Case 44.1 United States of America v. LaGrou Distribution Systems, Incorporated

1/30/2014 UNITED STATES v. LaGROU DISTRIBUTION SYSTEMS INCORPORATED, No. 05-3361., October 20, 2006 - US 7th Circuit | FindLaw

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FindLaw Caselaw United States US 7th Cir. UNITED STATES v. LaGROU DISTRIBUTION SYSTEMS INCORPORATED

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U N IT E D S T A T E S v . L a G R O U D IS T R IB U T IO N S Y S T E M S

IN C O R P O R A T E D

U nited States C ourt of A ppeals,Seventh C ircuit.

U N IT E D ST A T E S of A m erica, P laintiff-A ppellee, v. L aG R O U D IST R IB U T IO N

SY ST E M S, IN C O R P O R A T E D , D efendant-A ppellant.

N o. 05-3361.

A rgued Feb. 14, 2006. -- O ctober 20, 2006

Before BAUER, RIPPLE, and W ILLIAM S, Circuit Judges. Angela Crawford (argued), Office of the United

States Attorney, Chicago, IL, for Plaintiff-Appellee. W illiam R. Coulson (argued), Gold & Coulson,

Chicago, IL, for Defendant-Appellant.

Based on severe rodent infestation and sanitary problem s at a LaGrou Distribution System s warehouse,

LaGrou was convicted of three felony counts: the knowing im proper storage of poultry products, 21

U.S.C. §§ 458(a)(3) and 461(a) (Count Three); the knowing im proper storage of m eat products, 21

U.S.C. §§ 610(d) and 676(a) (Count Four); and the knowing im proper storage of food products, 21

U.S.C. §§ 331(b), 333(a)(2), and 342(a)(4) (Count Five). LaGrou was sentenced to a five-year term of

probation, ordered to pay a total restitution of $8.2 m illion, jointly and severally with co-defendants,

and sentenced with a total fine of $2 m illion. LaGrou now appeals its convictions and sentence. W e

affirm LaGrou's convictions on Counts Three, Four, and Five and its sentence for Counts Three and

Four. W e vacate and rem and the sentence for Count Five.

I. Background

The conditions at LaGrou's cold storage warehouse at 2101 Pershing Road in Chicago were enough to

turn even the m ost enthusiastic m eat-loving carnivore into a vegetarian. The Pershing Road

warehouse was a cold storage facility that stored raw, fresh, and frozen m eat, poultry, and other food

products. LaGrou did not own m ost of the products that it stored at the facility. Rather, LaGrou's

business consisted of storing products owned by its custom ers. As m uch as 2 m illion pounds of food

went in and out of the Pershing Road warehouse on a daily basis.

The record is unclear as to how long the rodent problem s existed, but based on the trial testim ony of

LaGrou's m anager, David Sm ith, it is clear that LaGrou was aware of the problem in 1999. In January

of 1999, Sm ith (a codefendant who pleaded guilty to m isdem eanor charges) was hired as the m anager

of the Pershing Road warehouse. W hen he started, he noticed a rodent problem at the facility.

Specifically, Sm ith learned that LaGrou workers found rodent droppings and occasionally caught rats

in traps throughout the warehouse. Soon after, Sm ith approached LaGrou's president, Jack Stewart

(an individual co-defendant at trial), about the rodent problem at the warehouse. Sm ith and Stewart

discussed the rodent problem about three tim es per week, with the frequency of these discussions

increasing as tim e went on.

Unfortunately, the rat problem only worsened. According to Sm ith, in 2001 LaGrou em ployees were

catching m ore rats and finding m ore rodent droppings. Sm ith testified that in late 2001 or early

2002, LaGrou warehouse workers regularly caught rats (at least one to two rodents per day ), and

discovered rat droppings and rodent-gnawed products in the warehouse. Rodent-dam aged product

was com ing from all over the warehouse, with the bulk of the dam aged product com ing from the

basem ent. Sm ith testified that although em ployees would destroy the product that had been gnawed,

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LaGrou did not conduct any tests to m ake sure that other boxes that appeared okay were not sim ilarly

contam inated by rodents.

Eventually, the rat problem becam e so bad that LaGrou assigned warehouse em ployees to “rat patrols”

to search for rats and rat droppings, to put out traps, and to report back about the num ber of rats they

were rem oving from traps each day. According to trial testim ony, at one point the “rat patrols”

tallied as m any as 50 trapped rats. LaGrou em ployees even tried various m akeshift pest control

rem edies, including fashioning their own rat traps and pouring papier m âché and brine on the floor of

the warehouse.

Stewart and Sm ith m et with representatives from M cCloud, LaGrou's pest control com pany, to discuss

the rodent problem at LaGrou's warehouse. Although M cCloud recom m ended that LaGrou m ake

certain changes to the warehouse, including rodent proofing dock doors, cem enting holes in walls, and

sealing sewer lids, Stewart did not give Sm ith authorization to im plem ent these recom m endations

because he concluded that the project was too expensive.

Despite im provised solutions to the rodent problem , the situation at the Pershing Road warehouse

worsened. For exam ple, in February 2002, LaGrou had particular problem s with rats getting into the

beef brisket held in the basem ent cooler area of the warehouse. LaGrou arranged to ship the beef

brisket from its Pershing Road warehouse to its Ham m ond facility. Before LaGrou shipped the brisket,

its em ployees inspected the boxes, separated boxes that appeared to have rodent dam age, and the

boxes that appeared to be undam aged were returned to inventory. But, the LaGrou em ployees were

not com pletely successful in discarding all of the rodent-dam aged product: a driver picking up som e of

this beef brisket from the Ham m ond facility refused to take the product because blood was dripping

from the boxes and it looked as if the brisket had been “chewed” by rats.

Although LaGrou usually noted product dam age on outgoing bills of lading to custom ers, LaGrou did

not tell its custom ers that the dam age was caused by rodents. Instead, LaGrou's practice was to tell

the custom er that the product had been thrown out because of warehouse dam age, such as from torn

boxes or forklift m ishaps. LaGrou em ployees started writing “M M ” (short for “M ickey M ouse”) on

outgoing bills of lading to differentiate the rodent dam age from other warehouse-related dam age.

Upon discovering that LaGrou em ployees were using the “M M ” notation for rodent-dam aged product,

Stewart instructed them to stop doing so because he did not want custom ers asking what “M M ” m eant.

M any custom ers did m ake claim s for dam aged product. One custom er asked LaGrou if it had a rodent

problem because the custom er had received rodent-dam aged m eat from LaGrou's warehouse on

several occasions, specifically, boxes with gnaw m arks and holes. In response, LaGrou sent a letter

explaining that there was a sm all area of the basem ent with rodent activity and that it would m ove the

product out of the basem ent to be stored som ewhere else in the facility. Despite the letter, the

custom er's product was still stored in the basem ent of the warehouse.

Ronda Dunson, a quality assurance m anager for LaGrou custom er Aurora Foods, cam e to the Pershing

Road warehouse to check on her products in the spring of 2001. Dunson discovered “excessive

droppings,” what looked like a feeding area for rodents, ceiling and wall dam age, exposed cork, m old

growth, and pest harborage. In later correspondence between Stewart and Aurora Foods, LaGrou

refused to pay a claim from Aurora Foods for product dam age. Further, Stewart represented to

Aurora Foods that the pest control com pany only “found two totes with old m ouse droppings” and “no

other signs of infestation,” and that a recent Am erican Sanitation Institute (“ASI”) inspection did not

find any problem s. This inform ation provided by LaGrou was not true; as the ASI representative

testified at trial, one of the “critical” issues ASI found was rodent activity. M oreover, a report from

M cCloud, LaGrou's pest control com pany, had previously inform ed LaGrou of the vast rodent

problem s.

On M ay 25, 2002, Hugh M cCauley, a United States Departm ent of Agriculture (“USDA”) food safety

inspector went to the Pershing Road warehouse. At the tim e, LaGrou em ployees were processing

ham s for freezing without the benefit of USDA inspection. In addition, the ham s were uncovered.

M cCauley notified other USDA officials, and Vella Kay Holm es, a USDA com pliance official, went to the

Pershing Road warehouse on M ay 29, 2002. Holm es noticed that in the warehouse freezer where the

ham s were being stored, the walls were deteriorating, the ceiling and structures were rusty, and the

paint was flaking. Holm es was concerned that due to these conditions in the freezer, the ham s that

had been processed and were uncovered could have been contam inated. Because of these concerns,

Holm es detained the ham s.

On M ay 29, 2002, Holm es and M cCauley conducted a m ore detailed exam ination of the conditions in

the Pershing Road warehouse. Holm es observed holes in the walls with glue boards in front of them ,

fresh rat droppings on the floor of the food storage areas, and a box of beef product that had been

gnawed by rats and was dripping blood. Holm es advised Sm ith that no food products would be

allowed to com e into or leave the basem ent of the warehouse. Holm es also advised LaGrou officials 1/30/2014 UNITED STATES v. LaGROU DISTRIBUTION SYSTEMS INCORPORATED, No. 05-3361., October 20, 2006 - US 7th Circuit | FindLaw

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that the USDA inspectors would return the next m orning to inspect the entire facility.

After the USDA inspectors left, Stewart advised Sm ith to start cleaning up the warehouse. Consistent

with this discussion, Sm ith and approxim ately 20 LaGrou em ployees cleaned the Pershing Road

warehouse and threw out m eat, boxes, and pallets.

The following m orning, 14 USDA officials arrived at the warehouse to begin an intensive inspection.

Prior to arriving at the Pershing Road warehouse, USDA officials advised representatives from other

federal, state, and local health agencies about the conditions at the warehouse. As a result, officials

from the Food and Drug Adm inistration (“FDA”), the Illinois Departm ent of Public Health, the Chicago

Departm ent of Public Health, and the Illinois Departm ent of Agriculture assisted in the inspection.

W hen the officials arrived, they observed and photographed dum psters and tow bins full of m eat, ice,

debris, pallets, and packaging m aterial. These findings were discussed with Sm ith, who acknowledged

that he and other LaGrou em ployees had been there all night cleaning the warehouse in anticipation of

the m orning's inspection.

According to Dr. Bonnie Rose, the USDA m icrobiologist who testified, LaGrou's warehouse was the

“worst case” she had seen in her 28 years with the USDA. The inspectors found and photographed the

following conditions at the Pershing Road warehouse: rat droppings and rat nesting m aterial

throughout the warehouse, including next to and on product; rodent-gnawed m eat, poultry, and other

food products; live rodent sightings; blood from m eat product on the floor m ixed with rodent

droppings and rat tail m arks; dirt and debris on m eat product; potential rodent access points,

including open sewer drains and openings under doors; holes in ceilings, walls, and floors; ice buildup

on the ceilings directly above stored product and water dripping from the ceilings onto the product;

m old and filth on the walls and ceilings; several inoperable bathroom s, which forced warehouse

workers to use broken toilets and “flush” them with buckets of water; and raw sewage and standing

water on the floors.

In addition to the photographs and observations generated by the inspection, representative sam ples

of food products and packaging were collected and sent to the USDA and FDA labs for testing. The

testing confirm ed adulteration of food products, including rodent gnawing, rodent hair, and rodent

feces on several products. Dr. Rose testified that rodents transm it num erous bacterial, viral,

parasitic, and fungal pathogens, including E. coli and salm onella. These pathogens could be

transm itted by rodent urine, fecal m atter, or saliva, or could sim ply be transported by rodents walking

over product. In hum ans, these pathogens m anifest them selves in a variety of illnesses and

sym ptom s, including gastrointestinal, respiratory, or even neurological. Dr. Rose further explained

that given the ventilation system in the warehouse, m any of these pathogens and viruses, which could

survive for m onths and are not visible to the naked eye, could have becom e airborne. In addition,

leaking roofs, condensation from overhead pipes and ceilings, and dripping pipes could also carry

food-borne pathogens.

On M ay 30, 2002, all 22 m illion pounds of the m eat, poultry, and food products at the warehouse were

ordered detained and LaGrou was issued a notice of non-com pliance. On M ay 31, LaGrou's Pershing

Road warehouse was shut down. In July 2002, the governm ent filed a civil action seeking to seize and

condem n all of the food products stored in the warehouse. The 22 m illion pounds of food products

stored in the warehouse were either destroyed or were subjected to a strict decontam ination

procedure.

II. Analysis

A. Jury Instructions

LaGrou argues that the district judge's jury instructions im properly subjected LaGrou to strict

liability for felony offenses. The Court reviews the district court's decision as to jury instructions for

abuse of discretion. United States v. Graham , 431 F.3d 585, 588 (7th Cir.2005). W e review de novo

whether an instruction accurately sum m arizes the law or if it is legally erroneous. United States v.

Stewart, 411 F.3d 825, 827 (7th Cir.2005).

Judge Leinenweber instructed the jury that to sustain charges against LaGrou for adulteration of

poultry products (Count Three), m eat products (Count Four), and food products (Count Five), the

governm ent m ust prove that

(1) from on or about October 1998 and continuing to on or about M ay 30, 2002 LaGrou knowingly did

any act that had the effect of causing any poultry products, m eat products, or food products to becom e

adulterated;

(2) the poultry, m eat and food products were capable of use as hum an foods; and (3) the poultry,

m eat, and food products were being held for sale after transportation in com m erce. 1/30/2014 UNITED STATES v. LaGROU DISTRIBUTION SYSTEMS INCORPORATED, No. 05-3361., October 20, 2006 - US 7th Circuit | FindLaw

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In addition, Judge Leinenweber instructed the jury that for Counts Three and Four, the governm ent

was required to prove that “defendant's conduct involved either the intent to defraud, or any

distribution or any attem pted distribution of such adulterated poultry products.” For Count Five, the

jury needed to find that “defendants com m itted the act with the intent to defraud or m islead.”

The trial judge also gave the jury the definition for “knowingly” from the Seventh Circuit Pattern Jury

Instructions:

W hen the word “knowingly” is used in these instructions, it m eans that the defendant realized what he

was doing and was aware of the nature of his conduct, and did not act through ignorance, m istake, or

accident. Knowledge m ay be proved by the defendant's conduct, and by all the facts and

circum stances surrounding the case. You m ay infer knowledge from a com bination of suspicion and

indifference to the truth. If you find that a person had a strong suspicion that things were not what

they seem ed or that som eone had withheld som e im portant facts, yet shut his eyes for fear of what he

would learn, you m ay conclude that he acted knowingly, as I have used that word. You m ay not

conclude that the defendant had knowledge if he was m erely negligent in not discovering the truth.

Seventh Circuit Pattern Jury Instruction 4.06.

Since LaGrou was a corporate defendant, Judge Leinenweber also gave the jury the Seventh Circuit

Pattern Jury Instruction explaining that a corporation acts only through its agents and em ployees who

are authorized or em ployed to act for the corporation. The district court also instructed the jury that

to be qualified as an agent of a corporation, the person m ust be explicitly or im plicitly authorized to

act for the principal. Further, an agency relationship m ay be im plied by the conduct, actions, or

com m unications of the principal.

Finally, the judge instructed the jury on the legal definition of an adulterated m eat, poultry, or food

product:

(1) it consists in whole or in part of any filthy, putrid, or decom posed substance or is for any other

reason unsound, unhealthful, unwholesom e, or otherwise unfit for hum an food; or (2) it has been

prepared, packed, or held under insanitary conditions whereby it m ay have becom e contam inated

with filth, or whereby it m ay have been rendered injurious to health.

This definition of adulterated food products is consistent with definitions set forth in the m eat, poultry,

and food statutes. See 21 U.S.C. §§ 342(a)(3), 342(a)(4), 453(g)(3), 453(g)(4) and 601(m )(4).

LaGrou offered a separate jury instruction based on a Tenth Circuit case from 1991. Relying on United

States v. Agnew, 931 F.2d 1397 (10th Cir.1991), LaGrou proposed the following jury instruction:

The crim es charged in Counts Three, Four, and Five require proof of intent before the defendant can be

convicted. To establish intent, the governm ent m ust prove that the defendant knowingly did an act

which the law forbids. Such intent m ay be determ ined from the facts and circum stances surrounding

the case.

Judge Leinenweber rejected LaGrou's proposed instruction because the defendant in Agnew was

convicted of the sale of adulterated beef products, which was a different charge than LaGrou faced.

Contrary to LaGrou's representations, the superseding indictm ent and jury instructions not only

m ade clear that the jury was required to find that LaGrou (and the agents and em ployees acting on its

behalf) knew that the conditions of the warehouse were insanitary, but also, the jury instructions

closely tracked the corporate liability law in the Seventh Circuit. See United States v. One Parcel of

Land Located at 7326 Highway 45, 965 F.2d 311 (7th Cir.1992). Judge Leinenweber instructed the

jury that

[a] corporation acts through its agents ․ [and] ‘knows' through its agents ․ To distinguish knowledge

belonging exclusively to an agent from knowledge belonging to the corporate principal, courts rely on

certain presum ptions. W here a corporate agent obtains knowledge while acting in the scope of

agency, he presum ably reports that knowledge to this corporate principal so the court im putes such

knowledge to a corporation.

The instructions in this case explained that in order to convict LaGrou, the jury had to find that an

authorized agent or em ployee of LaGrou knowingly stored products under insanitary conditions.

Since 1999, LaGrou's President, m anagers, and several em ployees were aware of the insanitary

conditions in the Pershing Road warehouse. LaGrou was aware of the rodent infestation from form al

reports, such as from the ASI and M cCloud, LaGrou's pest control com pany, and from inform al reports,

such as LaGrou em ployee rat patrols and the em ployees' necessary sorting of rat-infested product from

supposedly clean product.

A crucial charge in these three offenses is that LaGrou knowingly stored these products under 1/30/2014 UNITED STATES v. LaGROU DISTRIBUTION SYSTEMS INCORPORATED, No. 05-3361., October 20, 2006 - US 7th Circuit | FindLaw

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insanitary conditions, which states the requisite m ens rea for the charges. W e have long held that a

court need not recite the differences between general and specific intent. United States v. M arkowski,

772 F.2d 358, 365 (1985); United States v. Aram basich, 597 F.2d 609, 611 (7th Cir.1979). LaGrou's

argum ent that the prosecutor's passing claim during rebuttal turned the case into a strict liability

prosecution is wrong. W hile the prosecution explained in rebuttal that the quantity of food in this

case does not m atter, and even went so far as to claim that one bad ham burger would be enough to

convict, read in context, the prosecutor's rebuttal responded to an inaccurate claim by LaGrou in

closing argum ent, which incorrectly argued that the governm ent needed to prove that LaGrou stored a

specific am ount of adulterated food product.

Finally, LaGrou turns to the Suprem e Court's recent decision in Arthur Andersen LLP v. United States,

544 U.S. 696, 125 S.Ct. 2129, 161 L.Ed.2d 1008 (2005), as support for its contention that the jury

instructions did not properly define the requisite intent involved. The argum ent, however, is

m isplaced. Arthur Andersen involved jury instructions that charged defendants with “knowingly ․

corruptly persuad[ing] another person with intent to ․ cause that person to withhold docum ents from ,

or alter docum ents for use in, an official proceeding.” Id. at 703, 125 S.Ct. 2129 (internal quotations

om itted). In Arthur Andersen, the Court held that the instruction failed to convey the requisite

consciousness of wrongdoing because it allowed a conviction for an act of persuasion which was itself

innocuous and not inherently m align. Id. at 703-04, 125 S.Ct. 2129. W hile LaGrou and Arthur

Andersen were both charged with corporate liability, the sim ilarities in the two cases end there. Here,

LaGrou was charged with knowingly storing m eat, poultry, and food products in insanitary conditions.

This corporate culpability is a stark contrast to Arthur Andersen, where in an obstruction of justice

case, the governm ent needed to prove that corporate agents corruptly persuaded others to withhold

or alter docum ents. In this case, the governm ent needed to prove that agents of the LaGrou

corporation knowingly stored m eat, poultry, and food products under insanitary conditions.

LaGrou's president, Jack Stewart, and the Pershing Road warehouse m anager, David Sm ith, were both

well aware of the rodent infestation problem and other insanitary conditions at the warehouse, yet

persisted in storing and distributing m eat, poultry, and food products there. The district court

accurately sum m arized the law and did not abuse its discretion in its jury instructions.

B. Restitution

LaGrou next argues that the district court's im position of the $8.2 m illion restitution order violated

the Sixth Am endm ent under Apprendi and Booker, and that the order was not reasonable. United

States v. Booker, 543 U.S. 220, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005); Apprendi v. New Jersey, 530

U.S. 466, 120 S.Ct. 2348, 147 L.Ed.2d 435 (2000). W e review a district court's order of restitution for

abuse of discretion. United States v. Chay, 281 F.3d 682, 686 (7th Cir.2002).

LaGrou concedes that this Court has consistently held that restitution is a civil rem edy, not penal,

and therefore the Sixth Am endm ent and Booker do not apply. United States v. Danford, 435 F.3d 682,

689 (7th Cir.2006); United States v. George, 403 F.3d 470, 473 (7th Cir.2005). Nonetheless, LaGrou

urges us to reconsider this position. W e reiterate: restitution is not a penalty for a crim e for Apprendi

purposes since “restitution for harm done is a classic civil rem edy” that is adm inistered for

convenience by the courts that have entered crim inal convictions. United States v. Behrm an, 235

F.3d 1049, 1054 (7th Cir.2000). LaGrou gives us no reason to reconsider our well-settled Circuit

precedent.

W e next consider LaGrou's contention that the district court's restitution order was unreasonable.

Based on the horrendous conditions at LaGrou's Pershing Road warehouse, on M ay 30, 2002, the

USDA detained all 22 m illion pounds of the m eat, poultry, and food products on the prem ises. The

evidence at trial and sentencing showed that the conditions on every floor of the warehouse were

insanitary and the USDA considered product stored on every floor adulterated. In July of 2002, the

governm ent seized and condem ned all of the food products stored in the warehouse. Thereafter, the

22 m illion pounds of food products stored in the warehouse were either destroyed or were treated

through strict decontam ination procedures.

W hile LaGrou argues that the infested area was lim ited to the warehouse basem ent, the evidence

illustrated that the situation at the warehouse was dire. The USDA and other governm ent agencies

found dangerous conditions throughout the Pershing Road facility. Dr. Rose testified that LaGrou's

warehouse was the “worst case” she had seen in her 28 years with the USDA. She further explained that

given the ventilation system in the warehouse, the pathogens and viruses could have becom e airborne.

In addition, the leaking roofs, condensation from overhead pipes and ceilings, and dripping pipes

found throughout the warehouse could have also carried food-borne pathogens.

In an effort to salvage the products, LaGrou custom ers worked with scientists and public health

officials to create a process to decontam inate or recondition certain food products. This process was

perform ed on products that were in sealed packages that showed no signs of contam ination and the 1/30/2014 UNITED STATES v. LaGROU DISTRIBUTION SYSTEMS INCORPORATED, No. 05-3361., October 20, 2006 - US 7th Circuit | FindLaw

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process consisted, am ong other things, of applying a bio fog sanitizing agent to the sealed packages.

LaGrou's custom ers paid over $2 m illion for this service. As a result of the decontam ination process,

LaGrou custom ers were able to salvage over 12 m illion pounds of products stored at LaGrou's

warehouse, and the rem aining product was destroyed. The district court ordered LaGrou to pay a

total restitution of $8.2 m illion based on the wholesale price of the 8 m illion pounds of product that

had to be destroyed (approxim ately $5.5 m illion), and the cost of reconditioning and decontam inating

approxim ately 12 m illion pounds of m eat, poultry, and food products stored at the warehouse

(approxim ately $2.7 m illion).

At the sentencing hearing, Judge Leinenweber noted that if the governm ent had not rehabilitated the

m eat, poultry and food products at the Pershing Road warehouse, they would have destroyed $20

m illion worth of food. In his opinion, “[i] t certainly was to the benefit of LaGrou ․ to have ․

approxim ately 12 m illion pounds of product rehabilitated at a cost of $2 m illion.” W e agree, and

therefore conclude that the restitution am ount ordered by the district court was reasonable.

C. LaGrou's Sentence

The district court sentenced LaGrou to a total of $2 m illion in fines. W e review fines im posed on

crim inal defendants for reasonableness. Booker, 543 U.S. at 260-63, 125 S.Ct. 738.

At sentencing, the district court extensively discussed that, under the advisory Sentencing

Guidelines, LaGrou's fine could be anywhere from $12 m illion to $25 m illion. Pursuant to 18 U.S.C. §

3571, an organizational defendant that has been found guilty of a felony offense m ay be sentenced to

pay a m axim um statutory fine of not m ore than the greater of (a) $500,000; (b) twice the gross gain;

or (c) twice the gross loss. 18 U.S.C. § 3571(c)(3), (d). Noting that the Guidelines were advisory,

Judge Leinenweber declined to im pose a fine within the Guideline range and instead im posed a fine of

$2 m illion. After further discussion from the parties, Judge Leinenweber sentenced LaGrou to a fine

of $500,000 on Count Three, $500,000 on Count Four, and $1 m illion on Count Five-for an aggregate

fine of $2 m illion. As to Counts Three and Four, we find that the sentences are reasonable.

As to Count Five, however, the default statutory m axim um was $500,000 but the district court

levied a fine for $1 m illion. The defendant argues that, absent a jury finding beyond a reasonable

doubt, the district court had no authority to sentence LaGrou in excess of the default statutory

m axim um of $500,000. W e agree.

The Sixth Am endm ent requires that any fact (other than the fact of prior conviction) that increases

the m axim um “penalty” for a crim e beyond the prescribed statutory m axim um m ust be proved to a

jury beyond a reasonable doubt. Apprendi, 530 U.S. at 490, 120 S.Ct. 2348. Here, the problem is

that the district court did not give a special interrogatory with the jury instructions or verdict form

asking the jury to find a loss am ount. Thus, at sentencing, it was the district judge using a

preponderance of the evidence standard to find the loss am ount, not a jury finding loss am ount beyond

a reasonable doubt. This is error, and we rem and to the district court for resentencing.

Accordingly, while we Affirm LaGrou's convictions on Counts Three, Four, and Five, and Affirm

LaGrou's sentence as to Counts Three and Four, we Vacate LaGrou's sentence on Count Five and

Rem and for proceedings consistent with this opinion. Affirm ed in part and Rem anded in part.

BAUER, Circuit Judge.

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