United States v. Dowlin

F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
MAY 17 2005
UNITED STATES COURT OF APPEALS
PATRICK FISHER
Clerk
TENTH CIRCUIT

UNITED STATES OF AMERICA,

Plaintiff-Appellee,
v. Nos. 03-8038 and 03-8055
SANDEE D. DOWLIN and
WALTER G. NAYLOR, d/b/a Freship,
Provider Corp., Dos Brisas
Corporation,

Defendants-Appellants.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF WYOMING
(D.C. NO. 02-CR-74-J)

James H. Barrett, Assistant Federal Public Defender, (Michael G. Katz, Federal
Public Defender, with him on the brief) Office of the Federal Public Defender,
Cheyenne, Wyoming (with Ronald G. Pretty, Cheyenne, Wyoming, on
Supplemental Brief as to Application of Booker ) for Defendant-Appellant Sandee
D. Dowlin, and Maynard D. Grant, Grant & Newcomb LLC, Seattle, Washington,
for Defendant-Appellant Walter G. Naylor.

Lisa E. Leschuck, Assistant United States Attorney, (Matthew H. Mead, United
States Attorney, with her on the briefs) Office of the United States Attorney,
Cheyenne, Wyoming, for Plaintiff-Appellee.

Before MURPHY , ANDERSON , and TYMKOVICH , Circuit Judges.
TYMKOVICH , Circuit Judge.

A Wyoming jury convicted Walter G. Naylor and Sandee D. Dowlin on

numerous federal fraud charges. From the mid-1990’s to 2002, the defendants

promoted investments in which investors were promised enormous returns (in

excess of 6,500%) over a short period of time (90 days) in exchange for relatively

small investments.

Specifically, the jury convicted both Naylor and Dowlin of conspiracy to

transport in interstate commerce money and securities taken by fraud, wire fraud,

securities fraud, and mail fraud, in violation of 18 U.S.C. § 371; securities fraud

and aiding and abetting, in violation of 15 U.S.C. §§ 77q(a)(1)–(3) and 77x, and

18 U.S.C. § 2; and wire fraud and aiding and abetting, in violation of 18 U.S.C.

§ 1343 and 18 U.S.C. § 2. In addition, the jury convicted Naylor of money

laundering, in violation of 18 U.S.C. § 1957(a) and (b)(1); mail fraud, in violation

of 18 U.S.C. § 1341; transportation in interstate commerce of money and

securities taken by fraud, in violation of 18 U.S.C. § 2314; and an additional

count of wire fraud, in violation of 18 U.S.C. § 1343.

On appeal, Naylor asserts a number of trial errors. He argues (1) that the

government presented insufficient evidence to convict him on the conspiracy

charge. He does not, however, claim there was insufficient evidence to sustain

his other convictions. Naylor also claims the district court erred during the

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course of the trial by (2) improperly excluding certain state-of-mind evidence, (3)

erroneously refusing to grant a continuance of the trial, and (4) giving improper

jury instructions. 1

Dowlin, in turn, argues that the government presented insufficient evidence

to support her convictions. She also claims in supplemental briefing that her

sentence is improper under United States v. Booker, 125 S. Ct. 738 (2005).

We take jurisdiction pursuant to 28 U.S.C. § 1291 and 18 U.S.C. § 3742(a),

consolidate the two appeals, and affirm the convictions. We also affirm Dowlin’s

sentence.

I. Background

A. The Investors and Investment Opportunities

At the time of his indictment, Naylor was a sixty-nine year-old resident of

Cheyenne, Wyoming. For over 20 years he targeted local area ranchers, farmers,

and others for participation in his investment schemes. In exchange for relatively

small sums of money, Naylor promised huge returns over a short period of time.

During those years, Naylor promoted several exotic and complex

investment “programs” involving large sums of money and vague deliverables.

The trial focused on three specific investments: (1) the development of a

Naylor withdrew his claim that the district court erred in applying the
1

United States Sentencing Guidelines in light of Blakely v. Washington, 124 S. Ct.
2531 (2004) and United States v. Booker, 125 S. Ct. 738 (2005).

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patented “hyperbaric” storage container that would allow perishable items to be

kept fresh for several weeks in transit from farm to market; (2) the redemption or

sale of gold certificates that Naylor obtained from a Philippine organization,

which were supposedly authentic and worth billions of dollars; and (3) the trade

of “high-yield, mid-term” promissory notes. 2

Naylor’s investment solicitations followed a predictable pattern. He found

most of the investors through networking in Colorado, Nebraska and Wyoming,

and convinced them that he could provide an unprecedented opportunity to realize

substantial returns. Investors typically filled out an “application form” and paid a

refundable “application fee” or “loan” of $15,000, which Naylor was to use for

expenses associated with bringing the projects to fruition. In exchange, Naylor

promised $1.0 to 1.5 million, a return of over 6,500%, within months at the time

of “funding.”

Investors parted with their money in a variety of ways. Some gave Naylor

personal checks or cash, while others wired money to one of his or Dowlin’s

2
The trial record does little to clarify how these trading programs allegedly
worked. One investor stated that Naylor did not provide specifics as to any
particular program. A government expert witness testified that legitimate mid or
medium term notes are debt obligations issued by banks or bank holding
companies that are ordinarily repaid in ten years and issued into the market by
brokers or sold privately to large pension funds. Naylor’s testimony did not
explain how the alleged programs operated other than stating that they “return a
tremendous amount of profit rapidly” and “are all offshore.”

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accounts. One investor permitted Naylor to use the investor’s credit card for

travel and living expenses, including lodging and food service at luxury hotels

around the world. Another investor, an elderly nursing home resident, allowed

Naylor to fill out personal checks, which Naylor cashed and used for traveling

expenses.

B. The Gold Certificates

Naylor’s representations as to how he intended to realize the promised

exorbitant returns were inconsistent. However, much of the evidence at trial

centered on two gold certificates, supposedly worth billions of dollars at

“maturity.”

1. The 1,000-metric ton certificate

The first certificate was purportedly redeemable for 1,000 metric tons of

gold (the “1,000-metric ton certificate”). Naylor claimed the International

Foundation for Community Development (Philippines), Inc. (the “Foundation”)

obtained the certificate, valued at approximately $9 billion, from the estate of the

late Philippine President Ferdinand Marcos. According to Naylor, the certificate

had been issued in 1983 and would mature in 2003, at which time it could be

redeemed at the Union Bank of Switzerland (“UBS”). Evidence introduced by

Naylor suggested that the Overseas Investment Bank, Ltd. originally issued the

certificate, Lincoln Bank and Trust Co. subsequently reissued the certificate after

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the Overseas Bank dissolved, and the gold underlying the certificate was

deposited at UBS after Lincoln Bank dissolved. 3

Naylor testified that the Foundation assigned the certificate to him so he

could raise funds for a variety of humanitarian projects. According to Naylor, he

intended to redeem, sell or draw a line of credit on the certificate and use the

resulting billions of dollars to either (1) provide investors with their promised

returns, or (2) invest in another trading program, which itself would yield the

promised returns. Naylor would keep a sizeable commission on the funds he

received.

Naylor’s testimony is cryptic, at best, on how he actually would obtain

money secured by the certificate. In the late 1990’s, he retained Edmond Miles of

Great Britain as a “project consultant” to assist in obtaining funding for the

1,000-metric ton certificate. Miles testified at trial via video deposition that

neither his efforts to obtain funding in exchange for the certificate, nor any of the

other ventures on which he worked with Naylor, ever bore fruit. In addition,

Miles testified that the certificate would not be vouched for by UBS, and that any

3
Douglas Freedman, the bank compliance officer for the New York office
of UBSAG, the successor corporation to UBS, testified that (1) UBS had no
affiliation with Lincoln or the Overseas Bank, (2) the UBS logo that appeared on
the 1,000-metric ton certificate was invalid, (3) UBS did not hold “anything along
the lines” of 1,000 metric tons of gold, (4) UBS did not issue gold certificates,
and (5) UBS had informed Naylor that at least one of his certificates “was a
fraudulent document.”

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representations about the certificate for the purpose of inducing an investment

would be improper. Miles nonetheless testified that he thought Naylor honestly

believed in the bona fides of the certificate.

2. The 3,500-metric ton certificate

The second gold certificate was supposedly redeemable for 3,500 metric

tons of gold (the “3,500-metric ton certificate”). Naylor claimed he also obtained

it from the Foundation. At some point in the mid-1990’s, however, Naylor

apparently entrusted the original certificate to Arne Lundh, a London

businessman. Naylor testified that Lundh had prior experience trading in gold

certificates and was assisting in obtaining money collateralized by the certificate.

Unfortunately, according to Naylor, Lundh stole the original certificate. Naylor

sued him in London in the late 1990’s. A London barrister named Bitu Bhalla

represented Naylor in the British action and testified by video deposition at

Naylor’s criminal trial. A British court issued an order requiring Lundh to return

the certificate.

C. The Role of Sandee Dowlin

Sandee Dowlin served as Naylor’s executive assistant. In 1993, she met

Naylor at a Village Inn restaurant in Cheyenne, Wyoming, where she worked as a

waitress. Their relationship started as a personal one. Thereafter, Dowlin began

helping Naylor promote his investment programs. Naylor acted as the President

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and Chief Financial Officer of Dos Brisas, one of his several investment vehicles,

and Dowlin served as Secretary-Treasurer. While Naylor traveled, Dowlin kept

track of office matters. Sometimes Dowlin accompanied Naylor to meetings with

investors, where they both discussed the humanitarian building projects they

intended to finance, including construction of sod houses and a daycare center in

the Philippines, and a baseball diamond in Wyoming. Naylor represented falsely

to investors that Dowlin had been an accountant for years at KPMG. She

similarly represented to investors that she was a certified public accountant, when

she was not.

Although investors never saw their investments materialize, Naylor and

Dowlin obtained more than $1,000,000 by promising that huge returns were just

around the corner. Naylor and Dowlin used these funds for their personal benefit,

obtaining, among other things, a 1999 Lincoln Navigator, a 1999 GMC Suburban,

and a house.

D. The Investigation

Eventually, a federal investigation uncovered the defendants’ scheme. In

October 2000, agents from the Federal Bureau of Investigation executed a search

warrant for Naylor’s and Dowlin’s residence, where the agents discovered and

seized copies of gold certificates and other documents. The agents found what

Naylor claimed was an original gold certificate worth billions of dollars in an

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unlocked file cabinet. Agents also found copies of gold certificates that had been

altered using what appeared to be “white-out.” Multiple facsimiles both to and

from the defendants disclosed that UBS had denied the validity of the 1,000-

metric ton certificate.

In addition, agents seized at least seven facsimiles between the defendants

and an individual named Jeff Putnam. Naylor claimed Putnam was an Evansville,

Indiana bookkeeper and business associate responsible for securing at least

$300,000,000 in funding. Putnam, it turns out, was wanted by local police for

failure to pay small amounts of restitution at the same time Naylor was asking

him to raise millions of dollars. Putnam died prior to trial.

E. The Trial

At trial, Naylor’s main defense was that he had no intent to defraud because

he had a good faith belief in the legitimacy of the proposed investments. He

testified that he trusted Putnam to fund the high-yield trading programs.

Evidence introduced at trial, however, indicated that Putnam never obtained any

loans to support the programs and had little ability to do so.

Naylor also attempted to show he had a good faith belief in the authenticity

of the 1,000-metric ton and the 3,500-metric ton certificates. To this end, Naylor

introduced evidence and testimony as to (1) how he obtained the certificates, (2)

how the Foundation from which he received the certificates claimed to have come

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into possession of them, (3) what he was to do with the certificates, and (4) how

he was to be compensated.

He also introduced evidence and testimony that allegedly demonstrated the

certificates’ authenticity and his belief that the certificates were legitimate.

Further, Naylor introduced most of a video deposition of Edmund Miles detailing

their joint efforts to use the 1,000-metric ton certificate to obtain funds. With

respect to the 3,500-metric ton certificate, Naylor introduced evidence from the

London trial against Arne Lundh, including a video deposition of Bitu Bhalla

detailing the legal proceedings, and the order from the British court requiring

Lundh to return the certificate.

Dowlin’s trial defense was that she, like the investors, was a hapless victim

of Naylor’s deception who had no knowledge that his business dealings were a

hoax.

A jury found the defendants guilty on all counts. The trial court sentenced

Naylor to 97 months imprisonment and ordered him to pay $484,000 in

restitution. The court sentenced Dowlin to 46 months imprisonment and ordered

her to pay $272,000 in restitution jointly and severally with Naylor.

II. Sufficiency of the Evidence

Naylor and Dowlin both argue the evidence introduced at trial was

insufficient to support their conspiracy convictions. They contend the

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government failed to prove Dowlin knew of the fraudulent nature of Naylor’s

activities. Dowlin also contends that insufficient evidence existed to convict her

of the fraud and aiding and abetting claims.

We review de novo claims that the evidence presented at trial was

insufficient to support a conviction. See United States v. Gabaldon, 389 F.3d

1090, 1094 (10th Cir. 2004). “Evidence is sufficient to support a conviction if

the evidence and the reasonable inferences drawn therefrom, viewed in the light

most favorable to the government, would allow a reasonable jury to find the

defendant guilty beyond a reasonable doubt.” Id. Our review in this context is

highly deferential as “we will not overturn a jury’s verdict unless no reasonable

juror could have concluded, on the basis of the evidence presented, that the

defendant was guilty of the crime charged.” Id. During our de novo review, we

accept the jury’s credibility determinations and resolution of conflicting evidence.

See United States v. Davis, 1 F.3d 1014, 1017 (10th Cir. 1993).

A. Conspiracy Between Naylor and Dowlin

A conspiracy under 18 U.S.C. § 371 requires the government to prove: (1)

the existence of an agreement; (2) to break the law; (3) an overt act; (4) in

furtherance of the conspiracy’s object; and (5) that the two willfully entered into

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the conspiracy. 4 See United States v. Hanson, 41 F.3d 580, 582 (10th Cir. 1994).

“While all five of these elements must be present, the essence of any conspiracy

is the agreement or confederation to commit a crime.” Id. (citations and

quotations omitted). Further, “[t]he nature of a conspiracy, with its attendant

aspects of secrecy, often requires that elements of the crime be established by

circumstantial evidence.” United States v. Nall, 949 F.2d 301, 305 (10th Cir.

1991).

An agreement may be inferred from a “unity of purpose or common design

and understanding” among conspirators to accomplish the objects of the

conspiracy. United States v. Kendall, 766 F.2d 1426, 1431 (10th Cir. 1985).

Similarly, an agreement may be inferred from the joint appearance of defendants

at transactions and negotiations furthering the conspiracy, the relationship among

co-defendants, and their mutual representations to third parties. See United States

v. Evans, 970 F.2d 663, 669 (10th Cir. 1992); United States v. Grimes, 967 F.2d

4
Section 371 provides in relevant part:

If two or more persons conspire either to commit any offense against
the United States, or to defraud the United States, or any agency
thereof in any manner or for any purpose, and one or more of such
persons do any act to effect the object of the conspiracy, each shall
be fined under this title or imprisoned not more than five years, or
both.

18 U.S.C. § 371.

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1468, 1471–72 (10th Cir. 1992).

Both defendants argue the government introduced insufficient evidence to

prove that they entered into an agreement to break the law or that Dowlin did so

knowingly or willfully. Although both concede Dowlin willingly participated in

Naylor’s businesses, their argument is that Dowlin did not know Naylor’s

activities were fraudulent. Therefore, our analysis of the conspiracy focuses on

whether the government introduced sufficient evidence for a rational jury to find

that Dowlin knew of the illegality of Naylor’s schemes and agreed to participate

in them. We find there was sufficient evidence.

As an initial matter, Dowlin was not an uninformed office assistant. She

substantially assisted Naylor in the day-to-day operations of the companies Naylor

had set up to promote the investments. For example, she was Secretary-Treasurer

of their company, Dos Brisas, and corporate documents authorized her to trade on

the gold certificates. She assisted Naylor in preparing paperwork supplied to

investors and others, and had access to his written correspondence and faxes,

including some that demonstrated the “programs” were not likely to ever produce

revenue, even if they were real. Dowlin also accessed investor money, which she

was responsible for during Naylor’s absences. She traveled with Naylor to

London on one business trip.

In addition to her involvement with the operational side of Naylor’s

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businesses, Dowlin appeared at meetings with investors. Her representations at

these meetings played into the charitable instincts of investors and reinforced the

credibility of Naylor’s statements about benefitting Philippine and Wyoming

humanitarian projects. Dowlin also falsely represented to some investors that she

was a certified public accountant when she was not; Naylor represented to other

investors that Dowlin had worked as an accountant at KPMG. In short, the

evidence supports a conclusion that Dowlin was aware of the dubious prospects of

Naylor’s ventures, but did not reveal to investors what she knew about the

schemes at a time she was benefitting from them.

Further, Dowlin knew that the funding she and Naylor received was not

being spent on investment projects, but for personal gain. For instance, following

a meeting with investors on October 15, 1998, Dowlin and Naylor received a

$400,000 investment in exchange for assurances of large, short-term returns.

That same day, the defendants used the funds to obtain a cashier’s check to

purchase a 1999 Lincoln Navigator in Dowlin’s name, and a short time later,

bought a home. Dowlin also deposited investor money into her own bank

accounts and used the money for personal or family expenses, such as providing

cash to her children, paying her son’s mortgage, and paying a grandchild’s private

school tuition.

Based on these facts, a rational jury could have found beyond a reasonable

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doubt that Dowlin knew Naylor’s activities were fraudulent and that she willingly

participated in his schemes. Accordingly, the evidence was sufficient to support

the conspiracy convictions.

B. Fraud and Aiding and Abetting as to Dowlin

Dowlin also contends that insufficient evidence existed to convict her of

wire fraud and aiding and abetting, in violation of 18 U.S.C. § 1343 and 18

U.S.C. § 2, and securities fraud and aiding and abetting, in violation of 15 U.S.C.

§§ 77q(a)(1)–(3) and 77x and 18 U.S.C. § 2. 5 Dowlin does not deny that Naylor

engaged in the activities that led to him being charged and convicted for these

crimes. Rather, as above, she argues she could not be found guilty because the

government failed to prove she knowingly assisted Naylor in his fraudulent

practices.

5
To establish wire fraud under § 1343 the government must prove “(1) a
scheme or artifice to defraud and (2) use of interstate wire communications to
facilitate that scheme.” United States v. Janusz, 135 F.3d 1319, 1323 (10th Cir.
1998). The indictment charged Dowlin and Naylor with fraudulently inducing
investors to transfer $25,000 to them via wire.

To establish securities fraud under Section 17(a) of the Securities Act of
1933, 15 U.S.C. § 77q, the government must prove (1) “the offer or sale of any
security by the use of instruments of interstate commerce,” United States v.
Austin, 462 F.2d 724, 730 (10th Cir. 1972), and (2) fraudulent conduct in
connection with that offer or sale, such as “the use of any scheme to defraud [or]
the omission of material facts necessary to make statements not misleading.”
C.E. Carlson, Inc. v. SEC, 859 F.2d 1429, 1433–34 (10th Cir. 1988). The
indictment charged Naylor and Dowlin with fraudulently charging an “application
fee” of $10,000 to $15,000 in exchange for a funding expectation of $1 million.

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 “Under the aiding and abetting statute, once the device, scheme or artifice

to defraud has emerged, the question is whether one has participated in the

criminal transaction or transactions shown to have been perpetrated.” United

States v. Austin, 462 F.2d 724, 732 (10th Cir. 1972). Here, the existence of the

device to defraud is not challenged. In addition, as discussed above, the

government presented ample evidence at trial to support a finding of Dowlin’s

willing and knowing involvement in Naylor’s fraudulent ventures. Consequently,

we hold that the government introduced sufficient evidence to convict Dowlin.

III. Trial Objections and Jury Instructions

Naylor next argues that several of the district court’s rulings during the

course of the trial constituted reversible error. First, he asserts the court denied

him the right to present a defense by excluding portions of the deposition

testimony of two witnesses regarding the gold certificates. Second, he claims the

court erred in refusing to continue the trial after a foreign witness became ill the

last day of trial and was unable to testify. Finally, he claims the court erred in

two of the instructions tendered to the jury. We reject each argument.

A. Exclusion of Testimony at Trial

Naylor contends the district court violated his Fifth and Sixth Amendment

rights by improperly excluding portions of the videotaped testimony of two

witnesses, Bitu Bhalla and Edmund Miles. Naylor argues the excluded testimony

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would have bolstered his claim that he had a good faith belief in the validity of

the gold certificates.

The district court has broad discretion in determining the admissibility of

evidence. See United States v. Bautista, 145 F.3d 1140, 1151 (10th Cir. 1998).

Accordingly, “[w]e review questions concerning the admission of evidence under

an abuse of discretion standard” such that “[w]e will not disturb an evidentiary

ruling absent a distinct showing that it was based on a clearly erroneous finding

of fact or an erroneous conclusion of law or manifests a clear error in judgment.”

United States v. Jenkins, 313 F.3d 549, 559 (10th Cir. 2002). The question of

whether a constitutional violation has occurred is reviewed de novo. See United

States v. Ramone, 218 F.3d 1229, 1234 (10th Cir. 2000).

A defendant’s right to due process of law under the Fifth Amendment and

to compulsory process under the Sixth Amendment includes the right to present

witnesses in his or her own defense. See Washington v. Texas, 388 U.S. 14,

18–19 (1967). “The right to offer the testimony of witnesses . . . is in plain terms

the right to present a defense . . . . This right is a fundamental element of due

process of law.” Id. at 19. “However, the right to present defense witnesses is

not absolute. A defendant must abide the rules of evidence and procedure,”

including “standards of relevance and materiality.” Bautista, 145 F.3d at

1151–52.

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 To determine whether the district court violated Naylor’s right to present

witness testimony, we first determine whether the district court erred in excluding

the testimony. If so, we examine whether the excluded testimony was relevant

and material, i.e. “whether it was of such an exculpatory nature that its exclusion

affected the trial’s outcome.” Richmond v. Embry, 122 F.3d 866, 872 (10th Cir.

1997). With this framework in mind, we discuss Naylor’s objections to the partial

exclusion of testimony by Bhalla and Miles.

1. Bitu Bhalla’s testimony

Bitu Bhalla represented Naylor in his London action to recover the 3,500-

metric ton certificate Arne Lundh supposedly stole. As a result of the

proceedings, a British court issued an order requiring Lundh to return the

certificate. Naylor introduced the court’s order (but not the transcript of the

proceedings) at trial. In addition, Naylor sought to introduce a videotape

deposition of Bhalla discussing Bhalla’s representation of Naylor in the action

against Lundh.

Although the district court allowed the deposition to be shown, it excluded

a portion of Bhalla’s testimony regarding his recollection of the British judicial

proceedings. The excluded testimony consisted of Bhalla’s statements that during

the London trial (1) Naylor was in the courtroom and became “quite animated”

when Lundh testified he had found an expert who could authenticate the 3,500-

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metric ton gold certificate and (2) Lundh testified he used the certificate to obtain

a line of credit from a bank. The district court concluded this testimony was

hearsay and not relevant to whether the 3,500-metric ton gold certificate was

genuine.

We find the district court erred in excluding this testimony as hearsay. We

agree with Naylor that he did not offer the testimony for the truthfulness of

Lundh’s statements, but rather for the nonhearsay purpose of showing a basis for

Naylor’s belief in the authenticity of the certificate. See Hernandez v. United

States, 608 F.2d 1361, 1364 (10th Cir. 1979) (evidence properly admitted where

offered to show lack of knowledge rather than truth of matter asserted). We also

find the evidence was relevant because whether Naylor heard someone attest to

the certificate’s authenticity had some bearing on whether he had a good faith

belief in its authenticity. See Miller v. United States, 120 F.2d 968, 970 (10th

Cir. 1941) (defendant can show lack of fraudulent intent by introducing

statements of third persons).

Although the testimony was not excludable on hearsay or relevancy

grounds, to establish constitutional error Naylor must also show the evidence was

material to the extent its exclusion violated his right to present a defense. See

Richmond, 122 F.3d at 872. To determine materiality, we examine the record as a

whole and inquire “as to whether the evidence was of such an exculpatory nature

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that its exclusion affected the trial’s outcome.” Id. at 874 (citing United States v.

Valenzuela-Bernal, 458 U.S. 858, 868 (1982)). Two queries inform our analysis:

first, whether the proffered testimony was “the type that if believed would have,

by necessity, exculpated the defendant;” and second, whether “the proffered

testimony, even if admitted, would have created a reasonable doubt that did not

exist without the evidence.” Id.

The excluded testimony does not satisfy either query. Initially, Bhalla’s

testimony would not have necessarily exculpated Naylor even if believed.

Naylor’s reaction at trial upon hearing Lundh’s testimony could have been due to

many things aside from a good faith belief in the 3,500-metric ton certificate’s

authenticity. Second, Naylor’s belief regarding the validity of one of several gold

certificates at issue in the trial would not by itself exculpate him from the overall

scheme. The excluded testimony related to the 3,500-metric ton certificate, which

itself did not figure prominently in any of the investment pitches described during

trial. Rather, the testimony of investors suggests that Naylor primarily relied on

the 1,000 metric ton certificate during the time period in question. In addition,

even if Naylor did believe in the authenticity of the gold certificate, such a belief

would not preclude a jury from finding that he nonetheless used fraudulent

solicitations to obtain investor funds, for example by falsely indicating that the

gold certificates would generate large returns in a short period of time or that

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Dowlin was a CPA.

The next inquiry, then, is whether the excluded testimony would have

created a reasonable doubt as to Naylor’s culpability. It would not. Naylor

presented extensive evidence, through Bhalla and others, of the sincerity of his

efforts to recover the gold certificate from Lundh in the British court proceedings.

Naylor, Bhalla, Miles, and an FBI agent all testified about the British trial.

Naylor even introduced the court order. Further, the FBI agent testified Naylor

informed him that during the British court proceedings a witness testified to the

authenticity of the 3,500-metric ton certificate. Naylor also presented substantial

evidence of his good faith belief in his investment programs through the

testimony of other witnesses who confirmed that Naylor appeared to honestly

believe in the authenticity of the certificates. Finally, Naylor personally testified

regarding all of these events. Nonetheless, after hearing hours of testimony and

viewing considerable evidence purportedly demonstrating Naylor’s belief in the

certificates’ authenticity, the jury convicted Naylor on all counts.

In light of the substantial evidence of guilt in the record, we find the

district court’s exclusion of portions of Bhalla’s deposition testimony did not

violate Naylor’s right to present a defense. 6

6
Naylor did not assert that the district court's error in excluding Bhalla's
testimony, independent of its affect on his Fifth and Sixth Amendment right to
(continued...)

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 2. Edmund Miles’s testimony

Edmund Miles met Naylor in the late 1990’s when Naylor asked him to

obtain a line of credit on the 1,000-metric ton certificate. At trial, Naylor sought

to introduce a video deposition of Miles discussing their business dealings. The

district court admitted most of the deposition but excluded two parts of Miles’s

testimony: first, one instance in which Miles testified that he believed the

certificate was genuine; and second, one instance in which Miles stated he

informed Naylor that it was UBS’s policy not to authenticate gold certificates

until they reached their date of maturity.

Naylor argues the court erred in excluding this evidence. However, he

failed to object to the exclusion of the evidence at trial and did not advance an

argument before the district court demonstrating the evidence’s admissibility.

Therefore, he failed to adequately preserve the claim for appeal and our review is

for plain error. See Allan v. Springville City, 388 F.3d 1331, 1335 (10th Cir.

6
(...continued)
present a defense, entitles him to a new trial. See United States v. Velarde, 214
F.3d 1204, 1211 (10th Cir. 2000) ("A non-constitutional error, such as a decision
whether to admit or exclude evidence, is considered harmless unless a substantial
right of a party is affected." (quotations and alterations omitted)). Accordingly,
we do not consider the question. Even if it had been raised, however, Naylor
would not be entitled to relief for those same reasons set out above in resolving
his constitutional claim. See id. ("We have defined an effort affecting a
substantial right of a party as an error which had a substantial influence on the
outcome or which leaves one in grave doubt as to whether it had such an effect."
(quotations and alterations omitted)).

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2004) (“To adequately object to the exclusion of evidence, the proponent of the

excluded evidence must explain [to the district court] what he expects the

evidence to show and the grounds for which he believes the evidence is

admissible.” (quotations and citation omitted)); United States v. James, 257 F.3d

1173, 1182 (10th Cir. 2001) (detailing elements of plain error review).

We find no error in the district court’s ruling. Regarding Miles’s excluded

testimony about his belief in the authenticity of the 1,000-metric ton certificate,

there is no showing he ever communicated this belief to Naylor. In fact, Miles

testified in the excluded portions that this belief came into being “a long time”

after he spoke with Naylor about UBS’s policy regarding the authentication of

gold certificates. Therefore, the testimony would not bolster Naylor’s good faith

defense. In addition, the portion of Miles’s testimony admitted by the court

established that both Miles and Naylor believed the certificate to be authentic. In

light of the admitted testimony, we cannot conclude the court erred in excluding

one more instance in which Miles stated he believed the certificate to be

authentic.

With respect to Miles’s testimony that he informed Naylor of UBS’s policy

not to authenticate gold certificates until they reached their date of maturity, the

testimony is only marginally relevant to whether Naylor believed the certificate to

be legitimate. Further, Naylor’s ‘pot of gold at the end of the rainbow’ defense

-23-
was more than adequately explained through other evidence. For example, the

admitted portions of Miles’s testimony established that (1) he communicated to

Naylor nothing could be done with the certificate until maturity unless Naylor

located a private buyer, (2) no one could determine the validity of the certificates

until the time of maturity, and (3) UBS had a policy not to “verify or acknowledge

until maturity,” which was designed to limit public information about existence of

the valuable holdings. In addition, the court allowed Naylor to present direct

evidence of his good faith belief in the certificates through documentary and

testimonial evidence.

Based on the evidence in the record, we cannot say the excluded portion of

Miles’s testimony affected the outcome of the trial. Therefore we hold that

exclusion of the evidence was not plain error.

B. Denial of Continuance

Naylor next maintains the district court impeded his ability to present a

defense by denying him a continuance when a listed foreign defense witness,

Eugenio Macacabayao, fell ill.

Prior to trial, the parties anticipated the case would take about two weeks to

try. The government rested its case on Monday, February 3, 2003. Macacabayao,

however, did not arrive in Cheyenne from the Philippines until Friday, February

7, 2003, the last scheduled day of trial. Because Macacabayao did not arrive in

-24-
time to testify on Friday, the district court continued the trial until the following

Monday, February 10, 2003. Unfortunately, upon arrival in Wyoming,

Macacabayao experienced chest pains and was admitted to a local hospital.

Although he was interviewed by defense counsel over the weekend, the illness

apparently left Macacabayao in no condition to testify or even to give a deposition

under oath.

Naylor moved for a continuance to allow Macacabayao time to recover

sufficiently to either testify in open court or to be deposed in his hospital room.

In support of the motion, counsel proffered that Macacabayao would testify he

was a practicing attorney and chairman of the Foundation; Major Rolando

Miranda, a board member of the Foundation, had given a gold certificate to

Naylor; Miranda represented to Naylor the certificate was a valuable and

authentic document; and Naylor was enlisted to use the certificate to obtain

funding to assist the Foundation with its humanitarian projects.

In the district court, the government argued the testimony was largely

irrelevant and cumulative because the only relevant fact it supported was whether

Naylor believed the certificates were real. The government also pointed out that

Naylor’s counsel provided no showing as to when Macacabayao would be

sufficiently recovered to testify. The court agreed and denied the continuance,

noting the testimony would consist largely of inadmissible hearsay.

-25-
 On appeal, Naylor argues Macacabayao’s testimony was important to his

defense because it corroborated Naylor’s testimony regarding how he obtained the

1,000-metric ton gold certificate and why he believed it was authentic. He

maintains the exclusion of this testimony was especially damaging because he

testified at trial that a Filipino would corroborate his version of the events and the

jury was left to speculate as to the reason for Macacabayao’s non-appearance. 7

“We review the denial of a motion for continuance of trial for abuse of

discretion and ‘will find error only if the district court’s decision was arbitrary or

unreasonable and materially prejudiced the defendant.’” United States v. Diaz,

189 F.3d 1239, 1247 (10th Cir. 1999) (quoting United States v. Simpson, 152 F.3d

1241, 1251 (10th Cir. 1998)). In determining whether a district court arbitrarily

or unreasonably denied a motion for a continuence, we examine:

7
Naylor testified during cross examination in this regard as follows:

Q: Who gave you—you met somebody in the Philippines
and they simply gave you $9 billion worth of a
certificate?
Naylor: Well, if we could get the story straight, I could probably
tell you exactly what happened, but I think we’re
starting in the wrong direction here. The people I met in
the Philippines—you’re going to be seeing one of them
here tomorrow.
Q: And he can testify about what he knows about the gold
certificate, is that right?
Naylor: Oh, yes. Yes.

-26-
 (1) the diligence of the party requesting the continuance; (2) the
likelihood that the continuance, if granted, would accomplish the
purpose underlying the party’s expressed need for the continuance;
(3) the inconvenience to the opposing party, its witnesses, and the
court resulting from the continuance; [and] (4) the need asserted for
the continuance and the harm that appellant might suffer as a result
of the district court’s denial of the continuance.

United States v. Wynne, 993 F.2d 760, 767 (10th Cir. 1993) (citations omitted).

Furthermore, because Naylor sought the continuance to obtain witness

testimony, he was required to show who the witness was, what his testimony

would be, and that the testimony would be competent and relevant. See United

States v. Harris, 441 F.2d 1333, 1336 (10th Cir. 1971).

Applying these factors, we conclude that Naylor has not made a sufficient

showing to justify relief. First, although Naylor sought the continuance as soon

as it was clear Macacabayao would not be able to testify, he did not use diligence

in procuring Macacabayao’s presence at the trial. Even without the witness’s

illness, Naylor had already caused a delay of the trial because Macacabayao did

not arrive in Cheyenne in time to testify on February 7.

Second, if granted, the continuance would have seriously inconvenienced

the court, the prosecution and the jury. At the time of Naylor’s request for a

continuance, no alternate jurors existed. 8 Had the court granted a continuance, it

8
One alternate was excused on grounds not disclosed in the record. The
second alternate was excused due to physical ailment on the day Naylor requested
(continued...)

-27-
would have risked having to retry the entire case if any additional juror needed to

be excused. Furthermore, the case had already lasted two weeks and, excluding

Macacabayao’s testimony, each side had presented its entire case, including out-

of-state witness testimony.

On the other hand, the denial of the continuance caused only minimal harm

to Naylor. He sought the testimony for two purposes. First, to corroborate his

own testimony regarding how he came into possession of the 1,000-metric ton

certificate. Naylor’s proffer outlining Macacabayao’s proposed testimony,

however, did not establish whether Macacabayao was present when Naylor

received the certificate. If Macacabayao learned of the transaction from a third

party, his testimony would have been hearsay.

Second, Naylor offered the proposed testimony to show his good faith

belief in the certificate’s validity. However, as noted above, Naylor put forth

extensive other evidence of his beliefs, including documents from the Foundation

that attest to the bona fides of the certificates. In addition, as above, the proffer

does not establish that Macacabayao was present when the Foundation made the

alleged representations to Naylor regarding the certificate. Without such

evidentiary groundwork, the district court properly excluded the proposed

8
(...continued)
a continuance.

-28-
testimony as hearsay.

In any event, having reviewed the record in its entirety we conclude that

Macacabayao’s testimony would have done little to exculpate Naylor because it

was mainly cumulative and, even if believed, would not have precluded the jury

from finding him guilty. Thus, the district court’s decision not to grant the

continuance did not “materially prejudice” Naylor in the presentation of his good

faith defense. See United States v. McKneely, 69 F.3d 1067, 1077 (10th Cir.

1995); see also United States v. Rodriguez, 15 F.3d 408, 411 (5th Cir. 1994)

(holding that when a continuance is sought because a witness is unavailable, the

movant must show, among other things, that the witness would provide

substantial favorable evidence).

Finally, the district court specifically instructed the jury not to speculate as

to the reason for Macacabayao’s absence, thereby alleviating any prejudice caused

by his failure to appear at trial. For these reasons, we hold that the district court

did not err in denying a continuance.

C. Jury Instructions

Naylor contends the court tendered two erroneous instructions to the jury

regarding the government’s burden of proof and the elements of fraud under the

1935 Securities Act.

1. Instruction 12—Burden of Proof

-29-
 Naylor argues the district court’s reasonable doubt instruction misled the

jury into believing it could convict him by only a preponderance of the evidence.

Typically, “[t]he appropriate standard of review for challenges to jury instructions

is whether the jury, considering the instructions as a whole, was misled.” United

States v. Smith, 13 F.3d 1421, 1424 (10th Cir. 1994). Similarly, the constitutional

question implicated by concerns over the adequacy of jury instructions is

“whether there is a reasonable likelihood that the jury understood the instructions

to allow conviction based on proof insufficient to meet the Winship standard.”

Victor v. Nebraska, 511 U.S. 1, 6 (1994) (referring to In re Winship, 397 U.S.

358, 364 (1970), which held that the government must prove beyond a reasonable

doubt every element of a charged offense). Here, however, Naylor did not object

to the instruction at trial. Therefore, our review is for plain error. See United

States v. Hernandez-Garcia, 901 F.2d 875, 876 (10th Cir. 1990).

On appeal, Naylor raises three specific objections to Instruction 12, which

read in part:

If you, as jurors view the evidence in the case as reasonably
permitting either of two conclusions -- one of innocence, the other of
guilt -- you should of course adopt the conclusion of innocence. 9

9
The entirety of Instruction 12 read as follows:

The law presumes a defendant to be innocent of a crime. Thus a
defendant, although accused, begins the trial with a “clean slate” with
(continued...)

-30-
 9
(...continued)
no evidence against him or her. And the law permits nothing but
legal evidence presented before the jury to be considered in support of
any charge against the accused. The presumption of innocence, alone,
is sufficient to acquit a defendant, unless the jurors are satisfied
beyond a reasonable doubt of the defendant’s guilt after careful and
impartial consideration of all the evidence in the case.

As I have said many times, the United States has the burden of
proving the defendant guilty beyond a reasonable doubt. Some of you
may have served as jurors in civil cases, where you were told that it is
only necessary to prove that a fact is more likely true than not. In
criminal cases, the United States’ proof must be more powerful than
that. It must be beyond a reasonable doubt.

There are very few things in this world that we know with absolute
certainty, and in criminal cases the law does not require proof that
overcomes every possible doubt. A reasonable doubt is the kind of
doubt arising, after consideration of all the evidence, that would cause
reasonable people to hesitate to act upon it when conducting the more
serious and important affairs in their own lives. A defendant is not to
be convicted on mere suspicion or conjecture.

The burden of proof is always upon the prosecution to prove that the
defendant is guilty beyond a reasonable doubt. The burden never
shifts to a defendant. A defendant has the right to require the United
States to prove its case against him or her, and if he or she is satisfied
that the United States has not proved its case, may decline to call any
witnesses or produce any evidence.

Therefore, after careful and impartial consideration of all the evidence
in the case, you as jurors retain a reasonable doubt that a defendant is
guilty of the charge you must acquit. If you, as jurors view the
evidence in the case as reasonably permitting either of two
conclusions -- one of innocence, the other of guilt -- you should of
course adopt the conclusion of innocence.

(continued...)

-31-
 The first objection is that the instruction used the term “should” instead of

the term “must.” Naylor’s second objection is that the instruction improperly

interchanged the terms “innocence” and “not guilty.” Finally, Naylor claims the

instruction unlawfully diluted the burden of proof by suggesting there is a

standard below “beyond a reasonable doubt” on which the jury could convict.

Although we disapprove of a portion of the tendered instruction, viewing the

instruction in its entirety we hold that it did not compromise Naylor’s right to a

fair trial.

a. Use of the term “should”

Naylor first argues that the instruction improperly used the non-mandatory

term “should” in instructing the jury to return a not guilty verdict if the evidence

reasonably permitted a finding of innocence. The penultimate sentence of the

instruction, however, stated, “[If] after careful and impartial consideration of all

the evidence in the case, you as jurors retain a reasonable doubt that a defendant

is guilty of the charge, you must acquit.” In light of this language, as a whole, the

instruction made clear that the jury was only allowed to convict if it found Naylor

guilty beyond a reasonable doubt. We thus discern no error.

b. Not guilty and innocent

9
(...continued)

-32-
 Naylor next argues that the instruction was also misleading because it used

the terms “not guilty” and “innocent” interchangeably. He relies on a First

Circuit case concluding that interchanging the terms could confuse a jury and

“risks undercutting the government’s burden by suggesting that they should find

the defendant guilty if they think he is not innocent--regardless of how convincing

the government’s proof has been.” United States v. Mendoza-Acevedo, 950 F.2d

1, 4 (1st Cir. 1991).

We disagree with this assessment. Although the instruction used mixed

terminology, in light of the instruction as a whole we do not see how the jury was

misled concerning its obligation to apply the presumption of innocence. As a

practical matter, in the context of this jury instruction “not guilty” and

“innocence” are equivalent. Taking a step back, on this record the instruction’s

overall structure and language are not misleading. The two terms—“not guilty”

and “innocent”—were not likely to confuse the jury in applying the proper burden

of proof.

c. Two-inference language

Naylor’s third argument has merit. He contends that by allowing two

inferences, guilt and innocence, where the evidence does not decisively favor one

outcome, the instruction improperly diluted the government’s burden of proof by

suggesting there is a quantum of proof sufficient to convict above “innocent” but

-33-
below “beyond a reasonable doubt.”

The Second Circuit has long disapproved of the instruction:

The “two-inference” language, that if the jury believes the evidence
permits either the inference of innocence or of guilt, the jury should
adopt the former, is obviously correct as far as it goes. But such an
instruction by implication suggests that a preponderance of the
evidence standard is relevant, when it is not. . . . It instructs the jury
on how to decide when the evidence of guilt or innocence is evenly
balanced, but says nothing on how to decide when the inference of
guilt is stronger than the inference of innocence but no[t] strong
enough to be beyond a reasonable doubt. . . . Therefore, . . . the
“two-inference” language should not be used because, standing
alone, such language may mislead a jury into thinking that the
government’s burden is somehow less than proof beyond a
reasonable doubt.

United States v. Khan, 821 F.2d 90, 93 (2d Cir. 1987) (emphasis added); see also

United States v. Jacobs, 44 F.3d 1219, 1226 (3d Cir. 1995) (disapproving use of

two-inference language).

Our circuit has yet to address the narrow question as to the propriety of

using this two-inference language. We agree with the Second and Third Circuits

that, standing alone, the language is imprecise and should not be used. The

mischief from the instruction comes from the risk that a jury may focus on narrow

portions of the instruction and not its overall thrust. In light of this risk, we

agree that the instruction should be modified to delete the two-inference

language.

The saving grace for the instruction is that overall it adequately directed the

-34-
jury to the applicable burden of proof. Applying the plain error standard, there is

little doubt the jury properly understood its constitutional duty. The instructions

as a whole told the jury not to convict Naylor unless the government proved his

guilt beyond a reasonable doubt. For example, Instruction 12 explained to the

jury that the government had the burden of proving guilt beyond a reasonable

doubt, specifically defined “reasonable doubt,” and distinguished reasonable

doubt from a preponderance of the evidence. Considered in context, we cannot

conclude the jury was misled by the instruction. See Victor, 511 U.S. at 6.

Accordingly, the district court did not plainly err when it issued this

instruction.

2. Instruction 51—Elements of Fraud

Naylor’s last argument is that the district court inappropriately instructed

the jury it could find securities fraud under 15 U.S.C. § 77q without finding

Naylor had an intent to defraud. Naylor objected to this instruction at trial.

Therefore we review the instructions de novo “to determine whether, as a whole,

the instructions correctly state the governing law and provide the jury with an

ample understanding of the issues and applicable standards.” United States v.

Cecil, 96 F.3d 1344, 1347 (10th Cir. 1996).

The portion of Instruction 51 to which Naylor objected provided:

A statement which is untrue or a representation which is false rises to
the level of “fraud” when the person making it knew the statement to

-35-
 be untrue or knew the representations to be false at the time that the
statement or representation was made.

Naylor asserts this instruction allowed a jury to make a finding of fraud

based solely on whether he knowingly made an untrue statement or representation,

without requiring the jury to also find that he had an actual intent to defraud.

Once again, Naylor’s argument fails because it improperly isolates one part

of the jury instruction, rather than taking into account the instructions as a whole.

Instruction 51 consisted of seven full paragraphs describing the meaning of

“fraud,” “fraudulent,” and “defrauding.” Other parts of the instruction explained:

– If “the evidence has established beyond a reasonable doubt that the
defendants . . . acted with a fraudulent intent . . . it is unimportant
whether the defendants were successful and accomplished the plan;”

– “[E]ven though some individual may have lost money in the
transactions . . . , this does not rise to the level of fraud unless the
evidence establishes beyond a reasonable doubt that the transaction
was designed and intended by the defendant to deceive, or trick, or
injure, or damage;” and

– “An honest belief or ‘good faith’ belief by the defendants that the
statements or representations made were true is a complete and total
defense to the charge of securities fraud.”

Viewed as a whole, the instruction required the jury to find intent to

defraud before it could convict Naylor. Consequently, Naylor’s contention is

without merit and the district court did not err.

IV. Dowlin’s Sentence

The base level offense provided in the United States Sentencing Guidelines

-36-
(“Guidelines” or “USSG”) for Dowlin’s fraud convictions was 6. See USSG

§ 2B1.1(a) (2002). The district court enhanced Dowlin’s sentence by 14 points

after determining the loss in the case exceeded $400,000, see id. §

2B1.1(b)(1)(H), and by another 2 points after finding there were more than 10 but

less than 50 victims, see id. § 2B1.1(b)(2)(A). On the basis of these

enhancements, the court increased the offense level from 6 to 22. Dowlin’s

criminal history category of II and her offense level of 22 provided for a

sentencing range of 46-57 months. The court sentenced Dowlin to the bottom end

of the range, 46 months. Without any judge-found facts, Dowlin would have had

an offense level of 6, which provides for a sentence of 1-7 months when

combined with her criminal history.

After oral argument, Dowlin moved to file a supplemental brief arguing her

sentence was invalid under Blakely v. Washington, 124 S. Ct. 2531 (2004).

Following the Supreme Court’s ruling in United States v. Booker, 125 S. Ct. 738

(2005), we granted the motion. Dowlin asks this court to remand her case for

resentencing because the district court determined her sentence using

impermissible judicial factfinding and treated the Guidelines as mandatory in

violation of Booker. Dowlin first argues Booker error constitutes structural error

warranting a remand without a showing of prejudice. In the alternative, she

claims that if the plain error standard of review applies, that standard is satisfied.

-37-
 A. Constitutional Booker error is not structural error

At the outset, we reject Dowlin’s argument that Booker error is structural

error. Though we have recently held non-constitutional Booker error is not

structural error, see United States v. Gonzalez-Huerta, 403 F.3d 727, 734 (10th

Cir. 2005) (en banc), we have yet to determine whether constitutional Booker

error such as occurred here, see infra Part IV.B.1, is structural error. See, e.g.,

United States v. Clifton, No. 04-2046, — F.3d —, 2005 WL 941581, *8 (10th Cir.

Apr. 25, 2005) (not addressing structural error question because constitutional

Booker error warranted remand under plain error analysis); United States v.

Lawrence, No. 02-1259, — F.3d —, 2005 WL 906582 (10th Cir. Apr. 20, 2005)

(issue not addressed); United States v. Dazey, 403 F.3d 1147 (10th Cir. 2005)

(same).

As we stated in concluding that non-constitutional Booker error is not

structural error: (1) “generally speaking structural errors must, at a minimum, be

constitutional errors;” (2) where the defendant had counsel and an impartial

judge, such as here, “there is a strong presumption against finding structural

error;” and (3) “a defining feature of structural error is that the resulting

unfairness or prejudice is necessarily unquantifiable and indeterminate, such that

any inquiry into its effect on the outcome of the case would be purely

speculative.” Gonzalez-Huerta, 403 F.3d at 734 (internal quotations and citations

-38-
omitted). Regarding the third of these considerations, we further elaborated that

“if, as a categorical matter, a court is capable of finding that the error caused

prejudice upon reviewing the record, then that class of errors is not structural.”

Id.

Taking these considerations into account, the error in question here is

constitutional and therefore must be more carefully scrutinized for structural

concerns. However, here as in the non-constitutional Booker error context, a

“defining feature of structural error” is lacking. Specifically, our post-Booker

jurisprudence clearly indicates we have been able to determine whether

constitutional Booker error prejudiced defendants based on the record of the

district court proceedings. Compare Clifton, 2005 WL 941581, *7–*8 (applying

plain error review and remanding for resentencing based on constitutional Booker

error), and Dazey, 403 F.3d at 1173–79 (same), with Lawrence, 2005 WL 906582

(applying plain error review and affirming sentence). Accordingly, we hold that

constitutional Booker error is not structural error because any prejudice stemming

from such error can be evaluated on the record developed in the prior

proceedings. In doing so we join the First Circuit, which has already reached a

similar conclusion. See United States v. Antonakopoulos, 399 F.3d 68, 80 n.11

(1st Cir. 2005).

B. Plain error analysis

-39-
 Having concluded Booker error is not structural error, we review the

district court’s sentencing decision for plain error because Dowlin did not contest

the constitutionality of the Guidelines before the district court. See Clifton, 2005

WL 941581, at *7.

To establish plain error, Dowlin must demonstrate the district court (a)

committed error, (b) the error was plain, and (c) the plain error affected her

substantial rights. See United States v. Cotton, 535 U.S. 625, 631 (2002); Clifton,

2005 WL 941581, at *5–*6. If all these conditions are met, a court reviewing the

error may exercise discretion to correct it if the error seriously affects the

fairness, integrity, or public reputation of judicial proceedings. See Cotton, 535

U.S. at 631–32. We conduct this analysis “less rigidly when reviewing a potential

constitutional error.” Dazey, 403 F.3d at 1174 (quoting United States v. James,

257 F.3d 1173, 1182 (10th Cir. 2001)). Applying this framework, we hold that

Dowlin is not entitled to resentencing.

1. Was there Error?

The Supreme Court in Booker extended the Sixth Amendment rule

articulated in Apprendi v. New Jersey, 530 U.S. 466, 490 (2000), and Blakely, 124

S. Ct. at 2537, to the federal Guidelines. See Booker, 125 S. Ct. at 756 (“Any fact

(other than a prior conviction) which is necessary to support a sentence exceeding

the maximum authorized by the facts established by a plea of guilty or a jury

-40-
verdict must be admitted by the defendant or proved to a jury beyond a reasonable

doubt.”). To remedy the constitutional infirmity created by applying judge-found

facts to the Guidelines, the Court severed the provision of the federal sentencing

statute that made application of the Guidelines mandatory. Id. at 756–57. In

Dowlin’s case, the district court committed both constitutional and non-

constitutional Booker error because it enhanced her sentence based on facts found

by the court by a preponderance of the evidence and treated the Guidelines as

mandatory. As we noted in Clifton, cases “involving constitutional Booker error

will always involve non-constitutional Booker error as well” and the non-

constitutional error may compound the constitutional error. 2005 WL 941581, at

*5.

2. Was the Error Plain?

To be plain, an error must be “clear or obvious” under “current, well-

settled law.” United States v. Whitney, 229 F.3d 1296, 1308–09 (10th Cir. 2000).

If the Supreme Court or this court has addressed the issue, then an error is

contrary to well-settled law. See United States v. Ruiz-Gea, 340 F.3d 1181, 1187

(10th Cir. 2003). Here, the district court enhanced the sentence based on judge-

found facts and treated the Guidelines as mandatory, each of which is contrary to

Booker. See 125 S. Ct. at 756–57. Therefore, the court plainly erred in

sentencing Dowlin.

-41-
 3. Did the Error Affect Substantial Rights?

For an error to have affected substantial rights, “the error must have been

prejudicial: It must have affected the outcome of the district court proceedings.”

United States v. Olano, 507 U.S. 725, 734 (1993). The burden to establish

prejudice to substantial rights is on the party that failed to raise the Booker issue

below. See Clifton, 2005 WL 941581, at *6.

A defendant can show Booker error affected substantial rights by

demonstrating “a reasonable probability that, but for the error claimed, the result

of the proceeding would have been different.” Id. (quoting Gonzalez-Huerta,

2005 WL 807008, at *3); see also Dazey, 403 F.3d at 1175–76. We have held

there are at least two ways by which a defendant can establish the sentencing

result would have been different but for the Booker error. “First, non-

constitutional or constitutional Booker error may affect substantial rights if the

defendant shows ‘a reasonable probability that, under the specific facts of his case

as analyzed under the sentencing factors of 18 U.S.C. § 3553(a), the district court

judge would reasonably impose a sentence outside the Guidelines range.’” Clifton,

2005 WL 941581, at *6 (quoting Dazey, 470 F.3d at 1175). This showing can be

made where there is “a disconnect between the § 3553(a) factors and [the]

sentence” or the district court “expressed dissatisfaction with the mandatory

Guidelines sentence” in the case. Id. “Second, constitutional Booker error may

-42-
affect substantial rights ‘if the defendant shows a reasonable probability that a

jury applying a reasonable doubt standard would not have found the same material

facts that a judge found by a preponderance of the evidence.’” Id. (quoting

Dazey, 470 F.3d at 1175).

On this record, there is considerable doubt whether Dowlin can satisfy her

burden under the third prong of plain error review. To begin, Dowlin has failed

to establish a reasonable probability that a jury applying a reasonable doubt

standard would not have reached the same conclusions as the district court in

determining loss amount and the number of victims. As we described above, the

district court enhanced Dowlin’s sentence based on a finding of loss in excess of

$400,000. Witnesses at trial testified to investing well in excess of this amount in

Naylor’s schemes after Dowlin became involved. With respect to the district

court’s determination that the offenses of conviction involved more than 10 but

less than 50 victims, more than 10 witnesses testified at trial to personally

investing funds in the schemes subsequent to when Dowlin became involved.

Dowlin offers no argument that the jury would not have reached the same

conclusions as the district court regarding this evidence, nor did she object when

the court made these factual determinations. 10 Accordingly, we find it highly

10
Dowlin did object to the loss amount of $1,007,715 originally contained
in the presentence report. She argued that, although the sentencing “computation
(continued...)

-43-
unlikely that the factual findings of the district court affected Dowlin’s

substantial rights.

Further, our review of the record does not indicate a reasonable probability

the district court would impose a sentence outside the Guidelines range applying

the factors in § 3553(a). Nothing in the record indicates the court would have

sentenced Dowlin differently had the Guidelines not been mandatory, nor has she

pointed to any mitigating evidence that she failed to enter into the record because

of a misapprehension that the Guidelines were mandatory.

The record, in fact, shows the following. First, the court at sentencing

received argument as to Dowlin’s mental health history and letters of support

from friends and family. Dowlin was thus not limited by the mandatory nature of

the Guidelines in presenting mitigating evidence to the district court. Second, the

court found Dowlin’s relatively minor role in the criminal conspiracy merited

sentencing at the very low end of the Guideline range, 46 months. Third,

10
(...continued)
fairly recognizes the appropriate time period and appears otherwise to be a
conservative accounting,” a reduction of $8,000 would decrease her sentence by
two offense levels. The probation officer subsequently revised the PSR to
recommend a loss amount of less than $1,000,000, which the district court
adopted. Dowlin did not object to the revised loss figure. Rather, at sentencing
the court queried Dowlin and her attorney, asking “[i]s there anything else that
you can think of that needs to be resolved” other than whether one of the
investors in the schemes should be classified as a “vulnerable victim.” See USSG
§ 3A1.1(b). Both Dowlin and her attorney answered no.

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although the court acknowledged its reduced discretion under the Guidelines, it

said nothing to suggest that Dowlin’s conduct merited a sentence below the

prescribed range. Finally, the facts of her case do not show the sentence is

outside the heartland of sentences for similar conduct.

Though these facts cast significant doubt on whether Dowlin could show a

“reasonable probability” that her sentence would have been different under a

discretionary sentencing regime, we need not resolve this question since her

sentence does not meet the fourth element necessary to notice plain error.

4. Did the Error Affect the Proceeding’s Integrity, Fairness or
Public Reputation?

We have discretion to correct an error that satisfies the first three prongs of

the plain error test if that error also affects the integrity, fairness, or public

reputation of judicial proceedings. See United States v. Cotton, 535 U.S. 625,

631–32 (2002). Where only non-constitutional Booker error is at issue, this

standard is especially demanding. We will not notice non-constitutional Booker

error unless the defendant establishes the error is “particularly egregious” and that

our failure to correct it would result in a “miscarriage of justice.” 11 Gonzalez-

11
As we explained in United States v. Trujillo-Terrazas, No. 04-2075, –
F.3d –, 2005 WL 880896, *4 n.1 (10th Cir. Apr. 13, 2005) (citing Olano, 507
U.S. at 736) the term “miscarriage of justice” has a different meaning in the plain
error context than in the collateral review context. In the plain error context, a
defendant can meet this burden without demonstrating actual innocence. See id.

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Huerta, 403 F.3d at 736. However, in cases containing constitutional Booker

error, we conduct the analysis “less rigidly,” meaning “we do not require the

exceptional showing required to remand a case of non-constitutional error.”

Dazey, 403 F.3d at 1178.

Evidence that would tend to support an exercise of our discretion under this

standard might include, for example: (a) a sentence increased substantially based

on a Booker error, see Clifton, 2005 WL 941581, at *6; (b) a showing that the

district court would likely impose a significantly lighter sentence on remand, see

id. at *8; (c) a substantial lack of evidence to support the entire sentence the

Guidelines required the district court to impose, see id. at *6–*7; (d) a showing

that objective consideration of the § 3553(a) factors warrants a departure from the

sentence suggested by the Guidelines, see United States v. Trujillo-Terrazas, No.

04-2075, — F.3d —, 2005 WL 880896, *5 (10th Cir. Apr. 13, 2005); or (e) other

evidence peculiar to the defendant that demonstrates a complete breakdown in the

sentencing process, see Clifton, 2005 WL 941581, at *8.

To the contrary, a generalized assertion of error anchored solely to a Sixth

Amendment violation or mandatory application of the Guidelines does not meet

this standard. Furthermore, we are less likely to exercise our discretion to notice

constitutional Booker error where the defendant failed to contest the judge-found

facts on which the sentence was enhanced before the district court. Cf. Dazey,

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403 F.3d at 1178 (emphasizing that defendant vigorously contested judge-found

facts in deciding to remand).

Turning to this case, we hold that even if Dowlin could establish her

substantial rights were affected by the sentencing error, she has failed to meet her

burden under the fourth prong of our plain error analysis. Although our review is

less rigid because constitutional Booker error occurred, and the Booker error

increased Dowlin’s sentence range, Dowlin has pointed to nothing in the record

that casts doubt on the fairness of her sentence. As discussed above, Dowlin did

not object to the facts on which her sentence was enhanced, the record contains

ample evidence supporting the sentence imposed, and she has not identified

mitigating evidence the district court did not consider at sentencing which might

justify a lower sentence. Further, the statement of the court recognizing its

limited discretion under the mandatory Guidelines does not indicate an inclination

to impose a lighter sentence if the case were remanded. Finally, there is nothing

peculiar about the facts of Dowlin’s case to show a breakdown in the sentencing

process. The facts of the case establish that Dowlin’s conduct warranted the

sentence imposed.

In sum, Dowlin’s sentence is not plainly erroneous and should not be

remanded for resentencing.

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 V. Conclusion

We hold the government presented sufficient evidence at trial to support

Naylor’s and Dowlin’s convictions. The two errors we identified regarding the

exclusion of evidence and the jury instructions did not compromise Naylor’s right

to a fair trial. In addition, Dowlin’s sentence is not plainly erroneous.

Case No. 03-8038 is AFFIRMED, and Case No. 03-8055 is AFFIRMED.

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