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United States v. Uddin

January 6, 2009

UNITED STATES OF AMERICA, APPELLEE,
v.
MOHAMMED UDDIN, DEFENDANT-APPELLANT.



SYLLABUS BY THE COURT

Appeal from a judgment of conviction of the United States District Court for the Southern District of New York (Stein, J.) sentencing defendant to twenty-one months' imprisonment, two years of supervised release, and forfeiture of $377,799. We affirm, finding that the district court's loss calculation was a reasonable estimate of the loss caused by the defendant, and that the district court's forfeiture calculation was not plainly erroneous.

The opinion of the court was delivered by: Katzmann, Circuit Judge

Argued: October 23, 2008

Before KEARSE, SACK, and KATZMANN, Circuit Judges.

This case calls on us to determine whether a district court's loss calculation was reasonable in the absence of data as to the exact amount of loss. Defendant-appellant Mohammed Uddin appeals from a judgment of conviction of the United States District Court for the Southern District of New York (Stein, J.) for food stamp fraud and theft of public property. The district court sentenced Uddin to twenty-one months' imprisonment, two years of supervised release, and forfeiture of $377,799. Because we find that the district court's loss calculation was a reasonable estimate of the loss caused by the defendant, and that the district court's forfeiture calculation was not plainly erroneous, we affirm the conviction and sentence.

FACTUAL BACKGROUND

Mohammed Uddin owned a small grocery store on Ninth Avenue in Manhattan called Dhaka Grocery Inc. In 2000, Uddin applied to the United States Department of Agriculture's ("USDA") Food and Nutrition Service for a license to redeem food stamps at his store. His application was accepted, and he set up a bank account to receive reimbursements from the federal government for food stamps redeemed at his store.

The government began investigating Uddin's participation in the food stamp program in January 2006. Through a series of transactions initiated by confidential witnesses and video surveillance, the government concluded that Uddin was dispensing cash in exchange for food stamps. Uddin was indicted on November 8, 2006, and was arrested by USDA agents the following day. The indictment charges Uddin with "exchang[ing] several hundred thousands of dollars of customers' food stamp benefits for cash at his Manhattan grocery store in exchange for a share of the cash proceeds." In particular, the indictment alleges two violations of federal law:

(1) food stamp fraud in violation of 7 U.S.C. §§ 2024(b)(1), 2016 and 7 C.F.R. § 278.2, and (2) conversion of public money, property, or records, in violation of 18 U.S.C. §§ 641, 2. The indictment also contains forfeiture allegations, pursuant to 18 U.S.C. § 981(a)(1)(C) and 28 U.S.C. § 2461, seeking all proceeds traceable to the commission of the offenses.

Uddin pled guilty to both counts of the indictment without a plea agreement on February 14, 2007. At the plea colloquy, Uddin admitted that he knowingly and intentionally exchanged food stamps for cash in excess of $5,000, the jurisdictional amount, while keeping "some of the money" for himself.

Prior to sentencing, the government argued to the district court that the proper loss amount from Uddin's offense was $1,259,330.39, an amount it calculated by assuming that all food stamp redemptions exceeding $50 between 2003 and November 2006 were fraudulent. Uddin maintained that any losses exceeding $5,000, the amount to which he had admitted at his plea, were not supported by the evidence. The district court held a Fatico hearing on May 31, 2007, to assess the loss amount.

At that hearing, the government called two witnesses. Special Agent Christopher Santangelo testified that he learned during the course of his investigation that from 2003 to 2006 Uddin's grocery store redeemed several times the value in food stamp benefits than did two comparably sized grocery stores nearby. Moreover, in 2006 Uddin exchanged food stamps for cash with a confidential government informant on fourteen occasions. Santangelo testified as well about the loss amount resulting from Uddin's food stamp transactions. To determine that amount, Santangelo estimated, based on his training and experience, that transactions involving $50 or more in such a store were highly unusual; and based on that training and his observations of Dhaka Grocery, his view was that most or all of the food stamp redemptions in excess of $50 at Dhaka Grocery were fraudulent. He characterized this $50 threshold as "a conservative figure" because of the (1) limited supply of eligible food items in the store, (2) dusty, outdated stock of eligible items, "which indicated . . . that the eligible foodstuffs in Dhaka Grocery remained on the shelves for long periods of time without being purchased," (3) small size of the store, (4) lack of baskets or carts, which would have made it difficult to purchase large amounts of food, and (5) lack of any delivery service. Santangelo also described video surveillance of the store from 2006, which showed that on days and at times during which Dhaka Grocery claimed to have engaged in large food stamp transactions, "no customers appeared to emerge from Dhaka Grocery . . . carrying groceries worth $50.00 or more," most customers appeared carrying small bags or nothing, and "other customers . . . appeared to emerge from [the store] while counting cash in their hands." Using this $50 threshold, combined with data that revealed that 82% of the total food stamp benefits redeemed by Dhaka Grocery from 2003 through Uddin's arrest in 2006 involved transactions of $50 or more, Santangelo calculated the loss amount as totaling $1,259,330.39.

On cross examination, Santangelo admitted that he had observed the store only in 2006, not during 2003 through 2005. Defense counsel also brought out that Santangelo had no evidence that the purchases he deemed fraudulent were totally fraudulent-in other words, a $50 purchase could have been partially fraudulent, with the food stamp recipient purchasing food as well as receiving cash.

The government also called Gilda Torres, the officer in charge of the New York office of the Food and Nutrition Service of the USDA, who corroborated that (1) Dhaka Grocery's redemptions were much higher than those of comparable nearby stores and (2) the store reported many large transactions in close temporal proximity. Torres also testified, based on her review of the transaction data and of a November 2006 video that showed the store's limited stock, that the number of over-$50 transactions being reported was unusual. Torres noted further that the store was well-stocked and "full of food" when the license to redeem food stamps first was granted in 2002, but it had very little eligible food in 2006. On cross-examination, Torres agreed that she had not looked at the store's stock at any time other than when she viewed pictures of the store when it first opened in 2002 and viewed the November 2006 video, and that she had not done any statistical analyses ...


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