In the 

United States Court of Appeals 

For the Seventh Circuit ____________________ 

Nos. 18-1687 & 18-1950 

UNITED STATES OF AMERICA, 

Plaintiff-Appellee/ 

Cross-Appellant, 

v.

HEON SEOK LEE, 

Defendant-Appellant/ 

Cross-Appellee. 

____________________ 

Appeals from the United States District Court for the 

Northern District of Illinois, Eastern Division. 

No. 1:12-cr-00109-1 — Sharon Johnson Coleman, Judge. 

____________________ 

ARGUED APRIL 9, 2019 — DECIDED AUGUST 21, 2019 

____________________ 

Before KANNE, BARRETT, and BRENNAN, Circuit Judges. 

BRENNAN, Circuit Judge. Crowbar in hand, U.S. Customs 

Officer Jorge Parra spent December 8, 2010 “cracking open 

containers” at a warehouse near the Los Angeles seaport. 

Parra pried open one from South Korea to inspect its freight. 

Inside he found a fully assembled, five-foot tall industrial fan 
2 Nos. 18-1687 & 18-1950 

called a turbo blower. A placard riveted to the side read, “Assembled in USA.” 

Presented with a fully assembled machine fresh off the 

boat from South Korea, which brazenly advertised its assembly in the United States, little sleuthing was required to determine something was amiss. Parra’s discovery kicked off a 

federal investigation that traced back to the defendant in this 

case, Heon Seok Lee. Prosecutors eventually charged Lee with 

executing a scheme to defraud local governments by falsely 

representing that his company manufactured its turbo blowers in the United States. 

A grand jury indicted Lee on five counts of wire fraud and 

three counts of smuggling. After a trial, the jury found Lee 

guilty on all counts. Lee now appeals his convictions and the 

restitution ordered, and the government cross-appeals Lee’s 

prison sentence. We find no fault in the trial or the sentence. 

I. Background 

A. The Recovery Act 

This criminal case has an atypical origin: an economic 

stimulus package. Congress passed the American Recovery 

and Reinvestment Act, Pub. L. No. 111-5, 123 Stat. 115 

(2009)—which we will simply call the “Recovery Act”—to 

jumpstart the flagging domestic economy during the Great 

Recession. See Kameron Hillstrom, The American Recovery and 

Reinvestment Act: A Fitting Future for Recovery Legislation, 44 

PUB. CONTRACT L. J. 285, 288 (2015). The Recovery Act earmarked billions to fund public infrastructure projects. Id. at 

289 (noting the Recovery Act made $261.2 billion available for 

such projects). 
Nos. 18-1687 & 18-1950 3

Relevant to this case, Congress allocated $6.4 billion to the 

EPA for water-infrastructure improvements. The EPA did not 

spend the money directly; instead it awarded grants to “revolving funds” administered by the States. After receiving 

EPA grants, the revolving funds then issued low-interest 

loans to local municipalities or agencies sponsoring specific 

projects. Those local governments were then responsible for 

hiring contractors to perform the work. 

To achieve Congress’s objective of bolstering the American economy, the Recovery Act included the following domestic purchasing requirement, commonly known as the 

“Buy American” provision: 

None of the funds appropriated or otherwise 

made available by this Act may be used for a 

project for the construction, alteration, maintenance, or repair of a public building or public 

work unless all of the iron, steel, and manufactured goods used in the project are produced in 

the United States. 

Recovery Act § 1605(a), 123 Stat. 303.1 

At first glance, this requirement seems straightforward. 

But federal agencies struggled to pin down what it means for 

a product to have been “produced in the United States.” Different agencies used different tests. See Thomas D. Blanford, 

Navigating the Recovery Act’s Buy American Rule in State and 

Local Government Construction, 46 PROCUREMENT LAWYER 3, 4 

(Fall 2010) (listing five tests used by different agencies). The 

 

1 The Recovery Act’s Buy American provision should not be confused 

with the separate, much older, Buy American Act of 1933, 

41 U.S.C. §§ 8301–8305. 
4 Nos. 18-1687 & 18-1950 

EPA adopted the “substantial transformation” standard to 

administer the Recovery Act, and it developed a three-part 

test to assess whether a manufacturer substantially transformed a product within the United States. 

As a condition to receiving Recovery Act funding, local 

governments and their contractors were required to abide by 

the Buy American provision. Federal agencies like the EPA 

audited projects to ensure compliance. Local governments required their suppliers to complete “Buy American certifications” representing that their products complied with the statute. 

B. KTurbo’s Initial Plan 

Heon Seok Lee founded KTurbo Inc. in his homeland of 

South Korea. KTurbo manufactures centrifugal turbo blowers—large industrial fans used to provide oxygen for biological water treatments in wastewater facilities. Turbo blowers 

are sophisticated and expensive pieces of equipment, requiring on-site programming, testing, and calibration. 

Lee saw the Recovery Act as a growth opportunity for 

KTurbo, whose penetration into the United States market was 

limited at the time. The Recovery Act earmarked billions for 

products like KTurbo’s turbo blowers. But KTurbo would be 

unable to tap into those funds unless it demonstrated compliance with the Buy American provision. So, Lee and his sister, 

Trinity Lee,2 developed a Recovery Act plan. They researched 

regulatory guidance from the EPA and monitored larger competitors’ responses. KTurbo leadership discussed Buy 

 

2 We refer to the defendant, Heon Seok Lee, as “Lee” and Trinity Lee by 

her full name. Trinity Lee served as KTurbo’s general manager for North 

America. 
Nos. 18-1687 & 18-1950 5

American compliance for months, with several in-depth 

meetings that lasted hours. 

KTurbo enlisted independent sales representatives around 

the country to market its turbo blowers to local governments 

pursuing Recovery Act projects. KTurbo also consulted with 

several sales representatives in the early stages of its Buy 

American planning. One sales representative, Dick Koch, discouraged KTurbo from pursuing a plan to make turbo blowers in South Korea, ship them to the United States, take them 

apart, and then reassemble stateside. Koch warned Lee and 

KTurbo in an email that such evasive practices could be 

deemed criminal: 

The [EPA] webcast specifically excludes Heon 

Seok’s idea of sending the equipment to the US 

and taking it apart and putting it back together. 

In fact the webcast says that if you say that is 

[Buy American] you are committing criminal 

fraud. 

Trinity Lee reassured Koch that KTurbo would use components from both South Korea and the United States and assemble the turbo blowers in greater Chicago. Other sales representatives who inquired about KTurbo’s Buy American 

compliance plan were told the same thing, including by Lee 

himself. 

At that point, KTurbo formed an Illinois subsidiary, 

KTurbo USA Inc.,3 leased a warehouse in Batavia, Illinois, and 

hired three American technicians. KTurbo’s sales 

 

3 The legal distinction between KTurbo Inc. and KTurbo USA Inc. does 

not matter for purposes of this opinion, so we refer to the two companies 

collectively as “KTurbo.” 
6 Nos. 18-1687 & 18-1950 

representatives landed several contracts for Recovery Act 

projects. In its bids, KTurbo highlighted its domestic presence 

and promised Buy American compliance. For example, 

KTurbo submitted a bid to South Burlington, Vermont in the 

summer of 2009, which included the following Buy American 

certification: 

By this letter, KTurbo USA certifies that it will 

manufacture and deliver KTurbo brand blower 

packages and equipment in compliance with 

the final requirements of the 2009 U.S. economic 

stimulus law, The American Recovery and Reinvestment Act of 2009. 

KTurbo sent nearly identical compliance letters for projects in 

California, Massachusetts, Nevada, and Oregon. 

These representations—a South Korean company certifying its product was “produced in the United States”—did not 

go unnoticed. A competitor that lost a bid to KTurbo filed a 

complaint with the EPA in the fall of 2009. In response, EPA 

officials visited KTurbo’s Batavia facility on October 30, 2009. 

During that visit, Lee gave a PowerPoint presentation 

detailing KTurbo’s plans to comply with the Buy American 

provision. He represented that KTurbo would assemble its 

turbo blowers at the Batavia facility. Slides in Lee’s presentation indicated fifty percent of the total input costs would be 

attributable to American components, assembly, and testing. 

Trinity Lee sent the EPA a letter confirming these details a few 

weeks later. 

KTurbo manufactured its first turbo blower at the Batavia 

facility in January 2010. It built nine more there over the next 

three months, at a rate of one to two weeks per blower. 
Nos. 18-1687 & 18-1950 7

C. The Revised Plan 

It did not take long for Lee to abandon that original plan 

to produce turbo blowers in Batavia. By April 2010, Lee concluded production costs in the United States were prohibitively expensive, and he decided to go back to importing 

turbo blowers from South Korea. Employees pushed back 

with concerns about KTurbo’s Recovery Act compliance, but 

Lee forged ahead. At trial, one of KTurbo’s technicians explained how the component parts from South Korea began 

arriving more and more fully assembled, until completely assembled blowers started showing up. No new components 

were added to the turbo blowers once they reached Batavia. 

Technicians simply plugged them in and ran performance efficiency tests. 

Lee’s revised plan depended on its secrecy. He instructed 

KTurbo employees not to disclose to customers the fact that 

their turbo blowers were made in South Korea. To evade detection, KTurbo (with Lee’s knowledge) went out of its way to 

avoid shipping the machines from South Korea directly to 

customers. When municipalities questioned KTurbo about 

Recovery Act compliance, KTurbo simply lied. Take KTurbo’s 

May 20, 2010 response to Lowell, Massachusetts: “The blower 

will be assembled and tested at KTurbo’s Chicago location.” 

Lee himself participated, emailing a sales representative similar misrepresentations in September 2010: “We assemble and 

test in Chicago. Only motor and VFD comes from Korea. It is 

almost Made In USA.” 

But this scheme unraveled quickly. Jorge Parra’s shipyard 

discovery in December 2010 was the beginning of the end. 

When U.S. Customs detained KTurbo’s products at the border, the company fell behind on its deliveries. This required 
8 Nos. 18-1687 & 18-1950 

more lies to hide that the turbo blowers were coming from 

overseas and needed to clear U.S. Customs. When a Lowell, 

Massachusetts general contractor contacted KTurbo about the 

delays, Joel Schomo (a KTurbo engineer) told him the Batavia 

facility was waiting for parts to begin final assembly, even 

though KTurbo had discontinued all assembly operations in 

Batavia months earlier. At trial, Schomo testified he told this 

lie because the Recovery Act funded Lowell’s project and he 

did not want to raise any “red flags” that KTurbo “might not 

be complying with the Recovery Act requirements.” 

Within two months, federal investigators executed a 

search warrant at the Batavia facility. Lee was present. During 

the search, Lee admitted he was aware that the turbo blowers 

were for Recovery Act projects, that KTurbo shipped them 

fully assembled from South Korea, and that it was “wrong” 

to do so. 

D. Lee’s Prosecution 

About a year later, a grand jury returned an indictment 

against Lee. It alleged he falsely represented that KTurbo’s 

turbo blowers complied with the Buy American provision 

when Lee knew KTurbo “did not perform and did not intend 

to perform substantial transformation of the turbo blowers at 

the KTURBO facility in Batavia, Illinois, before delivery of the 

turbo blowers to municipal wastewater treatment facilities receiving Recovery Act stimulus funds.” The indictment also 

charged Lee “knew that turbo blowers were substantially assembled before their arrival in the United States and did not 

require meaningful assembly or manufacturing in the United 

States.” 
Nos. 18-1687 & 18-1950 9

By this point, Lee had fled the country. It took three years 

to extradite him from South Korea. When the government finally brought Lee back to appear, he responded to the indictment with a series of motions to dismiss, each of which the 

district court denied. 

During an eight-day trial, the government presented dozens of witnesses: U.S. Customs officers, federal agents, 

KTurbo employees, sales representatives, general contractors, 

and employees of municipal customers. Lee elected to take 

the stand, and he adamantly denied any knowledge that 

KTurbo imported fully assembled blowers into the United 

States. On cross-examination, the government battered Lee’s 

credibility, impeaching him with documentary evidence and 

other witnesses’ testimony. The jury ultimately convicted Lee 

on all counts. 

E. Post-Trial Proceedings 

Lee filed a series of post-trial motions seeking to vacate the 

jury’s verdict; the district court denied each. The district court 

held three sentencing hearings over several months, which 

centered on the parties’ dispute about how to calculate Lee’s 

guideline range. For wire fraud convictions, the Sentencing 

Guidelines instruct district courts to begin with a base offense 

level of seven and then to add levels based on the amount of 

the “loss” caused by the defendant. U.S. SENTENCING 

GUIDELINES MANUAL § 2B1.1(a)–(b) (U.S. SENTENCING 

COMM’N Nov. 2018). In this case, the parties disputed whether 

Lee should receive credit in the loss calculation for the market 

value of KTurbo blowers sold to customers. 

The district court initially ruled that the loss equaled the 

total amount KTurbo received from defrauded municipalities 
10 Nos. 18-1687 & 18-1950 

(about $180,000), putting Lee’s guideline range at 46–57 

months. But the court gave Lee a below-guidelines prison sentence of 20 months, plus restitution. Two weeks later, Lee filed 

a notice of appeal and a motion asking the district court to 

correct its judgment under FED. R. CRIM. P. 35(a). The district 

court held a hearing on Lee’s Rule 35(a) motion, where it 

agreed with Lee’s argument on the guideline calculation and 

resentenced Lee to 12 months. After the district court entered 

its final judgment on March 14, 2018, Lee filed a second notice 

of appeal on March 28, 2018. Thirty days later, the government cross-appealed Lee’s sentence. 

II. Discussion 

A. Wire Fraud Convictions 

We begin with Lee’s wire fraud convictions. He asks us to 

vacate them because the government’s trial evidence constructively amended the indictment and failed to prove all the 

elements of the crime. 

1. Did the government’s case at trial impermissibly 

deviate from the indictment? 

“No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment 

of a Grand Jury ... .” U.S. CONST. amend. V. The Founders 

adopted this grand jury requirement from English tradition, 

in which lay grand jurors considered whether a crime should 

be charged while also protecting the accused from prosecutorial overreach. See Wood v. Georgia, 370 U.S. 375, 390 (1962); see 

also Andrew D. Leipold, Grand Jury Requirement, in THE 

HERITAGE GUIDE TO THE CONSTITUTION 431 (David F. Forte & 

Matthew Spalding eds., 2d ed. 2014). The Supreme Court has 

explained “that a court cannot permit a defendant to be tried 
Nos. 18-1687 & 18-1950 11

on charges that are not made in the indictment against him.” 

Stirone v. United States, 361 U.S. 212, 217 (1960). 

Two related doctrines arise out of this Fifth Amendment 

requirement: constructive amendment and variance. Both 

explain differences between the government’s case in the indictment and the government’s case at trial. Constructive 

amendment occurs where the trial evidence supports (or the 

court’s jury instructions charge) an offense not alleged in the 

indictment. United States v. Burge, 711 F.3d 803, 813 (7th Cir. 

2013). Variance refers to situations where the government’s 

trial evidence “proves facts materially different from those alleged in the indictment.” United States v. Ajayi, 808 F.3d 1113, 

1125 (7th Cir. 2015) (quotation marks omitted). The distinction 

between the two doctrines is subtle, but significant. Where a 

different crime has been proved (constructive amendment), it 

is error per se and the verdict must be vacated. United States 

v. Ratliff-White, 493 F.3d 812, 820 (7th Cir. 2007).4 But where 

the same crime is proved, only through evidence different 

than the factual allegations in the indictment (variance), the 

defendant must demonstrate prejudice to his substantial 

rights. Id.

Lee contends the government constructively amended the 

indictment by presenting evidence of misrepresentations beyond KTurbo’s Buy American certifications. He claims the indictment confined itself to the falsity of the certifications, 

while the government’s trial evidence focused on other lies, 

 

4 This assumes the defendant properly preserved the error in the district 

court. If the issue was waived or forfeited, we review only for plain error. 

United States v. Remsza, 77 F.3d 1039, 1043–44 (7th Cir. 1996) (assessing defendant’s constructive amendment argument under a plain error standard 

due to defendant’s failure to raise it in the district court). 
12 Nos. 18-1687 & 18-1950 

such as false statements in sales presentations, misrepresentations to sales representatives, and misleading emails to 

general contractors. 

Even if we accept as true Lee’s interpretation of the indictment and his characterization of the trial evidence, it would 

not rise to the level of a constructive amendment. The government did not attempt to prove a crime different from the one 

alleged. See United States v. Khilchenko, 324 F.3d 917, 920 (7th 

Cir. 2003) (“To effect a constructive amendment, the evidence 

at trial must establish offenses different from or in addition to 

those charged by the grand jury.”). Prosecutors did not argue 

Lee committed mail fraud when the indictment charged wire 

fraud. The government’s case at trial did not attempt to prove 

a fraud in the air compressor market after alleging a scheme 

in the turbo blower market. Constructive amendments arise 

“where there is a ‘complex of facts distinctly different from 

those set forth in the charging instrument and not where there 

is a single set of facts.’” United States v. Galiffa, 734 F.2d 306, 

314 (7th Cir. 1984) (quoting United States v. Von Stoll, 726 F.2d 

584, 586 (9th Cir. 1984)). Here, the government consistently 

maintained that Lee committed wire fraud by selling turbo 

blowers made in South Korea as if they were made in the 

United States. 

Lee’s argument is more aptly characterized as one of variance, although he does not frame it that way. Even if the crime 

charged remains consistent, it is a problem if the government 

materially alters the factual underpinnings of that charge. See 

United States v. Cina, 699 F.2d 853, 857–58 (7th Cir. 1983) 

(defendant may establish reversible error where the variance 

altered an essential or material element of the charge). But 

variance claims are subject to harmless error review—we will 
Nos. 18-1687 & 18-1950 13

not disturb a conviction on account of “a technical deficiency 

of no prejudice to the defendant.” Id. (quoting Russell v. United 

States, 369 U.S. 749, 763 (1962)). No prejudice exists in this 

case. 

First, despite Lee’s characterization, the indictment did 

tailor its fraud allegations to KTurbo’s failure to manufacture 

its turbo blowers at the Batavia facility. Paragraph 3 of the indictment alleged KTurbo “did not perform and did not intend 

to perform substantial transformation of the turbo blowers at 

the KTURBO facility in Batavia, Illinois, before delivery of the 

turbo blowers to municipal wastewater treatment facilities 

receiving Recovery Act stimulus funds.” It also expressly alleged that Lee knew the turbo blowers were already assembled before arriving in the United States. The government 

proved those allegations at trial with evidence that Lee knew 

KTurbo made its turbo blowers in South Korea and lied about 

that fact. Such evidence matches the indictment’s fraud allegations. 

Second, even if these misrepresentations were not expressly covered by the indictment’s text, they were “part and 

parcel” of the same scheme described by the indictment. Nye 

& Nissen, Corp. v. United States, 336 U.S. 613, 617 (1949) (no 

variance where indictment alleged a single scheme to defraud 

executed in various ways). Additional evidence regarding 

technical details about how a defendant executed an alleged 

scheme does not constitute an impermissible variance. Ajayi, 

808 F.3d at 1125 (presentation of “more detailed” facts at trial 

not an impermissible variance). Lee cannot demonstrate his 

Fifth Amendment rights were violated because the government’s trial evidence concerned “the same elaborate scheme 

to defraud ... as was described in the indictment.” 
14 Nos. 18-1687 & 18-1950 

Ratliff-White, 493 F.3d at 821 (quoting United States v. Dupre, 

462 F.3d 131, 140–41 (2d Cir. 2006)). 

Two concerns underlie the constructive amendment and 

variance doctrines: ensuring criminal defendants have adequate notice of the charges against them and avoiding the risk 

of double jeopardy. Neither is present here. The indictment 

notified Lee of the allegations against him: that he committed 

wire fraud by importing turbo blowers from South Korea 

while representing they were made in Batavia. See United 

States v. Corrigan, 912 F.3d 422, 428 (7th Cir. 2019) (indictment 

provided valid notice despite listing wrong name of victim); 

United States v. Kuna, 760 F.2d 813, 819 (7th Cir. 1985) (alleged 

variance in mail fraud prosecution was harmless because the 

defendant “was able to identify with great certainty the acts 

for which he was placed in jeopardy”). 

The indictment also included specific details about the 

scheme alleged, alleviating any double jeopardy concerns. See 

United States v. Moore, 563 F.3d 583, 586 (7th Cir. 2009) (holding specificity in the indictment would “avoid any later double jeopardy concerns”). It described the Recovery Act’s Buy 

American provision, how KTurbo leased a warehouse in 

Batavia, KTurbo’s Recovery Act contracts, the fact KTurbo 

failed “to perform substantial transformation of the turbo 

blowers at the KTURBO facility in Batavia,” Lee’s knowledge 

“that turbo blowers were substantially assembled before their 

arrival in the United States and did not require meaningful 

assembly or manufacturing in the United States,” and Lee’s 

misrepresentations and concealment of KTurbo’s true operations. Such detail in the indictment protected Lee from exposure to double jeopardy. See United States v. Scheuneman, 712 

F.3d 372, 378 (7th Cir. 2013) (indictment sufficient where it 
Nos. 18-1687 & 18-1950 15

“presented enough detail to allow [the defendant] to plead 

double jeopardy to avoid future prosecution based on the 

same conduct alleged”). 

Because the indictment afforded Lee ample notice of the 

case the government presented at trial and included specific 

details of the crimes alleged to avoid double jeopardy risk, no 

impermissible constructive amendment or variance occurred 

in this case.5

2. Did the government present enough evidence to 

convict Lee of wire fraud? 

Lee appeals the district court’s denial of his motion for acquittal under FED. R. CRIM. P. 29. We review such decisions de 

novo, asking if the evidence—viewed in the light most favorable to the prosecution—could support a rational finding of 

all the essential elements of the crime beyond a reasonable 

doubt. United States v. Mohamed, 759 F.3d 798, 803 (7th Cir. 

2014). Put differently, we reverse only if the trial record “is 

devoid of evidence from which a jury could conclude guilt 

beyond a reasonable doubt.” United States v. Alhalabi, 443 F.3d 

605, 613 (7th Cir. 2006). Given this deference to the jury verdict, Lee’s hurdle on appeal is high, as “we rarely reverse a 

conviction for mail or wire fraud due to insufficient evidence.” United States v. Weimert, 819 F.3d 351, 354 (7th Cir. 

2016). 

 

5 Lee’s concerns are also mitigated because the district court gave the jury 

a copy of the indictment and instructed jurors to convict only if the government had proved the crimes it alleged. See United States v. Cusimano, 

148 F.3d 824, 830–31 (7th Cir. 1998) (district court’s provision of the indictment to the jury and proper instruction on it “establish[ed] that there was 

no constructive amendment to the indictment”). 
16 Nos. 18-1687 & 18-1950 

To convict a defendant of wire fraud, the government 

must prove three elements: (1) a scheme to defraud, (2) the 

defendant’s intent to defraud, and (3) the defendant’s use of 

interstate wires in furtherance of the scheme. United States v. 

Jackson, 860 F.3d 438, 446 (7th Cir. 2017). Lee challenges the 

government’s proof on the first element, the scheme to defraud. The wire fraud statute, 18 U.S.C. § 1343, reaches “any 

scheme to deprive another of money or property by means of 

false or fraudulent pretenses, representations, or promises.” 

Carpenter v. United States, 484 U.S. 19, 27 (1987). 

On appeal, Lee argues that KTurbo’s Buy American certifications were not false. He claims KTurbo’s turbo blowers 

complied with the Buy American provision because they were 

made in South Korea. That claim is not as self-contradictory 

as it first sounds, given the text of Recovery Act § 1605(d), 

which requires the statute to be “applied in a manner consistent with United States obligations under international 

agreements.” Both the United States and South Korea have 

joined the World Trade Organization’s Agreement on Government Procurement (WTO-GPA), which requires all signatories to provide all other signatories’ exports “treatment no 

less favourable than the treatment the Party, including its procuring entities, accords to: (a) domestic goods, services and 

suppliers; and (b) goods, services and suppliers of any other 

Party.” WTO-GPA art. 4 § 1, Apr. 6, 2014, 3008 U.N.T.S. Reg. 
Nos. 18-1687 & 18-1950 17

No. A-31874.6 In other words, the WTO-GPA is a multi-lateral 

“most favored nation” clause for government purchasing. Lee 

interprets Recovery Act § 1605(d) to mean the WTO-GPA’s 

most favored nation clause supersedes the Buy American 

provision, such that South Korean products must be given the 

same treatment as American products for purposes of the 

Recovery Act.7 

Critically however, when the Recovery Act was enacted 

the EPA publicly rejected the interpretation Lee now offers. 

An April 2009 EPA memorandum explained that the agency 

interpreted Recovery Act § 1605(d) to apply to direct purchases by the federal government and the specific state and 

local agencies expressly listed in the WTO-GPA’s appendices, 

but not “to procurement initiated by local entities ([state revolving fund] assistance recipients), unless they are listed in 

the appendix.” U.S. ENVTL. PROT. AGENCY, Memorandum on 

 

6 By its terms, the WTO-GPA covers purchases made by the EPA above 

certain dollar thresholds. WTO-GPA, Coverage Schedules, United States

ann. 1. Coverage of purchases made by States themselves, state agencies, 

and local municipalities is more complicated, varying from State to State 

and from agency to agency within a State. WTO-GPA, Coverage Schedules, United States ann. 2–3; see also Hong-Sik Chung, Government Procurement in the United States–Korea Free Trade Agreement: Great Opportunities for 

Both Sides?, 34 NW. J. INT’L L. & BUS. 299, 303 (2014). But the WTO-GPA 

provides that where a covered entity “requires persons not covered under 

a Party’s annexes to Appendix I to procure in accordance with particular 

requirements, Article IV shall apply mutatis mutandis to such requirements.” WTO-GPA art. 2 § 5. 

7 Federal purchasing regulations provide that where an international 

agreement applies, the “restrictions of section 1605 of the Recovery Act do 

not apply to designated country iron, steel, and/or other manufactured 

goods.” 2 C.F.R. § 176.160(b)(ii). South Korea is listed as a “designated 

country” based on its membership in the WTO-GPA. 2 C.F.R. § 176.160(a). 
18 Nos. 18-1687 & 18-1950 

Implementation of Buy American provisions of P.L. 111-5 

(Apr. 28, 2009), https://www.epa.gov/sites/production/files/2

014-12/documents/buy_am.pdf (last visited August 13, 2019). 

In the nature of a “smoking gun,” federal agents found a copy 

of this EPA memorandum in KTurbo’s Batavia facility, with 

the relevant paragraph flagged by handwritten markings. 

Reasonable jurors could thus conclude Lee was aware that the 

EPA did not consider South Korean products Buy American 

compliant. 

As a result, even if one accepts Lee’s interpretation of Recovery Act § 1605(d), the EPA’s express rejection of it makes 

KTurbo’s South Korean manufacturing a “material” fact for 

wire fraud purposes. Neder v. United States, 527 U.S. 1, 16 

(1999) (holding a statement is “material” if it has “a natural 

tendency to influence, or is capable of influencing, the decision of the decisionmaking body to which it was addressed”) 

(quoting United States v. Gaudin, 515 U.S. 506, 509 (1995)). 

KTurbo could not legitimately certify its Buy American compliance, at least not without disclosing to customers that the 

turbo blowers were made in South Korea. Federal fraud statutes reach such misleading omissions of material information. 

United States v. Stephens, 421 F.3d 503, 507 (7th Cir. 2005). 

A reasonable purchaser in this scenario—one who received funds from the EPA pursuant to the Recovery Act and 

was bound to comply with the Buy American provision—

would deem it highly relevant whether a supplier based its 

Buy American certification on an interpretation of the statute 

expressly rejected by the EPA. A series of trial witnesses consistently testified that Recovery Act compliance was “absolutely vital,” given it was a legal requirement of the project 

funding. Without Buy American compliance, municipalities 
Nos. 18-1687 & 18-1950 19

jeopardized losing all Recovery Act funding from the EPA. As 

one customer testified, his municipality considered KTurbo’s 

representations that the turbo blowers were “Assembled in 

USA” to be “extremely important” because “it bolstered 

[their] belief that [the turbo blower] was substantially 

transformed in the United States.” Municipal employees also 

testified they would not have purchased KTurbo’s blowers 

without KTurbo’s Recovery Act assurances. 

Where the fraud alleged deals with a half truth or material 

omission, we generally require proof of an act of concealment 

on the part of the defendant. See Stephens, 421 F.3d at 507. The 

record in this case unmistakably reflects such concealment. 

Trial evidence showed KTurbo’s repeated misrepresentations 

to its customers about where KTurbo made its turbo blowers. 

For example, KTurbo sent the City of Pendleton, Oregon a 

Buy American certification in April 2010—shortly after Lee 

decided to stop all domestic manufacturing operations—representing that KTurbo had “established an assembly facility 

in Batavia, Illinois, where partial manufacturing and assembly of all units sold in North America will be complete[d].” 

No one at KTurbo ever corrected that misrepresentation. At 

the beginning of 2011, KTurbo sent the City of Ottawa, Illinois 

a similar Buy American certification, signed by Trinity Lee, 

which stated: “All assembly of the completed unit will be executed domestically. The assembly process includes wiring 

and panel assembly, riveted frame assembly, total assembly 

including all internal connections and power wiring, tubing 

and final calibration will be perofrmaned [sic] at KTurbo USA 

in Batavia, IL.” None of that certification was truthful, but it 

was emblematic of KTurbo’s fraudulent scheme. United States 

v. Betts-Gaston, 860 F.3d 525, 533 (7th Cir. 2017) (jurors are permitted to infer fraudulent methodologies from evidence of 
20 Nos. 18-1687 & 18-1950 

similar fraudulent transactions). KTurbo repeatedly assured 

municipalities and their general contractors of its Recovery 

Act compliance. Several customers testified at trial about their 

belief that KTurbo made its turbo blowers in the United 

States. 

KTurbo also misled its own sales representatives into 

thinking KTurbo manufactured turbo blowers in Batavia, not 

South Korea. These sales representatives testified they told 

customers—based on KTurbo’s representations to them—that 

KTurbo complied with the Buy American provision because 

it manufactured and assembled its blowers in Batavia. Lee 

masterminded these material misrepresentations, even if he 

used sales representatives to pass them on to the ultimate customers. See United States v. Seidling, 737 F.3d 1155, 1160 (7th 

Cir. 2013) (“Nothing in the statutory text of 18 U.S.C. § 1341 

requires a scheme to defraud to involve deception of the same 

person or entity whose money or property is the intended object of the scheme.”). He is responsible for misrepresentations 

he commanded or willfully caused others to make as 

KTurbo’s chief executive. 18 U.S.C. § 2; see also United States v. 

Gunning, 984 F.2d 1476, 1483 (7th Cir. 1993) (“One who counsels or commands another to commit a crime, and knowingly 

and actively contributes toward its success, is guilty of that 

crime under 18 U.S.C. § 2.”). 

But Lee himself also actively participated in the cover up. 

During his trial cross-examination, Lee acknowledged he 

knew that KTurbo’s customers and the EPA cared about Buy 

American compliance. But he admitted he told customers that 

KTurbo blowers were manufactured and assembled in the 

United States. When a sales representative asked Lee about 

Buy American compliance in a September 2010 email, Lee 
Nos. 18-1687 & 18-1950 21

responded: “We assemble and test in Chicago. Only motor 

and VFD comes from Korea. It is almost Made In USA.” Lee 

made that statement months after KTurbo stopped assembly 

in the United States. Even as the scheme began to unravel in 

early 2011, Lee persisted in his lies. On January 28, 2011, a 

sales representative directly asked Lee about a rumor that federal agents were investigating KTurbo. Lee responded by ensuring him that KTurbo faced no Recovery Act issues: “Most 

important parts is [sic] final assembly and testing. We are doing those, so we are compliant.” Then, on February 8, 2011, 

when representatives of Pendleton, Oregon, asked KTurbo 

where its turbo blowers would be assembled, Lee wrote: “In 

Chicago the blowers will be finalized and tested and 

shipped.” 

Lee also challenges the government’s proof of his intent to 

defraud. A defendant acts with an intent to defraud where he 

acts “willfully and with specific intent to deceive or cheat, 

usually for the purpose of getting financial gain for himself or 

causing financial loss to another.” United States v. Pust, 798 

F.3d 597, 600 (7th Cir. 2015) (quoting United States v. Paneras, 

222 F.3d 406, 410 (7th Cir. 2000)). Lee claims the government 

failed to prove he intended to defraud anyone because the 

trial evidence showed KTurbo took concrete steps toward 

manufacturing turbo blowers in the United States. 

Lee’s intent argument ignores that his misrepresentations 

continued well beyond April 2010, when he decided to stop 

KTurbo’s American manufacturing operations. That Lee kept 

telling people KTurbo assembled its turbo blowers in Batavia 

months after KTurbo ceased doing so is strong circumstantial 

evidence of Lee’s intent to defraud. Pust, 798 F.3d at 600–01 

(specific intent to defraud may be established by 
22 Nos. 18-1687 & 18-1950 

circumstantial evidence and examination of the scheme itself). Agents’ discovery of copies of the EPA’s guidance memoranda on the Buy American provision, as well as testimony 

from other KTurbo employees about the extent of KTurbo’s 

Recovery Act meetings and planning, support the conclusion 

that Lee willfully attempted to circumvent the law. 

A jury also could reasonably conclude that Lee never intended to make turbo blowers in Batavia long term, but rather 

set up the facility as part of his scheme to mislead the EPA, 

sales representatives, and customers. Cf. United States v. Freed, 

921 F.3d 716, 724 (7th Cir. 2019) (holding a promise made 

without a present intention to keep it can be fraudulent). After 

all, Lee did not wait even a full three months before putting 

the kibosh on the entire operation. Viewing the evidence in 

the light most favorable to the prosecution, there is more than 

enough to conclude Lee intended to deceive and defraud 

KTurbo’s customers. 

The trial evidence presented over the course of eight days 

adequately supports Lee’s participation in a scheme to defraud and his intent to do so. Lee does not challenge his use 

of interstate wires as a part of that scheme. With all three elements of wire fraud adequately established in the trial record, 

we affirm the jury’s verdict. 

B. Smuggling Convictions 

We turn now from Lee’s wire fraud convictions to his three 

smuggling convictions under 18 U.S.C. § 545. The statute provides, in part: 

Whoever fraudulently or knowingly imports or 

brings into the United States, any merchandise 
Nos. 18-1687 & 18-1950 23

contrary to law ... Shall be fined under this title 

or imprisoned not more than 20 years, or both. 

Over a century ago, when dealing with the predecessor to 

§ 545, the Supreme Court held the words “contrary to law” 

refer to legal provisions outside the statute itself. Keck v. 

United States, 172 U.S. 434, 437 (1899). A violation of § 545 requires a violation of another law—the predicate offense if you 

will—done with a fraudulent or knowing mindset. In this 

case, the government claimed Lee violated 19 U.S.C. § 1304(a): 

[E]very article of foreign origin ... imported into 

the United States shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or container) 

will permit in such manner as to indicate to an 

ultimate purchaser in the United States the English name of the country of origin of the article. 

Lee asserts that a violation of § 1304(a) cannot serve as a 

predicate offense for a § 545 conviction. According to Lee, the 

words “imports ... merchandise contrary to law” in § 545 

mean that the merchandise itself is per se illegal to import, not 

merely that the merchandise was imported in a condition 

noncompliant with some federal law or regulation somewhere. 

In making this argument, Lee stresses the title of § 545: 

“Smuggling goods into the United States.” He contends the 

word “smuggling” refers exclusively to bringing on shore 

goods whose importation is categorically prohibited. Lee effectively says he could not have “smuggled” the turbo blowers into the United States because turbo blowers are allowed 

in the United States. 
24 Nos. 18-1687 & 18-1950 

Even accepting Lee’s narrow interpretation of the word 

“smuggling,”8 the text of the statute is not so cabined when 

examined in its entirety. Section 545 contains two separate 

prohibitions; we must consider both when assessing the statute’s meaning. See United States v. Fisher, 6 U.S. 358, 386 (1805) 

(Marshall, C.J.) (“It is undoubtedly a well established 

principle in the exposition of statutes, that every part is to be 

considered, and the intent of the legislature to be extracted 

from the whole.”). Section 545’s first paragraph, which is not 

at issue, criminalizes “knowingly and willfully ... 

smuggl[ing], or clandestinely introduc[ing] ... into the United 

States any merchandise which should have been invoiced ... .” That language criminalizes smuggling goods into 

the United States, and the statute’s title summarizes that prohibition. But § 545’s second paragraph—the one that is at issue—is broader. It criminalizes “fraudulently or knowingly 

import[ing] ... any merchandise contrary to law ... .” The text 

of the second paragraph of § 545 makes no mention of the 

word “smuggling.” 

A statute’s title or heading is a permissible indicator of the 

meaning of its text. Yates v. United States, 135 S. Ct. 1074, 1083 

(2015); see also ANTONIN SCALIA AND BRYAN A. GARNER,

 

8 We have some doubt that the term is quite so limited. Cf. Smuggling, 

BLACK’S LAW DICTIONARY (11th ed. 2019) (“The crime of importing or exporting illegal articles or articles on which duties have not been paid.”); 

Smuggling, BALLENTINE’S LAW DICTIONARY (3d ed. 2010) (“The criminal offense of knowingly and willfully, with intent to defraud the United States, 

clandestinely introducing into the United States any merchandise which 

should have been declared for customs duty.”); Smuggle, AMERICAN 

HERITAGE DICTIONARY OF THE ENGLISH LANGUAGE (5th ed. 2019) (“To 

bring into a country (a prohibited item) secretively and intentionally in 

violation of the law.”). 
Nos. 18-1687 & 18-1950 25

READING LAW: THE INTERPRETATION OF LEGAL TEXTS 221 (2012).

But a title cannot override the statutory text itself. Bhd. of R.R. 

Trainmen v. Baltimore & Ohio R.R. Co., 331 U.S. 519, 528–29 

(1947). Although § 545—true to its title—outlaws smuggling 

goods into the United States, the statute also criminalizes the 

fraudulent or knowing importation of “merchandise contrary 

to law.” Lee’s construction of that language as equating with 

“smuggling” renders the two provisions of § 545 duplicative, 

a heavily disfavored result. Kungys v. United States, 485 U.S. 

759, 778 (1988) (discussing the “cardinal rule of statutory interpretation that no provision should be construed to be entirely redundant”); see also SCALIA & GARNER, supra, at 175. 

The better reading of the second paragraph of § 545 is that it 

makes it a crime to fraudulently or knowingly import merchandise in any manner contrary to law. Section 545’s title 

cannot save Lee from its text. 

Lee next argues the case law is on his side. He claims the 

cases only address scenarios where the defendant imported 

goods that are illegal per se—barred entirely from importation into the United States. That might be true, but it would 

not change the meaning of § 545. The scope of a statute cannot 

be altered based on the fact patterns of cases that happen to 

be charged and end up in the Federal Reporter. In any event, 

Lee’s assertions about the state of the case law are inaccurate. 

His cited authorities, Babb v. United States, 218 F.2d 538 (5th 

Cir. 1955) and Steiner v. United States, 229 F.2d 745 (9th Cir. 

1956), dealt with indictments that failed to identify an underlying violation to serve as the predicate for § 545 liability. The 

indictments simply lacked any predicate offense undergirding the § 545 charge. We do not have that here: the government’s indictment specifically accused Lee of violating 

§ 1304(a). 
26 Nos. 18-1687 & 18-1950 

And despite Lee’s attempts, we do not see how this case is 

distinguishable from United States v. Kuipers, 49 F.3d 1254 (7th 

Cir. 1995).9 In Kuipers, we affirmed the defendant’s § 545 conviction for attempting to import the horns of a protected species under false paperwork. Id. at 1256. It was legal to import 

the horns into the United States with the proper paperwork, 

but the defendant used forged documentation to circumvent 

the law. Here, Lee essentially did the same thing. Nothing 

prohibited Lee from importing turbo blowers into the United 

States, but he needed to do so with a proper country-of-origin 

designation under § 1304(a). Lee circumvented that requirement in a fraudulent fashion, similar to the defendant in 

Kuipers. 

Lee also claims he could not have violated § 545 because 

U.S. Customs detained the turbo blowers at the border, such 

that the machines were never imported into the country. But 

Lee fails to provide any reason to exclude domestic U.S. Customs facilities from the definition of the “United States,” as 

used in § 545. If anything, the text supports the opposite conclusion, specifically excluding other areas but not U.S. 

Customs offices. 18 U.S.C. § 545 (“The term ‘United States’, as 

used in this section, shall not include the Virgin Island, American Samoa, Wake Island, Midway Islands, Kingman Reef, 

Johnston Island, or Guam.”); see also 19 U.S.C. § 1304(j) (referring to merchandise held by U.S. Customs for inspection as 

an “imported article”). 

 

9 Lee’s claim that Kuipers dealt with only the first paragraph of § 545, and 

not the second, is not correct. 49 F.3d at 1256 (“Kuipers was indicted on 

March 1, 1994 for ... (2) fraudulently and knowingly importing the Desert 

Bighorn Sheep into the United States contrary to law 

(18 U.S.C. § 545) ... .”). 
Nos. 18-1687 & 18-1950 27

Lee notes that federal law allows mismarked goods, after 

their markings are corrected, to be imported. 19 U.S.C. 

§ 1304(j); see also 19 C.F.R. § 134.51. He emphasizes that § 1304 

does not itself purport to criminalize mismarking a product’s 

country of origin, despite providing criminal sanctions for 

other violations. 19 U.S.C. § 1304(l) (penalizing anyone who 

“defaces, destroys, removes, alters, covers, obscures, or obliterates” a country-of-origin mark with intent to conceal that 

information). Yet one federal statute does not preempt 

another. Baker v. IBP, Inc., 357 F.3d 685, 688 (7th Cir. 2004). 

Section 1304(l)’s silence cannot override the text of § 545. The 

fact § 1304(l) does not separately criminalize conduct already 

outlawed under § 545 is not a basis for limiting the scope of 

§ 545. Cf. United States v. Hassanzadeh, 271 F.3d 574, 576–79 

(4th Cir. 2001) (affirming § 545 conviction based on underlying § 1304 labeling violation).10 

Finally, Lee claims treating § 1304 violations as predicate 

offenses for § 545 liability will criminalize a vast array of innocent behavior in international commerce. This policy argument fails to account for § 545’s high scienter bar—fraudulent 

or knowing misbehavior. Such a scienter requirement ensures 

 

10 Lee’s invocation of United States ex rel. Huangyan Import v. Nature’s Farm 

Prods., 370 F. Supp. 2d 993 (N.D. Cal. 2005), is not well received, particularly his selective and misleading quotation. Although the opinion states 

federal regulations “permit the importation of mismarked goods,” Lee 

leaves out the important qualifying language about the monetary penalties imposed in such circumstances. Id. at 1001. And, as the underlying 

statute makes clear, goods originally mismarked upon arrival may be 

withheld until their country-of-origin markings are corrected. 19 U.S.C. 

§ 1304(i)–(j). Nothing in the Huangyan Import opinion suggests that attempting to import merchandise with false country-of-origin designations 

is anything but “contrary to law.” 
28 Nos. 18-1687 & 18-1950 

the statute does not criminalize innocent commercial mistakes. See Rehaif v. United States, 139 S. Ct. 2191, 2196 (2019) 

(“The cases in which we have emphasized scienter’s 

importance in separating wrongful from innocent acts are legion.”). And this case involves no mere administrative oversight. KTurbo’s mislabeling served an important function in 

Lee’s broader scheme to deceive KTurbo customers about the 

origin of the turbo blowers. 

For all these reasons, we affirm Lee’s three smuggling convictions. 

Having affirmed all Lee’s convictions, we now proceed to 

the sentencing issues presented by the parties. We first address the government’s cross-appeal regarding Lee’s prison 

sentence, before resolving Lee’s challenge to the restitution 

ordered by the district court. 

C. The Government’s Cross-Appeal 

The government asks us to reinstate the 20-month 

sentence the district court originally imposed. It claims the 

district court lacked authority under FED. R. CRIM. P. 35(a) to 

reduce Lee’s sentence to 12 months. But before we reach the 

merits of the government’s cross-appeal, we must resolve two 

jurisdictional questions. 

1. Is there statutory jurisdiction for the government’s 

cross-appeal? 

The government may appeal an adverse decision in a 

criminal case only if expressly authorized by statute. United 

States v. Martin Linen Supply Co., 430 U.S. 564, 568 (1977). Here, 

the government cites 18 U.S.C. § 3731. But that provision does 

not apply—the government is not appealing a dismissal of its 

indictment, a new trial order, or any of the other issues listed 
Nos. 18-1687 & 18-1950 29

in § 3731. See United States v. Spilotro, 884 F.2d 1003, 1005–06 

(7th Cir. 1989) (holding § 3731 does not provide jurisdiction 

for appeals challenging “a district court order reducing a sentence”); see also CHARLES ALAN WRIGHT, ET AL., 15B FED. PRAC.

& PROC. § 3919.8 (2d ed. April 2019 supp.) (“Ordinarily the 

government cannot rely upon either § 1291 or § 3731 to support appeal from a criminal sentence ... .”). 

The relevant statute is 18 U.S.C. § 3742(b), which authorizes the government to appeal a defendant’s sentence on specific grounds. A district court’s modification of a sentence 

without authority to do so, as the government argues here, is 

one such ground. 18 U.S.C. § 3742(b)(1) (providing the government the ability to appeal sentences “imposed in violation 

of law”). The government’s errant citation is not insignificant, 

given that timeliness is an issue for its cross-appeal (as discussed below). Section 3731 contains a 30-day deadline for filing a notice of appeal that § 3742(b) lacks. See CHARLES ALAN 

WRIGHT, ET AL., 16A FED. PRAC. & PROC. § 3950.8 (4th ed. April 

2019 supp.); see also In re Grand Jury Proceedings, 616 F.3d 1186, 

1195–99 (10th Cir. 2010) (discussing the interplay between 

§ 3731 and FED. R. APP. P. 4(b)). Nevertheless, where the record provides enough information to establish appellate jurisdiction, we may exercise such jurisdiction despite the parties’ 

failure to direct us to its proper statutory source. See NewPage 

Wis. Sys. Inc. v. United Steel Workers Int’l Union, 651 F.3d 775, 

778 (7th Cir. 2011) (if the jurisdictional statute cited by a party 

is inaccurate, the “court still must inquire whether another 

statute supplies jurisdiction”); see also In re Sealed Case, 449 

F.3d 118, 121 (D.C. Cir. 2006) (holding the appellant’s failure 
30 Nos. 18-1687 & 18-1950 

to cite § 3742, “while bothersome to a court, is not necessarily 

fatal”). 

One issue remains: Section 3742(b) requires the government to obtain “the personal approval of the Attorney 

General, the Solicitor General, or a deputy solicitor general 

designated by the Solicitor General” in order to appeal. Because the government did not rely on § 3742(b) in its briefing, 

it has not provided proof of its compliance with that statutory 

requirement. But our circuit precedent does not treat 

§ 3742(b)’s approval requirement as jurisdictional. United 

States v. Hendrickson, 22 F.3d 170, 172 n.1 (7th Cir. 1994).11

Nothing in the record suggests the government lacks authorization to pursue its cross-appeal, and Lee never raised the 

issue. 

 

11 See also United States v. Jackson, 544 F.3d 1176, 1181–82 (11th Cir. 2008) 

(personal approval requirement in § 3742(b) is non-jurisdictional), abrogated on different grounds by United States v. DiFalco, 837 F.3d 1207, 1216 

(11th Cir. 2016); United States v. Ruiz-Alonso, 397 F.3d 815, 818 (9th Cir. 

2005) (same); United States v. Zamudio, 314 F.3d 517, 520 (10th Cir. 2002) 

(same); United States v. Gonzalez, 970 F.2d 1095, 1102 (2d Cir. 1992) (same);

but see United States v. Thibodeaux, 211 F.3d 910, 912 (5th Cir. 2000) (per 

curiam) (dismissing the government’s sentencing appeal for failure to establish the requisite approval); United States v. Smith, 910 F.2d 326, 328 (6th 

Cir. 1990) (holding the approval is not jurisdictional but requiring proof 

that it has been obtained as part of the court’s “exercise of its supervisory 

authority”); cf. Greenlaw v. United States, 554 U.S. 237, 246 (2008) (explaining that an appellate court may not increase a defendant’s sentence absent 

a cross-appeal because “Congress ... entrusted to named high-ranking officials within the Department of Justice responsibility for determining 

whether the Government, on behalf of the public, should seek a sentence 

higher than the one imposed”). 
Nos. 18-1687 & 18-1950 31

2. Did the government file its notice of appeal in time? 

The next jurisdictional question concerns the timeliness of 

the government’s notice of appeal. In a criminal case like this, 

FED. R. APP. P. 4(b)(1)(B) provides the government’s deadline: 

When the government is entitled to appeal, its 

notice of appeal must be filed in the district 

court within 30 days of the later of: 

(i) the entry of the judgment or order being appealed; or 

(ii) the filing of a notice of appeal by any 

defendant. 

The government must file its own notice of appeal to pursue 

a sentencing increase following a conviction; it cannot piggyback on the defendant’s notice. Greenlaw, 554 U.S. at 252–53. 

Here, the relevant timeline looks like this: 

 February 28, 2018: The district court orally sentenced Lee to 20 months in prison. 

 March 11, 2018: Lee filed his first notice of appeal 

and a Rule 35(a) motion to correct his sentence. 

 March 14, 2018: The district court modified Lee’s 

sentence to 12 months in prison and entered its 

written judgment. 

 March 28, 2018: Lee filed his second notice of appeal. 

 April 27, 2018: The government cross-appealed. 

The government does not rely on the date of judgment under Rule 4(b)(1)(B)(i). It cannot, as it filed its notice of appeal 

45 days after the district court’s judgment. But what about 
32 Nos. 18-1687 & 18-1950 

Rule 4(b)(1)(B)(ii)? The government’s notice of appeal came 

30 days after Lee’s second notice of appeal, but 48 days after 

Lee’s first notice. Which of Lee’s notices triggered the government’s deadline clock? 

As with any matter of statutory interpretation, the text 

controls. Cochise Consultancy, Inc. v. United States ex rel. Hunt, 

139 S. Ct. 1507, 1512–13 (2019); see also SCALIA & GARNER,

supra, at 56 (“The words of a governing text are of paramount 

concern, and what they convey, in their context, is what the 

text means.”). Notably, Rule 4(b)(1)(B)(ii) refers to “a notice of 

appeal by any defendant” rather than “the first notice of appeal by any defendant.” That is important because the analogous rule for civil cases triggers a party’s deadline to initiate 

a cross-appeal on “the date when the first notice [of appeal] 

was filed ... .” FED. R. APP. P. 4(a)(3) (emphasis added). The 

drafters could have used the same language for the criminal 

rule, but they chose different words. We must respect that decision and give such variations effect. Murphy v. Smith, 138 S. 

Ct. 784, 787–88 (2018); see also SCALIA & GARNER, supra, at 170 

(“[A] material variation in terms suggests a variation in meaning.”). 

Lee offers no persuasive reason to interpret “a notice of 

appeal by any defendant” to mean “the first notice of appeal 

by any defendant.” The text of the rule already contemplates 

there may be multiple notices of appeal, and it allows the government to file its cross-appeal within thirty days of the “later 

of” such notices. The only authority Lee offers, Cyrak v. Lemon, 

919 F.2d 320 (5th Cir. 1990), is a civil case addressing Rule 4(a), 

which expressly refers to the “first notice.” Rather than 

simply analogize criminal cases to civil cases, as Lee asks us 
Nos. 18-1687 & 18-1950 33

to do, we give effect to the different text of the different provisions and apply the rules as written. 

Rule 4(b) permits the government to file its notice of appeal within thirty days of “a notice of appeal by any defendant.” Lee timely filed “a notice of appeal” on March 28, 2018. 

And the government filed its notice exactly thirty days later, 

on April 27, 2018, so the government’s appeal is timely under 

the plain meaning of FED. R. APP. P. 4(b)(1)(B)(ii). 

3. In reducing Lee’s sentence, did the district court exceed its authority? 

Now we arrive at the substance of the government’s crossappeal. The government claims district courts lack authority 

to revisit advisory guideline calculations on a motion brought 

under FED. R. CRIM. P. 35(a). It does not challenge the merits 

of the district court’s ruling, only the court’s authority to 

make it. Rule 35(a) states: “Within 14 days after sentencing, 

the court may correct a sentence that resulted from arithmetical, technical, or other clear error.” 

In sentencing Lee, the district court struggled with how to 

calculate the “loss” caused by Lee’s crimes for purposes of 

U.S.S.G. § 2B1.1. Where the loss cannot be determined, the 

Guidelines permit courts to look at the defendant’s gain as an 

alternative. U.S.S.G. § 2B1.1 app. n. 3(B). The district court 

originally found Lee’s gain to be the $180,392 in Recovery Act 

funds paid to KTurbo by municipalities. That put Lee’s guideline range at 46–57 months, although the district court departed down from that range and sentenced Lee to 20 months. 

The district court abandoned that math on Lee’s Rule 35(a) 

motion. Based on United States v. Giovenco, 773 F.3d 866, 871 

(7th Cir. 2014), the court determined it needed to assess net 
34 Nos. 18-1687 & 18-1950 

profit, rather than KTurbo’s gross revenue, and that it lacked 

the evidentiary record to do so. It therefore decided not to apply any sentencing enhancement based on Lee’s gain under 

U.S.S.G. § 2B1.1. Using a guideline range of 12–18 months, the 

court sentenced Lee to 12 months plus one day. 

The government emphasizes that a district court’s authority on a Rule 35(a) motion is “narrow.” As we have said, the 

“Rule does not give the district court a second chance to exercise its ‘discretion with regard to the application of the sentencing guidelines,’ nor does it allow for changes to a sentence 

based on the court’s change of mind.” United States v. Clark, 

538 F.3d 803, 809 (7th Cir. 2008) (quoting FED. R. CRIM. P. 35 

advisory committee’s note to 1991 amendments). Still, Rule 

35(a) is not the straitjacket the government suggests. It does 

allow district courts to correct “clear errors” and avoid wasteful appeals by fixing obvious sentencing issues. United States 

v. Schenian, 847 F.3d 422, 424 (7th Cir. 2017). This extends to 

clear errors that produce mistakenly high sentences. Id. If the 

judge identifies an aspect of the sentence that is objectively 

erroneous—whether on a factual matter or a point of law—

the judge may use Rule 35(a) to address the problem. 

Here, the district court realized that its gain calculation 

needed to assess net profit, not gross revenue, see Giovenco, 

773 F.3d at 871, and that it lacked an evidentiary basis to do 

so. It also determined nothing in the record showed how 

much Lee personally gained from KTurbo’s sales. The government bore the burden to establish a “loss” or “gain” under 

U.S.S.G. § 2B1.1. United States v. Johns, 686 F.3d 438, 454 (7th 

Cir. 2012). Sentencing Lee without a supporting evidentiary 

record would have constituted clear error. Id. at 456–57. Rule 

35(a)’s entire purpose is to correct errors otherwise destined 
Nos. 18-1687 & 18-1950 35

to be reversed. Schenian, 847 F.3d at 424; Clark, 538 F.3d at 809. 

The district court was thus well within its authority to modify 

Lee’s sentence on his Rule 35(a) motion. 

D. Restitution 

Finally, we return to Lee’s appeal, specifically his challenge to the restitution ordered by the district court. 

Under the Mandatory Victims Restitution Act, courts must 

order restitution to any victim of “an offense against property 

under this title, ... including any offense committed by fraud 

or deceit.” 18 U.S.C. § 3663A(c)(1)(A)(ii). The statute sets the 

restitution amount at the value of the victim’s lost property 

on the date of loss or the date of sentencing (whichever is 

greater) minus the value of any returned property. 18 U.S.C. 

§ 3663A(b)(1)(B); see also United States v. Malone, 747 F.3d 481, 

485 (7th Cir. 2014). 

On appeal, Lee objects to paying any restitution, denying 

that any municipality sustained a loss. He acknowledges that 

two municipalities, Mishawaka, Indiana and Redmond, 

Oregon, paid KTurbo a total of $180,392 for turbo blowers 

manufactured in South Korea. But Lee points out that the EPA 

subsequently authorized Mishawaka and Redmond to continue using the KTurbo blowers without returning the Recovery Act funds. So Lee argues neither municipality sustained 

any loss: each paid for turbo blowers to use on its project, and 

each received turbo blowers that it is using on its project. 

But Lee waived this argument in the district court. The 

probation office recommended the court order $180,392 in 

restitution based on the sums paid by Mishawaka and 
36 Nos. 18-1687 & 18-1950 

Redmond.12 The government agreed with probation’s recommendation. Despite the fact the district court held three 

sentencing hearings, Lee failed to raise the issue of restitution, 

even once. Lee failed to object in his written sentencing memorandum, and he failed to raise the issue in his Rule 35(a) motion. Indeed, Lee’s entire argument regarding restitution in 

the district court comprised two sentences in a supplemental 

brief requested by the court on a different topic, with no citations to any statutory authority or case law supporting his position.13 That is insufficient to preserve an objection.

The closer question is whether Lee affirmatively waived 

the restitution arguments he now pursues on appeal, or 

whether he only forfeited them. Waiver requires the intentional relinquishment of a known right, while forfeiture is a 

mere accidental or neglectful failure to assert a right. United 

States v. Hathaway, 882 F.3d 638, 641 (7th Cir. 2018). The distinction is important, as waiver precludes appellate review altogether, while forfeited rights may be vindicated on appeal 

through plain-error review. Id. In making this determination, 

 

12 Neither of these municipal contracts served as a basis for any of the five 

counts of wire fraud in the indictment. Ordinarily restitution is limited to 

the losses caused by the specific conduct underlying the defendant’s convictions. United States v. Locke, 759 F.3d 760, 765 (7th Cir. 2014). But where 

the offense “involves as an element a scheme, conspiracy, or pattern of 

criminal activity,” such as the scheme to defraud necessary for a wire 

fraud conviction, the applicable statute permits courts to award restitution 

to “any person directly harmed by the defendant’s criminal conduct in the 

course of the scheme, conspiracy, or pattern.” 18 U.S.C. § 3663(a)(2). 

13 In the district court Lee argued: “Since the loss amount is zero, the restitution amount is also zero. And the government’s motion to use Heon 

Seok Lee’s bond deposit to pay restitution (Dkt # 239) should therefore be 

denied.” 
Nos. 18-1687 & 18-1950 37

we look to whether the defendant “chose, as a matter of strategy, not to present the argument.” Id. (quoting United States v. 

Garcia, 580 F.3d 528, 541 (7th Cir. 2009)). 

After reviewing the extensive sentencing transcripts in 

this case, we conclude Lee and his counsel made a strategic 

decision to not press objections to restitution in the district 

court, and thus waived the issue. The main event during the 

sentencing was the loss calculation under U.S.S.G. § 2B1.1. Yet 

restitution did come up. At the first hearing, Lee’s counsel interjected, “I would also just note since restitution is brought 

up—been brought up, that the restitution amount I don’t 

think needs to be above 180.” Rather than argue the district 

court should not order restitution because there was no loss, 

as he does now, Lee asked the district court to not go above 

the $180,392 figure recommended by the probation office.14

Although Lee did include a two-sentence objection to restitution in his supplemental memorandum before the second 

hearing, he never raised the issue at the second hearing itself, 

despite the prosecution addressing the topic. Lee never mentioned restitution in his Rule 35(a) motion. And, at the third 

sentencing hearing, when the district court noted its intention 

to enter the same $180,392 in restitution (despite reducing 

Lee’s prison term on account of the government’s failure to 

prove the loss amount), Lee’s counsel represented, “I think 

that’s correct as to what should—what would be in the judgment.” These repeated decisions to press other arguments, 

and not address restitution, evinced a “tactical choice” on 

 

14 Lee made this point in the context of a debate about whether the loss 

figure under the Sentencing Guidelines should be the $1.6 million face 

value of KTurbo’s Recovery Act contracts. Lee’s incentive to push the district court toward a figure substantially lower than that was clear. 
38 Nos. 18-1687 & 18-1950 

Lee’s part, constituting waiver. United States v. Jin Hua Dong, 

675 F.3d 698, 702 (7th Cir. 2012). 

We realize there is some logical tension between the district court’s restitution award, and its conclusion that it lacked 

a sufficient evidentiary basis to determine victims’ “loss” for 

purposes of U.S.S.G. § 2B1.1.15 But the appropriate forum for 

addressing that issue was the district court in the first instance. Calculating restitution in an atypical fraud case such 

as this one is difficult, as the losses caused by a scheme to circumvent governmental purchasing preferences are “inherently difficult to quantify.” United States v. Leahy, 464 F.3d 773, 

794 (7th Cir. 2006). The district court was entitled to the benefit of the parties’ best arguments on how restitution should be 

calculated. By strategically choosing to forego his challenge to 

the restitution figure in the district court, Lee waived the issue: “A defendant cannot squirrel away objections, revealing 

them only upon successive appeals.” Kuipers, 49 F.3d at 1258. 

III. Conclusion 

Heon Seok Lee repeatedly lied about where his company 

manufactured its products in order to profit off a federal stimulus package. Such a fraudulent scheme is wire fraud and 

prohibited by 18 U.S.C. § 1343. To execute his scheme, Lee directed his company to mislabel the country of origin for its 

 

15 Although the restitution amount typically tracks the loss amount under 

the Sentencing Guidelines, United States v. McGee, 612 F.3d 627, 635 (7th 

Cir. 2010), courts must be careful not to confuse the two given the differences between the definitions of “loss” under U.S.S.G. § 2B1.1 and restitution under 18 U.S.C. § 3663A(b)(1)(B). United States v. Hussein, 664 F.3d 

155, 161 n.2 (7th Cir. 2011) (“The amount of restitution does not always 

correspond to guidelines loss because the rules for calculating each differ.”). 
Nos. 18-1687 & 18-1950 39

products and attempt to import them with those incorrect 

designations. This violated 19 U.S.C. § 1304(a) and the federal 

prohibition against smuggling, 18 U.S.C. § 545, and evidence 

supported the jury’s verdict on those counts. As to Lee’s sentence, although the government timely appealed, the district 

court did not exceed its authority when it revisited Lee’s sentencing guidelines range and modified Lee’s prison sentence 

accordingly. Finally, Lee waived any objection to how the district court calculated restitution. We therefore AFFIRM the 

judgment of the district court in full.