In the

United States Court of Appeals

For the Seventh Circuit

No. 12-2630

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

v.

JAMES KENNEDY,

Defendant-Appellant.

Appeal from the United States District Court for the 

Northern District of Illinois, Eastern Division.

No. 08 CR 009 — Joan B. Gottschall, Judge.

ARGUED FEBRUARY 25, 2013 — DECIDED AUGUST 9, 2013

Before BAUER, POSNER, and SYKES, Circuit Judges.

BAUER, Circuit Judge. James Kennedy pleaded guilty to mail

fraud, 18 U.S.C. § 1341, wire fraud, 18 U.S.C. § 1343, and

threatening an informant, 18 U.S.C. § 1513(b), for his role in a

scheme to sell counterfeit art. The district court sentenced him
2 No. 12-2630

to 96 months’ imprisonment and ordered him to pay restitution in the amount of $316,425.65. On appeal, Kennedy

challenges thedistrict court’sSentencing Guidelines calculation

as to loss amount and number of victims as well as the restitution amount. We affirm.

I. BACKGROUND 

From 2000 to 2008, Kennedy was involved in a scheme to

sell counterfeit fine art prints of well-known artists, including

Alexander Calder, Salvador Dali, Marc Chagall, Roy

Lichenstein, Joan Miro, and Pablo Picasso. The prints Kennedy

sold bore forged signatures or false markings that made the

prints appear as if they were part of an original limited edition

or prepared for the artist’s own use. Kennedy obtained many

prints knowing they had forged signatures and markings, and

sometimes Kennedy himselfforged the signatures of the artists

on the prints or added other markings indicative of an original

limited edition print. Kennedy then sold the prints on eBay and

at art shows throughout the country, representing to customers

that the prints were genuine limited edition prints signed and

authorized by the artists.

On March 18, 2008, a grand jury returned a superseding

indictment charging Kennedy with three counts of mail fraud,

in violation of 18 U.S.C. § 1341, three counts of wire fraud, in

violation of 18 U.S.C. § 1343, and one count of threatening

bodily harm to a witness, in violation of 18 U.S.C. § 1513(b).

Kennedy pleaded guilty to all counts on September 23, 2010.

Kennedy’s sentencing was originally set for August 3, 2011.

At the sentencing, the parties disagreed on the number of

victims and the loss amount for the fraud, so the district court
No. 12-2630 3

set a hearing to permit the parties to present evidence regarding the number of victims, loss amount, and restitution. The

district court held hearings on September 16, 2011, October 21,

2011, June 20, 2012, and June 29, 2012, to resolve these issues. 

At the hearings on September 16 and October 21, the

government argued that the loss amount in this case exceeded

a million dollars, and was likely far greater, and presented

testimony from two witnesses in support. FBI Special Agent

BrianBrusokas, a case agent who was involved in investigating

Kennedy and the fraudulent art scheme, testified regarding

interviews with Kennedy inJanuary and February 2007. At one

interview, on January 17, 2007, after initially denying that he

knowingly sold fraudulent artwork, Kennedy admitted to

engaging in such conduct and told Agent Brusokas that he had

forged various artists’ signatures “hundreds of times.” In an

interview the following month, Kennedy said that he had three

primary sources of fraudulent artwork: Leon Amiel, Jr.,

Michael Zabrin, and Giuseppe Concepcion. Kennedy said that

he had paid Concepcionapproximately $500,000 for fraudulent

artwork. Agent Brusokas also testified regarding an interview

with Zabrin, who said that he and Kennedy had traded fake

artwork back and forth over the years. The Milwaukee Police

Department, which had investigated Kennedy for selling

fraudulent art in 2004, provided Agent Brusokas an invoice for

a single transaction of fraudulent art between Kennedy and

Zabrin that had an estimated value of $129,600. Agent Brusokas also testified that Zabrin said he marked the price of

counterfeit art up for resale by approximately three times the

wholesale price he paid.
4 No. 12-2630

U.S. Postal Inspector John Donnelly also testified regarding

his investigation of the fraudulent art scheme. He said that

over the course of his multi-year investigation, he consulted

with art experts and participants in the counterfeit art scheme

to identify the counterfeit prints. He then identified sales of

prints he believed were fake using Kennedy’s business records

from November 2005 to January 2007, including sales invoices,

copies of checks and credit card receipts, and bank statements,

and estimated that there were at least $744,108 of sales attributable to fraudulent art for this fifteen-month period.

Inspector Donnelly also reviewedrecords fromthe accounting firm that prepared tax returns for Kennedy’s business since

at least 2000, from which he obtained the total sales amounts

Kennedy reported for 2000 through 2005: $721,019 in 2000;

$389,862 in 2001; $398,920 in 2002; $369,191 in 2003; $453,126 in

2004; $630,124 in 2005. For the years 2000 through 2002,

Inspector Donnelly obtained detailed schedules of invoices for

the sales of some of the artwork sold by Kennedy, and based

on his knowledge from the investigation, identified the sales of

counterfeit art. He estimated that between 2000 and 2002, at

least $255,550 of sales were related to counterfeit artwork.1

Inspector Donnelly also estimated $285,000 in counterfeit art

sales in 2004, and identified $35,407 in counterfeit art sales

based on eBay records from 2005 and 2006. Additionally,

Because the documents were incomplete, the information pertained to 1

only a portion of the total sales for the year. For example, in 2002, the

documents indicated $398,000 in total sales, but there were only detailed

invoices for about $125,000 of the sales, and of that $125,000, Inspector

Donnelly identified $90,275 in sales of counterfeit art. There were no

invoices for the period of 2003 to 2005.
No. 12-2630 5

Inspector Donnelly testified that he had identified $73,375 in

counterfeit art sales based on information from victims whose

purchases were not evident in the available records, but who

contacted the government during the investigation.

Kennedy contended that the loss amount was less than

$1,000,000. He argued that many of the documents and records

upon which Inspector Donnelly relied for his calculations were

not reliable and that a much smaller percentage of Kennedy’s

sales were of counterfeit art than the government estimated.

At the end of the second hearing, the district court found

that the loss amount exceeded $1,000,000 and applied an

enhancement under § 2B1.1(b)(1)(I). In support of this loss

amount, which the district court noted was imprecise, the

district court relied upon Kennedy’s admission that he paid

one of his three suppliers $500,000 for fraudulent art, and that

he then marked up the price of the art by at least twice what he

paid, and sometimes even ten times as much as he paid. The

district court also considered the calculations of Inspector

Donnelly, whose estimates of Kennedy’s sales of fraudulent art

from 2000 to 2007 exceeded $1,000,000 and did not include the

sales of fraudulent art from periods from which records were

not available and any sales Kennedy conducted in cash.

When the district court asked whether there were any

remaining objections to the PSR, Kennedy’s attorney mentioned that the PSR calculated 312 victims, but that only 130

victims had responded to the government during its investigation, and that many of those victims had only lost around $300.

The district court agreed that the victims in this case were not

harmed as seriously as is common in cases where the number-
6 No. 12-2630

of-victims enhancement is applied and stated that it would

take that into account under the 18 U.S.C. § 3553(a) factors. The

district court indicated, though, that it suspected that “there

probably are 250 victims.” Kennedy’s attorney then said, “I’ll

back off on that.” The district court accordingly adopted the

PSR’s calculation that the number of victims was at least

250 and applied a six-level enhancement under U.S.S.G.

§ 2B1.1(b)(2)(c). After the loss amount and number-of-victim

enhancements, the resulting Guidelines range was 108 months

to 135 months. The district court considered the § 3553(a)

factors and ultimately imposed a sentence of 96 months’

imprisonment.

At the end of the hearing, when the district court turned to

the issue of restitution, the parties agreed to submit further

briefing on the issue because the government had not yet

completed a list specifying each victim and the corresponding

loss. The government submitted additional briefs on

October 28, 2011, and November 18, 2011. In the submissions,

the government provided a list of 135 victims’ names, addresses, and loss amounts, and requested restitution totaling

$821,714.65. The government relied upon the evidence it

provided at sentencing to prove loss amount for purposes of

the Sentencing Guidelines but did not submit any additional

evidence supporting the loss amount claimed for each named

victim for purposes of restitution. The district court accordingly issued an order on June 8, 2012, indicating that the

government had failed to establish by the preponderance ofthe

evidence actual losses by specific victims as required by 18

U.S.C. § 3664(e), with the exception of two victims. The district

court gave the government an opportunity to submit addi-
No. 12-2630 7

tional evidence as to the other victims it identified, such as

proof that the transactions listed on invoices in the government’s possession occurred, that the victim had not returned

the artwork, and that any money obtained through a restitution order could be returned to the victim. The government

then produced a reduced list of 41 victims’ names and requested a revised total restitution amount of $469,131.65. In

support of the requested amount, the government submitted

several files of documents on the eve of the restitution hearing,

which was held on June 20 and June 29, 2012. The district court

sifted through the documents, which included bank records,

victim questionnaires, copies of cancelled checks, and other

financial records, and ultimately found that the government

had met its burden as to 21 victims and ordered Kennedy to

pay $316,425.65. The district court rejected the government’s

request as to twenty victims for a variety of reasons, including

a complete lack of evidence to support the restitution request

in six cases, insufficient evidence to support the requested loss

amount in thirteen cases, and in one case, a lack of evidence

that the identified party had purchased fraudulent art from

Kennedy. 

II. DISCUSSION

Kennedy appeals the restitution awardandthe loss amount

and number of victims the district court used to enhance his

sentence. We address each in turn.

A. Restitution

The Mandatory Victims Restitution Act of 1996 requires

that a court sentencing a defendant for certain crimes in which

“an identifiable victim ... has suffered a ... pecuniary loss”
8 No. 12-2630

must order that the defendant make restitution to the victim of

the offense. 18 U.S.C. §§ 3663A(a)(1), (b)(1), (c)(1).

The amount of restitution is limited to the actual losses

caused by the specific conduct underlying the offense, see 18

U.S.C. § 3663A(a); United States v. Dokich, 614 F.3d 314, 319 (7th

Cir. 2010), and the government must establish the loss amount

by the preponderance of the evidence. 18 U.S.C. § 3664(e);

United States v. Hosking, 567 F.3d 329, 333 (7th Cir. 2009). We

review a district court’s calculation of restitution for abuse of

discretion, viewing the evidence in the light most favorable to

the government. United States v. Hassebrock, 663 F.3d 906, 925

(7th Cir. 2011) (citations omitted).

Kennedy contends that the district court’s restitution

calculation lacked sufficient evidentiary support, pointing to

the dwindling nature of the government’s request for restitution over the course of the sentencing and restitution proceedings. As we have noted, the government’s request for restitution fell from $821,714.65 for 135 victims to $468,131.65 for 41

victims, and the district court ultimately ordered $316,425.65

paid to 21 victims. Additionally, the government failed to

provide any specific support for its initial requested restitution

amount for each victim, and when given a chance by the

district court to support its request, provided the evidence to

the district court in a haphazard manner.

2

 Even in its final submission, the district court was unable to locate any

2

records that supported the government’s request as to six of the victims on

the government’s list.
No. 12-2630 9

We agree with Kennedy that the government’s handling

of its restitution request in this case was difficult to follow. The

restitution amount sought in a case may evolve as the government obtains more information during its investigation. E.g.

Dokich, 614 F.3d at 316–17. Here, though, the government

revised its request not because of additional evidence, but

because the district court reminded the government of its

burdenofproof. Nonetheless, the government’s less-than-ideal

handling of its restitution request does not mean that the final

amount determined by the district court lacked evidentiary

support. Fortunately for thegovernment,thedistrict court here

went to great lengths to sort through the disorganized record

to ensure that its calculation of restitution was precise and

victim-specific, relying upon sworn complaints submitted to

the government, copies of invoices indicating that payment

was made, victim interviews by postal inspectors, copies of

bank records, and copies of cancelled checks.

Kennedy’s only specific challenge to the calculation of the

restitution amount pertains to the $247,000 awarded to one

victim, Linden N. The district court found that Linden N. 3

suffered an actual loss of this amount based on Inspector

Donnelly’s testimony that Linden N. told Inspector Donnelly

that “he was out” $240,000; a copy of a fax sent from Kennedy

to Linden N. that states “You gave me 75,000 money[,] 60,000

Kennedy raises specific arguments regarding the restitution amounts 3

awarded to eleven of the victims in his reply brief, taking issue with the

evidence the district court relied upon to determine the loss amount for

each victim. Arguments raised for the first time in a reply brief, however,

are waived. Broaddus v. Shields, 665 F.3d 846, 854 (7th Cir. 2011). 
10 No. 12-2630

watch[,] 22,000 auto[,] 90,000 watch[e]s”; and that the government seized 23 pieces of art from Linden N. that were deemed

to be fakes. The government also submitted three sets of

invoices for sales of art by Kennedy to Linden N. totaling

$375,960. 

4

Kennedy contends that this evidence was unreliable and

argues that the amount awarded to Linden N. reflects only an

“approximation” for his loss as opposed to his actual loss. We

disagree. While Linden N. offered “approximations” of what

he paid Kennedy to the FBI investigators during his interviews

(according to Inspector Donnelly, Kennedy said he “was out”

around $240,000; the records from his FBI interview said he

had lost about $250,000), the final amount reached by the

district court was supported by the fax Kennedy sent

Linden N., which listed $247,000 worth of money and goods

Linden N. paid Kennedy. While this was clearly not an

orthodox transaction or typical invoice, Kennedy fails to

convince us that the district court erred in relying upon it in

determining that LindenN.paidKennedy $247,000 for artwork

that turned out to be fraudulent. We therefore conclude that

the district court did not abuse its discretion in ordering

Kennedy to pay $316,425.65 in restitution to his victims.

 Linden N. told the government that he was not owed that full amount 4

because he had not paid Kennedy for some of the art and had returned

some of the pieces.
No. 12-2630 11

B. Loss Calculation and Number of Victims

Kennedy next challenges the district court’s factual findings

regarding the loss amount and number of victims used for

sentencing. We review a district court’s factual determinations

at sentencing for clear error. United States v. McKinney, 686 F.3d

432, 434 (7th Cir. 2012). To establish clear error, Kennedy must

show that the district court’s determination “was inaccurate

and outside the realm of permissible computations.” United

States v. Borrasi, 639 F.3d 774, 783 (7th Cir. 2011) (citation

omitted).

On appeal, Kennedy rehashes many of the arguments he

made regarding loss amount before the district court, including

that the documents and records that Inspector Donnelly used

for his calculations were not reliable. Specifically, Kennedy

contends that Inspector Donnelly’s use of invoices was

problematic because the invoices may document sales that

were never consummated or sales in which the artwork was

returned to Kennedy, as in the case of Linden N. The district

court recognized this possibility, however, but noted that even

if the invoices might overstate the actual loss, the invoices were

evidence of Kennedy’s intent to sell the fake pieces of artwork

listed on the invoice, and the invoice amounts were therefore

accurate indicators of intended loss. See Dokich, 614 F.3d at

318–19 (noting that unlike with restitution, “loss” for purposes

of calculating the offense level for someone convicted of mail

fraud under the Sentencing Guidelines is defined as “the

greater of actual or intended loss” under § 2B1.1(b)(1)).

Additionally, in arriving at the loss amount, the district court

gave only limited weight to Inspector Donnelly’s calculations

and primarily relied upon Kennedy’s own admissions regard-
12 No. 12-2630

ing the amount he had spent purchasing counterfeit art from

just one dealer—$500,000—and then marked up before selling

to his customers. Kennedy identifies no problems with the

district court’s reliance on these admissions, and we therefore

find no error in the district court’s determination that the loss

amount exceeded $1,000,000.

We likewise reject Kennedy’s contention that the district

court erred in finding that Kennedy’s offense involved 250 or

more victims because he waived any objection to the finding

at sentencing. Waiver is the intentional relinquishment or

abandonment of a known right, and forfeiture is the failure to

make a timely assertion of a right. United States v. Irby, 558 F.3d

651, 655 (7th Cir. 2009) (citing United States v. Olano, 507 U.S.

725, 733 (1993)). The waiver of a right precludes appellate

review, but when the right is merely forfeited, we may review

the district court ruling for plain error. Id. While “[w]aiver

principles must be construed liberally in favor of the defendant,” United States v. Anderson, 604 F.3d 997, 1002 (7th Cir.

2010) (citation omitted), we find waiver “when there are sound

strategic reasons explaining why counsel would elect topursue

a route as a matter of strategy.” Swanson v. United States, 692

F.3d 708, 716 (7th Cir. 2012) (internal quotation marks and

citations omitted).

As we noted above, Kennedy’s attorney expressed concern

that only 130 victims had come forward during the government’s investigation, but he “back[ed] off” this argument after

the district court indicated that it would be receptive to an

argument from Kennedy under the § 3553(a) factors that while

the fraud in this case involved a significant number of victims,

they had been defrauded only a relatively small amount. By
No. 12-2630 13

making this strategic decision to abandon his objection to the

calculation of the number of victims and instead focus on

arguments in mitigation under the § 3553(a) factors, Kennedy

waived his objection to the finding that the offense involved

more than 250 victims. See United States v. Jaimes-Jaimes, 406

F.3d 845, 848 (7th Cir. 2005) (“There may be sound strategic

reasons why a criminal defendant will elect to pursue one

sentencing argument while also choosing to forgo another, and

when the defendant selects as a matter of strategy, he also

waives those arguments he decided not to present.”). We

accordingly decline to review Kennedy’s arguments regarding

the number-of-victims enhancement under U.S.S.G.

§ 2B1.1(b)(2)(C).

III. CONCLUSION

Forthe foregoing reasons, we AFFIRM the judgment of the

district court.