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UNITED STATES v. ALBORZ

April 14, 1993

UNITED STATES OF AMERICA, Plaintiff,
v.
MERSHAD ALBORZ, Defendant.



The opinion of the court was delivered by: WALKER

 Defendant is one of six individuals charged with a series of violations of 15 USC § 1984, an offense popularly referred to as odometer fraud.

 Defendant pled guilty to three counts of this offense. Two of his codefendants were also charged with, and pled guilty to, money laundering (18 USC § 1956). Following the pleas, a presentence investigation was ordered and a presentence report prepared by the United States Probation Officer of this court. Defendant's sentencing came before the court on March 19, 1993. The presentence report recommended that defendant's specific offense level under the United States Sentencing Guidelines be determined by aggregating the amounts by which defendant's sales prices exceeded the purchase prices for all the cars on which defendant tampered with the odometer. Consideration of this recommendation necessitates a revisit of Sentencing Guidelines Chapter Two, Part F - Offenses Involving Fraud or Deceit.

 I.

 Licensed as a wholesale automobile dealer and operating under the name Import Motors, defendant bought cars from people who advertised them for sale in newspapers. He provided a false name and address to conceal his true identity. After rolling back the odometers in these cars, defendant, in conjunction with his codefendants, sold the cars through automobile auctions in southern California. On documents completed at the auctions, defendant represented that the odometer readings on the cars reflected their true and correct mileage.

 One example of this scheme will suffice to illustrate how it worked. On September 6, 1989, defendant bought for $ 4800 a 1983 Honda with 118,810 miles of use. On October 11, 1989, the vehicle was sold by Import Motors to Bay Cities Auto Auction for $ 6400, but with 59,275 miles on the odometer. In connection with the sale, defendant completed a form showing that he sold the vehicle to Bay Cities Auto Auction with 59,275 miles on the odometer and certifying that to the best of his knowledge this was the true mileage of the vehicle. In all, defendant rolled back the odometers on six vehicles charged in the indictment. These cars were sold for amounts totalling $ 14,900 more than he paid for them.

 Eventually, the odometer scheme in which defendant was involved same to light. The cars were traced to their original owners who identified defendant as the person who bought the cars using a false name. Defendant was indicted and, as noted, in due course entered his plea

 II.

 The offense of odometer fraud is designated as a base offense level six under the Sentencing Guidelines. See United States Sentencing Guidelines Manual, § 2N3.1(a) (1992 ed). For crimes involving fraud or deceit, the Guidelines require an increase in offense level to reflect what are termed specific offense characteristics. See § 2F1.1. *fn2" The Guidelines' specific offense level for fraud and deceit crimes depends, in part, upon the loss suffered by the victim of the crime.

 As with other fraudulent activities, setting a sentencing for odometer fraud requires the court to consider the amount of loss suffered by victims. A table reflecting the increase in offense level for various amounts of victim loss appears in section 2F1.1(b)(1) of the Guidelines Manual. A loss greater than $ 10,000, but less than $ 20,000, calls for an increase in the offense level of three. Based on the $ 14,900 difference between defendant's total purchase and sale prices for the cars to which he pled to odometer tampering, the probation officer assigned an additional three points to defendant's total Guidelines score.

 Contrary to the assumption implicit in the presentence report, however, the loss associated with odometer fraud does not equate simply to the difference between what a person who tampers with an odometer buys a car for and the amount for which that person sells the car. In the case of a high mileage car purchased and sold, and which has been detailed, repainted, given new tires and a battery and had its odometer rolled back, the difference in the price before and after these events reflects the value added by each activity, not simply the reduced mileage. A criminal defendant who has done all of these things before reselling the car has conferred both actual and illusory value on the purchaser of the car. Because the specific offense characteristics of the Guidelines seek to capture the actual loss (or the intended loss, if that amount is higher and determinable) from the criminal activity, *fn3" any specific offense characteristic which includes in the amount of loss the value added by defendant's legal activities in relation to the car overstates the seriousness of the loss, an thus the crime. This is precisely the mistake made here by the preparer of the presentence report.

 Likewise, an odometer tamperer who buys a car at a particularly favorable price through skillful and non-deceptive bargaining or because he has located a seller desperate to sell performs an important service to the economy, whose efficient functioning depends on market makers. The odometer tamperer should not be punished for such constructive, wholly legitimate activities. Yet, perversely, that is ...


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