NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

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No. 19-2063

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UNITED STATES OF AMERICA

v.

EUGENE SMITH,

Appellant

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APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

(D.C. Crim. No. 2-18-cr-00306-001)

District Judge: Honorable R. Barclay Surrick

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Argued: July 15, 2021

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Before: McKEE, GREENAWAY, JR., and RESTREPO, Circuit Judges

(Opinion Filed: September 10, 2021)

Richard Coughlin

Karina D. Fuentes [ARGUED]

Office of Federal Public Defender

1002 Broad Street

Newark, NJ 07102 

Counsel for Appellant 

Jennifer Arbittier Williams

Robert A. Zauzmer

Joan E. Burnes

Anita D. Eve

Bernadette A. McKeon [ARGUED]
2

Office of United States Attorney 

615 Chestnut Street 

Suite 1250

Philadelphia, PA 19106

Counsel for Appellee 

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OPINION*

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GREENAWAY, JR., Circuit Judge.

Appellant Eugene Smith appeals his sentence and challenges: (1) the application 

of a two-level role enhancement, pursuant to United States Sentencing Guidelines 

(“U.S.S.G.”) § 3B1.1(c); (2) the application of a two-level enhancement for use of 

sophisticated means, pursuant to U.S.S.G. § 2B1.1(b)(10)(C); (3) the calculation of the 

loss amount used to calculate the guidelines range; and (4) the reasonableness of the final 

sentence. The District Court did not clearly err in applying the sophisticated means 

enhancement or in calculating the loss amount. However, because the District Court did 

not provide sufficient explanation and factual findings to enable our review of the 

application of the role enhancement, we will vacate the judgment of conviction and 

remand for resentencing. 

* This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 

does not constitute binding precedent.
3

I. BACKGROUND

From at least December 2016 through January 2018, Smith organized the 

production, sale, and distribution of counterfeit tickets to popular events, including 

National Collegiate Athletic Association football and basketball games, National Football 

League games, and concerts. The counterfeit tickets displayed the trademarks of several

organizations and agencies that are registered with the United States Patent and 

Trademark Office. As part of this scheme, Smith purchased a genuine ticket to an event

and requested that another individual, the printer, produce counterfeit versions of the

tickets that bore the features of the genuine ticket, including specific seat and section 

numbers. Smith and three other individuals would then travel to events nationwide to sell 

the counterfeit tickets. These events included: the 2017 College National Championship 

game in Tampa, Florida; the 2017 Super Bowl in Houston, Texas; the 2017 NBA All-Star 

Game in New Orleans, Louisiana; the 2017 Army–Navy Game in Philadelphia, 

Pennsylvania; and the 2018 Super Bowl in Minneapolis, Minnesota, among others. 

After Smith’s scheme was uncovered, a grand jury returned an indictment, 

charging Smith with one count of conspiracy to commit wire fraud, in violation of 18 

U.S.C. § 1349; one count of wire fraud, and aiding and abetting wire fraud, in violation 

of 18 U.S.C. §§ 1343 and 2; one count of conspiracy to traffic in counterfeit goods, in 

violation of 18 U.S.C. § 2320; and one count of trafficking in counterfeit goods, and 

aiding and abetting the trafficking, in violation of 18 U.S.C. §§ 2320(a)(1) and 2. Smith 

entered a plea of guilty to all four counts.
4

The Probation Office provided the District Court with a Presentence Investigation 

Report (“PSR”). The Probation Office set the total offense level at nineteen, including 

(1) a two-level enhancement for Smith’s role and (2) a ten-level enhancement based on 

the infringement amount of $173,250. The Probation Office did not include an 

enhancement for the use of sophisticated means. Based on Smith’s criminal history and 

this offense level calculation, the Probation Office determined that the appropriate 

guidelines range was forty-six to fifty-seven months. Both the Government and Smith 

filed objections to the PSR.

The District Court conducted a sentencing hearing. After hearing from the parties, 

the District Court (1) applied the role enhancement, (2) applied the sophisticated means 

enhancement because the offense occurred over several years, involved various 

individuals, targeted events across the country, and employed a ticket selling process that

was “somewhat complicated, somewhat complex,” and (3) found that the loss was in 

excess of $150,000. App 190. Consequently, the District Court sentenced Smith to fiftyone months in prison, followed by three years of supervised release. The District Court 

also ordered restitution in the amount of $77,850 and a special assessment of $400.

This timely appealed followed.

II. JURISDICTION AND STANDARD OF REVIEW

The District Court had jurisdiction pursuant to 18 U.S.C. § 3231. This Court has 

jurisdiction pursuant to 28 U.S.C. § 1291 and 18 U.S.C. § 3742(a). We exercise plenary 

review over challenges to a district court’s interpretation and application of the Federal 
5

Sentencing Guidelines. United States v. Grier, 475 F.3d 556, 570 (3d Cir. 2007) (en 

banc). We review any associated factual determinations for clear error. United States v. 

Bierley, 922 F.2d 1061, 1064 (3d Cir. 2009). In reviewing sentencing guidelines 

determinations for clear error, this Court reverses “only if [it is] left with a definite and 

firm conviction that a mistake has been committed.” United States v. Lessner, 498 F.3d 

185, 199 (3d Cir. 2007). “Where there are two permissible views of the evidence, the 

factfinder’s choice between them cannot be clearly erroneous.” United States v. Beckett, 

208 F.3d 140, 148 (3d Cir. 2000) (quoting Anderson v. Bessemer City, 470 U.S. 564, 574 

(1985)).

III. DISCUSSION

A. ROLE ENHANCMENT

Smith first argues that the District Court erred when it applied a two-level role 

enhancement pursuant to U.S.S.G. § 3B1.1. Section 3B1.1(c) allows for a two-level 

enhancement if the defendant was a “an organizer, leader, manager, or supervisor in any 

criminal activity.” To qualify for the enhancement, “the defendant must have been the 

organizer, leader, manager, or supervisor of one or more other participants.” § 3B1.1, 

cmt. 2. A “participant” is defined as “a person who is criminally responsible for the 

commission of the offense, but need not have been convicted. A person who is not 

criminally responsible for the commission of the offense (e.g., an undercover law 

enforcement officer) is not a participant.” § 3B1.1, cmt. 1. 
6

Smith objected to the inclusion of the role enhancement in the PSR. The District 

Court stated: “Mr. Smith was in fact the leader of this situation, the organizer/leader of 

the situation . . . .” App. 191. Absent from the District Court’s statement is any factual 

finding. 

Smith contends that the District Court failed to sufficiently explain its decision to 

apply the enhancement. We agree. 

A district court must “adequately explain the chosen sentence to allow for 

meaningful appellate review.” Gall v. United States, 552 U.S. 38, 50 (2007). Our review 

of the District Court’s application of the role enhancement is deferential, see United 

States v. Fountain, 792 F.3d 310, 321 (3d Cir. 2015) (reviewing the application of the 

role enhancement for clear error), but we cannot defer to the District Court’s brief 

conclusion, which is devoid of the requisite factual findings. For instance, the District 

Court never made a factual finding as to who was the “participant” required for the 

§ 3B1.1 enhancement to apply.

1 See § 3B1.1, cmt. 2. While the Government may be 

correct that there is enough information in the record to support a proper conclusion that 

the enhancement applies, our precedent advises that this Court should not speculate

1 The printer and the other individuals who sold the counterfeit tickets are possible 

participants, but this Court has no way of knowing who, if anyone, the District Court 

determined was the participant who was organized, led, managed or supervised by Smith. 

The Probation Office noted that the printer and the three individual sellers were all 

participants, but the Government argues that only the printer was a participant for the 

purposes of the § 3B1.1(c) enhancement. The Government asks us to guess that the 

District Court based the enhancement on Smith’s relationship to the printer, and not to 

the others as discussed in the PSR. 
7

regarding what facts the District Court relied upon. See United States v. Tai, 750 F.3d 

309, 319 (3d Cir. 2014) (“Under our precedent, the culpable participation of the person 

being supervised is central to the applicability of an upward adjustment for role. The 

question here then is whether the absence of such a finding of criminal culpability of a 

participant constitutes plain error. We conclude that it does.”).2

We cannot discern whether the District Court committed error because it provided 

an insufficient explanation on the record. Accordingly, we will vacate and remand to the 

District Court for resentencing.

B. SOPHISTICATED MEANS ENHANCEMENT

Next, Smith contends that the District Court erred in applying an enhancement for 

use of sophisticated means pursuant to U.S.S.G. § 2B1.1(b)(10)(C). The Sentencing 

Guidelines prescribe a two-point enhancement if an offense “involve[s] sophisticated 

means and the defendant intentionally engaged in or caused the conduct constituting 

2 Our sister courts have come to the same conclusion. See United States v. Burnley, 

988 F.3d 184, 187-88 (4th Cir. 2021) (determining that “the district court’s explanation 

[for applying the § 3B1.1 enhancement] is insufficient to facilitate meaningful appellate 

review, so we remand for further fact-finding and resentencing”); United States v. Ware, 

577 F.3d 442, 451–52 (2d Cir. 2009) (noting that “the sentencing court must make specific 

findings as to why a particular subsection of § 3B1.1 adjustment applies,” that these 

findings “must be sufficiently specific to permit meaningful appellate review,” and that 

“[i]t is not enough for the court merely to repeat or paraphrase the language of the guideline 

and say conclusorily that the defendant meets those criteria”); United States v. Tai, 994 

F.2d 1204, 1212 (7th Cir. 1993) (rejecting the government’s argument that the record 

included sufficient support for the enhancement because “it is not [the appellate] court’s 

role to make the factual findings necessary to support a sentencing calculation; that is a 

task for the district court”). 
8

sophisticated means.” § 2B1.1(b)(10)(C) (emphasis added). The commentary defines 

“sophisticated means” as conduct that is “especially complex or especially intricate.” § 

2B1.1 cmt. 9(B). The commentary includes specific examples of what would constitute 

sophisticated means, such as hiding assets or transactions or using fictitious entities, 

corporate shells, or offshore financial accounts. Id. Yet the commentary does not limit

the ways a defendant could use sophisticated means to facilitate his crime. See id. This 

Court has said that factors to consider when making this determination include “the 

duration of a scheme, the number of participants, the use of multiple accounts, and efforts 

to avoid detection,” and that the “enhancement is appropriate where a defendant’s 

conduct ‘shows a greater level of planning or concealment than a typical fraud of its 

kind.’” Fountain, 792 F.3d 310 at 319 (quoting United States v. Fumo, 655 F.3d 288, 

315 (3d Cir. 2011)). 

At the sentencing hearing, after both the Government and Smith presented their 

views on the applicability of this enhancement, the District Court stated: 

After hearing all of the evidence and after hearing counsel’s respective 

positions with regard to it, I’m satisfied that the sophisticated means 

enhancement is appropriate in this situation. The crime here occurred over 

an extended period of time, a couple years. There were a number participants 

in it . . . . The scope of the endeavor was nationwide, actually. . . . 

And I’m satisfied that this is not just a simple criminal endeavor. It was 

somewhat complicated, somewhat complex: getting a ticket, getting [the 

printer] to do the right thing, distributing those tickets in different areas. So 

I’m satisfied under all the circumstances that the sophisticated means 

enhancement is appropriate. 

App. 190. 
9

The District Court’s determination here was not clearly erroneous. The District 

Court commented on the duration of the scheme, its nationwide scope, the number of 

people involved, the work that went into creating counterfeit tickets, and it concluded that 

Smith caused the printer to create the “right thing.” Id. Given these findings, we do not 

find a reason to upset the District Court’s application of the sophisticated means

enhancement. 

C. LOSS CALCULATION

Finally, Smith contends that the District Court and Probation Office wrongly 

calculated the loss attributable to him for the purposes of computing his offense level. 

The Probation Office advised that the loss amount should be calculated to reflect the 

aggregate face value of the counterfeit tickets in accordance with U.S.S.G. § 2B5.3, and 

that this produced a $173,250 loss amount.3 The Government also calculated the loss 

amount at $173,250, but it did so pursuant to U.S.S.G. § 2B1.1.4 The District Court 

adopted this calculation. 

3 Section 2B5.3 of the Guidelines, which governs offenses involving counterfeits,

defines an “infringing item” as one “that violates the copyright or trademark laws.” 

U.S.S.G. § 2B5.1 cmt. 1. Section 2B5.3(b)(1)(B) counsels that if the infringement amount 

exceeds $6,500, the offense level should be increased in accordance with the table in 

§ 2B1.1. 

4 Section 2B1.1 of the Guidelines enhances fraud sentences based on the amount 

of “loss.” § 2B1.1(b)(1). The commentary defines “loss” as “the greater of actual loss or 

intended loss.” § 2B1.1 cmt. 3(A). “Actual Loss” is defined as “the reasonably 

foreseeable pecuniary harm that resulted from the offense.” § 2B1.1 cmt. 3(A)(i). 

“Intended Loss” is defined as “(I) . . . the pecuniary harm that the defendant purposely 

sought to inflict; and (II) includes intended pecuniary harm that would have been 
10

Pursuant to § 2B5.3, “[t]he infringement amount is the retail value of the infringed 

item, multiplied by the number of infringing items” where “the infringing item (I) is, or 

appears to a reasonably informed purchaser to be, identical or substantially equivalent to 

the infringed item; or (II) is a digital or electronic reproduction of the infringed item.” 

§ 2B5.1 n.2(A)(i). Here, the District Court did not err in determining the loss amount 

attributable to Smith was $173,250.

Pursuant to § 2B5.3, the face value, or retail value, of the counterfeit tickets was 

the “infringement amount,” and therefore the appropriate loss amount. The infringing 

items were the counterfeit event tickets, printed at Smith’s direction, that had a price on 

their face. 

Similarly, the District Court did not err if § 2B1.1 had solely applied.5 Section 

2B1.1 directs courts to utilize “the greater of actual loss or intended loss.” The “actual 

loss” (the amount Smith received, $77,850) is less than the “intended loss” (defined as 

“the pecuniary harm that the defendant purposely sought to inflict,” § 2B1.1 cmt.

3(A)(ii), which was determined to be the $173,250 face value of the tickets). 

impossible or unlikely to occur (e.g., as in a government sting operation, or an insurance 

fraud in which the claim exceeded the insured value).” § 2B1.1 cmt. 3(A)(ii). 

5 To the extent there is ambiguity in the record regarding the section employed by 

the District Court, it does not hamper our review because in this case loss under either 

section is based on the same predicate facts (the tickets’ face value), as to which the 

District Court made express findings.
11

Therefore, the District Court did not clearly err in determining that the loss

attributable to Smith was $173,250.

6

IV. CONCLUSION7

For the foregoing reasons, we will vacate the District Court’s judgment of 

sentence and remand for resentencing. The District Court need not reconsider the twolevel sentence increase for use of sophisticated means or revisit the loss calculation. 

6 Relying on Judge Bibas’s concurrence in United States v. Nasir, 982 F.3d 144

(3d Cir. 2020), Smith argues that “this situation calls for the rule of lenity and the least 

harsh interpretation.” Appellant’s Br. 34 (quotation marks and citations omitted). It is 

true that the commentary in the Guidelines relied upon here more than doubled the loss 

amount attributed to Smith—the actual loss was $77,850 (the amount Smith received for 

the tickets), which would add eight levels, whereas the retail value used by the District 

Court was $173,250, which added ten levels. See §2B1.1. However, this argument is 

unavailing because, even if the concurring opinion was binding, the commentary here 

specifically states that the greater of actual or intentional loss should be applied, 

acknowledging that in some cases the amount of loss will be higher than the amount 

intended. See § 2B1.1 cmt. 3(A). 

7 Smith also argues the final sentence imposed by the District Court was 

substantively unreasonable. Given that we are vacating and remanding Smith’s sentence 

on other grounds, we need not reach this argument at this posture. See e.g., United States 

v. Merced, 603 F.3d 203, 214 (3d Cir. 2010) (“If the district court commits procedural 

error, our preferred course is to remand the case for resentencing, without going any 

further.”); United States v. Douglas, 885 F.3d 145, 154 n.6 (3d Cir. 2018) (“Because we 

will remand for resentencing due to the erroneous application of the enhancement . . ., we 

need not address the substantive reasonableness of the sentence.”).