United States v. Sharapka

United States Court of Appeals
For the First Circuit

No. 06-2715

UNITED STATES,

Appellee,

v.

OLEKSIY SHARAPKA,

Defendant, Appellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Patti B. Saris, U.S. District Judge]

Before

Lynch, Circuit Judge,

Merritt,* Senior Circuit Judge,

and Howard, Circuit Judge,

Adam J. Bookbinder, Assistant U.S. Attorney, with whom Michael
J. Sullivan, U.S. Attorney, was on brief for appellant.
Peter B. Krupp with whom Lurie & Krupp, LLP was on brief for
appellee.

May 22, 2008

*
Of the Sixth Circuit, sitting by designation.
 MERRITT, Senior Circuit Judge. Oleksiy Sharapka was sentenced

to 121 months’ imprisonment after he pled guilty to a 13-count

information alleging identity theft, counterfeiting, and mail

fraud. The charges stemmed from the defendant's illegal activities

in Georgia — a state that he had fled during pretrial custody1 —

and in Boston, Massachusetts. At the time of his arrest, Sharapka

was found with approximately 315 stolen credit card numbers, “ID

kits,” various other PIN and credit card numbers, and equipment

valued at over $80,000.2

In this appeal, the defendant challenges his sentence on two

grounds. First, he argues as a factual matter that the district

court improperly determined that ten or more victims suffered

financial losses due to his activities, a finding that increased

his sentence by two levels. See U.S. Sentencing Guidelines Manual

(“Guidelines”) § 2B1.1(b)(2)(A) (2005). And second, he argues that

the district court erred in imposing a two-level enhancement for

possession of device-making equipment pursuant to § 2B1.1(b)(10)(A)

of the Guidelines. The defendant does not raise any Sixth

Amendment sentencing issue under the Blakely-Booker-Cunningham line

of cases. See Blakely v. Washington, 542 U.S. 296 (2004); United

1
The federal charges from Georgia were incorporated into the
13-count information in this case.
2
Sharapka’s scheme operated as follows: he would order
merchandise online using the stolen credit cards, have the items
sent to Mail Boxes Etc., arrange for someone to deliver the items
to his house, and then ship them overseas (primarily to Russia).

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States v. Booker, 543 U.S. 220 (2005); Cunningham v. California,

549 U.S. 270 (2007).

For the following reasons, we affirm the district court's

sentence of 121 months.

I. Sharapka’s sentence

Because the defendant only challenges the sentence, and not

the underlying conviction, we will only address the facts pertinent

to the issues raised. At sentencing, the district court found a

base offense level of seven under § 2B1.1(a)(1) of the Guidelines,

and then added the following enhancements: (1) 14 levels for the

stipulated loss ($400,000 to $1,000,000), (2) two levels for more

than 10 but fewer than 50 victims, (3) two levels for receipt of

stolen property, (4) three levels for the commission of an offense

while on release, (5) two levels for possession of device-making

equipment, and (6) two levels for managerial role in the offense.

The court then deducted two levels for acceptance of

responsibility. The resulting offense level of 30 corresponded to

a Guidelines sentencing range of 97-121 months. In addition, there

was a 24-month mandatory consecutive sentence for aggravated

identity fraud, which, when added to the level 30 offense, resulted

in a range of 121-145 months. See U.S. Sentencing Guidelines

Manual § 2B1.6 (2005). The district court then sentenced Sharapka

to the bottom of this range, 121 months.

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 We review findings of fact at sentencing hearings for clear

error and legal issues de novo. United States v. Pacheco, 489 F.3d

40, 44 (1st Cir. 2007).

II. The enhancement for more than 10 but fewer than 50 "victims"

At the first day of the sentencing hearing, a government agent

testified that the issuing banks suffered direct financial losses

as a result of Sharapka’s credit card fraud. However, another

agent later testified that he had been unable to quantify these

values because banks purge credit card accounts that are the

subject of fraud. The government maintained that the issuing bank,

and not the credit card company, suffered the direct financial loss

as a result of the fraudulent use.3 After the second day of the

sentencing trial, the district court indicated that it was still

unsure as to whether there were, in fact, more than 10 victims who

suffered a financial loss.

On the third day of the sentencing hearing, the government

introduced a proffer — based on its conversation with American

Express — that the vendor, and not the card-issuing bank, actually

suffered the financial losses due to Sharapka’s activities. The

government then provided a list of 14 vendors its agents had

3
The government provided evidence that Sharapka had used 10
or more cards, but conceded that it lacked sufficient evidence to
prove that Sharakpa had used each of these cards. The evidence
only showed that American Express had suffered a discernible,
actual loss.

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contacted and who had reported losses due to Sharapka’s illegal

purchases. Based on this newly introduced information, the

district court imposed a two-level increase to the defendant’s

sentence. The defendant contends that the court erred by relying

on this proffer; specifically, he argues that the proffer fails to

link the alleged losses (i.e. items seized at Sharapka’s apartment)

and that the court’s analysis of the document was insufficient. In

addition, the defendant notes that the government was unable to

confirm losses attributable to specific entities at a later

restitution hearing.

The United States Sentencing Guidelines permit a court to

increase a criminal defendant’s sentence by two levels if the

offense involved “10 or more victims.” U.S. Sentencing Guidelines

Manual § 2B1.1(b)(2)(A) (2005). To support such an enhancement,

the sentencing judge must find that 10 or more victims suffered

actual loss by a preponderance of the evidence. United States v.

Leahy, 473 F.3d 401, 413 (1st Cir. 2007). The Guidelines define

“actual loss” as the “reasonably foreseeable pecuniary harm that

resulted from the offense.” U.S. Sentencing Guidelines Manual §

2B1.1 (2005), cmt. n.3. The same explanatory note indicates that

deference is owed to a sentencing judge’s determination of the

loss: “The court need only make a reasonable estimate of the loss.

The sentencing judge is in a unique position to assess the evidence

and estimate the loss based on that evidence.” Id. In the instant

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case, we believe that the district court’s determination that

vendors were included within the definition of “victim” was

correct, and also that the record adequately supports the two-level

increase for more than 10 victims.

As described supra, the government first argued that only

financial institutions could suffer losses under § 2B1.1(b)(2)(A),

and then amended their theory to also include vendors. This change

resulted from an agent’s discussion with American Express in which

the government learned that banks suffer losses caused by

fraudulent ATM use, while vendors incur losses resulting from

fraudulent credit card use. At the sentencing hearing, the

defendant contended that this new interpretation was incorrect. We

believe that the district court properly relied on both the

testimony regarding the conversation with American Express and the

Sentencing Guidelines explanatory notes, which defines “victims”

for purposes of § 2B1.1(b)(2)(A) as including “individuals,

corporations, companies . . .” See U.S.S.G. § 2B1.1(b)(2)(A), cmt.

n.1. Such a definition is broader than financial institutions and

fairly encompasses the vendors identified by the government agents.

As a result, the question is whether the government provided

sufficient evidence to support the court’s finding that more than

10 vendors suffered financial losses due to Sharapka’s credit card

fraud. The government proffered that its agents had contacted 14

vendors who verified that they had suffered losses resulting from

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this fraud. In addition, the government provided a spreadsheet

listing the amount of loss and specific vendors for fraudulent

purchases made using American Express cards. The government then

gave the information about the 14 vendors to defense counsel and

the court. The defendant contends that because the government did

not later rely on the same information at the restitution hearing,

the district court should have disregarded this evidence at

sentencing.

We believe, however, that the government’s factual

determination — based on the government’s proffer — was sufficient

to support its enhancement under clear error review. The fact that

the government did not later rely on the same 14 vendors at the

restitution hearing does not necessarily cast doubt on the

sentencing phase; rather, it appears that vendors may, for various

reasons, have chosen not to submit the victim impact statements

necessary to qualify for restitution. Similarly, we believe that

the spreadsheet identifying the 14 vendors sufficiently connects

their losses to Sharapka’s fraudulent activities. Accordingly, the

two-level enhancement was proper.

III. The enhancement for possession of device-making equipment

The defendant also contends that the court’s two-level

enhancement for possession of “device-making equipment” resulted in

impermissible double counting. See U.S. Sentencing Guidelines

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Manual § 2B1.1(b)(10)(A)(i) (2005). This enhancement stemmed from

the discovery of a read/write scanning device at the defendant’s

home. According to Sharapka, the mandatory, consecutive sentence

for aggravated identity theft — punishable under § 2B1.6 of the

Guidelines — precludes application of a two-level increase for

specific offense characteristics under § 2B1.1(b)(10).

Section § 2B1.6 compels the sentencing court to impose a

consecutive punishment for identity theft counts punishable under

18 U.S.C. § 1028A (i.e., counts eleven and twelve of the

information to which Sharapka pled guilty). However, the

commentary to the Guidelines states that “if a sentence under this

guideline is imposed in conjunction with a sentence for an

underlying offense, do not apply any specific offense

characteristic for the transfer, possession, or use of a means of

identification . . .” U.S. Sentencing Guidelines Manual § 2B1.6

(2005), cmt. n.2 (emphasis added). This section therefore applies

to certain enhancements under § 2B1.1(b)(10), but not to all.

Section 2B1.1(b)(10) reads as follows:

If the offense involved (A) the possession or use of any
(i) device-making equipment, or (ii) authentication
feature; (B) the production or trafficking of any (i)
unauthorized access device or counterfeit access device,
or (ii) authentication feature; or (C) (i) the
unauthorized transfer or use of any means of
identification unlawfully to produce or obtain any other
means of identification, or (ii) the possession of 5 or
more means of identification that unlawfully were
produced from, or obtained by the use of, another means
of identification, increase by 2 levels.

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(emphasis added). The defendant argues that because §

2B1.1(b)(10)(C)(i) includes the language “transfer” and

“possession,” the prohibition under note 2 of § 2B1.6 operates to

bar application of any enhancement. The government responds by

arguing that the enhancement in this case resulted solely from “the

possession or use of device-making” equipment, which makes § 2B1.6

inapplicable.

We believe that the plain language supports the government’s

argument. § 2B1.1(b)(10) lists different offense characteristics,

separated by the conjunction “or,” whose presence may justify a

two-level enhancement. Had the court imposed the enhancement under

§ 2B1.1(b)(10)(C)(i), then § 2B1.6 would preclude application of a

two-level enhancement. In Sharapka’s case, however, the court

imposed its enhancement after finding that the defendant possessed

“device-making equipment” — to wit, a read/write device. This

finding implicates § 2B1.1(b)(10)(A)(i) and not §

2B1.1(b)(10)(C)(i); the two are different offense characteristics.

Because § 2B1.6 does not cover possession of device-making

equipment, the court acted appropriately in applying both the

mandatory minimum under § 2B1.6 and the two-level enhancement under

§ 2B1.1(b)(10)(A)(i). To hold otherwise would result in an

expansion of the application of § 2B1.6 beyond the specific

characteristics identified by the Guidelines in the explanatory

text.

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We therefore affirm Sharapka’s sentence.

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