Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 95 CR 155 Suzanne B. Conlon, Judge.
Before BAUER, FLAUM, and KANNE, Circuit Judges.
DECIDED SEPTEMBER 4, 1996
Damone Jackson, Mark Jackson, and Kerry Stephans were all convicted of wire fraud, under 18 U.S.C. secs. 1343 and 2, for their involvement in a fraudulent telemarketing scheme. Damone Jackson pled guilty and testified against Mark Jackson and Stephans at a joint jury trial, which resulted in the convictions of both men. The three men appeal various enhancements to their respective sentences under the Sentencing Guidelines, and Stephans also appeals the denial of a minor participant reduction in the determination of his sentence. We affirm.
Damone Jackson initiated the telemarketing scam in Chicago, Illinois in the fall of 1989 under the name "Midwest Marketing" ("Midwest"). In early 1990 Damone Jackson, who lived in Los Angeles and ran another telemarketing company there, recruited his nephew, Mark Jackson, then age eighteen, to oversee Midwest's operations in Chicago. Although Damone owned the Chicago company, received the funds collected, and sent employee pay checks from California, Mark was in charge of hiring, firing, and supervising Midwest employees in Chicago. He also handled "customer complaints." After Mark Jackson initially worked for Midwest for about two months, the Chicago operations ceased until he again started up the business in August or September of 1990. Kerry Stephans began working for Midwest in September of 1990 and worked through January of 1991. In October of 1990, Damone Jackson decided to expand Midwest's business, and he and Mark Jackson hired additional telemarketers to work for them in Chicago. Midwest remained in business until April of 1991. *fn1
While the exact nature of the scheme varied over time, the "prizes" changed somewhat, and different company names were used, the Midwest program basically worked as follows. Damone Jackson would purchase "lead lists" from other companies. These lists contained the names of persons who had previously bought products from telemarketers and included each customer's name, address, telephone number, and information on the earlier purchase. Such persons were then contacted by Midwest and informed that they were "guaranteed winners" of one of five prizes. In accordance with the typical telemarketer's script, which was prepared by Damone Jackson, persons would then be told that the five possible prizes included: 1) a Mazda Miata, 2) $5000 in cash, 3) five dream vacations, 4) a home entertainment center, and 5) $1000 in cash. The "winners" were then told that in order to receive their prize they would simply have to pay certain promotional fees and taxes on the prize. The telemarketers made a "sale" when someone agreed to pay these fees and taxes. Of course none of this money actually went to pay any promotional fees or taxes, and the "customers" were never told that they were purchasing anything. *fn2 The money taken in was actually used to pay for the "prizes," the operating expenses of the business, employee salaries (which were based on commissions), and a nice little profit for Midwest itself.
After persons sent in their money, they would generally receive five vacation vouchers, though some persons were sent a bracelet and many received nothing at all. Midwest never really held any "contests," and no one ever received cash or a car. Persons were instructed to send their checks to Midwest in Chicago, where the money was deposited in a Chicago bank, and then Damone Jackson would ship the goodies from California. Some persons were told what their prize would be, while others agreed to send in the requested money without knowing which of the items they were going to receive.
All of the prizes sent were purchased by Midwest for substantially less than the amount requested for fees and taxes. For example, Damone Jackson testified that he would purchase the vacation packages for $45 and the bracelets for $50 from Premium Research, a company that specialized in selling such items to telemarketers. Persons who "won" these prizes, however, were asked to send in more than $200 for taxes and fees. (According to the defendants the average amount requested for the vacation package was $249.49.) Various witnesses testified that they were quite disappointed by the vacation packages they were sent, since the five one-week packages did not include airfare or any transportation expenses, did not cover food, taxes, or other costs, and had other restrictions. Essentially the "packages" were certificates for one week of lodging at specific hotels, in specific cities, with no guaranteed availability. Some victims maintained that they considered the vouchers worthless.
Telemarketers for Midwest would keep track of their sales with sales order forms. A typical sales order form indicated the date of the contact, the telemarketer's real name, any aliases used on the phone with a particular customer, *fn3 the customer's name, address, and telephone number, the amount charged to the customer, and the item that was to be sent. When employees of Midwest were paid, they would receive a "commission statement" along with their paychecks. These statements informed the telemarketers of the date on which a particular customer's check was received, the customer's name, the amount the customer paid, Midwest's deduction for overhead expenses (7 percent of the amount paid by the customer), and the actual cost to Midwest of the item sent to the customer. The telemarketer's commission was then 25 percent of the amount paid by the customer, after the cost of Midwest's overhead and the item itself were deducted. Thus all telemarketers who worked for Midwest were informed of the price paid by Midwest for the items being sent.
Midwest also used a technique that employees referred to as "reloading." Certain customers who had previously sent in money would be re-contacted and informed that they were again lucky winners of a contest. This time customers were asked to pay more than $400 in taxes and fees. Such customers were generally promised an item like a "home entertainment center." *fn4 Only experienced telemarketers, including both Mark Jackson and Stephans, were allowed to reload customers. Customers that were successfully reloaded were referred to by Midwest employees as "reloads" and "mooches." Damone Jackson testified that "mooches" are people who "just can't say no." Telemarketers were required to indicate on their sales order forms when a customer was a reload. If a reload was told that he or she had won a specific prize, that information would be included on the order form.
Various victims of the telemarketing scam testified at trial, including persons who had been reloaded. The story of one such victim, "J.Z.," a car salesman in Stevens Point, Wisconsin, is particularly noteworthy. When J.Z. was first contacted by Midwest in November of 1990, he was told that he had won a car. J.Z. eventually agreed to send Midwest a check for $274.10 to cover taxes and the cost of shipping the car to Stevens Point. He received nothing. J.Z. wrote an additional check to one of the Jackson telemarketing companies (MJ Enterprises, Mark Jackson's company) on September 20, 1991, this time for $735. J.Z. could not remember the circumstances surrounding the sending of this check. *fn5 In January of 1992, J.Z. was contacted by another Midwest successor company (Diversified Incentives, run by the two Jacksons and a third person) and told that he was a guaranteed winner of three of five fabulous prizes, prizes grander even than those on the original Midwest list. This time the telemarketer faxed him a list of the prizes and assured him that his cash winnings would cover the amount of the taxes and fees. J.Z. agreed to send in $1895 and wrote two checks totalling this amount. Finally, in May of 1992, J.Z. was again contacted by Diversified Incentives, told that he had won four of seven listed prizes, promised that he had won at least $1000 in cash, and told to send in $947. J.Z. did so; and as in all of the preceding cases, he received nothing.
On March 14, 1995, a federal grand jury returned a nineteen-count indictment charging Damone Jackson, Mark Jackson, Deangelo Goodlet, *fn6 and Kerry Stephans with assorted acts of wire fraud. On May 12, 1995, Damone Jackson pled guilty to one count of the indictment (he was charged in all nineteen) and agreed to testify against Mark Jackson and Stephans, in exchange for the dismissal of the remainder of the counts against him. The trial occurred on June 19-23, 1995. The jury returned its verdict on the same day it was instructed and convicted Mark Jackson of thirteen counts of wire fraud and Stephans of one count of wire fraud. Damone Jackson was sentenced to 27 months of incarceration, followed by three years of supervised release, and was ordered to pay $30,000 in restitution and a $50 special assessment. Mark Jackson was sentenced to 57 months of incarceration, followed by three years of supervised release, and was ordered to ...