Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca7-18-03334/USCOURTS-ca7-18-03334-0/pdf.json

Parties Involved:
Hamza Dridi
Appellant
United States of America
Appellee

Document Text:

In the

United States Court of Appeals

For the Seventh Circuit ____________________

No. 18-3334

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

v.

HAMZA DRIDI, a/k/a ALEX,

Defendant-Appellant.

____________________

Appeal from the United States District Court for the

Southern District of Indiana, Indianapolis Division.

No. 16-cr-00167 — William T. Lawrence, Judge.

____________________

ARGUED DECEMBER 4, 2019 — DECIDED MARCH 13, 2020

____________________

Before MANION, KANNE, and BARRETT, Circuit Judges.

KANNE, Circuit Judge. From 2012 to 2015, employees of 

Elite Imports, a car dealership, engaged in a variety of fraudulent activities. For his involvement in these illegal schemes, 

one employee, Hamza Dridi, was charged with conspiring to 

violate the Racketeer Influenced and Corrupt Organizations 

Act, 18 U.S.C. § 1962(d), and interstate transportation of stolen 

property, 18 U.S.C. § 2314. A jury found him guilty of both 

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crimes. The district court sentenced him to 72 months in 

prison and ordered $1,811,679.25 in restitution.

Dridi now challenges his sentence and the restitution order, arguing that the district court—before sentencing Dridi 

and ordering restitution—should have made specific factual 

findings about Dridi’s participation in the conspiracy.

We agree with Dridi that the district court erred both by 

not making specific factual findings prior to sentencing Dridi 

and by not adequately demarcating the scheme before imposing $1,811,679.25 in restitution. But because only the second 

error affected Dridi’s substantial rights, we affirm Dridi’s 

prison sentence, vacate the restitution order, and remand the 

issue of restitution for further proceedings consistent with 

this opinion.

I. BACKGROUND

Mahammad Hindi and Mohamed Mahmoud co-owned 

two car dealerships in Indianapolis: Elite Imports and Elite 

Car Imports (collectively “Elite Imports”). By 2012, Elite Imports’s employees were engaged in a variety of illegal 

schemes intended to defraud lenders and insurance companies.

A. Fraudulent Schemes

Before acquiring cars for resale, Elite Imports needed to 

obtain financing from floor-plan lenders. Floor-plan lenders 

provide loans to dealerships like Elite, enabling them to buy 

cars in bulk. In exchange for these loans, a dealership agrees

that, shortly after a car is sold, the dealership will pay the 

floor-plan lender the amount borrowed for that car. To ensure 

payment, floor-plan lenders hold on to the title of each car, 

and only release the title to a dealership once the floor-plan 

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lender receives payment for the car. Floor-plan lenders also 

send auditors to a dealership’s car lot to make sure the dealership is not selling cars without repaying the loan after each 

sale.

However, Elite Imports’s employees found a way around 

acquiring a car’s title from floor-plan lenders: lying. Instead 

of seeking the original title from the floor-plan lender, an Elite 

Imports employee would obtain a copy of the car’s title from 

the Indiana Bureau of Motor Vehicles’s online portal. If a copy 

of the title could not be acquired, employees could still avoid 

asking floor-plan lenders to release the car’s title—by continually issuing the customer temporary license plates.

To prevent this scheme from being detected by floor-plan 

lenders and their auditors, Elite Imports’s employees would 

call customers and request that their cars be returned to the 

lot for a VIN number inspection or a free oil change. The customers who obliged would return their cars to the lot before 

an auditor’s inspection. If a car could not be returned, employees would simply lie to the auditor, saying that the car 

was not on the lot due to a test drive or repairs.

In the end, this multi-layered scheme allowed Elite Imports to sell cars without repaying floor-plan lenders.

Elite Imports’s employees also defrauded consumer lenders. Sometimes, employees would be approached by customers who could not afford a car without a loan and did not 

qualify for a consumer loan. To sell cars to these customers, 

employees helped the customer submit fraudulent applications to consumer lenders. Employees would create fake bank 

statements, driver’s licenses, and social security cards for the 

customers to send to their lenders. Multiple customers used 

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these fraudulent documents to obtain financing for a car purchase. When the loan was approved, the lenders paid Elite 

Imports the price of the vehicle, shifting all risk of loan nonpayment to the consumer lenders, who were often never repaid by the customer.

In a final scheme, Elite Imports’s employees used the dealership’s resources to defraud insurance companies for their 

own financial gain. Multiple employees used a chop shop located behind the dealership to disassemble their own vehicles. The employees would then report their vehicles as stolen 

to law enforcement agencies and insurance companies. Employees even directed customers to file similarly fraudulent 

insurance claims. The employee or the customer would then 

receive insurance proceeds on the reportedly stolen car.

B. Dridi’s Involvement

The parties dispute the exact time Dridi began working for 

Elite Imports. The government claims Dridi started in late 

2012 or early 2013; Dridi claims it was late 2013 but testified 

at trial that he did not remember the exact date. Although the 

record does not pin down exactly when Dridi began working 

there, it does reveal his employment began in or before May 

2013: Pam Tatom, Elite Imports’s finance manager, testified 

that Dridi was already working at Elite Imports by the time 

she started working there in May 2013. 

At some point after Dridi began working for Elite Imports, 

he participated in various aspects of its fraudulent schemes. 

For example, Dridi opened an insurance policy on a truck in 

August 2013. A few months later, he reported the truck stolen 

and collected $1,600.90 in insurance proceeds.

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Looking at another example, by late 2014, Elite Imports 

had promoted Dridi to service manager, a position in the 

body shop. In this role, Dridi oversaw the disassembly of multiple vehicles that would later be reported stolen. Specifically, 

Dridi directed an employee to disassemble a red Ducati motorcycle that belonged to another employee, Mahdi Khelefi. 

Khelefi then reported the motorcycle stolen, received a check 

for the proceeds, and endorsed that check to Dridi.

Dridi also participated in Elite Imports’s other fraudulent 

activity. In preparation for an audit by floor-plan lenders, 

Dridi would call customers to request that they return their 

cars to the lot; then, he would help clean the car so auditors 

could not tell the car had been sold. Additionally, Tatom 

would email Dridi documents to be used in defrauding consumer lenders.

C. Charges, Trial, and Sentencing

In an eight-count indictment in August 2016, the government charged four Elite Imports employees—Mohamed 

Mahmoud, Mahdi Khelefi, Issa Kayyali, and Hamza Dridi—

for their roles in Elite Imports’s fraudulent schemes. Dridi 

faced two counts: conspiring to violate the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962(d), 

and interstate transportation of stolen property, 18 U.S.C. § 

2314. Mahmoud and Kayyali pled guilty; Dridi and Khelefi 

proceeded to trial.

In a nine-day joint jury trial, the government called nearly 

sixty witnesses, including Dridi’s coconspirators, representatives from defrauded insurance companies and lenders, and 

former Elite Imports customers. The jury found Dridi guilty 

of both charged counts.

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After Dridi’s trial, but before he was sentenced, the district 

court sentenced Mahmoud, the conspiracy leader. For 

Mahmoud’s sentencing, the court required the government to 

“prepare and file a chart that lists each victim, the fraud 

scheme with which that victim is associated, the loss amount 

for that victim, the restitution amount due to that victim, and 

the source or sources for the loss and restitution numbers.” 

The government complied and concluded that Elite Imports’s

fraud schemes caused $1,812,788.19 in total loss.

A few months later, the probation office submitted Dridi’s 

final revised presentence investigation report (“PSR”). Based 

on the government’s loss calculation and updated victim information, the PSR indicated that the offense1 involved 

$1,848,868.50 in loss. Using this loss amount, the probation office recommended a sixteen-level increase in Dridi’s offense 

level and a restitution amount of $1,811,679.25. U.S.S.G. § 

2B1.1(b)(1)(I).

At Dridi’s sentencing hearing, the district court first reviewed restitution and reminded Dridi that he was jointly and 

severally liable for $1,811,679.25 in total restitution to more 

than thirty victims. Then the district court calculated Dridi’s 

guideline range to be 78 to 97 months in prison; this range 

included a sixteen-level enhancement based on a loss amount 

between $1,500,000 and $3,500,000. U.S.S.G. § 2B1.1(b)(1)(I). 

Dridi did not object to the restitution amount or the loss calculation. The district court ultimately sentenced Dridi to 72 

1 Both counts of conviction involved “substantially the same harm” 

and were grouped together for guideline calculation purposes. U.S.S.G. 

§ 3D1.2.

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months in prison and held him jointly and severally liable for 

$1,811,679.25 in restitution.

II. ANALYSIS

Dridi argues that the district court erred in calculating 

both his guideline range and his restitution amount. The government responds that Dridi waived these arguments because 

he did not raise them before the district court. So, before 

reaching the merits of Dridi’s arguments, we must first determine whether Dridi waived or merely forfeited his two arguments.

A. Waiver or Forfeiture

“Waiver is the intentional relinquishment of a known 

right.” United States v. Butler, 777 F.3d 382, 387 (7th Cir. 2015). 

Forfeiture is the accidental or neglectful failure to timely assert a right. United States v. Jaimes-Jaimes, 406 F.3d 845, 847–49

(7th Cir. 2005). Waiver precludes appellate review, but forfeiture allows review for plain error. United States v. Olano, 507 

U.S. 725, 733–34 (1993). The line between waiver and forfeiture, however, is sometimes hard to delineate and can depend 

on the nature of the right at issue. United States v. Flores, 929 

F.3d 443, 447 (7th Cir. 2019). We construe waiver principles 

liberally in favor of the defendant. United States v. Perry, 223 

F.3d 431, 433 (7th Cir. 2000).

We have found waiver when there are “sound strategic 

reasons” a defendant would choose to forego an argument before the district court. Jaimes-Jaimes, 406 F.3d at 848. But we 

have found forfeiture when the government cannot proffer a

plausible strategic justification for a decision to not object. 

United States v. Oliver, 873 F.3d 601, 607 (7th Cir. 2017). 

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Here, the government has not convinced us that strategy—as opposed to inadvertence—explains why Dridi’s attorney did not object to the increased offense level and restitution amount. The government claims the lack of objections 

can be attributed to Dridi throwing “himself on the mercy of 

the court.” But a defendant can request lenience and apologize for his behavior and still object to ensure his guideline 

range and restitution amount are based on the correct conduct.

So, construing waiver principles liberally in Dridi’s favor, 

his attorney’s failure to object looks more inadvertent than intentional. We therefore find that Dridi forfeited, rather than 

waived, his two related arguments on appeal.

B. Guideline Range

Dridi argues that the district court erred by not specifically

determining which conduct of Dridi’s coconspirators could 

be attributed to him for purposes of sentencing. U.S.S.G. 

§ 1B1.3(a)(1)(B).

Because Dridi forfeited this argument, we review for plain 

error. Fed. R. Crim. P. 52(b); Jaimes-Jaimes, 406 F.3d at 847. We 

may reverse if: (1) the court made an error that was plain and 

(2) that error affected the defendant’s substantial rights. 

United States v. Garvey, 688 F.3d 881, 884 (7th Cir. 2012). An

error is plain when “the law at the time of appellate review 

shows clearly that [the deviation] was an error.” United States 

v. Pierson, 925 F.3d 913, 919 (7th Cir. 2019). “Substantial rights 

are affected when the defendant can show ‘a reasonable probability that, but for the error, the outcome of the proceeding 

would have been different.’” United States v. Burns, 843 F.3d 

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679, 688 (7th Cir. 2016) (quoting United States v. Hulburt, 835 

F.3d 715, 725 (7th Cir. 2016)).

In turning to our first question—whether the district court 

committed an error that is plain—we start with Sentencing 

Guideline § 2B1.1. Section 2B1.1 explains that the defendant’s 

offense level should be increased based on the amount of loss 

the defendant caused. Loss is defined as “the greater of” intended loss or actual loss. U.S.S.G. § 2B1.1 cmt. n. 3(A). Actual 

loss “means the reasonably foreseeable pecuniary harm that 

resulted from the offense.” Id. § 2B1.1 cmt. n. 3(A)(i).

This loss calculation includes losses caused by others’ actions if those actions were (1) “within the scope of the jointly 

undertaken criminal activity,” (2) “in furtherance of that criminal activity,” and (3) “reasonably foreseeable in connection 

with that criminal activity.” U.S.S.G. § 1B1.3(a)(1)(B)(i)–(iii); 

see United States v. White, 883 F.3d 983, 987–88 (7th Cir. 2018). 

We have required district courts to make independent findings on each of these elements before basing a defendant’s 

sentence in part on loss caused by the entire conspiracy. See, 

e.g., United States v. Sykes, 774 F.3d 1145, 1150 (7th Cir. 2014)

(requiring a similar elemental analysis under a prior version 

of § 1B1.3); United States v. Aslan, 644 F.3d 526, 536 (7th Cir. 

2011) (same). Other circuits have imposed the same requirement. See, e.g., United States v. Figueroa-Labrada, 720 F.3d 1258,

1266–67 (10th Cir. 2013); United States v. Childress, 58 F.3d 693, 

722 (D.C. Cir. 1995).

The government argues that it is unclear whether a district 

court must make findings under § 1B1.3 when loss is undisputed. The government leans on our recent statement in 

White: “When the issue of individual responsibility for conduct of others is contested, a district court should make a 

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finding on each element of the relevant conduct test.” 883 F.3d 

at 988 (emphasis added). Unless the defendant contests the 

loss amount, the government reasons, the error cannot be 

plain.

We disagree. White did not address what a court must do

when a defendant does not contest the loss amount. After all, 

the defendant in White objected to the district court’s loss calculation. Id. Thus, White did not disturb the clear law in our 

circuit: before sentencing a defendant based on the loss 

caused by the entire conspiracy, the district court must make 

particularized findings about the scope of conduct attributable to the defendant. The district court here did not make 

those findings; that error is plain.

Now we must determine whether the error affected 

Dridi’s substantial rights. See Burns, 843 F.3d at 688. The district court attributed $1,848,868.50 in loss to Dridi. Under the 

Guidelines, if the loss was more than $1,500,000, the district 

court was to add sixteen levels to Dridi’s base offense level. 

See U.S.S.G. § 2B1.1(b)(1)(I). But if the loss was $1,500,000 or 

less, the district court was to add no more than fourteen levels 

to the base offense. See id. at § 2B1.1(b)(1)(H). And, keeping all 

else the same, had Dridi’s offense level dropped at all, his 

guideline range would have dropped as well. So, because he 

says his guideline range would have been different, Dridi argues the district court’s error requires resentencing. See Molina-Martinez v. United States, 136 S. Ct. 1338, 1345 (2016)

(“When a defendant is sentenced under an incorrect Guidelines range ... the error itself can, and most often will, be sufficient to show a reasonable probability of a different outcome 

absent the error.”).

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Thus, to show that Dridi is entitled to resentencing based 

on a different loss amount, Dridi must demonstrate a reasonable probability that relevant conduct findings under § 1B1.3 

would reveal loss attributable to Dridi of $1,500,000 or less. In 

other words, Dridi must show that—had the district court 

made specific findings under § 1B1.3—the loss amount would 

have been $348,868.50 less than the amount the district court

attributed to Dridi.

Dridi’s argument rests predominantly on the “reasonably 

foreseeable” requirement of § 1B1.3. Under that requirement, 

loss may be attributable to Dridi only if the acts producing the 

loss were “reasonably foreseeable” to him. See Sykes, 774 F.3d 

at 1150–51. He argues that he couldn’t have foreseen coconspirators’ acts before he joined the conspiracy—which he says 

happened in late 2014; and at least $139,308.67 of the conspiracy’s loss came from acts that happened before October 2014.

Dridi also argues, relying on new information provided by 

the government,2 that only $1,377,305.10 in losses occurred after he joined the conspiracy in late 2014. So, Dridi reasons that 

a § 1B1.3 factual finding would show that no more than 

$1,500,000 in loss can be attributed to him, resulting in a lower 

guideline range.

But the record is not as clear as Dridi suggests. While Dridi 

claims he started working for Elite Imports in late 2013, Pam 

Tatom testified that Dridi was already working there by May 

2013. Dridi also claims that he did not join any part of the 

2 The government filed a motion with the district court to supplement 

the record on appeal with the documents underlying its loss calculation. 

Dridi did not oppose this motion, and the district court added the proposed documents to the record.

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conspiracy until late 2014, yet Dridi filed a fraudulent insurance claim on his truck in late 2013. The record also shows 

that, during an undefined time period, Dridi helped defraud 

floor-plan lenders by asking customers to return their vehicles 

to the lot, and he participated in Elite Imports’s scheme to defraud consumer lenders.

So, the record does not uncover exactly when Dridi began 

participating in Elite Imports’s fraudulent schemes. Accordingly, the record does not confirm which of Dridi’s coconspirators’ actions were “within the scope of,” “in furtherance 

of,” and “reasonably foreseeable in connection with” the 

jointly undertaken criminal activity in which Dridi took part. 

U.S.S.G. § 1B1.3.

But we are sure that the record contradicts Dridi’s assertion—on which he builds his argument—that he did not join 

any part of the conspiracy until late 2014. Dridi therefore did 

not demonstrate, based on the record, a reasonable probability that, but for the district court’s failure to make § 1B1.3 findings, the outcome of his sentencing hearing would have been 

different. So, the district court’s error in foregoing findings 

under § 1B1.3 did not affect Dridi’s substantial rights.

C. Restitution Amount

Finally, Dridi argues the district court erred by not 

“mak[ing] findings on the scope of the scheme” before imposing restitution. As with Dridi’s first argument, Dridi failed to 

object with this contention during his sentencing hearing. So,

we review his restitution argument for plain error.

“The restitution issue is similar but not identical to the loss 

amount issue.” White, 883 F.3d at 992. The Mandatory Victim 

Restitution Act, which authorizes restitution in this case, 

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applies to “a victim’s losses from the offense of conviction, 

which is narrower than relevant conduct under the Guidelines.” Id. (emphasis added). Restitution is thus limited to the 

“actual losses caused by the specific conduct underlying the 

offense” and the government must “establish [actual loss] by 

a preponderance of the evidence.” United States v. Orillo, 733 

F.3d 241, 244 (7th Cir. 2013).

When calculating a defendant’s restitution amount, district courts should “adequately demarcate the scheme” by explaining the scheme’s scope. United States v. Smith, 218 F.3d 

777, 784 (7th Cir. 2000). This process necessarily requires the 

district court to explain how the defendant is responsible for 

the amount of restitution ordered. See White, 883 F.3d at 992.

Here, the district court did not adequately demarcate the

scheme. Instead, it accepted the loss amounts set forth in the 

PSR without explaining how and when the loss occurred and 

whether Dridi was responsible for it. For example, the restitution recommendation in the PSR—which the district court 

fully accepted—includes $11,428.00 representing the remaining loan amount of a victim who purchased a car from Elite 

Imports in May 2012. Importantly, this victim’s loss occurred 

in mid-2012. And based on the evidence in the record, we cannot assume that Dridi worked at Elite Imports during this 

time. So, the lack of factual findings on how Dridi is responsible for this restitution amount is a plain error.

This error affected Dridi’s substantial rights: he was “required to pay more in restitution than he owes.” Burns, 843 

F.3d at 689; see White, 883 F.3d at 992 (“[W]e must remand because the evidence actually contradicts the restitution 

award.”). The district court ordered $1,811,679.25 in restitution—the full amount recommended in the PSR. But as 

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discussed above, the evidence does not support holding Dridi 

liable for this entire amount. Therefore, the district court ordered restitution beyond what the record indicates Dridi 

caused; this warrants reconsideration of the entire restitution 

award. See Burns, 843 F.3d at 690. In redetermining the restitution award on remand, the court should demarcate the 

scheme and establish the actual amount of loss caused by 

Dridi’s conduct.

III. CONCLUSION

The district court’s errors at sentencing affected only 

Dridi’s restitution amount, not his guideline range. We therefore AFFIRM his sentence, VACATE the restitution order, and 

REMAND the issue of restitution for proceedings consistent 

with this opinion.

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