Counterfeit Goods Role and Value at Sentencing

On November 3, 2026, the Second Circuit affirmed a 24-month prison sentence for trafficking counterfeit goods. In United States v. Sow, No. 25-2621, the court held that testimony about one paid assistant supported a two-level supervisor increase, and that the judge could estimate the value of the goods from the seizure and from bank records. Read the decision (PDF).

What happened

Adama Sow pleaded guilty in the Southern District of New York, No. 23-cr-593, to one count of trafficking in counterfeit goods, in violation of 18 U.S.C. § 2320(a)(1)–(2). There was no plea agreement. The charge covered conduct from at least January 2023 through October 2023: storing and selling counterfeit clothing, shoes, and accessories at a Manhattan storage facility. In October 2023, officers searched the facility and recovered more than 80,000 counterfeit items from storage units rented by Sow.

The plea was in March 2024. In February 2025, the district court held a two-day hearing on disputed sentencing facts. The Second Circuit called it a Fatico hearing. Sow disputed the government's value estimate and its claim that she supervised other people. Two employees of the storage facility testified. The opinion describes them as paid informants. An appraiser who works with luxury brands testified about the street value of the goods.

The court then applied two guideline increases. One was a two-level aggravating-role increase under USSG §3B1.1. The other was a 20-level increase for the value of the counterfeit goods, under USSG §2B5.3(b)(1)(B) and the loss table in §2B1.1(b)(1). With those rulings, the total offense level was 27 and the criminal history category was I. The advisory range was 70 to 87 months.

The judge varied downward and imposed 24 months in prison, then three years of supervised release. The court later ordered $111,419.32 in restitution to the brands, for fees tied to the appraisal and the hearing. Sow appealed the role increase, the value increase, the judge's reading of a statute aimed at the Sentencing Commission, and the restitution award. The Second Circuit affirmed. The opinion is published. It was argued on October 15, 2026, and decided on November 3, 2026.

A variance is a sentence outside the advisory range, based on the factors in 18 U.S.C. § 3553(a). It is not a departure. Our page on departures and variances explains the difference. The offense level is the number that, with the criminal history category, produces the range.

The two-level supervisor increase

Section 3B1.1 raises the offense level for a person's role. The two-level increase in §3B1.1(c) applies when the person "was an organizer, leader, manager, or supervisor in any criminal activity" that does not meet the tests for the three-level or four-level increases. Those higher increases require five or more participants, or activity that was "otherwise extensive."

Application Note 2 states the limit in plain terms. To qualify, the person "must have been the organizer, leader, manager, or supervisor of one or more other participants." A participant is someone who is criminally responsible for the offense, even if that person was not convicted. One other participant is enough for the two-level increase.

The district court found that the two storage-facility employees were generally credible. It credited testimony that Sow was the largest vendor at the facility and that she had people working for her. Both employees described one person who worked with her, and under her direction, from about 2017 until the 2023 search. One employee said that person was "under her wing," that Sow gave requests through him, and that he said he was paid. The other employee said the assistant moved boxes for her and that Sow said he was her employee. He saw the assistant several times a day.

The Second Circuit held that this record supported the increase. It rejected two arguments.

Hearsay. Sow argued that the testimony relied on unreliable hearsay. A sentencing judge may consider hearsay. The Due Process Clause still requires some minimal sign that the statement is reliable. Here, much of the testimony was what the employees saw themselves. One of them also recounted Sow's own statement that she paid the assistant. The court held that any hearsay at the hearing had that minimal support.

Credibility. Sow pointed to discrepancies in the employees' testimony. The district court explained why it still believed them on the points that mattered. Where two readings of the evidence are both possible, the appeals court does not replace the judge's choice. The judge who heard the witnesses is in the better position to decide whom to believe.

Disputes like these belong in written objections to the presentence report. Federal Rule of Criminal Procedure 32 sets the clocks: the report is disclosed at least 35 days before sentencing, and written objections are due within 14 days.

How the court valued the goods

For a counterfeit-goods case, the guideline does not use the fraud loss table directly. USSG §2B5.3 uses an "infringement amount." That amount is then converted into levels by the table in §2B1.1.

Application Note 2 to §2B5.3 sets the usual math. In many cases the infringement amount is the retail value of the genuine item, multiplied by the number of infringing items. In other cases it is the retail value of the counterfeit item, multiplied by the number of those items. "Retail value" means the retail price in the market where the item is sold. When the items vary, the amounts are added together.

Note 2(E) covers the case in which the court cannot determine the number of infringing items. The court "need only make a reasonable estimate of the infringement amount using any relevant information, including financial records." That sentence is still in the 2026 Guidelines Manual. The loss commentary uses the same idea. The court need only make a reasonable estimate, and one factor is the fair market value of the property. See USSG §2B1.1, comment. (n.3(B)).

The Second Circuit found no clear error in three steps.

Whose goods. Sow argued that the facility's records were too messy to tie 85,000 seized items, from 16 units, to her. The judge agreed the records were messy and the procedures were loose. The judge still credited an employee who said he had seen Sow in those units, that the records matched the units she rented, and that he had not falsified records.

The seized goods. The appraiser assigned a midpoint street price to average-quality counterfeits, by product type, and assumed more than one sale a day. Multiplied by the number of items, that estimate was $7,486,562.50. The judge cut it by 10 percent, to account for sales at places like Canal Street rather than at stores with higher prices. The opinion describes the discounted figure as about $6.6 million. The court held that this was a reasonable estimate tied to the quantity of goods recovered and to Sow.

Goods sold before the search. Bank records for eight months of 2021 showed $3.1 million moving through Sow's accounts. The judge treated 2022 and 2023 as about the same, and found that more than $9 million ran through the accounts from May 2021 through the seizure. The judge also said that, even without that step, adding the $3.1 million to the discounted $6.6 million produced about $9.7 million. Note 2(E) allows a reasonable estimate from financial records when the item count cannot be pinned down. The appeals court affirmed the 20-level increase.

The dollar table that applies now

The 20 levels came from the loss table row then in effect. Under that row, §2B1.1(b)(1)(K), an amount more than $9,500,000 added 20 levels. The next row, more than $25,000,000, added 22. The opinion describes Sow's figure as more than $9.5 million and not more than $25 million. Section 2B5.3(b)(1)(B) told the court to take that number of levels from the §2B1.1 table. Sow was sentenced before November 1, 2026. The Fatico hearing was in February 2025, and the restitution order the court cited is dated October 2, 2025.

On November 1, 2026, amendment 838 changed the dollar amounts for inflation. The Commission had last adjusted them in 2015. The official text of the amendment quotes the old table and the new one. Under the 2026 Manual:

• More than $5,000,000 adds 18 levels. That is §2B1.1(b)(1)(J).
• More than $15,000,000 adds 20 levels. That is §2B1.1(b)(1)(K).

The same amendment changed the entry point in §2B5.3(b)(1). The one-level band is now an infringement amount that exceeded $3,500 but did not exceed $9,000. Above $9,000, the court still uses the §2B1.1 table. Our note on the 2026 fraud-loss thresholds walks through the amendment. Sow does not restate it. Sow shows how a court builds the infringement amount. The dollar row that amount lands on depends on the manual in effect.

For a sentencing on or after November 1, 2026, the judge generally uses the manual in effect that day. If the newer manual would raise the range, Peugh v. United States, 569 U.S. 530 (2013), requires the older manual as a whole. See USSG §1B1.11. An infringement amount of about $9.7 million is more than $5 million and not more than $15 million, so the 2026 table assigns 18 levels, not the 20 levels used in Sow.

Amendment 838 is not on the list of amendments that can support a lower sentence under 18 U.S.C. § 3582(c)(2). See USSG §1B1.10(d). A person already sentenced does not get a new range from the new dollar amounts alone.

Why §994(j) did not require a non-prison sentence

Sow argued that the guideline range conflicted with 28 U.S.C. § 994(j). That statute tells the Sentencing Commission to "insure that the guidelines reflect the general appropriateness of imposing a sentence other than imprisonment" for a first offender who has not been convicted of a crime of violence or an otherwise serious offense. Sow said she was a first offender, that trafficking counterfeit goods was not an "otherwise serious offense," and that the range of 70 to 87 months ignored Congress.

The Second Circuit disagreed. Section 994(j) is written to the Commission, not to the sentencing court. A judge may consider that directive when deciding how much weight to give a guideline. The statute does not require a sentence other than imprisonment in any particular case. The words are "general appropriateness."

The sentence still has to satisfy § 3553(a). The judge calculates the range, then makes an individualized decision about a sentence that is "sufficient, but not greater than necessary." Our page on the § 3553(a) factors lists what the statute requires. A judge may not presume that a guideline sentence is reasonable. United States v. Cavera, 550 F.3d 180, 189 (2d Cir. 2008) (en banc). The court of appeals reviews that decision for abuse of discretion. Gall v. United States, 552 U.S. 38, 51 (2007).

The district court did not stop at the range. It said the guideline sentence was "substantially longer than necessary to achieve the goals of sentencing," and it varied down to two years. It also said that selling counterfeit goods is a serious offense, and that a sentence with no time in prison was not reasonable for a business that went on for years.

The judge gave a second reason that § 994(j) did not call for probation here. Sow had received the §3B1.1(c) increase, so the judge did not treat her as a typical first offender. The judge pointed to USSG §4C1.1, the adjustment for certain zero-point offenders, which the Commission adopted in response to § 994(j). Under the 2026 Manual, that adjustment is a two-level decrease, and only if every listed condition is met. One condition is that the person did not receive an adjustment under §3B1.1. See §4C1.1(a)(10).

Sow argued that the judge failed to see the discretion to look past §4C1.1 when deciding who counts as a first offender under § 994(j). The appeals court found nothing in the record to show that kind of mistake. The judge varied downward after considering the § 3553(a) factors. There was no error, even without limiting the appeal to plain error.

Restitution for the brands' costs

The court also affirmed restitution of $111,419.32 under the Mandatory Victims Restitution Act, 18 U.S.C. § 3663A. The award pays the brands for the cost of retaining the appraisal firm and for the appraiser's work at the hearing. The district court's restitution order is United States v. Sow, No. 23-cr-593 (S.D.N.Y. Oct. 2, 2025), as cited in the opinion.

Section 3663A requires restitution for listed offenses, including certain property offenses, when an identifiable victim suffered a physical injury or a pecuniary loss. The Second Circuit held that harm to a trademark can be that kind of loss. A trademark is property, including for criminal statutes that protect property. The loss can include investigation costs caused by the infringing conduct, when those costs are a direct and proximate result of the offense. The court found that Sow's conduct at the facility contributed to the search, and that an investigation of the goods was a foreseeable result.

Our page on federal restitution orders explains how an award is entered and how it is collected. A different question, whether MVRA restitution counts as criminal punishment for the Ex Post Facto Clause, is covered in the note on Ellingburg v. United States.

Who it affects

• A person facing a counterfeit-goods sentence in Connecticut, New York, or Vermont. Sow is a published Second Circuit opinion, so it binds district courts in that circuit. The government still has to prove a supervisor increase and an infringement amount with reliable evidence. Testimony about one other person who worked under the defendant's direction can be enough for the two-level increase in §3B1.1(c).
• A person whose infringement amount is disputed. The court may use a reasonable estimate. Seized goods, an appraisal of street prices in the market where the goods were sold, and bank records can all be part of that estimate. Objections belong in the response to the presentence report, before the hearing.
• A person sentenced on or after November 1, 2026. The dollar rows are the 2026 rows, not the row used in Sow. An amount more than $5 million and not more than $15 million adds 18 levels under §2B1.1(b)(1)(J). The 20-level row now starts above $15 million. If the newer manual would raise the range, Peugh requires the older manual.
• A person already sentenced under the earlier table. Amendment 838 is not listed in §1B1.10(d). This opinion does not, by itself, reopen a final sentence.
• A person sentenced outside the Second Circuit. The guideline text is national. Sow binds courts in the Second Circuit. Other circuits apply their own cases to the same sections.