United States v. Giray Biyiklioglu

Case: 14-31003 Document: 00513548763 Page: 1 Date Filed: 06/15/2016
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 14-31003 United States Court of Appeals
Fifth Circuit
FILED
UNITED STATES OF AMERICA, June 15, 2016
Lyle W. Cayce
Plaintiff – Appellee, Clerk
v.
GIRAY BIYIKLIOGLU, also known as Johnny Bryan,
Defendant – Appellant.
Appeal from the United States District Court
for the Eastern District of Louisiana
USDC No. 2:12-CR-202
Before REAVLEY, JOLLY, and ELROD, Circuit Judges.
PER CURIAM:*
We hereby withdraw our previous opinion of April 7, 2016 and substitute
the following. 1
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
1 The government’s petition for panel rehearing and Biyiklioglu’s petition for en banc
rehearing, treated as a petition for panel rehearing, are otherwise DENIED. No member of
the panel nor judge in regular active service of the court having requested that the court be
polled on rehearing en banc, Biyiklioglu’s petition for rehearing en banc is DENIED. We
consider only the preserved issues raised in these petitions. See United States v. Hernandez-
Gonzalez, 405 F.3d 260, 261 (5th Cir. 2005) (“Absent extraordinary circumstances, this court
will not consider issues raised for the first time in a petition for rehearing.”) (collecting cases).
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Giray Biyiklioglu appeals his conviction and sentence for wire fraud,
aggravated identity theft, tax evasion, and money laundering. Because the
government failed to produce evidence that certain fraudulent wires crossed
state lines, that Biyiklioglu knew that one of his victims was an actual person,
and that Biyiklioglu structured his financial transactions with the intent to
evade taxes, we REVERSE Biyiklioglu’s conviction as to counts 1, 3, 6, 7, 11,
14, 21, and 22 of the indictment. Biyiklioglu’s various challenges to his
conviction as to the remaining counts fail, and we AFFIRM his conviction as to
counts 2, 4, 5, 8–10, 12, 13, 15, 17–20, and 23–41. Because the sentences
imposed for the reversed and affirmed counts of conviction are intertwined, we
VACATE Biyiklioglu’s sentence and REMAND for resentencing.
I.
A jury convicted Giray Biyiklioglu of thirteen counts of wire fraud, six
counts of aggravated identity theft, two counts of tax evasion, and nineteen
counts of money laundering, all arising from a scheme in which Biyiklioglu
transferred money online among his bank accounts and numerous fraudulent
PayPal accounts and then disputed certain transactions so as to cause double
payments to his bank accounts and corresponding losses to PayPal. 2 Evidence
adduced at trial showed that Biyiklioglu created and controlled about thirty
fraudulent PayPal accounts bearing names other than his own. He engaged in
a pattern of transferring money from bank accounts in his name to the
fraudulent PayPal accounts and then out to a different bank account through
Automated Clearinghouse (ACH) transactions, and then disputing the ACH
transactions with the first bank as unauthorized transfers. 3 This would often
2 PayPal is a global payment processor business that allows customers to make
payments and send money transfers through the Internet.
3 Automatic Clearing House is a system that allows banks to make automated
transfers of a large number of debits and credits to banks across the United States.
2
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cause the first bank to credit the disputed ACH funds to Biyiklioglu’s bank
account and to debit the PayPal account. Because Biyiklioglu had already
transferred the money out of the PayPal account, this would result in a loss to
PayPal and a doubling of Biyiklioglu’s money. In total, Biyiklioglu caused
PayPal to lose more than $418,000 through ACH reversals.
At trial, Biyiklioglu admitted that he owned all twenty-four bank
accounts identified in the indictment. These accounts were with six different
banks, all with locations in the Eastern District of Louisiana. He also admitted
that he had disputed certain transfers from these accounts, resulting in tens
of thousands of dollars in ACH reversals from PayPal. Other trial evidence
showed that Biyiklioglu created a company, Big Stake Investments, L.L.C., of
which he was the sole member, and that he used accounts of Big Stake
Investments as part of the PayPal fraud scheme. The evidence also showed
that Biyiklioglu sent PayPal identification documents, bank statements, and
utility bills, many of which were falsified, to set up the fraudulent PayPal
accounts. Biyiklioglu’s laptop computer contained information related to two
of the fraudulent PayPal accounts.
The jury found Biyiklioglu guilty on all forty counts on which he was
tried. 4 The district court denied Biyiklioglu’s motions for acquittal and
sentenced him to 192 months’ imprisonment. Biyiklioglu filed this appeal
challenging his conviction and sentence. 5 Biyiklioglu argues that: (1) he was
deprived of his right to self-representation at trial; (2) the evidence was
insufficient to sustain his conviction for wire fraud, aggravated identity theft,
4 Biyiklioglu was tried on counts 1–15 and 17–41 of the Second Superseding
Indictment. The government dismissed count 16 on the morning of the first day of trial
because it had been unable to secure the appearance of the victim in that count.
5 Biyiklioglu was represented by court-appointed counsel in the district court and
when he filed his appeal. We granted Biyiklioglu’s motion to relieve his counsel and allow
him to proceed pro se, and Biyiklioglu filed his briefs pro se.
3
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tax evasion, and money laundering; (3) the district court improperly admitted
evidence related to twenty-two PayPal accounts not included in the indictment;
(4) the district court gave the jury erroneous instructions on a number of issues
related to the wire fraud and tax evasion charges; (5) “spillover” from invalid
claims may require a new trial on the remaining claims; and (6) the district
court erred in enhancing Biyiklioglu’s sentence based on its findings of the loss
amount, the number of victims, the unusual vulnerability of some victims, and
Biyiklioglu’s obstruction of justice.
II.
Biyiklioglu first argues that he was denied his right to self-
representation. The Sixth Amendment guarantees the right of a criminal
defendant to represent himself at trial. Faretta v. California, 422 U.S. 806,
818 (1975). To invoke the right, “[t]he defendant must knowingly and
intelligently forego his right to counsel, and must clearly and unequivocally
request to proceed pro se.” United States v. Long, 597 F.3d 720, 724 (5th Cir.
2010). Furthermore, even if the defendant has knowingly and voluntarily
chosen to represent himself after a Faretta hearing at which the trial court
must caution him about the dangers of self-representation, “the defendant may
waive his right to self-representation through subsequent conduct indicating
an abandonment of the request.” Long, 597 F.3d at 724. “The denial of a
defendant’s right to represent himself, if established, requires reversal without
a harmless error analysis.” United States v. Majors, 328 F.3d 791, 794 (5th
Cir. 2003).
In a letter to the district court before trial, Biyiklioglu wrote, “I want to
leave the court appointed counsel and wish to represent myself pro-se at this
point,” and explained that he was dissatisfied with his counsel’s performance
and communications. The district court held a Faretta hearing at which
Biyiklioglu again stated his wish to represent himself. In response to the
4
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district court’s inquiries, Biyiklioglu explained that he was frustrated at not
having been allowed to file various pro se motions while represented by
counsel. The district court explained that it would allow Biyiklioglu to file his
motions with or without a lawyer, and that it would recommend the
appointment of a specific new defense attorney, who would “give you the
attention that you need, that you deserve, and his demeanor, I think, is one
that you’ll get along with him, okay.” Biyiklioglu responded, “Thank you very
much, Your Honor.” Later in the hearing, the district court stated that
Biyiklioglu’s pro se motions would not be filed into the record until he talked
to his new lawyer, after which the district court would allow him to file his
motions if he still wanted to do so. Biyiklioglu agreed.
Before the end of the hearing, the government’s counsel confirmed for
the record that Biyiklioglu was content to proceed to trial with counsel after
being allowed to file his motions:
[Government counsel]: Your Honor, I just wanted to make the
record just to continue what Mr. Biyiklioglu said about that he did
not want to proceed as pro se he wanted an attorney to represent
himself. He said to me, and if he will confirm that. He was not
going to go to trial without an attorney. He wanted to kind of pro
se, to go pro se to just file his motions, but did not intend to go to
trial without an attorney representing him; is that correct?
THE DEFENDANT: Yes, that’s –
[Government Counsel]: That’s what you just told me. So I just
wanted to make sure that he conveyed that to me, which he’s
already conveyed to the Court is that he always intended to go
forward -- to trial with an attorney.
THE COURT: Is that correct, Mr. Biyiklioglu?
THE DEFENDANT: Yes, Your Honor. As I stated to you also, I
said I wanted to represent myself to just file the motions by myself.
5
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After the Faretta hearing, Biyiklioglu was allowed to file his motions and then
proceeded to trial with his newly-appointed counsel. He did not raise the topic
of self-representation again.
Even assuming that Biyiklioglu “clearly and unequivocally” invoked his
right to self-representation, his subsequent statements before the end of the
Faretta hearing “indicat[ed] an abandonment of the request” so as to waive his
right to proceed pro se. Long, 597 F.3d at 724. Biyiklioglu thanked the district
court for appointing new counsel and agreed with government counsel’s
statement that Biyiklioglu had wanted to represent himself only for the
purposes of filing the motions and had not intended to proceed to trial without
counsel. Under these circumstances, the district court did not err by
appointing new counsel to represent Biyiklioglu at trial.
III.
Biyiklioglu next challenges the sufficiency of the evidence to support his
various counts of conviction. Where, as here, the defendant has preserved a
sufficiency of the evidence challenge by timely moving for acquittal, we review
the challenge de novo. United States v. Brown, 727 F.3d 329, 335 (5th Cir.
2013). We “must affirm a conviction if, after viewing the evidence and all
reasonable inferences in the light most favorable to the prosecution, any
rational trier of fact could have found the essential elements of the crime
beyond a reasonable doubt.” United States v. Vargas-Ocampo, 747 F.3d 299,
301 (5th Cir. 2014) (en banc) (citing Jackson v. Virginia, 443 U.S. 307, 319
(1979)).
A.
Counts 1–13 of the indictment alleged wire fraud in violation of 18 U.S.C.
§ 1343. “To prove wire fraud, the government must prove: (1) a scheme to
defraud; (2) the use of, or causing the use of, wire communications in
furtherance of the scheme; and (3) a specific intent to defraud.” United States
6
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v. Kuhrt, 788 F.3d 403, 413-14 (5th Cir. 2015), cert. denied, No. 15-6608, 2016
WL 854224 (U.S. Mar. 7, 2016). A conviction under § 1343 “requires that the
wire communication cross state lines.” Smith v. Ayres, 845 F.2d 1360, 1366
(5th Cir. 1988) (explaining that where relevant telephone calls were all
intrastate, there was no act that could have constituted wire fraud); United
States v. Izydore, 167 F.3d 213, 219 (5th Cir. 1999) (“[T]he communication at
issue must satisfy the interstate nexus set forth in § 1343; it is an immutable
requirement.”) (reversing wire fraud conviction based on intrastate telephone
calls and noting that the interstate nexus requirement is not a substantive
element of wire fraud but arises from constitutional limitations on
congressional power over intrastate activities); 18 U.S.C. § 1343 (prohibiting
transmission of fraudulent communication by wire “in interstate or foreign
commerce”). The use of the Internet alone is insufficient to establish the
required interstate nexus. See United States v. Kieffer, 681 F.3d 1143, 1155
(10th Cir. 2012) (“[O]ne individual’s use of the internet, ‘standing alone,’ does
not establish an interstate transmission . . . because the origin and host
servers, whether one and the same or separate, might be located in the same
state as the computer used to access the website.”).
Biyiklioglu argues that the government did not prove the required
interstate nexus as to counts 1–9 and 11–13. He argues that with respect to
counts 2, 4, 5, 8, 9, 12, and 13, the government failed to prove that the money
wired from PayPal’s bank to Biyiklioglu’s accounts crossed state lines, and that
with respect to counts 1, 3, 6, 7, and 11, 6 the government did not prove that the
identification information submitted to PayPal’s computers originated from
Biyiklioglu’s Internet service provider in Louisiana. The government counters
6Biyiklioglu’s briefs list counts 1, 2, 6, 7, and 11 for this argument, but he notified the
court by motion that this was a typographical error.
7
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that “[b]ecause PayPal’s data centers are located outside of Louisiana, the
necessary result of a wire transfer directed by PayPal to Biyiklioglu’s bank
accounts in Louisiana is that the wire transfer crossed state lines,” and that
Biyiklioglu’s wirings of victims’ personal information to PayPal also crossed
state lines because PayPal received all of the victims’ information through the
Internet outside of Louisiana, where Biyiklioglu and five victims lived.
We agree with the government’s first argument. The evidence at trial
established, and indeed it is undisputed, that PayPal engages with customers
solely on the Internet, that PayPal has no data facilities in Louisiana, and that
Biyiklioglu lived in Louisiana and had bank accounts there. The wire transfers
that give rise to counts 2, 4, 5, 8, 9, 12, and 13 were initiated by PayPal outside
of Louisiana when Biyiklioglu transferred the money from the fraudulent
PayPal accounts to his bank accounts in Louisiana through PayPal’s bank
processor, Wells Fargo. These transactions therefore necessarily included
interstate wire communications regardless of the location of Wells Fargo.
Because the record amply supports the jury’s determination that Biyiklioglu
acted with the requisite intent to defraud, his remaining arguments regarding
the sufficiency of the evidence fail. 7 Accordingly, we affirm Biyiklioglu’s wire
fraud convictions in counts 2, 4, 5, 8, 9, 12, and 13.
As for the counts relating to Biyiklioglu’s transfer of identification
information to PayPal to set up fraudulent accounts, the government argues
that PayPal received all of the victims’ information through the Internet, and
that “Biyiklioglu lived in Louisiana, as did five victims; he received the wire
fraud proceeds there; and he controlled the victims’ personal information,
storing it on his computer and in his home and emailing it to his wife,” such
7For the reasons discussed below in relation to count 10, Biyiklioglu’s additional
argument that there was a material variance as to counts 12 and 13 fails.
8
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that “a rational fact-finder could find that Biyiklioglu’s wirings of the victims’
personal information crossed interstate lines.” However, as Biyiklioglu
correctly argues, the government failed to identify evidence of the particular
wirings of identification information to PayPal that give rise to counts 1, 3, 6,
7, and 11, or any evidence that Biyiklioglu sent that information from his
computer in Louisiana. 8 The use of the Internet alone is insufficient to
establish that Biyiklioglu sent the information to PayPal across state lines.
See Kieffer, 681 F.3d at 1155. Accordingly, the government has failed to
establish the required interstate nexus for the alleged wire transmissions in
counts 1, 3, 6, 7, and 11, and we reverse Biyiklioglu’s conviction as to those
counts. 9 See Izydore, 167 F.3d at 219; Garrido, 713 F.3d at 998.
Biyiklioglu challenges his conviction for count 10 on other grounds,
arguing that “the government pleaded a single unitary scheme to defraud
involving false claims to banks which it failed to prove” and the difference
between the government’s theory at trial and in the indictment requires
reversal of Biyiklioglu’s conviction. Biyiklioglu relies solely on United States
v. Mastelotto, 717 F.2d 1238, 1248–49 (9th Cir. 1983) (“A defendant cannot be
convicted of a count charging participation in a fraudulent scheme Y where the
grand jury indicted based on his participation in a fraudulent scheme X, even
if the schemes themselves overlap or are concentric.”). Mastelotto was
overruled by United States v. Miller, which explained that “an indictment may
charge numerous offenses or the commission of any one offense in several
ways” and “[a]s long as the crime and the elements of the offense that sustain
the conviction are fully and clearly set out in the indictment, the right to a
8 In contrast, the government presented evidence that the identification information
in count 10 was sent to PayPal from a computer in Biyiklioglu’s home. Biyiklioglu does not
challenge the jurisdictional nexus as to count 10.
9 We do not reach Biyiklioglu’s remaining challenges to the sufficiency of the evidence
supporting his conviction as to counts 1, 3, 6, 7, and 11.
9
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grand jury is not normally violated by the fact that the indictment alleges more
crimes or other means of committing the same crime.” 471 U.S. 130, 136
(1985); see also United States v. Frega, 179 F.3d 793, 803 (9th Cir. 1999) (noting
Mastelotto’s overruling by Miller).
More importantly, there was no material variance between the
indictment and the evidence at trial. See United States v. Mitchell, 484 F.3d
762, 769 (5th Cir. 2007) (“A material variance occurs ‘when the proof at trial
depicts a scenario that differs materially from the scenario charged in the
indictment but does not modify an essential element of the charged offense.’”)
(quoting United States v. Delgado, 401 F.3d 290, 295 (5th Cir. 2005)). The
indictment alleged a scheme “to defraud PayPal by making wire transfers to
and from bank accounts in [Biyiklioglu’s] name, using as intermediaries
certain fraudulent PayPal accounts in the names of other individuals.” This is
precisely what the evidence showed. Accordingly, we affirm Biyiklioglu’s
conviction for wire fraud as to count 10.
B.
Counts 14, 15, and 17–20 of the indictment alleged aggravated identity
theft in violation of 18 U.S.C. § 1028A, with each count identifying a different
victim whose identity Biyiklioglu used to open a false PayPal account. 10 To
establish aggravated identity theft, the government must prove that
Biyiklioglu (1) knowingly (2) used the means of identification of another person
(3) without lawful authority (4) during and in relation to an enumerated
offense, including wire fraud. United States v. Oliver, 630 F.3d 397, 415 (5th
Cir. 2011). The government must show “that the defendant knew that the
10 As noted above, count 16, which also alleged aggravated identity theft, was
dismissed shortly before the trial began.
10
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means of identification at issue belonged to another person.” Flores-Figueroa
v. United States, 556 U.S. 646, 657 (2009).
Biyiklioglu argues that his conviction for count 14 should be reversed
because the government failed to prove that he knew that the victim, James
Smith, was an actual person. He argues that James Smith is a very common
name, that the only identifying information submitted to PayPal in addition to
Smith’s name was an address, and that the address was of an apartment
building that Smith had lived at more than twenty years earlier.
The government responds that other circuits have held that knowledge
that aggravated identity theft victims are actual people can be proven by
evidence of the defendant’s willingness to test the means of identification by
submitting it to a verification process. However, as Biyiklioglu correctly
argues in reply, the cases cited by the government emphasize that repeated
successful submission of identification information can show knowledge that
the victim is a real person. See United States v. Foster, 740 F.3d 1202, 1207
(8th Cir. 2014) (“The conspirators’ repeated subjection of [the victim’s] identity
to a lender’s scrutiny provides strong circumstantial evidence that the
conspirators knew the identity was real.”); United States v. Valerio, 676 F.3d
237, 244–45 (1st Cir. 2012) (“Valerio repeatedly subjected the [victim’s]
identity to government scrutiny. . . . A ‘willingness to subject [a] social security
card repeatedly to government scrutiny’ is evidence that allows a reasonable
jury to find that a defendant knew that a stolen identity belonged to a real
person.”) (citation omitted); United States v. Doe, 661 F.3d 550, 563 (11th Cir.
2011) (“Perhaps most significant, Doe repeatedly and successfully tested the
authenticity of [the victim’s] identifying information prior to submitting the
passport application to the United States Department of State.”). Here, in
contrast, the evidence relied on by the government established only that
Biyiklioglu on one occasion submitted Smith’s name and former address—
11
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along with a bank account, credit card, and e-mail address that were not
actually Smith’s—to PayPal.
Nor did the evidence establish that Biyiklioglu’s conduct was similar to
other situations that the Supreme Court has stated would establish the
requisite knowledge. See Flores-Figueroa, 556 U.S. at 656 (“[W]here a
defendant has used another person’s identification information to get access to
that person’s bank account, the Government can prove knowledge with little
difficulty. The same is true when the defendant has gone through someone
else’s trash to find discarded credit card and bank statements, or pretends to
be from the victim’s bank and requests personal identifying information.
Indeed, the examples of identity theft in the legislative history (dumpster
diving, computer hacking, and the like) are all examples of the types of classic
identity theft where intent should be relatively easy to prove, and there will be
no practical enforcement problem.”). Here, there was no evidence as to how
Biyiklioglu obtained Smith’s name and former address. Unlike the victims in
the other charged counts of aggravated identity theft, Smith lived in
Washington, and there was no evidence suggesting that he and Biyiklioglu had
ever encountered one another. 11 Under these circumstances, the evidence did
not permit the jury to find beyond a reasonable doubt that Biyiklioglu knew
Smith was a real person, and we therefore reverse his conviction as to count
14. 12
11The government cites to the testimony of Biyiklioglu’s ex-wife that he had told her
a $300 payment from PayPal would be coming to her from James Smith, whom Biyiklioglu
described as “his friend.” However, in light of Smith’s and Biyiklioglu’s uncontroverted
testimony that they did not know each other, Biyiklioglu’s statement to his then-wife that
Smith was his friend demonstrates only that he lied to her to allay her suspicions about the
source of the transfer, not that he knew Smith was a real person.
12 Biyiklioglu also summarily argues that counts 17–20 should be reversed because
“[t]he identity victims were total strangers to the defendant. The victims and defendant
testified that they did not know each other,” and the evidence was therefore “insufficient to
find that the defendant knew the victims were actual people.” Assuming, arguendo, that this
12
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C.
Counts 21 and 22 alleged tax evasion for the years 2010 and 2011,
respectively, in violation of 26 U.S.C. § 7201. To convict Biyiklioglu of tax
evasion under § 7201, the government was required to prove: (1) the existence
of a tax deficiency; (2) an affirmative act constituting an evasion or an
attempted evasion of the tax; and (3) willfulness. United States v. Miller, 588
F.3d 897, 907 (5th Cir. 2009). Biyiklioglu challenges the sufficiency of the
evidence as to the first two elements.
First, Biyiklioglu argues that the government failed to establish that he
had substantial tax due in 2010 and 2011 because the government’s witness
“testified that her calculations were preliminary, premature, and did not
include any cash transactions,” and that “without auditing the defendant,
I.R.S. would not be able to determine cash transactions, correct amount of
credits and deductions the defendant was entitled to.”
The evidence at trial amply proved the existence of a tax deficiency.
Internal Revenue Service (IRS) agent Denise O’Grady, who was certified
without objection as an expert in the computation of federal income taxes,
testified that she examined more than seventy-four bank accounts held by
Biyiklioglu during 2010 and 2011. She classified as income only the ACH
reversals that doubled Biyiklioglu’s money. O’Grady treated funds that were
seized, frozen, or returned to PayPal as refunds that were not included as
income. She also deducted $3,400 based on the single deposit that was
argument is not too conclusory to preserve his challenge on appeal, the evidence at trial was
sufficient for the jury to conclude that Biyiklioglu knew that the victims in counts 17–20 were
actual people. All four of those victims testified that they had worked at a restaurant that
Biyiklioglu admitted frequenting, one of them recognized him and had waited on him, and
Biyiklioglu submitted to PayPal the correct social security numbers of at least three of the
four victims. We affirm Biyiklioglu’s conviction as to counts 17–20.
Biyiklioglu does not challenge his conviction for count 15, for which he admits knowing
the victim.
13
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consistent with the sale of merchandise, although she concluded that “[t]here
was no indication [that any of the bank transactions] were related to any type
of jewelry business.” 13 After applying standard deductions and making further
assumptions that minimized Biyiklioglu’s tax liability, O’Grady calculated tax
liabilities of $17,377 for 2010 and $39,023 for 2011. It is undisputed that
Biyiklioglu did not file income tax returns in 2010 or 2011.
The testimony on which Biyiklioglu relies does not undermine this
evidence of a tax liability. O’Grady testified on cross-examination that the
documents she had examined would not reflect any cash transactions that did
not go through a bank, but explained that if Biyiklioglu were engaging in such
transactions as part of a business, both business expenses and income would
be underreported in her calculations. She agreed that her report was
“preliminary” and subject to revision to the extent that she lacked access to
additional documentation. However, in light of O’Grady’s conservative
approach to the calculations and the size of the tax liabilities, the possibility of
small adjustments to the amount of tax owed does not call into question
whether Biyiklioglu owed taxes for 2010 and 2011. See United States v. Bishop,
264 F.3d 535, 550 (5th Cir. 2001) (“The government must demonstrate the
existence of a deficiency beyond a reasonable doubt, but need not prove the
extent of the deficiency with mathematical certainty.”); United States v. Parr,
509 F.2d 1381, 1385–86 (5th Cir. 1975) (“The government need not prove the
exact income alleged in the indictment nor evasion of the entire tax charged,
so long as it is shown that a substantial portion of tax was evaded.”) (footnotes
omitted) (explaining that any error in the calculation of tax liability was
irrelevant where the government had proven a substantial tax liability).
Accordingly, the government established the existence of a tax deficiency.
13 Biyiklioglu testified that he earned income by buying and selling jewelry and gold.
14
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Biyiklioglu also argues that the government did not prove the second
element required for a conviction under § 7201, an affirmative act constituting
an evasion or attempted evasion of tax. The indictment identifies his
“affirmative acts of evasion” as “concealing and attempting to conceal from all
proper officers of the United States of America his true and correct income,
opening multiple bank accounts, opening and using PayPal accounts in other
people’s names, and forming Big Stake Investments LLC and opening bank
accounts in its name.” Biyiklioglu argues that: (1) he did not file any tax
returns or make false reports of any kind so as to affirmatively conceal his
income; (2) the bank accounts were opened using his name and social security
number, and the fact that there were multiple accounts did not result in
greater secrecy; (3) opening and using PayPal accounts in other people’s names
did not conceal income because all of the transfers occurred between PayPal
and Biyiklioglu’s bank accounts and could be easily traced by reviewing his
bank statements; and (4) Big Stake Investments and all of the bank accounts
opened for it were opened with Biyiklioglu’s name and social security number,
so there was no increase in secrecy.
“The mere failure to pay a tax voluntarily when due, even if willful, does
not establish a criminal attempt to evade.” United States v. Nolen, 472 F.3d
362, 379 (5th Cir. 2006). “Affirmative acts that satisfy the second element [of
§ 7201] may include keeping double sets of books, concealment of assets, or
‘any conduct, the likely effect of which would be to mislead or to conceal.’”
Miller, 588 F.3d at 907 (quoting Spies v. United States, 317 U.S. 492, 499
(1943)). “If the tax-evasion motive plays any part in such conduct the offense
may be made out even though the conduct may also serve other purposes such
as concealment of other crime.” Spies, 317 U.S. at 499.
The evidence at trial proved that Biyiklioglu created numerous bank
accounts and structured elaborate transactions to defraud PayPal and to
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No. 14-31003
conceal his fraud from PayPal and the banks. The government, relying on this
evidence, conclusorily argues that “[t]he evidence sufficiently established the
affirmative acts supporting [Biyiklioglu’s] conviction” for tax evasion.
However, the government has not identified any evidence suggesting that a
motive to evade taxes contributed to this deception, nor does the court’s own
review of the trial record reveal any such motive. Indeed, the government fails
even to argue that Biyiklioglu was motivated by a desire to evade taxes. In
United States v. Jones, we held that a defendant’s “placing money on circuitous
paths of cashier’s checks and funneling it into a house purchased through a
convoluted scheme designed to put it out of reach” was sufficient to support his
conviction for tax evasion. 459 F. App’x 379, 384 (5th Cir. 2012). Jones,
however, took these actions “while his tax file was in active collection,” and the
evidence supported the government’s contention that the only conceivable
reason for his conversion of fees into cashier’s checks—which Jones failed to
report in his financial statement to the IRS—was to evade taxes. Id. Here, in
contrast, the obvious explanation for Biyiklioglu’s complex and circuitous
transactions was the perpetuation of his fraud, and there is no evidence that
he took any action for the purpose of evading tax liability. Accordingly, we
reverse Biyiklioglu’s conviction for tax evasion as to counts 21 and 22.
D.
Counts 23–41 alleged money laundering under three different statutory
provisions. Counts 23–26 alleged that Biyiklioglu engaged in monetary
transactions involving criminally derived property of a value greater than
$10,000, namely, the purchases of three motorcycles and a jet ski, in violation
of 18 U.S.C. § 1957. Counts 27–39 alleged that he transferred wire fraud
proceeds in transactions designed to conceal and disguise the nature, location,
source, ownership, and control of the funds, in violation of 18 U.S.C.
§ 1956(a)(1)(B)(i). Counts 40 and 41 alleged that he transmitted wire fraud
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proceeds to Turkey in violation of 18 U.S.C. § 1956(a)(2)(B)(i). Biyiklioglu
challenges the sufficiency of the evidence as to all but two counts of money
laundering. 14
Biyiklioglu argues that his conviction under § 1957 in counts 23 and 26
must be reversed because “the government failed to prove that there was a
wire fraud and interstate wires were used in the furtherance of the crime.”
However, as discussed above, Biyiklioglu was properly convicted on eight
counts of wire fraud, and the evidence showed that Biyiklioglu engaged in
numerous similar transactions. The evidence also suggested that Biyiklioglu’s
fraudulent scheme was his only significant source of income during the
relevant years. Accordingly, the evidence supported the jury’s conclusion that
Biyiklioglu used funds derived from wire fraud in making the purchases in
counts 23 and 26, and we affirm his conviction as to those counts.
Biyiklioglu challenges his conviction under § 1956(a)(1)(B)(i) in counts
27–39 and under § 1956(a)(2)(B)(i) in counts 40 and 41, arguing that the
government failed to prove that the transactions were designed to conceal
unlawful activity. See United States v. Bieganowski, 313 F.3d 264, 279 (5th
Cir. 2002) (“The offense of money laundering under section 1956(a)(1)(B)(i),
requires that the government prove that the defendant: (1) conducted or
attempted to conduct a financial transaction, (2) that the defendant knew
involved the proceeds of unlawful activity, and (3) that the defendant knew
was designed to conceal or disguise the nature, location, source, ownership, or
control of the proceeds of the unlawful activity. An offense under section
1956(a)(2)(B)(i) is almost identical, with the exception that the transaction in
question must be from a place in the United States to a place outside the
14Biyiklioglu does not challenge his conviction under § 1957 as to counts 24 and 25,
and his conviction is affirmed as to those counts.
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United States.”) (citations omitted). Determining whether specific intent to
commit money laundering has been proven is a fact-bound inquiry that
frequently turns upon circumstantial evidence. United States v. Trejo, 610
F.3d 308, 315 (5th Cir. 2010).
The evidence at trial was sufficient for the jury to conclude that
Biyiklioglu structured his transactions to conceal the proceeds of his
fraudulent scheme. Biyiklioglu engaged in various circuitous transactions
between his numerous bank accounts, often on the same day, that served no
apparent purpose other than to disguise the source of the money. For example,
on February 2, 2012, Biyiklioglu made two separate deposits of $15,000 each
into one of his Bank of America accounts, then made two transfers of $15,000
each from that account into a Chase account, then made two transfers of
$15,000 each from that Chase account into a different Chase account, and then
withdrew $25,000 of that money from the second Chase account in two
separate cash withdrawals. 15 Cf. United States v. Willey, 57 F.3d 1374, 1386
(5th Cir. 1995) (“Moving money through a large number of accounts has, in the
light of other evidence, also been found to support the design element of this
offense, even when all the accounts to which the defendant transferred the
money and from which he withdrew it were in his own name.”). Biyiklioglu
also told a bank representative that he would receive automatic deposits from
PayPal into certain accounts but did not want PayPal to have access to the
accounts in any way or to be able to see his balances. Moreover, shortly after
15 Biyiklioglu argues that his purpose in these transactions was merely to access his
cash at a local bank branch because Bank of America did not have a branch in New Orleans.
However, this explanation does not account for the serial transfers first to one Chase account
and then to another. Moreover, to the extent that Biyiklioglu offered an alternative
explanation for the transfers, the jury was not obligated to believe him. Cf. United States v.
Rodriguez, 278 F.3d 486, 491 (5th Cir. 2002) (affirming money laundering conviction where
“the jury was free to discredit Rodriguez’s explanation of the source of the funds and did so.”).
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No. 14-31003
some of his accounts were frozen, Biyiklioglu formed a business organization
with no recorded business activity, in which Biyiklioglu was the only member,
and used it to open additional bank accounts to further his fraudulent scheme.
In total, Biyiklioglu used at least seventy-four bank accounts while engaged in
his scheme.
Biyiklioglu argues that the charged transactions did not conceal his
ownership of the money because each transaction was an ordinary,
straightforward banking transaction. However, “in order to establish the
design element of money laundering, it is not necessary to prove with regard
to any single transaction that the defendant removed all trace of his
involvement with the money or that the particular transaction charged is itself
highly unusual.” Willey, 57 F.3d at 1386. “That is, it is not necessary that a
transaction be examined wholly in isolation if the evidence tends to show that
it is part of a larger scheme that is designed to conceal illegal proceeds.” Id.;
accord United States v. Rodriguez, 278 F.3d 486, 491 (5th Cir. 2002). Here, the
government produced ample evidence from which the jury could conclude that
Biyiklioglu intended to conceal the fraudulent source of his funds through the
transactions in counts 27–41. Accordingly, we affirm Biyiklioglu’s conviction
as to counts 27–41.
IV.
Biyiklioglu argues that the district court violated Federal Rule of
Evidence 404(b) when it admitted government exhibit 4.2, a summary of
Biyiklioglu’s fraudulent scheme that referenced twenty-two PayPal accounts
not included in the indictment. Rule 404(b) provides that “[e]vidence of a
crime, wrong, or other act is not admissible to prove a person’s character in
order to show that on a particular occasion the person acted in accordance with
the character,” but such evidence “may be admissible for another purpose, such
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as proving motive, opportunity, intent, preparation, plan, knowledge, identity,
absence of mistake, or lack of accident.” Fed. R. Evid. 404(b).
During the trial, Biyiklioglu’s counsel objected “to any PayPal record
other than the PayPal records of the witnesses who have testified up to this
point,” and upon admission of exhibit 4.2, objected “to the base information
which . . . resulted in this summary.” Biyiklioglu did not cite to any evidentiary
rule, and the district court reasonably construed the objection as going to the
relevance of the evidence. “To preserve error, an evidentiary objection must
‘state[] the specific ground, unless it was apparent from the context.’ . . . A
loosely formulated and imprecise objection will not preserve error.” United
States v. Lewis, 796 F.3d 543, 545–46 (5th Cir. 2015) (quoting Fed. R. Evid.
103(a)(1)(B)). Because Biyiklioglu’s general objection did not apprise the
district court that he objected under Rule 404(b), we review his evidentiary
challenge for plain error. See id. at 546 (“We conclude that Lewis failed to fully
apprise the court of the grounds of his objection or to alert it to the proper
course of action. Accordingly, this error was unpreserved, and plain error
review applies.”).
To establish plain error, Biyiklioglu must show that: (1) the district court
erred, (2) the error was clear or obvious, (3) the error affected his substantial
rights, and (4) this court should exercise its discretion to correct the error
because the error seriously affects the fairness, integrity, or public reputation
of judicial proceedings. Id.; Puckett v. United States, 556 U.S. 129, 135 (2009).
Biyiklioglu has not established that the district court erred, much less
that any error was plain. Rule 404(b) does not govern evidence that is
“intrinsic” to the offense charged. Freeman, 434 F.3d at 374. “Evidence of acts
other than conduct related to the offense is intrinsic when the evidence of the
other act and the evidence of the crime charged are inextricably intertwined or
both acts are part of a single criminal episode or the other acts were necessary
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preliminaries to the crime charged.” Id. (internal quotation marks and citation
omitted). The PayPal investigator who compiled the government’s exhibit 4.2
testified that he had reviewed all of the represented PayPal accounts, along
with related bank records, and identified a consistent fraudulent pattern
whereby Biyiklioglu transferred money from one bank account into the PayPal
account, sent it to a second bank account, and then disputed the original
transaction, resulting in a refund to the first bank account and a loss to PayPal.
This testimony was corroborated by several other witnesses. The uncharged
PayPal accounts with their respective losses and transfers were therefore
inextricably intertwined with the transactions charged in the indictment as
part of a single fraudulent scheme and were admissible as intrinsic evidence
not subject to Rule 404(b).
However, even assuming, arguendo, that the uncharged PayPal accounts
were extrinsic evidence, the district court still did not err in admitting exhibit
4.2. Rule 404(b) allows the admission of extrinsic evidence for a purpose other
than proving the person’s character, “such as proving motive, opportunity,
intent, preparation, plan, knowledge, identity, absence of mistake, or lack of
accident.” Fed. R. Evid. 404(b). Here, evidence concerning a large number of
PayPal accounts that were associated with Biyiklioglu’s bank accounts and fit
the same loss pattern as the PayPal accounts in the indictment was highly
probative of Biyiklioglu’s intent, knowledge, motive, and plan regarding the
wire fraud scheme alleged in the indictment. See United States v. Cooks, 589
F.3d 173, 182 (5th Cir. 2009) (affirming admission in fraud case of five
uncharged transactions, four of which “were materially indistinguishable from
the charged schemes,” and explaining that “extrinsic evidence of using the
same scheme repeatedly is relevant to intent, knowledge, motive and plan”).
Accordingly, Biyiklioglu has not demonstrated that the district court plainly
erred by admitting government exhibit 4.2.
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V.
Biyiklioglu challenges the district court’s jury instructions relating to the
wire fraud charges. 16 Because Biyiklioglu did not object to the jury
instructions before the district court, we review his challenges for plain error.
See United States v. Harris, 740 F.3d 956, 965 (5th Cir. 2014). As discussed
above, this requires Biyiklioglu to show an error that is plain and that affected
his substantial rights, and also that we should exercise our discretion to correct
the error because the error seriously affects the fairness, integrity, or public
reputation of judicial proceedings. Id. at 965–66.
Biyiklioglu first argues that the district court erred when it instructed
the jury that “[a] specific intent to defraud means a conscious, knowing intent
to deceive or cheat someone” because the word “deceive” did not require the
jury to find that Biyiklioglu acted for the purpose of obtaining financial gain.
The district court’s instruction defining “specific intent to defraud” followed the
Fifth Circuit pattern jury instruction verbatim. See Pattern Crim. Jury Instr.
5th Cir. 2.57. Moreover, the instruction is consistent with our precedent. See
United States v. Rivera, 295 F.3d 461, 466 (5th Cir. 2002) (“A conviction for
wire fraud requires proof of the specific intent to defraud or deceive.”).
Accordingly, the district court did not err in its definition of “specific intent to
defraud” when instructing the jury on the elements of wire fraud.
Biyiklioglu also argues that the district court constructively amended
the indictment by instructing the jury that to convict Biyiklioglu of wire fraud,
the jury must find that he “knowingly devised or intended to devise any scheme
to defraud.” (emphasis added). Biyiklioglu’s argument is premised on the
assertion that the jury heard evidence about eight separate PayPal schemes
Biyiklioglu also challenges the jury instructions on tax evasion, but those challenges
16
are moot because we reverse Biyiklioglu’s conviction for both counts of tax evasion.
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involving eight separate victims, including one scheme that was described in
the indictment but was not charged because the government dropped the
aggravated identity theft charge related to that scheme’s victim. Biyiklioglu
argues that the jury could have convicted him on the wire fraud counts based
on this uncharged scheme to defraud PayPal as to the one victim who did not
testify. His argument fails, however, because the indictment alleged not eight
distinct schemes, but rather an overarching fraudulent scheme to defraud
PayPal by creating false accounts, including the eight described in the
indictment. Biyiklioglu therefore was not convicted of a separate crime from
the one for which he was indicted. See United States v. Jara-Favela, 686 F.3d
289, 300 (5th Cir. 2012) (“We ‘scrutinize any difference between an indictment
and a jury instruction’ and ‘will reverse only if that difference allows the
defendant to be convicted of a separate crime from the one for which he was
indicted.’”) (quoting United States v. Nunez, 180 F.3d 227, 231 (5th Cir. 1999)).
Biyiklioglu has not established that the district court’s jury instructions were
erroneous, much less that there was any plain error.
VI.
Biyiklioglu argues that if we reverse some but not all of his counts of
conviction, we will need to determine “if prejudicial spillover from evidence
introduced in support of the reversed counts requires the remaining
convictions to be upset.” Biyiklioglu relies exclusively on United States v.
Edwards, in which we addressed a similar claim for the first time. 303 F.3d
606, 639 (5th Cir. 2002) (“This circuit has never addressed whether spillover
from invalid claims can be a basis for granting a new trial.”). In Edwards, we
concluded:
While we are willing to acknowledge that perhaps a grant of a new
trial might be appropriate in some cases of “retroactive
misjoinder,” that case is not before us. At a minimum, drawing
from our severance cases and authority from other circuits, the
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No. 14-31003
defendants must show that they experienced some prejudice as a
result of the joinder of the invalid claims, i.e., that otherwise
inadmissible evidence was admitted to prove the invalid fraud
claims. They have not, and cannot do so [because the challenged
evidence was relevant to other counts and admissible on other
theories].
Id. at 640. In Edwards, the “invalid” claims had been dismissed because they
were based on a legal theory rejected by the Supreme Court. Id. at 612, 638–
39. Here, in contrast, Biyiklioglu has not even argued, much less established,
that any charged count was legally “invalid” in this way, but rather merely
that the government failed to prove all of the elements of some of the charged
offenses. Accordingly, Edwards is inapposite and Biyiklioglu’s “spillover”
argument fails.
VII.
For the foregoing reasons, we REVERSE Biyiklioglu’s conviction as to
counts 1, 3, 6, 7, 11, 14, 21, and 22 of the indictment, and we AFFIRM his
conviction as to counts 2, 4, 5, 8–10, 12, 13, 15, 17–20, and 23–41 of the
indictment. Because the sentences imposed on these counts were intertwined,
we VACATE Biyiklioglu’s sentence and REMAND for resentencing on the
affirmed counts of conviction. 17
17 See United States v. Dupaquier, 74 F.3d 615, 619 (5th Cir. 1996) (reversing
conviction as to one count and vacating sentence and remanding for resentencing on two
remaining counts “[b]ecause the sentences imposed by the district court on the three counts
were intertwined”). Because we vacate Biyiklioglu’s sentence in its entirety, we do not reach
Biyiklioglu’s challenges to the sentencing enhancements applied by the district court.
24