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The People v. Hector Garcia et al

April 19, 2011


APPEALS from judgments of the Superior Court of Los Angeles County. Anne H. Egerton, Judge. (Los Angeles County Super. Ct. No. BA356518)

The opinion of the court was delivered by: Boren P. J.


Affirmed as modified.

Hector Garcia and Martin Avila pleaded guilty to two counts of failing to disclose the origin of a recording (Pen. Code, § 653w, subd. (a))*fn1 (counts 1, 2) and one count of counterfeiting a registered trademark (§ 350, subd. (a)(1)) (count 3).*fn2

The trial court suspended imposition of sentence and placed appellants on three years of formal probation with terms and conditions that included making victim restitution. After a restitution hearing, the trial court ordered appellants to pay, jointly and severally, the sum of $235,072.68 in victim restitution pursuant to section 1202.4, subdivision (f). This sum was comprised of $173,847.60 to be paid to the Motion Picture Association of America (MPAA) and $61,225.08 to be paid to the Recording Industry Association of America (RIAA).

Appellants appeal on the ground that the restitution order imposed by the trial court must be reversed because its terms amount to an abuse of discretion and rest upon a demonstrable error in law. We amend the order of restitution to eliminate the sums awarded for potential sales of the seized recordings in appellants' possession.


We recite the facts, gleaned from the transcript of the preliminary hearing, in the light most favorable to the judgment. (People v. Ochoa (1993) 6 Cal.4th 1199, 1206.) Officer Danny Arrona of the Los Angeles Police Department spotted Avila and a companion leaving a building with bags that were found to contain a large number of DVD's of recent films. Avila admitted he was going to sell the DVD's. Avila took the officer to his apartment, in which there were other individuals and "hundreds, if not thousands" of DVD's on shelves. Garcia and another individual came out of a bedroom. The apartment was Garcia's residence. Police found two notebooks that they characterized as pay-owe records. The apartment contained equipment for the manufacture and packaging of DVD's and CD's (compact discs). Investigators found over 10,000 pirated DVD's and 3,935 counterfeit music CD's in the apartment. Many of the DVD's were of films that had not yet been released on DVD format and were still in theaters.


I. Proceedings at Restitution Hearing

Hector Moya, an investigator employed by Investigative Consultants, which represents the RIAA, assisted police with the identification and cataloging of the suspected pirated merchandise. He confiscated 3,935 music CD's and 17 music DVD's. The RIAA provided Moya with a wholesale value of $7.15 for music CD's and $8.84 for music DVD's. Investigative Consultants incurred costs of $927.50 in its investigation of the case.

Moya examined the pay-owe sheets, which Officer Arrona identified as the ones he found in the bedroom, and he observed notations for approximately 4,000 CD's. The RIAA was seeking damages for what was seized and what was listed in the pay-owe sheets. Moya asserted that there would be no duplicate restitution because the pay-owe sheets were not an inventory of what was on stock, but rather what had been sold in the past. Pay-owe sheets normally represent transactions rather than inventory. Moya stated that, with respect to the items seized at the location, the number of items was to be multiplied by the dollar value provided by the recording industry. The dollar value represented a projection of the selling price of the items had they been authentic. When asked by the defense when the loss on the seized items occurred, Moya replied "When they make the copy of the original CD, that's the loss."

Robert Wetter, an investigator for the MPAA, testified that 10,629 movie DVD's were seized in this case. The MPAA assigned them an average wholesale value of $11.10 each. The MPAA incurred investigation costs of $898.50. Wetter had examined the pay-owe sheets and determined that they were typical of those found in manufacturing labs for DVD's and music CD's. He was able to identify at least 46 MPAA titles in the pay-owe sheets, but, due to time constraints, he was able to determine the quantities for only nine of the titles. There were 4,952 exemplars of these nine titles. Wetter stated that the quantity of DVD's seized on site was "displacing sales." When asked at what point the loss was suffered by the MPAA with respect to the DVD's in the apartment, Wetter replied "If I understand the question correctly, at the time of the seizure."

The trial court stated that the issue of restitution in this case was governed by section 1202.4, subdivision (r), and the statute set forth quite specifically the manner in which the court was to calculate restitution in fraudulent DVD and CD cases. The trial court stated its intention to award restitution based on the amounts submitted by the RIAA and the MPAA, which included restitution for both the seized items and the items in the pay-owe sheets. The trial court invited argument, and Garcia contended that, although section 1202.4, subdivision (r) governed, the trial court's interpretation of the statute was incorrect. He argued that actual economic loss to the victim should be the guide, not potential loss. The victims would get a windfall because they were actually not "out the loss" that they claimed. In addition, the statute was unconstitutional because it constituted a punishment and denied him due process of law. Avila argued that the pay-owe sheets did not necessarily prove that any specific items were sold, and the items ...

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