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United States v. Muaalla

United States District Court, E.D. Michigan, Southern Division

June 12, 2018

United States of America, Plaintiff,
v.
Ali Naser Muaalla and Sena Ali Muaalla, Defendants.

          Elizabeth A. Stafford United States Magistrate Judge.

          OPINION AND ORDER ACCEPTING IN PART AND REJECTING IN PART GOVERNMENT'S CALCULATION OF ECONOMIC LOSS

          GERSHWIN A. DRAIN UNITED STATES DISTRICT JUDGE.

         I. Introduction

         Defendants Ali Naser Muaalla and Sena Ali Muaalla were indicted on June 27, 2017.[1] See Dkt. No. 1. Then, on January 16, 2018, both Defendants pleaded guilty to certain charges. See Dkt. Nos. 28, 31. Ali pleaded guilty to Count I of the Indictment, which charged him with conspiring to defraud the United States, 18 U.S.C. § 371. See Dkt. No. 28. Sena, on the other hand, pleaded guilty to Count I of a First Superseding Information, which charged her with food stamp fraud of less than $100, 7 U.S.C. § 2024(b). See Dkt. No. 27, p. 1 (Pg. ID 89); see also Dkt. No. 31, pp. 1-2 (Pg. ID 101-02).

         The parties dispute only the amount of economic loss for incorporation into the Defendants' sentencing guidelines calculation. See U.S.S.G. § 2B1.1(b)(1). And even there, the Defendants generally acknowledge the Government's proposed methodologies, which are the “comparative store method” and “post-search warrant” method. According to the Government, Ali's economic loss is between $1, 595, 000 (post-search warrant method) and $2, 138, 000 (comparative store method). Dkt. No. 35, pp. 13, 17 (Pg. ID 147, 151). Sena's economic loss, the Government contends, is between $1, 526, 000 (post-search warrant method) and $1, 936, 000 (comparative store method). Id. at pp. 13-14, 17-18 (Pg. ID 147-48, 151-52). These totals combine both Defendants' supposed economic loss for the Supplemental Nutrition Assistance Program (“SNAP”) and the Special Supplemental Nutrition Program for Women, Infants, and Children (“WIC”).

         The Government, on March 23, 2018, submitted a sentencing memo outlining its economic loss analysis. See Id. The Defendants did not file sentencing memoranda, but presented their positions at an evidentiary hearing, which the Court held over three days, starting on May 30, 2018. See Dkt. No. 36. For the following reasons, the Court will ACCEPT IN PART and REJECT IN PART the Government's calculation of loss. The Court will find that the Government has demonstrated by a preponderance of evidence that the Defendants' loss amount is greater than $550, 000, but no more than $1, 500, 000. Therefore, Ali and Sena's specific offense characteristics yield a score of fourteen points.

         II. Background

         Ali owned and operated a convenience store called Modern Save A Lot, which was located in Dearborn, Michigan. Dkt. No. 28, p. 2 (Pg. ID 93). Sena, Ali's daughter, helped manage the store. Dkt. No. 31, p. 2 (Pg. ID 102). Modern Save A Lot accepted SNAP and WIC benefits from its customers, utilizing authorization from the United States Department of Agriculture (“USDA”). Dkt. No. 28, p. 2 (Pg. ID 93). Both Defendants pleaded guilty to accepting SNAP and WIC benefits in exchange for a discounted amount of cash, ineligible items (e.g. tobacco, hookah pipes), or both. Id.; see also Dkt. No. 31, p. 2 (Pg. ID 102). Additionally, Ali acknowledges purchasing SNAP and WIC benefits in exchange for cash and using the benefits at other stores to obtain merchandise for Modern Save A Lot. Dkt. No. 28, p. 2 (Pg. ID 3). The economic loss attributable to Ali spans from December 2006 through November 2013, and that for Sena stretches from January 2010 to November 2013. See, e.g., Dkt. Nos. 35-12, 35-14.

         During the evidentiary hearing, the Court heard testimony from Travis Deters, a Special Agent of the USDA, Office of the Inspector General. He calculated the Government's estimation of the Defendants' economic loss, and explained his methods. First, for the comparative stores method, he said that he used USDA Food and Nutrition Service categorizations to identify comparable stores. Next, he identified five other convenience stores within three miles of Modern Save A Lot that had also redeemed SNAP and WIC benefits during the relevant period. On the assumption that these stores had only legal sales, Deters averaged these stores' SNAP and WIC redemptions for each month during the relevant period. Third, he subtracted the comparable stores' average each month during the relevant period from Modern Save A Lot's SNAP and WIC redemptions for each corresponding month. By totaling the difference for each relevant month, Deters arrived at the amount of economic loss attributable to each Defendant.

         The post-search warrant method is relatively simple. It assumes that Modern Save A Lot stopped making fraudulent sales after the execution of the search warrant in November 2013. The method compares (1) the average of the SNAP and WIC redemptions in each post-search warrant month with (2) the SNAP and WIC redemptions for each pre-search warrant month. Deters stated that, after adding the difference between these two figures for the relevant time periods, he arrived at the total economic loss based on the post-search warrant method.

         III. Discussion

         The Court concludes that the Defendants' proposal of economic loss of $64, 321.81 is unsupported by the evidence. The Government has also not demonstrated by a preponderance of the evidence that the Defendants' economic loss is greater than $1, 500, 000. Yet the Government has presented sufficient evidence for the Court to find that the Defendants' loss amount is greater than $550, 000, but less than $1, 500, 000.

         A. Defendants' Economic Loss

         The Government must prove-by a preponderance of the evidence-the amount of economic loss. See United States v. White, 846 F.3d 170, 179 (6th Cir. 2017) (citing United States v. Healy, 553 Fed.Appx. 560, 564 (6th Cir. 2014)). “When determining the amount of loss for sentencing purposes, ” the Sixth Circuit has instructed district courts to estimate economic loss as “the actual or intended loss to a victim, whichever is greater, or a combination thereof.” United States v. Mahbub, 818 F.3d 213, 231 (6th Cir. 2016) (internal quotation marks and citations omitted). Courts do not have to be precise. See United States v. Sayed, No. 13-CR-20496, 2014 WL 7157104, at *1 (E.D. Mich. Dec. 14, 2014) (citing United States v. Triana, 468 F.3d 308, 320 (6th Cir. 2010)). Instead, only reasonableness is necessary. U.S.S.G. § 2B1.1, cmt. app. note 3(C); see also United States v. Wendlandt, 714 F.3d 388, 393 (6th Cir. 2013) (concluding that “[b]ecause of the difficulties often associated with attempting to calculate loss in a fraud case, ...


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