Court Opinion

ID: 3155406
Source: CourtListenerOpinion
Date Created: 2015-11-17 20:00:52.080165+00
Date Added: 2024-06-11T07:38:37.534276
License: Public Domain

PUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                               No. 14-4204

UNITED STATES OF AMERICA,

                Plaintiff - Appellee,

           v.

KAMAL ZAKI QAZAH, a/k/a Keemo,

                Defendant - Appellant.

                               No. 14-4366

UNITED STATES OF AMERICA,

                Plaintiff - Appellee,

           v.

NASSER KAMAL ALQUZA,

                Defendant - Appellant.

Appeals from the United States District Court for the Western
District of North Carolina, at Charlotte.    Frank D. Whitney,
Chief District Judge.  (3:11-cr-00373-FDW-DSC-3; 3:11-cr-00373-
FDW-DSC-10)

Argued:   September 16, 2015            Decided:   November 17, 2015

Before WILKINSON, NIEMEYER, and DUNCAN, Circuit Judges.
Affirmed in part, vacated in part, and remanded for resentencing
by published opinion.     Judge Niemeyer wrote the opinion, in
which Judge Wilkinson and Judge Duncan joined.

ARGUED: Milton Gordon Widenhouse, Jr., RUDOLF, WIDENHOUSE &
FIALKO, Chapel Hill, North Carolina, for Appellants. Michael E.
Savage, OFFICE OF THE UNITED STATES ATTORNEY, Charlotte, North
Carolina, for Appellee.      ON BRIEF: Christopher W. Adams,
CHRISTOPHER W. ADAMS LAW OFFICE, Charleston, South Carolina, for
Appellant Nasser Kamal Alquza.    Jill Westmoreland Rose, Acting
United States Attorney, Asheville, North Carolina, Anthony J.
Enright, Assistant United States Attorney, OFFICE OF THE UNITED
STATES ATTORNEY, Charlotte, North Carolina, for Appellee.

                               2
NIEMEYER, Circuit Judge:

       A    jury    convicted      Kamal    Zaki    Qazah       and   his    uncle      Nasser

Kamal Alquza of conspiracy, in violation of 18 U.S.C. § 371, by

conspiring         to    receive    and     transport           stolen      cigarettes        in

interstate commerce, in violation of 18 U.S.C. §§ 2314 and 2315;

conspiracy to commit money laundering, in violation of 18 U.S.C.

§    1956(h);      and    money    laundering,          in    violation     of    18    U.S.C.

§ 1956(a)(3).            In addition, Qazah was convicted of receiving

cigarettes         purportedly       stolen        in        interstate     commerce,         in

violation of 18 U.S.C. §§ 2315 and 21.                             The district court

sentenced Qazah to 216 months’ imprisonment and Alquza to 108

months’ imprisonment.

       On appeal, Alquza challenges the district court’s denial of

his motion to suppress evidence recovered from a search of his

house,      as    well   as    several     other    evidentiary          rulings       made   at

trial.       Qazah challenges the court’s denial of his motion to

sever his trial from Alquza’s.                     And both defendants challenge

their sentences, primarily on the ground that the district court

erroneously calculated the “loss” for which they are responsible

under the Sentencing Guidelines by relying on the retail value

of    the        purportedly      stolen     cigarettes,           rather        than    their

wholesale value.              For the reasons that follow, we affirm the

defendants’ convictions, vacate their sentences, and remand for

resentencing.

                                              3
                                             I

    During 2010 and 2011, Qazah, in conspiracy with others,

purchased       thousands     of    cases      of   purportedly       stolen    Marlboro

brand cigarettes from undercover law enforcement officers, who

had represented that the cigarettes had been stolen from Philip

Morris USA trucks in Virginia or Tennessee before being brought

to North Carolina or South Carolina for sale.                            Each case of

cigarettes contained 60 cartons, with each carton containing 10

packs.     Qazah sold the purportedly stolen cigarettes, on which

state taxes had not been paid, to coconspirators who operated

convenience stores in South Carolina, allowing Qazah to make a

substantial profit in the process.

     Qazah       eventually        brought       his   uncle,       Alquza,    into    the

conspiracy in order to make additional money by laundering the

undercover      officers’     cash       proceeds      from   the    cigarette       sales.

The two men provided the officers with checks drawn on various

accounts in exchange for approximately $275,000 in cash.

     In    November      2011,     the    undercover      officers      arranged      with

Qazah     the    final    controlled         purchase     of    purportedly       stolen

cigarettes, agreeing to deliver 1,377 cases of cigarettes to a

warehouse       owned    by   Alquza      on     November      30,    2011,    for    $1.8

million.        Instead of completing that transaction, however, law

enforcement officers arrested Qazah and Alquza at Qazah’s house,

where they also executed a search warrant and recovered, among

                                             4
other things, $1.3 million in cash and a notebook in which Qazah

had recorded his cigarette sales to various retailers.                                        That

same day, officers executed another search warrant at Alquza’s

house,       recovering,          among     other        things,        relevant      financial

records and false identification documents.

       Prior    to     trial,       Alquza    filed          a   motion      to   suppress     the

evidence seized during the search of his house on the ground

that     the     warrant          authorizing          the       search      incorporated       an

attachment, Attachment B, that described the items to be seized

from Qazah’s house, not Alquza’s.                       At the hearing on the motion,

the    ATF     agent    who       served     as       the    lead    case     agent     for    the

investigation and an Assistant U.S. Attorney acknowledged that,

when they applied for the search warrant for Alquza’s house,

they mistakenly included the Attachment B they had prepared in

connection       with       the    search     of       Qazah’s       house.         While     both

versions of Attachment B included a similar list of items to be

seized,      many      of    the     items        were      linked      to    the    particular

defendant       and    his    businesses,             which      were     different     in    each

Attachment      B.      The       version    of       Attachment        B    attached    to    the

warrant authorizing the search of Alquza’s house included the

following list of items, with the material in brackets showing

what had been intended in lieu of the underlined material:

       The following records, documents,                            and items that
       constitute  evidence, contraband,                            fruits,  and/or

                                                  5
     instrumentalities   of    violations    of   Title   18   U.S.C.
     1956(a)(3)(B):

     1.   Cash or United States currency, cigarettes,
     documentation of personal and business bank account
     numbers,    bank    statements,     investment    account
     statements, safety deposit boxes, and other financial
     statements for Kamal QAZAH and 7 Stars Auto [Nasser
     ALQUZA and May Hassouneh], or in nominee names, for
     the periods 2009 through current.     Documentation will
     also     include    all     written     or     electronic
     correspondences, canceled checks, deposit slips, and
     signature cards. Documentation of asset ownership for
     Kamal QAZAH and 7 Stars Auto [Nasser ALQUZA and May
     Hassouneh].    Furthermore, documentation showing the
     use of straw parties or fictitious names to conceal
     individual assets for the years 2009 through current.

     2.    All corporate and individual bookkeeping records
     and other financial records including balance sheets,
     deposit and withdrawal sheets, statements of assets,
     statements of cash flows, statements of liabilities,
     general ledgers, general journals, subsidiary ledgers,
     gross receipts, safety deposit box, cash receipts,
     disbursement    records,    accounts   receivable    and
     payable[,] ledgers and records [for] KQ LLC, City Food
     Mart LLC and Z and Z of Columbia LLC and 7 Stars Auto
     owned    by   Kamal   QAZAH    [Kamal,  LLC,    Complete
     Construction, LLC, and any other businesses owned by
     Nasser ALQUZA].

(Emphasis added).    Both versions of Attachment B also included a

third   paragraph,   which    listed   various    types   of    “[d]igital

[e]vidence” and did not mention either Qazah or Alquza.

     Thus, the version of Attachment B that the ATF agent and

the Assistant U.S. Attorney intended to include for Alquza’s

house would have specified documents relating to “Nasser ALQUZA

and May Hassouneh” in paragraph one, rather than those relating

to “Kamal QAZAH and 7 Stars Auto.”          And, in paragraph two, the

correct attachment would have specified documents relating to
                                   6
“Kamal,      LLC,    Complete         Construction,          LLC,     and     any     other

businesses     owned      by     Nasser      ALQUZA,”     rather       than    documents

relating to “KQ LLC, City Food Mart LLC and Z and Z of Columbia

LLC and 7 Stars Auto owned by Kamal QAZAH.”

      The Assistant U.S. Attorney testified that while he and the

ATF agent had printed and included the wrong Attachment B in the

packet that they physically brought to the magistrate judge to

sign, he had previously emailed the entire search warrant and

application for it to the magistrate judge’s chambers and that

this email version included the correct version of Attachment B

for Alquza’s warrant.                When the ATF agent and Assistant U.S.

Attorney     went   into       the    judge’s      chambers,    the    judge    had    the

correct version of the documents open on her desk and looked

down at them when she referenced a detail that had been included

in the ATF agent’s affidavit.                 She then asked the ATF agent for

his   copy    of    the   warrant       --    which    contained       the    mistakenly

switched Attachment B -- signed it, and handed it back to the

ATF agent, who filed a copy with the clerk’s office.

      Government      witnesses        also       testified    that    the    search    of

Alquza’s residence was conducted on the same day as the search

of three additional locations in South Carolina, as well as the

execution     of    11    arrest      warrants.         In     preparation      for    the

“takedown,” agents held a briefing that provided an overview of

the investigation for the approximately 100 officers that would

                                              7
be participating in the warrants’ execution.                              In advance of the

briefing,     one    of       the    undercover        officers,      using        the   correct

version of Attachment B, prepared a summary list of the items

for   which    the       search       team   at     Alquza’s        residence       should      be

looking.      The leader of that search team, Agent Sherry Hamlin,

testified that she received that summary list at the briefing

and relied on it when supervising the search.                             On the morning of

the search, she also had a copy of the signed warrant, which

contained     the    incorrect         version         of    Attachment       B.     When      she

examined the warrant and its attachments, however, she noticed

no discrepancy.           She explained, “When I did look at the search

warrant, I remember seeing the name ‘Kamal [Qazah],’ but I also

kn[e]w     that     he    was        related      to    this       investigation.”             She

testified     that       it    was    only     after        she    received    a    call      from

Alquza’s    wife     following         the     search       that    she    “looked       at   [the

warrant] more closely and realized” the error.

      Following the hearing, the district court denied the motion

to suppress, finding as fact that the warrant’s inclusion of the

incorrect attachment was a clerical error.                           The court concluded

that even if the error had rendered the warrant defective, the

evidence recovered in the search was admissible under the good-

faith exception to the exclusionary rule recognized in United

States v. Leon, 468 U.S. 897 (1984).

                                                8
       At the six-day trial, the jurors heard extensive testimony

from   two    of     the     undercover       officers           who    had   conducted       the

transactions         with    Qazah      and     Alquza          and     saw   excerpts       from

recordings made by the officers.                     They also heard testimony from

two    coconspirators,           who    explained           that       they   had     purchased

cigarettes from undercover officers and then immediately resold

them to Qazah.              Both of these witnesses testified that they

understood     the     cigarettes        to     have       been    stolen     and     that    they

discussed      that        understanding            with       Qazah.         Following       the

government’s case in chief, Qazah testified on his own behalf

and admitted that he had purchased more than 1,000 cases of

cigarettes supplied by the undercover officers and that he had

been   planning       on     purchasing         1,300          cases    directly      from    the

undercover officers on the day that he was arrested.                                         Qazah

further admitted that the undercover officers had represented

that    the     cigarettes             they     were           supplying       were     stolen.

Nonetheless, he maintained that, notwithstanding the officers’

representations,            he    believed           that         the     cigarettes          were

counterfeit, rather than stolen.

       The    jury    convicted         Qazah       and     Alquza      of    conspiracy,       in

violation      of     18    U.S.C.      §     371,        by    conspiring      to     receive,

transport, and sell stolen property in interstate commerce, in

violation of 18 U.S.C. §§ 2314 and 2315; conspiracy to commit

money laundering, in violation of 18 U.S.C. § 1956(h); and money

                                                9
laundering, in violation of 18 U.S.C. § 1956(a)(3).                    Qazah was

also   convicted     of   receiving   and    selling       property    stolen   in

interstate commerce, in violation of 18 U.S.C. §§ 2315 and 21.

       Following their convictions, the Probation Officer prepared

a presentence report for each defendant.               The report for Qazah

recommended that he be held responsible for 8,112.66 cases of

cigarettes, with a retail value of $24,337,980, and the report

for Alquza recommended that he be held responsible for 2,909.66

cases, with a retail value of $8,728,980.                  Based on those loss

amounts, the reports applied a 22-level enhancement to Qazah’s

offense level, pursuant to U.S.S.G. § 2B1.1(b)(1)(L) (2012), and

a 20-level enhancement to Alquza’s offense level, pursuant to

U.S.S.G. § 2B1.1(b)(1)(K) (2012).                The presentence report for

Qazah also recommended applying a two-level adjustment to his

offense    level   for     obstruction      of    justice     based    on   false

statements that he made during his initial appearance before a

magistrate judge.

       Both defendants objected to the presentence reports’ use of

the cigarettes’ retail value in calculating the loss amount,

arguing that the cigarettes’ wholesale value should have been

used instead.      Using wholesale value would have lowered each

defendant’s offense level by two levels.                   The district court,

however,    rejected       the   defendants’         argument,    relying        on

Application   Note    3   of   U.S.S.G.    § 2B1.1    to    conclude    that    the

                                      10
cigarettes’ retail value was the appropriate measure of loss.

Qazah     also      objected         to     the     application          of     a    two-level

enhancement       for    obstruction         of     justice,       and    the       court    also

rejected that challenge.                  But in doing so, the court relied not

on statements made by Qazah during his initial appearance, but

on his testimony at trial that he did not think the cigarettes

were stolen, finding that, by giving this testimony, Qazah had

committed perjury.

     After       concluding          that   the    correct     Sentencing           Guidelines

range for Qazah was 235 to 293 months’ imprisonment, the court

sentenced     him       to     216    months’      imprisonment.              And    after     it

concluded     that       the     correct      Sentencing       Guidelines           range     for

Alquza was 121 to 151 months, it imposed a sentence of 108

months’ imprisonment.

     These appeals followed.

                                              II

     Alquza      first       contends       that    the    district       court       erred    in

denying    his    motion       to     suppress     the    evidence       seized       from    his

house,    arguing       that,        “because      the    search    warrant         for     [his]

residence     identified         items       and    business       entities         that     were

exclusively      associated          with    Qazah[,]      [t]he     warrant         [did]    not

satisfy the Fourth Amendment’s particularity requirement.”                                     He

also contends that the district court erred in relying on the

                                              11
good-faith        exception    to    the     exclusionary           rule      recognized        in

United States v. Leon, 468 U.S. 897 (1984), arguing that Leon’s

good-faith        exception    does     not       apply      here       (1)    because        “the

magistrate judge fail[ed] to perform [her] proper, neutral and

detached function”; and (2) because the warrant here was “so

facially      deficient       that     the        executing         officer        could       not

reasonably have assumed the warrant was valid.”

       The government contends that, despite the inclusion of the

wrong     attachment,        the     search       warrant          for     Alquza’s        house

satisfied the Fourth Amendment’s particularity requirement, as

it described in detail the things to be seized, from whom they

were    to   be    seized,    and    from     where       they     were       to   be    seized,

thereby      providing    sufficient         guidance        to     executing       officers.

The government further contends that “even if the warrant were

deficient [because of the inclusion of the incorrect version of

Attachment B], suppression would not be appropriate” under Leon

“because law-enforcement officers acted in good-faith reliance

on the warrant” and because “the error did not involve the kind

of wrongdoing that suppression could meaningfully deter.”

       The Fourth Amendment requires that, in the ordinary course,

searches and seizures be conducted pursuant to a warrant issued

“upon    probable     cause,       supported       by   Oath       or    affirmation,          and

particularly        describing       the    place       to    be    searched,           and    the

persons or things to be seized.”                    U.S. Const. amend. IV.                    When

                                             12
officers obtain a search warrant but the requirements of the

Fourth      Amendment      are       nonetheless         violated,      evidence       recovered

during the search may, in certain egregious cases, be excluded

at trial, such as, for instance, when “the issuing magistrate

wholly abandon[s] his judicial role” or when the warrant issued

is “so facially deficient -- i.e., in failing to particularize

the place to be searched or the things to be seized -- that the

executing officers cannot reasonably presume it to be valid.”

Leon, 468 U.S.    at     923.         But,       in   the    ordinary       course,      the

exclusion of evidence is not the proper remedy.                                See id. at 918

(“[S]upression of evidence obtained pursuant to a warrant should

be    ordered     only     on        a    case-by-case        basis     and    only    in    those

unusual cases in which exclusion will further the purposes of

the    exclusionary        rule”).            The    Leon     Court     held       that,    in   the

circumstances before it, the exclusionary rule should not be

applied      to     bar        the       government        from     introducing        “evidence

obtained by officers acting in reasonable reliance on a search

warrant      issued       by    a        detached    and      neutral    magistrate,”            even

though the warrant was ultimately found to be invalid.                                      Id. at

900.

       In    this   case,        Alquza       contends        that    two     of    the    extreme

circumstances recognized in Leon as justifying the exclusion of

evidence obtained pursuant to a warrant apply here, arguing that

the magistrate judge abandoned her judicial role in signing a

                                                    13
warrant      containing   the    incorrect        Attachment   B    and   that   the

warrant therefore was so facially deficient that the executing

officers could not have reasonably assumed that it was valid.

We disagree.

       The error in this case was a technical one, as the district

court found, which did not influence the warrant’s issuance, nor

adversely affect its execution.               Alquza does not contend that

probable cause was lacking or that the applicant’s affidavit

misstated any facts.            Nor does he identify any defect in the

email version of the warrant that the magistrate judge reviewed

to    make   her   decision     to   issue    it.       Moreover,    he   does   not

complain that the actual search conducted or the items seized

were unauthorized by the correct version of the warrant.

       The record supports the district court’s findings that the

magistrate judge made her decision to issue the warrant based on

the   email    copy   that    was    sent    to   her   by   the   Assistant     U.S.

Attorney and that the email version included the correct version

of Attachment B.          When she signed the physical copy of the

warrant presented to her by the AFT agent and the Assistant U.S.

Attorney, she assumed, as did the agent and the Assistant U.S.

Attorney, that she was signing the same version.                     In addition,

the search team executed the warrant by seizing items based on a

summary list prepared from the correct version of the warrant.

Consequently, both the issuance and the execution conformed to

                                        14
the    warrant     as    if   it     had    contained     the    correct        version        of

Attachment B.         The only discrepancy in the process was that the

actual warrant that was signed by the magistrate judge and given

to Alquza contained the wrong version of Attachment B.                                        The

executing officer did not realize the discrepancy until after

the search had been completed, when Alquza’s wife called the

officer.

       In   these       circumstances,        we    conclude      that       the    judicial

officer did not wholly abandon her judicial role in issuing the

warrant.       See Leon, 468 U.S. at 923.             Nor did she “merely rubber

stamp[] the warrant.”              United States v. Gary, 528 F.3d 324, 329

(4th    Cir.    2008).        To     the    contrary,     she    examined          the    email

version of the proposed warrant, which was the correct version,

before deciding to sign it, although she unwittingly signed an

incorrect version.            And Alquza does not challenge the correct

version that was considered by the judge.

       We   also    conclude       that     the    warrant      was    not    so    facially

deficient as to preclude the officers performing the search from

forming an objectively reasonable belief in its validity.                                     See

Leon, 468 U.S. at 923.               The signed warrant correctly identified

the place to be searched and included an Attachment B, albeit

the incorrect one, that correctly listed many of the items to be

seized.        Moreover,      when    the    executing       officer     looked          at   the

signed      version      of   the     warrant,      she    saw        Qazah’s      name       but

                                             15
reasonably concluded that its inclusion was not peculiar because

she knew that Qazah was a central figure in the conspiracy.

More importantly, the executing officer was not relying on her

personal reading of the warrant’s Attachment B to inform her of

the items that her team was authorized to seize.                       Instead, she

reasonably relied on the summary list that her colleagues had

prepared and given to her in advance of the search -- a summary

list   that     was   based   on    the   correct       version   of    the   search

warrant.      As a result, in actual fact, the officers of the

search   team    executed     the   warrant    in   a    manner   that    was   both

consistent with the warrant that they thought they had received

and consistent with the warrant that the magistrate judge had

intended to issue.       In light of these circumstances, we conclude

that the officers of the search team reasonably believed that

the search that they were conducting was authorized by a valid

warrant.      See Massachusetts v. Sheppard, 468 U.S. 981, 990-91

(1984) (concluding that the evidence recovered during a search

of the defendant’s home need not be suppressed even though the

warrant’s description of the items to be seized was “completely

inaccurate,” id. at 988 n.5, as a result of a “technical error

on the part of the issuing judge,” id. at 984).

       Most important to the analysis, however, is our conclusion

that the suppression of evidence recovered in this case would

have almost no deterrent effect because the officers were, at

                                          16
bottom, acting in good faith.             The Supreme Court has repeatedly

explained that the exclusionary rule’s “sole purpose . . . is to

deter future Fourth Amendment violations” and that exclusion is

appropriate only when “the deterrence benefits of suppression .

. . outweigh its heavy costs.”                Davis v. United States, 131 S.

Ct. 2419, 2426-27 (2011).              The Davis Court explained that the

key to this balancing analysis is the relative culpability of

the police officer’s conduct:

      The basic insight of the Leon line of cases is that
      the deterrence benefits of exclusion vary with the
      culpability of the law enforcement conduct at issue.
      When the police exhibit deliberate, reckless, or
      grossly negligent disregard for Fourth Amendment
      rights, the deterrent value of exclusion is strong and
      tends to outweigh the resulting costs.    But when the
      police act with an objectively reasonable good-faith
      belief that their conduct is lawful, or when their
      conduct involves only simple, isolated negligence, the
      deterrence rationale loses much of its force, and
      exclusion cannot pay its way.

Id.   at    2427-28   (emphasis        added)    (internal    quotation    marks,

alterations, and citations omitted); see also Herring v. United

States, 555 U.S. 135, 144 (2009) (“To trigger the exclusionary

rule,      police   conduct     must     be   sufficiently    deliberate     that

exclusion can meaningfully deter it, and sufficiently culpable

that such deterrence is worth the price paid by the justice

system”).

      Given    that   the     officers    here   were,   at   most,   guilty   of

simple negligence in failing to recognize the document-assembly

                                         17
error before executing the warrant and that, in any event, they

acted in good faith, Leon and its progeny compel the conclusion

that   the   district    court   correctly          denied   Alquza’s   motion   to

suppress.

                                         III

       The defendants’ other significant issue on appeal arises

from their contention that the district court erred in enhancing

their offense levels and, consequently, their sentencing ranges

under the Sentencing Guidelines by holding them accountable for

a loss under U.S.S.G. § 2B1.1(b)(1) based on the retail value of

the purportedly stolen cigarettes.              The defendants maintain that

the district court was, instead, required to use the cigarettes’

wholesale value, which would represent the loss sustained by the

cigarettes’     manufacturer,        from       whom    the    cigarettes    were

purportedly stolen.

       In rejecting the wholesale value of the cigarettes as the

appropriate    measure      of   loss,    the       district   court    relied   on

U.S.S.G. § 2B1.1(b)(1) and Application Note 3(A) to conclude

that it should apply the “greatest intended loss” as between the

wholesale    and   retail    value   of       the   cigarettes,   regardless     of

whether that value in fact represented a loss.                     As the court

explained:

       [Y]ou go to intended loss.               And under intended loss
       you look at what is the                 greatest intended loss,

                                         18
       particularly with a government sting operation where
       you have no loss. So isn’t the issue were they going
       to be selling them wholesale or are they knowingly
       going to be pushing them further down to get to retail
       outlets?

                                *     *    *

       [I]t is the Probation Office’s position that . . . the
       greater intended loss would ultimately be retail.

                                *     *    *

       The court, for the reasons raised by the United States
       and the Probation Office, as well as this own court’s
       discussion of the sentencing guidelines, finds that
       the appropriate value is retail value for determining
       the loss amount.

(Emphasis added).

       When questioned by counsel for the defendants about where

the court derived the conclusion that it must apply the greatest

value, the court directed counsel to both U.S.S.G. § 2B1.1(b)(1)

and the Application Notes under it, stating:

       Apply -- the    greatest is under 2B1.1(b)(1). And then
       you look by     the word “loss” and it says apply the
       greatest.       So it is greater intended loss [as
       indicated in   Application Note 3(A)].

                                *     *    *

       Apply the greatest.    That’s           where it comes from.
       Loss.    Apply the greatest.              So that’s greatest
       intended loss. All right.

       Accordingly, the court concluded that the loss resulting

from   the   defendants’   offenses    should    be   based   on   the   retail

value of $3,000 per case, as distinct from the wholesale value

of $2,126 per case.        The district court’s use of retail value,

                                      19
as   opposed       to    wholesale              value,    increased      both        defendants’

offense levels by two levels and consequently increased their

recommended sentencing ranges.

     As     recognized          by        the     district    court,      the        defendants’

offense         levels        are     properly           determined       under         U.S.S.G.

§ 2B1.1(b)(1), which correlates a defendant’s offense level with

the amount of the “actual loss” or the “intended loss” resulting

from the commission of an offense.                         See U.S.S.G. § 2B1.1 cmt.

n.3(A).     In this case, because the defendants’ offenses occurred

during the course of an undercover sting operation, the parties

agree,    as     did    the    district          court,    that    the   “intended        loss,”

rather than the “actual loss,” is the relevant measure.                                 See id.

§ 2B1.1 cmt. n.3(A)(ii).

     In     the     version          of     the     Sentencing      Guidelines         used   in

sentencing the defendants, the Application Notes explain that

the “intended loss” is determined by “the pecuniary harm that

was intended to result from the offense.”                          U.S.S.G. § 2B1.1 cmt.

n.3(A)(ii) (2012) (emphasis added). *                        The Notes provide further

that “[t]he court need only make a reasonable estimate of the

loss”     and     that    its       estimate        “shall    be    based       on    available

information, taking into account, as appropriate and practicable

     * Effective November 1, 2015, the Sentencing Commission
amended Application Note 3(a) to define “intended loss” as “the
pecuniary harm that the defendant purposefully sought to
inflict.” U.S.S.G. § 2B1.1 cmt. n.3(A)(ii).

                                                  20
under the circumstances,” a number of factors, including “[t]he

fair market value of the property unlawfully taken” and “[t]he

approximate number of victims multiplied by the average loss to

each   victim.”          Id.    § 2B1.1   cmt.    n.3(C).         Thus,    as   we     have

observed     previously,         “[t]he     general    rule       is    that    loss    is

determined by measuring the harm to the victim” of the offense

committed.        United States v. Ruhe, 191 F.3d 376, 391 (4th Cir.

1999);   see      also    id.    at   380,    390-92    (applying         the   rule    to

determine loss resulting from the crime of transporting stolen

property in interstate commerce).                  The victim, of course, is

determined by the nature of the offense and the impact of its

violation.

       The relevant offense for this determination of loss is the

charge   that      the    defendants      participated       in    a    conspiracy      to

receive, transport, and sell stolen goods -- specifically, over

8,000 cases of Marlboro cigarettes manufactured by Philip Morris

-- in violation of 18 U.S.C. §§ 2314 and 2315.                         Even though the

cigarettes were not in fact stolen, but were instead supplied to

the defendants by undercover agents in a sting operation, the

defendants were told -- and they believed -- that they were

receiving cigarettes stolen from Philip Morris trucks in either

Virginia or Tennessee.                See 18 U.S.C. § 21 (defining stolen

property     to    include       property     which    was    represented        by    law

                                             21
enforcement and persons under their direction to be stolen and

which the defendant believed to be stolen).

     Thus,   for   the   purpose   of   determining      the   loss    that   was

intended to result from the offense, see U.S.S.G. § 2B1.1 cmt.

n.3(A)(ii), the court must identify and focus on the intended

victim or victims of the offense of receiving and selling stolen

property.    Had the cigarettes actually been stolen, the most

obvious victim would have been the property’s true owner, which

the defendants believed to be Philip Morris, the cigarettes’

manufacturer.      This    makes    Philip     Morris    the    most    obvious

intended victim of the conspiracy offense.               And Philip Morris’

loss would have been the amount of money that it would have

otherwise    received      for     selling     the      purportedly      stolen

cigarettes, a figure that the record indicates was an average of

$2,126 per case.

     But Philip Morris was not necessarily the only intended

victim of the defendants’ scheme.            For example, other potential

intended victims might well have included the States that were

denied cigarette taxes that otherwise would have been paid in

this case, at roughly $300 per case.              It is also conceivable

that the defendants and their coconspirators intended to harm

legitimate retailers by enabling conspiring retailers to sell

the cigarettes at a discount, thus possibly depriving legitimate

retailers of sales as a result.           If legitimate retailers were

                                     22
found to be among the class of intended victims, then it would

likely have been appropriate for the district court to estimate

their losses in its loss calculations as well.

        These questions about the identity of the intended victims

and   their      losses     are   ultimately       questions       of    fact    for     the

district court to resolve as part of its loss calculations under

the Sentencing Guidelines.

      The      district     court   in     this    case       appeared    to    conclude,

without making any such inquiries, that the cigarettes’ retail

market value was the appropriate measure of loss simply because

the Guidelines required it to apply the “greater intended loss,”

and     the     cigarettes’       retail    value       was     greater    than        their

wholesale value.          We do not suggest that the retail value of the

cigarettes is necessarily an incorrect measure here, but the

district court did not explain how the retail value represented

loss.         Rather, it justified its use of retail value on the

ground that the defendants intended, in their scheme, to sell

the     cigarettes     at    retail.         That       the    defendants       sold     the

cigarettes       at   retail,     however,       does   not     necessarily      indicate

that the retail value is an approximate measure of loss.                               Loss,

by definition, would require a victim and would represent an

amount that is lost or taken away from the victim.                        See Merriam-

Webster’s Collegiate Dictionary 736 (11th ed. 2007) (defining

“loss” and “lost”).          This is consistent with what the Sentencing

                                            23
Guidelines provide and with what we have previously held.                     See

Ruhe, 191 F.3d at 391.            In this limited respect, we therefore

conclude that the district court’s reasoning was in error.                   See,

e.g., United States v. Machado, 333 F.3d 1225, 1228 (11th Cir.

2003) (joining other circuits in concluding that loss must be

measured       “within   the     factual     circumstances      presented”    and

therefore may not necessarily be the property’s retail market

value).        Accordingly, we vacate the defendants’ sentences and

remand for resentencing, allowing the district court to expand

its inquiry into the intended victim or victims of the relevant

offenses and to recalculate the defendants’ sentencing ranges

based on its findings and conclusions about the amount of loss

that    they    intended    to   result    from   their   commission    of    the

offense or offenses.

                                        IV

       Finally,    the   defendants    contend    that    the   district     court

erred     in    making     several    other    rulings    during    trial     and

sentencing.       We affirm each, however, concluding that they merit

only brief discussion.

       First, Alquza contends that the district court abused its

discretion by allowing the government to present (1) evidence of

statements he made to the undercover officers about his prior

experience dealing with stolen goods and (2) evidence of false

                                        24
identification      documents     recovered    during   the   search    of   his

home.     He argues that the district court should have excluded

this evidence under Federal Rule of Evidence 404(b)(1), which

specifies that “[e]vidence of a crime, wrong, or other act is

not admissible to prove a person’s character in order to show

that on a particular occasion the person acted in accordance

with the character.”        The Rule provides further, however, that

such evidence “may be admissible for another purpose, such as

proving     motive,     opportunity,        intent,     preparation,     plan,

knowledge, identity, absence of mistake, or lack of accident.”

Fed. R. Evid. 404(b)(2); see also United States v. Queen, 132
F.3d 991, 997 (4th Cir. 1997).          In the context of this case, we

conclude that the district court acted within its discretion in

admitting the challenged evidence under Rule 404(b)(2).

       Second, Alquza contends that the district court abused its

discretion by allowing the government to present evidence that

the Federal Reserve Board had investigated the large sums of

money being wired overseas to Jordan through a bank account that

Alquza jointly controlled, maintaining that this evidence was

both    “completely    irrelevant”    and     “highly   prejudicial.”        The

district    court     correctly    concluded,     however,    that     Alquza’s

counsel opened the door to this evidence by asking one of the

undercover officers whether there was any evidence that Alquza

“was wiring hundreds of thousands of dollars in and out of the

                                      25
United     States.”        Again,    we     conclude       that    the    district     court

acted within its discretion in admitting this evidence.

      Third, Qazah contends that the district court abused its

discretion        in    denying     his    motion     to    sever        his   trial    from

Alquza’s.         He    bases     this     argument    on     the    district        court’s

admission     of       evidence    seized     during       the    search       of   Alquza’s

house, as well as its admission of evidence concerning Alquza’s

prior illegal conduct.              Qazah argues that this evidence would

not have been admissible had he been tried alone; that it “had

an unfair tendency to cast [him] in a bad light with the jury”;

and that the district court was therefore compelled to grant a

severance to enable him to receive a fair trial.                           This argument,

however, lacks any merit.                 When defendants are properly charged

together, a district court should grant severance under Federal

Rule of Criminal Procedure 14 “only if there is a serious risk

that a joint trial would compromise a specific trial right of

one   of    the    defendants,       or     prevent    the        jury    from      making   a

reliable judgment about guilt or innocence.”                             Zafiro v. United

States, 506 U.S. 534, 539 (1993).                   Because Alquza comes nowhere

close to satisfying this standard, the court correctly denied

his motion to sever.

      Fourth, Qazah contends that the district court erred at

sentencing by applying a two-level adjustment for obstruction of

justice under U.S.S.G. § 3C1.1, based on its conclusion that

                                             26
Qazah    committed        perjury      when    he     testified       at    trial    that    he

thought    the       cigarettes     were      counterfeit,       rather       than    stolen.

Specifically, Qazah maintains that the district court erred by

applying the enhancement without making factual findings that he

(1) gave false testimony, (2) concerning a material matter, (3)

with    the    willful        intent   to     deceive.        See     United       States    v.

Dunnigan, 507 U.S. 87, 95 (1993) (holding that when a district

court     bases      an   obstruction          of     justice    enhancement         on     the

defendant’s trial testimony, the court must “make[] a finding of

an obstruction of . . . justice that encompasses all of the

factual predicates for a finding of perjury”); United States v.

Perez, 661 F.3d 189, 193 (4th Cir. 2011) (concluding that, under

Dunnigan,      “[i]f      a    district       court    does     not    make    a     specific

finding as to each element of perjury, it must provide a finding

that    clearly       establishes       each    of     the    three    elements”).           We

conclude, however, that the district court’s findings that Qazah

obstructed        justice       sufficiently          “encompasse[d]          all    of     the

factual predicates for a finding of perjury.”                                Dunnigan, 507
U.S. at 95.          First, the court found that Qazah actually knew the

cigarettes       were     stolen,      despite      testifying        at    trial    that    he

thought       they    were     counterfeit,         thus     establishing       the       first

element of perjury -- i.e., that Qazah gave false testimony.

The    court     further       found    that     whether      Qazah        thought    he    was

handling stolen cigarettes or counterfeit cigarettes “was the

                                               27
central issue for the jurors,” thus establishing the materiality

of the false testimony.           And, finally, the willfulness element

of perjury was encompassed by the court’s findings that Qazah

had   “categorically      denied”       knowing         that    the     cigarettes        were

stolen and that this denial was the “core of his testimony.”

      Fifth,   and     finally,          both          defendants        challenge         the

reasonableness of their sentences.                 Specifically, Qazah contends

that his sentence of 216 months’ imprisonment is “greater than

necessary” and that the district court “placed undue emphasis on

the   seriousness    of     the   offense          and    general        deterrence”        in

arriving at that sentence.               Alquza similarly argues that the

district   court    failed    “to       make     adequate           findings    of   the    18

U.S.C. § 3553(a) factors.”          We find no merit to either of these

contentions.       Throughout the sentencing hearings, the district

court   explained     its    chosen       sentences            by     reference      to    the

§ 3553(a) factors, and the defendants have not shown that the

district court abused its discretion in selecting an appropriate

sentence in light of those factors.                    See Gall v. United States,

552 U.S. 38, 41 (2007).

                                    *        *     *

      In sum, we affirm both defendants’ convictions but vacate

their   sentences,     remanding        to       allow    the        district     court     to

                                          28
reevaluate   its   loss   finding   in   light   of   our   opinion   and   to

resentence the defendants.

                                    AFFIRMED IN PART, VACATED IN PART,
                                         AND REMANDED FOR RESENTENCING

                                    29