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U.S. v. ABUHAMRA

June 24, 2005.

UNITED STATES OF AMERICA,
v.
MOHAMED ABUHAMRA, AREF AHMED, RMZY ABDULLAH, NAGIB AZIZ, and AZZEAZ SALEH, Defendants.



The opinion of the court was delivered by: RICHARD ARCARA, District Judge

DECISION AND ORDER

INTRODUCTION

On March 3, 2004, defendants Mohamed Abuhamra, Aref Ahmed, Rmzy Abdullah, Nagib Aziz and Azzeaz Saleh were found guilty following a jury trial of conspiracy to commit money laundering, in violation of 18 U.S.C. § 1956(h), and substantive violations of the Contraband Cigarette Trafficking Act, 18 U.S.C. § 2342(a). Currently before the Court are: (1) defendants' objections to the amount of loss determinations in their respective Presentence Investigation Reports ("PSR"); (2) the government's request for a two-level upward adjustment for use of a minor by defendant Mohamed Abuhamra; and (3) the government's motions for upward departures regarding defendants Nagib Aziz and Azzeaz Saleh, based on their alleged participation in a robbery of another cigarette smuggler. A sentencing hearing was held on February 9 and May 4, 2005. BACKGROUND

  From February 1995 to January 1997, defendants, along with 27 other codefendants, participated in a scheme whereby they bought large quantities of untaxed cigarettes from a smokeshop located on the reservation of the Seneca Nation of Indians, and then transported and sold such cigarettes in New York and/or Michigan, without collecting or paying any state excise taxes. At least some of the proceeds from the sale of the cigarettes were used to buy additional cigarettes to perpetuate the scheme.

  The defendants would usually order the cigarettes in advance from the smokeshop, which was owned and operated by witness Linda Mohawk ("Mohawk"). Once Mohawk received an order from a defendant, she would, in turn, relay the order to her cigarette wholesaler, defendant A.D. Bedell Company ("A.D. Bedell"). On each such order to A.D. Bedell, Mohawk would indicate a "code name" for the particular defendant making the order. For example, Mohawk testified that the code name for defendant Aref Ahmed was "AT." Once A.D. Bedell received an order from Mohawk, it would prepare an invoice for that order, charging a special account set up by Mohawk for this smuggling activity and indicating the code name of the particular defendant making the order. Thus, an A.D. Bedell invoice for an order by Aref Ahmed would have indicated that the order was for "AT."

  According to the PSR, if all the cigarettes for which there are invoices would have been sold in New York, the total amount of tax loss to New York would have been $12,750,645. Likewise, if all the cigarettes had been sold in Michigan, the total tax loss to Michigan would have been $17,760,758. There is no evidence of exactly how many cigarettes were sold in New York as opposed to Michigan.

  DISCUSSION

  A. Amount of Loss

  Section 1B1.3 of the United States Sentencing Guidelines ("U.S.S.G.") provides that when determining the amount of relevant conduct for which a defendant is to be held accountable, the sentencing court should include:
in the case of jointly undertaken criminal activity (a criminal plan, scheme, endeavor, or enterprise undertaken by the defendant in concert with others, whether or not charged as a conspiracy), all reasonably foreseeable acts and omissions of others in furtherance of the jointly undertaken criminal activity, that occurred during the commission of the offense of conviction, in preparation for that offense, or in the course of attempting to avoid detection or responsibility for that offense[.]
See U.S.S.G. § 1B1.3(a)(1)(B). Application Note 2(c) of § 1B1.3 provides several examples to assist courts in determining whether a defendant should be held accountable for jointly undertaken criminal activity. Both the government and the defendants agree that the most relevant example with regard to this case is Application Note 2(c)(6), which provides as follows:
Defendant P is a street-level drug dealer who knows of other street-level drug dealers in the same geographic area who sell the same type of drug as he sells. Defendant P and the other dealers share a common source of supply, but otherwise operate independently. Defendant P is not accountable for the quantities of drugs sold by the other street-level drug dealers because he is not engaged in a jointly undertaken criminal activity with them. In contrast, Defendant Q, another street-level drug dealer, pools his resources and profits with four other street-level drug dealers. Defendant Q is engaged in a jointly undertaken criminal activity and, therefore, he is accountable under subsection (a)(1)(B) for the quantities of drugs sold by the four other dealers during the course of his joint undertaking with them because those sales were in furtherance of the jointly undertaken criminal activity and reasonably foreseeable in connection with that criminal activity.
  The government contends that the defendants in this case are "Q's" rather than "P's," and therefore each of them should be held accountable for the entire amount of tax loss resulting from the conspiracy because all such losses were in furtherance of the jointly undertaken criminal activity and reasonably foreseeable in connection with that criminal activity. The government argues that the defendants should be considered "Q's" because they employed common drivers to transport the cigarettes (in some instances, they even used each other as drivers). According to the government, such pooling of resources makes defendants "Q's" rather than "P's." The government's theory results in a New York tax loss of $12,740,645 and a Michigan tax loss of $17,760,758, with a corresponding base offense level of 26 for each defendant. See U.S.S.G. §§ 2S1.1(a)(1), 2E4.1(a)(2), 2T4.1(K). As stated above, these tax loss amounts were derived from totaling all the A.D. Bedell invoices for the cigarette orders that were part of the scheme and calculating the tax owing thereon.

  In the alternative, the government argues that even if the defendants were considered to be "P's" rather than "Q's," the base offense level for each defendant would still be 26. The government arrives at this conclusion based on evidence regarding how frequently each defendant picked up cigarettes at the smoke shop and how large their loads usually were, along with evidence regarding the invoices from A.D. Bedell. See Item No. 1101. According to the government, when the amount of trips each defendant made to the smokeshop is multiplied by the average load, the total tax loss caused by each defendant is in excess of $2.5 million, which under U.S.S.G. §§ 2S1.1(a)(2) and 2B1.1(b)(1)(J), the government argues, results in a base offense level of 26.*fn1

  Contrary to the government, the defendants contend that they should be considered "P's" rather than "Q's." Defendants argue that although they may have had a common source of supply, i.e., A.D. Bedell and the smokeshop, there is no evidence that they participated in jointly undertaken criminal activity. They each operated their own businesses independently of their codefendants. There is no evidence that they received any type of benefit from or had any responsibility for any of the businesses or activities of their codefendants. Perhaps most importantly, there is no evidence that they pooled their profits or had any financial interest in each other's businesses. Thus, defendants argue, they should each be held accountable only for the amount of tax loss for which the government can prove they were each personally responsible.

  Defendants further argue that the government has failed to prove any specific tax loss amounts by a preponderance of the evidence. They argue that the government relies almost exclusively on the testimony of Linda Mohawk, who is not a credible witness. For example, defendants argue, Mohawk testified at trial that the code name "AT" belonged to defendant Aref Ahmed, yet before the grand jury, she testified that the code name "AT" belonged to someone else. Defendants also point out that while Mohawk testified at trial that the defendants came to the smoke shop hundreds of times over the period of the conspiracy, they appear on relatively few of the approximately 400 in-store video surveillance tapes she provided to the government. Thus, defendants argue, because the government has failed to prove by a preponderance of the evidence any specific tax loss amounts attributable directly to each defendant, the Court must apply the minimum base offense level of 9 for each of them. See U.S.S.G. §§ 2S1.1(a)(1) and 2E4.1(a)(1).

  In the alternative, at least some of the defendants argue that the most tax loss they should each be held accountable for is the amount traceable directly to each of them through the code names used on the A.D. Bedell invoices. This would result in a different base offense level for each defendant, each of which would be substantially lower than the base offense level of 26 proposed by the government.

  The Court finds that the defendants should be considered "P's" rather than "Q's." In United States v. Studley, 47 F.3d 569, 575 (2d Cir. 1995), the Second Circuit, in discussing the example in Application Note 2(c)(6) to § 1B1.3, stated as follows:
This illustration demonstrates, first, that a defendant's knowledge of another participant's criminal acts is not enough to hold the defendant responsible for those acts. It also demonstrates that a relevant factor in determining whether activity is jointly undertaken is whether the participants pool their profits and resources, or whether they work independently. P's success was not dependant upon the other dealers in the area, whereas Q's success was directly tied to the activities of the other dealers.
  Here, the evidence adduced at trial and at the hearing supports the conclusion that each defendant's agreement to participate in the cigarette smuggling scheme was limited to his own smuggling activity and did not encompass the smuggling activity of the other smugglers. Each defendant operated independently, with the objective of making as much money as possible for ...

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