IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 08-20269

UNITED STATES OF AMERICA,

Plaintiff - Appellee

v.

STEVEN JAY SCHER,

Defendant - Appellant

Appeal from the United States District Court

 for the Southern District of Texas

Before HIGGINBOTHAM, GARZA, and PRADO, Circuit Judges.

EMILIO M. GARZA, Circuit Judge:

Stephen Jay Scher, a travel agent, was convicted of wire fraud for using

unauthorized waiver codes to obtain illegal discounts on Continental Airlines

flights. Complaining that the jury instructions improperly amended the

indictment and that the loss calculation method unreasonably inflated

Continental’s losses, Scher appeals. 

I

Continental sells airline tickets to consumers in several ways, including

through ticketing agents at airports and through independent travel agencies.

To allow selected travel agents to issue tickets at reduced prices normally

available with certain limitations, Continental provides “waiver codes.” These

United States Court of Appeals

Fifth Circuit

F I L E D

March 23, 2010

Charles R. Fulbruge III

Clerk

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No. 08-20269

2

codes, when entered into Continental’s reservation system, waive otherwise

applicable limitations on reduced fares. For example, if a travel agent promises

a customer a certain rate and then fails to book the travel early enough to secure

the reduced fare, the waiver code allows the agent to secure the advanced

purchase reduced fare even though it is no longer available. 

Continental security agents review Continental’s records to identify

possible abuses of the waiver code system. During one of these reviews, an agent

determined that 926 unauthorized waiver codes had been used by Travel Center

of New Jersey. Eventually, the agent traced these unauthorized codes to Scher.

Scher was using the unauthorized codes to issue tickets at a reduced fare. He

charged his customers a price lower than the actual full-fare coach price but

higher than the unauthorized reduced fare he obtained with the waiver codes.

Scher and his accomplices kept the difference between the unauthorized reduced

fare and the price the customers paid. Continental lost the difference between

the actual full-fare coach price and the unauthorized reduced fare. 

The government indicted Scher on five counts of wire fraud, alleging a

scheme to obtain money and property by utilizing the unauthorized waiver codes

to issue unauthorized reduced fare tickets. At trial, Scher admitted that he paid

Jose Nieto, a Continental ticketing agent, for the unauthorized waiver codes and

that the waivers allowed for a significant savings over the cost of a full fare. The

jury convicted Scher on all five counts: (1) conspiracy to commit wire fraud in

violation of 18 U.S.C. §§ 371 and 1343; and (2)–(5) wire fraud in violation of

§§ 1343, 1346, and 2. 

 The presentence report (“PSR”) calculated an advisory guidelines range

of forty-one to fifty-one months. The most significant factor in determining the

advisory range was the loss calculation, which resulted in a fourteen-point

increase to Scher’s base offense level under U.S.S.G. § 2F1.1(b)(1)(O). Scher

objected to the methodology used to compute the loss and presented his own loss

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estimate based on data provided by an aviation consulting group. Ultimately,

the district court adopted the PSR loss calculation. The court did, however,

grant a two-point reduction in Scher’s offense level for accepting responsibility.

The court sentenced Scher to thirty-three months of imprisonment and three

years of supervised release, ordered restitution in the amount of $1,211,011, and

made a special assessment of $500. Scher filed a timely notice of appeal. 

II

A

The district court instructed the jury that it could find Scher guilty of wire

fraud if it found beyond a reasonable doubt that Scher knowingly created a

scheme to obtain money, property, or other things of value. Scher argues that

the inclusion of the phrase “other things of value” constructively amended the

indictment by adding a basis for conviction not alleged in the indictment. 

Scher did not raise this argument during trial. Thus, our review is for

plain error. United States v. Reyes, 102 F.3d 1361, 1364 (5th Cir. 1996). Under

the plain error standard, we will reverse only if “(1) there is an error, (2) that is

clear or obvious, and (3) that affects [the defendant’s] substantial rights.” United

States v. Ferguson, 211 F.3d 878, 886 (5th Cir. 2000). Even if these factors are

met, “the decision to correct the forfeited error is within the sound discretion of

the court, and the court will not exercise that discretion unless the error

seriously affects the fairness, integrity, or public reputation of judicial

proceedings.” Id. (citing United States v. Olano, 507 U.S. 725, 735)36 (1993)).

A constructive amendment occurs when the trial court “through its

instructions and facts it permits in evidence, allows proof of an essential element

of the crime on an alternative basis provided by the statute but not charged in

the indictment.” United States v. Phillips, 477 F.3d 215, 222 (5th Cir. 2007)

(quotation omitted). In evaluating whether a constructive amendment has

occurred, we consider “whether the jury instruction, taken as a whole, is a

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correct statement of the law and whether it clearly instructs jurors as to the

principles of the law applicable to the factual issues confronting them.” United

States v. Guidry, 406 F.3d 314, 321 (5th Cir. 2005) (quotation omitted). We

“scrutinize any difference between an indictment and a jury instruction” and

“will reverse only if that difference allows the defendant to be convicted of a

separate crime from the one for which he was indicted.” United States v. Nunez,

180 F.3d 227, 231 (5th Cir. 1999). Otherwise, a defendant must “show how the

variance in the language between the jury charge and the indictment so severely

prejudiced his defense that it requires reversal under harmless error review.”

Id.

Here, the balance of the instructions focused the jury’s attention squarely

on the correct legal standard. Correct statements of the law bookended the

district court’s incorrect statement. First, the district court said that Count One

charged Scher with conspiring to obtain “money and property.” Next, the district

court said that Counts Two through Five also charged Scher with perpetrating

a scheme to obtain “money or property.” After those correct statements, the

district court incorrectly stated that the jury should find Scher guilty of

involvement in a “scheme to defraud” under 18 U.S.C. § 1343 if it found that he

schemed to obtain “money, property, or other things of value.” Finally, the

district court correctly stated that a “scheme to defraud” includes any scheme to

deprive another of money or property. Scher’s argument, that the indictment

was constructively amended because the court’s definition of “scheme to defraud”

on one occasion included the language “or other things of value,” ignores the

balance of the instructions, which were on the whole correct. See e.g., United

States v. Leahy, 82 F.3d 624, 631 (5th Cir. 1996) (finding no constructive

amendment where one misstatement of the law was made but the balance of the

instructions were correct).

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 Scher argues that de novo review applies because he is challenging the loss calculation 1

methodology. Although he is correct that de novo review applies when the methodology is

5

Further, the government did not seek to expand the indictment by

presenting a theory that Scher defrauded Continental of “other things of value”

such as goodwill. At trial, the government presented substantial evidence of

Continental’s loss of money. Indeed, the entire trial focused on how Scher used

the codes to sell tickets below cost so that he could illegally profit at

Continental’s expense. The government referred repeatedly to money in its

summation, and the defense also characterized the effect of the waiver codes in

terms of price. Simply put, “the overriding and predominant theory of the

government’s case” on the fraud counts involved Continental’s loss of money. 

United States v. Richerson, 833 F.2d 1147, 1157 (5th Cir. 1987).

Because, given the evidence presented, Scher could not have been

convicted of a crime other than that for which he was indicted, the trial court’s

single reference to “other things of value” in an otherwise correct jury instruction

does not constitute a constructive amendment. Accordingly, we will not reverse

Scher’s conviction.

B

Scher also challenges the district court’s loss calculation method for the

purposes of both the amount-of-loss enhancement and restitution. To determine

the amount of loss to Continental, the district court started with the full-fare,

one-way price for each ticket, then subtracted the amount actually paid to

Continental, as well as any applicable discounts. Scher argues that this method

of loss calculation grossly inflated Continental’s losses. 

“This court reviews a district court’s factual findings at sentencing for

clear error and its legal analysis de novo.” United States v. Olis, 429 F.3d 540,

545 (5th Cir. 2005). A district court’s loss calculation under the Sentencing

Guidelines is a factual finding reviewed for clear error. United States v. 1

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challenged, see United States v. Randall, 157 F.3d 328, 330 (5th Cir. 1998), the parties do not

dispute methodology. Scher and the government agree that the proper methodology for

calculating the loss to Continental is to subtract the after-waiver price that Scher paid to

Continental from the actual value of the ticket absent the illegal waiver. In other words, the

disagreement centers on the actual value of the tickets absent the illegal waiver. The court’s

determination of the actual value is a factual finding that we review for clear error.

6

Bieganowski, 313 F.3d 264, 294–95 (5th Cir. 2002). “Factual findings are not

clearly erroneous if they are plausible in light of the record read as a whole.”

United States v. Ayala, 47 F.3d 688, 690 (5th Cir. 1995).

“Ordinarily, when property is taken . . . the loss is the fair market value

of the particular property at issue .” U.S.S.G. § 2B1.1 cmt. n.2 (2000); see also

United States v. Onyiego, 286 F.3d 249, 255 (5th Cir. 2002). Where, as here,

market value is difficult to determine, a sentencing court may use “other

reasonable means to ascertain the level of loss to the victim.” Onyiego, 286 F.3d

at 256 (citation omitted); see also U.S.S.G. § 2F1.1 n.9 (2000) (“For the purposes

of subsection (b)(1), the loss need not be determined with precision. The court

need only make a reasonable estimate of the loss, given the available

information.”). 

In making factual determinations at sentencing, the district court is

entitled to rely upon the information in the PSR as long as the information bears

some indicia of reliability. United States v. Shipley, 963 F.2d 56, 59 (5th Cir.

1992). The defendant bears the burden of presenting rebuttal evidence to

demonstrate that the information in the PSR is inaccurate or materially untrue.

United States v. Washington, 480 F.3d 309, 320 (5th Cir. 2007). 

In the instant case, Scher did not provide rebuttal evidence that the

district court deemed sufficient to undermine the information in the PSR. The

PSR relied on the evidence submitted at trial, specifically spreadsheets produced

by Continental’s fraud investigator, detailing the fraudulent tickets issued and

their corresponding value to Continental. Scher neither provided the district

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court with a viable alternative nor demonstrated that the information in the

PSR was inaccurate or materially untrue. Although Scher did commission a

consulting group to make an alternative loss calculation, neither Scher nor his

counsel seemed to understand the most basic precepts of the alternate

methodology that produced their loss estimate or seemed able to identify the

price data upon which it relied. Their lack of understanding could certainly

undermine the district court’s confidence in the proposed alternative and the loss

calculation it produced. See Van Gorp Mfg., Inc. v. Townley Indus. Plastics, Inc.,

464 F.2d 16, 19 (5th Cir. 1972) (noting that lack of basic understanding

regarding subject of testimony undermines its validity). 

In his briefing, Scher presents a number of plausible arguments that the

loss amount was too high))(1) that Scher’s unauthorized price discrimination

brought Continental additional revenue that offset any loss; (2) that the

government’s use of one-way fares resulted in higher loss amounts than can be

attributed to the round-trip fares actually purchased; and (3) that several of the

fares used in the district court’s calculation were much higher than what

customers would have actually paid. But, the arguments are not supported by

evidence. Indeed, in response to similar objections in codefendant Nieto’s case,

Continental re-examined its initial loss amount in the instant case, taking into

account the potential for reduced fares, and revised downward by approximately

$100,000 to arrive at the current figure. Further, neither Continental’s profit

margin nor the prospect that passengers would have flown with another airline

without the lower fare provided by the waiver code mitigates Scher’s criminal

activities. 

Although we have some misgivings about the calculated value of

Continental’s loss, Scher simply failed to produce reliable evidence supporting

an alternate number or demonstrating that the information in the PSR was

inaccurate or materially untrue. As Scher failed to present sufficient rebuttal

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evidence, we cannot say that the district court clearly erred in adopting the

PSR’s factual finding regarding the loss amount. See United States v. Tampico,

297 F.3d 396, 404 (5th Cir. 2002).

Because the district court used the same figures to calculate the

restitution amount that it used to calculate the damages amount, we likewise

find that Scher has not produced sufficient evidence to show that the restitution

award was an abuse of discretion. See Onyiego, 286 F.3d at 256. 

AFFIRMED.

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