United States v. Kalu

791 F.3d 1194

UNITED STATES of America, Plaintiff–Appellee

v.Kizzy KALU, Defendant–Appellant.

No. 14–1068.

United States Court of Appeals, Tenth Circuit.

June 29, 2015.

Robert T. Fishman, Ridley, McGreevy & Winocur, PC, Denver, CO, appearing for Appellant.

James C. Murphy, Assistant United States Attorney (John F. Walsh, United States Attorney, with him on the brief), Office of the United States Attorney for the District of Colorado, Denver, CO, appearing for Appellee.

Before MATHESON, BACHARACH, and MORITZ, Circuit Judges.

Opinion

MATHESON, Circuit Judge.

Kizzy Kalu recruited foreign nationals to come to the United States for specialized nursing employment, required them to work as non-specialized laborers in nursing homes, retained a portion of their wages for personal profit, and threatened them with deportation and financial ruin if they did not comply with his demands. As part of the scheme, he misrepresented the terms of their employment to the government to obtain visas and bring the foreign nationals into the country.

The government determined Mr. Kalu's enterprise was fraudulent and charged him in a 95–count superseding indictment. After a trial, a jury found Mr. Kalu guilty of 89 of the counts alleged, including (1) mail fraud under 18 U.S.C. § 1341 and 18 U.S.C. § 2 ; (2) encouraging and inducing an alien under 8 U.S.C. § 1324(a)(1)(A)(iv), (a)(1)(B)(i), and 18 U.S.C. § 2 ; (3) visa fraud under 18 U.S.C. § 1546 and 18 U.S.C. § 2 ; (4) forced labor under 18 U.S.C. § 1589 and 18 U.S.C. § 2 ; (5) trafficking in forced labor under 18 U.S.C. § 1590 and 18 U.S.C. § 2 ; and (6) money laundering under 18 U.S.C. § 1956 and 18 U.S.C. § 2. The district court sentenced Mr. Kalu to 130 months of imprisonment on some counts and 120 months on others, with the sentences running concurrently. The court also ordered forfeiture in the amount of $475,592.94 and awarded $3,790,338.55 in restitution.

Mr. Kalu argues the district court erroneously instructed the jury on various offenses and seeks reversal of his convictions. He also contends the district court abused its discretion in calculating restitution.

Exercising jurisdiction under 28 U.S.C. § 1291 and 18 U.S.C. § 3742(a), we affirm the district court.

I. BACKGROUND

A. Factual History

H–1B visas are temporary worker visas for those who work in a “specialty occupation.” 8 C.F.R. § 214.2(h)(1)(ii)(B). The visa grants a “nonimmigrant alien” admission to the United States for an initial tenure of up to three years. Id. § 214.2(h)(9)(iii)(A)(1). The application process requires the employer to attest to a number of employment conditions in a Labor Condition Application (“LCA”)—including that the employee will be working in a specialized position, performing particular job duties, and earning above a certain threshold for the location where the position is located—and then file a form (“I–129”) with the Department of Homeland Security to petition for an H–1B visa. The employer must notify the government if the underlying conditions of employment change. Id. § 214.2(h)(2)(i)(E). H–1B visas are employer specific; if the foreign national ceases to work for the sponsoring employer, the government must be notified and the visa may be cancelled or, under some conditions, transferred to a different employer. Id. § 214.2(h)(2)(i)(D).

Mr. Kalu recruited nurses from abroad, charging them a fee—typically $6,500—to procure H–1B visas to allow them to enter the United States.¹ He oversaw the submission of 41 H–1B visa petitions, primarily for foreign nationals from the Philippines, which indicated they would work for Adam University (“AU”) as “nurse instructor/supervisors.”² The federal government grants 65,000 H–1B visas per year, but educational institutions are exempt from the H–1B visa cap.

When they arrived in the United States, the foreign nationals did not work for AU. Instead, Mr. Kalu's for-profit corporation, Advanced Training and Education for Foreign Healthcare Professionals Group, LLC (“FHPG”), placed the foreign nationals as employees in nursing homes in Colorado.³ Although the foreign nationals were admitted as employees of AU, Mr. Kalu did not update the government and continued to file visa petitions after October 1, 2008, when AU no longer had a physical presence in Colorado and had ceased to exist in any meaningful fashion. He continued to represent to the nurses, his attorney, and immigration officials that AU was functioning and recruiting foreign nationals for employee positions.

Upon arriving in the United States, the foreign nationals discovered they would be working as unspecialized laborers in nursing homes and not as instructors or supervisors as indicated on their visa petitions. Mr. Kalu arranged for the nurses to work in particular nursing homes and orchestrated their remuneration. The nursing homes typically paid FHPG $35/hour for the nurses' labor, and FHPG would pay $20/hour of that rate to the nurses themselves. Mr. Kalu eventually told many of the nurses they would have to find their own nursing jobs with non-FHPG-affiliated facilities. He informed the nurses that, because they would be paid for these non-FHPG jobs by the nursing homes directly, they would be required to pay him over a thousand dollars per month, whether or not they were working. If the nurses did not pay him, Mr. Kalu threatened to report them, have their visas revoked, have them deported, or enforce a $25,000 penalty for breaching their contract.

Mr. Kalu's scheme relied on a number of fraudulent misrepresentations that allowed him to bring the nurses to the United States, keep them in the country, and profit from their labor. The H–1B visa applications falsely indicated the foreign nationals would be AU employees, when they were in fact required to sign separate employment contracts with Mr. Kalu's company and were outsourced to nursing homes.⁴ The applications also indicated the foreign nationals would be nurse instructors/supervisors and thus engaged in a “specialty occupation”—a requirement for an H–1B visa—when they in fact did not have any meaningful instruction or supervision responsibilities and would be ordinary nurses in nursing homes.⁵ The applications further referenced job offers from AU falsely representing that the foreign nationals would be earning $72,000 per year, which would satisfy the requirement that they be paid at or above the prevailing wage for Denver, when none of them actually earned that amount. Most were paid $20/hour, and many worked outside of Denver.⁶ The applications did not indicate Mr. Kalu would be retaining a sizable portion of their wages for his personal gain. The government argued 14 foreign nationals provided labor, at least in part, because Mr. Kalu held them in debt for various costs and informed them that if they did not work in a nursing home he would be required to report them to the government and they could face deportation.

B. Procedural History

On March 1, 2012, Mr. Kalu and Philip Langerman, the president and founder of AU, were named in a 132–count indictment. On February 12, 2013, a superseding indictment charged Mr. Kalu with: (1) Counts 1–22 of commercial carrier/mail fraud in violation of 18 U.S.C. § 1341 and 18 U.S.C. § 2 ; (2) Counts 23–37 of encouraging and inducing an alien in violation of 8 U.S.C. § 1324(a)(1)(A)(iv), (a)(1)(B)(i) and 18 U.S.C. § 2 ;⁷ (3) Counts 38–40 of visa fraud in violation of 18 U.S.C. § 1546 and 18 U.S.C. § 2 ;⁸ (4) Counts 41–54 of forced labor in violation of 18 U.S.C. § 1589 and 18 U.S.C. § 2 ; (5) Counts 55–64 of trafficking in forced labor in violation of 18 U.S.C. § 1590 and 18 U.S.C. § 2 and (6) Counts 65–95 of money laundering in violation of 18 U.S.C. § 1956 and 18 U.S.C. § 2.⁹

Mr. Kalu pled not guilty. He argued he was a middleman tasked with arranging visas and it was AU's obligation to ensure the foreign nationals were working as nursing instructors/supervisors. He contended only AU indicated the nurses would earn $72,000 annually, while FHPG's website and Mr. Kalu's own communications with the nurses indicated they would be paid $20/hour. He also argued he acted in good faith in accordance with advice he received from Denise Perez, the attorney who reviewed the H–1B petitions. After a 15–day trial and three days of deliberation, a jury found Mr. Kalu guilty of the charges in Counts 1–18, 22–49, 51–59, 61–67, and 69–95, for a total of 89 of the 95 counts alleged.

At sentencing, the district court determined Mr. Kalu's total offense level was 38 and his criminal history category was 1. The presentence report (“PSR”) calculated the United States Sentencing Guidelines (“Guidelines”) range as 235 to 293 months of incarceration. The PSR observed the Guidelines range exceeded the statutory maximum of 240 months for Counts 1–18, 22, 41–49, 51–59, 61–67, and 69–95 and 120 months for Counts 23–40. Based on these calculations, the district court noted the applicable range would be 235 to 240 months for Counts 1–18, 22, 41–49, 51–59, 61–67, and 69–95 and 120 months for Counts 23–40. The court rejected the Government's request for a 300–month sentence, explaining that Mr. Kalu's crimes were largely economic, distinguishing them from forced-labor cases involving physical brutality or isolation. After considering the circumstances of the offense, the court opted to use a total offense level of 32, which yielded a guideline range of 121 to 151 months of incarceration. It sentenced Mr. Kalu to 130 months of imprisonment on Counts 1–18, 22, 41–49, 51–59, 61–67, 69–95, and 120 months for Counts 23–40, with the sentences on all counts running concurrently. The court ordered Mr. Kalu to pay $475,592.94 in forfeiture and $3,790,338.55 in restitution to compensate the nurses for their losses.

Mr. Kalu subsequently appealed his convictions and the restitution ordered by the court.

II. DISCUSSION

On appeal, Mr. Kalu argues the district court erroneously instructed the jury regarding the charged offenses and incorrectly...