United States v. Jeffrey Heckel

In the

United States Court of Appeals

For the Seventh Circuit

No. 07-3514

U NITED S TATES OF A MERICA,

Plaintiff-Appellee,

v.

JEFFREY H ECKEL,

Defendant-Appellant.

Appeal from the United States District Court

for the Western District of Wisconsin.

No. 07 CR 41—John C. Shabaz, Judge.

A RGUED JUNE 5, 2008—D ECIDED JUNE 22, 2009

Before P OSNER, K ANNE, and S YKES, Circuit Judges.

S YKES, Circuit Judge. After auctioning items on the

Internet that he had no intention of delivering, Jeffrey

Heckel was indicted on five counts of wire fraud. He

pleaded guilty to one of those counts and was sentenced

to 30 months in prison. Heckel appeals his sentence;

he contends that the district court erred in calculating

both his offense level and criminal-history score when

it applied a two-level enhancement for mass-marketing

and added three criminal-history points for a state-

court theft conviction.

2 No. 07-3514

We affirm. Application of the mass-marketing enhance-

ment was appropriate because Heckel used the Internet

to conduct large-scale advertising to attract bidders to

his fraudulent online auctions. Moreover, the district

court did not clearly err when it determined

that Heckel’s previous state conviction had resulted in a

19-month term in prison, which added three criminal-

history points to his total. Heckel’s recollection that

his sentence was shorter was insufficient to cast doubt on

the reliability and accuracy of the information in the

presentence investigation report (“PSR”), on which the

district court relied. Because the district court correctly

calculated Heckel’s offense level and criminal-history

score and imposed a sentence within the applicable

guidelines range, we presume that the sentence was

reasonsable—a presumption Heckel has failed to rebut.

I. Background

Beginning in March 2002, Jeffrey Heckel used two

Internet auction websites to defraud successful bidders

on items he had listed for sale. The scheme was simple:

He would list an item for auction, accept the highest

bid, cash the check sent to him by the winning bidder,

and ship a product far inferior to the one advertised

on the website. Heckel’s fraud netted him in excess of

$15,000.

Most of the winning bidders cheated by Heckel’s fraud

contacted law-enforcement authorities, and his operation

was shut down just over a year after it had begun. Heckel

was indicted on five counts of mail fraud in violation of

No. 07-3514 3

18 U.S.C. § 1341. He agreed to plead guilty to one count

and pay restitution to all five victims. In exchange the

government dismissed the remaining counts and recom-

mended that he receive a reduction in his offense level

for acceptance of responsibility. The district court

accepted Heckel’s plea.

The probation office calculated a total offense level of 11

under the sentencing guidelines, which included a base

offense level of 7 plus a 4-level increase because the

amount of loss was more than $10,000 but less than

$30,000. U.S.S.G. § 2B1.1(a)(1) & (b)(1)(C) (2006). The PSR

also applied the two-level reduction for acceptance of

responsibility, id. § 3E1.1(a), but then added two levels

because the offense was committed through “mass-market-

ing,” id. § 2B1.1(b)(2)(A)(ii). Heckel objected to the ap-

plication of the mass-marketing enhancement.

For Heckel’s criminal-history score, the PSR initially

assessed 12 points, placing him in criminal-history Cate-

gory V. Heckel made two objections to this total. The

probation office then agreed with one of these objections

and issued an addendum reducing Heckel’s score to 10,

the minimum for Category V. The probation office dis-

agreed with Heckel’s second objection—relating to his

state conviction for theft—and refused to reduce

Heckel’s total any further.

The district court accepted the reduction from 12 to 10

points, but did not specifically address Heckel’s

objection regarding the treatment of his theft conviction.

As a result, Heckel remained in criminal-history Category

V. The court also rejected Heckel’s challenge to the ap-

4 No. 07-3514

plication of the mass-marketing enhancement, so the

guidelines recommended a range of 24-30 months. Com-

menting on Heckel’s extensive criminal past and the

need to deter any future criminal behavior, the court

sentenced Heckel to 30 months in prison and 3 years of

supervised release. Heckel appealed.

II. Analysis

Our review of a district court’s application of the guide-

lines is de novo, but we review findings of fact for clear

error. United States v. Samuels, 521 F.3d 804, 815 (7th Cir.

2008). Sentencing factfinding is entitled to deference

“ ‘unless we have a definite and firm conviction that a

mistake has been made.’ ” Id. (quoting United States v.

Wilson, 502 F.3d 718, 721 (7th Cir. 2001)).

A. Mass-marketing

Heckel first argues that the district court incorrectly

calculated his offense level because the court added

two levels for use of “mass-marketing.” U.S.S.G.

§ 2B1.1(b)(2)(A)(ii). The commentary to this guideline

explains that “mass-marketing” includes “a plan,

program, promotion, or campaign that is conducted

through solicitation by telephone, mail, the Internet, or

other means to induce a large number of persons to . . .

purchase goods or services.” Id. § 2B1.1 cmt. n.4(A).

Because the auction websites Heckel used were

accessible to the general public and Heckel attempted to

No. 07-3514 5

increase the price of the items posted by soliciting a

large number of bids over the Internet, the district court

applied the enhancement.

According to Heckel, the district court erred because

Internet auctions are different in kind from mass-market-

ing frauds that use telemarketing or other forms of large-

scale solicitation. An auction, Heckel argues, can only

have one victim: the winning bidder. The guideline

requires that the scheme “induce a large number of

persons to . . . purchase goods or services.” Heckel main-

tains that the limited pool of actual victims defeats the

application of the enhancement.

Caselaw is sparse on this line of argument, but the few

cases that have taken up the issue have been decided in

favor of applying the enhancement. In United States v.

Pirello, the defendant used Internet classifieds to

advertise computers for sale. 255 F.3d 728, 730 (9th Cir.

2001). Three unsuspecting consumers sent Pirello more

than $4,000 for computers that he did not have and could

not provide. Pirello argued that the mass-marketing

enhancement should not apply because only three

people responded to his fraudulent Internet solicitation.

The Ninth Circuit rejected this argument, holding

instead that the limited number of victims “was the

product of chance” that was “in no way indicative of the

breadth of Pirello’s solicitation.” Id. at 732. The court

reasoned that any other consumers who responded also

“would have fallen victim to his plan.” Id.; see also

United States v. Magnuson, 307 F.3d 333, 335 (5th Cir.

2002) (agreeing with Pirello that the mass-marketing

6 No. 07-3514

enhancement “merely requires advertising that reaches

a large number of persons”) (internal quotation marks

omitted).

The guideline itself suggests that the mass-marketing

enhancement applies to solicitation schemes reaching a

large number of potential victims regardless of the

number of actual victims. Contained within § 2B1.1(b)(2)

are three other enhancements for frauds involving

more than 10, 50, or 250 victims respectively. U.S.S.G.

§ 2B1.1(b)(2)(A)-(C). Increasing a sentence under the mass-

marketing enhancement only when the victim count is

large would render these other provisions superfluous.

Instead of focusing on the actual number of victims, the

mass-marketing enhancement focuses on defendants

who have used a particular solicitation method to

increase the number of potential victims. Indeed, the

Application Notes explain that the enhancement applies

to “cases in which mass-marketing has been used to

target a large number of persons, regardless of the

number of persons who have sustained an actual loss or

injury.” U.S.S.G. app. C, vol. II, amend. 617 (2003); see also

United States v. Olshan, 371 F.3d 1296, 1301 (11th Cir.

2004) (finding that the mass-marketing “enhancement

focuses on the method of inflicting the harm”);

United States v. Fredette, 315 F.3d 1235, 1244 n.4 (10th

Cir. 2003) (“[T]he enhancement for multiple victims goes

to the ultimate harm caused by the defendant’s

conduct, while the enhancement for mass-marketing

concerns the scope and sophistication of the defendant’s

fraud.”).

No. 07-3514 7

Here, Heckel’s scheme netted only a small number of

victims, but the loss that those few suffered was exacer-

bated by Heckel’s chosen method of solicitation. The

competitive bidding process of an Internet auction often

increases the price that a bidder might otherwise have

to pay. Use of the Internet to advertise and conduct an

auction—like use of telephones in a “telemarketing cam-

paign that solicits a large number of individuals to pur-

chase” goods or services—exposes more consumers to

the fraud than otherwise would have been possible, and

potentially increases the price (and therefore the loss) by

expanding the number of bidders. U.S.S.G. § 2B1.1

cmt. n.4(A).

Even though an Internet auction results in just one

winning bidder and thus only one victim, the sheer

scope of the possible bidding drives the price of the

item on the virtual auction block. Posting a rare coin

for sale on the Internet, as Heckel did in the count to

which he pled guilty, invited the vast online public to

bid, and those who did so were trying to purchase the

item by suggesting a price that they believed no

competing online bidder would exceed. That only one

such bidder eventually won the online auction does not

negate the harm of this method of fraudulent solicitation.

Cf. United States v. Blanchett, 41 F. App’x 181, 183 (10th

Cir. 2002) (“[The defendant] never intended to provide

computers to prospective buyers, and thus did not feel

bound to accept only the highest offer, leaving

every Internet user who bid on the computers

potentially vulnerable.”). Heckel’s was exactly the type

of “plan, program, promotion, or campaign” that the mass-

8 No. 07-3514

marketing enhancement is designed to address. U.S.S.G.

§ 2B1.1 cmt. n.4(A).1

B. Criminal-history Score

Heckel also contends that the district court erred by

assessing three criminal-history points for his 1992 state

conviction for theft. Under U.S.S.G. § 4A1.1(a), a criminal

defendant is assigned three points for each “prior

sentence of imprisonment exceeding one year and one

month.” Two points are added if the sentence was

between 60 days and 13 months. Id. § 4A1.1(b). The PSR

reported that Heckel was sentenced to 19 months for this

offense; Heckel only recalled spending 6 months in a

community-based behavioral modification program

with short stints in prison for probation violations.

Heckel claims that the government had the burden of

proving that the information in the PSR was reliable and

that it failed to do so. He argues that he should have

received only the two-point increase instead of three,

placing him in criminal-history Category IV; the ap-

plicable guidelines range would then have dropped from

24-30 months to 18-24 months. Id. Ch. 5, Pt. A. Heckel

preserved his objection at sentencing, so we review the

1

Because we conclude that use of an Internet auction is a means

of “solicitation . . . to induce a large number of persons to . . .

purchase goods or services,” we need not address the gov-

ernment’s alternative argument that such an auction also

qualifies as a “contest or sweepstakes.” U.S.S.G. § 2B1.1 cmt.

n.4(A)(i)-(ii).

No. 07-3514 9

court’s decision for clear error. United States v. Newman,

148 F.3d 871, 877 (7th Cir. 1998).

The district court may rely on the information contained

in the PSR so long as it is well supported and appears

reliable. United States v. Salinas, 365 F.3d 582, 587 (7th Cir.

2004). “When the court relies on such information in

sentencing a defendant, the defendant bears the burden

of showing that the presentence report is inaccurate or

unreliable.” Id. The defendant cannot attack the informa-

tion in the PSR by making a “bare denial” of its accuracy.

United States v. Mustread, 42 F.3d 1097, 1101-02 (7th Cir.

1994). Only when the defendent’s objection creates real

doubt as to the reliability of the information in the

PSR does the government have the burden of independ-

ently demonstrating the accuracy of the information. Id.

at 1102.

Heckel presented no documentary evidence to

challenge the information in the PSR about his 19-month

theft sentence, and his recollection was far from unam-

biguous. His initial claim, made in his objections to the

PSR, was that he served six months’ incarceration and

attended a treatment program for an additional six months

after he violated probation. At sentencing, however, his

counsel simply argued that Heckel “does not recall ever

being told by a judge that he was being sentenced to a

prison sentence.” Heckel’s counsel also said he had

checked the records on which the probation officer had

relied, but the objection remained highly ambiguous:

“I went over there and looked, and I just don’t feel that

the record is clear enough to give him three criminal

history points on this particular conviction.”

10 No. 07-3514

Heckel’s tentative and conflicting recollection of his

theft sentence of 15 years earlier was not enough to cast

doubt on the accuracy or reliability of the PSR. At sen-

tencing Heckel’s counsel suggested only that the docu-

ments used by the probation office to support the infor-

mation in the PSR were not completely clear. This amounts

to a “bare denial” of the information in the PSR—not

enough to call the accuracy of the PSR into question. The

PSR reported that Heckel was sentenced to 19 months in

the custody of the Minnesota Department of Corrections,

but that this sentence was stayed and he was placed on

probation for 5 years. The stay was lifted, however, and

the 19-month sentence was reinstated after Heckel com-

mitted a third violation of his probation. Absent any

hard evidence demonstrating that this information was

inaccurate, we cannot say that the district court clearly

erred by relying on the PSR to calculate Heckel’s criminal-

history category.2

Heckel also asserts that the district court failed to make

a specific ruling on his objection to the three-point assess-

2

In his reply brief, Heckel argues that the district court improp-

erly allowed the government to supplement the record after

he had filed his brief with this court. The supplementary

document had been relied upon by the probation office when

making its recommendation but was not submitted to the

district court for consideration at sentencing. There is no need

to address Heckel’s objection to the supplementation, how-

ever; we conclude that the district court did not clearly err

in adopting the PSR’s recommendation even though it never

considered the supporting evidence later submitted by the

probation office.

No. 07-3514 11

ment for his theft conviction in violation of the Federal

Rules of Criminal Procedure. The rules require the sen-

tencing court to rule on “any disputed portion of the

presentence report or other controverted matter . . . or

determine that a ruling is unnecessary.” F ED. R. C RIM . P.

32(i)(3)(B). In announcing its sentence, the district court

referred to the PSR’s criminal-history calculation and

noted that the point total was 10 rather than 12 as stated

in the original report. But the court did not directly

address Heckel’s objection to the 19-month theft sen-

tence and instead placed him in Category V without

further elucidation.

We have characterized Rule 32’s requirement as a

“minimal burden.” United States v. Sykes, 357 F.3d 672, 674

(7th Cir. 2004). The sentencing court must make findings

to resolve a dispute between the defendant and the gov-

ernment, but a general reference by the court to the

PSR “constitutes sufficient findings even as to contro-

verted facts when we are assured that the district court

made a decision of design, rather than of convenience, to

adopt the PSR.” United States v. Burke, 148 F.3d 832, 836

(7th Cir. 1998); see also United States v. Cureton, 89 F.3d 469,

473 (7th Cir. 1996) (“[S]o long as it actually resolves the

disputed issue on the record, a sentencing court fulfills

the purposes of Rule 32.”).

Although the district court did not explicitly address

Heckel’s objection to the PSR’s treatment of his theft

conviction, the court referenced the information in the

PSR and specifically adopted the PSR’s findings. After

Heckel objected to the additional criminal-history point

12 No. 07-3514

for the theft conviction, the probation office filed an

addendum to the PSR along with its sentencing recom-

mendation. The addendum detailed the sequence of events

leading to Heckel’s term of imprisonment, including the

three dates upon which his probation was revoked and the

date that the previously stayed 19-month sentence was

reinstated. The court acknowledged and accepted the

addendum when it noted that Heckel’s correct criminal-

history score was 10, instead of 12 as initially stated in

the PSR, and that he remained in Category V. Rule 32

requires nothing more. See United States v. Cunningham, 429

F.3d 673, 679 (7th Cir. 2005) (“We hesitate to read [Rule 32]

so broadly that the judge is obliged to address

every argument that a defendant makes at the sen-

tencing hearing.”).

C. Reasonableness of the Sentence

Heckel’s challenge to the reasonableness of his sentence

requires only brief attention. Heckel first contends that the

sentence is unreasonable because it is based on a proce-

dural error—that is, an incorrect guidelines range. Our

review is for abuse of discretion, Gall v. United States,

128 S. Ct. 586, 597 (2007), and there was no abuse of

discretion here. Heckel’s argument is merely a reiteration

of his two challenges to the guidelines calculation,

which we have rejected above.

Because Heckel’s guidelines range was correctly calcu-

lated and the district court sentenced him within that

range, the sentence is presumed reasonable on appeal.

Rita v. United States, 127 S. Ct. 2456, 2462-63 (2007).

No. 07-3514 13

Heckel nonetheless maintains that his sentence is unrea-

sonable because the district court referenced a May 2007

probation violation for purchasing and selling firearms,

despite being on notice that these charges had been

dropped. But a wide range of conduct is relevant at

sentencing—including uncharged conduct and charges

of which the defendant was acquitted—so long as that

conduct is established by a preponderance of the evi-

dence. United States v. Watts, 519 U.S. 148 (1997);3 see also

18 U.S.C. § 3661; U.S.S.G. § 1B1.4. Heckel doesn’t argue

that the conduct underlying the probation violation

did not occur—only that the formal charges were dis-

missed. Absent evidence to the contrary, the district

court was entitled to rely on this information in the PSR

even though the charges were dropped. Heckel makes

no other challenge to the reasonableness of his sentence,

and as such, has failed to rebut the presumption of rea-

sonableness.

A FFIRMED

3

We have held that Watts survived United States v. Booker,

543 U.S. 220 (2005), and remains good law. E.g., United States

v. Hurn, 496 F.3d 784, 788 (7th Cir. 2007).

6-22-09