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).
- 2 -
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.
- 3 -
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.
- 4 -
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
- 5 -
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
- 6 -
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
- 7 -
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.
- 8 -
(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.
- 9 -
We therefore affirm Sharapka’s sentence.
- 10 -