USA v. Karl Popovski
Filed opinion of the court by Judge Easterbrook. AFFIRMED. Diane P. Wood, Chief Judge; Frank H. Easterbrook, Circuit Judge and Ilana Diamond Rovner, Circuit Judge. [6872333-1]  [16-4178]
United States Court of Appeals
For the Seventh Circuit
UNITED STATES OF AMERICA,
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 14 CR 131 — Ronald A. Guzmán, Judge.
ARGUED SEPTEMBER 19, 2017 — DECIDED SEPTEMBER 28, 2017
Before WOOD, Chief Judge, and EASTERBROOK and ROVNER,
EASTERBROOK, Circuit Judge. Karl Popovski pleaded guilty
to wire fraud. 18 U.S.C. §1343. The criminal scheme entailed
obtaining credit-card or debit-card numbers from abroad,
encoding them onto blank cards, and using those cards to
withdraw money from automated teller machines. Popovski,
one of a large group directed by Gheorgui Martov that implemented this scheme, was responsible for more than 1,000
account numbers but planned to use 800 of them in Peru.
The district judge disregarded those 800 numbers and calculated an intended loss based on actual or planned transactions in the United States. The judge concluded that the intended loss attributable to Popovski was $131,000, which
added eight offense levels under U.S.S.G. §2B1.1. The judge
sentenced Popovski to 30 months’ imprisonment, the middle
of the Guidelines range (27 to 33 months). Popovski contends that his offense level and sentence should have been
A card reprogrammed with a stolen number for use in an
ATM is an “unauthorized access device” as defined in 18
U.S.C. §1029(e)(1), (3). Application Note 3(F)(i) to §2B1.1
provides: “In a case involving any counterfeit access device
or unauthorized access device, loss includes any unauthorized charges made with the counterfeit access device or unauthorized access device and shall be not less than $500 per
access device.” In United States v. Moore, 788 F.3d 693 (7th
Cir. 2015), we concluded that this includes all access devices
that the defendant possessed, whether used or not. The district court calculated loss at $500 per reprogrammed card or
stolen number that was to be used within the United States.
Popovski maintains that a card or number counts under
Application Note 3(F)(i) only if it produced money or was
demonstrably functional. He insists that cards with canceled
numbers, or those whose accounts or credit limits have been
exhausted by earlier withdrawals, do not count toward the
number of devices. He relies on United States v. Onyesoh, 674
F.3d 1157 (9th Cir. 2012), which held this, while the prosecutor relies on United States v. Moon, 808 F.3d 1085 (6th Cir.
2015), which disagreed with Onyesoh.
Onyesoh relied on the statutory definition of an “access
device” in §1029(e)(1) as a card, number, or other identifier
that can be “used” to obtain goods or money. (Application
Note 3(F)(i) refers to this statute for the definition of “access
device”.) The Ninth Circuit thought that “used” means “able
to be used successfully”. But Moon relied on the fact that the
definition of “unauthorized access device” in §1029(e)(3) includes “any access device that is lost, stolen, expired, revoked, canceled, or obtained with intent to defraud”. This
necessarily implies that a card, number, or other identifier
with a potential to obtain goods or initiate a transfer of funds
remains an “access device” even if it is “expired, revoked,
[or] canceled”. These two statutory paragraphs can work together only if paragraph (1) defines an “access device” according to its nature—the sort of thing that could in principle be used to get goods or funds, whether or not it would
work in practice. Application Note 3(A)(ii)(II) adds that intended loss includes all loss that the defendant sought to inflict, including “intended pecuniary harm that would have
been impossible or unlikely to occur”. Popovski does not
deny that he intended to steal from all of the persons whose
account information he possessed, and this Application Note
tells us that his inability to carry out that intent does not diminish “loss.” Sensibly so, Moon observes, because even a
device that cannot be used to siphon funds can injure the account’s owner by helping the thief create a false identity at
the owner’s expense. 808 F.3d at 1092.
The Ninth Circuit’s conclusion was based on a desire to
eliminate extreme situations, such as a long sentence based
on a cache of credit cards that had been buried for a generation and dug up long after all of them had expired or been
canceled, or the discovery in a museum of clay tablets that
the Persians used for banking. Like the panel in Onyesoh, we
too think that a district judge should not increase a sentence
just because the defendant possessed ancient pieces of plastic or lists of numbers useful only during the reign of Xerxes.
But we disagree with Onyesoh’s view that this result should
be achieved by treating the language in §1029(e)(3) as irrelevant to the meaning of “access device”. Courts must read the
statute to reconcile these paragraphs.
After United States v. Booker, 543 U.S. 220 (2005), all sentences must be reasonable in light of the criteria in 18 U.S.C.
§3553(a), no matter what the Sentencing Guidelines say. If a
calculation under Application Note 3(F)(i) overstates the seriousness of the offense, a district judge must adjust accordingly. That process, rather than warping the language of
§1029(e), is the way to avoid the Ninth Circuit’s parade of
horribles. We accordingly agree with the Sixth Circuit’s
reading of the statute and Guideline 2B1.1.
Popovski does not contend that a significant fraction of
the numbers encoded onto his blank cards was ancient or
unlikely to work. The district judge therefore was entitled to
rely on the rule in Application Note 3(F)(i) without requiring
card-by-card proof of functionality while the scheme was in
operation. The Application Note’s aggregate approach takes
account of the possibility that some access devices won’t
work, while others could produce more than $500. Popovski
does not contend that a sentence of 30 months is unreasonably high, in light of the statutory criteria, for his criminal
conduct. He relies entirely on a contention that §1029(e)(1)
requires card-by-card proof of functionality. As we have rejected that reading of the statute, the judgment is
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