United States v. Jesse Kaplan, 2016 U.S. App. LEXIS 18247

Background

In 2013 Jesse Kaplan and Daniel Strycharske, with David Shultz, produced hash oil in an apartment; butane fumes ignited on November 5, 2013, causing a large explosion, severe injuries to six people, and one later death.
A federal grand jury indicted Kaplan and Strycharske on three counts including endangering human life while manufacturing controlled substances; both pleaded guilty.
District court calculated guideline ranges (24–30 months) for each defendant but imposed an upward departure under USSG § 5K2.0 and sentenced each to 36 months’ imprisonment.
The district court awarded restitution under the Mandatory Victims Restitution Act (MVRA) totaling $2,771,929, including approximately $40,000 for destroyed personal property (clothing, furniture, appliances) calculated by replacement value.
Defendants appealed, arguing replacement value was improper (should be fair market value) and raising sentencing challenges (notice under Fed. R. Crim. P. 32(h), factual findings, prejudicial analogy, and substantive reasonableness).

Issues

Issue	Plaintiff's Argument (Government)	Defendant's Argument	Held
Proper method to value destroyed property for MVRA restitution	MVRA permits district courts discretion; replacement value may be appropriate to make victims whole	Replacement value inflated restitution; court should use fair market value	Court: Fair market value generally preferred but replacement value appropriate when FMV is difficult to determine or inadequate to make victim whole; district court did not abuse discretion using replacement value
Adequacy of notice under Fed. R. Crim. P. 32(h) for upward departure	PSR and parties’ filings identified § 5K2.0 grounds, satisfying notice requirement	Defendants claim additional notice was required of upward departure	Court: No plain error—PSR gave adequate notice; no further notice required
Whether district court made clearly erroneous factual findings or used inflammatory analogy (Strycharske)	Government: statements and analogies supported by record and sentencing rationale	Strycharske argued court erred on butane quantity/open flame and used prejudicial “Bering Sea” analogy	Court: No clear error on facts; analogy was not improper or outcome-determinative
Substantive reasonableness of 36-month sentences	Sentence justified by extreme harm (death, permanent injuries, millions in damage); needed to address conduct beyond guideline scope	Defendants argued sentence excessive relative to guidelines and circumstances	Court: 36 months substantively reasonable; district court made individualized § 3553(a) assessment and did not abuse discretion

Key Cases Cited

United States v. Simmonds, 235 F.3d 826 (3d Cir. 2000) (approving replacement value for destroyed household furniture where market value inadequately captures personal loss)
United States v. Shugart, 176 F.3d 1373 (11th Cir. 1999) (upholding replacement cost for destroyed church where actual cash value unavailable or unreliable)
United States v. Boccagna, 450 F.3d 107 (2d Cir. 2006) (declining to limit district courts to fair market value under § 3663A)
United States v. Frazier, 651 F.3d 899 (8th Cir. 2011) (replacement value may be appropriate when property lacks a viable market or is unique)
United States v. Pemberton, 904 F.2d 515 (9th Cir. 1990) (district court may use non-market measures of value for unique items in loss calculations)
Hughey v. United States, 495 U.S. 411 (1990) (ordinary meaning of restitution is restoring victim to pre-event position)
Gonzales v. Raich, 545 U.S. 1 (2005) (marijuana is a fungible commodity with an established market)
United States v. Gordon, 393 F.3d 1044 (9th Cir. 2004) (MVRA’s primary goal is to make victims whole)
United States v. Luis, 765 F.3d 1061 (9th Cir. 2014) (standards for reviewing restitution orders)
United States v. Carty, 520 F.3d 984 (9th Cir. 2008) (sentence reasonableness review and need for individualized assessment)