funds to cover
Nos. 05-1463 & 05-1464 3
their expenses. The thieves, in turn, would report by
telephone on the progress of their trips. At the Waszes’
instruction, the thieves would remove price tags and other
identifying marks from the stolen merchandise so that
the provenance of the goods would appear legitimate to
buyers. The Waszes also maintained a trail of falsified
paperwork on the merchandise to make it appear as though
they had obtained it legitimately, and in furtherance of that
effort, they had the thieves complete fictitious invoices on
the goods they stole. By standing agreement, the Waszes
paid the thieves cash for the stolen goods in amounts
between 33 and 40 percent of their retail value.
On receipt of the contraband, Laura and Bruce Wasz
divided the items between themselves, stored the merchan-
dise at their pawn shops and other locations, and then sold
the items over the Internet. Under a number of different
user names, the Waszes offered the stolen goods for sale on
eBay. Both described themselves as “honest” sellers and
concealed from prospective buyers the fact that the mer-
chandise was stolen. Goods were frequently described as
“new,” “brand new,” and “new in box”. The items typically
were offered for sale at prices substantially below their
usual retail value: the Federal Bureau of Investigation
(“FBI”) would later prepare an analysis indicating that the
Waszes sold their most popular lines of stolen goods at
prices averaging 62 percent of the goods’ retail value.
Needless to say, buyers snapped up the goods, unaware that
they were purchasing stolen items. Over the time span of
this scheme, the Waszes completed auctions of more than
13,000 items at sale prices totaling more than $2.3 million.
The government was tipped off to the scheme when a
manufacturer of sump pumps complained to the FBI that
its products were being offered for sale on eBay in “new in
box” condition at less than their wholesale value and
without the manufacturer’s permission. Investigation led
the government to some of the thieving co-defendants, who
4 Nos. 05-1463 & 05-1464
agreed to cooperate and in some cases engaged in electroni-
cally monitored conversations with the Waszes.
The Waszes ultimately were charged in a multi-count
indictment with engaging in both mail and wire fraud in
violation of 18 U.S.C. §§ 1341 and 1343, conspiring with
their nine co-defendants to transport stolen goods in and
receive stolen goods from interstate commerce in violation
of 18 U.S.C. §§ 371 and 2315, and possessing stolen goods
that had moved in interstate commerce in violation of 18
U.S.C. § 659. Both defendants pleaded guilty to Count One,
which charged them with wire fraud. The thrust of that
count and the companion charges of mail and wire fraud
was that the Waszes had defrauded the eBay customers
who had purchased stolen merchandise from them by
misrepresenting themselves as honest sellers, affirmatively
concealing the stolen nature of the goods they were offering
for sale, and falsely representing and creating the false
impression that they had legitimate possession of such
merchandise and could lawfully transfer ownership of the
goods to the buyers. (Like all eBay buyers and sellers, the
Waszes had accepted the terms of eBay’s User Agreement,
which in relevant part prohibits the sale of stolen merchan-
dise.1) The indictment identified various mail and wire
communications executed in furtherance of this fraudulent
scheme. The wire communication underlying Count One
was an e-mail sent from the Chicago area to San Jose,
California (where eBay has its headquarters) establishing
one of the Waszes’ eBay accounts. R.1 at 8.
Pursuant to the United States Sentencing Guidelines, the
advisory sentencing ranges for both Bruce and Laura Wasz
1
Concretely, individuals who bought stolen items from the
Waszes were at a disadvantage in the sense that warranties and
other consumer protections on the items were in some cases
unavailable because the items had been stolen.
Nos. 05-1463 & 05-1464 5
turned in large measure on the loss attributable to their
crime. Section 2B1.1 of the Guidelines, which applies to
offenses involving stolen property, specifies a base offense
level of 6 for the Waszes’ offense, but it also mandates an
increase to that offense level commensurate with the extent
of the loss. See U.S.S.G. § 2B1.1(b)(1) (Nov. 2001).2 In her
pre-sentence report (“PSRs”) for each of the Waszes, the
probation officer estimated that the loss in this case was
between $1 million and $2.5 million dollars, an amount that
called for a 16-level increase in the base offense level. See
§ 2B1.1(b)(1)(I). The probation officer’s estimate of the loss
tracked the estimate that the government had set forth in
its version of the offense. Although the proceeds of the
Waszes’ eBay sales exceeded $2 million, the government
conceded that not all of the goods sold by the Waszes were
stolen. However, the Waszes had sold certain product lines
on a frequent basis, and these corresponded with the types
of items their thieving co-defendants had regularly stolen
from retailers. A preliminary government analysis had
identified ten such product lines. The Waszes had sold over
2,000 items from these lines, and sales of products in these
lines had yielded $641,782.62 in gross proceeds to the
Waszes. The retail value of these items totaled an esti-
mated $1,029,907.06. R. 232, Government’s Official Version
of the Offense at 15 & Ex. 2.3 The probation officer agreed
2
The 2001 version of the Guidelines was used in this case
pursuant to the Probation Officer’s determination that the earlier
version was more beneficial to the defendants than the ver-
sion in effect at the time of their sentencing. R. 230 at 10, R. 232
at 10; see U.S.S.G. § 1B1.11(b)(1). Therefore, all references to
the Guidelines in this opinion are to the 2001 version of the
Guidelines.
3
Prior to sentencing, the government updated that analysis
to include the fourteen most popular stolen product lines that
(continued...)
6 Nos. 05-1463 & 05-1464
with the government that this analysis was adequate to
establish that the loss exceeded $1 million. R. 230 at 11-12;
R. 232 at 11-12.
The defendants contended that the probation officer’s loss
calculation was too high. With the support of a loss analysis
prepared by a forensic accounting firm that they had
engaged, the Waszes argued that the actual loss fell
between $400,000 and $1 million, an amount that would
have called for a more modest increase of 14 levels to the
base offense level. See § 2B1.1(b)(1)(H). The defendants
suggested that the loss could be calculated from two
different perspectives: the gain realized by the Waszes on
the sale of the stolen goods or the actual loss suffered by the
retailers from the theft of their merchandise.
Looking at the loss in terms of what the Waszes gained
from their criminal conduct, the defendants proposed that
the loss was equal to the net revenue that the Waszes
realized on the sales of the stolen merchandise. The Waszes’
calculation of this amount began with an effort to cull from
the their total eBay sales during the relevant time period
the revenue realized on items that were not available for
sale at the stores targeted by the Waszes’ thieving co-
defendants and thus (presumably) had not been stolen.
These include items such as cars, used goods, jewelry,
clothing, computers, office supplies, health and beauty
items, and eyeglasses. Removing those items yielded
corrected sales figures of $1,273,237 for Laura Wasz and
$991,067 for Bruce Wasz. R. 205, Hopewell Report at 5-6. In
the view of the defendants’ consultants, those figures then
3
(...continued)
the Waszes offered for sale via eBay. That analysis indicated
that the Waszes sold more than 6,500 items from these lines for
amounts totaling over $1.4 million. The retail value of these items
totaled in excess of $2.2 million. R. 203 Gov. Ex. 5.
Nos. 05-1463 & 05-1464 7
had to be reduced further to reflect the cost of generating
that revenue:
[T]otal transactions—or using the accounting
term—gross revenue, is not “gain”, as the concept of
gain includes not only revenue but the offset of revenue
by expenses. The Wasz’s are actually business owners.
They operate legitimate pawn and second hand dealer
businesses. As such, in determination of gain one must
subtract from gross revenue the cost of generating that
revenue. From the business records of the Wasz’s, the
consultants have determined that the cost for Laura to
generate the $1,351,893 in total [eBay] transactions
was $894,676 or 66%. The cost for Bruce to generate the
$1,307,987 i[n] total transactions was $892,724 or 68%.
Applying those percentages to the $1,273,237 and
$991,067 in [corrected] sales subject to the indictment,
the cost of generating those sales was $842,622 for
Laura and $676,420 for Bruce.
R. 205, Hopewell Report at 7. Subtracting those costs from
the corrected sales figures for each defendant yielded net
revenue figures of $430,615 for Laura Wasz and $314,647
for Bruce Wasz. Id. Combining the two produced a collective
net gain of $745,262 for both defendants. Id.
Looking at the loss from the perspective of the retailer
victims, the defendants proposed that the loss should be
measured not by the total retail value of the items stolen,
but rather the profit the retailers lost as a result of their
inability to sell the stolen items. That would be the gross
profit the retailers would have realized on the sale of the
goods, an amount equal to the retail price of the items less
the retailers’ cost of acquiring the goods for sale. (Overhead
and other fixed administrative costs would not be deducted,
as the retailers would have incurred these costs regardless
of the lost sales.) Id. at 6. Looking to data on the gross
profits of home improvement and building supply retailers,
8 Nos. 05-1463 & 05-1464
the Waszes’ consultants had identified 31 percent as a
reasonable estimate of the percentage of gross profit that
such retailers derive from the sale of their goods. Using that
percentage as the measure of the retailers’ loss, the defen-
dants contended that the retailers had lost a total of
$701,934.17. Id. at 7.4
4
There is an apparent error in the consultants’ calculation of
the retailers’ lost profit. Rather than applying the 31-percent
figure to the gross revenue that the retailers would have realized
on the sale of the stolen goods by selling them at typical retail
prices, the consultants instead applied that percentage to the
revenue that Bruce and Laura Wasz had realized from the sale of
the stolen merchandise. See Hopewell Report at 7 (applying the
31-percent figure to defendants’ corrected total eBay sales). Yet,
the Waszes were not selling the stolen items on eBay at their
usual retail prices but rather at substantial discounts: as we noted
above, an FBI analysis indicated the Waszes sold items from the
most popular lines of goods at prices averaging of 62% of their
retail prices. Moreover, there is no reason to believe that a fence
realizes the same percentage of gross profit on the sale of stolen
merchandise as a retailer does in making a legitimate sale. The
31-percent figure should have been applied to the sum total of the
retail prices of the stolen goods.
As it turns out, the error does not make a dramatic difference
in the relevant loss figure in this case. As we have mentioned, the
government in an effort to quantify the loss prepared a summary
identifying certain product lines that the Waszes sold on eBay
with some regularity and that their thieving co-defendants
admitted having stolen. According to an updated summary
submitted at sentencing, the retail value of these items alone
totaled just over $2.2 million. See R. 203, Gov. Ex. 5; see n.3,
supra. The government cited that total as a reasonable albeit
conservative estimate of the loss. Applying the 31-percent figure
to that amount, rather than to the Waszes’ corrected total eBay
sales would yield a total of over $682,000. That amount still falls
within the loss range of $400,000 to $1 million that the Waszes
(continued...)
Nos. 05-1463 & 05-1464 9
At sentencing, the district court found that the loss was
more than $1 million but no greater than $2.5 million. The
court agreed with the government that the loss should be
measured using the typical retail value of the stolen
merchandise sold by the Waszes. R. 251-2 at 19-20. The
court expressly rejected the defendants’ contention that the
loss ought to be limited instead to the gross profit that the
retailers would have realized on the stolen goods. “[A]s I
understand it, the store lost an item . . ., so the store
got nothing, so it’s a total loss to [the store], both its profit
and its cost. So . . . it is whatever the retail value would be,
I think.” Id. at 4; see also id. at 21. The court added that the
thefts likely imposed additional costs on the retailers that
they would not have incurred otherwise. Id. at 8. The court
likewise rejected the Waszes’ alternative contention that
the loss should be measured using the proceeds realized on
the defendants’ sales of the stolen items and then deducting
from those proceeds the costs the Waszes had incurred to
generate the sales. The court noted that the Waszes were
selling the goods at prices well below their typical retail
value. For that reason, an approach based on the proceeds
of those illegitimate sales was not an appropriate way to
calculate the retailers’ loss. Id. at 18-19, 21. Ultimately, the
court formally adopted the probation officer’s calculation of
the loss. Id. at 21.
The court also found that Bruce and Laura Wasz both
qualified as organizers or leaders of the offense and in-
creased their offense levels by four levels based on their
aggravating role. U.S.S.G. § 3B1.1(a). Here, too, the court
adopted the probation officer’s analysis. R. 251-2 at 33. The
probation officer reasoned that the Waszes had played a
leading role in that they owned the pawn shops used as
4
(...continued)
contended was appropriate.
10 Nos. 05-1463 & 05-1464
fronts for the fencing operation, identified products they
wished their co-defendants to steal, advanced funds to their
co-defendants to cover the costs of their road trips, directed
their co-defendants to complete false invoices in order to
hide the stolen nature of the merchandise, and benefitted
financially from the scheme. R. 230 at 13-14; R. 232 at 13-
14.
These and other adjustments resulted in total adjusted
offense levels of 27 for each defendant. Coupled with a
criminal history category of I, that offense level produced an
advisory sentencing range of 70 to 87 months for Laura
Wasz. Bruce Wasz’s more extensive record of prior offenses
placed him in a criminal history category of IV, which
yielded a sentencing range of 100 to 125 months. The
district court ordered Laura Wasz imprisoned for 70
months—a term at the bottom of the advisory range. The
court ordered Bruce Wasz to serve 83 months in prison—a
term that was below the advisory range but, in the court’s
view, more in line with the term it had imposed on his
mother. R. 251-2 at 66.
II.
Pursuant to the Supreme Court’s decision in United
States v. Booker, 543 U.S. 220, 125 S. Ct. 738 (2005), the
district court was not obligated to impose a sentence within
the range called for by the Sentencing Guidelines and,
indeed, did not do so in Bruce Wasz’s case. Nonetheless, the
court was required to and did consult the advisory Guide-
lines range in selecting an appropriate sentence. E.g.,
United States v. Laufle, 433 F.3d 981, 984-85 (7th Cir.
2006). For that purpose it was of course necessary for the
court to accurately calculate the sentencing range called for
by the Guidelines, “so that that calculation c[ould] serve as
a meaningful guide in the district court’s imposition of a
Nos. 05-1463 & 05-1464 11
final sentence.” United States v. Baretz, 411 F.3d 867, 877
(7th Cir. 2005). Our task on appeal is to determine whether
the district court’s calculations were correct. E.g., Laufle,
433 F.3d at 984-85. The Waszes contend that the district
court erred in holding them to account for a loss amount
between $1 million and $2.5 million and in characterizing
them as organizers or leaders in the scheme to steal goods
from retailers and fence those goods on the Internet.
A.
We begin our review with the loss calculation, which had
the most pronounced impact on the defendants’s sentencing
level. To the extent that calculation turns on factual
determinations, we review it for clear error. E.g., United
States v. Schaefer, 384 F.3d 326, 331 (7th Cir. 2004).
However, threshold questions concerning the meaning of
“loss” and the methodology to be used in measuring that
loss present questions of law that call for de novo review.
United States v. Sensmeier, 361 F.3d 982, 986 (7th Cir.
2004); United States v. Walker, 234 F.3d 780, 783 (1st Cir.
2000).
We should make one point clear at the outset: the Waszes
each may be held to account for the total value of the
merchandise stolen by their thieving co-defendants and sold
by either Bruce or Laura Wasz on eBay. There is no dispute
that the steal-to-sell venture among the Waszes and their
thieving co-defendants qualifies as a jointly undertaken
criminal activity for purposes of the loss calculation. See
U.S.S.G. § 1B1.3(a)(1)(B). The thieves were stealing on the
Waszes’ behalf, customizing their thefts to the Waszes’
preference for particular types of goods and receiving by
standing arrangement agreed-upon percentages of the retail
value of those goods. And although the Waszes themselves
maintained separate eBay accounts and to some degree
auctioned off the merchandise independently of one an-
other, there is no doubt that each was aware of the other’s
12 Nos. 05-1463 & 05-1464
sales activity. The record indicates that the Waszes divided
the stolen merchandise between themselves; they some-
times instructed the thieves to divert goods from one Wasz
to the other; they sold the same types of items on eBay,
often under identical descriptions; and Laura Wasz admit-
ted that she and her employee, co-defendant Michael
Hockins, monitored Bruce’s sales. Without doubt, the
aggregate value of the stolen merchandise that the Waszes
received and then sold on eBay was foreseeable to them
both. What is disputed by the Waszes is how to calculate
the total worth of the stolen merchandise that they fenced.
We may quickly dispose of the Waszes’ threshold sug-
gestion that the district court did not make adequate
findings to support its determination that the loss resulting
from their offense was within the range of $1 million to $2.5
million. The district court was presented with a fully
developed record as to the parties’ competing calculations
of the loss amount. The district court’s remarks at sentenc-
ing make patently clear not only that the court rejected the
defendants’ proposed loss calculation (see R. 251-2 at 4, 8,
16, 18-20), but that the court expressly adopted the findings
of the PSR, which in relevant part tracked the government’s
loss calculation (see id. at 3, 21). The court’s findings are
more than adequate. See, e.g., United States v. Sykes, 357
F.3d 672, 674 (7th Cir. 2004).
Echoing a point they made below, the defendants also
suggest that the district court’s loss calculation may
have been based on inaccurate data. As noted, the Waszes
auctioned more than 13,000 items on eBay during the time
frame covered by the indictment. It is common ground
among the parties that not all of these sales are within the
scope of the indictment. Not all of the items the Waszes sold
were stolen, for example, and that fact no doubt helps to
explain why a number of the items that the Waszes auc-
tioned off on eBay (e.g., cars, jewelry, clothing, and comput-
ers) were not the types of goods offered for sale by the home
Nos. 05-1463 & 05-1464 13
improvement retailers victimized by the Waszes’ thieving
co-defendants.
But any uncertainty as to the exact number and iden-
tity of the items that the Waszes sold pursuant to the
charged scheme turns out to be immaterial to the dispute
over the loss calculation. As noted above, in an effort to
make a reasonable estimate of the loss attributable to the
scheme, the government in its version of the offense had
identified ten of the most frequently sold product lines from
the list of the defendants’ eBay sales that both Laura and
Bruce admitted fencing during the time frame of the
charged scheme and that corresponded with the types of
items that the thieving co-defendants acknowledged having
stolen and sold to the Waszes. R. 232, Government’s Official
Version of the Offense Ex. 2. Prior to sentencing, the
government updated and expanded this list to include a
total of fourteen product lines. These lines included
Aquastar tankless water heaters; Genie garage door
openers; Kohler, Mico, and Moen faucets; Basement
Watchdog sump pumps; and Insinkerator garbage dispos-
als. Sales of these product lines alone totaled over 6,500
items (roughly one-half of the defendants’ total eBay
auctions) and generated some $1.4 million in revenue to the
Waszes. Using the typical prices at which the victimized
retailers normally sold these items, the government put the
total retail value of these goods at just over $2.2 million,
and it cited this figure as a conservative but reasonable
estimate of the loss. R. 203 at 14-15 & Gov. Ex. 5. The
district judge explicitly agreed that this was a conservative
estimate of the loss. R. 251-2 at 20. Notably, the defendants
offered no reason why confining the loss estimate to these
fourteen categories of stolen goods was not a reasonable
approach to estimating the loss. For their part, as we
discussed above, the defendants and their consultants
parsed the list of total eBay auctions by the Waszes and
eliminated the types of items that they believed were not
14 Nos. 05-1463 & 05-1464
sold pursuant to the charged scheme. With those items
eliminated, the total eBay sales by the Waszes amounted to
$2,264,303.76. R. 205, Hopewell Report at 6. Again we point
out that this total reflects the prices actually charged by the
Waszes rather than the prices that would have been
charged by the retailers. If this figure were adjusted to
account for the fact that the Waszes were selling the stolen
merchandise at prices averaging 62 percent of retail, the
total retail value of the items stolen would amount to over
$3.5 million. What these varying calculations make clear is
that the merit of the Waszes’ appeal turns not on which
particular items are included in the loss calculation, but
rather on how those items are valued.
The material question insofar as the loss calculation
in this case is concerned is whether the items admittedly
sold by the Waszes should be valued at their retail or a
lesser value. “Loss” is defined as either the actual or
intended loss, whichever is greater. § 2B1.1, comment.
(n.2(A)). The parties agree that actual loss is the appropri-
ate benchmark in this case. “Actual loss” is defined as “the
reasonably foreseeable pecuniary harm that resulted from
the offense.” Id. comment. (n.2(A)(i)). The loss need not be
quantified with exacting precision; “a reasonable estimate”
will suffice. Id., comment. (n.2(C)); see, e.g., United States v.
Spano, 421 F.3d 599, 608 (7th Cir. 2005), cert. denied, 126
S.Ct. 1084, 1098 (2006). Where stolen goods are concerned,
“the fair market value of the property unlawfully taken” is
among the factors that the court should consider in placing
a value on the loss. § 2B1.1, comment. (n.2(C)(i)).
The district court was on firm ground in using the retail
value of the stolen merchandise fenced by the Waszes as the
benchmark in estimating the loss. Other courts have
recognized that when the stolen merchandise at issue has
been taken from retailers, the price at which the retailers
would have sold that merchandise serves as a reasonable
estimate of the loss. E.g., United States v. Carrington, 96
F.3d 1, 6 (1st Cir. 1996); United States v. Lopez, 64 F.3d
Nos. 05-1463 & 05-1464 15
1425, 1427 (9th Cir. 1995); United States v. Williams, 50
F.3d 863, 864 (10th Cir. 1995); United States v. Colletti, 984
F.2d 1339, 1345 (3d Cir. 1992); cf. United States v. Eyoum,
84 F.3d 1004, 1007-08 (7th Cir. 1996) (approving use of
retail value vis-à-vis illegally imported wildlife for purposes
of Guidelines § 2Q2.1(b)(3)(A)). Contrast United States v.
Machado, 333 F.3d 1225, 1228 (11th Cir. 2003) (appropriate
valuation depends on context; error to use retail value
where goods were stolen from wholesalers and were to be
resold wholesale); United States v. Hardy, 289 F.3d 608,
613-14 (9th Cir. 2002) (same); United States v. Warshawsky,
20 F.3d 204, 213-14 (6th Cir. 1994) (same). In this case, the
merchandise stolen was ready for sale and, in fact, had been
offered for sale by the retailers; the Waszes’ co-defendants
literally took the merchandise off the retailers’ shelves and
out of the stores, bypassing the cashiers on their way out.
The retailers would have already incurred virtually all of
the costs associated with the sales of these items and were
simply waiting to ring up the sales. In that regard, there is
no dispute between the parties as to the prices at which the
retailers would have sold the merchandise to willing
customers. Under these circumstances, it was entirely
reasonable for the district court to use the total retail value
of the stolen items as a reasonable estimate of the loss. If
anything, the defendants may have benefitted from the fact
that the government relied on a conservative list of which
items sold on eBay by the defendants were within the scope
of the scheme.
We reject the defendants’ suggestion that the loss instead
be measured in terms of the gain that the Waszes realized
on the sales of the stolen goods. See R. 205, Hopewell
Report at 7. This approach would begin with the prices at
which the Waszes actually sold the goods on eBay (prices
which, as we have noted, were substantially below the
usual retail prices of the goods) and deduct the costs
of generating those sales (costs that presumably would
16 Nos. 05-1463 & 05-1464
include the amounts that the Waszes paid their co-defen-
dants for the goods). See id. Although this approach might
accurately measure the amount the Waszes pocketed from
their fraudulent activity, it does not constitute a reasonable
estimate of the loss for a number of reasons. First, as the
government correctly points out, the defendants’ gain does
not serve as an accurate measure of the loss where the fair
market value of the stolen goods can be determined, as it
can be in this case. See Guidelines § 2B1.1, comment.
(n.3(B)); see also United States v. Colello, 16 F.3d 193, 197
(7th Cir. 1994) (proper inquiry focuses on victim’s loss
rather than defendant’s personal gain). Second, the Waszes
elected to sell the stolen items at substantially discounted
prices; the fact that the items were stolen may well have
factored into that decision. Third, the defendants were not
operating a legitimate business but were dealing in stolen
merchandise. The costs they incurred in obtaining and
auctioning the goods, and the net amounts they realized on
the sales, do not necessarily correspond with the harm
inflicted on the retailers from whom the goods were stolen.
See Spano, 421 F.3d at 607 (“The objective in calculating
the loss inflicted by a crime is to determine how much
worse off the victim was made by a crime, and so the costs
incurred by the criminal to commit the crime are irrele-
vant.”) (citation omitted) (emphasis in original).
The defendants alternatively have proposed that the
loss be measured by the gross profit that the retailer-
victims would have realized on the sale of the stolen items,
but we reject this approach as well. The premise behind this
theory is that the retailers would have incurred certain
costs in selling the stolen items that they did not incur
when the items were stolen. Given the facts, we have some
doubt as to the accuracy of this premise. The goods in
question were stolen off the store shelves, so to speak.
Consequently, it seems likely that the retailers would
have already incurred many if not most of the costs that the
Nos. 05-1463 & 05-1464 17
defendants propose to deduct from the loss calculation. In
all likelihood, for example, the retailers would have already
paid their suppliers for the items, and they would have
already incurred the costs of stocking, distributing, pricing,
advertising, and displaying the items for sale. The only cost
that the retailers did not incur by virtue of the theft was
the cost (if any) of completing actual sales transactions.
Thus, using the gross profit strikes us as an inadequate
measure of the loss to the extent that it excludes costs that
the retailers already had incurred. That point aside, this
approach can also be criticized (as the district court did)
because it neglects to take into account costs to the retailers
associated with the defendants’ stealing. R. 251-2 at 8. Even
assuming, for example, that the retailers were insured for
theft, it could well be that the defendants’ thievery resulted
in higher insurance premiums. The retailers may have paid
higher prices to obtain replacements for the goods stolen
from their stores. And they may have also lost sales due to
depleted inventories as well as the availability of the stolen
goods on eBay at discounted prices.
For all of these reasons, we find no clear error in the
district court’s decision to value the loss associated with the
Waszes’ crime at between $1 million and $2.5 million. As
that figure corresponds to a conservative estimate of the
retail value of the stolen merchandise that the Waszes sold
on eBay, it serves as a reasonable measure of the loss.
B.
The Waszes also challenge the district court’s finding that
they played an aggravating role in the offense for purposes
of Guidelines section 3B1.1. As relevant here, the guideline
specifies a four-level enhancement “[i]f the defendant was
an organizer or leader of a criminal activity that involved
five or more participants or was otherwise extensive.”
§ 3B1.1(a). The purpose of the aggravating-role enhance-
18 Nos. 05-1463 & 05-1464
ment is to penalize more heavily those defendants who bear
greater responsibility for crimes involving many individu-
als, both to reflect their greater degree of culpability and in
recognition that such individuals are likely to profit more
from the crime and pose a greater danger to the community
and risk of recidivism. See § 3B1.1, comment. (background).
Whether the defendant qualifies as an organizer or leader
for purposes of this guideline is a factual determination.
There is no dispute here that the underlying criminal
activity involved five or more individuals or was otherwise
extensive. The Waszes instead contend that they are not
properly characterized as organizers or leaders of the
criminal activity. Factors that bear on that assessment
include: the exercise of decisionmaking authority, the
nature of the defendant’s participation in the offense, the
recruitment of accomplices, a claimed right to a larger share
of the fruits of the crime, the degree of participation in the
planning or organization of the offense, the nature and
scope of the illegal activity, and the degree of control or
authority exercised over other participants. § 3B1.1,
comment. (n.4). No one of these factors is considered a
prerequisite to the enhancement, and, at the same time, the
factors are not necessarily entitled to equal weight. E.g.,
United States v. Matthews, 222 F.3d 305, 307 (7th Cir.
2000). And although the nature and purposes of the en-
hancement certainly require the defendant to have played
a leading role in the offense, he need not literally have been
the boss of his cohorts in order to qualify for the enhance-
ment, for a leader can influence others through indirect as
well as direct means:
A finding that the defendant functioned as an organizer
or leader does not necessarily mean that he directly
controlled other individuals. Rather, the defendant
must have exercised some degree of control over others
involved in the commission of the offense or he must
have been responsible for organizing others for the
Nos. 05-1463 & 05-1464 19
purpose of carrying out the crime. Efforts to marshall
other individuals for the purpose of executing the crime
thus satisfy 3B1.1(a).
United States v. Carson, 9 F.3d 576, 585 (7th Cir. 1993)
(internal quotation marks and citations omitted) (emphasis
added); see also United States v. Blaylock, 413 F.3d 616, 621
(7th Cir. 2005); United States v. Hanhardt, 361 F.3d 382,
393-94 (7th Cir. 2004), cert. granted & j. vacated on other
grounds, 543 U.S. 1097, 125 S. Ct. 994 (2005); United States
v. Fones, 51 F.3d 663, 670 n.5 (7th Cir. 1995); United States
v. Mustread, 42 F.3d 1097, 1104 (7th Cir. 1994); United
States v. Guyton, 36 F.3d 655, 662 (7th Cir. 1994). Because
the district court’s assessment of the defendant’s role in the
offense constitutes a factual determination, we review it for
clear error. E.g., Blaylock, 413 F.3d at 618.
The Waszes characterize their relationship with their
thieving co-defendants as a symbiotic joint venture for
which they bear equal but no greater responsibility. The
Waszes emphasize that long before they were introduced to
their thieving co-defendants, those co-defendants were in
the business of stealing goods from home improvement
retailers, that they (the Waszes) simply functioned as an
outlet for the stolen merchandise, and that to the extent
their co-defendants took any direction from them (e.g., as to
the types of goods they wanted stolen), they did so as any
supplier eager to please his buyer would. The government,
on the other hand, sees the Waszes as being more culpable
than their co-defendants because (a) they owned and
managed the pawn shops, which served as a front for the
fencing operation; and (b) they organized their co-defen-
dants in the sense that they told the thieves what to steal,
occasionally fronted money to cover the costs of their out-of-
state trips, and instructed the thieves to remove price tags
and complete false invoices to help conceal the stolen
nature of the goods. On review of the record, we conclude
20 Nos. 05-1463 & 05-1464
that the district court was not clearly erroneous in ascribing
an organizing or leadership role to the Waszes.5
There is, we should clarify at the outset, no issue as to
whether one of the Waszes but not the other qualifies for
the enhancement. Their roles in the offense were similar if
not identical: both were involved in the procurement of
stolen merchandise from their co-defendants, both re-
ceived merchandise from their co-defendants (which they
divided between themselves), both took steps to maintain a
fictitious paper trail to conceal the stolen nature of the
merchandise, and both auctioned off the stolen merchandise
on eBay. The only material distinction between the two was
that Laura Wasz had an employee, co-defendant Hockins,
who worked at a pawn shop that she owned and who, at her
behest, regularly engaged in a number of activities in
furtherance of the charged scheme. Her control of Hockins’
activities certainly lends additional support to the notion
5
The government represented below, and has repeated the
assertion here, that the Waszes recruited the thieving co-defen-
dants to join the steal-to-sell scheme. If true, that would support
the finding that the Waszes were leaders or organizers. See
§ 3B1.1, comment. (n.4) (citing “the recruitment of accomplices” as
an indicum of leadership); see also, e.g., Blaylock, 413 F.3d at 621
(citing the defendant’s recruitment of accomplices, inter alia, as
evidence that she was the “mastermind” of the crime). However,
the Waszes have disputed the notion that they recruited anyone.
They insist that they were introduced to the thieving co-defen-
dants, who were already in the business of stealing, and came to
a mutually satisfactory agreement as to how the Waszes might
help their co-defendants dispose of the stolen goods. The district
court does not appear to have rendered a finding on this particular
point. And because we find that other circumstances support the
district court’s determination that the Waszes were leaders or
organizers, we see no need to address the subject of recruitment.
Nos. 05-1463 & 05-1464 21
that she acted as an organizer or leader in this scheme.6
But the remainder of our analysis shall focus on the
evidence supporting the enhancement for both defendants.
First, the offense to which the Waszes pleaded guilty
was wire fraud, and the underlying fraud was the passing
off of stolen goods as legitimate to unsuspecting eBay
customers. As the purveyors of the merchandise, the
Waszes were, of course, at the forefront of that fraud. Their
co-defendants had nothing to do with the eBay sales: by
standing arrangements with their co-defendants, the
Waszes typically paid cash for the stolen goods delivered to
them in amounts corresponding to a set percentage (33 to
40 percent) of the retail value of the goods; how and at what
prices the Waszes sold the goods was entirely up to them.
Second, vis-à-vis their thieving co-defendants, the Waszes
provided an outlet for the stolen merchandise that the
thieves sorely needed. Due to changes in the merchandise
return policies of their retailer victims, the thieving co-
defendants were finding it increasingly difficult to
steal goods and then return the items to the stores for cash
refunds. As the owners of pawn shops, the Waszes had a
ready-made cover for the handling of stolen merchandise.
6
Arguably, Laura Wasz’s control over a single participant in the
scheme would suffice to qualify her for the enhancement. The
commentary to section 3B1.1 states that “the defendant must
have been the organizer, leader, manager or supervisor of one or
more other participants.” U.S.S.G. § 3B1.1, comment. (n.2)
(emphasis added). Thus, as we recognized in Blaylock, although
the crime must have involved at least five participants or have
been otherwise extensive in order for the organizer/leader
enhancement to apply, the defendant need not have controlled
(directly or indirectly) more than one of the other participants.
413 F.3d at 619-21. In any event, for the reasons we discuss below,
the record supports a finding that the Waszes played a leadership
role as to all of their co-defendants.
22 Nos. 05-1463 & 05-1464
By agreeing to buy the stolen merchandise from the thieves
and sell it on eBay, the Waszes enabled their co-defendants
to circumvent the problem of store returns, supplied them
with a guaranteed income on their thefts, and in these ways
enabled their co-defendants to continue stealing and to do
so on a relatively large-scale basis. Thus, even as to the
thieving aspect of the scheme, the Waszes played a key
facilitating role.
Third, one may reasonably infer from the evidence that
the Waszes to a material degree did direct the efforts of
their co-defendants. The Waszes frequently specified what
items they wanted their co-defendants to steal, on occasion
naming the brands, model numbers, and quantities of the
items they wanted. When their co-defendants embarked
on interstate road trips to steal merchandise, the Waszes
occasionally gave them cash to help defray the expenses of
the expeditions. While on such trips, the co-defendants
would check in with the Waszes by telephone to apprise
them of their progress. Finally, the Waszes instructed their
co-defendants to remove the price tags and other identifying
marks from the stolen merchandise and to complete
fictitious invoices for the merchandise, two steps that aided
the Waszes’ effort to disguise the illicit source of the goods
they were selling on eBay.
Collectively, these facts permit the inference that the
Waszes bear a greater degree of responsibility for the
overall effort to steal merchandise from retailers and sell it
to unsuspecting buyers on eBay than do their thieving co-
defendants. Not only were the Waszes solely responsible for
the planning and execution of the sales end of the scheme,
but they gave material direction to their co-defendants with
respect to the thieving end of the scheme; the stolen
merchandise did not simply arrive at their doorstep on a
take-it-or-leave-it basis. We appreciate the Waszes’ point
that it may not be at all unusual for a thief to try to
accommodate his fence by stealing the types of goods that
Nos. 05-1463 & 05-1464 23
the fence has a market for, but the Waszes’ direction of
their co-defendants went beyond merely supplying their co-
defendants with a wish list: they placed rather detailed
orders for desired merchandise, had standing arrangements
to pay specified amounts for stolen merchandise, helped to
fund their co-defendants’ theft expeditions, were kept
apprised of those road trips, and solicited the thieves’
cooperation in their own efforts to create falsified paper-
work for the merchandise. It is reasonable, in short, to view
the relationship between the Waszes and their co-defen-
dants not simply as a symbiotic and mutually profitable
exchange between two autonomous groups (thieves and
fences) but rather as a unitary scheme (steal to sell) with
the Waszes at the helm. Their actions reflect the exercise of
planning and decisionmaking authority, a culpable involve-
ment in all aspects of the crime, and a guiding influence
over the other participants in the offense.
III.
Finding no clear error in either the loss calculation or the
finding that Bruce and Laura Wasz were organizers or
leaders of the criminal offense to which they pleaded guilty,
we AFFIRM their sentences.
24 Nos. 05-1463 & 05-1464
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—6-14-06