United States v. Mantas, Theodore ( 2001 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 01-2213
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
THEODORE MANTAS and HELMOS
FOOD PRODUCT, INCORPORATED,
Defendants-Appellants.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 00 CR 214--James F. Holderman, Judge.
Argued September 28, 2001--Decided December 11, 2001
Before FLAUM, Chief Judge, and BAUER and
EVANS, Circuit Judges.
EVANS, Circuit Judge. According to a
2001 Gallup poll, only 6 percent of
American adults are vegetarians. We think
that percentage would jump dramatically
if the other 94 percent read the record
in this case. This panel has read the
record and will be recommending that more
broccoli, rutabagas, asparagus,
cauliflower, kohlrabi, and tofu burgers
be served at future court dinners.
In July of 1998, Paul Wolseley, a
compliance officer with the United States
Department of Agriculture, conducted a
random inspection at a Helmos Food
Product warehouse in the South Water
Market District of Chicago. Helmos Food
was a meat and poultry broker owned by
Theodore Mantas. What Wolseley discovered
was deplorable. He noted that the meat
cooler on the warehouse’s first floor was
not very cool. In fact, it was warm:
puddles of water were on its floor and
condensation was dripping from its
ceiling and pipes. Black mold was also
growing on the ceiling. Wolseley said he
saw "hot dogs"/1 stored in the cooler
that were not fully sealed--their
packaging was swollen with a milky white
substance, indicating microbiological
growth. When Wolseley asked Mantas if he
would destroy the hot dogs, Mantas
refused.
As he continued his inspection, Wolseley
noted rodent fecal pellets on pallets and
boxes that contained meat products. He
also saw several turkeys in the same
bloated condition as the hot dogs. His
most disturbing discovery, however, was
of two skids containing unpackaged meat
products covered with rodent excrement
and gnaw marks. After this discovery,
Wolseley left the warehouse to get his
camera. When he returned 10 minutes
later, Helmos employees were throwing the
defiled meat into a dumpster. Wolseley
asked them to stop so that he could take
pictures. Mantas then approached Wolseley
and demanded that he leave.
Wolseley returned the next morning with
Illinois Department of Agriculture
compliance officer Harris Sachs.
Accompanied by Mantas, Wolseley returned
to the area where he had seen the meat
covered with rodent feces. It was gone.
When Wolseley asked Mantas where the meat
products went, he replied, "What
products?"
During the second inspection, still more
meat covered with rodent excrement and
other unsanitary conditions were
discovered. Sachs also learned that
Helmos’ state license to sell meat and
poultry had lapsed. After completing
their inspection of the first floor, the
inspectors told Mantas that the State of
Illinois was seizing all of the meat and
poultry in the cooler. In so doing, Sachs
placed a "red tag" on the cooler,
indicating an official seizure.
After tagging the cooler, the inspectors
asked Mantas if he was storing any other
meat products in the warehouse. Mantas
said no. While inspecting the second
floor of the warehouse, however, the
officials discovered a locked freezer.
After it was unlocked, the inspectors
discovered more meat and poultry
products, many of which were covered with
heavy ice, mold, and rodent gnaw marks.
The inspectors also noted more than two
dozen mice running around on the second
and third floors.
While the inspectors were still in the
warehouse, the owner of the Bloomingdale
Market arrived to place an order. Mantas
agreed to the sale, completed an invoice,
and the Bloomingdale customer left with
meat, poultry, and cheese from the first
floor cooler. Upon seeing this, Wolseley
reminded Mantas that he could not sell
the products because of their condition.
After learning of the sale, Sachs
alsoreminded Mantas that the sale
violated the seizure order. Nonetheless,
an hour later, with inspectors still in
the warehouse, Mantas attempted to fill a
sales order from M&G Meats. Observing the
attempted sale, Sachs again reminded
Mantas that the sale would violate state
law. After hearing this discussion, the
M&G Meats employee backed out of the sale
and left the building.
Finally, Mantas decided to close the
warehouse to customers later that
morning. Officers then began a 2-week
inspection. The search revealed severe
rodent infestation, which posed a serious
health hazard to consumers. Inspectors
discovered more living and dead rodents,
as well as their fecal pellets, nesting
materials, and meat and poultry products
that they had gnawed./2
All of this led to federal charges
against Mantas and his company for
improperly storing adulterated poultry
and meat products held for sale in
violation of 21 U.S.C. sec.sec.
458(a)(3), 461(a), 610(d), and 676(a).
The charges were contested before a jury
that found both Mantas and Helmos guilty
as charged. They now appeal, raising only
issues regarding their sentences, which
for Mantas was 24 months in prison and a
$50,000 fine and for Helmos a fine of
$250,000.
The defendants argue that the district
court improperly applied the federal
sentencing guideline for fraud rather
than the general guideline covering food
violations. The district court’s choice
of which guideline to apply is a question
of law, which we review de novo. See
United States v. Andersen, 45 F.3d 217,
218 (7th Cir. 1995). Federal sentencing
guideline sec.2N2.1 applies to violations
of statutes and regulations dealing with
food or agricultural products. See
U.S.S.G. sec.2N2.1. A district court may
use sec.2F1.1, however, when the offense
involves fraud or deceit. See U.S.S.G.
sec.2F1.1.
The government argues that the
defendants waived the argument about
which sentencing guideline should apply
because they agreed to the use of the
fraud guideline. We may not review waived
issues because, technically, there is no
error to correct. See United States v.
Cooper, 243 F.3d 411, 415 (7th Cir. 2001)
(citing Fed. R. Crim. P. 52(b)); United
States v. Walton, 255 F.3d 437, 441 (7th
Cir. 2001). A waiver is an intentional
relinquishment or abandonment of a known
right. See Cooper, 243 F.3d at 415-16.
Forfeiture, on the other hand, is the
failure to make a timely assertion of a
right. See id. at 415. We review
forfeitures for plain error. See Walton,
255 F.3d at 441.
Here, defense counsel argued at the
sentencing hearing that, although
sec.2F1.1 applied, sec.2N2.1 was a more
appropriate guideline because it
specifically addresses food offenses. In
making this argument, defense counsel
expressly stated that he agreed that
sec.2F1.1 applied. Additionally, defense
counsel expressly agreed with the
district court’s use of U.S.S.G.
sec.2X1.1, the guideline covering
attempt. The court proposed using the
attempt guideline because Mantas
completed neither his fraudulent sale of
adulterated meat to M&G Meats on the day
of the seizure nor a later attempt to
sell adulterated products to another
company, Cermak Produce.
We are reluctant to review issues if it
appears that a defendant waived them as a
matter of strategy. See Richardson, 238
F.3d at 841. Here, the record indicates
that defense counsel agreed as a
strategic matter to the district court’s
use of the attempt guideline. By doing
so, the defendants received a 3-level
reduction in the base offense level for
fraud. See U.S.S.G. sec.2X1.1(b)(1). The
district judge and defense counsel
explicitly discussed this outcome in con
sidering whether sec.2X1.1 should apply.
Therefore, because the defendants
affirmatively agreed to the court’s use
of sec.sec.2F1.1 and 2X1.1, they waived
their right to now complain about the
choice on appeal.
The defendants also argue that the
district court erred in calculating the
loss amount for sentencing purposes. Loss
is the value of money, services, or
property unlawfully taken. See U.S.S.G.
sec.2F1.1, cmt. n.8. The guideline’s
commentary states that if, for example,
the fraud consisted of selling or
attempting to sell $40,000 in worthless
securities, the loss would be $40,000.
See id. Because it found that the
defendants would have attempted to sell
everything in the warehouse if inspectors
had not intervened, the district court
based its loss calculation on what the
value of the entire inventory of meat and
poultry in the warehouse would have been
had it been in suitable condition. That
computation totaled $258,310. The
defendants argue that the court should
have considered only the goods that
Mantas actually sold or attempted to sell
on the day of the seizure, which totaled
less than $2,000.
A district court’s calculation of the
loss amount under the guidelines is a
question of fact, which we review for
clear error. See United States v.
Freitag, 230 F.3d 1019, 1025 (7th Cir.
2000); United States v. Hassan, 211 F.3d
380, 383 (7th Cir. 2000). A defendant
appealing a loss calculation carries the
heavy burden of showing that the
calculation was not only inaccurate, but
also outside the realm of permissible
computation. See Hassan, 211 F.3d at 383.
Here, Mantas argues that the district
court improperly speculated that he
intended to sell all of the meat and
poultry in the warehouse. See United
States v. Vitek Supply Corp., 144 F.3d
476, 492 (7th Cir. 1998) (holding that
district court improperly included
speculative losses in its calculation).
He claims that there is no clear evidence
that he intended to sell any goods other
than those that he sold to Bloomingdale
Market and attempted to sell to M&G Meats
and Cermak Produce. Incredibly,
Mantasargues that the warehouse’s
disgusting conditions support this
argument. He points out that a lot of
meat in thewarehouse had passed its
expiration date, in some cases by several
years, and that many products were in
such deteriorated condition that they
were "obviously" unfit for human
consumption. Such evidence, he argues,
shows that these products "were clearly
not intended for sale." Mantas also
argues that he was holding some of the
spoiled products for return to suppliers
and that he intended to destroy others.
Given the evidence, the district court
did not clearly err in finding that
Mantas intended to sell all of the
produce in the warehouse. Underlining
this point were Mantas’ brazen attempts
to sell adulterated meat after inspectors
had red-tagged the cooler and were still
inspecting the warehouse. Although he
claimed that he intended to destroy or
return the spoiled products in the
upstairs freezer, this claim is belied by
several facts. First, Mantas lied to
inspectors about the existence of the
upstairs freezer and the products it
contained, which implies that he was
trying to hide something. Second, Mantas
moved the frozen products from Helmos’
old warehouse to its new one rather than
simply destroying them or returning them
to suppliers. Third, some of the products
contained fraudulently marked expiration
dates, suggesting that Mantas still
intended to sell them. In light of this
substantial evidence, the district judge
did not err in basing his loss
calculation on the entire amount of food
stored in the warehouse.
The defendants also take issue with the
district court’s enhancement of their
sentences by 2 levels for violation of
official process. They argue that the
Illinois Department of Agriculture’s "red
tag" was not sufficient to trigger
enhancement because it was not the result
of judicial or quasi-judicial process. We
review de novo the district court’s
imposition of a 2-offense-level sentence
enhancement for violation of official
process under U.S.S.G.
sec.2F1.1(b)(4)(C)./3 See United States
v. Michalek, 54 F.3d 325, 331 (7th Cir.
1995).
Few cases have addressed this
enhancement outside of the context of
bankruptcy fraud. The two circuits that
have addressed it in other contexts are
somewhat split over what constitutes
official process. The Ninth Circuit held
that a letter merely informing the
defendant that she might be violating the
law was not sufficient to trigger the
sentence enhancement. See United States
v. Linville, 10 F.3d 630, 631 (9th Cir.
1993). Linville expressed its holding in
somewhat broad terms, stating, "We hold
that process must be construed to be a
directive based upon the kind of formali
ties that undergird orders, injunctions,
and decrees. We also hold that the
letters and notice and warning of
violation in this case are not that. They
do little more than convey information
about the law and an alleged violation."
Id. at 633.
On the other hand, the Second Circuit
held that informal administrative process
resulting in an informal decree is enough
to trigger the enhancement. See United
States v. Spencer, 129 F.3d 246, 252 (2d
Cir. 1997). Spencer distinguished
Linville, finding that the Linville
defendant’s disregard of an informal
warning letter did not demonstrate the
sort of aggravated criminal intent
intended to trigger the enhancement. See
Spencer, 129 F.3d at 252. See also
U.S.S.G. sec.2F1.1, cmt. n.6 (stating "A
defendant who does not comply with such a
prior, official judicial or
administrative warning demonstrates
aggravated criminal intent and deserves
additional punishment."). In Spencer, the
defendant had engaged in extensive
negotiation with the United States
Department of Transportation, culminating
in an agreement that he later violated.
See Spencer, 129 F.3d at 252. Therefore,
the court upheld application of the
sentence enhancement because the
negotiations constituted informal process
sufficient to notify the defendant that
he would be punished for violating the
agreement. See id.
We have not had occasion to weigh in
directly on this issue. In United States
v. Gist, 79 F.3d 52, 56 (7th Cir. 1996),
we noted only that the injunction at
issue fit squarely within Linville’s
suggested guidelines. We had no occasion
to discuss what other sorts of process
could trigger the sentencing enhancement.
We think the Second Circuit’s more
liberal approach to triggering the
enhancement beats the more constricted
view of the Ninth Circuit. Here, like the
defendant in Spencer, Mantas received
informal process through the USDA and IDA
inspections. The IDA’s red tag was an
informal decree notifying Mantas that
selling the tagged goods would violate
state law. See 410 Ill. Comp. Stat.
620/6. Thus, substantial evidence of
Mantas’ aggravated criminal intent
existed to support the district court’s
use of the sentencing enhancement.
The judgment of the district court is
AFFIRMED.
FOOTNOTES
/1 Wolseley said he saw "hot dogs." We think of a
hot dog, however, as an oblong sandwich consist-
ing of a meat product--usually called a frank-
furter or wiener--encased in a split bun. We
assume no buns were in the cooler and that
Wolseley was only referring to the meat product
when he talked about "hot dogs."
/2 Wolseley also testified that he did not observe
any rodent urine during the inspection because it
is not visible to the naked eye. He noted,
though, that he would suspect that rodent urine
was present throughout the warehouse because mice
do not have bladders and therefore urinate con-
stantly, leaving traces of urine everywhere they
roam. We note, however, that Wolseley was not
proffered as an expert witness in mouse anatomy
or mouse urology. Additionally, an Internet
search reveals several scholarlyarticles dealing
with scientific experiments on the urinary blad-
ders of mice, indicating that mice do indeed have
urinary bladders. Therefore, Wolseley’s testimony
on this matter may have been incorrect. But in
his defense, we note that Wolseley’s precise
testimony was that "Mice don’t have bladders like
we do" (emphasis added), whatever that means.
/3 This provision was previously U.S.S.G.
sec.2F1.1(b)(3)(B). Many of the cases cited here,
including United States v. Linville, 10 F.3d 630
(9th Cir. 1993), and United States v. Spencer,
129 F.3d 246 (2d Cir. 1997), refer to this
previous citation.