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Sample Government Alborz Memorandum -- Ninth Circuit
From a Ninth Circuit brief, May 1994.
These considerations were left out of the computation because of difficulties of computing their value, but they do show the conservative nature of the estimate of $3,000 loss per vehicle, and more than offset any "value" in the reconditioning effort. (PSR ¶ 63.)
Nowhere in the record did defendant provide anything but his own undocumented guess at the dollars he spent on this "reconditioning." (PSR ¶ 52.) He also claimed that he did "a good job in reconditioning the vehicles he sold." (SD 40, response to PSR ¶ 57.).
He provided nothing to contradict the PSR's findings on the reasons for the "reconditioning" of the vehicles. The record on this issue thus underscores the correctness of the district court in adopting the PSR's finding that "reconditioning costs" should not be used as an offset to consumer losses.
In support of his argument on appeal, XXXXXXXX now cites United States v. Alborz, 818 F. Supp. 1306 (N.D. Cal. 1993), (Br. at 7, 26, 27) for the proposition that the value of "reconditioning" work the defendant did on his rolled-back cars must be credited to him in computing the amount of loss. However, Alborz is distinguishable on its facts. Furthermore, Alborz disregards an important Ninth Circuit principle of loss evaluation discussed above, leading to erroneous conclusions. It has no application to the instant case.
In Alborz, the court stated:
the presentence report did not consider the effect of any of this [detailing or rehabilitation] work on the value of the cars sold and thus the victims' actual losses. There is no suggestion that the detailing and rehabilitation work did not add legitimate value to the cars.818 F. Supp. at 1308. Indeed, in Alborz this issue was not raised by the parties, but by the court. Id. at 1307-08, and n.1.
In the instant case, on the other hand, the PSR does discuss "detailing" work. As stated above, the PSR notes that the "reconditioning" costs were necessary "to successfully carry out this scheme." (PSR ¶ 70.) It is obviously necessary to disguise the vehicles so they will look like the low mileage cars they are represented to be. The PSR correctly rejects the notion that this part of the fraudulent scheme somehow inures to the defendant's benefit in calculating losses.[FN2]
FN2. If these costs were to be considered a "mitigating" item in valuation, then a defendant should be required to survey his victims to learn the "value" to them of the cosmetic improvements employed to disguise the true mileage of the vehicle. (As discussed above, the burden is on the defendant to show evidence contrary to the conclusions reached in the PSR.) The defendant's cost of obtaining the services would vastly overstate their value to the consumer who was gulled into purchasing the vehicle on the basis of its false appearance.In addition, Alborz states that "the difference between defendant's purchase and sale prices sets an outside limit to the amount of the loss." 818 F. Supp. at 1309. The court reaches this conclusion by applying economic principles the court views as requiring giving an odometer tamperer credit for his "legitimate distributional activities", inasmuch as the criminal in Alborz is seen as "perform[ing] an important service to the economy[.]" Id.[FN3] No evidence would support such a conclusion in this case.
FN3. Alborz cites an example of a Honda with 118,810 miles which the defendant sold at wholesale for $6,400 represented as having 59,275 miles on the odometer. 818 F. Supp. at 1307. Under common markups, a consumer somewhere likely paid at least $8,000 for this vehicle which had over 118,000 miles on it. To suggest that the consumer suffered a maximum of $1,600 damage under these circumstances (the difference between defendant's purchase and sale price), demonstrates a total lack of understanding of what in all likelihood befell that consumer who thought the vehicle had, and paid $8,000 to obtain, many miles of remaining useful service.
In sum, this case is not like Alborz because the PSR here did consider and properly reject the proposition that the defendant should get credit for the costs of disguising the true mileage of the vehicles. Moreover, Alborz is, simply put, wrongly decided.
The court below properly rejected XXXXXXXX's arguments regarding the value of his "reconditioning" efforts; it certainly was not clear error to reject those claims.