United States v. Skrodzki

UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT

No. 93-1339

UNITED STATES OF AMERICA,

Appellee,

v.

MARK A. SKRODZKI,

Defendant, Appellant.

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,

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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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.

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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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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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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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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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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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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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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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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