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United States v. Odeh

United States Court of Appeals, Seventh Circuit

August 10, 2016

United States of America, Plaintiff-Appellee,
Majdi Odeh and Qais Hussein, Defendants-Appellants.

          Argued May 20, 2016

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

          Before Flaum and Manion, Circuit Judges, and ALONSO, District Judge. [*]

         Manion, Circuit Judge. Qais Hussein and Majdi Odeh ran two convenience stores in southern Illinois where they sold counterfeit goods and illegally traded cash or ineligible items for food stamps. They also filed false tax returns on behalf of their businesses. They were eventually indicted in a four-count indictment and pleaded guilty to all counts. As part of the plea agreement, Hussein and Odeh waived their right to appeal their sentences so long as their sentences were within the advisory guideline range. The district court sentenced Hussein and Odeh each to a within-guidelines term of imprisonment of 85 months. Nonetheless, the defendants appeal, arguing the government breached the plea agreement by not recommending reductions for acceptance of responsibility, and not recommending a sentence at the low end of the range for Odeh. The defendants also attempt to challenge the loss calculation on appeal. However, because the defendants waived their right to appeal, we dismiss these appeals.


         Hussein and Odeh operated the Garden Grill Market, Inc. and Garden Grill Market, Inc. II (jointly, "Garden Grill"), which were both convenience stores located in southern Illinois. The stores were certified to accept "food stamps, " which are now formally known as SNAP benefits (SNAP stands for supplemental nutrition assistance program). SNAP benefits are provided to recipients on Electronic Benefits Transfer ("EBT") cards known as "Link" cards. Link cards are used like debit cards to purchase eligible food. Stores certified to accept Link cards may not exchange the SNAP benefits for cash or for ineligible items such as tobacco, alcohol, pre-cooked foods, or cellular phones. Additionally, the Garden Grill participated as a vendor in the federal Women, Infant, and Children ("WIC") program. The WIC program issued vouchers to participants to purchase specific food items such as formula, eggs, or milk. The vouchers specified a dollar amount and the food for which they could be used. Additionally, the vouchers were dated by the month of redemption and could not be used until that month.

         Rather than complying with the terms of the SNAP and WIC programs, Garden Grill exchanged cash and ineligible items for SNAP benefits and WIC vouchers. Specifically, Garden Grill exchanged cash for the government payments at a rate of 50 or 60 cents on the dollar, or sold ineligible items such as tobacco products, synthetic marijuana, cellular phones, alcohol, and counterfeit consumer goods such as perfume and Coach purses. This foray into fraud was not Hussein's first: He was also involved with food-stamp fraud at the Bagel and Halal Deli operating out of New York.

         In late 2010, the government began investigating Garden Grill for violating the terms of the SNAP and WIC programs. During the investigation, the government interviewed employees of Garden Grill, as well as recipients of SNAP benefits and WIC vouchers. According to SNAP and WIC beneficiaries, it was commonplace for them to sell their benefits for cash or to use them to purchase ineligible items at Garden Grill. Interviews of the employees confirmed these statements. Employees also noted that the defendants or family members would use the SNAP cards to make bulk purchases at Sam's Club or Aldi's. The government used "undercover cards, " meaning cards which they tracked, and those confirmed sales at Sam's and Aldi's. Video surveillance of the stores likewise captured individuals identified as the defendants or their family members leaving those stores with bulk purchases. Additionally, the government watched seventeen days' worth of surveillance videos filmed in the Garden Grill locations. During this time, the SNAP and WIC exchanges were going on night and day. The government identified some of the customers selling their SNAP cards and interviewed those individuals, but noted that it would be extremely difficult to track every individual.

         The investigation continued into July 2012 and, on July 19, 2012, the government obtained search warrants for the stores. In executing the search warrant, officers recovered evidence of the SNAP and WIC fraud, including receipts for SNAP sales that included handwritten notations that employees later identified as indicating the amount of cash exchanged for the SNAP benefit. The government also recovered "stacks" of blank WIC vouchers dated for subsequent months. (Recall that WIC vouchers could only be used during the month indicated.) On the day of the search alone, the government recovered blank WIC vouchers totaling approximately $8, 000. The government also recovered counterfeit Coach purses and perfumes during the search.

         Following this multi-year investigation, a grand jury issued a four-count indictment against Hussein and Odeh. Count 1 charged the defendants with conspiracy to unlawfully acquire food-stamp payments; Counts 2 and 3 charged them with aiding and assisting in the filing of a false corporate tax return; and Count 4 charged them with trafficking in counterfeit goods.

         Prior to trial, both defendants entered into plea agreements in which they pleaded guilty to all four counts and admitted that the government's loss exceeded $1, 000, 000. In the plea agreements, the government agreed to recommend reductions for acceptance of responsibility, unless the defendants subsequently acted inconsistently with acceptance of responsibility. The government also agreed to recommend that Odeh be sentenced at the low end of the advisory guidelines range and that Hussein be sentenced within the advisory guidelines range. As part of the plea agreements, the defendants waived their right to challenge any aspect of their convictions or sentences unless the court imposed a sentence in excess of the advisory guidelines range. During the plea colloquy, the defendants swore that they understood and accepted the terms of their pleas. They also expressly stated that they understood they were giving up their rights to appeal their sentences.

         About two weeks before sentencing, Odeh sought to withdraw his plea agreement. Rather than delay things more, the government agreed that it would allow Odeh to challenge the loss amount at sentencing, even though the plea agreement had precluded such an argument. The government and Odeh amended the plea agreement to allow him to challenge the loss amount, and Odeh then withdrew his motion to withdraw his plea agreement. Two days before sentencing, Hussein filed a motion to join in Odeh's objection to the loss amount. The district court viewed this motion as an objection to the loss amount calculated in the Presentence Investigation Report. ("PSR"). The government informed the district court that, by objecting to the loss amount, Hussein was breaching his plea agreement. Nonetheless, Hussein's attorney, along with Odeh's attorney, presented evidence challenging the loss amount. Specifically, the defendants presented three witnesses who calculated the loss using, among other things, financial information provided by the brothers. But during questioning, the defendants' witnesses testified that they had not been told the brothers bought supplies in bulk from Sam's and Aldi's with SNAP cards. Also, the defendants' experts testified the defendants had told them of only two bank accounts, whereas the IRS knew of at least twenty bank accounts associated with the defendants. The district court found the defendants' position on the amount of loss was frivolous. The district court further held that the government had supported its loss calculation with evidence of the difference between the amount of SNAP and WIC sales redeemed from the government less the amount reported on their state tax returns as SNAP and WIC sales. This calculation put the loss at approximately $1.6 million, and the defendants were sentenced on the basis of this loss amount.

         Following the presentation of evidence at the sentencing hearing, the government argued that Hussein should not receive a reduction for acceptance of responsibility. The government did not take a position on whether Odeh should receive such a reduction, saying it was "punting" on that issue. But after Odeh made a statement at sentencing deflecting his guilt and falsely blaming his employees, his lack of English proficiency, and his ignorance of American law for his conduct, the government argued that Odeh had also breached the plea agreement. For that reason, the government then recommended that Odeh be denied a reduction for acceptance of responsibility. The government also recommended that the district court sentence Odeh at the top end of the advisory guidelines range. The district court denied both Odeh and Hussein reductions for acceptance of responsibility, finding that, by making a frivolous argument about the loss amount, they had not accepted responsibility. Additionally, the district court noted that Hussein had challenged the loss amount, which was barred by his plea agreement and thus also indicative of not accepting responsibility. And the district court found that Odeh had not accepted responsibility for his offenses because he attempted to place blame for his conduct elsewhere. The district court then sentenced Odeh to 85 months' imprisonment (the advisory guidelines range was 70 to 87 months) and also sentenced Hussein to 85 months' imprisonment (his range was 78 to 97 months). Odeh and Hussein appeal their sentences.


         On appeal, the government argues that this court should dismiss Odeh and Hussein's appeals because the defendants waived their rights to appeal their sentences unless their sentences were outside the advisory guidelines range. Because both defendants were sentenced within the advisory guidelines range, the government maintains that their appeals are barred by the plea agreements. Odeh and Hussein respond that they are entitled to appeal their sentences because the government breached the plea agreements by ...

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