United States v. Lee

77 F.4th 565

UNITED STATES of America, Plaintiff-Appellee/Cross-Appellant, v. Bruce LEE, Defendant-Appellant/Cross-Appellee.

No. 22-1293

No. 22-2138

United States Court of Appeals, Seventh Circuit

Argued May 18, 2023

Decided August 9, 2023

Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. No. 20 CR 67 — Matthew F. Kennelly, Judge.

David Benjamin Green, Attorney, Office of the United States Attorney, Minneapolis, MN, Michelle Marie Petersen, Attorney, Office of the United States Attorney, Chicago, IL, for Plaintiff-Appellee/Cross-Appellant.

Nishay Sanan, Cece White, Attorneys, Chicago, IL, for Defendant-Appellant/Cross-Appellee.

Before Wood, Lee, and Pryor, Circuit Judges.

Wood, Circuit Judge.

Scalping tickets to popular athletic events or concerts is nothing new, but there are legal limits to how far one can go with that practice. Bruce Lee crossed the line when he carried out a scheme to defraud the Chicago White Sox. With the help of two White Sox employees, Lee obtained thousands of discounted and free game tickets and resold them online for profit. He was caught three years into the scheme, and a federal jury convicted him of wire fraud in violation of 18 U.S.C. § 1343.

Although the indictment expressly sought forfeiture of Lee's ill-gotten gains and Lee raised no objection to that request, the parties disagreed on the amount he would have to pay. What should have happened next was the entry of a preliminary order of forfeiture specifying what would be due and what property was subject to forfeiture. See Fed. R. Crim. P. 32.2(b)(2). Unfortunately, the district court skipped that step. It did everything else necessary for forfeiture, however, including giving Lee notice and an opportunity to contest the amount the government was seeking and orally imposing forfeiture in the sentence, along with an 18-month prison term, restitution, and the required special assessment. The written judgment, however, omitted forfeiture. After some additional proceedings, the court threw its hands up and concluded that it was too late to enter a proper forfeiture order, and so it refused to amend the written judgment to reflect its oral sentence.

On appeal, Lee raises a host of issues, including challenges to the indictment, the court's denial of his motion for acquittal, and his sentence. In the end, we conclude that none requires reversal. The government has cross-appealed from the court's refusal to amend the judgment to include forfeiture. Because the written judgment should conform to the oral sentence, we reverse and remand for the district court to amend the judgment under Federal Rule of Criminal Procedure 36 to include forfeiture in the amount the court found, $455,229.23. See Fed. R. Crim. P. 32.2(b)(4)(B).

I

Like any other enterprise, Major League Baseball teams use marketing and business strategies to keep their fan base enthusiastic. The Chicago White Sox are no exception. Beginning in 2015, the club distributed promotional vouchers during late-season games. Fans could exchange those vouchers for discounted tickets to the following season's games (either a free upper-deck seat or a $5 outfield seat). In addition, starting in 2017, the White Sox introduced an additional code, RAIN17, to be used when a fan wanted to exchange a ticket to a game cancelled on account of weather for a new game. The White Sox did not give out these tickets just to be nice. They hoped to improve their public relations, encourage fans to return to the stadium, and reap other intangible benefits.

This business strategy was implemented through certain rules. To redeem the tickets, fans had to exchange their rained-out tickets or vouchers at the booth (no more than four at a time). Because discounted tickets were designed for promotional purposes, the terms and conditions printed on their back side forbade fans from reselling them. Box-office employees also had to follow strict guidelines. They were required to place the rained-out tickets and vouchers in a box behind the booth, but no one ever checked what was in the box. In addition, the employees had to use their personal employee code to log into the system before processing each redeemable ticket or voucher. These safeguards were meant to preclude fans and employees from reusing rained-out tickets or vouchers or otherwise profiting from them. But the White Sox overlooked a key precautionary measure. Employees were not required to keep a record of the rained-out tickets and vouchers that had been collected—they were shredded instead—nor did anyone attempt to reconcile the new tickets sold with the redeemed tickets and vouchers.

Realizing with the help of some insiders that there was no auditing mechanism, Bruce Lee saw an opportunity to profit. Between March 2016 and March 2019, Lee partnered with two White Sox employees to obtain thousands of tickets for resale without the quid pro quo of rained-out tickets or vouchers. At the start of the 2016 season, he connected with James Costello, a box-office worker. Costello provided Lee with $5 outfield tickets without collecting vouchers in exchange. Lee would give Costello $5 per ticket, which Costello then would deposit in the till so that it would not come up short. He charged Lee an additional fee per ticket for his services. At that point, Lee was able to sell the tickets for whatever they would bring.

In 2017, Costello recruited William O'Neil, another ticket-booth employee. That was the year when the White Sox started using the RAIN17 code for complimentary tickets exchanged for the fan's tickets for rained-out games. With another insider in the booth and a wider variety of tickets to print, Costello devised a more sophisticated scheme. He asked Lee to give him a large sum of cash upfront; Lee obliged. Throughout the season, Lee texted Costello how many tickets he needed and for which games. Costello then removed money from the envelope where the cash was stored to "pay" for the $5 outfield seats; he withdrew nothing for the free upper-deck tickets or the rain substitutes. Costello continued to charge fees for his services (which he took out of the cash reserve) and shared a small portion of the profits with O'Neil. Throughout the season, in order to avoid detection, Costello and O'Neil printed tickets in small batches, refrained from processing tickets if a supervisor was in the ticket booth, and used other employees' operator codes to log into the system.

Lee resold the tickets he had obtained in this manner on Stubhub.com, an online ticket marketplace. He chose that website because buyers could not see images of the physical tickets, which allowed him to conceal the tickets' real value and source. Each time Lee sold a ticket, StubHub sent him an email detailing the transaction; another email followed detailing the amount StubHub paid Lee (purchase price less Stub-Hub fees). Depending on the number of tickets he sold, Lee could gauge which games were in high demand and ask Costello and O'Neil for additional tickets if needed.

The White Sox detected the scheme in the fall of 2018 and immediately informed the Federal Bureau of Investigation (FBI). At the beginning of the 2019 season, Costello and O'Neil provided discounted and complimentary tickets to Lee from March 5 to March 10, but FBI agents approached them on March 12. Trapped, Costello agreed to cooperate with the officers and recorded incriminating conversations with Lee. On March 23, the agents confronted Lee, putting an end to his operation.

Lee's plot had been very profitable. From 2016 to 2019, Lee sold 12,910 discounted tickets and 21,936 complimentary tickets on StubHub; in the aggregate, he collected $867,269. He paid the White Sox only $74,650 for the $5 discounted tickets and nothing at all for the complimentary tickets. Costello received over $100,000 and O'Neil approximately $5,000 in fees.

In January 2020, Lee, Costello, and O'Neil were indicted. Costello pleaded guilty to one wire-fraud count and was sentenced to three years' probation; O'Neil pleaded guilty to making a false statement to the FBI and also was sentenced to three years' probation. Lee was charged with 11 counts of wire fraud in violation of 18 U.S.C. § 1343 and two counts of money laundering in violation of 18 U.S.C. § 1957. The indictment also sought forfeiture of Lee's gain in the amount of $867,269. After an unsuccessful motion to dismiss the indictment under Federal Rule of Criminal Procedure 29(a), Lee's case proceeded to trial in October 2021. Before the jury began deliberating, Lee moved for acquittal on all grounds. The district court granted the motion insofar as it applied to the money-laundering counts and otherwise denied it. The jury returned a guilty verdict on the wire-fraud counts, and the court later denied Lee's post-trial motion under Rule 29(c) for acquittal.

Before sentencing, the government renewed its request for forfeiture of the full $867,269 Lee had gained. Lee conceded that forfeiture applied but argued for approximately $455,000, reflecting his net gains. The district court was required by Federal Rule of Criminal Procedure 32.2(b) to enter a preliminary forfeiture order in advance of sentencing, but it failed to do so. At sentencing the court adopted Lee's forfeiture calculation, ordered forfeiture in that amount, and sentenced Lee to 18 months in prison. Yet, overlooking Rule 32.2(b)(4)(B)'s instructions, the court did not include forfeiture in the written judgment. Realizing the procedural snarl that was developing, the government then filed a motion asking the court to enter a preliminary order of forfeiture and to amend the judgment accordingly. The court refused. After missing the deadlines outlined in Rule 32.2, the court concluded that it lacked the authority to amend the judgment. This appeal and cross-appeal followed.

II

A

Lee first contests the district court's denial of his motion to dismiss the indictment, a challenge...