Court Opinion

ID: 4023412
Source: CourtListenerOpinion
Date Created: 2016-08-10 22:01:05.275374+00
Date Added: 2024-06-11T14:37:01.556187
License: Public Domain

In the

        United States Court of Appeals
                   For the Seventh Circuit
                       ____________________
Nos. 15-3389 & 15-3392
UNITED STATES OF AMERICA,
                                                      Plaintiff-Appellee,

                                    v.

MAJDI ODEH and QAIS HUSSEIN,
                                                Defendants-Appellants.
                       ____________________

          Appeals from the United States District Court for the
                     Southern District of Illinois.
             No. 14-CR-30177 — David R. Hendon, Judge.
                       ____________________

        ARGUED MAY 20, 2016 — DECIDED AUGUST 10, 2016
                       ____________________

   Before FLAUM and MANION, Circuit Judges, and ALONSO,
District Judge. *
   MANION, Circuit Judge. Qais Hussein and Majdi Odeh ran
two convenience stores in southern Illinois where they sold
counterfeit goods and illegally traded cash or ineligible items

    *Hon. Jorge L. Alonso, Northern District of Illinois, sitting by desig-
nation.
2                                       Nos. 15-3389 & 15-3392

for food stamps. They also filed false tax returns on behalf of
their businesses. They were eventually indicted in a four-
count indictment and pleaded guilty to all counts. As part of
the plea agreement, Hussein and Odeh waived their right to
appeal their sentences so long as their sentences were within
the advisory guideline range. The district court sentenced
Hussein and Odeh each to a within-guidelines term of impris-
onment of 85 months. Nonetheless, the defendants appeal, ar-
guing the government breached the plea agreement by not
recommending reductions for acceptance of responsibility,
and not recommending a sentence at the low end of the range
for Odeh. The defendants also attempt to challenge the loss
calculation on appeal. However, because the defendants
waived their right to appeal, we dismiss these appeals.
                                 I.
    Hussein and Odeh operated the Garden Grill Market, Inc.
and Garden Grill Market, Inc. II (jointly, “Garden Grill”),
which were both convenience stores located in southern Illi-
nois. The stores were certified to accept “food stamps,” which
are now formally known as SNAP benefits (SNAP stands for
supplemental nutrition assistance program). SNAP benefits
are provided to recipients on Electronic Benefits Transfer
(“EBT”) cards known as “Link” cards. Link cards are used like
debit cards to purchase eligible food. Stores certified to accept
Link cards may not exchange the SNAP benefits for cash or
for ineligible items such as tobacco, alcohol, pre-cooked
foods, or cellular phones. Additionally, the Garden Grill par-
ticipated as a vendor in the federal Women, Infant, and Chil-
dren (“WIC”) program. The WIC program issued vouchers to
participants to purchase specific food items such as formula,
eggs, or milk. The vouchers specified a dollar amount and the
Nos. 15-3389 & 15-3392                                           3

food for which they could be used. Additionally, the vouchers
were dated by the month of redemption and could not be
used until that month.
    Rather than complying with the terms of the SNAP and
WIC programs, Garden Grill exchanged cash and ineligible
items for SNAP benefits and WIC vouchers. Specifically, Gar-
den Grill exchanged cash for the government payments at a
rate of 50 or 60 cents on the dollar, or sold ineligible items such
as tobacco products, synthetic marijuana, cellular phones, al-
cohol, and counterfeit consumer goods such as perfume and
Coach purses. This foray into fraud was not Hussein’s first:
He was also involved with food-stamp fraud at the Bagel and
Halal Deli operating out of New York.
    In late 2010, the government began investigating Garden
Grill for violating the terms of the SNAP and WIC programs.
During the investigation, the government interviewed em-
ployees of Garden Grill, as well as recipients of SNAP benefits
and WIC vouchers. According to SNAP and WIC beneficiar-
ies, it was commonplace for them to sell their benefits for cash
or to use them to purchase ineligible items at Garden Grill.
Interviews of the employees confirmed these statements. Em-
ployees also noted that the defendants or family members
would use the SNAP cards to make bulk purchases at Sam’s
Club or Aldi’s. The government used “undercover cards,”
meaning cards which they tracked, and those confirmed sales
at Sam’s and Aldi’s. Video surveillance of the stores likewise
captured individuals identified as the defendants or their
family members leaving those stores with bulk purchases.
Additionally, the government watched seventeen days’
worth of surveillance videos filmed in the Garden Grill loca-
tions. During this time, the SNAP and WIC exchanges were
4                                       Nos. 15-3389 & 15-3392

going on night and day. The government identified some of
the customers selling their SNAP cards and interviewed those
individuals, but noted that it would be extremely difficult to
track every individual.
    The investigation continued into July 2012 and, on July 19,
2012, the government obtained search warrants for the stores.
In executing the search warrant, officers recovered evidence
of the SNAP and WIC fraud, including receipts for SNAP
sales that included handwritten notations that employees
later identified as indicating the amount of cash exchanged
for the SNAP benefit. The government also recovered
“stacks” of blank WIC vouchers dated for subsequent
months. (Recall that WIC vouchers could only be used during
the month indicated.) On the day of the search alone, the gov-
ernment recovered blank WIC vouchers totaling approxi-
mately $8,000. The government also recovered counterfeit
Coach purses and perfumes during the search.
    Following this multi-year investigation, a grand jury is-
sued a four-count indictment against Hussein and Odeh.
Count 1 charged the defendants with conspiracy to unlaw-
fully acquire food-stamp payments; Counts 2 and 3 charged
them with aiding and assisting in the filing of a false corporate
tax return; and Count 4 charged them with trafficking in
counterfeit goods.
   Prior to trial, both defendants entered into plea agree-
ments in which they pleaded guilty to all four counts and ad-
mitted that the government’s loss exceeded $1,000,000. In the
plea agreements, the government agreed to recommend re-
ductions for acceptance of responsibility, unless the defend-
ants subsequently acted inconsistently with acceptance of re-
sponsibility. The government also agreed to recommend that
Nos. 15-3389 & 15-3392                                        5

Odeh be sentenced at the low end of the advisory guidelines
range and that Hussein be sentenced within the advisory
guidelines range. As part of the plea agreements, the defend-
ants waived their right to challenge any aspect of their con-
victions or sentences unless the court imposed a sentence in
excess of the advisory guidelines range. During the plea col-
loquy, the defendants swore that they understood and ac-
cepted the terms of their pleas. They also expressly stated that
they understood they were giving up their rights to appeal
their sentences.
    About two weeks before sentencing, Odeh sought to with-
draw his plea agreement. Rather than delay things more, the
government agreed that it would allow Odeh to challenge the
loss amount at sentencing, even though the plea agreement
had precluded such an argument. The government and Odeh
amended the plea agreement to allow him to challenge the
loss amount, and Odeh then withdrew his motion to with-
draw his plea agreement. Two days before sentencing, Hus-
sein filed a motion to join in Odeh’s objection to the loss
amount. The district court viewed this motion as an objection
to the loss amount calculated in the Presentence Investigation
Report. (“PSR”). The government informed the district court
that, by objecting to the loss amount, Hussein was breaching
his plea agreement. Nonetheless, Hussein’s attorney, along
with Odeh’s attorney, presented evidence challenging the loss
amount. Specifically, the defendants presented three wit-
nesses who calculated the loss using, among other things, fi-
nancial information provided by the brothers. But during
questioning, the defendants’ witnesses testified that they had
not been told the brothers bought supplies in bulk from Sam’s
and Aldi’s with SNAP cards. Also, the defendants’ experts
6                                      Nos. 15-3389 & 15-3392

testified the defendants had told them of only two bank ac-
counts, whereas the IRS knew of at least twenty bank accounts
associated with the defendants. The district court found the
defendants’ position on the amount of loss was frivolous. The
district court further held that the government had supported
its loss calculation with evidence of the difference between
the amount of SNAP and WIC sales redeemed from the gov-
ernment less the amount reported on their state tax returns as
SNAP and WIC sales. This calculation put the loss at approx-
imately $1.6 million, and the defendants were sentenced on
the basis of this loss amount.
    Following the presentation of evidence at the sentencing
hearing, the government argued that Hussein should not re-
ceive a reduction for acceptance of responsibility. The govern-
ment did not take a position on whether Odeh should receive
such a reduction, saying it was “punting” on that issue. But
after Odeh made a statement at sentencing deflecting his guilt
and falsely blaming his employees, his lack of English profi-
ciency, and his ignorance of American law for his conduct, the
government argued that Odeh had also breached the plea
agreement. For that reason, the government then recom-
mended that Odeh be denied a reduction for acceptance of
responsibility. The government also recommended that the
district court sentence Odeh at the top end of the advisory
guidelines range. The district court denied both Odeh and
Hussein reductions for acceptance of responsibility, finding
that, by making a frivolous argument about the loss amount,
they had not accepted responsibility. Additionally, the dis-
trict court noted that Hussein had challenged the loss amount,
which was barred by his plea agreement and thus also indic-
ative of not accepting responsibility. And the district court
Nos. 15-3389 & 15-3392                                         7

found that Odeh had not accepted responsibility for his of-
fenses because he attempted to place blame for his conduct
elsewhere. The district court then sentenced Odeh to 85
months’ imprisonment (the advisory guidelines range was 70
to 87 months) and also sentenced Hussein to 85 months’ im-
prisonment (his range was 78 to 97 months). Odeh and Hus-
sein appeal their sentences.
                                 II.
    On appeal, the government argues that this court should
dismiss Odeh and Hussein’s appeals because the defendants
waived their rights to appeal their sentences unless their sen-
tences were outside the advisory guidelines range. Because
both defendants were sentenced within the advisory guide-
lines range, the government maintains that their appeals are
barred by the plea agreements. Odeh and Hussein respond
that they are entitled to appeal their sentences because the
government breached the plea agreements by not arguing for
acceptance of responsibility reductions, and by not recom-
mending Odeh for a sentence at the low end of the sentencing
range.
    This court rejected this argument in United States v. Hicks,
129 F.3d 376 (7th Cir. 1997), and United States v. Hare, 269 F.3d
859 (7th Cir. 2001). In both Hicks and Hare, the respective de-
fendants pleaded guilty and in their plea agreements waived
their right to appeal. However, after the district court sen-
tenced them they appealed, arguing the government
breached the plea agreement. But neither Hicks nor Hare had
argued to the district court that the government breached the
plea agreement. As we explained in Hare, by agreeing to
waive his right to appeal, the defendant agreed to have a
claim of breach of the plea agreement “resolved by the district
8                                       Nos. 15-3389 & 15-3392

court.” Hare, 269 F.3d at 862. And where the claim was not
presented to the district court, we dismissed the appeals on
the basis of the defendants’ appeal waivers. Hicks, 129 F.3d at
381; Hare, 269 F.3d at 863.
    Similarly, in this case, Odeh and Hussein entered into a
plea agreement in which they waived their rights to appeal,
except in the event that they were sentenced outside the advi-
sory guidelines range, which they were not. While they claim
the prosecution violated the plea agreement by not recom-
mending an acceptance of responsibility reduction, or recom-
mending that Odeh be sentenced at the low end of the advi-
sory guidelines range, they agreed to allow the district court
to resolve the question of whether a breach occurred by agree-
ing to the appeal waiver. However, as in Hicks and Hare, the
defendants never presented that argument to the district
court. And their waiver of appeal bars them from having this
court consider the question on appeal. Hicks, 129 F.3d at 381;
Hare, 269 F.3d at 862; see also United States v. Whitlow, 287 F.3d
638 (7th Cir. 2002) (holding that a waiver of appellate rights
precluded a defendant from arguing on appeal that the pros-
ecution violated the plea agreement, and explaining “[w]aiver
of appeal means that the final decision [concerning whether
there was a breach of the plea agreement] will be made by one
Article III judge rather than three Article III judges …”).
   Odeh and Hussein believe that United States v. Navarro,
817 F.3d 494 (7th Cir. 2016), compels a different outcome. In
that case, Navarro had waived his right to appeal and also
had not objected to the government’s purported breach of the
plea agreement. On appeal, this court reversed on plain-error
principles, concluding that “Navarro’s likely sentence”
would have been lower but for the government’s breach. Id.
Nos. 15-3389 & 15-3392                                           9

at 501. Based on Navarro, the defendants maintain that this
court should review for plain error.
     The defendants’ reliance on Navarro is misplaced. The plea
agreement in Navarro gave the defendant “the right to chal-
lenge the reasonableness of the sentence [on appeal] if the
[district] court imposed a sentence in excess of the applicable
guidelines range.” Id. at 497. In that case, the district court im-
posed a sentence outside the applicable guidelines range.
Thus, under the terms of the plea agreement, Navarro was en-
titled to appeal. Id. at 498. Conversely, in this case, Odeh and
Hussein were not sentenced outside the advisory guidelines
range, and thus their plea agreements, which allowed for an
appeal in that limited circumstance, do not allow for an ap-
peal in this case. See United States v. Smith, 759 F.3d 702, 706
(7th Cir. 2014) (“When the defendant pursuant to the plea
agreement has knowingly and voluntarily waived his appel-
late rights, and the terms of that waiver are express and un-
ambiguous, we will enforce those terms.”).
    Moreover, even if we applied a plain-error standard, it
would not benefit Odeh and Hussein. While the government
did not recommend a reduction for acceptance of responsibil-
ity for the defendants and did not recommend that Odeh be
sentenced at the low end of the advisory guidelines range, the
government did not violate the terms of the plea agreement.
Under the plea agreement, if the defendants took any act or
position inconsistent with an acceptance of responsibility, the
government was no longer required to recommend such a re-
duction, and any violation of the plea agreement would enti-
tle the government to request the court to impose on the de-
fendants any penalty allowed by law. Hussein acted incon-
sistent with an acceptance of responsibility by arguing that
10                                             Nos. 15-3389 & 15-3392

the loss was around $332,000 because he had stipulated in the
plea agreement that the loss exceeded at least $1,000,000. 1
And Odeh falsely blamed his employees, his lack of English
proficiency, and his ignorance of American laws for his crim-
inal conduct; this also was inconsistent with an acceptance of
responsibility and in breach of his plea agreement. 2 Thus, un-
der the terms of the plea agreement, the government was no
longer required to recommend acceptance of responsibility
reductions or that Odeh should be sentenced at the low end
of the advisory guidelines range. As such, there was no error,
much less plain error.
      Finally, Odeh and Hussein attempt to challenge the dis-
trict court’s loss calculation. Such a challenge would also fail
under plain-error review because Odeh and Hussein cannot
show any error. The government presented evidence that the
loss exceeded $1.6 million. The extent of loss is appalling, es-
pecially considering it stemmed from two small convenience
stores in Illinois over a 19-month period. As the government

     1Odeh also argued the loss was only $332,000, but the government
had modified the plea agreement to allow Odeh to make that argument.
The government posited at sentencing, though, that this modification did
not allow Odeh to present what the district court found to be a frivolous
argument. Nonetheless, the government did not argue against an ac-
ceptance of responsibility reduction on that basis.
     2Odeh counters by arguing that the government breached the plea
agreement first by falsely telling the district court that he had stipulated
that the loss exceeded $1,000,000. In support of his position, though, Odeh
quotes language from the government’s argument at sentencing out of
context. And the government, in fact, clarified to the district court that it
had amended its plea agreement with Odeh, allowing Odeh to present
evidence of the amount of loss. The evidence does not support Odeh’s
contention that the government breached the plea agreement.
Nos. 15-3389 & 15-3392                                      11

acknowledged at the sentencing hearing, the programs are set
up in a way that are arguably too lax and it could do better on
oversight, but noted that that would mean delaying benefits.
The government also acknowledged that the people who
trade the benefits “violate the law—because of drugs or gam-
bling or some other type of addiction … .” At oral argument,
the government explained that it targets the stores rather than
the recipients, though, so the needy are not deprived of food.
Those efforts don’t seem to be working: In this case, Hussein
had previously been involved in food-stamp fraud in New
York and, even after entering into the underlying plea agree-
ment, the government discovered that Hussein had put in a
$20,000 pizza oven at a convenience store that had SNAP au-
thorization and had instructed an employee to continue to ex-
change SNAP benefits for cash. (Recall that cooked food is not
an eligible item under SNAP or WIC.) The government’s in-
vestigation also revealed that the defendants continued to il-
legally purchase WIC benefits because the process to be dis-
qualified from WIC is independent and takes longer than can-
celing the SNAP benefits. Additionally, the agents explained
that convenience stores were often set up with straw owners
and SNAP and WIC authorizations were obtained using those
names. The agencies, or maybe even Congress, will need to
address these deficiencies. In the meantime, families and chil-
dren are being deprived of the intended benefits and all we
can do is determine the loss to the government.
    Here, the government determined the defendants caused
a loss of approximately $1.6 million. The government’s wit-
ness calculated this dollar amount by subtracting the amount
of SNAP and WIC sales the defendants had reported on state
income tax forms from the amount of reimbursement they re-
12                                     Nos. 15-3389 & 15-3392

ceived under the SNAP and WIC programs. While the de-
fendants now claim that their state tax returns were not accu-
rate, the district court could reasonably rely on those figures
to determine that the loss exceeded $1.6 million. Accordingly,
even applying a plain-error standard, the defendants fare no
better.
                               III.
   Hussein and Odeh pleaded guilty to all counts in a four-
count indictment and as part of the plea agreement, they
agreed to waive their right to appeal their sentences unless
they were sentenced above the advisory guideline ranges.
They were not. Accordingly, we dismiss these appeals.