United States District Court, E.D. Michigan, Southern Division
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.
Ali Naser Muaalla and Sena Ali Muaalla were indicted on June
27, 2017. 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).
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”).
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
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.
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.
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.
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.
Defendants' Economic Loss
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, ...