Shou Mei pleaded guilty to six felonies stemming from his role in a conspiracy to commit fraud using counterfeit credit cards, and now challenges the calculation of the financial loss used to determine his sentences. Although he conceded stealing nearly $600,000, the district court determined that Mei intended to cause a loss of more than $1.9 million. Most of the credit cards involved in the conspiracy were never recovered, so the district court estimated Mei’s intended loss by multiplying the average maximum credit limit of the recovered cards with known credit limits by the total number of cards used during the conspiracy. Mei contends that the method used by the district court to calculate the loss was not reasonably reliable, and that the actual financial losses he caused more reasonably reflect the harm. We affirm.
The story begins in early 1999, just after Mei was released from federal custody in Ohio after serving time for attempted credit card fraud (his second credit card fraud-related federal conviction, it turns out). Under pressure to make good on his gambling debts, Mei returned to Chicago to raise cash. His fund-raising scheme involved having accomplices place “skimmers,” portable data storage devices that capture information from the magnetic strip on the back of a credit card, in Chinese restaurants, where corrupt cashiers and servers would swipe the cards of unsuspecting diners. Mei downloaded the information from the skimmers onto a computer that he used to produce counterfeit credit cards and matching identification. On May 17, 1999, Mei gave four cards bearing the name “Xin Chan” to an accomplice, Lau Ming, who tried to use the cards at a Marshall Field’s department store in Calumet City, Illinois. The cards did not work and were confiscated. Mei gave four more “Xin Chan” cards to another accomplice (and a future government informant) known only as “Person A,” who attempted the same fraud at the same store. Again the cards did not work and were confiscated. Mei continued to produce cards, however. Ming, along with
On June 15, 1999, Mei hosted a meeting of Ming, Person D, and accomplices Chris Huang, Zhou Li, and Nom Tin Chan. There, Mei introduced a profit-sharing arrangement by which he would distribute to each of them counterfeit credit cards and matching identification, and in turn each would use the cards to obtain cash or goods that Mei could trade for cash, on the illegal market. Any person able to obtain $12,000 or more would share in the profits of the scheme. In addition, Mei urged the crew to place his skimmers in restaurants, and offered to pay $20 for each stolen credit card number.
At the same time, Mei was trafficking counterfeit cards to persons operating in Ohio. One of his Ohio contacts, a government informant known as “Person C,” bought 30 cards and matching identification from Mei in Chicago, returned to Ohio, and made approximately $12,000 in bogus purchases. Mei then delivered 30 more cards to Person C in Ohio, who charged another $12,000. On another occasion, Person C and another informant known as “Person B” met Mei outside of a McDonald’s restaurant in Highland, Indiana, where they gave Mei $16,300 for 20 cards and matching identification. Through the end of 1999, Mei sold Persons B and C approximately 130 cards along with several matching driver’s licenses and at least two skimmers for about $40,000. And by November 1999, Person B had obtained over $33,000 with the cards, in part by taking out cash advances at Indiana riverboat casinos.
The scheme continued into the following year. In early February, Mei arranged to deliver 20 cards and matching identification to Person A. Then, on February 19, 2000, Mei and Chris Huang ordered $30,000 in computer equipment from Urban Computer in Chicago, telling the salesperson that they were starting an internet business. They arranged to pay for and pick up the equipment the next day. Mei, Ming, Huang, Zhou Li, Nom Tin Chan, and Person A met at Mei’s home the next morning. Mei distributed 20 cards each to Ming, Li, Chan, and Person A, and at noon they boarded vans and proceeded to Urban Computer. Mei remained in one of the vans, but directed Huang to negotiate the remainder of the sale. Although many of the 80 cards did not work, Ming, Li, Chan, and Person A produced card after card until they found some that did work. Eventually, Ming charged $11,550, Li charged $8,550, and Person A charged $10,050. As they loaded up the vans and prepared to do additional “shopping,” federal agents, tipped off by Person A, intervened and arrested everyone. Mei was indicted on charges of conspiracy to commit credit card fraud, trafficking in one or more credit cards, possessing fifteen or more counterfeit credit cards, plus three counts of aiding and abetting the use of counterfeit credit cards. See 18 U.S.C. §§ 2, 1029(a)(1), (a)(3), (b)(1). Huang, Ming, Li, and Chan were named in the same indictment as co-conspirators. Persons B and C later told the government that the object of the scheme was simply to steal as much as possible by using each card up to its credit limit or until it no longer functioned.
Pointing out that the estimate was based on a sampling of just 16 percent of the cards employed during the conspiracy, Mei argued that the government’s loss estimate was too speculative. Instead, he urged the court to adopt one of what he asserted were two more reasonable methods of calculating his loss. First, Mei suggested multiplying the average actual loss to each victim ($2,722.61) by the number of cards placed at risk (219). This calculation resulted in an estimated loss of $596,251.59. Alternatively, he suggested multiplying the average loss for the cards in each category by the number of cards seized or used in each category, which resulted in a slightly lower loss estimate of $555,191.79. Both alternatives would have increased Mei’s base offense level by ten under U.S.S.G. § 2Fl.l(b)(l)(K). The district court rejected Mei’s suggestions, however, finding that the government’s calculation more accurately reflected the loss because Mei “intended to gouge his victims for every penny he could with every card that he had in every way that he knew.” The addition of the 12-level increase to his offense level set Mei’s guideline range at 57-71 months. The district court imposed the maximum term allowed in the range.
On appeal, Mei argues that the district court’s loss calculation was unreasonable, and that either of his two suggested alternative methodologies provide a more accurate and reasonable estimate of the loss. He contends that neither the sentencing guidelines nor the cases interpreting them sanction the averaging methodology applied by the district court; that even if it were proper to employ an averaging methodology in this case, the methodology was too imprecise to render a reasonable estimate of the loss; and that even if the methodology employed by the
The base offense level for fraud and deceit crimes is subject to graduated increases based on the amount of financial loss attributable to the defendant, if the loss exceeds $2,000. U.S.S.G. § 2F1.1(b)(1). The commentary following the guideline, which is an authoritative interpretive aid explaining how the guideline should be applied, U.S.S.G. § 1B1.7;
United States v. DeCicco,
Intended loss, if it can be determined, is applied in fraud cases because the actual amount of money or property obtained generally understates the true financial loss.
See id.; United States v. Snyder,
Both of Mei’s suggested methodologies estimate the actual losses he inflicted, so either might stand in as an acceptable alternative if his intended loss could not be reasonably estimated. We believe, however, that there was sufficient information for the district court to determine the intended loss, and that the methodology it employed to do so was appropriate. Despite Mei’s contention otherwise, we, as well as other courts and the Sentencing Commission, have approved averaging as a reasonable method of calculating intended loss in fraud cases.
See Scott,
Mei contends, however, that the representative sampling of cards with known credit limits was far too small to render a
Of course, these numbers hold water only if, as the district court found, Mei “intended to gouge his victims for every penny he could with every card that he had in every way that he knew.” Mei argues that this finding is contrary to the evidence before the court at sentencing. He points out that only one card was used up to its maximum credit limit, and that only two other cards were used close to their maximum credit limits. He further argues that he could not have intended to use each card up to its limit because it was not possible for him to do so. But Mei’s failure to exploit the cards to their fullest potential is not dispositive — it is irrelevant that the full extent of the risk did not materialize.
Higgins,
Here, there was plenty of evidence for the district court to conclude that Mei intended to use each card up to its limit if possible: the profit-sharing arrangement Mei introduced, whereby his accomplices would share in the profits of the scheme only after they had charged at least $12,000, suggested to and encouraged his accomplices to charge as much as possible; Persons B and C indicated that they purchased cards from Mei with the understanding that they were to use the cards to their maximum limits; and there is nothing in the record or the briefs suggesting that Mei or his accomplices set a limit on
Because we see no error in the calculation of Mei’s intended loss, we Affirm the judgment of the district court.
Notes
Mei was sentenced under the guidelines manual effective November 1, 1998. On November 1, 2001, the Sentencing Commission deleted § 2F1.1 and consolidated its provisions as amended with § 2B1.1. See U.S.S.G.App. C, amendment 617. All references in this opinion to guidelines sections are to the 1998 version of the manual.