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United States v. Channon

United States Court of Appeals, Tenth Circuit

January 31, 2018

UNITED STATES OF AMERICA, Plaintiff - Appellee,
v.
MATTHEW CHANNON, Defendant-Appellant. UNITED STATES OF AMERICA, Plaintiff - Appellee,
v.
BRANDI CHANNON, Defendant-Appellant.

         Appeal from the United States District Court for the District of New Mexico (D.C. Nos. 1:13-CR-00966-JCH-KK-1 and 1:13-CR-00966-JCH-KK-2)

          Marc H. Robert, Assistant Federal Public Defender, Albuquerque, New Mexico, for Defendant - Appellant Matthew Channon.

          Todd B. Hotchkiss, Albuquerque, New Mexico, for Defendant - Appellant Brandi Channon.

          C. Paige Messec, Assistant United States Attorney (James D. Tierney, Acting United States Attorney, with her on the brief), Albuquerque, New Mexico, for Plaintiff -Appellee.

          Before PHILLIPS, KELLY, and MURPHY, Circuit Judges.

          KELLY, CIRCUIT JUDGE.

         Defendants-Appellants, Matthew and Brandi Channon, were convicted by a jury of wire fraud and conspiracy to commit wire fraud relating to a scheme to defraud retailer OfficeMax. 18 U.S.C. §§ 1343, 1349.[1] They now appeal, challenging the district court's decision to (1) admit exhibits derived from computer records and (2) enter a money judgment forfeiture. Exercising jurisdiction under 28 U.S.C. § 1291, we uphold the district court's admission of the exhibits but remand so the district court may conduct further proceedings on the money judgment of forfeiture.

         Background

         Defendants used fictitious names and addresses to open rewards accounts at OfficeMax - known as MaxPerks accounts. They used these accounts to fraudulently obtain more than $100, 000 in OfficeMax products. The scheme came to light when Steven Gardner, an OfficeMax fraud investigator, noticed an unusually high number of online-adjustments across several different accounts. Mr. Gardner observed that most of these accounts were registered to one of three email addresses, although a fourth address was discovered later.[2] Defendants used the same email addresses and simply interspersed periods between the characters of each address (e.g., teechur123.45678@gmail.com). OfficeMax recognized the variations as unique email addresses, but gmail did not. Defendants then used these fraudulent email addresses to claim purchases by other customers, thus generating rewards to which they were not entitled. They also used various accounts to sell more than 27, 000 used ink cartridges, receiving $3 in rewards from OfficeMax for each after paying an average of $.32 per cartridge on eBay.[3] In total, over the 21 months of their scheme, Defendants redeemed $105, 191 in OfficeMax rewards.

         Prior to trial, Defendants objected to the use of summary exhibits regarding their accounts. These exhibits summarized thousands of transactions and were drawn from three Excel spreadsheets containing OfficeMax records - which had been maintained by a third party formerly known as SHC Direct (SHC). OfficeMax would send SHC the data it collected each day, and if OfficeMax later needed to view information, SHC would place the data into a user-friendly Excel spreadsheet for OfficeMax to use. SHC would not alter the raw data, but would consolidate the necessary information from the larger database.

         The three Excel spreadsheets (also called workbooks) at issue in this case consisted of (1) enrollment and transaction activity for the majority of fraudulent accounts (File 1); (2) information for the Group 1 accounts during the specific time period of the scheme (File 2); and (3) an enhanced spreadsheet, essentially a user-friendly version of File 1 and 2 combined (File 3). Each Excel workbook contained several worksheets. These included a worksheet listing the 5, 463 suspect accounts, a worksheet listing the 63, 581 transactions associated with the suspect accounts, and a worksheet listing the 2, 144 transactions in which a reward card was used by one of the suspect accounts.

         Defendants argued that the exhibits derived from Excel were inadmissible because they were not originals, and Defendants never received the full database maintained by SHC. They also argued that the spreadsheets were hearsay because they were prepared for purposes of litigation. The district court rejected Defendants' arguments, finding that the spreadsheets were originals under Federal Rule of Evidence 1001(d). Moreover, the district court found that File 1 and File 2 were business records, [4] and also that the records were likely machine generated. The files were therefore found to be admissible.

         After Defendants were convicted, the government moved for entry of an order of forfeiture in its favor. The district court entered a money judgment of $105, 191, or the value of the ...


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