The United States government charged William C. Norris and Jim Gee in a 32-count indictment in connection with a scheme to assist in the unauthorized reception of cable television signals. 1 Before submitting the ease to the jury, the government dropped two of the counts against Norris. The jury returned guilty verdicts on all remaining counts. Defendants appeal their convictions and their sentences. The government appeals defendants’ sentences. For the reasons stated below, we reverse defendants’ convictions on mail fraud, wire fraud, and conspiracy. We affirm Norris’s conviction for assisting unauthorized reception of cable service, but we remand for resentencing consistent with this opinion.
I
Little of the evidence at trial was in dispute. The government charged, and the defense readily admitted, that Gee and Norris were involved in the production of equipment that buyers could use to transform cable television converters into devices that could descramble all encrypted cable programming. A cable television subscriber who acquires a descrambler from a source other than the cable company can access premium programming without paying the cable company any additional fees. The evidence showed that Bryan Corrigan, a cooperating witness, developed chips and modules that could modify cable converter boxes to descramble all encrypted cable programming. Gee took Corrigan’s work product and sold it to Norris and other after-market dealers. Norris sold these chips and modules, and cable boxes modified by these chips and *891 modules, to home viewers. These devices allow the user to, among other things, descramble and view premium cable television channels without the cable provider’s permission.
A jury found Norris guilty of thirteen counts of wire fraud, violating 18 U.S.C. § 1843; five counts of mail fraud, violating 18 U.S.C. § 1341; seven counts of misdemeanor assisting unаuthorized reception of cable service and four counts of felony assisting unauthorized reception of cable service, violating 47 U.S.C. § 553(a)(1); and one count of conspiracy, violating 18 U.S.C. § 371. The same jury found Gee guilty of ten counts of wire fraud and one count of conspiracy.
The district court sentenced Norris to 37 months of home confinement and imposed a fine and special assessments totaling $16,325. The court sentenced Gee to 37 months of imprisonment and imposed a fine and special assessments totaling $8,050.
II
A. Material Falsehood
Norris and Gee claim that their convictions on wire and mail fraud should be reversed because the government did not properly allege or prove materiality and because the court did not properly instruct on materiality. We review de novo the sufficiency of an indictment.
See United States v. Agostino,
In 1999, the Supreme Court ruled that a “scheme to defraud” under the wire and mail fraud statutes must include the element of a material falsehood.
See Neder v. United States,
Earlier in this case, in 1997, defendants filed an unsuccessful motion to dismiss, arguing, inter alia, that the indictment failed “to allege any false or misleading statements” to customers or cable companies. In response to that motion, the government acknowledged that the indictment does not base fraud charges on any misleading statements or fraudulent omissions. 2 Under the law at that time, the district court correctly ruled that a material falsehood was not an essential element of the wire or mail fraud statutes. 3
On appeal, the government argues that the indictment does in fact allege false and misleading statements.
4
However, as the government acknowledged in 1997, the indictment does not allege that defendants misrepresented or concealed a material fact in aid of their scheme. All the government can point to is the language in the indictment and argue that the court should view it as a whole, rather than in a hyper-technical manner.
5
The government ac
*892
knowledges that the indictment does not use the words “material,” “misrepresentation,” or “concealment” but suggests that the indictment sufficiently apprized defendants of the nature of the charges and all essential elements, including materiality. The indictment merely alleges a “scheme to defraud,” however, which the
Neder
court ruled insufficient.
See id.
at 20,
The government next argues that even if material falsehoods were not in the indictment, it introduced sufficient evidence of material falsehoods at trial to support the verdict. We review sufficiency of the evidence under a substantial evidence standard.
See United States v. Durrive,
The government claims that it introduced evidence that end-users misrepresented and concealed the use of the illegal descrambler units from cable operators. This evidence does not prove, however, that defendants misrepresented or concealed material facts. Furthermore, the government did not proffer any evidence that Norris or Gee ever induced any of their customers to make false or misleading statements to their customers’ cable companies.
The government also points to trial testimony that demonstrated that the chips and descramblers sold by Norris and Gee were designed to allow free access to premium cable channels and to block the subscriber’s descrambler unit from receiving electronic authorization instructions from the cable operator. The devices’ capabilities do not, however, prove material falsehoods by Norris and Gee. The government did not proffer any evidence that defendants made any false or misleading statements. Therefore, even after viewing the evidence in the light most favorable to the government, no rational jury could have found the essential element of a material falsehood.
We find that the government not only failed to allege but also failed to prove that Norris or Gee made any false or misleading statements. Consequently, we reverse their mail and wire fraud convictions and remand "with instructions that the district court grant a judgment of acquittal on these charges. Accordingly, we find it unnecessary to review whether the district court’s jury instructions on material falsehoods were sufficient.
B. Conspiracy
Defendants next argue that their conspiracy convictions should be reversed on two grounds. First, they contend that the government failed to proffer substantial evidence of an agreement between Norris and Gee to violate 28 U.S.C. § 553(a)(1). 6 *893 Second, they argue that the district court’s failure to include a buyer-seller instruction is reversible error.
1. Substantial Evidence
As noted above, we review sufficiency of the evidence under a substantial evidence standard.
See Durrive,
a sufficiency of the evidence challenge is hard to win, given the standard of appellate review. We consider the evidence in the light most favorable to the government, and we must affirm the conviction so long as any rational factfinder could have found the essential elements of the offense to have been established beyond a reasonable doubt. We will overturn the verdict “only if the record contains no evidence, regardless of how it is weighed, from which the jury could find guilt beyond a reasonable doubt.”
United States v. Menting,
The trial evidence establishes that: 1) Gee programmed chips that descrambled premium cable programming; 2) Norris regularly purchased these chips from Gee; 3) Norris installed the chips into descrambling equipment and sold the equipment or just thе chips to customers and distributors; 4) Gee programmed different Mnds of chips, depending on Norris’s order; 5) Norris and Gee established a routine for their joint venture; 6) Norris and Gee had regular contact with each other via telephone and facsimile; 7) Gee visited Norris’s shop on at least two occasions; 8) Norris and Gee collaborated by sharing instructions, warnings, and disclaimers and by having Norris train Gee’s employee; and 9) after Gee found out that authorities raided Norris’s shop, Gee shipped all of his cable supplies out of state. Defendants counter, however, that this circumstantial evidence suggests only that they had an arm’s-length business relationship, not a conspiracy.
A conspiracy requires the government to prove (1) the existence of an agreement to commit an unlawful act; (2) that defendants knowingly and intentionally became members of the conspiracy; and (3) the commission of an overt act that was committed in furtherance of the conspiracy.
See United States v. Lahey,
A conspiracy is more than a buyer-seller agreement. A conspiracy
is an agreement with a particular kind of object — an agreement to commit a crime.... What is required for conspiracy in such a case is an agreement to commit some other crime beyond the crime constituted by the agreement itself. ... But insofar as there was an agreement between [defendants] merely on one side to sell and on the other to buy, there was no conspiracy between *894 them no matter what [the buyer] intended to do with the [contraband] after he bought [it].... A person who sells a gun knowing that the buyer intends to murder someone may or may not be an aider or abettor of the murder, but he is not a conspirator, because he and his buyer do not have an agreement to murder anyone.
United States v. Lechuga,
To find sufficient evidence of a conspiracy, we have “looked for evidence of ‘a prolonged and actively pursued course of sales coupled with the seller’s knowledge of and a shared stake in the buyer’s illegal venture.... ’ Other important indicia of conspiracy include ‘the length of affiliation, the established method of payment, ... the extent to which the transactions arе standardized, and the demonstrated level of mutual trust.’ ”
Menting,
Here, the government proffered sufficient evidence to conclude that Gee knew what Norris was doing with the chips. Moreover, over a period of 13 months, Gee and Norris had regular dealings with each other and developed a routine for their orders and payments. Defendants argue, however, that their transactions could just as easily be construed as routine commercial transactions between business associates and not as “standardized” transactions between conspirators. The supplies Gee sold to Norris and the equipment Norris sold to his customers were not contraband per se. 7 Furthermore, Gee and Norris did not have a financial interest in each other’s business or share in any of their business profits or losses.
We will not reverse the verdict if we find that the jury, when looking at the evidence in the light most favorable to the government, could have rationally determined that a conspiracy existed.
See Durrive,
2. Buyer-Seller Jury Instruction
Defendants also argue that the district court should have included a buyer-seller jury instruction. They make this argument though they did not suggest this instruction below and never argued this theory of the case to the jury. We review jury instructions not objected to at trial under a plain error standard.
See United States v. Reynolds,
District judges should inform juries that repeated transactions do not constitute a conspiracy.
See United States v. Thomas,
This case'presents one of those situations. The proffered evidence of a conspiracy was circumstantial and not overwhelming. The evidence was as consistent with a buyer-seller relationship as it was with a conspiracy. The instructions allowed the jury to. make a guilty finding without determining whether the government had proved the еxistence of a conspiracy. Cf. id. at 466.
We have no way of knowing whether, had the jury understood the distinction between a conspiracy and a buyer-seller relationship, it would still have convicted Norris and Gee of conspiracy. Because a rational jury could find that Gee dealt with Norris without any agreement between them, to commit any future crimes, the district court should have included a buyer-seller jury instruction. Moreover, the district court should have sua sponte included a buyer-seller instruction because it knew that the conspiracy evidence was weak. 8
The district judge’s reservation about the proof of a conspiracy should have alerted him to be certain that the jury correctly evaluated the evidence before determining whether a conspiracy existed.
See Thomas,
affected the substantial rights of the defendants because we cannot be sure whether the jury made the factual findings of conspiratorial agreement necessary for a verdict of guilt. Though we cannot know the probability that the error changed the outcome—a properly instructed jury might, nonetheless, have determined that there was a conspiratorial agreement—we are certain that the *896 error had a substantial potential to affect the outcome. Thus the error affected the defendants’ substantial rights.
Mims,
Having satisfied the prerequisites for reversal on grounds of plain error in this case, we must determine whether the error is one that “seriously affects the fairness, integrity and public reputation of judicial proceedings.”
Olano,
C. Norris’s Proposed Jury Instructions
Norris proposed several instructions to advise the jury that the cable equipment at issue in this case was not contraband or illegal
per se
and that this circuit had ruled in 1988 that a person could not be convicted under 47 U.S.C. § 553 for selling a descrambler with the intent that the buyer use it for lawful purposes.
9
We review the district court’s refusal to give a party’s instruction by determining whether the omission prejudiced the party.
See United States v. Katalinich,
*897 A defendant is only entitled to an instruction on his theory of defense if: (1) the defendant proposed a correct statement of the law; (2) the evidence lends some support to the defendant’s theory; (3) the defendant’s theory of defense is not part of the charge; and (4) the failure to include the defendant’s instruction would deny him a fair trial.
Id. Thе district court rejected defendants’ proposed instructions, finding that Instruction 18 properly covered the topics addressed in Norris’s proposed instructions. Instruction 18 states:
The government does not have to prove that the equipment involved in a particular count was sold for the sole and specific purpose of cable television theft, or that the equipment was actually used illegally. The government must prove that Mr. Norris intended the equipment involved in a particular count to be used for unauthorized reception of cable service, or that he acted with specific knowledge that the equipment involved would be so used. 11
While Norris’s Proposed Instruction No. 5 would have provided more direct guidance than Instruction 18, the district court’s refusal to use his instruction did not prejudice Norris. His proposed instruction accurately states that cable de-scramblers are not per se illegal and that a person is criminally liable only if he sells thе devices with the intent or specific knowledge that the buyer will use them for unauthorized purposes. Like Norris’s proposed instructions, Instruction 18 states the wilfulness .requirement to convict under § 558. Consequently, the district court’s refusal to use his proposed instructions did not prejudice Norris.
Accordingly, we find that the district court did not err when it rejected Norris’s Proposed Instructions Nos. 5 through 8. While we would have preferred Norris’s Proposed Instruction No. 5, we do not find that he was prejudiced by the use of Instruction 18.
D. Norris’s Relevant Conduct Under U.S.S.G. § IB 1.3
Defendants contend that the district court erred in its loss calculations by holding against defendants conduct not necessarily found criminal by the jury and not found criminal by the court at all. First, they maintain that because the district judge determined for purposes of his evi-dentiary ruling that the government had not proven its conspiracy case, 12 the court should not have considered as relevant conduct any losses other than those related to the descrambler sales specifically charged in the indictment. In other words, the court should ignore any losses only attributable to the conspiracy conviction. Second, defendants maintain that losses from sales not addressed by a specific count in the indictment cannot be included as relevant conduct because the jury did not specifically find such sales illegal. While we have already ruled that defendants’ conspiracy convictions must be reversed, we will offer some comments on this relevant conduct question because it will be relevant at Norris’s resentencing.
*898
The Supreme Court allows the sentencing court to include acts or omissions in its sentencing calculations even if the jury acquitted the defendant on those acts or omissions.
See United States v. Watts,
In
Edwards v. United States,
the Supreme Court ruled that “regardless of the jury’s actual, or assumed, beliefs about the conspiracy, the Guidelines nonetheless require the judge to determine [relevant conduct].”
The district court addressed defendants’ arguments in its April 6, 1999, opinion denying defendants’ motion for a new trial and denying their motion to reconsider the loss calculations. After summarizing defendants’ arguments, the court concluded:
The court’s ruling under Fed.R.Evid. 801(d)(2)(E) was not the final word on whether the charged conspiracy was proven. In count 32, the jury found Mr. Norris and Mr. Gee guilty of the conspiracy that had not been proven to the court’s satisfaction in the government’s case in chief. While the jury was not required to find each charged overt act to have been proven, the jury had to find that Mr. Norris and Mr. Gee agreed to assist criminal conduct. It is one thing to say as the Watts Court said, that a jury’s finding that a count was not proven beyond a reasonable doubt does not preclude a sentencing judge from finding that the activity charged in the count was proven by a рreponderance of the evidence. It is quite another to say (as the court believes it must to accept the defendant’s argument) that a sentencing judge may disregard a jury’s finding of guilt on a count when constructing a “sentencing package,” see Woodhouse v. United States,109 F.3d 347 (7th Cir.1997), that includes that count.
The jury found the defendants guilty of conspiracy to assist, knowingly and willfully, in the authorized and illegal interception and reception of communications services offered over a cable system and for the purpose of commercial advantage and private financial gain. The court cannot sentence either defendant for that crime without assuming the verdict’s truth, and the court cannot determine the guideline range without accepting the truth of the verdict, whatever the sentencing judge might have found under Fed.R.Evid. 104(a) at the conclusion of the government’s case in chief. When it is accepted — as [it] must be accepted to impose any sentence on the conspiracy count — that Mr. Norris and Mr. Gee agreed with each other and *899 with others to assist the unlawful interception of cable signals, the rest of the evidence persuades the court that it is more likely than not than [sic] all of the sales reflected in the Norris Electronics invoices were part of that conspiracy. They must all be considered in determining the sentencing range.
(emphasis added.)
If the district judge concluded that it was more likely than not that the jury included the relevant conduct in its conspiracy conviction, then the judge misread Edwards and Watts. The jury could have convicted defendants of conspiracy with the commission of only one overt act. The district judge made the correct sentencing determination under Edwards and Watts, however, if he independently determined that the government proved by a preponderance of the evidence that all of the relevant conduct included in his sentencing calculations were part of the conspiracy.
Accordingly, at Norris’s resentencing, the district judge should make an independent evaluation of the relevant conduct to include in his sentence calculations. Norris’s relevant conduct includes the specific convictions that still stand — the eleven counts of assisting unauthorized reception of cable service. The district judge can also include conduct that is “part of the same course of conduct or common scheme or plan as the offense of conviction,” U.S.S.G. § lB1.3(a)(2);
accord Edwards,
E. Loss Calculation Under U.S.S.G. § 2Fl.l(b)(l)
The government appeals the district court’s loss calculations. This loss calculation issue will resurface when the district court resentences Norris. At defendants’ sentencing, the government argued that the district court should calculate loss using the formula devised by the National Cable Television Association (“NCTA”), which computes loss based on the value of the cable television programming to which the descramblers affоrded unauthorized access. Under this approach, the losses attributed to Norris are $15,176,364 and to Gee are $13,233,864. Defendants urged the court to employ a method used by the government in a similar case from New Jersey, which computed loss by summing the sale prices of the equipment sold. Under this method, the losses attributed to Norris are $1,240,875 and to Gee are $1,041,510.
The district court adopted the defendants’ approach. We review the district court’s loss determinations under U.S.S.G. § 2Fl.l(b)(l) for clear error.
See United States v. Saunders,
The Guidelines increase the offense level for offenses involving fraud or deceit based on the amount of “loss.” The Guidelines suggest that
the loss need not be determined with precision. The court need only make a reasonable estimate of the loss, given the available information. This estimate, for example may be based on the approximate number of victims and an estimate of the average loss to each victim, or on more general factors, such as the nature and duration of the fraud and the revenues generated by similar operations. The offender’s gain from committing the fraud is an alternative method that ordinarily will underestimate the loss.
U.S.S.G. § 2F1.1 cmt. 9. Courts may use the gain from participation in the fraud when the exact amount of the loss to the victim is unknown.
See United States v. Craig,
The district court found the NCTA calculation unreasonable because this calculation assumes that each purchaser used the descrambler illegally and that each purchaser used the descrambler to view all available premium programming. More important, according to the district court, the NCTA calculation assumes, without any evidence, that had Norris not sold descramblers, his customers would have purchased all of the available premium channels from the cable companies. Accordingly, the district court opted to compute loss based on defendants’ gross revenue because a precise method of calculating loss was unavailable. Nothing in the government’s arguments on appeal convinces us that the district court’s determination was clearly erroneous. The government makes the same arguments on appeal that it did before the district court. The district court evaluated the government’s arguments but found that the defendants’ approach was the better method of calculating loss. The government would be well served in cases like this to include a survey or statistical sampling to support its estimate of the loss.
Accordingly, at Norris’s resentencing, the district judge can calculate the meaning of “loss” under U.S.S.G. § 2F1.1 (b)(1) by using the gross revenue that Norris derived from his relevant conduct. Based on our above relevant conduct analysis, the district judge may attribute a different loss amount to Norris at his resentencing.
F. Departure Under U.S.S.G. § 5K2.0
Although Norris was not eligible for a reduction in his offense level for acceptance of responsibility under U.S.S.G. § 3E1.1, 13 the district court granted him a two-level downward departure for acceptance of responsibility under § 5K2.0. 14 The district court found that Norris demonstrated a “non-heartland” acceptance of responsibility. He made early and consistent offers to the government to determine the legality of his business through a prompt civil declaratory judgment action. Moreover, he immediately discontinued his business following the verdict against him. The government argues that the district court had no authority to grant Norris a departure for “quasi-acceptance of responsibility” after denying him a reduction under § 3E1.1.
We review a district court’s departure decision for abuse of discretion and its findings of fact for clear error.
See United States v. Wilke,
Norris consistently believed that he was operating a legal business because his product was ambiguous in the sense that customers could use it for legal — as well as illegal — purposes. He offered for more than five years to play a lower-stakes game with the governmеnt — one in which his ante would be his business, but not his freedom. He invited a civil suit, seeking an injunction, which would have prevented the sales of any items found illegal. Early on, Norris prevailed: counts brought under one statute were dismissed, and the dismissal was affirmed,
see United States v. Norris,
After his conviction, Norris immediately ceased his business, froze his inventory, offered negotiations with the government concerning the disposal of his inventory, and offered his full assistance to the government with respect to access to his inventory.
In the ordinary (“heartland”) case, such posttrial conduct would be unremarkable, but in the unusual circumstances of this case, it demonstrates a different form of acceptance of responsibility that seems to echo the concerns that led the drafters of the guidelines to allow a finding of § 3El.l(a) when a defendant goes to trial to determine a statute’s applicability to his conduct. This case’s circumstances are far too unusual to have been contemplated by the Sentencing Commission when it drafted § 3E1.1.
Norris April 9, 1999 Sentencing Mem. at 1.3.
The government argues that the district court did not have authority to grant this departure after denying Norris a § 3E1.1 departure. The government suggests that a “quasi-acceptance of responsibility” departure under § 5K2.0 is-available only to defendants who have already received the maximum reduction under § 3E1.1. The government’s cited cases, however, are unavailing.
In
United States v. Bean,
In
United States v. Bailey,
*902
Likewise, we easily distinguish the facts in
Stefonek
from the instant case. In
Ste-fonek,
we reversed the district court’s “community service” ground for departurе because the services were provided by the same businesses that were the vehicles of Stefonek’s multiple violations of federal law.
The district court correctly applied the applicable grounds for departure. Therefore, we conclude that it was not clear error for the district court to depart downward two-levels under § 5K2.0.
G. Norris’s Downward Departure for his Physical Condition and Imposition of Home Detention
After reviewing more than 500 pages of medical records, watching a videotaped deposition of Norris’s cardiologist, observing Norris at trial and during sentencing, and listening to the in court testimony of both Norris and his mental health therapist, the district court concluded that imprisonment posed a substantial risk to Norris’s life and, therefore, departure under U.S.S.G. § 5H1.4 was warranted.
15
The government contends that Norris’s physical condition was not an “extraordinary physical impairment” within the meaning of § 5H1.4 and that the Bureau of Prisons (“BOP”) could provide adequate medical care to Norris. We review a district court’s departure decision for abuse of discretion and its findings of fact for clear error.
See Wilke,
We have developed a three-part test to facilitate our analysis:
First, we must determine whether the district court has stated adequate grounds for departure. This is a question of law and is reviewed de novo. Second, we must determine whether the facts which underlie the grounds for the departure actually exist. This determination is reviewed using the clearly erroneous standard of review. Third, we must determine whether the degree of departure is linked to the structure of the Guidelines. The district court’s findings on what degree of departure is appropriate are given deference.
United States v. Hendrickson,
*903 The government also argues that the district court’s imposition of a nonprison sentence — probation and home monitoring — is not available because Norris’s offense level of 21 falls in Zone D of the sentencing table. Imprisonment substitutes are not available for offense levels that fall in Zone D. See U.S.S.G. §§ 5B1.1 cmt. 2, 501.1(f) & cmt. 8, 5F1.2. 17
The district court tried to keep Norris’s sentence consistent with the Guidelines while also keeping him out of prison. Consequently, instead of departing through the offense levels, the judge departed from the restrictions of § 5B1.1 and § 5C1.1. The district court recognized that the Guidelines do not provide for 37 months of home detention, but ruled the Guideline’s restriction
no impediment, because this case involves factors not adequately considered by the Sentencing Commission. Finally, the court believes the sentence properly considers the structure of the guidelines, because, among other reasons noted thus far, the guidelines include the recognition in U.S.S.G. § 5H1.4 that “in the case of a seriously infirm defendant, home detention may be as efficient as ... imprisonment.”
Norris April 9, 1999 Sentencing Mem., at 13.
The district court improperly departed outside the Guidelines. Although § 5H1.4 allows the use of home detention, the defendant’s offense level must be in Zone A or B to satisfy the requirements of § 5Bl.l(a) (probation not allowed for Zone C or D offense levels), § 5Cl.l(f) (“if the applicable guideline range is in Zone D of the Sentencing Table, the minimum term shall be satisfied by a sentence of imprisonment”), and § 5F1.1 (“community confinement may be imposed as a condition of probation or supervised release”). Consequently, upon resentencing, unless Norris’s offense level is in Zone A or B, the district court may not sentence him to home detention.
Ill
For the reasons stated above, we Reverse Jim Gee’s and William C. Norris’s convictions on mail fraud, wire fraud, and conspiracy. We Affirm Norris’s conviction for assisting unauthorized reception of cable service, but we Vaoate his sentence and Remand for resentencing consistent with this opinion.
Notes
. Norris was originally charged over six years ago with unauthorized decryption of satellite cable programming under 47 U.S.C. § 605(e)(4). The district court granted Norris’s motion to dismiss on the ground that his alleged conduct concerned coaxial cable rather than satellite signals. We affirmed.
See United States v. Norris,
. "It is clear from a reading of the indictment that the fraud charges are not based on misleading statements or fraudulent omissions." Gov't’s Resp. in Opp’n to Mot. to Dismiss Second Superseding Indictment at 2.
. Norris first moved the district court to dismiss the wire and mail fraud charges in 1993, well before Gee was ever involved in this case. The district court denied the motion, stating that “[c]ontrary to Mr. Norris's assertions, a charge of wire or mail fraud need not be supported by an underlying false representation or statement.”
United States v. Norris,
. The government concedes that the Neder holding will be retroactively applied to this case.
. Count 1 charges that
William Norris ... knowingly devised a scheme and artifice to defraud cable television companies ... of premium and special *892 programming transmissions and subscription fee revenues. The scheme and artifice to defraud include the assembly, modification, sale and distribution of modified cable television converter-decoders and other decoding devices which enabled basic cable television subscribers to receive premium and special cable programming without the knowledge and authorization of the cable television companies and without payment of the required subscription fee.
Superseding Indictment, Count 1 ¶ 14.
Count 2 charges that Norris bought chips from Gee who programmed the chips and modules so that the cable converter-decoder in which they were installed would receive all premium cable television programming, including Pay-Per-View, without detection and without payment of the required fee or subscription fee to the cable television company.
Id. Count 2 ¶ 2.
. Count 32 of the Superseding Indictment alleges that defendants
did combine, conspire, confederate and agree among themselves and with other persons both known and unknown to the Grand Jury, to ... violatfe] 47 U.S.C. *893 § 553(a)(1), by knowingly and willfully, for the purpose of commercial advantage and private financial gain, assist! ] in intercepting and receiving certain communications services offered over a cable system, which was not specifically authorized by a cable operation and otherwise not specifically authorized by law, in that they manufactured and distributed and caused to be manufactured and distributed equipment intended for unauthorized reception of premium and Pay-Per-View cable television programming.
Superseding Indictment, Count 32 ¶ 2.
. During the triаl, the district court ruled that the government could not admit coconspirator statements under Fed.R.Evid. 801(d)(2)(E). The district court found that the government had not shown, by a preponderance of the evidence, that a conspiracy existed between the defendants.
See generally Bourjaily v. United States,
This is not a matter of the sufficiency of the evidence to allow Count 32 of the Indictment to survive the motion for judgment of acquittal at the close of the government's case. This is not a matter of the sufficiency of the evidence for the trier of fact to find the predicate facts to be true. It’s a question for me to decide. So I can’t just sit here and decide whether the jury could find these things to have been proven. I must find that these things have been proven by a preponderance of the evidence. And in making thаt determination, I weigh the evidence as though we were at the end of a bench trial....
Sitting as a fact finder, ... I find myself unpersuaded that there was an agreement to assist others in the unauthorized reception of cable signals.
The district court did find, however, that there was sufficient evidence to let the jury decide whether the government had proven a conspiracy.
. Norris tendered the following as his proposed Instructions Nos. 5 through 8.
A person does not violate 47 U.S.C. § 553 for being engaged in the production or sale of a device or equipment which is used for legal purposes merely because the same device or equipment is capable of being used for unauthorized reception of cable service. The particular device or equipment that is the subject of any count brought in the Indictment under 47 U.S.C. § 553 must have been provided with the intent or specific knowledge that it will be used for unauthorized reception of cable service before any provider could be convicted.
Norris's Proposed Instruction No. 5.
This proposed instruction was adopted from the Cable Communications Policy Act’s legislative histoiy. See H.R. Rep. No. 98-934, at 84 (1984), reprinted in 1984 U.S.C.C.A.N. 4721 (“The Committee does not intend that manufacturers, distributors or retailers be subject to liability under this section if they are engaged in the production or sale of a device or equipment which is used for legal purposes merely because the same device or equipment is capable of being used for unauthorized reception of cable service, if they do not provide the equipment with the intent or specific knowledge that it will be used for the unauthorized reception of cable service.”).
There is no federal law making it a crime merely to manufacture, distribute, or own a descrambler. It is a federal crime to manufacture, distribute, or own a descrambler only if there is an intent to receive or assist in receiving unpurchased programming.
Norris's Proposed Instruction No. 6.
It is not a violation of § 553 to use a customer-owned descrambler to view programming that a customer has purchased.
Norris's Proposed Instruction No. 7.
In 1988 the United States Court of Appeals for the Seventh Circuit (the federal appellate court having jurisdiction over federal cases brought in Indiana, Illinois, and Wisconsin) handed down a case entitled United States v. Gardner,860 F.2d 1391 (7th Cir.1988). The United States Court of Appeals stated in that Gardner case that a person could not be convicted of an offense under 47 U.S.C. § 553 if he sold so-called black boxes (meaning nonaddressable de-scramblers) with the intent that they be used for lawful purposes.
Norris's Proposed Instruction No. 8.
. The government argues that this court should review Norris's rejected jury instructions for plain error because Norris did not properly object to the court's Instruction No. 18. "Merely submitting an instruction is not enough. A defendant must object to the judge’s refusal on the record and clearly state the reasons for his objections. Otherwise, we will review a district court’s refusal of a proposed jury instruction for plain error.”
Kata-linich,
. Instruction 18 was adopted from our Gardner opinion. See 860 F.2d'at 1399 ("To convict under § 553, the jury was not required to find that the black boxes were sold for the sole and specific purpose of cable piracy, nor that the boxes were actually used illegally. Rather, the jury only needed to find that [defendant] intended the black boxes to be used for the unauthorized reception of cable service when hе sold the boxes to [his customer].”).
. See supra note 8.
. In this regard, Norris's and Gee’s case is unlike the quintessential illegal drug case that forms the basis for conspiracy case law in this circuit.
See, e.g., Menting,
. U.S.S.G. § 3E1.1 allows a two-level offense level reduction if "the defendant clearly demonstrates acceptance of responsibility for his offense.” This reduction does not generally apply, however, in situations, like here, where the defendant "puts the government to its burden of proof at trial by denying the essential factual elements of guilt.” U.S.S.G. § 3E1.1 cmt. 2.
. U.S.S.G. § 5K2.0 states:
an offender characteristic or other circumstance that is, in the Commission’s view, "not ordinarily relevant” in determining whether a sentence should be outside the applicable guideline range may be relevant to this determination if such characteristic or circumstance is present to an unusual degree and distinguishes the case from the "heartland” of cases covered by the guidelines.
. U.S.S.G. § 5H1.4 states:
Physical condition or appearance, including physique, is not ordinarily relevant in determining whether a sentence should be outside the applicable guideline range. However, an extraordinary physical impairment may be a reason to impose a sentence below the applicable guideline range; e.g., in the case of a seriously infirm defendant, home detention may be as efficient as, and less costly than, imprisonment.
. This was the only evidence presented by the government at Norris's sentencing in arguing against departure.
. U.S.S.G. § 5B1.1 cmt. 2 states: "Where the applicable guideline range is in Zone C or D of the Sentencing Table ..., the guidelines do not authorize a sentence of probation.”
U.S.S.G. § 5C1.1 (f) states that “[i]f the applicable guideline range is in Zone D of the Sentencing Table, the minimum term shall be satisfied by a sentence of imprisonment." Comment 8 to § 5C 1.1(f) precludes the use of any imprisonment substitutes where the applicable guideline range is in Zone D.
U.S.S.G. § 5F1.2 states that "Home detention may be imposed as a condition of probation or supervised release, but only as a substitute for imprisonment.”