22-1293
7th Cir.Aug 9, 2023Background:
- The Chicago White Sox distributed promotional vouchers and RAIN17 codes (free or $5 tickets) with terms forbidding resale; booth employees logged redemptions but no reconciliation/audit occurred.
- From 2016–2019 Bruce Lee conspired with two White Sox box-office employees (Costello and O’Neil) to obtain thousands of discounted and complimentary tickets without proper vouchers and resell them on StubHub for profit.
- Lee sold tens of thousands of tickets and grossed $867,269; he paid the White Sox $74,650 and paid insiders roughly $100,000 in fees.
- A jury convicted Lee of wire fraud under 18 U.S.C. § 1343; money‑laundering counts were dismissed. The indictment sought forfeiture of Lee’s proceeds.
- At sentencing the district court orally ordered forfeiture of $455,229.23 (adopting Lee’s net-gain figure) but failed to enter the Rule 32.2 preliminary forfeiture order and omitted forfeiture from the written judgment.
- The government appealed the district court’s refusal to amend the written judgment; the Seventh Circuit affirmed convictions/sentence but reversed on the forfeiture point and remanded to amend the judgment under Rule 36.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether indictment was duplicitous by treating ticket-obtainment and resale as separate schemes | Government: obtaining and reselling tickets were components of a single continuous fraud to deprive the White Sox of market control and value | Lee: the resale on StubHub was lawful commerce distinct from the fraudulent obtaining of tickets, so counts alleging both were duplicitous | Court: Not duplicitous—obtaining and reselling had a close nexus and together comprised one scheme to profit at the White Sox’s expense |
| Whether interstate wires (StubHub emails/transfers) furthered the fraud (sufficiency / Rule 29) | Government: StubHub communications and transfers were incident to essential parts of the scheme (sales, demand signals, concealment) | Lee: resales were lawful and the wires did not further fraud because tickets were legitimate when resold | Court: Evidence permitted a rational jury to find wires were a step in the plot and used to avoid detection and spur additional theft; conviction stands |
| Proper measure of loss under U.S.S.G. §2B1.1 for fraud sentencing | Government: use fair‑market value (secondary-market pricing) or defendant’s gross gain, yielding a larger loss and higher guideline range | Lee: loss should equal what the White Sox were "willing to part with" (face/$5 price paid), yielding much smaller loss | Court: Agreed with government’s approach (Mount clarified vendor’s lost choice and market price matter); district court didn’t clearly err using defendant’s gain as alternative; sentence affirmed |
| Whether the district court could later amend the written judgment to include forfeiture when it failed to enter a preliminary order before sentencing | Government: failure to enter preliminary order was a time‑related directive/harmless error; clerk’s omission is correctable under Fed. R. Crim. P. 36 to conform judgment to oral sentence | Lee: preliminary order is mandatory; missing it by sentencing is substantive and untimely to cure after judgment (Rule 35 deadline passed) | Court: Distinguishes preliminary vs. final order; preliminary-order timing is a time‑related directive (not jurisdictional) and harmless here because defendant had notice and contested amount pre‑sentencing and the court orally ordered forfeiture; omission in written judgment was clerical and correctable under Rule 36—remand to amend judgment |
Key Cases Cited
- Schmuck v. United States, 489 U.S. 705 (1989) (wires that facilitate avoiding detection may further a fraud scheme)
- Dolan v. United States, 560 U.S. 605 (2010) (distinguishing jurisdictional rules, claims-processing rules, and time-related directives; harmlessness analysis)
- United States v. Sampson, 371 U.S. 75 (1962) (single scheme may encompass acts before and after the taking of money)
- United States v. Mount, 966 F.2d 262 (7th Cir. 1992) (vendor’s choice and the difference between face and market price can measure loss)
- United States v. Quintero, 572 F.3d 351 (7th Cir. 2009) (failure to include intended forfeiture in written judgment may be a clerical error correctable under Rule 36)
- United States v. Martin, 662 F.3d 301 (4th Cir. 2011) (Rule 32.2 preliminary-order timing is a time-related directive; harmless-error framework applies when defendant had notice and opportunity to contest)
- United States v. Shakur, 691 F.3d 979 (8th Cir. 2012) (failure to enter preliminary order and to provide procedures/notice can make forfeiture invalid; viewed timing as a claims-processing requirement)
- United States v. McIntosh, 58 F.4th 606 (2d Cir. 2023) (preliminary-order timing treated as time-related directive; district court’s post hoc cure held acceptable where defendant had notice and an opportunity to object)
- United States v. Mattux, 37 F.4th 1170 (6th Cir. 2022) (adopted claims-processing view where procedural protections were not observed)
- United States v. Powell, 576 F.3d 482 (7th Cir. 2009) (wires need not be indispensable but may be a step in the defendant’s scheme)
- United States v. McClain, 16 F.4th 487 (7th Cir. 2021) (inconsistency between oral pronouncement and written sentence is clerical under Rule 36 and may be corrected)