United States v. Channon (Brandi), No. 19-2028 (10th Cir. 2020)Annotate this Case
Defendants, a married couple, opened numerous rewards accounts at OfficeMax using fictitious names and addresses. They fraudulently claimed other customers’ purchases as their own to generate undeserved rewards through OfficeMax’s customer loyalty program. As part of the scheme, Defendants also violated the terms of the reward program by using various accounts to sell more than 27,000 used ink cartridges to OfficeMax in exchange for OfficeMax rewards. In 21 months' time, they redeemed $105,191 in OfficeMax rewards. A jury convicted Defendants of wire fraud and conspiracy to commit wire fraud relating to their scheme to defraud OfficeMax. At sentencing, the district court ordered Defendants to pay $96,278 in restitution to OfficeMax and entered a separate forfeiture money judgment jointly and severally against Defendants in the amount of $105,191. In Defendants' first appeal, they argued the district court erred when it entered a forfeiture money judgment without proving the $105,191 constituted, or was derived from, proceeds traceable to the wire fraud. The government contended it proved Defendants fraudulently acquired OfficeMax rewards with a face value of $105,191, and that Defendants exchanged that credit for $105,191 in actual merchandise. At first glance, the Tenth Circuit surmised a district court’s order of forfeiture and its order of restitution appeared to be a double punishment, particularly when the district court ordered defendants to pay forfeiture and restitution in the same amount. Restitution exists to make victims whole; forfeiture punishes those who commit crimes. In some cases, a defendant either does not resell fraudulently obtained merchandise or does so at a discount and thus has no profit above the value of the merchandise. To address that scenario, the Tenth Circuit held here that a district court could base a judgment’s forfeiture amount on the value of the fraudulently obtained merchandise at the time a defendant acquired it. Furthermore, a district court may not reduce or eliminate criminal forfeiture because of restitution. Finally, the Court reaffirmed its holding that in personam money judgments representing the amount of unlawful proceeds are appropriate under the criminal forfeiture statutes.