US v. Kamal Qazah

Filing

PUBLISHED AUTHORED OPINION filed. Originating case number: 3:11-cr-00373-FDW-DSC-3. [999700194]. [14-4204, 14-4366]

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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-00373FDW-DSC-10)

Argued:

September 16, 2015

Decided:

November 17, 2015

Before WILKINSON, NIEMEYER, and DUNCAN, Circuit Judges.

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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.

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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

§ 1956(a)(3).
cigarettes

money

laundering,

in

violation

of

18

U.S.C.

In addition, Qazah was convicted of receiving

purportedly

stolen

in

interstate

violation of 18 U.S.C. §§ 2315 and 21.

commerce,

in

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,
trial.

as

well

as

several

other

evidentiary

rulings

made

at

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

wholesale value.

stolen

cigarettes,

rather

than

their

For the reasons that follow, we affirm the

defendants’ convictions, vacate their sentences, and remand for
resentencing.
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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
Qazah

November
the

final

2011,

the

controlled

undercover
purchase

officers
of

arranged

purportedly

with

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
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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.
the

ATF

agent

who

served

as

At the hearing on the motion,
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

defendant

and

Attachment

B.

of

the

his
The

items

were

businesses,
version

linked

which

of

were

Attachment

to

the

particular

different
B

in

attached

to

each
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,
constitute
evidence,
contraband,

5

and items that
fruits,
and/or

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instrumentalities
1956(a)(3)(B):

of

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violations

of

Title

18

U.S.C.

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

which

paragraph,

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
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“Kamal,

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LLC,

businesses

Complete

owned

by

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Construction,

Nasser

ALQUZA,”

LLC,
rather

and

any

than

other

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.
Attorney

went

into

When the ATF agent and Assistant U.S.

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

which

copy

of

the

warrant

--

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
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be participating in the warrants’ execution.
briefing,

one

of

the

undercover

In advance of the

officers,

using

the

correct

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

which

looking.

the

search

team

at

Alquza’s

residence

should

be

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

testified
Alquza’s

he

that
wife

was
it

related

to

only

after

the

search

was

following

this
she

investigation.”
received

that

she

a

call

“looked

at

She
from
[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 goodfaith exception to the exclusionary rule recognized in United
States v. Leon, 468 U.S. 897 (1984).

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

two

of

transactions

the

undercover

with

Qazah

officers

and

Alquza

recordings made by the officers.
two

coconspirators,

who

who

had
saw

and

conducted
excerpts

the
from

They also heard testimony from

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

discussed

that

to

have

understanding

been

with

stolen

that

they

Following

Qazah.

and

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

undercover officers on the day that he was arrested.

the
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
violation

jury
of

convicted
18

U.S.C.

Qazah
§

and

371,

Alquza
by

of

conspiracy,

conspiring

to

in

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

convicted

of

receiving

and

selling

Qazah was

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.
however,

rejected

Application

Note

3

the
of

defendants’

U.S.S.G.
10

§ 2B1.1

The district court,

argument,
to

relying

conclude

that

on
the

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

also

enhancement

objected
for

to

the

obstruction

rejected that challenge.

application

of

justice,

of

and

a

the

two-level
court

also

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

concluded

that

to

216

the

months’

correct

imprisonment.

Sentencing

And

Guidelines

after
range

it
for

Alquza was 121 to 151 months, it imposed a sentence of 108
months’ imprisonment.
These appeals followed.

II
Alquza
denying
house,

first

his

motion

arguing

residence
exclusively

contends
to

that,

identified
associated

that

the

suppress
“because
items
with

the
the

and

district
evidence
search

business

Qazah[,]

[t]he

court

erred

seized

from

warrant
entities
warrant

for

in
his

[his]

that

were

[did]

not

satisfy the Fourth Amendment’s particularity requirement.”

He

also contends that the district court erred in relying on the

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good-faith

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exception

to

the

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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

thereby

be

seized,

providing

and

from

sufficient

where

they

guidance

to

were

to

be

executing

seized,

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

particularly

cause,

describing

supported
the

by

place

persons or things to be seized.”
12

Oath
to

be

or

affirmation,

searched,

and

U.S. Const. amend. IV.

and
the
When

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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

exclusion of evidence is not the proper remedy.

course,

the

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,”

though the warrant was ultimately found to be invalid.

even

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
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warrant

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containing

the

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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
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the

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warrant

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as

Attachment B.

if

it

had

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contained

the

correct

version

of

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.

stamp[] the warrant.”
(4th

Cir.

2008).

Nor did she “merely rubber

United States v. Gary, 528 F.3d 324, 329

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.
Leon, 468 U.S. at 923.

See

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.
signed

Moreover,
version

of

when

the

executing

the

warrant,
15

she

officer
saw

looked

Qazah’s

at

the

name

but

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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

warrant.
search

was

based

on

the

correct

version

of

the

search

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

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
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bottom, acting in good faith.

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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.”
Ct. 2419, 2426-27 (2011).

Davis v. United States, 131 S.

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

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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,

whether that value in fact represented a loss.

regardless

As the court

explained:
[Y]ou go to intended loss.
you look at what is the
18

of

And under intended loss
greatest intended loss,

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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
you look by
greatest.
indicated in

greatest is under 2B1.1(b)(1). And then
the word “loss” and it says apply the
So it is greater intended loss [as
Application Note 3(A)].
*

*

Apply the greatest.
That’s
Loss.
Apply the greatest.
intended loss. All right.

*
where it comes from.
So that’s greatest

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,
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to

wholesale

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value,

increased

both

defendants’

offense levels by two levels and consequently increased their
recommended sentencing ranges.
As

recognized

offense

levels

by

the

are

district

properly

court,

determined

the

defendants’

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.
n.3(A).

See U.S.S.G. § 2B1.1 cmt.

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

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

loss,”
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.”
n.3(A)(ii) (2012) (emphasis added). *

U.S.S.G. § 2B1.1 cmt.

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).
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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.”

observed

Id.

§ 2B1.1

previously,

cmt.

“[t]he

n.3(C).

general

Thus,

rule

is

as

that

we

have

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);

also

see

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.
property

to

include

See 18 U.S.C. § 21 (defining stolen

property

which

21

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represented

by

law

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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

intended victim of the conspiracy offense.

the

most

obvious

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.
22

If legitimate retailers were

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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’

wholesale value.

retail

value

was

greater

than

their

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

cigarettes

at

at

retail.

retail,

That

however,

does

the
not

defendants
necessarily

sold

the

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
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Guidelines provide and with what we have previously held.
Ruhe, 191 F.3d at 391.

See

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,
erred

in

sentencing.

the

making

defendants
several

contend
other

that

rulings

the

district

during

trial

court
and

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

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identification
home.

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documents

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recovered

during

the

search

of

his

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

district

court

irrelevant”
correctly

and

“highly

concluded,

prejudicial.”

however,

that

The

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
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States.”

Again,

we

Pg: 26 of 29

conclude

that

the

district

court

acted within its discretion in admitting this evidence.
Third, Qazah contends that the district court abused its
discretion

in

Alquza’s.
admission

denying

He
of

bases

evidence

his

motion

this

to

argument

seized

during

sever

on

the

the

his

trial

district

search

of

from

court’s
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.
however, lacks any merit.

This argument,

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

reliable judgment about guilt or innocence.”
States, 506 U.S. 534, 539 (1993).

from

making

a

Zafiro v. United

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
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committed

thought

the

perjury

cigarettes

when
were

Pg: 27 of 29

he

testified

counterfeit,

at

trial

rather

that

than

he

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]

factual predicates for a finding of perjury.”
U.S. at 95.
cigarettes
thought

all

of

the

Dunnigan, 507

First, the court found that Qazah actually knew the
were

they

stolen,

were

despite

testifying

counterfeit,

thus

at

trial

establishing

that

the

he

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
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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

reasonableness of their sentences.

challenge

the

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

arriving at that sentence.
district

court

failed

contentions.
court

general

deterrence”

in

Alquza similarly argues that the

“to

U.S.C. § 3553(a) factors.”

and

make

adequate

findings

of

the

18

We find no merit to either of these

Throughout the sentencing hearings, the district

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

28

allow

the

district

court

to

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its

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loss

finding

in

Pg: 29 of 29

light

of

our

opinion

and

to

resentence the defendants.

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

29