United States of America v. Eric Kyereme

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 23-3415
U NITED S TATES OF A MERICA,
Plaintiff-Appellee,
v.
ERIC K YEREME,
Defendant-Appellant.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 1:20-cr-00363-1 — Mary M. Rowland, Judge.
____________________
A RGUED O CTOBER 28, 2024 — DECIDED F EBRUARY 3, 2025
____________________
Before R OVNER , BRENNAN , and K OLAR , Circuit Judges.
K OLAR , Circuit Judge. After pleading guilty to wire fraud,
Eric Kyereme was sentenced to three years’ imprisonment,
three years of supervised release, and was ordered to pay
$185,500 in restitution. On appeal, Kyereme argues that the
district court erred by determining that his transaction with a
business associate, Da Zhou, was within the scope of his con-
viction. Kyereme also contends that the district court pro-
vided insufficient notice that it would rule on the Zhou

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2 No. 23-3415
transaction at the final sentencing hearing. We reject both of
Kyereme’s arguments and affirm his sentence.
I. Background
In 2020, Kyereme was indicted on five counts of wire fraud
in violation of 18 U.S.C. § 1343. Although he proceeded to
trial, after opening statements and testimony from two wit-
nesses, Kyereme entered a blind guilty plea to count one of
the indictment.
Kyereme admitted to running a scheme to mislead inves-
tors in his company, Sika Capital Management, LLC. It started
when Kyereme solicited $200,000 of investments from indi-
vidual investors for Sika’s “Alpha Fund.” He deposited these
funds into a brokerage account and began trading. The trad-
ing went poorly. Eventually, the Alpha Fund brokerage ac-
count had lost all but $17,112 of the original $200,000 invest-
ment. In response to the losses, Kyereme did not tell his in-
vestors he lost their money. Rather, he created fake account
statements and sent out newsletters that falsely reflected pos-
itive returns. He hoped this deception would allow Alpha
Fund to retain the remaining investment funds.
What Kyereme expressly reserved from his guilty plea,
however, was an admission of wrongdoing with respect to a
business associate named Da Zhou. Zhou did not invest in the
Alpha Fund. Instead, Kyereme’s interactions with Zhou
pertain to RestoreFlow Allografts (RFA), a start-up company
that distributed cryopreserved tissue taken from deceased
people to living patients. Kyereme served on RFA’s board of
directors and owned a portion of the company through his
shares in Primrose Health, LLC, which held an equity stake in
RFA. Kyereme and the government agreed at the plea hearing

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No. 23-3415 3
that the district court would decide during sentencing
whether Kyereme’s dealings with Zhou were part of his wire
fraud offense. Additionally, Kyereme moved to bifurcate
sentencing, with an evidentiary hearing on the Zhou
transaction to occur before the final hearing. The district court
granted the motion and scheduled a hearing for August 2023.
At the August 2023 hearing, the government presented ev-
idence that Kyereme defrauded Zhou of $133,000 as part of
his scheme to cover up Alpha Fund’s losses. In the govern-
ment’s telling, Zhou wanted to invest in RFA, and Kyereme
said he would facilitate the investment by creating a new legal
entity that would purchase and manage newly-offered RFA
shares on behalf of Zhou. But Kyereme never formed that en-
tity. The government presented a forensic accounting report
to show that shortly after Kyereme received $133,000 from
Zhou, he transferred $100,000 into the dwindling Alpha Fund
brokerage account and purchased 1,000 shares of a high-risk
investment. The investment proved unsuccessful.
Kyereme testified that his transaction with Zhou was a le-
gitimate sale. He said that although Zhou originally wanted
to purchase new RFA shares directly, Zhou ultimately agreed
to pay $133,000 for a portion of Kyereme’s interest in RFA by
buying part of his Primrose equity. In other words, Kyereme
testified he earned Zhou’s money in exchange for Primrose
equity and was free to invest it as he pleased.
The government cross-examined Kyereme with two doc-
uments related to RFA. First, the government introduced the
operating agreement for Primrose, which prohibited
Kyereme from transferring his interest in Primrose (and thus
RFA) during the time period that he allegedly sold some of it
to Zhou. Kyereme testified that he had not read the full

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4 No. 23-3415
operating agreement and did not know about the restriction.
Second, the government showed Kyereme that the written
membership agreement between him and Zhou envisioned
an entity that would invest Zhou’s money into RFA shares di-
rectly and did not mention purchasing Kyereme’s interest in
RFA. Kyereme responded that a lawyer drafted the document
and he did not examine it in detail.
The evidentiary hearing also revealed that after another
company bought RFA’s assets and Kyereme received an ini-
tial distribution of $79,000 from the sale, he did not send Zhou
any portion of the money. Kyereme testified that he was wait-
ing for the full distribution before sending Zhou his percent-
age, thinking it would come within a few days. Kyereme’s
contact at Primrose stopped responding to him and the rest of
the distribution never came; Kyereme never passed any of the
money along to Zhou.
At the second and final sentencing hearing, which oc-
curred in December 2023, the district court endorsed the gov-
ernment’s position that Kyereme had defrauded Zhou. The
court stated that it did not believe Kyereme and would not
credit his testimony. It further found that the membership
agreement and the Primrose operating agreement were both
inconsistent with Kyereme’s portrayal of the Zhou transac-
tion. And it deemed the government’s accounting report to be
a “very damning” demonstration that Kyereme attempted to
use Zhou’s money to cover up the Alpha Fund’s losses. The
district court also observed that Kyereme used the remaining
money from Zhou to pay off personal debts.
The district court ruled that the total loss amount from
Kyereme’s offense was $335,500, including the “straightfor-
ward” $200,000 from the Alpha Fund investors and $135,500

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No. 23-3415 5
in loss incurred by Zhou.1 With Zhou’s money included, the
total loss amount of $335,500 led to a 12-point increase to the
offense level under United States Sentencing Guidelines
§ 2B1.1, greater than the 10-point increase it would be without
that addition. The court calculated an offense level of 21 and
a Guidelines range of 41 to 51 months’ imprisonment.
The district court sentenced Kyereme to 36 months’ im-
prisonment followed by three years of supervised release. It
ordered him to pay $185,500 restitution to the victims, includ-
ing $135,500 to Zhou.2 The district court emphasized that it
found the Zhou transaction to be “much more troubling” than
the deceptive information sent to Alpha Fund investors,
deeming it “blatant criminal conduct.” Because Kyereme had
not expressed any remorse about the Zhou transaction during
his allocution, the court concluded that a carceral sentence
was necessary to deter Kyereme from future criminal con-
duct.
Kyereme now appeals.
II. Analysis
Kyereme first takes issue with the district court’s finding
that the Zhou transaction was part of the wire fraud offense.
He also argues he lacked notice that this decision would be
made at his final sentencing hearing rather than beforehand.
Neither challenge is persuasive.
1 In addition to the $133,000 he transferred to Kyereme, Zhou also in-
curred a $2,500 loss from payments to a lawyer who drafted the member-
ship agreement between him and Kyereme.
2 This number is lower than the $335,000 total loss amount because it
reflects prior payments Kyereme made to two of the victims.

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6 No. 23-3415
A. THE DISTRICT COURT DID NOT CLEARLY ERR
According to Kyereme, the district court clearly erred by
finding that the Zhou transaction was fraudulent and that the
resulting loss was part of his wire fraud scheme. Including the
Zhou transaction in the loss amount raised Kyereme’s offense
level to 21 and led to a Guidelines range of 41 to 51 months’
imprisonment. “We review a district court’s interpretation
and application of the Sentencing Guidelines de novo and its
factual findings for clear error.” United States v. Sykes, 774 F.3d
1145, 1149 (7th Cir. 2014). Likewise, we review Guidelines
findings of loss amounts for clear error.3 United States v. White,
883 F.3d 983, 986 (7th Cir. 2018).
“A district court need find only, by a preponderance of the
evidence, that the facts are sufficient to support an enhance-
ment.” United States v. Prieto, 85 F.4th 445, 448 (7th Cir. 2023).
“[W]hen a district court chooses between two permissible in-
ferences from the evidence, the factual findings cannot have
been clearly erroneous.” United States v. Cruz-Rea, 626 F.3d
929, 938 (7th Cir. 2010). In sum, a finding of fact is clearly er-
roneous only when, after considering all the evidence, we are
“left with the definite and firm conviction that a mistake has
been made.” United States v. Dickerson, 42 F.4th 799, 804 (7th
Cir. 2022) (quoting Cruz-Rea, 626 F.3d at 938).
Courts “aggregate losses to victims of ‘the same course of
conduct or common scheme or plan’ as the offense of convic-
tion.” United States v. Meza, 983 F.3d 908, 915–16 (7th Cir. 2020)
(quoting U.S.S.G. § 1B1.3(a)(2)). “Because the offense of wire
fraud is a scheme, the loss amount can include losses incurred
3 If supported by sufficient evidence, the district court’s findings lead
to a higher offense level. Kyereme does not argue otherwise.

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No. 23-3415 7
in the entire scheme….” Id. at 916. A defendant challenging a
loss calculation “bears a heavy burden: he must ‘show that
the court’s loss calculations were not only inaccurate but out-
side the realm of permissible computations.’” United States v.
Collins, 949 F.3d 1049, 1053 (7th Cir. 2020) (quoting United
States v. White, 737 F.3d 1121, 1142 (7th Cir. 2013)).
To begin, Kyereme insists that the district court viewed the
Zhou transaction as a separate fraud and failed to analyze
whether it was “relevant conduct” to the offense of convic-
tion. See, e.g., United States v. Burnett, 805 F.3d 787, 791 (7th Cir.
2015) (explaining that under the Guidelines, “relevant con-
duct” can include acts that are not part of a common scheme,
as long as they are part of the same course of conduct). Not so.
The sentencing transcript shows that the district court deter-
mined Zhou was a victim of the same wire fraud offense that
Kyereme pleaded guilty to, and that Zhou’s losses were
“loss[es] in the fraud.” The district court also ordered restitu-
tion, and “[r]estitution must be based on the offense of con-
viction, not relevant conduct.” United States v. Frith, 461 F.3d
914, 916 (7th Cir. 2006). To the extent this case involves rele-
vant conduct, it is only because the Guidelines define relevant
conduct to include “conduct that constitutes the offense of
conviction….” Edwards v. United States, 523 U.S. 511, 514
(1998) (citing U.S.S.G. § 1B1.3(a)(1)). This appeal is not about
whether the Zhou transaction was “part of the same course of
conduct or common scheme or plan as the offense of con-
duct.” U.S.S.G. § 1B1.3(a)(2).
With that in mind, we turn to the substance of the district
court’s findings and hold that they are supported by ample
evidence in the record. The membership agreement between
Kyereme and Zhou prescribed that Kyereme would create a

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8 No. 23-3415
shared investment entity to purchase shares of RFA. Kyereme
testified that the membership agreement did not accurately
capture the nature of the transaction and that Zhou actually
agreed to indirectly purchase some of Kyereme’s existing RFA
shares by buying part of his Primrose equity. Even if we were
to accept that Kyereme and Zhou were content to proceed
with a written contract that incorrectly reflected their agree-
ment, there are other problems with Kyereme’s testimony.
For one, the Primrose operating agreement prohibited
Kyereme from transferring his interest in Primrose. What’s
more, Kyereme’s conduct did not align with the transaction
he described in his testimony. He never transferred a portion
of his shares to Zhou and never gave Zhou any of the money
that was distributed after RFA was purchased.
If Kyereme is to be believed, his conduct was not fraudu-
lent but instead exceptionally careless. He purportedly did
not read the Primrose operating agreement governing his
RFA shares, signed the membership agreement without no-
ticing that it laid out a different transaction than he and Zhou
had agreed to, forgot to set up an entity to transfer his interest
in RFA, and indefinitely delayed sending Zhou the proceeds
from RFA’s sale because he thought more money was coming
in the near future and preferred to send it all at once. That
chain of events is implausible. Thus, it was not clear error for
the district court to decline to credit Kyereme’s testimony.
Nor was it clear error for the district court to adopt the plain
interpretation of events: Kyereme defrauded Zhou as part of
the fraudulent scheme laid out in the indictment. In the words
of the indictment, “[i]t was further part of the scheme that de-
fendant Eric Kyereme told at least one investor that his funds
would be invested in [RFA] ... [c]ontrary to his representations
to the investor, Kyereme did not invest that money in [RFA].”

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No. 23-3415 9
The district court also had sufficient evidence to conclude
that the fraud on Zhou was part of Kyereme’s scheme to de-
ceive the Alpha Fund investors. As shown by the accounting
report introduced by the government, Kyereme took the
money he received from Zhou and immediately put most of
it into a high-risk investment made through the Alpha Fund.
Kyereme testified that this maneuver was not an attempt to
hide the Alpha Fund’s losses because if the investment was
successful, the benefits would have accrued to him rather
than the Alpha Fund investors. Yet this contention about how
the Alpha Fund worked is hard to square with the fact that
Kyereme transferred the money into the same brokerage ac-
count that held the investors’ dwindling funds. Such an in-
flux, and the possibility of positive investment returns, would
have aided Kyereme’s efforts to mislead investors about the
account’s performance. That is enough evidence for the dis-
trict court to link the Zhou transaction with Kyereme’s fraud
against the Alpha Fund investors.
In short, the district court did not clearly err in finding that
Kyereme defrauded Zhou as part of his wire fraud scheme to
deceive the Alpha Fund investors. Consequently, the district
court properly included Zhou’s $135,500 loss when calculat-
ing the total loss amount of the offense. See Meza, 983 F.3d at
916. And the district court was well within its discretion to
rely on the Zhou transaction when determining Kyereme’s
sentence.
B. THE DISTRICT COURT PROVIDED SUFFICIENT
NOTICE
Kyereme also argues that the district court indicated that
it would rule on the Zhou transaction before the final sentenc-
ing hearing, leaving him unprepared to address the court’s

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10 No. 23-3415
decision at that hearing. But the record contradicts this asser-
tion.
“Whether the district court followed proper sentencing
procedure is a legal question reviewed de novo.” United States
v. Pulley, 601 F.3d 660, 664 (7th Cir. 2010). “At sentencing, the
court … must—for any disputed portion of the presentence
report or other controverted matter—rule on the dispute or
determine that a ruling is unnecessary….” Fed. R. Crim. P.
32(i)(3)(B). “[T]he requirements of due process during a sen-
tencing hearing are met if the defendant is given adequate no-
tice of the proceeding and an opportunity to contest the facts
relied upon to support the imposed criminal penalty.” United
States v. Freeman, 815 F.3d 347, 355 (7th Cir. 2016) (quoting
United States v. McCoy, 770 F.2d 647, 649 (7th Cir. 1985)).
The district court twice made clear that it would rule on
the Zhou transaction at the final sentencing hearing—once
during the August 2023 evidentiary hearing and again in a
December 2023 order. Kyereme notes that at a July 2023 hear-
ing, the district court suggested that it would decide the issue
“the first week of August” and then “come back a month later
and do the sentencing.” But at the end of the August 2023 ev-
identiary hearing, the district court announced a different
plan for a final sentencing hearing where it would “come out
and rule on all the sentencing guidelines” and then “[t]ake a
break, and … impose [the] sentence.” Kyereme did not object.
The final sentencing hearing was originally set for September
2023 and then postponed three times due to scheduling con-
flicts. In December 2023, a week before the sentencing hear-
ing, Kyereme moved to continue the hearing until after the
district court ruled on the Zhou transaction. Four days before
the sentencing hearing, the district court denied the motion,

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No. 23-3415 11
which once again established it would decide the issue at the
sentencing hearing. The record leaves no doubt that Kyereme
had sufficient notice of the district court’s intentions and an
adequate opportunity to prepare for an adverse decision.
III. Conclusion
The district court’s findings were not clearly erroneous
and the district court provided sufficient notice that it would
rule on the Zhou transaction at the final sentencing hearing.
We AFFIRM Kyereme’s sentence.

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