United States v. Serdar Kalaycioglu

[DO NOT PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
No. 04-12339 DEC 11, 2006
________________________ THOMAS K. KAHN
CLERK
D.C. Docket No. 02-80107-CR-DTKH

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

versus

SERDAR KALAYCIOGLU,

Defendant-Appellant.

________________________

Appeal from the United States District Court for the
Southern District of Florida
_________________________

(December 11, 2006)

Before TJOFLAT and CARNES, Circuit Judges, and HODGES,* District Judge.

HODGES, District Judge:

*Honorable Wm. Terrell Hodges, United States District Judge for the Middle District of
Florida, sitting by designation.
 Defendant Serdar Kalaycioglu appeals his conviction following a jury verdict

of guilty on eleven counts of wire fraud, 18 U.S.C. § 1343, and one count of

conspiracy to commit wire fraud, 18 U.S.C. § 371. Kalaycioglu also appeals his

sentence of 324 months imprisonment plus an order to pay $6,722,592.29 in

restitution. We affirm the conviction and the sentence.

Facts and Background

Kalaycioglu is a naturalized Canadian citizen, a resident of Canada, and an

employee of the Canadian Space Agency. He holds a Ph.D. in Engineering,

specializing in space robotics and satellite technologies.

According to the superseding indictment and the evidence at trial, from May

2000 to September 2001, Kalaycioglu defrauded residents of Broward and Palm

Beach Counties, Florida, by obtaining investment of funds from them on the basis of

a false representation, among others, that he was one of only seven traders in the

world who was approved and licensed by the United States Federal Reserve to engage

in the trading of bank instruments that yielded a very high rate of return. The

superseding indictment further alleged, and the evidence proved, that Kalaycioglu

became the Chairman of the Board and Chief Executive Officer of Meridian

Investment Bank, Ltd. (the “Bank”), an offshore bank licensed in Grenada with its

principal place of business in St. George’s, Grenada, West Indies, and then

2
fraudulently induced others to invest money with him and the Bank by falsely

representing that they would receive a high rate of return on their investment. With

regard to the charge of conspiracy to commit wire fraud, the evidence established that

Kalaycioglu (and his co-defendants who entered pleas of guilty) conspired to pay a

$10,000,000 kickback to an undercover FBI agent posing as a corrupt securities

trader for a fictitious foreign-based mutual fund, and to pay other cooperating

witnesses, who posed as corrupt stock promoters, in exchange for the fund’s purchase

of $40,000,000 in certificates of deposit issued by the Bank.

At trial, the Government presented evidence that Kalaycioglu held himself out

to be a highly successful investment trader in monetary instruments that he described,

among other things, as “medium term notes,” letters of credit, guarantees, and CDs

from “prime banks.” Kalaycioglu represented that his unique knowledge and ability

to trade in these monetary instruments allowed him to offer potential investors high

yield investment programs (“HYIPs”). Kalaycioglu explained that he was able to

leverage comparably modest sums into huge bank instruments and was thereby able

to receive large, risk-free returns on the original investment. Kalaycioglu’s claims

were bolstered by his purported affiliation with a Montreal law firm that supposedly

held all the investor money in trust, thereby protecting the initial investment.

Further, Kalaycioglu claimed to be engaged in investment trading for the Canadian

3
government and to have a mandate from the United States Federal Reserve and World

Bank to invest in certain humanitarian programs. To support his claimed

connections, Kalaycioglu often flashed his Canadian Space Agency identification and

an American Express card issued to him by the Canadian government. Kalaycioglu

also became involved with the Bank, a financially troubled institution, and then led

its principals to believe that the Bank could be turned around through investment in

his HYIPs. In return for his assistance, Kalaycioglu was appointed Chairman of the

Board and Chief Executive Officer of the Bank.

With the help of numerous false documents, Kalaycioglu convinced several

individuals to invest in his HYIPs. Due to his affiliation with the Bank, Kalaycioglu

often persuaded these individuals to invest in his HYIPs by buying CDs issued by the

Bank. Not surprisingly, the rates of return that Kalaycioglu promised never

materialized. When individual investors complained, Kalaycioglu delayed by

refunding portions of their money, but ultimately those victims lost substantial sums.

Moreover, when the promised high rates of return did not occur, the Bank itself

failed. Much of the money paid in by individual investors to purchase the Bank’s

CDs was funneled to Kalaycioglu through the Canadian law firm’s attorney trust

account.

4
 The Government also presented evidence that in May 2001 co-defendant

Mickelson met with an undercover FBI agent and two cooperating individuals

(collectively the “UCs”), who stated to Mickelson that they were employed by a U.S.

based representative of the Fund and were seeking high rates of investment return.

Mickelson, attempting to secure an influx of cash to help the ailing Bank, told the

UCs about the HYIPs touted by Kalaycioglu, as well as CDs they could purchase

from the Bank that would allow the fictitious foreign based mutual fund to invest in

Kalaycioglu’s HYIPs. Following a series of telephone conversations involving

Kalaycioglu and his co-defendants, the UCs agreed to have the Fund purchase $40

million of CDs issued by the Bank. In return, the UCs were to receive a $10 million

kickback, which the UCs, Kalaycioglu and his co-defendants would deduct from the

original $40 million investment and conceal the deduction from the Fund.

Kalaycioglu also boldly suggested that the UCs invest their kickback in his HYIPs.

When the UCs asked to see a copy of Kalaycioglu’s Federal Reserve license,

Kalaycioglu faxed them a copy of his Canadian Space Agency identification and his

American Express card issued by the Canadian government. The UCs backed out of

the deal before any money changed hands. According to the Government, and

unbeknownst to his co-defendants, Kalaycioglu intended to cause a loss of the entire

5
$40 million because he would have funneled the remaining $30 million to himself

rather than the Bank.

At the conclusion of trial the jury found Kalaycioglu guilty of eleven counts

of substantive wire fraud offenses (18 U.S.C. § 1343) involving separate wire

communications and transfers of funds originating in South Florida on specified dates

in 2000-2001 as a result of the scheme to defraud. Kalaycioglu was also convicted

of the conspiracy count,1 but was acquitted of two of the substantive wire fraud

charges. At sentencing the district court imposed an aggregate commitment term of

324 months and an order of restitution in the amount of $6,722,592.29.

Issues

On appeal, Kalaycioglu raises four issues, attacking both his conviction and his

sentence. He contends that (1) the district court improperly admitted expert

testimony, in violation of Federal Rules of Evidence 403 and 704(b), linking

Kalaycioglu’s conduct to characteristics of a fraudulent financial scheme; (2) the

district court improperly instructed the jury on “honest services” fraud (18 U.S.C. §

1
The alleged purpose and object of the conspiracy charged in Count 14 was to “deprive
another of the intangible right of honest services,” thereby invoking 18 U.S.C. § 1346; and the
intended victim of the conspiracy was alleged to be the Fund which would be defrauded “through
paying undisclosed kickbacks . . . to others in exchange for their causing the Fund to purchase a large
amount of certificates of deposit” issued by Meridian Investment Bank. There was no substantive
count relating to this alleged transaction, of course, and none of the other counts involve an allegation
of “honest services” fraud under § 1346.

6
1346); (3) the district court erred in calculating the amount of loss for purposes of

sentencing and restitution; and (4) the district court erred in applying a sentencing

enhancement for Kalaycioglu’s misrepresentation that he was acting on behalf of a

government agency.

Discussion

A. The Expert Testimony of Herbert Biern

One of the witnesses at trial was the senior official in charge of the Federal

Reserve’s Division of Banking Supervision and Regulation, Herbert Biern, who was

not involved in the investigation or apprehension of Kalaycioglu. Biern testified that

in mid-1993 he began looking into HYIPs after receiving thousands of inquiries from

the public seeking information about their legitimacy. Ultimately, Biern concluded

that HYIPs were not legitimate investment vehicles, and he caused the Federal

Reserve to issue worldwide warnings about them. Biern also testified that HYIPs do

not exist as a legitimate means of earning high rates of returns; that the Federal

Reserve does not license or register traders; and that the Federal Reserve does not

mandate involvement in any humanitarian programs.

In his testimony, Biern identified what he described as the common

characteristics of HYIPs, including: (1) abnormal confidentiality provisions; (2)

reference to a limited number or category of banks (such as “prime” banks) that could

7
perform the investments; (3) unrealistically high rates of return; (4) trading a banking

instrument over and over to achieve those returns during a specified period of time;

(5) a minimum investment amount; (6) use of legitimate banking instruments in

unconventional ways; (7) representations that the funds were safe because they were

in an attorney’s trust account or were protected by a letter of credit or bank guarantee;

and (8) representations that government authorities such as the Federal Reserve,

World Bank or International Monetary Fund were involved and that the profits had

to be used for humanitarian projects. Biern further testified that he was never able to

figure out how HYIPs were supposed to generate the extraordinary investment returns

they promised, and that he had never seen anyone make any money through a HYIP.

Following his general testimony, Biern reviewed certain documentary evidence

entered by the Government against Kalaycioglu. Biern testified, over objection, that

the characteristics of HYIP schemes were present in the documents, but did not go so

far as to state that Kalaycioglu’s activities were fraudulent. Specifically, Biern

examined documents related to a Letter of Credit transaction that Kalaycioglu entered

into with Larry Schweiger, one of the alleged victims. Biern testified that the claimed

70% monthly returns in the Schweiger transaction were unrealistic, and that he had

never seen a legitimate transaction with a monthly rate of return of 70%. Biern stated

that it made no sense that a person could earn $291 million in forty weeks on an

8
initial investment of $10 million. In the documentation related to the Schweiger

transaction, Biern also identified references to terms such as “prime” banks and “40

weeks” as hallmarks of HYIP scams.

Kalaycioglu argues that the admission of Biern’s testimony violated Federal

Rules of Evidence 704(b) and 4032 because the witness described a criminal profile -

the hallmarks of illegal HYIP scams - and then testified in detail about how

Kalaycioglu fit this profile, providing substantive evidence of guilt. Kalaycioglu

contends that Biern’s testimony, if credited, would necessarily lead the jury to

conclude that the expert believed Kalaycioglu’s transactions were scams, and that

Kalaycioglu had the requisite knowledge and intent to defraud. In response, the

Government asserts that the expert testimony at issue here was proper evidence

regarding the modus operandi of illegitimate high yield investment scams and

enlightened the jury regarding common practices used in those complex fraudulent

investment schemes.

2
“District court rulings on the admissibility of expert testimony are subject to the abuse of
discretion standard.” United States v. Dulcio, 441 F.3d 1269, 1274 n.6 (11th Cir. 2006). “This
standard of review requires that we defer to the district court's ruling unless it is manifestly erroneous.”
Rink v. Cheminova, Inc., 400 F.3d 1286, 1291 (11th Cir. 2005).

Rule 704(b) provides that, “No expert witness testifying with respect to the mental state or
condition of a defendant in a criminal case may state an opinion or inference as to whether the
defendant did or did not have the mental state or condition constituting an element of the crime
charged or of a defense thereto. Such ultimate issues are matters for the trier of fact alone.”

9
 “Courts have condemned the use of profiles as substantive evidence of guilt,

while acknowledging that there is a fine line between potentially improper profile

evidence and accepted specialized testimony.” United States v. Long, 328 F.3d 655,

665 (D.C. Cir. 2003) (quoting United States v. Becker, 230 F.3d 1224, 1231 (10th

Cir. 2000), cert. denied 532 U.S. 1000, 121 S. Ct. 1666, 149 L. Ed. 2d 647 (2001) and

United States v. McDonald, 933 F.2d 1519, 1521 (10th Cir. 1991)); see also United

States v. Quigley, 890 F.2d 1019, 1022 (8th Cir. 1989) (holding that testimony of a

drug courier profile was impermissibly introduced as substantive evidence of guilt);

United States v. Hernandez-Cuartas, 717 F.2d 552, 555 (11th Cir. 1983) (in which a

panel of this court criticized the use of drug smuggler profiles as substantive evidence

of guilt, but affirmed the conviction where the subject testimony was used only as

background evidence to explain why the defendant was initially stopped and searched

by Custom Officials). Accord United States v. Chastain, 198 F.3d 1338, 1349 (11th

Cir. 1999).

We believe the correct rule in this area was stated by the D. C. Circuit in Long,

when the Court said:

[E]xperts may testify regarding the modus operandi of a certain category
of criminals where those criminals’ behavior is not ordinarily familiar
to the average layperson, as in the case of the modus operandi of persons
involved in illegal drug trafficking or prostitution. Still, there is a line
that expert witnesses may not cross. What is proscribed is questioning

10
 that produces responses suggesting some special knowledge of the
defendant’s mental processes. This line relates to the limits of Rule
704(b) on opinion evidence regarding the ultimate issue. . . .”

328 F.3d at 666 (citations and quotations omitted).

Key to the Government’s case against Kalaycioglu was the illegitimacy of

HYIPs, as well as the way in which scams involving HYIPs operate. Thus, under the

circumstances of this case, Biern provided highly relevant information directly related

to complicated factual issues before the jury. His testimony first educated the jurors

concerning the characteristics of HYIPs. Second, Biern described the hallmarks of

the modus operandi of persons running a scam involving HYIPs. Third, Biern opined

that certain documents related to transactions entered into between Kalaycioglu and

his alleged victims contained the hallmarks of illegitimate HYIPs. Critically,

however, while Biern described HYIPs as illegitimate, he did not testify that

Kalaycioglu engaged in fraud, nor did he testify that a person promoting HYIPs was

necessarily engaged in fraud. Indeed, Biern never suggested that he had any special

knowledge of Kalaycioglu’s mental processes. Moreover, the district court

repeatedly gave the jury limiting instructions concerning Biern’s testimony, directing

them, for example, not to confuse his testimony concerning his background and

experience investigating other HYIPs with the facts of this case.

11
 We conclude that the district court properly exercised its discretion in

admitting the testimony of Herbert Biern without running afoul of Federal Rule of

Evidence 704(b), and also correctly concluded that the probative value of his

testimony was not substantially outweighed by prejudicial effect. See Fed. R. Evid.

403.

B. Jury Instruction on Honest Services Fraud

Kalaycioglu asserts that the district court committed reversible error when it

refused a defense request and instead gave the jury, under 18 USC § 1346, the circuit

pattern jury instruction on “honest services” fraud.3 Kalaycioglu argues that the

instruction as given is fatally flawed because it presumed as a matter of law the

existence of a fiduciary duty owed by the supposed mutual fund representatives to the

Fund, and did not require the jury to determine the factual nature and existence of

such a duty as an essential element of the conspiracy offense.4

We find Kalaycioglu’s argument unpersuasive for two reasons. First, it ignores

the fact that Kalaycioglu and his coconspirators were not charged with a substantive

offense involving honest services wire fraud in violation of 18 USC §§ 1343 and

1346; rather, they were charged under 18 USC § 371 with a conspiracy to commit

3
Offense Instruction 51.2, Eleventh Circuit Pattern Jury Instructions (Criminal Cases) (2003).
4
We review a district court’s rulings on jury instructions for abuse of discretion. United States
v. Chastain, 198 F.3d 1338, 1350 (11th Cir. 1999).

12
“honest services” wire fraud, and the actual existence of a fiduciary relationship was

not an essential element of that offense. Indeed, the indictment obviously charged a

conspiracy offense and not an “honest services” substantive offense precisely because

the Fund did not in fact exist.

Second, while the cases suggest that the district court should ordinarily instruct

the jury concerning the elements of the substantive offense or offenses constituting

the object of an alleged conspiracy,5 the district court’s instructions in the

circumstances of this case were clearly sufficient to meet that obligation.

In United States v. deVegter, 198 F.3d 1324 (11th Cir. 1999), we had occasion

to review at length the history of honest services fraud as now embodied in 18 U.S.C.

§1346 (which makes no mention at all of fiduciary duties).6 We observed that in

private sector honest services fraud cases, other circuits have held that “[t]he

prosecution must prove that the employee intended to breach a fiduciary duty, and

that the employee foresaw or reasonably should have foreseen that his employer

might suffer an economic harm as a result of the breach.” Id. at 1329. We also said,

5
See United States v. Vaglica, 720 F.2d 388, 391 (5th Cir. 1983); United States v. Martinez,
496 F.2d 664, 669 (5th Cir. 1974). But see United States v. Threadgill, 172 F.3d 357, 367 & n.8 (5th
Cir. 1999).

6
In its entirety, 18 U.S.C. § 1346 simply states: “For purposes of this chapter, the term
‘scheme or artifice to defraud’ includes a scheme or artifice to deprive another of the intangible right
of honest services.”

13
in any event, that “[t]he nature and interpretation of the duty owed is a question of

federal law,” and ultimately concluded that it was unnecessary to decide in that

instance “whether a fiduciary duty is necessary in §1346 private sector cases.” Id. at

1330. We reach the same conclusion here. There can be no doubt as a matter of law

that persons employed to seek out investment opportunities for a mutual fund owe a

fiduciary duty to the fund, but whether or not proof of such a duty is a necessary

element of an “honest services” wire fraud offense, the district court’s instructions to

14
the jury, set out in the margin,7 constituted a fully sufficient and correct charge

concerning honest services fraud as an object of the conspiracy alleged in this case.

C. Sentencing Issues

Kalaycioglu appeals his 324-month sentence and order to pay $6,722,592.29

in restitution. We review the district court’s application of the Sentencing Guidelines

de novo, while factual findings are reviewed for clear error. United States v.

Crawford, 407 F.3d 1174, 1177-78 (11th Cir. 2005). Further, we review the district

7 Let me turn now, then, to the concept of depriving someone of the intangible right to
the honest services. [sic.]

To deprive another of the intangible right of honest services means to violate or to
cause an employee or agent of another person to violate the employee’s or the agent’s
duty to provide honest services to the employer or the principal.

****

Now, with regard to employers or principals in the private sector, the Government
must prove that the employee or agent intended to breach a fiduciary duty, and that the
employee slash agent foresaw or reasonably should have foreseen that the
employer/principal might suffer an economic harm as a result of that breach.

Under the law every agent or employee representing or working for somebody else,
that is, the employer, has a duty, it is called a fiduciary duty to act honestly and
faithfully in all of his or her dealings with the employer and to transact business in the
best interest of the employer, including a duty to make full and fair disclosure to the
employer of any personal interest or profit or kickback the employee expects to derive
or has derived from any transaction in which he or she participates in the course of
their employment.

A kickback includes any kind of an undisclosed payment or reward to an employee for
dealing in the course of employment with the person making the payment so that the
employee’s personal financial interest interferes with the employee’s duty to secure the
most favorable bargain for the employer. [Emphasis supplied].

15
court’s factual findings as to the amount of restitution under the clearly erroneous

standard. United States v. Bourne, 130 F.3d 1444, 1446 (11th Cir. 1997).

Kalaycioglu asserts (1) that the district court failed to apply the Guidelines

correctly in calculating the loss attributable to him as over $40,000,000; (2) that the

district court erred by ordering restitution on the basis of unreliable evidence; (3) that

the district court erred in enhancing his sentence for misrepresenting that he worked

on behalf of a government agency; and (4) that the district court committed

constitutional error under United States v. Booker, 543 U.S. 220, 125 S. Ct. 738, 160

L. Ed. 2d 621 (2005), because the court applied those Guidelines Sentencing

enhancements by relying on facts not found by the jury.

i. Loss Calculation

We review for clear error a district court’s determination of the amount of loss

involved in an offense. United States v. Nostari-Shamloo, 255 F.3d 1290, 1291 (11th

Cir. 2001). Under U.S.S.G. § 2F1.1(a) (2000), the base offense level for fraud is 6.

If the loss exceeded $40,000,000, then the offense level is increased by 17 levels.

U.S.S.G. § 2F1.1(b)(1)(R). “[I]f an intended loss that the defendant was attempting

to inflict can be determined, this figure will be used if it is greater than the actual

loss.” U.S.S.G. § 2F1.1 comment. (n.8) (2000). “[O]ften the amount of loss caused

16
by fraud is difficult to determine accurately. Thus, courts may reasonably estimate

that amount.” United States v. Miller, 188 F.3d 1312, 1317 (11th Cir. 1999).

Kalaycioglu’s co-defendants, who were affiliated with the Bank and were

charged only with conspiracy to commit wire fraud, pled guilty to that charge and

their plea agreements specified that the amount of loss resulting from their offense

was more than $5,000,000, but less than $10,000,000. Kalaycioglu asserts that the

district court violated principles of judicial estoppel in calculating the loss attributable

to him as over $40,000,000. Although we have not previously addressed the

applicability of judicial estoppel to facts like those of this case, the Seventh Circuit

discussed a similar situation in United States v. Christian, 342 F.3d 744 (7th Cir.

2003). In that case, as a result of conduct originating from one incident, three

defendants were charged with violations of 18 U.S.C. § 242, the offense of

deprivation of rights under color of law which can be charged as a misdemeanor, or

as a felony if bodily harm was involved. See id. at 747. Two of the defendants

entered into plea agreements with the Government and pled guilty to the § 242 charge

as a misdemeanor crime. The other defendant proceeded to trial and was convicted

of the felony offense. On appeal, he argued that the Government should have been

prevented, through the doctrine of judicial estoppel, from presenting evidence of

bodily harm at his trial. Id. The Seventh Circuit rejected the defendant’s argument

17
that the Government’s plea agreement with the other defendants constituted an

admission by the Government that no bodily injury had occurred, and concluded that

judicial estoppel did not prevent the Government from introducing evidence that the

defendant on trial committed bodily harm as part of the offense. See id. at 749. The

Court further explained that, in reaching a plea agreement with a defendant, the

Government can offer a plea to a lesser charge or drop certain offenses from the

indictment. Id. at 748 (noting that a “court must find that the facts support the charge;

the facts may prove more than what is charged but not less”). As a result, the Seventh

Circuit concluded that judicial estoppel did not restrict the Government’s presentation

of evidence at trial that the defendant committed a more serious offense than the one

to which his codefendants had pled guilty. See id. at 748-49.

Kalaycioglu has offered no authority to demonstrate that the doctrine of

judicial estoppel prevented the district court from attributing a loss to him that was

higher than the loss the court attributed to his co-defendants. Here, the plea

agreement into which the Government entered with Kalaycioglu’s co-defendants did

not constitute an admission by the Government as to the amount of loss attributable

to Kalaycioglu. See Christian, 342 F.3d at 747-49. The Government was not bound

to argue to the district court that the amount of loss attributable to Kalaycioglu was

identical to that attributable to his co-defendants. See id. Furthermore, there was

18
evidence presented at trial that Kalaycioglu represented that he could place a

proposed $40,000,000 investment into his high-yield trading programs, which did not

actually exist. Accordingly, the district court did not err in considering the loss

attributable to Kalaycioglu as an issue separate from the loss attributable to his co-

defendants and calculating that loss as greater than $40,000,000.

ii. Restitution

Restitution in this case was required by the Mandatory Victims Restitution Act.

18 U.S.C. § 3663A. As here, where the offense of conviction involved as an element

a scheme, conspiracy, or pattern of criminal activity, a “victim” for purposes of the

Act is any person directly harmed by the defendant’s conduct in the course of the

scheme, conspiracy, or pattern. § 3663A(c)(1)(B); United States v. Hasson, 333 F.3d

1264, 1275-76 (11th Cir. 2003). The district court is required to order restitution “in

the full amount of each victim’s losses,” and the court must resolve disputes over the

amount of the restitution by a preponderance of evidence. See 18 U.S.C. § 3664(e)

& (f)(1)(A); Hasson, 333 F.3d at 1276. In determining the appropriate amount of

restitution, the district court may consider hearsay evidence that bears “minimal

indicia of reliability” so long as the defendant is given an opportunity to refute that

evidence. See Bourne, 130 F.3d at 1447. To establish that evidence lacks the

“minimal indicia of reliability,” the defendant must establish: “(1) that the challenged

19
evidence is materially false; and (2) that it actually served as a basis for the sentence.”

Id. (quoting United States v. Hairston, 888 F.2d 1349, 1353 (11th Cir. 1989)).

As part of his sentence, the district court ordered that Kalaycioglu pay

$6,722,592.29 in restitution, which included $1,420,000.00 to Geoffrey Horne and

$600,000.00 to Stephen Renaud. The transactions involving Horne and Renaud were

not the subject of charges in the superceding indictment, and Horne and Renaud did

not testify at trial. Instead, the Government presented the affidavits of Horne and

Renaud, as well as the hearsay testimony of an FBI Special Agent based on his

interviews with them and his review of documents that substantiated their

transactions and resulting losses. Kalaycioglu did not dispute the underlying

transactions, but attempted to establish that he had sent Horne and Renaud funds in

an amount that would vitiate the need for restitution.

Kalaycioglu asserts that the district court abused its discretion in assessing

restitution for Horne and Renaud because the evidence presented was not sufficiently

reliable for the Government to meet its burden by a preponderance of the evidence.

Further, Kalaycioglu argues that he was prevented from refuting the evidence relating

to Horne and Renaud, because Horne was not made available for cross-examination,

and although Renaud was made available via telephone for cross-examination,

Kalaycioglu’s counsel’s decision to forgo cross-examination due to a scheduling

20
conflict did not operate as an effective waiver of Kalaycioglu’s Sixth Amendment

right to confrontation.

We find that the district court did not err by relying upon the evidence

presented by the Government and ordering Kalaycioglu to pay $2,020,000.00 in

restitution to Horne and Renaud.8 While the FBI Special Agent’s hearsay testimony

served as the basis for the order of restitution to Renaud and Horne, Kalaycioglu has

failed to establish that the hearsay testimony was materially false or otherwise lacking

minimal indicia of reliability. Kalaycioglu did not rebut the hearsay testimony of the

FBI Special Agent, and the affidavits of Horne and Renaud supported the Agent’s

testimony. To the extent that Kalaycioglu argues that his counsel was ineffective for

declining to cross-examine Renaud due to a scheduling conflict, that issue is not

properly before the Court. See United States v. McLean, 138 F.3d 1398, 1406 (11th

Cir. 1998).

However, although the district court’s oral judgment correctly awarded

restitution to Renaud, the written judgment incorrectly included only the victims

listed in the Pre-sentence Investigation Report. Renaud is not identified as a victim

8
See United States v. Dickerson, 370 F.3d 1330, 1342 (11th Cir. 2004) (“[W]e hold that where
a defendant is convicted of a crime of which a scheme is an element, the district court must, under 18
U.S.C. § 3663A, order the defendant to pay restitution to all victims for the losses they suffered from
the defendant’s conduct in the course of the scheme.”).

21
in that Report. Accordingly, a limited remand is necessary to allow the district court

to correct the amended judgment to include Renaud in the restitution order.9

iii. U.S.S.G. § 2F1.1(b)(4)(A)

Under U.S.S.G. § 2F1.1(b)(4)(A) (2000), a defendant’s offense level should be

increased by two levels “[i]f the offense involved . . . a misrepresentation that the

defendant was acting on behalf of a charitable, educational, religious or political

organization, or a government agency.” The background to the commentary relating

to this provision makes clear that the “guideline is designed to apply to a wide variety

of fraud cases.” U.S.S.G. § 2F1.1 comment. (backg’d).

According to the testimony presented at trial, Kalaycioglu represented to

various investors that he was one of only seven persons in the world that was licensed

by the Federal Reserve to engage in a high-yield investment program. Kalaycioglu

also informed at least one investor that the Federal Reserve asked him to do

humanitarian projects on its behalf and told another investor that he could also

participate in these humanitarian programs. Kalaycioglu has offered no authority to

support his proposition that the Federal Reserve is not a governmental organization

so that his representations about being a Federal Reserve trader should not qualify for

9
See United States v. Portillo, 363 F.3d 1161, 1164-65 (11th Cir. 2004) (“Where a sentence
that is pronounced orally and unambiguously conflicts with the written order of judgment, the oral
pronouncement controls.”); United States v. Bates, 213 F.3d 1336, 1340 (11th Cir. 2000) (same).

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a § 2F1.1(b)(4)(A) enhancement. Furthermore, Kalaycioglu represented to some

investors that he handled financing matters for the Canadian government, or the

Canadian military. As evidence of his government affiliation, Kalaycioglu presented

potential investors a copy of an identification card issued by the Canadian

government and an American Express card issued in his name by the Canadian

government. Representations that Kalaycioglu acted on behalf of a foreign

government could alone qualify him for a § 2F1.1(b)(4)(A) enhancement. See

United States v. Achiekwelu, 112 F.3d 747 (4th Cir. 1997); United States v. Ferrera,

107 F.3d 537 (7th Cir. 1997).

The district court did not err in enhancing Kalaycioglu’s sentence for

misrepresenting that he was acting on behalf of a government agency.

iv. Booker Issues

Because Kalaycioglu did not raise a Booker claim at his sentencing hearing,

we review his claim only for plain error. See United States v. Dowling, 403 F.3d

1242, 1246-47 (11th Cir.), cert. denied, 126 S.Ct. 462 (2005). Under a plain error

analysis, a defendant must show “(1) error, (2) that is plain, and (3) that affects

substantial rights.” Id. at 1247 (quotations omitted). If the defendant is able to make

a showing of all three conditions, we then may exercise our discretion to notice the

error if it “seriously affects the fairness, integrity, or public reputation of judicial

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proceedings.” Id. (quotations omitted). We have held that, in the context of Booker

error, the plain error test is satisfied only when the defendant can show that “there is

a reasonable probability of a different result if the guidelines had been applied in an

advisory instead of a binding fashion.” Id. (quotation omitted); see also United States

v. Fields, 408 F.3d 1356, 1360-61 (11th Cir.) (explaining that a sentence at the low

end of the Guidelines range does not necessarily indicate that the district court would

have sentenced the defendant outside of the Guidelines if the court considered the

Guidelines as advisory), cert. denied, 126 S. Ct. 221 (2005).

In Apprendi v. New Jersey, 530 U.S. 466, 490, 120 S. Ct. 2348, 2362-63, 17

L. Ed. 2d 435 (2000), the Supreme Court held that, “[o]ther than the fact of a prior

conviction, any fact that increases the penalty for a crime beyond the prescribed

statutory maximum must be submitted to a jury, and proved beyond a reasonable

doubt.” In Blakely v. Washington, 542 U.S. 296, 304, 124 S. Ct. 2531, 2538, 159 L.

Ed. 2d 403 (2004), the Supreme Court, examining the state of Washington’s

sentencing guidelines, held that the imposition of a sentencing enhancement must be

supported by facts that were either admitted by the defendant or found by a jury

beyond a reasonable doubt. In Booker, the Supreme Court extended the reasoning

of Blakely to the federal Sentencing Guidelines, concluding that the mandatory nature

of the Sentencing Guidelines rendered them incompatible with the Sixth

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Amendment’s guarantee to the right to a jury trial. Booker, 543 U.S. at 231-35, 125

S. Ct. at 749-51. The Supreme Court concluded that, to preserve Congress’s intent

in enacting the Sentencing Reform Act of 1984, two specific sections of the Act must

be excised – 18 U.S.C. § 3553(b)(1) (requiring a sentence within the Guideline range,

absent a departure) and 18 U.S.C. § 3742(e) (establishing standards of review on

appeal, including de novo review of departures from the applicable Guideline range)

– thereby effectively rendering the Guidelines advisory only. Id. at 259, 125 S. Ct.

at 764.

Based on the Supreme Court’s holding in Booker, we have stated that there can

be two types of Booker errors: (1) a Sixth Amendment, constitutional, error – the

error of imposing a sentencing enhancement based on judicial findings that go beyond

the facts admitted by the defendant or found by the jury; and (2) a statutory error –

the error of being sentenced under a mandatory Guidelines system. See United States

v. Shelton, 400 F.3d 1325, 1329-31 (11th Cir. 2005).

In this case, it is likely that Kalaycioglu could meet the first two prongs of the

plain error test because his sentencing hearing took place in April 2004 under a

mandatory Guidelines scheme. Nevertheless, although Kalaycioglu received a

sentence at the bottom of his Guidelines range, because Kalaycioglu has not shown

– and the record does not indicate – that he would have received a different sentence

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if the district court had applied the Guidelines in an advisory instead of a mandatory

manner, we conclude that Kalaycioglu’s substantial rights were not affected by the

court’s treatment of the Guidelines as mandatory. See Dowling, 403 F.3d at 1247;

Fields, 408 F.3d at 1360-61. Instead, the record shows that the district court

specifically considered the factors provided at 18 U.S.C. § 3553(a) and concluded

that Kalaycioglu’s 324-month sentence was appropriate given those factors. See

United States v. Crawford, 407 F.3d 1174, 1178-79 (11th Cir. 2005) (explaining that,

in sentencing a defendant after Booker, district courts must correctly calculate a

defendant’s Guideline imprisonment range and consult the § 3553(a) factors). Thus,

Kalaycioglu cannot satisfy the third prong of the plain error test and there was no

Booker error in this case. See Dowling, 403 F.3d at 1247.

Conclusion

The judgment of the district court, including both the conviction and sentence

of Kalaycioglu, is AFFIRMED, except that the district court is directed to correct and

reenter the amended judgment as specified in this opinion.

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