United States v. James Kennedy
2013 U.S. App. LEXIS 16573
| 7th Cir. | 2013Background
- James Kennedy pleaded guilty to mail fraud, wire fraud, and threatening an informant for operating a nationwide counterfeit fine‑art scheme (2000–2008) selling forged, marked, or fraudulently signed prints on eBay and at art shows.
- Investigators identified large volumes of suspect sales from business records, eBay records, bank records, invoices, and witness interviews; Kennedy admitted buying $500,000 worth of counterfeit art from one source and ‘‘hundreds’’ of forged signatures.
- At sentencing the government initially sought $821,714.65 in restitution for 135 victims; after the court required victim‑specific proof, the government reduced its claim to $469,131.65 for 41 victims.
- The district court held multiple hearings, found intended/actual loss exceeded $1,000,000 (applying U.S.S.G. § 2B1.1 enhancements), and adopted the PSR’s finding of at least 250 victims (applying the victims‑count enhancement).
- The court ordered 96 months’ imprisonment and, after reviewing documentary and testimonial evidence, awarded $316,425.65 in restitution to 21 victims (rejecting other claims for lack of proof).
Issues
| Issue | Plaintiff's Argument (Kennedy) | Defendant's Argument (Government) | Held |
|---|---|---|---|
| Sufficiency of restitution evidence | Government’s restitution claims were disorganized, reduced repeatedly, and lacked victim‑specific proof; district court abused discretion in awarding $316,425.65 | Government produced victim questionnaires, invoices, cancelled checks, bank records, and investigative testimony sufficient to prove losses by a preponderance | Affirmed: district court did not abuse discretion; it winnowed claims and relied on admissible documentation to identify 21 victims and $316,425.65 in losses |
| Loss amount for Guidelines (>$1,000,000) | Inspector Donnelly’s invoice‑based estimates were unreliable; many invoices might reflect unconsummated or returned transactions, so loss was under $1,000,000 | Loss for §2B1.1 is greater of actual or intended loss; court relied principally on Kennedy’s admissions (e.g., $500,000 purchase from one supplier and markups) plus investigative estimates | Affirmed: clear‑error review; district court permissibly relied on Kennedy’s admissions and investigative evidence to find loss exceeded $1,000,000 |
| Number of victims (≥250) | Only ~130 victims had come forward; application of the 250+ victims enhancement was unsupported | PSR listed 312, court reasonably found at least 250 based on records and the nature of scheme | Not reviewed on merits: Kennedy waived the objection at sentencing by strategically abandoning it and focusing on §3553(a) mitigation; appellate review precluded |
| Procedural burden and proof standard | Government failed to meet preponderance for individual restitution entries and initially presented chaotic submissions | District court appropriately required victim‑specific proof under 18 U.S.C. § 3664(e) and gave the government opportunity to supplement, then evaluated submitted evidence favorably to government where sufficient | Affirmed: district court followed statutory burden rules, exercised discretion in admitting and weighing evidence, and excluded unsupported claims |
Key Cases Cited
- United States v. Dokich, 614 F.3d 314 (7th Cir.) (loss for Guidelines is greater of actual or intended loss)
- United States v. Hosking, 567 F.3d 329 (7th Cir.) (government must prove restitution by a preponderance)
- United States v. Hassebrock, 663 F.3d 906 (7th Cir.) (standard of review for restitution calculation—abuse of discretion)
- United States v. McKinney, 686 F.3d 432 (7th Cir.) (clear‑error review of sentencing factual findings)
- United States v. Borrasi, 639 F.3d 774 (7th Cir.) (definition of clear error in loss computation)
- United States v. Irby, 558 F.3d 651 (7th Cir.) (distinguishing waiver and forfeiture on appeal)
- United States v. Olano, 507 U.S. 725 (Sup. Ct.) (standards for forfeiture and plain‑error review)
- United States v. Jaimes‑Jaimes, 406 F.3d 845 (7th Cir.) (strategic waiver of sentencing arguments)