In the
United States Court of Appeals
For the Seventh Circuit
No. 11-3074
U NITED S TATES OF A MERICA,
Plaintiff-Appellee,
v.
A BBAS G HADDAR,
Defendant-Appellant.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 09 CR 999—Samuel Der-Yeghiayan, Judge.
A RGUED A PRIL 25, 2012—D ECIDED M AY 8, 2012
Before P OSNER, S YKES, and T INDER, Circuit Judges.
P ER C URIAM. Abbas Ghaddar failed to report to
federal and state tax authorities more than $60 million
in currency received by his business and funneled part
of this money into foreign bank accounts. He pleaded
guilty to mail fraud and impeding the administration
of the Internal Revenue Code. At sentencing the
district court added 2 offense levels for using “sophisti-
cated means” in committing these crimes. See U.S.S.G.
2 No. 11-3074
§ 2B1.1(b)(10)(C) (formerly denominated as subsection
(b)(9)(C)). Ghaddar challenges this increase. Because
the record supports the district court’s finding of sophis-
ticated means, we affirm the judgment.
I. Background
Ghaddar was the sole shareholder of Tobacco House,
an Illinois corporation that operates tobacco stores in
the Chicago suburbs. Currency sales accounted for
roughly half of the revenue from these stores, and
Ghaddar directed his employees to separate currency
receipts from credit-card and check receipts. He used
currency to pay employees and tobacco suppliers and
failed to report the currency receipts on federal and state
tax forms from 2002 to 2009. He also channeled a sub-
stantial portion of the currency to bank accounts he
controlled in Lebanon, his homeland, where he owns
property and maintains a residence. He accomplished
this overseas transfer by carrying currency or cashier’s
checks with him when he traveled, wiring money from
noncorporate accounts he controlled at stateside banks,
and shifting money into the accounts of relatives and
associates, who then wired it to his Lebanese accounts.
In addition, on at least three occasions, Ghaddar di-
rected his accountant to make multiple deposits of cur-
rency in amounts around $9,000 and then transfer
lump sums to an account in the Channel Islands (British
Crown Dependencies off the French Coast of Nor-
mandy). The account was under Ghaddar’s control but
not in his name; the name of the account holder is not
disclosed in the record.
No. 11-3074 3
Ghaddar pleaded guilty to mail fraud, 18 U.S.C.
§ 1341, and impeding the administration of the Internal
Revenue Code, 26 U.S.C. § 7212(a). At sentencing he
objected to the probation officer’s recommendation to
apply the upward adjustment for using sophisticated
means. The Chapter 2 guideline for each count of convic-
tion calls for an upward adjustment of 2 levels for
using sophisticated means. U.S.S.G. §§ 2B1.1(b)(10)(C),
2T1.1(b)(2). The two adjustments are interpreted consis-
tently. See United States v. Allan, 513 F.3d 712, 716 (7th Cir.
2008). Both provisions apply to “especially complex or
especially intricate offense conduct pertaining to the
execution or concealment of an offense,” and both guide-
lines include an application note identifying, as ex-
amples of conduct ordinarily warranting the increase,
the concealment of assets and transactions “through the
use of fictitious entities, corporate shells, or offshore
financial accounts.” U.S.S.G. §§ 2B1.1 cmt. n.8(B); 2T1.1
cmt. n.4. In this case the probation officer applied § 2B1.1,
the guideline for mail fraud, because Ghaddar’s convic-
tions were grouped under U.S.S.G. § 3D1.2(d) (the
crimes involved substantially the same harm) and the
§ 1341 conviction resulted in a higher offense level,
see id. § 3D1.3(b).
In challenging the upward adjustment, Ghaddar
asserted that he did not create phony corporations, use
fake names to open bank accounts, or employ special
technology to conceal his assets. The government coun-
tered that Ghaddar’s conduct was sophisticated be-
cause he directed employees to separate out currency
receipts, withheld those funds from corporate bank
4 No. 11-3074
accounts, and concealed the magnitude of his tobacco
sales by using currency to pay suppliers and employ-
ees. Moreover, the government emphasized, Ghaddar
secreted money into foreign accounts by carrying cur-
rency and cashier’s checks during his travels, avoided
reporting requirements by having currency destined
for overseas transfer deposited in stateside accounts in
multiple transactions, each below the reporting thres-
hold (a crime called “structuring” or “smurfing,” see 31
U.S.C. § 5324; http://en.wikipedia.org/wiki/Structuring
(last visited April 25, 2012)), and concealed the origins
of other transfers into his foreign accounts by “washing”
the money through the bank accounts of relatives
and associates.
The district court concluded that Ghaddar’s conduct
warranted the sophisticated-means adjustment and,
after applying the adjustment, sentenced him within
the guidelines range to a total of 76 months’ imprison-
ment. The court decided that the sophistication of
Ghaddar’s scheme was reflected in “all the steps that
he took,” especially his steps to ensure that money
from Tobacco House’s currency receipts was not traced
to the business.
II. Discussion
On appeal Ghaddar attacks the government’s rationale
for labeling his conduct as sophisticated and insists that
his actions were commonplace compared to other cases
where the adjustment has been applied. Defense counsel
asserts that paying suppliers with currency is “the
No. 11-3074 5
normal course of business in the retail tobacco indus-
try,” though he never submitted any evidence to
support this proposition. Counsel also asserts that this
court has rejected the notion that a rudimentary “cash-
skimming” operation is sophisticated. As for Ghaddar’s
overseas transactions, counsel maintains—again with-
out evidence—that American banks do not operate
in Lebanon, that Ghaddar reported the currency he
carried to customs officials at the appropriate time,
that Ghaddar did not use any “fraudulent or fictitious”
accounts, and that all of the money sent back to him
came from family members and employees using their
own names.
Although Ghaddar’s arguments are ultimately unper-
suasive, one of his contentions is well-taken: By itself,
skimming currency receipts and using that money to
pay employees and suppliers is not a particularly
elaborate form of tax evasion. As we explained in
United States v. Kontny, 238 F.3d 815, 820-21 (7th Cir.
2001), some degree of concealment “is inherent in
criminal tax fraud,” and situations where a shopowner
simply empties the cash register and hides the day’s
receipts under his bed “must be distinguished from
efforts over and above that concealment to prevent detec-
tion.” See United States v. Tin Yat Chin, 371 F.3d 31, 42
(2d Cir. 2004) (suggesting that requiring customers to
pay with currency is not sophisticated); United States
v. Hart, 324 F.3d 575, 579 (8th Cir. 2003) (concluding
that not recording personal income is not sophisticated).
For that reason, the adjustment for sophisticated means
is warranted only “ ‘when the conduct shows a greater
6 No. 11-3074
level of planning or concealment than a typical fraud of
its kind.’ ” United States v. Green, 648 F.3d 569, 576 (7th
Cir. 2011) (quoting United States v. Landwer, 640 F.3d
769, 771 (7th Cir. 2011)).
But not all of Ghaddar’s actions needed to be
elaborate for the adjustment to apply; it is enough that,
as the district court found, his actions when viewed as
a whole constituted a sophisticated scheme. See United
States v. Wayland, 549 F.3d 526, 529 (7th Cir. 2008);
United States v. Ghertler, 605 F.3d 1256, 1267 (11th Cir.
2010); United States v. Jackson, 346 F.3d 22, 25 (2d Cir. 2003);
see also United States v. Furkin, 119 F.3d 1276, 1284-85 (7th
Cir. 1997) (concluding that using currency to purchase
equipment, together with other acts, constituted sophisti-
cated means); United States v. Cianci, 154 F.3d 106, 110
(3d Cir. 1998) (concluding that failure to record sales
of merchandise for currency, together with other acts,
constituted sophisticated means).
We review the application of the adjustment for
clear error, see Green, 648 F.3d at 576, and there is
none here. Ghaddar repeatedly channeled money into
foreign bank accounts (including one account not in
his name or home country), actions that ordinarily
qualify as sophisticated means. See U.S.S.G. § 2B1.1 cmt.
n.8(B); United States v. Whitson, 125 F.3d 1071, 1072-73,
1075 (7th Cir. 1997); United States v. Hammes, 3 F.3d 1081,
1083 (7th Cir. 1993). In addition, he used elaborate
tactics to conceal the source of this money, including
exchanging currency for cashier’s checks to carry over-
seas, see United States v. Clements, 73 F.3d 1330, 1340 (5th
No. 11-3074 7
Cir. 1996) (upholding adjustment when defendant ob-
scured money’s source using multiple cashier’s checks
and wife’s bank account), directing his accountant to
illegally structure currency deposits, see United States
v. Gricco, 277 F.3d 339, 360 (3d Cir. 2002) (upholding
adjustment where defendant had structured currency
transactions); United States v. Middleton, 246 F.3d 825,
848 (6th Cir. 2001) (same); United States v. Guidry, 199 F.3d
1150, 1158 (10th Cir. 1999) (same), and washing money
through third-party bank accounts, see United States v.
Wu, 81 F.3d 72, 73-74 (7th Cir. 1996) (upholding adjust-
ment when defendant concealed money in relative’s
account); United States v. Becker, 965 F.2d 383, 390 (7th
Cir. 1992) (same); United States v. May, 568 F.3d 597, 607
(6th Cir. 2009) (upholding adjustment when defendant
concealed money in third-party accounts); United States
v. Clarke, 562 F.3d 1158, 1166 (11th Cir. 2009) (same).
A FFIRMED.
5-8-12